Form 10-Q

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, S4kNh4GJgVkgcsuD3lPjp+7//oiYDwdYE8DxbKBs8QvqZzPulS361TCL8+AqAnQ0 MTR1tsRLz6grZYmABGh29Q== 0001193125-03-083902.txt : 20031119 0001193125-03-083902.hdr.sgml : 20031119 20031119152835 ACCESSION NUMBER: 0001193125-03-083902 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20030930 FILED AS OF DATE: 20031119 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHART INDUSTRIES INC CENTRAL INDEX KEY: 0000892553 STANDARD INDUSTRIAL CLASSIFICATION: FABRICATED PLATE WORK (BOILER SHOPS) [3443] IRS NUMBER: 341712937 STATE OF INCORPORATION: DE FISCAL YEAR END: 2002 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11442 FILM NUMBER: 031012788 BUSINESS ADDRESS: STREET 1: 5885 LANDERBROOK DRIVE STREET 2: SUITE 150 CITY: MAYFIELD HEIGHTS STATE: OH ZIP: 44124 BUSINESS PHONE: 4407531490 10-Q 1 d10q.htm FORM 10-Q Form 10-Q

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2003

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-11442

CHART INDUSTRIES, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware		34-1712937
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

5885 Landerbrook Dr., Suite 205, Cleveland, Ohio		44124
(Address of Principal Executive Offices)		(ZIP Code)

Registrant’s Telephone Number, Including Area Code: (440) 753-1490

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes x No ¨

At November 15, 2003, there were 5,325,331 outstanding shares of the Company’s Common Stock, par value $.01 per share.

Page 1 of 30 sequentially numbered pages.

CHART INDUSTRIES, INC.

INDEX

		Page
Part I. Financial Information

Item 1:	Financial Statements

	Condensed Consolidated Balance Sheets as of September 30, 2003 and December 31, 2002	3

	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2003 and 2002	4

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2003 and 2002	5

	Notes to Unaudited Condensed Consolidated Financial Statements	6-19

Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20-26

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26

Item 4:	Controls and Procedures	26

Part II. Other Information

Item 1:	Legal Proceedings	26-27

Item 2:	Changes in Securities and Use of Proceeds	27

Item 3:	Defaults Upon Senior Securities	27-28

Item 6:	Exhibits and Reports on Form 8-K	28

Signatures		29

Exhibit Index		30

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements.

CHART INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share amounts)

	Reorganized Company* September 30, 2003		Predecessor Company* December 31, 2002
	(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	27,815	$	7,225
Accounts receivable, net		36,104		42,081
Inventories, net		42,269		45,998
Other current assets		20,509		27,540
Assets held for sale		550		10,192

Total Current Assets		127,247		133,036

Property, plant and equipment, net		46,396		55,312
Goodwill, net				77,232
Reorganization value in excess of amounts allocable to identifiable assets		71,540
Identifiable intangible assets, net		51,983		8,630
Other assets, net		2,579		5,084

TOTAL ASSETS	$	299,745	$	279,294


LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current Liabilities
Accounts payable	$	21,634	$	22,873
Customer advances and billings in excess of contract revenue		6,830		10,037
Accrued expenses and other current liabilities		31,667		38,473
Current maturities of long-term debt		3,475		5,865
Senior debt in default				256,874

Total Current Liabilities		63,606		334,122

Long-term debt		122,537		1,161
Other long-term liabilities		23,737		25,628
Shareholders’ Equity (Deficit)
Common stock of Reorganized Company, par value $.01 per share – 9,500,000 shares authorized, 5,325,331 shares issued		53
Common stock of Predecessor Company, par value $.01 per share – 60,000,000 shares authorized, 25,707,709 shares issued				257
Additional paid-in capital		89,812		45,792
Retained deficit				(116,086	)
Accumulated other comprehensive loss				(10,799	)
Treasury stock of Predecessor Company, at cost, 153,648 shares				(781	)

		89,865		(81,617	)

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)	$	299,745	$	279,294

The balance sheet at December 31, 2002 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

*See accompanying notes to these unaudited condensed consolidated financial statements, including Note A - Basis of Presentation, describing the Reorganized Company and Predecessor Company.

CHART INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(Dollars and shares in thousands, except per share amounts)

	Predecessor Company*
	Three Months Ended September 30,						Nine Months Ended September 30,
	2003			2002			2003			2002
Sales	$	63,232		$	69,469		$	197,017		$	205,781
Cost of sales		44,552			51,661			141,240			153,647

Gross profit		18,680			17,808			55,777			52,134

Selling, general and administrative expense		11,908			12,972			44,211			43,253
Employee separation and plant closure (income) costs		(147	)		2,175			882			3,483
Loss on insolvent subsidiary								13,682
Equity income in joint venture		(44	)		(103	)					(382	)

		11,717			15,044			58,775			46,354

Operating income (loss)		6,963			2,764			(2,998	)		5,780

Other income (expense):
Gain on sale of assets		3,642						4,753			1,420
Interest expense, net		(788	)		(4,329	)		(9,911	)		(13,084	)
Financing costs amortization		(64	)		(638	)		(1,653	)		(2,383	)
Derivative contracts valuation income (expense)		23			(702	)		(389	)		(1,114	)
Foreign currency (loss) gain		(242	)		1			(287	)		(661	)
Reorganization items, net		5,677						5,677

		8,248			(5,668	)		(1,810	)		(15,822	)

Income (loss) from continuing operations before income taxes and minority interest		15,211			(2,904	)		(4,808	)		(10,042	)
Income tax benefit		(3,481	)		(1,447	)		(1,953	)		(3,742	)

Income (loss) from continuing operations before minority interest		18,692			(1,457	)		(2,855	)		(6,300	)

Minority interest, net of taxes		38			23			63			24

Income (loss) from continuing operations		18,654			(1,480	)		(2,918	)		(6,324	)

Income from discontinued operation, net of taxes					758			833			2,508

Net income (loss)	$	18,654		$	(722	)	$	(2,085	)	$	(3,816	)


Net income (loss) per common share — basic and assuming dilution:
Income (loss) from continuing operations	$	0.70		$	(0.06	)	$	(0.11	)	$	(0.25	)
Income from discontinued operation					0.03			0.03			0.10

Net income (loss) per common share	$	0.70		$	(0.03	)	$	(0.08	)	$	(0.15	)

Shares used in per share calculations — basic		26,627			25,129			26,336			24,977

Shares used in per share calculations — assuming dilution		26,691			25,129			26,336			24,977

* See accompanying notes to these unaudited condensed consolidated financial statements, including Note A - Basis of Presentation, describing the Reorganized Company and Predecessor Company and the description of shares used in per share calculations.

CHART INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollars in thousands)

	Predecessor Company*
	Nine Months Ended September 30,
	2003			2002
OPERATING ACTIVITIES
Loss from continuing operations	$	(2,918	)	$	(6,324	)
Adjustments to reconcile loss from continuing operations to net cash provided by operating activities:
Reorganization items, net		(5,677	)
Loss on insolvent subsidiary		13,682
Gain on sale of assets		(4,753	)		(1,420	)
Depreciation and amortization		7,607			8,431
Financing costs amortization		1,653			2,383
Debt restructuring-related professional fees expensed		6,046			3,756
Employee separation and plant closure costs		456			868
Other non-cash operating activities		735			1,250
Increase (decrease) in cash resulting from changes in operating assets and liabilities, excluding effect of discontinued operation:
Accounts receivable		2,486			2,127
Inventory and other current assets		5,270			(4,916	)
Accounts payable and other current liabilities		(1,527	)		(8,439	)
Income tax refund					9,258
Customer advances and billings in excess of contract revenue		(3,594	)		(421	)

Net Cash Provided By Operating Activities		19,466			6,553
INVESTING ACTIVITIES
Capital expenditures		(1,907	)		(2,296	)
Proceeds from sale of assets		16,075			2,300
Dividends received from joint venture					492
Other investing activities		933			741

Net Cash Provided By Investing Activities		15,101			1,237

FINANCING ACTIVITIES**
Borrowings on revolving credit facilities		20,359			37,411
Repayments on revolving credit facilities		(21,614	)		(36,596	)
Principal payments on long-term debt		(1,199	)		(3,056	)
Debt restructuring-related fees paid		(12,583	)		(5,850	)
Payments on interest rate collars		(759	)		(1,750	)
Other financing activities		(111	)		(168	)

Net Cash Used In Financing Activities		(15,907	)		(10,009	)

Cash flows provided by (used in) continuing operations		18,660			(2,219	)
Cash flows provided by discontinued operation		1,592			3,923

Net increase in cash and cash equivalents		20,252			1,704
Effect of exchange rate changes on cash		338			484
Cash and cash equivalents at beginning of period		7,225			11,801

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	27,815		$	13,989

* See accompanying notes to these unaudited condensed consolidated financial statements, including Note A - Basis of Presentation, describing the Reorganized Company and Predecessor Company.

** On September 15, 2003, in accordance with the Company’s plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code, existing senior debt of $255,746 and related interest and fees of $1,861 were exchanged for 95 percent of the common stock of the Reorganized Company and a $120,000 secured term loan, which matures in 2009.

CHART INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements — September 30, 2003

(Dollars and shares in thousands, except per share amounts)

NOTE A — Basis of Preparation

The accompanying unaudited condensed consolidated financial statements of Chart Industries, Inc. and subsidiaries (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (which include normal recurring adjustments and fresh-start accounting adjustments) considered necessary for a fair presentation as of September 30, 2003 have been included. Certain prior year amounts have been reclassified to conform to the current year presentation. Operating results for the three- and nine-month periods ended September 30, 2003 are not necessarily indicative of the results that may be expected for the year ending December 31, 2003. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002.

Nature of Operations: The Company is a leading global supplier of standard and custom-engineered products and systems serving a wide variety of low-temperature and cryogenic applications. The Company has developed an expertise in cryogenic systems and equipment, which operate at low temperatures sometimes approaching absolute zero. The majority of the Company’s products, including vacuum-insulated containment vessels, heat exchangers, cold boxes and other cryogenic components, are used throughout the liquid-gas supply chain for the purification, liquefaction, distribution, storage and use of industrial gases and hydrocarbons. Headquartered in Cleveland, Ohio, the Company has domestic operations located in nine states and an international presence in Australia, China, the Czech Republic, Germany and the United Kingdom.

Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Principles of Consolidation: The unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany accounts and transactions are eliminated in consolidation. Investments in affiliates where the Company’s ownership is between 20 percent and 50 percent, or where the Company does not have control but has the ability to exercise significant influence over operations or financial policy, are accounted for under the equity method. The Company’s Chart Heat Exchangers Limited (“CHEL”) subsidiary, which is 100 percent owned by the Company, filed for a voluntary administration under the U.K. Insolvency Act of 1986 on March 28, 2003, as more fully described in Note G of the unaudited condensed consolidated financial statements. Because CHEL is not under the control of the Company subsequent to March 28, 2003, the unaudited condensed consolidated financial statements do not include the accounts or results of CHEL subsequent to March 28, 2003.

Basis of Presentation: The Company’s consolidated financial statements have been presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

On July 8, 2003, the Company and all of its majority-owned U.S. subsidiaries filed voluntary petitions for reorganization relief under Chapter 11 of the U.S. Bankruptcy Code to implement an agreed upon senior debt restructuring plan through a pre-packaged plan of reorganization. None of the Company’s non-U.S. subsidiaries were included in the filing in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). On September 15, 2003, the Company (as reorganized, the “Reorganized Company”) and all of its majority-owned U.S. subsidiaries emerged from Chapter 11 proceedings pursuant to the Amended Joint Prepackaged Reorganization Plan of Chart Industries, Inc. and Certain Subsidiaries, dated September 3, 2003 (the “Reorganization Plan”), which the Bankruptcy Court confirmed by an order entered on September 4, 2003. Under the Reorganization Plan, the Company’s senior debt of $255,746 and related interest and fees of $1,861 were converted into a $120,000 secured term loan, with the balance of the existing senior debt being cancelled in return for an initial 95 percent equity ownership position in the Reorganized Company, and Chart’s $40,000 secured debtor-in-possession financing facility was amended and restated as a $40,000 post-bankruptcy secured revolving credit facility. On September 15, 2003, all of the Company’s common stock, warrants, options and other rights to acquire the Company’s common stock were cancelled, and the Company’s former stockholders received five percent of the initial equity of the Reorganized Company and the opportunity to acquire up to an additional five percent of equity through the exercise of new warrants.

CHART INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements — September 30, 2003

(Dollars and shares in thousands, except per share amounts)

NOTE A — Basis of Preparation — Continued

The Company’s emergence from Chapter 11 bankruptcy proceedings resulted in a new reporting entity and the adoption of fresh-start reporting in accordance with the American Institute of Certified Public Accountants (“AICPA”) Statement of Position 90-7, “Financial Reporting by Entities in Reorganization Under the Bankruptcy Code” (“SOP 90-7”) (“Fresh-Start accounting”). The Company used September 30, 2003 as the date for adopting Fresh-Start accounting in order to coincide with the Company’s normal financial closing for the month of September. Upon adoption of Fresh-Start accounting, a new reporting entity is deemed to be created and the recorded amounts of assets and liabilities are adjusted to reflect their estimated fair values. Accordingly, the reported historical financial statements of the Company prior to the adoption of Fresh-Start accounting (the “Predecessor Company”) for periods ended prior to September 30, 2003 are not necessarily comparable to those of the Reorganized Company. In this Quarterly Report on Form 10-Q, references to the Company’s three- and nine-month periods ended September 30, 2003 and periods ended in fiscal 2002 refer to the Predecessor Company.

SOP 90-7 requires that financial statements for the period following the Chapter 11 filing through the bankruptcy confirmation date distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, revenues, expenses, realized gains and losses and provisions for losses directly associated with the reorganization and restructuring of the business, including adjustments to fair value assets and liabilities and the gain on the discharge of pre-petition debt, are reported separately as reorganization items, net, in the other (income) expense section of the Predecessor Company’s unaudited condensed consolidated statement of operations.

Fresh-Start Adjustments: In accordance with Fresh-Start accounting, all assets and liabilities are recorded at their respective fair values as of September 30, 2003. Such fair values represent the Company’s best estimates based on independent appraisals and valuations.

To facilitate the calculation of the enterprise value of the Reorganized Company, the Company developed a set of five-year financial projections. Based on these financial projections, the enterprise value was determined by a financial advisor, using various valuation methods, including (i) a comparison of the Company and its projected performance to the market values of comparable companies, (ii) a review and analysis of several recent transactions of companies in similar industries to the Company, and (iii) a calculation of the present value of the future cash flows derived from the financial projections, including an assumption for a terminal value, discounted back at the Reorganized Company’s estimated weighted average cost of capital. The estimated enterprise value is highly dependent upon achieving the future financial results set forth in the projections as well as the realization of certain other assumptions, none of which are guaranteed. For Fresh-Start accounting purposes, the estimated enterprise value of the Reorganized Company was calculated to be $190,400. In applying Fresh-Start accounting, adjustments to reflect the fair value of assets and liabilities, on a net basis, and the restructuring of the Company’s capital structure and resulting discharge of the senior lender’s pre-petition debt, resulted in net other income of $5,677 in the third quarter of 2003. The reorganization value exceeded the fair value of the Reorganized Company’s assets and liabilities, and this excess is reported as reorganization value in excess of amounts allocable to identifiable assets in the Reorganized Company’s unaudited condensed consolidated balance sheet.

As part of the provisions of SOP 90-7, the Reorganized Company was required to adopt on September 30, 2003 all accounting guidance that was going to be effective within the twelve-month period following September 30, 2003. See Note B – Recently Adopted Accounting Standards for a discussion of the impact on the Company’s financial statements of the accounting guidance required to be adopted.

Changes to Significant Accounting Policies: Fresh-Start accounting requires the selection of appropriate accounting policies for the Reorganized Company. The significant accounting policies previously used by the Predecessor Company will continue to be used by the Reorganized Company except for certain policies related to inventory valuation and the policy for estimating the accounts receivable allowance for doubtful accounts. As of September 30, 2003, the Company changed its method of accounting for inventories at sites of the Company’s Chart Heat Exchangers Limited Partnership legal entity and former Process Systems, Inc. legal entity from the last-in, first-out (“LIFO”) method to the first-in, first-out (“FIFO”) method since the value of inventory on the LIFO method was approximately equal to the value on a FIFO basis. Additionally, as of September 30, 2003, the Company changed its methods for estimating reserves for slow moving and obsolete inventories and the accounts receivable allowance for doubtful accounts to better match historical experience.

CHART INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements — September 30, 2003

(Dollars and shares in thousands, except per share amounts)

NOTE A — Basis of Preparation — Continued

The following table reflects the reorganization adjustments to the Reorganized Company’s unaudited condensed consolidated balance sheet at September 30, 2003.

	Predecessor Company September 30, 2003			Fresh-Start Fair Value Adjustments				Fresh-Start Equity Adjustments				Reorganized Company September 30, 2003
ASSETS

Current Assets
Cash and cash equivalents	$	30,995		$	(3,180	)	A					$	27,815
Accounts receivable, net		37,316			(1,212	)	B						36,104
Inventories, net		38,741			3,528		C						42,269
Other current assets		26,219			(5,710	)	D						20,509
Assets held for sale		550											550

Total Current Assets		133,821			(6,574	)							127,247

Property, plant and equipment, net		46,079			317		E						46,396
Goodwill, net		74,977			(74,977	)	F
Reorganization value								$	71,540		G		71,540
Identifiable intangible assets, net		7,136			44,847		E						51,983
Other assets, net		3,796			(1,217	)	H						2,579

TOTAL ASSETS	$	265,809		$	(37,604	)		$	71,540			$	299,745

LIABILITIES & SHAREHOLDERS’ (DEFICIT) EQUITY

Current Liabilities
Accounts payable	$	18,277		$	3,357		A					$	21,634
Customer advances and billings in excess of contract revenue		6,830											6,830
Accrued expenses and other current liabilities		32,123			(456	)	I						31,667
Current maturities of long-term debt		258,221			(254,746	)	J						3,475

Total Current Liabilities		315,451			(251,845	)							63,606

Long-term debt		3,537			119,000		J						122,537
Other long-term liabilities		28,015			(4,278	)	K						23,737

Shareholder’s (Deficit) Equity
Common stock — Reorganized Company					50		J	$	3		M		53
Common stock — Predecessor Company		266							(266	)	L
Additional paid-in-capital — Reorganized Company					85,321		J		4,491		M		89,812
Additional paid-in-capital — Predecessor Company		49,643							(49,643	)	L
Retained deficit		(126,950	)		5,677		N		121,273		L
Accumulated other comprehensive (loss) income		(3,267	)		8,471		O		(5,204	)	L
Treasury stock		(886	)						886		L

Shareholders’ (Deficit) Equity		(81,194	)		99,519				71,540				89,865

TOTAL LIABILITIES AND SHAREHOLDERS (DEFICIT) EQUITY	$	265,809		$	(37,604	)		$	71,540			$	299,745

A	Professional fees paid and accrued related to the reorganization process

B	Adjustment to accounts receivable allowance for doubtful accounts due to change in accounting policy

Adjustment of $5,368 to record income earned by the Predecessor Company related to the manufacturing effort for work-in- process and finished goods inventory, $70 reversal of the LIFO inventory reserve due to the Company’s election to change from LIFO to FIFO accounting and an increase of $1,910 in the reserve for slow moving and obsolete inventory (collectively, the adjustment to inventory to reflect fair value.)

D	Adjustment to write-off deferred financing costs related to the Predecessor Company’s senior debt

E	Adjustments to record fixed assets and identifiable intangible assets at fair values determined by an independent valuation specialist

F	Adjustment to write-off the Predecessor Company’s goodwill

CHART INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements — September 30, 2003

(Dollars and shares in thousands, except per share amounts)

Note A — Basis of Preparation — Continued

G	Adjustment to record the reorganization value in excess of amounts allocable to identifiable assets

H	Adjustment of $1,146 to write-off intangible assets related to defined benefit pension plans and $71 to write-off other assets

I	Adjustment of $1,861 to write-off senior debt related interest and fees partially offset by an adjustment of $1,405 to accrue severance expenses of the Predecessor Company related to the Reorganization Plan

J	Adjustment to write-off Predecessor Company senior debt and related interest and fees in exchange for a 95 percent ownership interest in the Reorganized Company and a new $120,000 secured term loan

Pre-petition senior debt	$	255,746
Pre-petition senior debt interest and fees		1,861

		257,607
New senior debt — current		1,000
New senior debt — long term		119,000

		137,607
95 percent equity interest in Reorganized Company		85,371

Debt forgiveness income	$	52,236

K	Adjustment of $3,904 to write-off a claim impaired in the Chapter 11 proceedings and an adjustment of $374 to reduce the defined benefit pension plan obligation

L	Adjustment to eliminate the retained deficit, common stock and other equity items of the Predecessor Company

M	Adjustment to record the Predecessor Company’s existing stockholders’ five percent equity interest in the Reorganized Company

N	Adjustment to record reorganization items as net other (income) expense, consisting of the following items:

Accounts receivable allowance for doubtful accounts	$	1,212
Deferred financing costs related to senior debt		5,710
Fixed assets fair value adjustment		(317	)
Intangible assets fair value adjustment		(44,847	)
Write-off of goodwill		74,977
Write-off of other assets		71
Impaired claim		(3,904	)
Adjust defined benefit pension plan assets and liabilities to fair value		9,243
Debt forgiveness income		(52,236	)
Reorganization fees		6,537
Reorganization related severance		1,405
Inventory fair value adjustment		(3,528	)

Reorganization items included in net other (income) expense	$	(5,677	)

O	Adjustment of $8,471 to write-off the defined benefit pension plan additional minimum liability

CHART INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements — September 30, 2003

(Dollars and shares in thousands, except per share amounts)

NOTE A — Basis of Preparation — Continued

Inventories: Inventories are stated at the lower of cost or market with cost being determined by the FIFO method at September 30, 2003 and by both the LIFO and FIFO methods at December 31, 2002. Inventory at September 30, 2003 includes a Fresh-Start accounting adjustment of $5,368 to write-up work-in-process and finished goods inventories to fair value based upon profit in these inventories related to the manufacturing effort undertaken by the Predecessor Company. The components of inventory are as follows:

	September 30, 2003		December 31, 2002
Raw materials and supplies	$	14,625	$	21,361
Work in process		14,411		13,165
Finished goods		13,233		11,542
LIFO reserve				(70	)

	$	42,269	$	45,998

Revenue Recognition: For the majority of the Company’s products, revenue is recognized when products are shipped, title has transferred and collection is reasonably assured. For these products, there is also persuasive evidence of an arrangement, and the selling price to the buyer is fixed or determinable. For heat exchangers, cold boxes, liquefied natural gas fueling stations and engineered tanks, the Company uses the percentage of completion method of accounting. Earned revenue is based on the percentage that incurred costs to date bear to total estimated costs at completion after giving effect to the most current estimates. The cumulative impact of revisions in total cost estimates during the progress of work is reflected in the period in which these changes become known. Earned revenue reflects the original contract price adjusted for agreed upon claims and change orders, if any. Losses expected to be incurred on contracts in process, after consideration of estimated minimum recoveries from claims and change orders, are charged to operations as soon as such losses are known. Timing of amounts billed on contracts varies from contract to contract causing significant variation in working capital needs.

Product Warranties: The Company provides product warranties with varying terms and durations for the majority of its products. The Company estimates its reserve for product warranties based upon specifically known warranty issues, if any, and historical product warranty claims experience over the related product warranty terms. The Company records warranty expense in cost of sales. The changes in the Company’s consolidated warranty reserve during the three- and nine-month periods ended September 30, 2003 and 2002, respectively, are as follows:

	Three Months Ended September 30,
	2003			2002
Balance as of July 1	$	3,906		$	4,035
Warranty expense		493			1,226
Warranty usage		(596	)		(998	)

Balance as of September 30	$	3,803		$	4,263


	Nine Months Ended September 30,
	2003			2002
Balance as of January 1	$	3,967		$	3,446
Warranty expense		1,214			2,534
Warranty usage		(1,378	)		(1,717	)

Balance as of September 30	$	3,803		$	4,263

Goodwill and Other Intangible Assets: Effective January 1, 2002, the Company adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 141, “Business Combinations,” and SFAS No. 142, “Goodwill and Other Intangible Assets,” which establish financial accounting and reporting for acquired goodwill and other intangible assets and supersede Accounting Principles Board (“APB”) Opinion No. 16, “Business Combinations,” and APB Opinion No. 17, “Intangible Assets.” Under SFAS No. 142, goodwill and indefinite lived intangible assets are no longer amortized but are reviewed at least annually for impairment. Intangible assets that have finite useful lives will continue to be amortized over their useful lives.

CHART INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements — September 30, 2003

(Dollars and shares in thousands, except per share amounts)

NOTE A — Basis of Preparation — Continued

The Company performed its 2002 annual impairment test of goodwill as of October 1, 2002 using discounted cash flow techniques and values of comparable businesses. These tests resulted in the fair value of the Company’s Distribution and Storage reporting unit being less than its carrying value including goodwill, which caused the Company to advance to step two of SFAS No. 142 and engage a valuation specialist to provide valuations of the Distribution and Storage reporting unit’s tangible and identifiable intangible assets. Although those procedures confirmed the value of the reporting unit’s tangible assets exceeded their carrying value, goodwill of the Distribution and Storage reporting unit was determined to be impaired. As a result, in the fourth quarter of 2002 the Company recorded a non-cash impairment charge of $92,379, or $3.69 per diluted share, to write off non-deductible goodwill. This non-cash charge was due to the combination of a reduction in the overall estimated enterprise value of the Company, attributable to the Company’s leverage situation and financial performance, and a reduction in the specific estimated value of the Distribution and Storage reporting unit, caused by the worldwide slowdown experienced by the manufacturing sectors of the industrialized world, reductions in capital expenditures in the consolidating global industrial gas industry and a lowering of expectations for future performance of this segment for these same reasons. Changes to the judgments and estimates used to determine the fair values, including estimates of future cash flows, sales, profitability growth and discount rates, could result in a significantly different estimate of the fair value of the reporting units, which could result in a different assessment of the recoverability of goodwill.

The Company considered its July 8, 2003 Chapter 11 bankruptcy filing to be an indicator of impairment under SFAS No. 142 and performed step one of the goodwill impairment test as of June 30, 2003. The Company used, for this purpose, discounted cash flow techniques and an overall enterprise value for the Company of $190,400, as estimated by the Company’s financial advisor and filed with the Bankruptcy Court in the Company’s disclosure statement accompanying its Reorganization Plan. These tests resulted in the fair value of the Company’s reporting units exceeding their carrying value and no impairment loss was recognized.

In order to apply Fresh-Start accounting for intangible assets, the Company engaged an independent valuation specialist to identify and value its intangible assets. The specialist conducted extensive interviews with the Company’s management to identify intangible assets and used discounted cash flow techniques to estimate a total fair value of $51,983 for these intangible assets.

As part of the Fresh-Start accounting adjustments, the Company recorded a charge of $74,977 to write-off Predecessor Company goodwill as of September 30, 2003 and recorded an intangible asset for the reorganization value in excess of amounts allocable to identifiable assets in the amount of $71,540 at September 30, 2003. This asset will be treated similar to goodwill in that it will not be amortized but will be allocated to the reporting units of the Reorganized Company and evaluated at least annually for impairment.

The following table displays the gross carrying amount and accumulated amortization for intangible assets that continue to be subject to amortization as well as intangible assets not subject to amortization.

	September 30, 2003		December 31, 2002
	Gross Carrying Amount		Gross Carrying Amount		Accumulated Amortization
Finite-lived intangible assets
Unpatented technology	$	3,305	$	7,690	$	(4,996	)
Patented technology		3,729
Patents		540		2,131		(1,024	)
Customer Base		23,960

	$	31,534	$	9,821	$	(6,020	)

Indefinite-lived intangible assets
Reorganization value in excess of amounts allocable to identifiable assets	$	71,540
Trademarks and trade names		20,449
Unpatented technology			$	6,439	$	(1,610	)
Goodwill				83,660		(6,428	)

	$	91,989	$	90,099	$	(8,038	)

CHART INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements — September 30, 2003

(Dollars and shares in thousands, except per share amounts)

Note A — Basis of Preparation — Continued

Amortization expense of the Predecessor Company for finite-lived intangible assets was $388 and $389 for the three-month periods ended September 30, 2003 and 2002, respectively, and $1,166 and $1,161 for the nine-month periods ended September 30, 2003 and 2002, respectively. Amortization expense of the Reorganized Company for finite-lived intangible assets is estimated to be approximately $702 for the three-month period ended December 31, 2003 and approximately $2,808 annually for fiscal years 2004 through 2007.

Employee Stock Options: The Company has elected to follow the intrinsic value method of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”) and related interpretations in accounting for its employee stock options. Under APB 25, because the exercise price of the Company’s employee stock options equals the market price of the underlying stock on the date of grant, the Company does not recognize compensation expense. The Company accounted for the 400,000 performance related options issued as part of the 2000 Executive Incentive Stock Option Plan as a variable plan. The Company has not recognized any compensation expense under this plan as the market value of the Company’s stock was less than the option exercise price when the performance criteria were met. As part of the Reorganization Plan, on September 15, 2003 all of the Company’s employee stock options were cancelled, and no new employee stock options have been issued as of September 30, 2003.

The Company’s pro forma disclosures showing the estimated fair value of employee stock options, amortized to expense over the options’ vesting periods, are as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2003			2002			2003			2002
Reported net income (loss)	$	18,654		$	(722	)	$	(2,085	)	$	(3,816	)
Pro-forma stock-based employee compensation cost, net of tax		(138	)		(138	)		(413	)		(414	)

Pro-forma net income (loss)	$	18,516		$	(860	)	$	(2,498	)	$	(4,230	)

Earnings per share — basic and assuming dilution:
Reported net income (loss)	$	0.70		$	(0.03	)	$	(0.08	)	$	(0.15	)
Pro-forma stock-based employee compensation cost, net of tax		(0.01	)		0.00			(0.01	)		(0.02	)

Pro-forma net income (loss)	$	0.69		$	(0.03	)	$	(0.09	)	$	(0.17	)

Weighted average shares — basic		26,627			25,129			26,336			24,977
Weighted average shares — assuming dilution		26,691			25,129			26,336			24,977

The earnings per share calculations are based on the weighted average shares of common stock of the Predecessor Company outstanding prior to the Company’s emergence from Chapter 11 proceedings. Upon emergence all common shares and employee stock options outstanding of the Predecessor Company were cancelled and the Reorganized Company issued 5,325,331 shares of new common stock.

NOTE B — Recently Adopted Accounting Standards

Effective January 1, 2003, the Company adopted SFAS No. 143, “Accounting for Asset Retirement Obligations,” which amends SFAS No. 19, “Financial Accounting and Reporting by Oil and Gas Producing Companies,” and is effective for all companies. This statement addresses the financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The adoption of this statement did not have a material impact on the Company’s financial position, liquidity, cash flows or results of operations.

Effective January 1, 2003, the Company adopted SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities,” which nullifies Emerging Issues Task Force Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).” The adoption of this statement did not have a material impact on the Company’s financial position, liquidity, cash flows or results of operations.

CHART INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements — September 30, 2003

(Dollars and shares in thousands, except per share amounts)

NOTE B — Recently Adopted Accounting Standards — Continued

at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The disclosure requirements of FIN No. 45 have been made in Note A of the unaudited condensed consolidated financial statements. The adoption of this interpretation did not have a material impact on the Company’s financial position, liquidity, cash flows or results of operations.

Effective July 1, 2003, the Company adopted SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities,” which amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133. The adoption of this statement did not have a material impact on the Company’s financial position, liquidity, cash flows or results of operations.

Effective July 1, 2003, the Company adopted SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” SFAS No. 150 establishes standards for how certain financial instruments with characteristics of both liabilities and equity are classified. SFAS No. 150 requires that certain financial instruments should be classified as liabilities (or as assets in some circumstances). The adoption of this statement did not have a material impact on the Company’s financial position, liquidity, cash flows or results of operations.

Effective September 30, 2003, the Company adopted FIN No. 46, “Consolidation of Variable Interest Entities.” FIN No. 46 provides guidance for identifying a controlling interest in a variable interest entity (“VIE”) established by means other than voting interests. FIN No. 46 also requires consolidation of a VIE by an enterprise that holds such a controlling interest. The adoption of this interpretation did not have a material impact on the Company’s financial position, liquidity, cash flows or results of operations.

NOTE C — Debt and Credit Arrangements

In order to finance the acquisition of MVE Holdings, Inc. (“MVE”), in March 1999 the Company negotiated a consolidated credit and revolving loan facility (the “Old Credit Facility”), which originally provided for term loans of up to $250,000 and a revolving credit line of $50,000, which could also be used for the issuance of letters of credit. Due to scheduled reductions in the commitment amount, at July 8, 2003 the Old Credit Facility provided a revolving credit line of $48,967. Under the Old Credit Facility, the Company granted a security interest in substantially all of the assets of the Company to the agent bank as representative of the senior lenders. Under the terms of the Old Credit Facility, term loans and revolving credit bore interest at rates that equaled the prime rate plus incremental margins or LIBOR plus incremental margins. The incremental margins varied based on the Company’s financial position and ranged from 2.0 percent to 4.75 percent.

The Company entered into the Series 1 Incremental Revolving Credit Facility in November 2000 and the Series 2 Incremental Revolving Credit Facility in April 2001 (collectively, the “Incremental Credit Facility”), which originally provided a revolving credit line of $10,000 in addition to the credit line available under the Credit Facility. Due to scheduled reductions in the commitment amount, at July 8, 2003 the Incremental Credit Facility provided a revolving credit line of $9,793. Borrowings on the Incremental Credit Facility were secured by the same collateral as the Old Credit Facility and bore interest, at the Company’s option, at rates equal to the prime rate plus 3.50 percent or LIBOR plus 4.25 percent. The Company was also required to pay a commitment fee of 0.75 percent per annum on the average daily unused amount. The Incremental Credit Facility expired on July 15, 2003.

The Old Credit Facility contained certain covenants and conditions which imposed limitations on the Company and its operating units, including meeting certain financial tests and the quarterly maintenance of certain financial ratios on a consolidated basis such as: minimum net worth, maximum leverage, minimum pre-tax interest coverage ratio, minimum fixed charge coverage ratio and minimum earnings before interest, taxes, depreciation, amortization and restructuring charges. As of December 31, 2002 and June 30, 2003, the Company was in default under the Old Credit Facility and the Incremental Credit Facility due to violations of these financial covenants. Subsequent to December 31, 2002, the Company also was in default under the Old Credit Facility as a result of its failure to make principal and interest payments when due and the insolvency of CHEL, which is more fully described in Note G to the unaudited condensed consolidated financial statements. The Company’s senior lenders amended the Old Credit Facility and Incremental Credit Facility on April 2, 2003 to waive all defaults existing at December 31, 2002 and through April 30, 2003 and to defer until April 30, 2003 $6,549 in scheduled term debt amortization payments and $9,793 in Incremental Credit Facility amortization payments originally due on March 31, 2003. In addition, the amendment provided that if a negotiated term sheet with the senior lenders was reached by April 30, 2003, the waiver of defaults and deferral of debt payments would be extended until June 30, 2003. The amendment also granted approval for certain asset sales, the proceeds of which were to be used to fund senior debt interest payments, restructuring related activities and working capital requirements.

On April 30, 2003, the Company reached an agreement in principle with its senior lenders on a restructuring plan and entered into an agreement with its senior lenders as of April 30, 2003 under which the senior lenders agreed to extend the waiver of defaults obtained on April 2, 2003 through June 30, 2003, to defer certain interest and principal payments to June 30, 2003 and to permit the Company to sell certain non-core assets. The Company and the senior lenders subsequently entered into an agreement on June 30, 2003 to extend the waiver of defaults and deferral of interest and principal payments

CHART INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements — September 30, 2003

(Dollars and shares in thousands, except per share amounts)

NOTE C — Debt and Credit Arrangements — Continued

to July 15, 2003 and to permit the Company to sell certain non-core assets. Proceeds from the sales of assets enabled the Company to fund certain senior debt interest payments and pay certain professional fees and provided the Company with increased liquidity for identified working capital requirements and other corporate needs and obligations.

In conjunction with the filing of its Reorganization Plan, on July 17, 2003, the Company entered into a debtor-in-possession credit facility (the “DIP Credit Facility”) with certain of its senior lenders. The DIP Credit Facility provided a revolving credit line of $40,000, of which $30,000 could also be used for the issuance of letters of credit. Loans under the DIP Credit Facility bore interest at rates equal to the prime rate plus 1.50 percent or LIBOR plus 2.50 percent. On August 13, 2003, the Bankruptcy Court entered a final order approving the DIP Credit Facility. The DIP Credit Facility expired on September 15, 2003, the bankruptcy consummation date.

On September 15, 2003, the Company and all of its majority-owned U.S. subsidiaries emerged from Chapter 11 proceedings pursuant to the Reorganization Plan, which the Bankruptcy Court confirmed by an order entered on September 4, 2003. Under the Reorganization Plan, the Company’s senior debt of $255,746 and related interest and fees of $1,861 were converted into a $120,000 secured term loan, with the balance of the existing senior debt being cancelled in return for an initial 95 percent equity ownership position in the Reorganized Company, and the Company’s $40,000 secured DIP Credit Facility was amended and restated as a $40,000 post-bankruptcy secured revolving credit facility. On September 15, 2003, all of the Predecessor Company’s common stock, warrants, options and other rights to acquire the Predecessor Company’s common stock were cancelled, and the Predecessor Company’s former stockholders received five percent of the initial equity of the Reorganized Company and the opportunity to acquire up to an additional five percent of equity under certain conditions through the exercise of new warrants.

Effective September 15, 2003, the Company entered into a new term loan agreement and revolving credit facility (collectively, the “Credit Facility”) and granted a security interest in substantially all of the assets of the Company to the agent bank as representative of the senior lenders. The Credit Facility provides a term loan of $120,000 with final maturity in 2009 and a revolving credit line of $40,000 that expires September 15, 2008, of which $30,000 may be used for the issuance of letters of credit. Under the terms of the Credit Facility, term loans bear interest, at the Company’s option, at rates equal to the prime rate plus 2.50 percent or LIBOR plus 3.50 percent and the revolving credit line bears interest, at the Company’s option, at rates equal to the prime rate plus 1.50 percent or LIBOR plus 2.50 percent. The Company is also required to pay a commitment fee of 0.375 percent per annum on the unused amount of the revolving credit line of the Credit Facility.

The Credit Facility contains certain covenants and conditions which impose limitations on the Company and its operating units, including a restriction on the payment of cash dividends and a requirement to meet certain financial tests and to maintain on a quarterly basis certain consolidated financial ratios such as: maximum leverage, minimum interest coverage ratio, minimum fixed charge coverage ratio, minimum earnings before interest, taxes, depreciation, amortization and restructuring charges and maximum capital expenditures.

At September 30, 2003, the Company had borrowings outstanding of $120,000 under the term loan portion of the Credit Facility and letters of credit outstanding and bank guarantees totaling $16,218 supported by the revolving credit line portion of the Credit Facility.

The Old Credit Facility required the Company to enter into two interest rate derivative contracts (collars) in March 1999 to manage interest rate risk exposure relative to the term loan portions of the Old Credit Facility. One of these collars expired and was settled on June 28, 2002. The other collar, in the amount of $26,672 at September 30, 2003, continues to be outstanding after the bankruptcy and expires in March 2006.

CHART INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements — September 30, 2003

(Dollars and shares in thousands, except per share amounts)

NOTE D — Net Income (Loss) per Share

The calculations of basic and diluted net income (loss) per share for the three- and nine-month periods ended September 30, 2003 and 2002, respectively, are set forth below. The earnings per share calculations are based on the weighted average shares of common stock of the Predecessor Company outstanding prior to the Company’s emergence from Chapter 11 proceedings. Upon emergence all shares of the Predecessor Company’s common stock were cancelled and the Reorganized Company issued 5,325,331 shares of new common stock. The assumed conversion of the Company’s potentially dilutive securities (employee stock options and warrants) was not dilutive for the nine-month period ended September 30, 2003 or the three- and nine-month periods ended September 30, 2002. As a result, the calculations of diluted net loss per share for the nine-month period ended September 30, 2003 and the three- and nine-month periods ended September 30, 2002 set forth below do not reflect any assumed conversion.

	Three Months Ended September 30,					Nine Months Ended September 30,
	2003		2002			2003			2002
Income (loss) from continuing operations	$	18,654	$	(1,480	)	$	(2,918	)	$	(6,324	)
Income from discontinued operation				758			833			2,508

Net income (loss)	$	18,654	$	(722	)	$	(2,085	)	$	(3,816	)

Weighted-average common shares		26,627		25,129			26,336			24,977
Effect of dilutive securities:
Employee stock options and warrants		64

Dilutive potential common shares		26,691		25,129			26,336			24,977

Net income (loss) per common share — basic and assuming dilution:
Income (loss) from continuing operations	$	0.70	$	(0.06	)	$	(0.11	)	$	(0.25	)
Income from discontinued operation				0.03			0.03			0.10

	$	0.70	$	(0.03	)	$	(0.08	)	$	(0.15	)

NOTE E — Comprehensive Income (Loss)

Foreign currency translation adjustments of $5,204 and minimum pension liability adjustments of $(8,471) previously included in accumulated other comprehensive loss were written off as part of Fresh-Start accounting at September 30, 2003. The components of accumulated other comprehensive loss at December 31, 2002 were:

	December 31, 2002
Foreign currency translation adjustments	$	336
Minimum pension liability adjustments, net of taxes of $737		(11,135	)

	$	(10,799	)

Total comprehensive income (loss) for the three-month periods ended September 30, 2003 and 2002 was $18,932 and $(630), respectively. Total comprehensive income for the nine-month periods ended September 30, 2003 and 2002 was $5,447 and $1,443 respectively.

CHART INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements — September 30, 2003

(Dollars and shares in thousands, except per share amounts)

NOTE F — Employee Separation and Plant Closure Costs

During the three- and nine-month periods ended September 30, 2003, the Company recorded employee separation and plant closure costs as it completed the previously announced closures of various facilities, primarily its Biomedical segment facility in Solingen, Germany, Distribution and Storage segment facilities in Costa Mesa, California and Denver, Colorado, and its Energy and Chemicals segment manufacturing facility in Wolverhampton, United Kingdom and sales office in Westborough, Massachusetts. The Company also recorded non-cash inventory valuation charges included in cost of sales for the write-off of inventory at certain of these sites. The following table summarizes the Company’s employee separation and plant closure costs activity for the three- and nine-month periods ended September 30, 2003.

	Three Months Ended September 30, 2003
	Solingen			Costa Mesa			Columbus			Denver			Wolverhampton			PSD			Other			Total
Reserve as of July 1, 2003	$	60		$	807		$	53		$	1,550								$	230		$	2,700
Employee separation and plant closure costs (income):
Facility related closure costs		47			(466	)					(1,254	)				$	545			(81	)		(1,209	)
Severance and other benefits		11			8								$	169			383			491			1,062

		58			(458	)					(1,254	)		169			928			410			(147	)
Reserve usage		(79	)		(47	)		(53	)		(84	)		(89	)		(218	)		(228	)		(798	)

Reserve as of September 30, 2003	$	39		$	302		$	0		$	212		$	80		$	710		$	412		$	1,755

	Nine Months Ended September 30, 2003
	Solingen			Costa Mesa			Columbus			Denver			Wolverhampton			PSD			Other			Total
Reserve as of January 1, 2003	$	163		$	999		$	422		$	1,823		$	4,881					$	527		$	8,815
Employee separation and plant closure costs (income):
Facility related closure costs		38			(457	)		197			(1,254	)		211		$	545			(81	)		(801	)
Severance and other benefits		11			8			21						368			383			892			1,683

		49			(449	)		218			(1,254	)		579			928			811			882
Non-cash inventory valuation in cost of sales								440												16			456

		49			(449	)		658			(1,254	)		579			928			827			1,338
Reserve usage		(173	)		(248	)		(1,080	)		(357	)		(2,404	)		(218	)		(942	)		(5,422	)
Write-off due to CHEL insolvency														(2,976	)								(2,976	)

Reserve as of September 30, 2003	$	39		$	302		$	0		$	212		$	80		$	710		$	412		$	1,755

The employee separation and plant closure costs reserve at September 30, 2003 consists of $862 for lease termination and facility-related closure costs and $893 for severance and other benefits.

During the three-month and nine-month periods ended September 30, 2002, the Company recorded employee separation and plant closure costs primarily related to the closure of its Costa Mesa, California, Columbus, Ohio, and Denver (East), Colorado manufacturing facilities and also including severance for certain other employees. The Company also recorded non-cash inventory valuation charges included in cost of sales for the write-off of inventory at these sites. The following tables summarize the Company’s employee separation and plant closure costs activity for the three-month and nine-month periods ended September 30, 2002, respectively.

CHART INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements — September 30, 2003

(Dollars and shares in thousands, except per share amounts)

NOTE F — Employee Separation and Plant Closure Costs — Continued

	Three Months Ended September 30, 2002
	Denver			Columbus			Costa Mesa			Other			Total
July 1, 2002 reserve	$	923								$	265		$	1,188
Employee separation and plant closure costs:
Facility related closure costs		20		$	334		$	755						1,109
Severance and other benefits					411			122			533			1,066

		20			745			877			533			2,175
Non-cash inventory write-offs in cost of sales		5			213			365						583

		25			958			1,242			533			2,758
Reserve usage		(252	)		(289	)		(702	)		(96	)		(1,339	)

September 30, 2002 reserve	$	696		$	669		$	540		$	702		$	2,607

	Nine Months Ended September 30, 2002
	Denver			Columbus			Costa Mesa			Other			Total
January 1, 2002 reserve										$	486		$	486
Employee separation and plant closure costs:
Facility related closure costs	$	1,016		$	334		$	755						2,105
Severance and other benefits		326			411			122			519			1,378

		1,342			745			877			519			3,483
Non-cash inventory write-offs in cost of sales		260			213			365						838

		1,602			958			1,242			519			4,321
Reserve usage		(906	)		(289	)		(702	)		(303	)		(2,200	)

September 30, 2002 reserve	$	696		$	669		$	540		$	702		$	2,607

The employee separation and plant closure costs reserve at September 30, 2002 consisted of $1,752 for lease termination and facility-related closure costs and $855 for severance and other benefits.

NOTE G — Loss on Insolvent Subsidiary

CHEL’s net pension plan obligations increased significantly prior to the closure of the Wolverhampton facility, primarily due to a decline in plan asset values and interest rates, resulting in a plan deficit as of March 2003. The Company determined not to advance funds to CHEL in amounts necessary to fund CHEL’s obligations. CHEL does not have the necessary funds to enable it to fund its net pension plan deficit, pay remaining severance due to former employees or pay other creditors. As a result, the trustees of the CHEL pension plan requested a decision to wind-up the plan from a United Kingdom pension regulatory board, which approved the wind-up as of March 28, 2003. Included in the impairment charge of $13,682 is an estimate of certain potential liabilities, including an estimate of CHEL’s net pension plan deficit. Adjustments to amounts provided may be required in subsequent periods when an analysis of the pension plan’s net deficit on a wind-up basis is ultimately completed by the administrator.

At the present time, the Company is unable to determine the financial impact of the April 1, 2003 approval of insolvency administration for CHEL and the related wind-up of CHEL’s United Kingdom pension plan. CHEL’s administrator has asserted certain claims on behalf of CHEL against the Company related to these matters, and the Company can provide no assurance that further claims will not be asserted against the Company for obligations of CHEL related to these matters. To the extent the Company has significant financial obligations as a result of CHEL’s insolvency and the pension plan wind-up, such liability could have a material adverse impact on the Company’s liquidity and its financial position.

CHART INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements — September 30, 2003

(Dollars and shares in thousands, except per share amounts)

NOTE H — Income Taxes

Income tax benefit of $3,481 and $1,953 in the third quarter and first nine months of 2003, respectively, consists of tax benefit from reversals of domestic income tax reserves associated with resolved tax contingencies, partially offset by taxes on earnings of foreign subsidiaries.

At September 30, 2003, the Company has a net deferred tax liability of $1,723, which represents foreign deferred tax liabilities. The Company has a full valuation allowance against its domestic net deferred tax assets in accordance with SFAS No. 109, “Accounting for Income Taxes,” based upon management’s assessment that it is more likely than not that the net deferred tax assets will not be realized.

Pursuant to Section 108 of the Internal Revenue Code, the Company will materially reduce certain tax attributes on January 1, 2004 due to the recognition of cancellation of indebtedness income in the three-month period ended September 30, 2003.

NOTE I — Discontinued Operation and Assets Held for Sale

On July 3, 2003, the Company sold certain assets and liabilities of its former Greenville Tube, LLC stainless steel tubing business, which the Company previously reported as a component of its Energy and Chemicals operating segment. The Company received gross proceeds of $15,500, consisting of $13,550 in cash and $1,950 in a long-term subordinated note, which resulted in a gain of $3,647 recorded in July 2003. In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” the Company classified the assets of its stainless steel tubing business as assets held for sale on its unaudited condensed consolidated balance sheet as of December 31, 2002 and the operating results of this business as a discontinued operation on its unaudited condensed consolidated statements of operations for the three- and nine-month periods ended September 30, 2003 and 2002.

In September 2003, the Company decided to sell a vacant building and a parcel of land at its New Prague, Minnesota Distribution and Storage manufacturing facility. The Company classified these assets as assets held for sale on its unaudited condensed consolidated balance sheet as of September 30, 2003.

NOTE J — Operating Segments

The Company changed the structure of its internal organization effective October 1, 2002, resulting in the following three reportable segments: Biomedical, Distribution and Storage and Energy and Chemicals. All segment information for all periods presented has been restated to conform to the current year presentation. The Company’s reportable segments are business units that offer different products. The reportable segments are each managed separately because they manufacture and distribute distinct products with different production processes and sales and marketing approaches. The Biomedical segment sells medical products, biological storage systems, magnetic resonance imaging (“MRI”) cryostat components and telemetry products. The Distribution and Storage segment sells cryogenic bulk storage systems, cryogenic packaged gas systems, cryogenic systems and components, beverage liquid CO₂ systems and cryogenic services to various companies for the storage and transportation of both industrial and natural gases. The Energy and Chemicals segment sells heat exchangers, cold boxes and liquefied natural gas (“LNG”) alternative fuel systems to natural gas, petrochemical processing and industrial gas companies who use them for the liquefaction and separation of natural and industrial gases. Due to the nature of the products that each operating segment sells, there are no inter-segment sales.

The Company evaluates performance and allocates resources based on profit or loss from operations before gain on sale of assets, net interest expense, financing costs amortization expense, derivative contracts valuation expense, foreign currency (gain) loss, income taxes and minority interest.

CHART INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements — September 30, 2003

(Dollars and shares in thousands, except per share amounts)

NOTE J — Operating Segments — Continued

	Three Months Ended September 30, 2003
	Biomedical		Distribution and Storage		Energy and Chemicals			Corporate			Total
Sales	$	17,172	$	30,382	$	15,678					$	63,232
Operating income (loss) ^(A)(B)(C)		4,712		3,451		1,265		$	(2,465	)		6,963

	Three Months Ended September 30, 2002
	Biomedical		Distribution and Storage		Energy and Chemicals			Corporate			Total
Sales	$	18,996	$	34,167	$	16,306					$	69,469
Operating income (loss) ^(A)(B)(C)		5,805		987		501		$	(4,529	)		2,764

	Nine Months Ended September 30, 2003
	Biomedical		Distribution and Storage		Energy and Chemicals			Corporate			Total
Sales	$	51,638	$	94,895	$	50,484					$	197,017
Operating income (loss)^(D)(E)(F)		12,381		8,773		(9,463	)	$	(14,689	)		(2,998	)

	Nine Months Ended September 30, 2002
	Biomedical		Distribution and Storage		Energy and Chemicals			Corporate			Total
Sales	$	51,711	$	101,578	$	52,492					$	205,781
Operating income (loss)^{(D) (F)}		13,428		2,513		2,417		$	(12,578	)		5,780

^(A)

Distribution and Storage operating income for the three months ended September 30, 2003 includes $(1,712) of employee separation and plant closure (income) costs and for the three months ended September 30, 2002 includes $1,642 of employee separation and plant closure (income) costs and $583 of inventory valuation charges related to the closure of the Company’s Denver, Colorado Costa Mesa, California and Columbus, Ohio manufacturing facilities.

^(B)	Energy and Chemicals operating income for the three months ended September 30, 2003 includes $169 of employee separation and plant closure costs related to the closure of the Company’s CHEL manufacturing facility.

^(C)	Corporate operating loss for the three months ended September 30, 2003 and 2002 includes $854 and $218, respectively, of professional fees incurred related to the restructuring of the Company’s senior credit facilities.

^(D)

Distribution and Storage operating income for the nine months ended September 30, 2003 and 2002 includes $(1,485) and $2,964, respectively, of employee separation and plant closure (income) costs and $440 and $838, respectively, in inventory valuation charges related to the closure of the Company’s Denver, Colorado, Costa Mesa, California and Columbus, Ohio manufacturing facilities.

^(E)	Energy and Chemicals operating loss for the nine months ended September 30, 2003 includes $579 of employee separation and plant closure costs related to the closure of the Company’s CHEL manufacturing facility and $13,682 of charges to write-off the Company’s net investment in CHEL.

^(F)	Corporate operating loss for the nine months ended September 30, 2003 and 2002 includes $6,046 and $3,756, respectively, of professional fees incurred related to the restructuring of the Company’s senior credit facilities.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Emergence from Chapter 11 and Fresh-Start Accounting

On July 8, 2003, the Company and all of its majority-owned U.S. subsidiaries filed voluntary petitions for reorganization relief under Chapter 11 of the U.S. Bankruptcy Code to implement an agreed upon senior debt restructuring plan through a pre-packaged plan of reorganization. None of the Company’s non-U.S. subsidiaries were included in the filing in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). On September 15, 2003, the Company (as reorganized, the “Reorganized Company”) and all of its majority-owned U.S. subsidiaries emerged from Chapter 11 proceedings pursuant to the Amended Joint Prepackaged Reorganization Plan of Chart Industries, Inc. and Certain Subsidiaries, dated September 3, 2003 (the “Reorganization Plan”), which the Bankruptcy Court confirmed by an order entered on September 4, 2003. Under the Reorganization Plan, the Company’s senior debt of $255.7 million and related interest and fees of $1.9 million were converted into a $120.0 million secured term loan, with the balance of the existing senior debt being cancelled in return for an initial 95 percent equity ownership position in the Reorganized Company, and Chart’s $40.0 million secured debtor-in-possession financing facility was amended and restated as a $40.0 million post-bankruptcy secured revolving credit facility. In addition, on September 15, 2003, all of the Company’s common stock, warrants, options and other rights to acquire the Company’s common stock were cancelled, and the Company’s former stockholders received five percent of the initial equity of the Reorganized Company and the opportunity to acquire up to an additional five percent of equity through the exercise of new warrants.

To facilitate the calculation of the enterprise value of the Reorganized Company, the Company developed a set of five-year financial projections. Based on these financial projections, the enterprise value was determined by a financial advisor, using various valuation methods, including (i) a comparison of the Company and its projected performance to the market values of comparable companies, (ii) a review and analysis of several recent transactions of companies in similar industries to the Company, and (iii) a calculation of the present value of the future cash flows derived from the financial projections, including an assumption for a terminal value, discounted back at the Reorganized Company’s estimated weighted average cost of capital. The estimated enterprise value is highly dependent upon achieving the future financial results set forth in the projections as well as the realization of certain other assumptions that are not guaranteed. For Fresh-Start accounting purposes, the estimated enterprise value of the Reorganized Company was calculated to be $190.4 million. In applying Fresh-Start accounting, adjustments to reflect the fair value of assets and liabilities, on a net basis, and the restructuring of the Company’s capital structure and resulting discharge of the senior lender’s pre-petition debt, resulted in net other income of $5.7 million in the third quarter of 2003 as described in further detail in Note A to the accompanying unaudited condensed consolidated financial statements. The reorganization value exceeded the fair value of the Reorganized Company’s assets and liabilities, and this excess is reported as reorganization value in excess of amounts allocable to identifiable assets in the Reorganized Company’s unaudited condensed consolidated balance sheet. This asset will be treated similar to goodwill in that it will not be amortized but will be allocated to the reporting units of the Reorganized Company and evaluated at least annually for impairment.

Three and Nine Months Ended September 30, 2003 and 2002

Sales for the third quarter of 2003 were $63.2 million versus $69.5 million for the third quarter of 2002, a decrease of $6.3 million, or nine percent. Biomedical segment sales decreased 10 percent to $17.2 million in the third quarter of 2003, compared with sales of $19.0 million in the third quarter of 2002. Sales of medical products and biological storage systems increased $0.2 million and $1.3 million, respectively, due to increased volume in strong international markets, while sales of MRI products were down $3.3 million on lower volume from General Electric. Distribution and Storage segment sales declined significantly, with third-quarter 2003 sales of $30.4 million, compared with $34.2 million for the same quarter in 2002. Sales volume in this segment was down as the market for bulk storage systems continued to be depressed. Energy and Chemicals segment sales were relatively flat, with sales of $15.7 million in the third quarter of 2003 compared with sales of $16.3 million in the third quarter of 2002. Sales of heat exchangers in the third quarter of 2003 increased $1.0 million when compared to the third quarter of 2002, primarily as a result of increased volume in the hydrocarbon processing market, while sales of process systems and LNG fueling stations in the third quarter of 2003 decreased $1.6 million when compared to the third quarter of 2002 on lower volume as a result of projects delayed or lost. The Company believes its Chapter 11 bankruptcy filing had a negative impact on orders and sales during the third quarter of 2003, primarily in the Energy and Chemicals segment, where products frequently have extended production times and significant dollar values.

Sales for the first nine months of 2003 were $197.0 million versus $205.8 million for the first nine months of 2002, a decrease of $8.8 million, or four percent. Biomedical segment sales were flat at $51.6 million in the first nine months of 2003, compared with sales of $51.7 million in the first nine months of 2002. Medical products and biological storage systems sales increased $1.1 million and $3.6 million, respectively, on increased international volume while sales of MRI products were down $4.7 million due to lower volume from General Electric. Distribution and Storage segment sales decreased six percent due to the continued weak global market for industrial bulk storage systems, with sales of $94.9 million for the first nine months of 2003, compared with $101.6 million for the same nine-month period in 2002. Energy and Chemicals segment sales decreased 4 percent to $50.5 million in the first nine months of 2003, from $52.5 million in the first nine months of 2002, primarily due to lower sales volume in the process system market partially offset by higher sales volume for heat exchangers in the hydrocarbon processing market.

Gross profit for the third quarter of 2003 increased $0.9 million from the third quarter of 2002 to $18.7 million even though sales were down $6.3 million from the corresponding quarter in the prior year. Gross profit margin for the third quarter of 2003 was 29.5 percent versus 25.6 percent for the third quarter of 2002. Gross profit for the first nine months of 2003 was $55.8 million versus $52.1 million for the first nine months of 2002. Gross profit margin for the first nine months of 2003 was 28.3 percent versus 25.3 percent for the first nine months of 2002. The increases in gross profit and gross profit margin were the results of improvements in the Distribution and Storage and Energy and Chemicals segments primarily due to the realization of operational savings from the Company’s manufacturing facility consolidation plan commenced in early 2002. Gross profit margin in the Biomedical segment was negatively impacted by a temporary shut-down of the Company’s Denver, Colorado manufacturing plant in the last half of March 2003 due to an unanticipated deferral until the second quarter of 2003 of MRI product orders at the request of General Electric, this product line’s only customer, and by a temporary shut-down of this same facility in June 2003 due to a weather-related extended power outage.

Selling, general and administrative (“SG&A”) expense for the third quarter of 2003 was $11.9 million versus $13.0 million for the third quarter of 2003. As a percentage of sales, SG&A expense was 18.8 percent for the third quarter of 2003 versus 18.7 percent for the third quarter of 2002. Prior to the Company’s Chapter 11 bankruptcy filing, the Company included fees paid to professional advisors related to the Company’s efforts to restructure its debt in SG&A expense. These fees totaled $0.9 million, or 1.4 percent of sales, in the third quarter of 2003 and $0.2 million in the third quarter of 2002. Subsequent to the Chapter 11 filing, these professional fees are included in other (income) expense as reorganization items, net, in the Company’s unaudited condensed consolidated statements of operations. The other components of SG&A expense declined $1.8 million in the quarter over quarter comparison, consisting primarily of a $0.7 million improvement in payroll and benefits due to the Company’s reduced headcount, a $0.4 million reduction in travel related expenses and a $0.4 million reduction in general professional services.

SG&A expense for the first nine months of 2003 was $44.2 million versus $43.3 million for the first nine months of 2002. As a percentage of sales, SG&A expense was 22.4 percent for the first nine months of 2003 versus 21.0 percent for the first nine months of 2002. The Company recorded $6.0 million, or 3.1 percent of sales, of SG&A expense in the first nine months of 2003 for fees paid to professional advisors related to the Company’s efforts to restructure its senior debt, versus $3.8 million expensed in the first nine months of 2002.

The Company recorded $0.1 million of employee separation and plant closure income in the third quarter of 2003, compared with $2.2 million of employee separation and plant closure costs in the third quarter of 2002. This income in the third quarter of 2003 includes $1.0 million of severance and lease termination expense related to the closure of the Company’s Energy & Chemicals group engineering office in Westborough, Massachusetts and $0.6 million of severance expense related to general headcount reduction throughout the Company, offset by $1.7 million of income from the

reversal of lease reserves related to closed facilities where the lease payments had been fully reserved to the end of the lease, but where the Company rejected and/or settled these claims in the bankruptcy proceedings at amounts less than the original reserve. The third quarter 2002 charges included costs related to the closure of the Company’s Wolverhampton, U.K. heat exchanger manufacturing facility and its Columbus, Ohio Distribution and Storage manufacturing facility, along with other severance benefits incurred throughout the Company.

The Company recorded $0.9 million of employee separation and plant closure costs in the first nine months of 2003, compared with $3.5 million of employee separation and plant closure costs in the first nine months of 2002. The expense in 2003 relates substantially to the items discussed above, whereas the expense in 2002 relates primarily to the closure of the Columbus, Ohio facility and the Denver, Colorado mobile equipment manufacturing facility of the Distribution and Storage segment. The charges in both periods were primarily for lease exit costs, severance and other items.

In March 2003, the Company completed the closure of its Wolverhampton, United Kingdom manufacturing facility, operated by Chart Heat Exchangers Limited (“CHEL”). The Company has continued to manufacture heat exchangers at its La Crosse, Wisconsin facility. On March 28, 2003, CHEL filed for a voluntary administration under the U.K. Insolvency Act of 1986. CHEL’s application for voluntary administration was approved on April 1, 2003 and an administrator was appointed. In accordance with SFAS No. 94, “Consolidation of All Majority-Owned Subsidiaries,” the Company is not consolidating the accounts or financial results of CHEL subsequent to March 28, 2003 due to the assumption of control of CHEL by the insolvency administrator. Effective March 28, 2003, the Company recorded a non-cash impairment charge of $13.7 million to write off its net investment in CHEL. Included in the impairment charge of $13.7 million is an estimate of certain potential liabilities, including an estimate of CHEL’s net pension plan deficit. Adjustments to amounts provided may be required in subsequent periods when an analysis of the pension plan’s net deficit on a wind-up basis is ultimately completed by the administrator.

The Company recorded equity income in its Coastal Fabrication joint venture of $0.04 million in the third quarter of 2003, compared with equity income of $0.1 million and $0.4 million in the third quarter and first nine months of 2002, respectively. The Company has evaluated its investment in Coastal Fabrication and determined that it is not a variable interest entity and does not need to be consolidated under FIN No. 46, “Consolidation of Variable Interest Entities.”

On July 3, 2003, the Company sold certain assets and liabilities of its former Greenville Tube, LLC stainless steel tubing business, which the Company previously reported as a component of its Energy and Chemicals operating segment. The Company received gross proceeds of $15.5 million, consisting of $13.5 million in cash and $2.0 million in a long-term subordinated note, and recorded a gain of $3.6 million in the third quarter of 2003. In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” the Company classified the assets of its stainless steel tubing business as assets held for sale on its condensed consolidated balance sheet as of December 31, 2002 and the operating results of this business as a discontinued operation on its unaudited condensed consolidated statements of operations for the three- and nine-month periods ended September 30, 2003 and 2002. The Company reported income from discontinued operation, net of taxes, of $0.8 million in the third quarter of 2002, and $0.8 million and $2.5 million in the first nine months of 2003 and 2002, respectively.

As part of closing its Columbus, Ohio manufacturing facility, the Company sold its cryopump and valves product lines in the second quarter of 2003 for net proceeds of $2.3 million and recorded a $0.9 million gain in other income, and sold various fixed assets of the Columbus, Ohio facility in the first quarter of 2003 for net proceeds of $0.2 million and recorded a $0.2 million gain in other income. The Company sold its cryogenic pump product line during the second quarter of 2002 for net proceeds of $2.3 million and recorded a gain of $1.4 million in other income.

Net interest expense was $0.8 million and $4.3 million for the third quarters of 2003 and 2002, respectively, and was $9.9 million and $13.1 million for the nine months ended September 30, 2003 and 2002, respectively. The Company recorded interest expense on amounts outstanding under the term loan portion and revolving credit loan portion of the Old Credit Facility and under the Incremental Credit Facility until July 8, 2003, the date the Company filed its Chapter 11 petitions, but not thereafter. As a result, interest expense for the three- and nine-month periods ended September 30, 2003 does not include approximately $3.8 million that would have been payable under the terms of these facilities had the Company not filed for Chapter 11 protection.

Financing costs amortization expense was $0.1 million and $0.6 million for the third quarters of 2003 and 2002, respectively, and $1.7 million and $2.4 million for the nine months ended September 30, 2003 and 2002, respectively. The Company recorded financing costs amortization expense related to the Old Credit Facility until July 8, 2003, the date the Company filed its Chapter 11 petitions, but not thereafter. The Company does not expect to record any financing costs amortization expense subsequent to the third quarter of 2003 related to its post-bankruptcy credit facilities.

The Company recorded $0.02 million of derivative contracts valuation income in the third quarter of 2003, compared with $0.7 million of derivative contracts valuation expense in the third quarter of 2002, and $0.4 million and $1.1 million of derivative contracts valuation expense in the nine months ended September 30, 2003 and 2002, respectively. The

Company’s one remaining interest rate collar, in the amount of $26,672 at September 30, 2003, continues to be outstanding after the bankruptcy and expires in March 2006.

Income tax benefit of $3.5 million and $2.0 million in the third quarter and first nine months of 2003, respectively, consists of tax benefit from reversals of domestic income tax reserves associated with resolved tax contingencies, partially offset by taxes on earnings of foreign subsidiaries. Income tax benefit of $1.4 million and $3.7 million for the third quarter and first nine months of 2002, respectively, was recorded based on the Company’s estimated 2002 annual effective tax rate.

At September 30, 2003, the Company has a net deferred tax liability of $1.7 million, which represents foreign deferred tax liabilities. The Company has a full valuation allowance against its domestic net deferred tax assets in accordance with SFAS No. 109, “Accounting for Income Taxes,” based upon management’s assessment that it is more likely than not that the net deferred tax assets will not be realized. Pursuant to Section 108 of the Internal Revenue Code, the Company will materially reduce certain tax attributes on January 1, 2004 due to the recognition of cancellation of indebtedness income in the three-month period ended September 30, 2003.

As a result of the foregoing, the Company reported net income for the third quarter of 2003 of $18.7 million, or $0.70 per diluted share, versus a net loss of $0.7 million, or $0.03 per diluted share, for the third quarter of 2002. The Company reported a net loss for the first nine months of 2003 of $2.1 million, or $0.08 per diluted share, versus a net loss of $3.8 million, or $0.15 per diluted share, for the first nine months of 2002.

Liquidity and Capital Resources

Cash provided by continuing operations in the first nine months of 2003 was $19.5 million compared with $6.6 million provided in the first nine months of 2002. The Company’s 2003 operating cash flow reflects significant improvement in inventory and other current assets as the Company reduced inventory levels, and increases in accounts payable and other current liabilities as the Company has been able to return to normal payment terms with the majority of its vendors, rather than paying in advance or on relatively short terms, and to temporarily delay the payment of certain professional fees related to the bankruptcy filing until they are approved for payment by the Bankruptcy Court. These items were partially offset by reductions in advance payments on large projects. The Company successfully managed its working capital in the third quarter of 2003 and throughout the bankruptcy filing period, and did not borrow any funds on its debtor-in- possession credit facility or its new revolving credit facility.

Capital expenditures for the first nine months of 2003 were $1.9 million compared with $2.3 million in the first nine months of 2002, and represented planned maintenance level expenditures. The Company presently does not have any large capital projects in process and anticipates a similar level of capital expenditures for the remainder of this year.

During the nine-month period ended September 30, 2003, the Company sold certain assets and liabilities of its former Greenville Tube, LLC stainless steel tubing business for cash proceeds of $13.5 million and a long-term subordinated note of $2.0 million, and certain fixed assets of its cryopump and valves product lines from its closed Columbus, Ohio manufacturing facility for net proceeds of $2.5 million. Proceeds from the sales of these assets were used to fund certain senior debt interest payments and pay certain professional fees and provided the Company with increased liquidity for identified working capital requirements and other corporate needs and obligations.

On September 15, 2003, the Company and all of its majority-owned U.S. subsidiaries emerged from Chapter 11 proceedings pursuant to the Reorganization Plan, which the Bankruptcy Court confirmed by an order entered on September 4, 2003. Effective September 15, 2003, the Company entered into a new term loan agreement and revolving credit facility (collectively, the “Credit Facility”) and granted a security interest in substantially all of the assets of the Company to the agent bank as representative of the senior lenders. The Credit Facility provides a term loan of $120.0 million with final maturity in 2009 and a revolving credit line of $40.0 million that expires on September 15, 2008, of which $30.0 million may be used for the issuance of letters of credit. Under the terms of the Credit Facility, term loans bear interest, at the Company’s option, at rates equal to the prime rate plus 2.50 percent or LIBOR plus 3.50 percent and the revolving credit line bears interest, at the Company’s option, at rates equal to the prime rate plus 1.50 percent or LIBOR plus 2.50 percent. The Company is also required to pay a commitment fee of 0.375 percent per annum on the unused amount of the revolving credit line of the Credit Facility.

At September 30, 2003, the Company had borrowings outstanding of $120.0 million under the term loan portion of the Credit Facility and letters of credit outstanding and bank guarantees totaling $16.2 million supported by the revolving credit line portion of the Credit Facility.

As previously discussed, on March 28, 2003, CHEL filed for a voluntary administration under the U.K. Insolvency Act of 1986. CHEL’s application for voluntary administration was approved on April 1, 2003 and an administrator was appointed. CHEL’s net pension plan obligations have increased significantly, primarily due to a decline in plan asset values and interest rates, resulting in a plan deficit as of March 2003. The Company determined not to advance funds to CHEL in amounts necessary to fund CHEL’s obligations. CHEL does not have the necessary funds to enable it to fund its net pension plan deficit, pay remaining severance due to former employees or pay other creditors. As a result, the trustees of the CHEL pension plan requested a decision to wind-up the plan from a United Kingdom pension regulatory board, which approved the wind-up as of March 28, 2003. Included in the impairment charge of $13.7 million that the Company recorded in the first quarter of 2003 is an estimate of certain potential liabilities, including an estimate of the net pension plan deficit. Adjustments to amounts provided may be required in subsequent periods when an analysis of the pension plan’s net deficit on a wind-up basis is ultimately completed by the administrator.

At the present time, the Company is unable to determine the financial impact of the April 1, 2003 approval of insolvency administration for CHEL and the related wind-up of CHEL’s United Kingdom pension plan. The Company can provide no assurance that claims will not be asserted against the Company for obligations of CHEL related to these matters. To the extent the Company has significant financial obligations as a result of CHEL’s insolvency and the pension plan wind-up, such liability could have a material adverse impact on the Company’s liquidity and its financial position.

Orders and Backlog

Chart’s consolidated orders from continuing operations for the third quarter of 2003 totaled $55.7 million, compared with orders of $69.9 million for the second quarter of 2003. Chart’s consolidated firm order backlog for continuing operations at September 30, 2003 was $51.8 million, compared with $60.7 million at June 30, 2003. Management believes that the Company’s Chapter 11 bankruptcy filing had a significant negative impact on orders in the Energy and Chemicals segment, where products have extended production cycles and can range in price to well over $1.0 million, resulting in delayed and lost orders. Although management believes the Chapter 11 bankruptcy filing has also had a negative impact on orders in the Biomedical and Distribution and Storage segments, the impact has not been as strong as in the Energy and Chemicals segment.

Biomedical orders for the third quarter of 2003 totaled $16.8 million, compared with $19.0 million for the second quarter of 2003. Biomedical backlog of $2.5 million at September 30, 2003 declined from $3.0 million at June 30, 2003. Orders for medical products and biological storage systems declined slightly from the new record levels set in the second quarter of 2003.

Distribution and Storage orders for the third quarter of 2003 totaled $30.0 million, compared with $35.5 million for the second quarter of 2003. Distribution and Storage backlog at September 30, 2003 totaled $24.8 million, compared with $26.0 million at June 30, 2003. The weak global industrial gas market continues to hurt this segment.

Energy and Chemicals orders from continuing operations for the third quarter of 2003 totaled $8.9 million, compared with $15.4 million in the second quarter of 2003. Energy and Chemicals backlog for continuing operations at September 30, 2003 totaled $24.4 million, compared with $31.7 million at June 30, 2003.

Application of Critical Accounting Policies

The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. As such, some accounting policies have a significant impact on amounts reported in these unaudited condensed consolidated financial statements. A summary of those significant accounting policies can be found in the Company’s 2002 Annual Report on Form 10-K, filed on April 15, 2003, in Note A of the Notes to the Consolidated Financial Statements and under the caption “Critical Accounting Policies” within Management’s Discussion and Analysis of Financial Condition and Results of Operations. In particular, judgment is used in areas such as revenue recognition for long-term contracts, determining the allowance for doubtful accounts and inventory valuation reserves, goodwill and indefinite lived intangibles, environmental remediation obligations, product warranty costs, debt covenants, pensions and deferred tax assets.

Fresh-Start accounting requires the selection of appropriate accounting policies for the Reorganized Company. The significant accounting policies previously used by the Predecessor Company will continue to be used by the Reorganized Company except for certain policies related to inventory valuation and the policy for estimating the accounts receivable allowance for doubtful accounts. As of September 30, 2003, the Company changed its method of accounting for inventories at sites of the Company’s Chart Heat Exchangers Limited Partnership legal entity and former Process Systems, Inc. legal entity from the last-in, first-out (“LIFO”) method to the first-in, first-out (“FIFO”) method since the value of inventory on the LIFO method was approximately equal to the value on a FIFO basis. Additionally, as of September 30, 2003, the Company changed its methods for estimating reserves for slow moving and obsolete inventories and the accounts receivable allowance for doubtful accounts to better match historical experience.

Recently Adopted Accounting Standards

Effective January 1, 2003, the Company adopted Interpretation (“FIN”) No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” FIN No. 45 elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued, including product warranties. It also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The disclosure requirements of FIN No. 45 have been made in Note A of the unaudited condensed consolidated financial statements. The adoption of this interpretation did not have a material impact on the Company’s financial position, liquidity, cash flows or results of operations.

Forward-Looking Statements

The Company is making this statement in order to satisfy the “safe harbor” provisions contained in the Private Securities Litigation Reform Act of 1995. This Quarterly Report on Form 10-Q includes forward-looking statements relating to the business of the Company. In some cases, forward-looking statements may be identified by terminology such as “may,” “will,” “should,” “expects,” “anticipates,” “believes,” “projects,” “forecasts,” “continue” or the negative of such terms or comparable terminology. Forward-looking statements contained herein or in other statements made by the Company are made based on management’s expectations and beliefs concerning future events impacting the Company and are subject to uncertainties and factors relating to the Company’s operations and business environment, all of which are difficult to predict and many of which are beyond the control of the Company, that could cause actual results of the Company to differ materially from those matters expressed or implied by forward-looking statements. The Company believes that the following factors, among others, could affect its future performance and cause actual results of the Company to differ materially from those expressed or implied by forward-looking statements made by or on behalf of the Company and could reduce the liquidity of the Company’s common stock and warrants: (a) general economic, political, business and market conditions and foreign currency fluctuations; (b) competition; (c) decreases in spending by its industrial customers; (d) the loss of a major customer or customers; (e) the effectiveness of operational changes expected to increase efficiency and productivity; (f) the ability of the Company to manage its fixed-price contract exposure; (g) the ability of the Company to pass on increases in raw material

prices, including as a result of tariffs; (h) the Company’s relations with its employees; (i) litigation and disputes involving the Company, including the extent of product liability, pension and severance claims asserted against the Company; (j) variability in the Company’s operating results; (k) the ability of the Company to attract and retain key personnel; (l) the costs of compliance with environmental matters and responding to potential environmental liabilities; (m) the ability of the Company to protect its proprietary information; (n) the ability of the Company to access additional sources of capital and sell certain assets on acceptable terms; (o) the ability of the Company to successfully realize operational restructuring savings and execute operational restructuring initiatives without unanticipated costs; (p) the ability of the Company to satisfy covenants under its Credit Facility and pay down its debt; (q) the insolvency of CHEL and the commencement of its administration proceedings in the United Kingdom, including the potential liability of the Company with respect to CHEL’s obligations; and (r) the threat of terrorism and the impact of responses to that threat.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

In the normal course of business, operations of the Company are exposed to continuing fluctuations in foreign currency values and interest rates that can affect the cost of operating and financing. Accordingly, the Company addresses a portion of these risks through a program of risk management.

The Company’s primary interest rate risk exposure results from the Credit Facility’s various floating rate pricing mechanisms. This interest rate exposure is managed by the use of interest rate collars on a portion of the term debt and to a lesser extent by varying LIBOR maturities in the entire Credit Facility. An interest rate collar originally covering $76.0 million of the Company’s debt under the Old Credit Facility expired and was settled on June 28, 2002. The Company’s remaining interest rate collar covering $26.7 million of debt expires on March 31, 2006. The fair value of the contract related to the collar outstanding at September 30, 2003 is a liability of $1.7 million. If interest rates were to increase 200 basis points (2 percent) from September 30, 2003 rates, and assuming no changes in debt from the September 30, 2003 levels, the additional annual expense would be approximately $2.4 million on a pretax basis.

The Company has assets, liabilities and cash flows in foreign currencies creating foreign exchange risk, the primary foreign currencies being the Czech Koruna and the Euro. Monthly measurement, evaluation and foreign currency forward exchange contracts are employed as methods to reduce this risk. The Company enters into foreign currency forward exchange contracts to hedge anticipated and firmly committed foreign currency transactions. The Company does not hedge foreign currency translation or foreign currency net assets or liabilities. The terms of the derivatives are one year or less. If the value of the U.S. dollar were to strengthen 10 percent relative to the currencies in which the Company has foreign currency forward exchange contracts at September 30, 2003, the result would be a loss in fair value of approximately $0.2 million.

Item 4.

Controls and Procedures

As of September 30, 2003 an evaluation was performed, under the supervision and with the participation of the Company’s management including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-15 under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”). Based upon that evaluation such officers concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.

There were no changes in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

In March 2003, the Company completed the closure of its Wolverhampton, United Kingdom manufacturing facility, operated by Chart Heat Exchangers Limited (“CHEL”). The Company will continue heat exchanger manufacturing at its LaCrosse, Wisconsin facility. On March 28, 2003, CHEL filed for a voluntary administration under the U.K. Insolvency Act of 1986. CHEL’s application for voluntary administration was approved on April 1, 2003 and an administrator was appointed. CHEL’s net pension plan obligations increased significantly prior to the closure of the Wolverhampton facility, primarily due to a decline in plan asset values and interest rates, resulting in a plan deficit as of March 2003. The Company has determined not to advance funds to CHEL in amounts necessary to fund CHEL’s obligations. CHEL does not have the necessary funds to enable it to fund its net pension plan deficit, pay remaining severance due to former employees or pay other creditors. As a result, the trustees of the CHEL pension plan requested a decision to wind-up the plan from a United Kingdom pension regulatory board, which approved the wind-up as of March 28, 2003. An analysis of the estimated net pension plan deficit on a wind-up basis will ultimately be completed by the administrator. At the present time, the Company is unable to determine the financial impact of the April 1, 2003 approval of insolvency administration for CHEL and the related wind-up of CHEL’s United Kingdom pension plan. CHEL’s administrator has asserted certain claims on

behalf of CHEL against the Company related to trade matters, and the Company can provide no assurance that further claims will not be asserted against the Company for obligations of CHEL related to these matters. To the extent the Company has significant financial obligations as a result of CHEL’s insolvency and the pension plan wind-up, such liability could have a material adverse impact on the Company’s liquidity and its financial position.

On July 8, 2003, the Company and all of its majority-owned U.S. subsidiaries filed voluntary petitions for reorganization relief under Chapter 11 of the U.S. Bankruptcy Code to implement an agreed upon senior debt restructuring plan through a pre-packaged plan of reorganization. None of the Company’s non-U.S. subsidiaries are included in the filing in the Bankruptcy Court. On September 15, 2003, the Company (as reorganized, the “Reorganized Company”) and all of its majority-owned U.S. subsidiaries emerged from Chapter 11 proceedings pursuant to the Amended Joint Prepackaged Reorganization Plan of Chart Industries, Inc. and Certain Subsidiaries, dated September 3, 2003 (the “Reorganization Plan”), which the Bankruptcy Court confirmed by an order entered on September 4, 2003. Under the Reorganization Plan, the Company’s senior debt of $255.7 million and related interest and fees of $1.9 million were converted into a $120.0 million secured term loan, with the balance of the existing senior debt being cancelled in return for an initial 95 percent equity ownership position in the Reorganized Company, and the Company’s $40.0 million secured debtor-in-possession financing facility was amended and restated as a $40.0 million post-bankruptcy secured revolving credit facility. In addition, on September 15, 2003, all of the Company’s common stock, warrants, options and other rights to acquire the Company’s common stock were cancelled, and the Company’s former stockholders received five percent of the initial equity of the Reorganized Company and the opportunity to acquire up to an additional five percent of equity through the exercise of new warrants. The Company continues to resolve a number of proofs of claim asserted in the bankruptcy proceedings, including a finder’s fee claim.

The Company is a party to other legal proceedings incidental to the normal course of its business.

Item 2.

Changes in Securities and Use of Proceeds

The Reorganization Plan became effective on September 15, 2003 (the “Consummation Date”), at which time all then-outstanding Company common stock, warrants, options and other rights to acquire the Company’s common stock were cancelled. Pursuant to the Reorganization Plan, new common stock, $.01 par value per share (“New Common Stock”), representing 95 percent of the initial equity of the Reorganized Company, was issued to the Company’s senior lenders in partial satisfaction of such senior lenders’ claims against the Company in the Chapter 11 proceedings. Additionally, pursuant to the Reorganization Plan, the Reorganized Company issued to the Company’s former stockholders New Common Stock representing five percent of the initial equity of the Reorganized Company and warrants to acquire New Common Stock (“New Warrants”) representing the opportunity to acquire up to an additional five percent of equity upon exercise.

Pursuant to the terms of the Reorganziation Plan, the Reorganized Company issued an aggregate of 5,325,331 shares of New Common Stock on the Consummation Date. Of this number, 5,059,064 shares initially were issued to the Company’s senior lenders and 266,267 shares initially were issued to the Company’s former stockholders, constituting 95 percent and five percent, respectively, of the aggregate shares of New Common Stock issued under the Reorganization Plan. The Credit Facility prohibits the Reorganized Company from paying cash dividends on shares of its capital stock. A full description of the New Common Stock was previously reported in the Company’s Current Report on Form 8-K filed on September 30, 2003.

On the Consummation Date, the Company’s former stockholders were issued New Warrants to acquire an aggregate of 280,281 shares (subject to anti-dillution adjustments) of New Common Stock pursuant to the terms of the Reorganization Plan. An equal number of shares of New Common Stock are reserved for issuance upon exercise of the New Warrants. A complete description of the New Warrants, including the exercise price, expiration date and adjustment provisions, was previously reported in the Company’s Registration Statement on Form 8-A filed on October 8, 2003.

The Reorganized Company is relying on the exemption provided by Section 1145(a)(1) of the U.S. Bankruptcy Code to exempt the exchange, issuance and distribution of the New Common Stock and New Warrants pursuant to the Reorganization Plan from the registration requirements of the Securities Act of 1933 (the “Securities Act”) and state securities and “blue sky” laws. Section 1145(a)(2) of the U.S. Bankruptcy Code also exempts from such registration requirements offers of securities through warrants distributed pursuant to the exemption set forth in Section 1145(a)(1). New Common Stock issued to the Company’s senior lenders under the Reorganization Plan was issued in exchange for claims under the Company’s pre-bankruptcy senior credit facilities, and all New Common Stock and New Warrants issued to the Company’s former stockholders under the Reorganization Plan were issued in exchange for their cancelled stock.

Item 3.

Defaults Upon Senior Securities.

also was in default under the Old Credit Facility as a result of its failure to make principal payments when due and the insolvency of CHEL. The Company’s senior lenders amended the Old Credit Facility and Incremental Credit Facility on April 2, 2003 to waive all defaults existing at December 31, 2002 and through April 30, 2003 and to defer until April 30, 2003 $6.5 million in scheduled term debt amortization payments and $9.8 million in Incremental Credit Facility amortization payments originally due on March 31, 2003. The Company’s senior lenders further amended the Old Credit Facility and Incremental Credit Facility as of April 30, 2003 to extend the waiver of defaults obtained on April 2, 2003 through June 30, 2003 and to defer the interest and principal payments to June 30, 2003. The Company’s senior lenders further amended the Old Credit Facility and Incremental Credit Facility as of June 30, 2003 to extend the waiver of defaults obtained on April 30, 2003 through July 15, 2003 and to defer the interest and principal payments to July 15, 2003.

Item 6.

Exhibits and Reports on Form 8-K

(a)

Exhibits.

See the Exhibit Index on page 30 of this Form 10-Q.

(b)

Reports on Form 8-K.

During the three-month period ended September 30, 2003, the Company filed the following Current Reports on Form 8-K:

Current Report on Form 8-K, dated July 1, 2003, furnishing under Item 9 a press release pursuant to Regulaton FD

Current Report on Form 8-K, dated July 3, 2003, furnishing under Item 9 a press release pursuant to Regulation FD

Current Report on Form 8-K, dated July 8, 2003, disclosing under Item 3 the Company’s bankruptcy filing and furnishing under Item 9 and Item 12 the Disclosure Statement filed with the Bankruptcy Court

Current Report on Form 8-K, dated July 11, 2003, furnishing under Item 9 a press release pursuant to Regulation FD

Current Report on Form 8-K, dated August 5, 2003, furnishing under Item 9 and Item 12 the Company’s debtor-in-possession revolving credit facility

Current Report on Form 8-K, dated September 3, 2003, furnishing under Item 9 a press release pursuant to Regulation FD

Current Report on Form 8-K dated September 4, 2003, disclosing under Item 3 the confirmation and consummation of the Company’s Reorganization Plan and under Item 5 the registration of the Company’s new common stock and filing exhibits under Item 7

Current Report on Form 8-K/A, dated September 4, 2003, filing exhibits under Item 7

Current Report on Form 8-K, dated September 9, 2003, disclosing under Item 5 the manner in which new Chart common stock and new warrants will be distributed to holders of old Chart common stock under the Reorganization Plan

Current Report on Form 8-K, dated September 15, 2003, disclosing under Item 1 a change in control of the Company and under Item 5 information about the terms of the New Common Stock

Current Report on Form 8-K, dated September 16, 2003, furnishing under Item 9 a press release pursuant to regulation FD

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

				Chart Industries, Inc. (Registrant)

Date: November 19, 2003				/s/ Michael F. Biehl
				Michael F. Biehl Chief Financial Officer and Treasurer (Duly Authorized Principal Financial Officer and Chief Accounting Officer)

EXHIBIT INDEX

Exhibit No.	Description of Document

2.1	Asset Purchase Agreement among GT Acquisition Company and Greenville Tube, LLC, dated July 1, 2003

2.2	Amended Joint Prepackaged Reorganization Plan of Chart Industries, Inc. and Certain Subsidiaries, dated September 3, 2003	(A)

2.2	Findings of Fact, Conclusions of Law, and Order Under 11 U.S.C. § 1129(a) and (b) and Fed. R. Bankr. P. 3020 (I) Confirming Joint Prepackaged Reorganization Plan of Chart Industries, Inc. and Certain Subsidiaries, (II) Approving Disclosure Statement and (III) Approving Solicitation Procedures, entered September 4, 2003	(B)

3.1	Amended and Restated Certificate of Incorporation of Chart Industries, Inc., as filed with the Secretary of State of the State of Delaware on September 15, 2003	(B)

3.2	Amended and Restated By-Laws of Chart Industries, Inc., effective September 15, 2003	(B)

4.1	Warrant Agreement between Chart Industries, Inc. and National City Bank, as Warrant Agent, dated September 15, 2003, including Form of Warrant Certificate	(B)

4.2	Specimen certificate of the Common Stock of the Company

10.1	Term Loan Agreement among Chart Industries, Inc., the Subsidiary Guarantors Party hereto, the Lenders Party hereto and JPMorgan, as Administrative Agent, dated September 15, 2003	(B)

10.2	Amended and Restated Revolving Credit Agreement among Chart Industries, Inc., the Subsidiary Guarantors Party hereto, the Lenders Party hereto and JPMorgan, as Administrative Agent, dated September 15, 2003	(B)

10.3	Amended and Restated Security Agreement among Chart Industries, Inc., the Subsidiary Guarantors party hereto and JPMorgan, as Collateral Agent, dated September 15, 2003	(B)

10.4	Collateral Agency and Intercreditor Agreement among: Chart Industries, Inc; JPMorgan Chase Bank, as Revolving Credit Agent under the Revolving Credit Agreement; JPMorgan Chase Bank, as Term Loan Agent under the Term Loan Agreement; and JPMorgan Chase Bank, in its capacity as Collateral Agent, dated September 15, 2003	(B)

10.5	Investor Rights Agreement by and among Chart Industries, Inc. and the Stockholder parties thereto, dated September 15, 2003	(A)

10.6	Escrow Agreement, dated as of July 10, 2003, by and among JP Morgan Chase Bank, each of the directors and senior officers of Chart Industries, Inc. signatory thereto and Christiana Corporate Services, Inc., as Escrow Agent

10.7	Form of Amended and Restated Mortgage, Assignment of Rents, Security Agreement and Fixture Filing

31.1	Rule 13a-14(a) Certification of Chief Executive Officer

31.2	Rule 13a-14(a) Certification of Chief Financial Officer

32.1	Section 1350 Certification of Chief Executive Officer

32.2	Section 1350 Certification of Chief Financial Officer

(A)	Incorporated herein by reference to the appropriate exhibit to the Company’s Current Report on Form 8-K/A, dated September 4, 2003 (Commission File No. 1-11442).

(B)	Incorporated herein by reference to the appropriate exhibit to the Company’s Current Report on Form 8-K, dated September 4, 2003 (Commission File No. 1-11442).

EX-2.1 3 dex21.txt ASSET PURCHASE AGREEMENT EXHIBIT 2.1 ASSET PURCHASE AGREEMENT Among GT ACQUISITION COMPANY, and GREENVILLE TUBE, LLC JULY 1, 2003 TABLE OF CONTENTS

3.21 Insurance......................................................................................48 3.22 Environmental Matters..........................................................................49 3.23 Employees......................................................................................51 3.24 Labor Disputes; Compliance.....................................................................52 3.25 Intellectual Property Assets...................................................................53 3.26 Parent Ownership of Assets.....................................................................56 3.27 Compliance with the Foreign Corrupt Practices Act and Export Control and Antiboycott Laws......56 3.28 Relationships With Related Persons.............................................................57 3.29 Brokers or Finders.............................................................................58 3.30 Securities Law Matters.........................................................................58 4. REPRESENTATIONS AND WARRANTIES OF BUYER..............................................................59 4.1 Organization and Good Standing.................................................................59 4.2 Authority; No Conflict.........................................................................59 4.3 Certain Proceedings............................................................................60 4.4 Brokers or Finders.............................................................................60 4.5 Sufficient Funds...............................................................................60 [5. Intentionally Omitted]...............................................................................60 [6. Intentionally Omitted]...............................................................................60 7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE..................................................60 7.1 Consents.......................................................................................60 7.2 Additional Documents...........................................................................60 7.3 Title Insurance................................................................................61 7.4 Governmental Authorizations....................................................................61 7.5 Employees......................................................................................61 7.6 Ancillary Agreements...........................................................................61 7.7 Financing......................................................................................61 7.8 Management Investment..........................................................................62 8. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE.................................................62 8.1 Consents.......................................................................................62 9. NO TERMINATION.......................................................................................62 10. ADDITIONAL COVENANTS.................................................................................62 10.1 Employees and Employee Benefits................................................................62 10.2 Payment of All Taxes Resulting From Sale of Assets by Seller...................................65 10.3 Payment of Other Retained Liabilities..........................................................65 10.4 Financial Information..........................................................................66 10.5 Removing Excluded Assets.......................................................................66 10.6 Reports and Returns............................................................................66 10.7 Assistance in Proceedings......................................................................66 10.8 Noncompetition, Nonsolicitation and Nondisparagement...........................................66

ii 10.9 Customer and Other Business Relationships......................................................67 10.10 Retention of and Access to Records.............................................................68 10.11 Further Assurances.............................................................................68 10.12 TCE Sealant....................................................................................68 10.13 Master Lease Payments..........................................................................68 10.14 Effetive Date..................................................................................68 11. INDEMNIFICATION; REMEDIES............................................................................69 11.1 Survival.......................................................................................69 11.2 Indemnification and Reimbursement by Seller....................................................69 11.3 Indemnification and Reimbursement by Seller - Environmental Matters............................70 11.4 Indemnification and Reimbursement by Buyer.....................................................78 11.5 Limitations on Amount - Seller.................................................................80 11.6 Limitations on Amount - Buyer..................................................................80 11.7 Time Limitations...............................................................................80 11.8 Right of Setoff................................................................................81 11.9 Third-Party Claims.............................................................................82 11.10 Direct Claims..................................................................................83 11.11 Insurance Tax..................................................................................83 11.12 Limitation on Consequential Damages............................................................84 11.13 Payment of Claims..............................................................................84 11.14 Exclusive Means................................................................................84 11.15 Indemnification in Case of Strict Liability or Indemnitee Negligence...........................80 11.16 Facility Lease.................................................................................80 12. CONFIDENTIALITY......................................................................................85 12.1 Definition of Confidential Information.........................................................85 12.2 Restricted Use of Confidential Information.....................................................86 12.3 Exceptions.....................................................................................86 12.4 Legal Proceedings..............................................................................87 12.5 Return or Destruction of Confidential Information..............................................87 12.6 Attorney-Client Privilege......................................................................87 12.7 Tax Disclosure.................................................................................82 13. GENERAL PROVISIONS...................................................................................88 13.1 Expenses.......................................................................................88 13.2 Public Announcements...........................................................................88 13.3 Notices........................................................................................88 13.4 Jurisdiction; Service of Process...............................................................89 13.5 Enforcement of Agreement.......................................................................90 13.6 Waiver; Remedies Cumulative....................................................................90 13.7 Entire Agreement and Modification..............................................................90 13.8 Disclosure Letter..............................................................................90

iii 13.9 Assignments, Successors and No Third-Party Rights..............................................90 13.10 Severability...................................................................................91 13.11 Construction...................................................................................91 13.12 Time of Essence................................................................................91 13.13 Governing Law..................................................................................91 13.14 Execution of Agreement.........................................................................91

iv ASSET PURCHASE AGREEMENT THIS ASSET PURCHASE AGREEMENT ("Agreement") is dated July 1, 2003, between GT Acquisition Company, a Delaware corporation ("Buyer") and Greenville Tube, LLC, a Delaware limited liability company ("Seller"). RECITALS Chart, Inc., a Delaware corporation ("Member"), owns one hundred percent (100%) of the issued and outstanding equity interest of Seller. Seller is, and since February 24, 2002, has been, in the business of manufacturing and selling steel and stainless steel tubing (the "Business"). From January 1, 2000, through June 30, 2000, Member, through an incorporated subsidiary, Chart Holdings, Inc., a Delaware Corporation ("CHI"), operated the Business. From July 1, 2000 through February 23, 2002, Member through an unincorporated division, operated the Business. Before January 1, 2000, Member's wholly owned subsidiary, Greenville Tube Corporation, an Arkansas corporation ("GTC," and, together with CHI and Member, the "Prior Owner") operated the Business. Member is a wholly owned subsidiary of Chart Industries, Inc., a Delaware corporation ("Parent"). Seller desires to sell, and Buyer desires to purchase, the Assets of Seller for the consideration and on the terms set forth in this Agreement. The parties, intending to be legally bound, agree as follows: 1. DEFINITIONS AND USAGE. 1.1 Definitions. For purposes of this Agreement, the following terms and variations thereof have the meanings specified or referred to in this Section 1.1: "Accounts Receivable" - (a) all trade accounts receivable and other rights to payment from customers of Seller and the full benefit of all security for such accounts or rights to payment, including all trade accounts receivable representing amounts receivable in respect of goods shipped or products sold or services rendered to customers of Seller, (b) all other accounts or notes receivable of Seller and the full benefit of all security for such accounts or notes, and (c) any claim, remedy or other right related to any of the foregoing. "Active Employees" - as defined in Section 10.1(a). "ADEQ Consent Order" - the Arkansas Department of Environmental Quality Consent Administrative Order #LIS 99-152, issued June 30, 1999, and any amendments thereto. "Adjustment Amount" - as defined in Section 2.8. "Affiliate" -- with respect to a Person (the "First Person"), any other Person who controls, is under common control with, or is controlled by the First Person. "Appurtenances" - all privileges, rights, easements, hereditaments, and appurtenances belonging to or for the benefit of the Land, including all easements appurtenant to and for the benefit of any Land (a "Dominant Parcel") for, and as the primary means of access between, the Dominant Parcel and a public way, or for any other use upon which lawful use of the Dominant Parcel for the purposes for which it is presently being used is dependent, and all rights of Seller existing in and to any streets, alleys, passages and other rights-of-way included thereon or adjacent thereto (before or after vacation thereof) and vaults beneath any such streets. "Assets" - as defined in Section 2.1. "Assignment and Assumption Agreement" - as defined in Section 2.7(a)(ii). "Assumed Contracts" - as defined in the definition of "Breach." "Assumed Liabilities" - as defined in Section 2.4(a). "Balance Sheet" - as defined in Section 3.4. "Best Efforts" - the efforts that a reasonably prudent Person desirous of achieving a result would use in similar circumstances to achieve that result as expeditiously as possible, provided, however, that a Person required to use Best Efforts under this Agreement will not be thereby required to take actions that would, in the reasonable sole determination of such Person, result in a material adverse change in the benefits to such Person of this Agreement and the Contemplated Transactions or to dispose of or make any change to its business, expend any funds in excess of Five Thousand Dollars ($5,000.00) or incur any other material burden. 2 "Bill of Sale" - as defined in Section 2.7(a)(i). "Breach" - any breach of, or any inaccuracy in, any representation or warranty or any breach of, or failure to perform or comply with, any covenant or obligation, in or of this Agreement, or any agreement or instrument executed and delivered by the parties hereto or their Affiliates in connection with the transactions contemplated by this Agreement, or any contract which is being assigned to or assumed by Buyer (the "Assumed Contracts") (which are listed on Part 1.1(a) of the Disclosure Schedule), or any event that with the passing of time or the giving of notice, or both, would constitute such a breach, inaccuracy or failure. "Bulk Sales Laws" - as defined in Section 5.10. "Business" - as defined in the Recitals. "Business Day" - any day other than (a) Saturday or Sunday or (b) any other day on which banks in Delaware are permitted or required to be closed. "Buyer" - as defined in the first paragraph of this Agreement. "Buyer Change of Control"--shall mean any of the following: (a) a liquidation, dissolution or winding up of the affairs Buyer (whether voluntary or involuntary), (b) the merger or consolidation of Buyer with or into another Person in a transaction pursuant to which the Investor Group, including its Affiliates, fails, directly or indirectly, to retain record or beneficial ownership or control in excess of 50% of the voting power of the surviving Person, (c) a sale by the Investor Group of more than 50% of the voting power of Buyer, excluding sales by members of the Investor Group to other members of the Investor Group or their Affiliates, (d) a sale of all or substantially all of the assets of Buyer, the consummation of which occurred when the Investor Group owned in excess of 50% of the voting power of Buyer, and (e) any capital reorganization or other transaction which creates a situation which is substantially similar to the situation that would result from any transaction described in the foregoing clauses (a) through (d). "Buyer Indemnified Persons" - as defined in Section 11.2. "Closing" - as defined in Section 2.6. 3 "Closing Date" - the date on which the Closing actually takes place. "Closing Financial Statements" - as defined in Section 2.9(b). "Closing Working Capital" - as defined in Section 2.9(b). "COBRA" - as defined in Section 3.16(f). "Code" - the Internal Revenue Code of 1986. "Confidential Information" - as defined in Section 12.1. "Consequential Damages" - incidental, special, derivative or punitive damages or any loss or liability arising from lost property, lost business opportunities, diminution of value, damage to reputation or lost profits or damages based upon a multiple of earnings, EBITDA, or cash flow. "Consent" - any approval, consent, ratification, waiver or other authorization. "Contemplated Transactions" - all of the transactions contemplated by this Agreement and the agreements executed and delivered hereunder. "Contingent Note" - as defined in Section 2.12. "Contract" - any legally binding agreement, contract, Lease, consensual obligation, promise or undertaking (whether written or oral and whether express or implied). "Copyrights" - as defined in Section 3.25(a)(iii). "Core Business" - the products and product lines produced, marketed or sold by Seller on the Closing Date and during the six (6) month period immediately preceding the Closing Date. Core Business shall not include other businesses, products, or product lines that Buyer adds or acquires after the Closing Date. "Damages" - as defined in Section 11.2 and, except as otherwise provided in this Agreement excludes Consequential Damages. 4 "Disclosure Schedule" - the disclosure schedule delivered by Seller to Buyer concurrently with the execution and delivery of this Agreement. "Diversion Agreement" - as defined in Section 2.2(m). "Earnout Agreement" - as defined in Section 2.7(a)(xii). "EBITDA" - as defined in the Earnout Agreement. "Effective Time" - the time of the closing of Seller's business on the Closing Date. "Employee Plans" - as defined in Section 3.16(a). "Encumbrance" - any charge, claim, community or other marital property interest, condition, equitable interest, lien, option, pledge, security interest, mortgage, right of way, easement, encroachment, servitude, right of first option, right of first refusal or similar restriction, including any restriction on use, voting (in the case of any security or equity interest), transfer, receipt of income or exercise of any other attribute of ownership. "Environment" - soil, land surface or subsurface strata, surface waters (including navigable waters and ocean waters), groundwaters, drinking water supply, stream sediments and ambient air (including indoor air). "Environmental Claims" - any Third Party Claim relating to any Environmental Liabilities or any demand by a Third Party in connection with a proposed acquisition of the Assets from Buyer or a proposed loan to Buyer relating to any Environmental Liabilities. "Environmental Law" - any applicable Federal, state, or local law, statute, ordinance, code, rule, regulation, authorization, permit, judgment, decision, order, decree, or rule of common law which pertains to the Environment or any Hazardous Material and shall include, without limitation, the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., the Emergency Planning and Community Right-to-Know Act, 42 U.S.C. Section 11001, et seq., the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601, et seq., the National Environmental Policy Act, 42 U.S.C. Section 4331, et seq., the Oil Pollution Act, 33 U.S.C. Section 2701, et seq., the Rivers and Harbors Act of 1899, 33 U.S.C. Section 401, et seq., the Federal 5 Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. Section 136, et seq., the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Federal Water Pollution Control Act, 33 U.S.C. Section 1251, et seq., the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., the Safe Drinking Water Act, 42 U.S.C. 300f, et seq., the Arkansas Water and Pollution Control Act, Sec. 8-4-101, Arkansas Code, et seq., the Arkansas Solid Waste Management Act, Sec. 8-6-201, Arkansas Code, et seq., the Solid Waste Management and Recycling Fund Act, Sec. 8-6-601 Arkansas Code, et seq., the Hazardous Waste Management Act, Sec. 8-7-201, Arkansas Code, et seq., Arkansas Resource Reclamation Act of 1979, Sec. 8-7-301, Arkansas Code, et seq., the Emergency Response Fund Act, Sec. 8-7-401, Arkansas Code, et seq., the Remedial Action Trust Fund Act, Sec. 8-7-501, Arkansas Code, et seq. "Environmental Liabilities" - any liabilities for personal injury, property damage, fines, penalties, Remedial Action or other costs and expenses incurred in connection with any Environmental Law or Occupational Health and Safety Law, including those consisting of or relating to: (a) any disposal, discharge, Release or presence in the Environment of any Hazardous Material on, under or from the Facility; (b) any fine, penalty, judgment, award, settlement, legal or administrative proceeding, damages, loss, claim, demand or response, investigation, remedial or inspection cost or expense arising under any Environmental Law or Occupational Health and Safety Law; (c) financial responsibility under any Environmental Law or Occupational Health and Safety Law for cleanup costs or corrective action, including any investigation, cleanup, removal, containment or other remediation or response actions ("Cleanup") and for any natural resource damages; or (d) any other compliance, corrective, investigative, or remedial measure required under any Environmental Law or Occupational Safety and Health Law. The terms "removal," "remedial," and "response action" include the types of activities covered by the United States Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA). "ERISA" - Employee Retirement Income Security Act of 1974. 6 "Exchange Act" - the Securities Exchange Act of 1934. "Excluded Assets" - as defined in Section 2.2 "Facility" or "Facilities" - the Real Property and the Tangible Personal Property used or operated by Seller at the Real Property. "Facility Lease" - as defined in Section 2.7(a)(iii). "GAAP" - generally accepted accounting principles for financial reporting in the United States, as in effect from time to time, applied on a basis consistent with the basis on which the Balance Sheet and the other financial statements referred to in Section 3.4 were prepared. "Governing Documents" - with respect to any particular entity, (a) if a corporation, the articles or certificate of incorporation and the bylaws; (b) if a general partnership, the partnership agreement and any statement of partnership; (c) if a limited partnership, the limited partnership agreement and the certificate of limited partnership; (d) if a limited liability company, the articles of organization or certificate of formation and operating agreement; (e) if another type of Person, any other charter or similar document adopted or filed in connection with the creation, formation or organization of the Person; (f) all equityholders' agreements, voting agreements, voting trust agreements, joint venture agreements, registration rights agreements or other agreements or documents relating to the organization, management or operation of any Person or relating to the rights, duties and obligations of the equityholders of any Person; and (g) any amendment or supplement to any of the foregoing. "Governmental Authorization" - any Consent, license, registration or permit issued, granted, given or otherwise made available by or under the authority of any Governmental Body or pursuant to any Legal Requirement. "Governmental Body" - any: (a) nation, state, county, city, town, borough, village, district or other jurisdiction; (b) federal, state, local, municipal, or other government; 7 (c) governmental or quasi-governmental authority of any nature (including any agency, branch, department, board, commission, court, tribunal or other entity exercising governmental or quasi-governmental powers); (d) body exercising or legally entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power; or (e) official of any of the foregoing. "Greenville Property" - the real property and improvements thereon located at 451 4th Street, Greenville, Pennsylvania, formerly owned by GTC. "GTC" - Greenville Tube Corporation, an Arkansas corporation and wholly owned subsidiary of Member that until 1999 owned the Owned Real Property and operated the business currently operated by Seller. "GT Proceeding" - means the proceedings related to that certain Diversion Agreement. "Hazardous Material" - any substance, material or waste which is regulated by any Environmental Law, including any material, substance or waste which is defined as a "hazardous waste," "hazardous material," "hazardous substance," "extremely hazardous waste," "restricted hazardous waste," "pollution," "contaminant," "toxic waste" or "toxic substance" under any provision of Environmental Law, and including petroleum, petroleum products, asbestos, or asbestos-containing material, urea formaldehyde and polychlorinated biphenyls. "Hired Active Employees" - as defined in Section 10.1(b)(i) and listed on Exhibit 10.1(b)(i). "Improvements" - all buildings, structures, fixtures and improvements located on the Land. "Indemnified Person" - as defined in Section 11.9. "Indemnifying Person" - as defined in Section 11.9. "Intellectual Property Assets" - as defined in Section 3.25(a). 8 "Interim Balance Sheet" - as defined in Section 3.4 "Inventories" - all inventories of Seller, wherever located, including all finished goods, work in process, raw materials, spare parts and all other materials and supplies to be used or consumed by Seller in the production of finished goods. "Investor Group"-- C.F.B. Venture Fund I, Inc., MidStates Capital L.P., Diamond State Ventures Limited Partnership, Hickory Venture Capital Corporation, and Alpha Capital III SBIC, L.P., collectively. "IRS" - the United States Internal Revenue Service and, to the extent relevant, the United States Department of the Treasury. "Knowledge" - a named individual acting within the scope of his or her authority will be deemed to have Knowledge of a particular fact or other matter if: (a) the named individual is actually aware of that fact or matter; or (b) the named individual would discover such fact or matter after conducting a reasonable investigation (consistent with his or her duties) of the books and Records, and making reasonable inquiry of employees, agents, and representatives of Seller and the Prior Owner regarding the accuracy of an applicable representation or warranty contained in this Agreement. For the purposes of this Agreement, the term "named individual" shall mean Michael Biehl, Charles E. Downs, Richard L. Vareha, Harry R. Holstead, and Larry B. McGaslin. A Person (other than an individual) will be deemed to have Knowledge of a particular fact or other matter if any named individual who is serving as a director, officer, partner, or trustee of that Person (or in any similar capacity) has Knowledge of that fact or other matter (as set forth in (a) and (b) above), and any such individual will be deemed to have conducted a reasonably comprehensive investigation regarding the accuracy of the representations and warranties made herein by or about such Person. "Land" - all parcels and tracts of land in which Seller has an ownership or leasehold interest. 9 "Lease" - any Real Property lease or any lease or rental agreement, license, right to use or installment and conditional sale agreement to which Seller is a party, other than the Facility Lease, and any other Seller Contract pertaining to the leasing or use of any Tangible Personal Property. "Lease Assignment" - as defined in Section 2.7(a)(iii). "Leased Real Property" - the Land, Appurtenances located at 316 Hadley Road, Greenville, Pennsylvania 16125-9700, and the subject of the Office Lease. "Legal Requirement" - any federal, state, local, municipal, foreign or other constitution, law, ordinance, principle of common law, code, regulation, statute or treaty in existence prior to or as of the Closing Date. "Liability" - with respect to any Person, any liability or obligation of such Person of any kind, character or description, whether known or unknown, absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due, vested or unvested, executory, determined, determinable or otherwise, and whether or not the same is required to be accrued on the financial statements of such Person. "Marks" - as defined in Section 3.25(a)(i). "Material Consents" - as defined in Section 7.1. "Member" - Chart, Inc., a Delaware corporation that is a wholly owned subsidiary of Parent. "Occupational Safety and Health Law" - any Legal Requirement designed to provide safe and healthful working conditions and to reduce occupational safety and health hazards, including the Occupational Safety and Health Act. "Office Lease" - that certain Lease entered into in 1978, between Seller as lessee and Diane L. Frye as assignee of the original lessor, Gordon A. Frye, relating to the Leased Real Property, as amended. 10 "Office Lessor" - Diane L. Frye as assignee of the original lessor under the Office Lease. "Order" - any order, injunction, judgment, decree, ruling, assessment or arbitration award of any Governmental Body or arbitrator. "Ordinary Course of Business" - an action taken by a Person will be deemed to have been taken in the Ordinary Course of Business only if that action: (a) is consistent in all material respects in nature, scope and magnitude with the past practices of such Person and is taken in the ordinary course of the normal, day-to-day operations of such Person; and (b) does not require authorization by the board of directors, board of managers, shareholders, partners, or members of such Person (or by any Person or group of Persons exercising similar authority). "Owned Real Property" - the Land, Appurtenances, and Improvements located at 501 South Montgomery Street, Clarksville, Arkansas. "Parent" - Chart Industries, Inc. "Patents" - as defined in Section 3.25(a)(ii). "Permitted Encumbrances" - as defined in Section 3.9 and Part 3.9(a) of the Disclosure Schedule. "Petty Cash" - cash balances of Seller's accounts listed on Exhibit 2.3. "Person" - an individual, partnership, corporation, business trust, limited liability company, limited liability partnership, joint stock company, trust, unincorporated association, joint venture or other entity or a Governmental Body. "Prepaid Expenses" - all rights of Seller relating to deposits and prepaid expenses, claims for refunds and rights to offset in respect thereof. "Prior Owner" - as defined in the Recitals. "Proceeding" - any action, arbitration, audit, hearing, investigation, litigation or suit (whether civil, criminal, administrative, judicial or investigative whether public or private) 11 commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Body or arbitrator, including any agreement related to the resolution of any of the foregoing. "Promissory Note" as defined in Section 2.7(b)(ii) "Purchase Price" - as defined in Section 2.3. "Purchased Inventories" - as defined in Section 2.1(c). "Purchased Receivables" - as defined in Section 2.1(d). "Real Property" - the Owned Real Property and Leased Real Property, collectively. "Record" - information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form. "Related Person" - With respect to a particular individual: (a) each other member of such individual's Family; (b) any Person that is directly or indirectly controlled by any one or more members of such individual's Family; (c) any Person in which members of such individual's Family hold (individually or in the aggregate) a Material Interest; and (d) any Person with respect to which one or more members of such individual's Family serves as a director, officer, partner, executor or trustee (or in a similar capacity). With respect to a specified Person other than an individual: (a) any Person that directly or indirectly controls, is directly or indirectly controlled by or is directly or indirectly under common control with such specified Person; (b) any Person that holds a Material Interest in such specified Person; 12 (c) any person that serves as a director, officer, partner, executor or trustee of such specified Person (or in a similar capacity); (d) any Person in which such specified Person holds a Material Interest; and (e) any Person with respect to which such specified Person serves as a general partner or a trustee (or in a similar capacity). For purposes of this definition, (a) "control" (including "controlling," "controlled by," and "under common control with") means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and shall be construed as such term is used in the rules promulgated under the Securities Act; (b) the "Family" of an individual includes (i) the individual, (ii) the individual's spouse, (iii) any other natural person who is related to the individual or the individual's spouse within the second degree and (iv) any other natural person who resides with such individual; and (c) "Material Interest" means direct or indirect beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of voting securities or other voting interests representing at least twenty percent (20%) of the outstanding voting power of a Person or equity securities or other equity interests representing at least twenty percent (20%) of the outstanding equity securities or equity interests in a Person. "Release" - any release, spill, emission, leaking, pumping, pouring, dumping, emptying, injection, deposit, disposal, discharge, dispersal, leaching or migration on or into the Environment or into or out of any property. "Remedial Action" - all actions, including any capital expenditures, undertaken (a) to clean up, remove or treat any Hazardous Material; (b) to minimize the extent of a Release of any Hazardous Material so that it does not migrate or endanger or threaten to endanger public health or welfare or the Environment; (c) to perform studies and investigations of a Release of any Hazardous Material or post-remedial monitoring and care after such a Release of Hazardous Material has been cleaned up, removed, or treated; or (d) to correct all violations or alleged violations of Environmental Law that occurred prior to the Closing Date. 13 "Representative" - with respect to a particular Person, any director, officer, manager, employee, agent, consultant, advisor, accountant, financial advisor, investment banker, or legal counsel of that Person. "Retained Liabilities" - as defined in Section 2.4(b). "Sale Transaction" - as defined in the Earnout Agreement. "SEC" - the United States Securities and Exchange Commission. "Securities Act" - as defined in Section 3.3. "Seller" - as defined in the first paragraph of this Agreement. "Seller Contract" - any Contract (a) under which Seller has or may acquire any rights or benefits; (b) under which Seller has or may become subject to any obligation or liability; or (c) by which Seller or any of the assets owned or used by Seller is or may become bound. "Software" - all computer software and subsequent versions thereof, including source code, object, executable or binary code, objects, comments, screens, user interfaces, report formats, templates, menus, buttons and icons and all files, data, materials, manuals, design notes and other items and documentation related thereto or associated therewith, other than "off-the-shelf" software with a retail price of Two Hundred Dollars ($200.00) or less. "Subsidiary" - with respect to any Person (the "Owner"), any corporation or other Person of which securities or other interests having the power to elect a majority of that corporation's or other Person's board of directors or similar governing body, or otherwise having the power to direct the business and policies of that corporation or other Person (other than securities or other interests having such power only upon the happening of a contingency that has not occurred), are held by the Owner or one or more of its Subsidiaries. "Tangible Personal Property" - all machinery, equipment, tools, furniture, office equipment, computer hardware and peripherals, production equipment, supplies, materials, vehicles and other items of tangible personal property (other than Inventories) of every kind owned or leased by Seller (wherever located and whether or not carried on Seller's books), 14 together with any express or implied warranty by the manufacturer, seller, or lessor of any item or component part thereof and all maintenance records and other documents relating thereto. "Tax" - any income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, property, environmental, windfall profit, customs, vehicle, airplane, boat, vessel or other title or registration, capital stock, franchise, employees' income withholding, foreign or domestic withholding, social security, unemployment, disability, real property, personal property, sales, use, transfer, value added, alternative, add-on minimum and other tax, fee, assessment, levy, tariff, charge or duty of any kind whatsoever and any interest, penalty, addition or additional amount thereon imposed, assessed or collected by or under the authority of any Governmental Body or payable under any tax-sharing agreement or any other Contract. "Tax Return" - any return (including any information return), report, statement, schedule, notice, form, declaration, claim for refund or other document or information filed with or submitted to, or required to be filed with or submitted to, any Governmental Body in connection with the determination, assessment, collection or payment of any Tax or in connection with the administration, implementation or enforcement of or compliance with any Legal Requirement relating to any Tax. "TCE Contamination" - any trichloroethylene ("TCE"), 1,1,1-trichloroethane or any chemical to which they break down in the environment (such as 1,1-dichloroethane, 1,2-dichloroethene, and 1,1-dichloroethene) that was (i) present on or before the Closing Date on or at the Facilities (or present on any other property, if such TCE Contamination emanated from any Facility or the Greenville Property and was present on or emanated from any Facility or the Greenville Property, on or prior to the Closing Date) or (ii) Released by any Person on or at any Facilities, Assets, or the Greenville Property at any time on or prior to the Closing Date. "TCE Remedial Action" - any Remedial Action required pursuant to the ADEQ Consent Order. "Third Party" - a Person that is not a party to this Agreement. 15 "Third-Party Claim" - any claim against any Indemnified Person by a Third Party, including a claim made by a Governmental Body, whether or not involving a Proceeding. "Threat of Release" - a reasonable likelihood of a Release in violation of Environmental Law that would reasonably be likely to require action in order to prevent or mitigate damage to the Environment that may result from such Release. "Transaction Documents" - as defined in Section 2.2(j). "WARN Act" - as defined in Section 3.23(d). 1.2 USAGE (a) Interpretation. In this Agreement, unless a clear contrary intention appears: (i) the singular number includes the plural number and vice versa; (ii) reference to any Person includes such Person's successors and assigns but, if applicable, only if such successors and assigns are not prohibited by this Agreement, reference to a Person in a particular capacity excludes such Person in any other capacity or individually, and reference to a Person does not include the Person's predecessors unless specifically indicated to the contrary; (iii) reference to any gender includes each other gender; (iv) reference to any agreement, document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof; (v) reference to any Legal Requirement in any representation or warranty means such Legal Requirement as amended, modified, codified, replaced or reenacted, in whole or in part, and currently or previously in effect, including all currently or previously effective rules and regulations promulgated thereunder; (vi) "hereunder," "hereof," "hereto," and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Article, Section or other provision hereof; (vii) "including" (and with correlative meaning "include") means including without limiting the generality of any description preceding such term; 16 (viii) "or" is used in the inclusive sense of "and/or"; (ix) with respect to the determination of any period of time, "from" means "from and including" and "to" means "to but excluding"; and (x) references to documents, instruments or agreements shall be deemed to refer as well to all addenda, exhibits, schedules or amendments thereto. (b) Accounting Terms and Determinations. Unless otherwise specified herein, all accounting terms used herein shall be interpreted and all accounting determinations hereunder shall be made in accordance with GAAP. (c) Legal Representation of the Parties. This Agreement was negotiated by the parties with the benefit of legal representation, and any rule of construction or interpretation otherwise requiring this Agreement to be construed or interpreted against any party shall not apply to any construction or interpretation hereof. 2. SALE AND TRANSFER OF ASSETS; CLOSING. 2.1 Assets to be Sold Upon the terms and subject to the conditions set forth in this Agreement, at the Closing, but effective as of the Effective Time, Seller shall sell, convey, assign, transfer and deliver to Buyer, and Buyer shall purchase and acquire from Seller, free and clear of any Encumbrances other than Permitted Encumbrances, all of Seller's right, title and interest in and to all of Seller's property and assets, tangible and intangible, of every kind and description, wherever located, including the following (but excluding the Excluded Assets): (a) Petty Cash; (b) all Tangible Personal Property, including those items (including trade fixtures) described in Part 2.1(b) of the Disclosure Schedule; (c) all Inventories existing on the Closing Date, all of which are listed on Part 2.1(c) of the Disclosure Schedule (the "Purchased Inventory"); (d) all Accounts Receivable existing on the Closing Date other than those excluded under Section 2.2(l), all of which are listed on Part 2.1(d) of the Disclosure Schedule (the "Purchased Receivables"); (e) except as provided in Section 2.2(e), all Seller Contracts that are Assumed Contracts, all of which are listed in Part 3.20(a) of the Disclosure Schedule (including all outstanding offers or solicitations made by or to Seller to 17 enter into any Contract, all of which are also separately listed on Part 3.20(a) of the Disclosure Schedule); (f) all Governmental Authorizations and all pending applications therefor or renewals thereof, in each case to the extent transferable to Buyer, including those listed in Part 3.17(b) of the Disclosure Schedule; (g) other than any Records related to the Diversion Agreement or matters related to it, all data and Records related to the operations of Seller, including client and customer lists and Records, referral sources, research and development reports and Records, production reports and Records, service and warranty Records, equipment logs, operating guides and manuals, financial and accounting Records, creative materials, advertising materials, promotional materials, studies, reports, correspondence and other similar documents and Records and, subject to Legal Requirements, copies of all personnel Records and other Records described in Section 2.2(f); provided, however, that Seller may retain copies of such Records; (h) all of the intangible rights and property of Seller, including Intellectual Property Assets and the names "Greenville Tube, LLC," "Greenville Tube Corporation" and "Greenville Tube," going concern value, goodwill, telephone, telecopy and e-mail addresses and listings and those items listed in Parts 3.25(d), (e), (f) and (h) of the Disclosure Schedule; (i) all claims of Seller against third parties relating to the Assets, whether choate or inchoate, known or unknown, contingent or noncontingent, including all such claims listed in Part 2.1(i) of the Disclosure Schedule; and (j) all Prepaid Expenses, other than those listed in Parts 2.2(c) and 2.2(h) of the Disclosure Schedule. All of the property and assets to be transferred to Buyer hereunder are herein referred to collectively as the "Assets." Notwithstanding the foregoing, the transfer of the Assets pursuant to this Agreement shall not include the assumption of any Liability related to the Assets unless Buyer expressly assumes that Liability pursuant to Section 2.4(a). 2.2 Excluded Assets. Notwithstanding anything to the contrary contained in Section 2.1 or elsewhere in this Agreement, the following assets of Seller (collectively, the "Excluded Assets") are not part of the sale and purchase contemplated hereunder, are excluded from the Assets and shall remain the property of Seller after the Closing: (a) the Owned Real Property, subject to the rights of Buyer under the Facility Lease; 18 (b) all minute books, equity security Records, company seals, and Records related to the Member's capital contributions to the Seller; (c) those rights relating to the deposits and prepaid expenses and claims for refunds and rights to offset in respect thereof listed in Part 2.2(c) of the Disclosure Schedule; (d) all insurance policies and rights thereunder; (e) each of the Seller Contracts (including any and all software licenses which are not assignable) that is not an Assumed Contract, including, without limitation, those listed in Part 2.2(e) of the Disclosure Schedule, and any employment, severance, termination, salary continuation, retention, stay-bonus, or similar agreements with Seller's employees; (f) all personnel Records and other Records that Seller is required by law to retain in its possession; (g) all Tax assets; (h) all claims for refund of Taxes and other governmental charges listed on Part 2.2(h) of the Disclosure Schedule; (i) all rights in connection with and assets of the Employee Plans; (j) all rights of Seller under this Agreement, the Earnout Agreement, the Facility Lease, the Bill of Sale, the Assignment and Assumption Agreement, the Lease Assignment, Assignment of Intellectual Property, Noncompetition Agreement, the Subordination Agreement, the Buyer Subordination Agreement, the Promissory Note, and the Contingent Note, (collectively, the "Transaction Documents"); (k) except as otherwise agreed by Buyer and Seller, all insurance benefits, insurance policies and all prepaid insurance premiums of Seller; (l) all accounts receivable from the Member or any Related Person of Seller or the Member; (m) that certain Agreement for Pre-Trial Diversion executed by Seller on July 2, 2002 in connection with the GT Proceeding and any other agreement, instrument, or document associated therewith (collectively, the "Diversion Agreement"); (n) the ADEQ Consent Order and all other agreements of Seller and its Affiliates with the ADEQ; (o) all of Seller's cash, cash equivalents, and short term investments (except Petty Cash); and 19 (p) any and all rights in or to the names "Chart," "Chart Industries," or any derivative thereof. 2.3 Consideration. The consideration for the Assets (the "Purchase Price") will be (a) Fifteen Million Five Hundred Thousand Dollars ($15,500,000.00) plus the amount of Petty Cash plus or minus the Adjustment Amount and (b) the assumption of the Assumed Liabilities. In accordance with Section 2.7(b), at the Closing, the Purchase Price, prior to adjustment on account of the Adjustment Amount, shall be delivered by Buyer to Seller as follows: (a) Thirteen Million Four Hundred Fifty Thousand Dollars ($13,450,000.00) by wire transfer; (b) One Million Nine Hundred Fifty Thousand Dollars ($1,950,000.00) payable in the form of the Promissory Note; (c) a check in the amount of the Petty Cash; and (d) the balance of the Purchase Price by the execution and delivery of the Assignment and Assumption Agreement. The Adjustment Amount shall be paid in accordance with Section 2.8. As additional consideration for the Assets, Seller may receive additional payments resulting from the adjustments to the Promissory Note that may occur pursuant to the Earnout Agreement identified in Section 2.7(a)(xii). Not included in the Purchase Price are amounts that may become payable under the Earnout Agreement and Contingent Note. 2.4 Liabilities. (a) Assumed Liabilities. On the Closing Date, but effective as of the Effective Time, Buyer shall assume and agree to discharge only the following Liabilities of Seller (the "Assumed Liabilities"): (i) any trade account payable listed on Part 2.4(a)(i) of the Disclosure Schedule (other than a trade account payable to the Member, Parent or a Related Person of Seller, Parent, or the Member); (ii) any unpaid accrued expenses of the kind described on Part 2.4(a)(ii) of the Disclosure Schedule; (iii) any Liability to Seller's customers incurred by Seller in the Ordinary Course of Business for nondelinquent orders outstanding as of the Effective Time reflected on Seller's books (other than any Liability arising out of or relating to a Breach that occurred prior to the Effective Time); (iv) any Liability to Seller's customers under written warranty agreements in the forms disclosed in Part 2.4(a)(iv) of the Disclosure Schedule given by Seller to its customers in the Ordinary Course of Business prior to the Effective Time (other than a Liability arising out of or relating to a Breach that occurred before the Effective Time); and (v) any Liability arising after the Effective Time under the Assumed Contracts (other than any Liability arising under the Seller 20 Contracts described on Part 2.4(a)(v) of the Disclosure Schedule or arising out of or relating to a Breach that occurred prior to the Effective Time). (b) Retained Liabilities. The Retained Liabilities shall remain the sole responsibility of and shall be retained, paid, performed and discharged solely by Seller. "Retained Liabilities" shall mean every Liability of Seller other than the Assumed Liabilities, including: (i) any Liability arising out of or relating to products of Seller to the extent manufactured or sold prior to the Effective Time other than to the extent assumed under Section 2.4(a)(iii), (iv) or (v) and Buyer's obligations under Section 11.2(d); (ii) any Liability under any Assumed Contract that arises after the Effective Time but that arises out of or relates to any Breach that occurred prior to the Effective Time; (iii) any Liability for Taxes not specifically assumed under Section 2.4(a), including (A) any Taxes arising as a result of Seller's or the Prior Owner's operation of its business or ownership of the Assets before the Effective Time, (B) any Taxes that will arise, as a result of the sale of the Assets pursuant to this Agreement but excluding Taxes relating to the transfer and registration of any vehicles included in the Assets listed on Part 2.4(b)(iii) of the Disclosure Schedule that Buyer will assume and pay, and (C) any deferred Taxes of any nature; (iv) any Liability (including interest) under any Seller Contract (other than the Assumed Contracts), including any Liability arising out of or relating to Seller's credit facilities or any security interest related thereto or any liability under any retention or salary continuation agreement with employees of Seller; (v) any Environmental Liabilities of Seller or any of its Related Persons that relate to acts, omissions or the condition of the Facilities or any other property on or prior to the Closing Date; (vi) any Liability arising out of, or relating to Seller's failure to comply with the ADEQ Consent Order; (vii) any Liability of Seller or any of its Related Persons under the Employee Plans (including liability for any underfunding and accrued expenses for group insurance) or relating to sick leave, workers' compensation, unemployment benefits, pension benefits, employee equity security option or profit-sharing plans, health care plans or benefits or any other employee plans or benefits of any kind (including payment of all life insurance premiums and life 21 insurance death benefits relating to all life insurance policies offered by Seller, whether Seller is self-insured for the same or not, including, without limitation, those set forth on Part 3.32(b) of the Disclosure Schedule) for Seller's employees or former employees or both; (viii) any Liability of Seller or any of its Related Persons under any employment, severance, retention, stay bonus, salary continuation, or termination agreement with any employee of Seller or any of its Related Persons; (ix) any Liability of Seller or any of its Related Persons arising out of or relating to any employee grievance with respect to any period before the Effective Time; (x) any Liability of Seller to the Member or Related Person of Seller or the Member; (xi) any Liability of Seller or any of its Related Persons to indemnify, reimburse or advance amounts to any officer, manager, employee or agent of Seller; (xii) any Liability of Seller to distribute to the Member or otherwise apply all or any part of the consideration received hereunder; (xiii) any Liability of Seller or any of its Related Persons arising out of any Proceeding pending as of the Effective Time (including the GT Proceeding or the Diversion Order); (xiv) any Liability of Seller or any of its Related Persons arising out of any Proceeding commenced after the Effective Time and arising out of or relating to any occurrence or event happening before the Effective Time, with the exception of any such Liability of Seller arising as a result of Buyer's failure to perform or satisfy any Assumed Liability; (xv) any Liability of Seller or any of its Related Persons arising out of or resulting from Seller's compliance or noncompliance with any Legal Requirement or Order of any Governmental Body arising from, or related to, operation of the Business by Seller or the Prior Owner during the period prior to the Closing Date; (xvi) any Liability of Seller or any of its Related Persons under this Agreement or any other document executed in connection with the Contemplated Transactions; 22 (xvii) any other Liability (other than an Assumed Liability) arising out of the ownership or operation of the Assets or the Facility before the Effective Time; (xviii) any Liability of Seller or any of its Related Persons based upon Seller's or such Related Person's acts or omissions occurring after the Effective Time; (xix) any Liability not specified in this Section 2.4(b) and excluded from assumption under Sections 2.4(a)(i)-(v); and (xx) accrued expenses payable to or on behalf of the Member or a Related Person of the Seller or Member. 2.5 Allocation. The Purchase Price shall be allocated in accordance with Exhibit 2.5. After the Closing, the parties shall make consistent use of the allocation, fair market value and useful lives specified in Exhibit 2.5 for all Tax purposes and in all filings, declarations and reports with the IRS and other taxing authorities in respect thereof, including the reports required to be filed under Section 1060 of the Code. Buyer shall prepare and deliver IRS Form 8594 to Seller within sixty-five (65) days after the Closing Date for Seller's review and agreement, which shall not be unreasonably denied, withheld, or delayed, and the parties agree to each file a Form 8594 with the IRS following such form, except to the extent that they mutually agree to any changes to such form. Amounts payable under the Earnout Agreement or Contingent Note shall be allocated to goodwill if they are treated as part of the Purchase Price. In any Proceeding related to the determination of any Tax, neither Buyer nor Seller shall contend or represent that such allocation is not a correct allocation. 2.6 Closing. The purchase and sale provided for in this Agreement (the "Closing") will take place at the offices of Husch & Eppenberger, LLC, 190 Carondelet Plaza, Suite 600, St. Louis, Missouri 63105, commencing at 9:00 a.m. (local time) on July 1, 2003, unless Buyer and Seller otherwise agree. 2.7 Closing Obligations. In addition to any other documents to be delivered under other provisions of this Agreement, at the Closing: (a) Seller shall deliver to Buyer the following: (i) a bill of sale for all of the Assets that are Tangible Personal Property in the form of Exhibit 2.7(a)(i) (the "Bill of Sale") executed by Seller; 23 (ii) an assignment of all of the Assets that are intangible personal property other than Intellectual Property Assets in the form of Exhibit 2.7(a)(ii), which assignment shall also contain Buyer's undertaking and assumption of the Assumed Liabilities (the "Assignment and Assumption Agreement") executed by Seller; (iii) for each interest in Real Property identified on Parts 3.7 and 3.8 of the Disclosure Schedule, (x) a lease and memorandum of Lease in the form of Exhibit 2.7(a)(iii)(x) (collectively, the "Facility Lease") executed by Seller, (y) an Assignment and Assumption of Lease in the form of Exhibit 2.7(a)(iii)(y) (the "Lease Assignment"), or (z) such other appropriate document or instrument of transfer, as the case may require, each in form and substance satisfactory to Buyer and its counsel and executed by Seller; (iv) assignments of all Intellectual Property Assets and separate assignments of all registered Marks, Patents and Copyrights in the forms set forth in Exhibit 2.7(a)(iv) executed by Seller; (v) a Registrant Name Change Agreement, executed by Seller, transferring the right to the website www.greenvilletube.com to Buyer, in the form of Exhibit 2.7(a)(v); (vi) such other bills of sale, assignments, certificates of title, documents and other instruments of transfer and conveyance as may reasonably be requested by Buyer, each in form and substance satisfactory to Buyer and its legal counsel and executed by Seller; (vii) noncompetition agreement in the form of Exhibit 2.7(a)(vii), executed by Seller, Member, and Parent (the "Noncompetition Agreement"); (viii) evidence satisfactory to Buyer of the termination of the employment agreements and salary continuation agreements listed on Exhibit 2.7(a)(viii), on terms and conditions satisfactory to Seller; (ix) a Guaranty in the form attached to this Agreement, executed by Member and Parent; (x) a certificate of the Secretary of Seller certifying, as complete and accurate as of the Closing, attached copies of the Governing Documents of Seller, certifying and attaching all requisite resolutions or actions of Seller's sole manager and Member approving the execution and delivery of this Agreement and the consummation of the Contemplated Transactions and the change of Seller's name to GTC of Clarksville, LLC, and certifying to the 24 incumbency and signatures of the officers of Seller executing this Agreement and any other document relating to the Contemplated Transactions and accompanied by the requisite documents for amending the relevant Governing Documents of Seller required to effect such change of name in form sufficient for filing with the appropriate Governmental Body; (xi) a certificate of the Secretary of the Member certifying as complete and accurate as of the Closing attached copies of the Governing Documents of the Member, certifying and attaching requisite resolutions of the Member's board of directors approving the execution and delivery of this Agreement and the other agreements and documents relating to the Contemplated Transactions to be executed and delivered by the Member, and certifying to the incumbency and signatures of the officers of the Member executing this Agreement and any other agreements or documents relating to the Contemplated Transactions; (xii) an Earnout Agreement in the form of Exhibit 2.7(a)(xii) executed by Seller (the "Earnout Agreement"); (xiii) the consent of the lessor to the Lease Assignment of the Office Lease and the consent of any other lessor to the Lease Assignment of any other Leased Real Property; (xiv) an owner's affidavit related to the Owned Real Property in the form of Exhibit 2.7(a)(xiv) executed by Seller; (xv) such affidavits as the issuer(s) of the title insurance policies specified in Section 7.3 may require; (xvi) Consents, where required, of the other contracting Persons to the Assumed Contracts; (xvii) A subordination agreement with the Buyer's senior secured lender (or the agent thereof) (the "Subordination Agreement") executed by Seller; (xviii) A subordination agreement with Buyer (the "Buyer Subordination Agreement") executed by Seller; (xix) Nineteen Thousand Eight Hundred Eighty One Dollars Fifty-five Cents Dollars ($19,881.55), representing an amount equal to fifty percent (50%) of the fee payable by Buyer for the Phase II assessment conducted by Buyer pursuant to an Access Agreement between Seller and Capital for Business, Inc., dated December 9, 2002, which amount has been paid to Buyer through a reduction in 25 the amount to be wire transferred to Seller under Section 2.7(b)(i); and (xx) Such other agreements, documents, and instruments as Buyer may reasonably request, including, without limitation, certificates of good standing of Seller, Member, and Parent in their states of incorporation, Certificate of Seller's good standing as a foreign corporation in the States of Arkansas and Pennsylvania, and Certificates of no tax due for Seller in the States of Arkansas and Pennsylvania. (b) Buyer shall deliver to Seller and Member, as the case may be: (i) Thirteen Million Four Hundred Fifty Thousand Dollars ($13,450,000.00) by wire transfer to the account set forth on Part 2.7(b)(i) of the Disclosure Schedule; (ii) A promissory note executed by Buyer and payable to Seller in the principal amount of One Million Nine Hundred Fifty Thousand Dollars ($1,950,000.00) in the form of Exhibit 2.7(b)(ii) (the "Promissory Note"); (iii) the Assignment and Assumption Agreement executed by Buyer; (iv) the Facility Lease executed by Buyer (v) the Lease Assignment executed by Buyer; (vi) the Noncompetition Agreement executed by Buyer; (vii) the Buyer Subordination Agreement executed by the Buyer; (viii) a certificate of the Secretary of Buyer certifying, as complete and accurate as of the Closing, attached copies of the Governing Documents of Buyer and certifying and attaching all requisite resolutions or actions of Buyer's board of directors approving the execution and delivery of this Agreement and the consummation of the Contemplated Transactions and certifying to the incumbency and signatures of the officers of Buyer executing this Agreement and any other document relating to the Contemplated Transactions; (ix) an Earnout Agreement in the form of Exhibit 2.7(a)(xii) executed by Buyer; (x) Buyer check in the amount of the Petty Cash; and (xi) Copies of (i) certificate of good standing of Buyer in Delware, (ii) certificate of good standing of Buyer as a foreign corporation in 26 Arkansas, and (iii) such other state certificates as Buyer simultaneously provides to LaSalle Business Credit, LLC. 2.8 Adjustment Amount and Payment. The "Adjustment Amount" (which may be a positive or negative number) will be equal to the amount determined by subtracting the Closing Working Capital from Seven Million Five Hundred Twenty-Seven Thousand Seven Hundred Eighty Four Dollars ($7,527,784). If the Adjustment Amount is positive, the Adjustment Amount shall be paid by Seller first by reduction of the principal balance of the Promissory Note by such amount to fund payment of the Adjustment Amount and second, by wire transfer to an account specified by Buyer in the amount by which the Adjustment Amount exceeds the principal amount of the Promissory Note. If the Adjustment Amount is negative, the difference between the Closing Working Capital and Seven Million Five Hundred Twenty-Seven Thousand Seven Hundred Eighty Four Dollars ($7,527,784) shall be paid by increasing the principal balance of the Promissory Note by the amount of such Adjustment Amount. Within three (3) business days after the calculation of the Closing Working Capital becomes binding and conclusive on the parties pursuant to Section 2.9, the applicable reduction or increase of the principal balance of the Promissory Note, if any, shall automatically be effective and Seller shall make any wire transfer payment provided for in this Section 2.8. 2.9 Adjustment Procedure. (a) "Working Capital" as of a given date shall mean the amount calculated by subtracting (i) the sum on such date of Seller's (1) trade accounts payable and listed on Part 2.4(a)(i) of the Disclosure Schedule, (2) accrued expenses specified in Section 2.4(a)(ii) and set for on Part 2.4(a)(ii) of the Disclosure Schedule, and (3) advances to its customers arising in the Ordinary Course of Business from (ii) the sum on such date of (1) the Purchased Receivables, (2) Prepaid Expenses and (3) the Purchased Inventory. Deferred Taxes shall not be included in items 1 through 3 of clause (ii) above. All amounts payable to or receivable from Related Persons of the Seller shall be excluded from the calculation of Working Capital on any date. Seller's cash, cash equivalents, and short term investments shall not be included in the computation of Working Capital. In computing Working Capital, there shall be no accruals for product warranty or product return claims, and the parties shall include in accrued employee expenses only accruals for the Hired Active Employees that Buyer specifies on the Closing Date as employees it expects to hire. Accrued employee expenses shall not include accruals of retention bonuses or payments or amounts payable to pension or other retirement plans to which Seller contributes. Neither the Purchased Receivables nor the Purchased Inventory shall be subject to any reserves. (b) Buyer shall prepare financial statements ("Closing Financial Statements") of Seller as of the Effective Time in accordance with the accounting principles, policies and practices historically used by Seller and set forth 27 on Exhibit 2.9. Buyer shall then determine the Working Capital as of the Effective Time (the "Closing Working Capital") based upon the Closing Financial Statements and using the methodology specified in Section 2.9(a) and Exhibit 2.9. Buyer shall deliver the Closing Financial Statements and its determination of the Closing Working Capital to Seller within sixty (60) days following the Closing Date. (c) If, within thirty (30) days following delivery of the Closing Financial Statements and the Closing Working Capital calculation, Seller has not given Buyer written notice of its objection as to the Closing Working Capital calculation (which notice shall state the basis of Seller's objection in reasonable detail), then the Closing Working Capital calculated by Buyer shall be binding and conclusive on the parties and be used in computing the Adjustment Amount. (d) If Seller duly gives Buyer such notice of objection, and if Seller and Buyer fail to resolve the issues outstanding with respect to the Closing Financial Statements and the calculation of the Closing Working Capital within thirty (30) days of Buyer's receipt of Seller's objection notice, Seller and Buyer shall submit the issues remaining in dispute to Grant Thornton LLP in Chicago, Illinois, (the "Independent Accountants") for resolution applying the principles, policies and practices referred to in Section 2.9(a) and Exhibit 2.9. If issues are submitted to the Independent Accountants for resolution, (i) Seller and Buyer shall furnish or cause to be furnished to the Independent Accountants such work papers and other documents and information relating to the disputed issues as the Independent Accountants may request and are available to that party or its agents and shall be afforded the opportunity to present to the Independent Accountants any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (ii) the determination by the Independent Accountants, as set forth in a notice to be delivered to both Seller and Buyer within sixty (60) days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the parties and shall be used in the calculation of the Closing Working Capital; and (iii) Seller and Buyer will each bear fifty percent (50%) of the fees and costs of the Independent Accountants for such determination. Set forth on Exhibit 2.9.1 is a calculation of the estimated Working Capital of Seller as of June 30, 2003. 2.10 Consents. (a) If there are any Material Consents that have not yet been obtained (or otherwise are not in full force and effect as of the Closing, in the case of each Seller Contract as to which such Material Consents were not obtained (or otherwise are not in full force and effect) (the "Restricted Material Contracts"), Buyer may waive the closing conditions as to any such Material Consent and either: 28 (i) elect to have Seller continue its efforts to obtain the Material Consents; or (ii) elect to have Seller retain that Restricted Material Contract and all Liabilities arising therefrom or relating thereto. If Buyer elects to have Seller continue its efforts to obtain any Material Consents, notwithstanding Sections 2.1 and 2.4, neither this Agreement nor the Assignment and Assumption Agreement nor any other document related to the consummation of the Contemplated Transactions shall constitute a sale, assignment, assumption, transfer, conveyance or delivery or an attempted sale, assignment, assumption, transfer, conveyance or delivery of the Restricted Material Contracts, and following the Closing, the parties shall use Best Efforts, and cooperate with each other, to obtain the Material Consent relating to each Restricted Material Contract as quickly as practicable. Pending the obtaining of such Material Consents relating to any Restricted Material Contract, the parties shall cooperate with each other in any reasonable and lawful arrangements designed to provide to Buyer the benefits of use of the Restricted Material Contract for its term (or any right or benefit arising thereunder, including the enforcement for the benefit of Buyer of any and all rights of Seller against a third party thereunder). Once a Material Consent for the sale, assignment, assumption, transfer, conveyance and delivery of a Restricted Material Contract is obtained, Seller shall promptly assign, transfer, convey and deliver such Restricted Material Contract to Buyer, and Buyer shall assume the obligations under such Restricted Material Contract assigned to Buyer from and after the date of assignment to Buyer pursuant to a special-purpose assignment and assumption agreement substantially similar in terms to those of the Assignment and Assumption Agreement (which special-purpose agreement the parties shall prepare, execute and deliver in good faith at the time of such transfer, all at no additional cost to Buyer). (b) If there are any Consents not listed on Exhibit 7.1 necessary for the assignment and transfer of any Assumed Contracts (the "Nonmaterial Consents") which have not yet been obtained (or otherwise are not in full force and effect) as of the Closing, Buyer shall elect at the Closing, in the case of each of the Seller Contracts as to which such Nonmaterial Consents were not obtained (or otherwise are not in full force and effect) (the "Restricted Nonmaterial Contracts"), whether to: (i) Accept the assignment of such Restricted Nonmaterial Contract, in which case, as between Buyer and Seller, such Restricted Nonmaterial Contract shall, to the maximum extent practicable and notwithstanding the failure to obtain the applicable Nonmaterial Consent, be transferred at the Closing pursuant to the Assignment 29 and Assumption Agreement as elsewhere provided under this Agreement; or (ii) Reject the assignment of such Restricted Nonmaterial Contract, in which case, notwithstanding Sections 2.1 and 2.4, (A) neither this Agreement nor the Assignment and Assumption Agreement nor any other document related to the consummation of the Contemplated Transactions shall constitute a sale, assignment, assumption, conveyance or delivery or an attempted sale, assignment, assumption, transfer, conveyance or delivery of such Restricted Nonmaterial Contract, and (B) Seller shall retain such Restricted Nonmaterial Contract and all Liabilities arising therefrom or relating thereto. 2.11 Accounts Receivable. Following the Closing, Buyer shall use its Best Efforts in the Ordinary Course of Business to collect the Purchased Receivables, provided, that, Buyer shall not be required to commence litigation to collect any of the Purchased Receivables. If during the ninety (90) days following the Closing Seller receives any payment on a Purchased Receivable, Seller shall give Buyer notice of such receipt and promptly pay the amount received to an account specified by Buyer. If Buyer receives a payment from an account debtor for which there is an outstanding account receivable both before and after the Closing Date, such payment shall be applied to the oldest outstanding invoice(s) not in dispute. Buyer shall not encourage any account debtor to dispute any Purchased Receivable or otherwise offer future discounts with respect to the nonpayment or dispute of any Purchased Receivable. If after the close of business on the ninetieth (90th) day (or if such day is not a Business Day, the close of business on the next following Business Day) after the Closing (including the Closing Date) any of the Purchased Receivable remain outstanding and uncollected in whole or in part, Buyer may give Seller notice of those Purchased Receivables (the "Resale Receivables") that Buyer will assign to Seller and Seller will purchase from Buyer. Buyer will give such notice no later than the close of business on the one hundredth (100th) day (or if such day is not a Business Day, the close of business on the next following Business Day) after the Closing, with the notice to identify the Resale Receivable by payor and the amount payable. Within three (3) Business Days after the date of the notice, Buyer shall assign the Resale Receivables to Seller, and Seller shall pay Buyer the outstanding amount payable of the Resale Receivables, provided, that if Buyer collects any Resale Receivables before such assignment, Buyer shall retain the amount collected and shall not assign the collected Resale Receivables to Seller. 2.12 Contingent Note. Seller shall be entitled to receive additional contingent payments (the "Contingent Amount") up to a maximum of $500,000 ("Maximum Contingent Amount") based on the EBITDA of the Core Business for the twelve-month period ending December 31, 2003. (the "Contingent Measurement Period"). If the EBITDA of the Core Business for the Contingent Measurement Period ending December 31, 2003 exceeds Three Million Two Hundred Thousand Dollars ($3,200,000) (the "2003 Target EBITDA"), Seller shall be entitled to receive seventy one percent 30 (71%) of such excess, if any (the "2003 Contingent Amount") up to an aggregate amount of $500,000. For the months of calendar year 2003 that the Business is owned by Seller prior to Closing, the EBITDA in those months will be adjusted by amounts that are identified as excessive or nonessential allocations from Member or Parent to Seller and agreed upon by Buyer and Seller, provided that Buyer and Seller agree that the aggregate EBITDA for January through June 2003 was $1,039,500.00. The 2003 Contingent Amount, if any, shall become a note in substantially the form of Exhibit 2.12 (the "Contingent Note") hereto with the principal amount due in equal amounts at the end of forty-eight (48) months from Closing and sixty (60) months from Closing. The Contingent Note shall bear an annual interest rate of six percent (6.0%) beginning January 1, 2004. The interest on the Contingent Note will accrue during 2004, and will be paid in cash annually the third (3rd), fourth (4th), and fifth (5th) years after the Closing. If the Contingent Note is required, Buyer shall deliver it, executed by Buyer, to Seller within thirty (30) days after the Buyer receives its audited financial statements for the fiscal year ending December 31, 2003. In no event shall the aggregate Contingent Amount payable to Seller hereunder exceed the Maximum Contingent Amount. The Buyer's independent public accountants will determine the EBITDA of the Core Business for the Contingent Measurement Period in accordance with Exhibit 2.12 as consistently applied by Seller to the Core Business. The computation of EBITDA shall be conducted in accordance with Section 4.1 of the Earnout Agreement. Buyer will deliver a report setting out the computation of EBITDA to Seller for review, and unless Seller notifies Buyer within thirty (30) days after receipt of the report that it objects to the computation, the report shall be binding and conclusive for the purposes of this Agreement. If Seller gives Buyer notice of its objection to the computation of EBITDA within the thirty (30) day period, the amount of EBITDA for the Contingent Measurement Period shall be determined by negotiation between Seller and Buyer. If Seller and Buyer are unable to reach agreement within thirty (30) business days after such notification, the determination of the amount of EBITDA for the Contingent Measurement Period shall be submitted to a mutually agreeable third-party firm of independent certified public accountants for determination, whose determination shall be binding and conclusive on the parties. All transactions between or among the Core Business or Buyer or Buyer's Affiliates shall be on term and conditions no less favorable to the Core Business than those available through comparable transactions with third parties. Seller represents and warrants to Buyer that all transactions between or among the Core Business and Seller or Seller's Affiliates in 2003 before the Closing have been no less favorable to the Core Business than those available through comparable transactions with third parties. 2.13 Termination of Promissory Note If Parent, or any of its U.S. or foreign subsidiaries, including Seller, is a debtor in any proceeding under Title 11 of the United States Code (the "Bankruptcy Code") or any similar reorganization or liquidation statute in any foreign jurisdiction ("Foreign Insolvency Law") where any of the following occur: (a) the environmental indemnity obligations set forth in (i) Section 11.3 of this Agreement or (ii) Section 11.2 of this Agreement with respect to Section 3.22 of the Asset Purchase Agreement, to the extent not addressed by Section 11.3(b) (collectively the "Indemnity Obligations") are rejected under Section 365 of the Bankruptcy Code or a similar provision under any Foreign Insolvency Law, or (b) any of the debtors in such a proceeding propose a plan of reorganization that seeks to impair or alter any of the Indemnity Obligations, the Buyer's obligation to make any remaining payments under the Promissory Note and Contingent Note, if any, shall terminate and the Buyer shall not thereafter be in default under the Promissory Note or Contingent Note, if any. 31 3. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and warrants to Buyer as follows: 3.1 Organization and Good Standing; Name. (a) Part 3.1(a) of the Disclosure Schedule contains a complete and accurate list of Seller's jurisdiction of organization and any other jurisdictions in which Seller is qualified to do business as a foreign entity. Seller is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, with full power and authority to conduct its business as it is now being conducted, to own or use the properties and assets that it purports to own or use, and to perform all its obligations under the Seller Contracts. Seller is duly qualified to do business as a foreign entity and is in good standing under the laws of each state or other jurisdiction in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such qualification, except for the failure to be so qualified would not have a material adverse affect on Seller. (b) Complete and accurate copies of the Governing Documents of Seller as currently in effect, are attached to Part 3.1(b) of the Disclosure Schedule. (c) Seller does not have any Subsidiaries and does not, directly or indirectly, own any shares of capital stock or other securities of any other Person. (d) Since January 1, 1998, the Business has been operated only under the names "Greenville Tube," "Greenville Tube, LLC," and the "Greenville Tube division of Chart, Inc." 3.2 Enforceability; Authority; No Conflict. (a) This Agreement constitutes the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar Legal Requirements affecting creditors' rights generally and by general principles of equity or the fact that specific performance or other equitable remedies are within the discretion of any court. Upon the execution and delivery by Seller, Parent, and Member of each Transaction Document to which it is a party by Seller, Parent, or the Member each Transaction Document will constitute the legal, valid and binding obligation of each of Seller, Parent, or the Member, as the case may be, enforceable against each of them in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar Legal Requirements affecting creditors' rights generally and by general principles of equity or the fact that specific performance or other equitable remedies are within the discretion of any court. Seller has the absolute 32 and unrestricted right, power and authority to execute and deliver this Agreement and the Transaction Documents to which it is a party and to perform its obligations under this Agreement and such Transaction Documents, and such action has been duly authorized by all necessary action by Member and Seller's board of managers. (b) Except as set forth in Part 3.2(b) of the Disclosure Schedule, neither the execution and delivery of this Agreement nor the consummation or performance of any of the Contemplated Transactions will, directly or indirectly (with or without notice or lapse of time): (i) Breach (A) any provision of any of the Governing Documents of Seller (B) any resolution adopted by the board of managers or Seller; (ii) Breach or give any Governmental Body or other Person the right to challenge any of the Contemplated Transactions or to exercise any remedy or obtain any relief under any Legal Requirement or any Order to which Seller or any of the Assets may be subject; (iii) contravene, conflict with or result in a violation or breach of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate or modify, any Governmental Authorization that is held by Seller or any of its Subsidiaries or that otherwise relates to the Assets or to the business of Seller or any of its Subsidiaries; (iv) Breach any provision of, or give any Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or payment under, or to cancel, terminate or modify, any Assumed Contract; or (v) result in the imposition or creation of any Encumbrance upon or with respect to any of the Assets, (other than Encumbrances to be imposed in connection with Buyer's financing of the Contemplated Transaction). (c) Except as set forth in Part 3.2(c) of the Disclosure Schedule, Seller is not required to give any notice to or obtain any Consent from any Person in connection with the execution and delivery of this Agreement or the consummation or performance of any of the Contemplated Transactions. 3.3 Capitalization. All of the equity interests in Seller are owned by Member, free and clear of all Encumbrances. There are no Contracts relating to the issuance, sale or transfer of any equity interests in other securities of Seller. Seller has no Subsidiaries. 3.4 Financial Statements. Seller has delivered to Buyer: (a) an unaudited consolidated balance sheet of Seller as at December 31, 2002 (including the notes, if any, 33 thereto, the "Balance Sheet"), and the related consolidated unaudited statements of income and cash flows for the fiscal year then ended; (b) unaudited consolidated balance sheets of Seller as at December 31, in each of the fiscal years 1999 through 2001, and the related unaudited consolidated statements of income and cash flows for each of the fiscal years then ended; and (c) an unaudited consolidated balance sheet of Seller as at May 31, 2003 (the "Interim Balance Sheet") and the related unaudited consolidated statements of income and cash flows for the five (5) months then ended, certified by Seller's chief financial officer. Such financial statements fairly present in all material respects the financial condition and the results of operations, changes in Member's equity and cash flows of Seller as at the respective dates of and for the periods referred to in such financial statements, all in accordance with GAAP, except (i) normal year-end adjustments that individually and in the aggregate would not be material (ii) the omission of footnote disclosure required by GAAP, and (iii) the practices disclosed in Part 3.4 of the Disclosure Schedule. Except as set forth in Part 3.4 of the Disclosure Schedule, the financial statements referred to in this Section 3.4 reflect and will reflect the consistent application of such accounting principles throughout the periods involved, except as disclosed in the notes to such financial statements. The financial statements have been prepared from and are in accordance with the accounting Records of Seller. Seller has also delivered to Buyer copies of the portions of all letters related to Seller or its financial condition, results of operations, financial statements, books of account, or internal controls from Member's auditors to Member or its parent corporation or the audit committee of its or its parent's board of directors during the thirty-six (36) months preceding the execution of this Agreement, together with copies of all responses thereto. 3.5 Books and Records. The books of account and other financial Records of Seller and the Prior owner with respect to the Business all of which have been made available to Buyer, are complete and correct and represent actual, bona fide transactions and have been maintained in accordance with sound business practices, including the maintenance of an adequate system of internal controls. The minute books of Seller and the Prior Owner with respect to the Business for the period commencing January 1, 2000, to the Closing Date, all of which have been made available to Buyer, contain accurate and complete Records of all meetings held of, and action taken by, the member and manager of Seller and shareholders and boards of directors of the Prior Owner, and no meeting of any such member or board of managers of the Seller or boards of directors or shareholders of the Prior Owner has been held for which minutes have not been prepared or are not contained in such minute books. 3.6 Sufficiency of Assets. Except as set forth in Part 3.6 of the Disclosure Schedule, the Assets (a) constitute all of the assets, tangible and intangible, of any nature whatsoever, necessary to operate Seller's business in the manner presently operated by Seller, and (b) include all of the operating assets of Seller. 3.7 Description of Owned Real Property. Part 3.7 of the Disclosure Schedule contains a correct legal description, street address and tax parcel identification numbers of the Owned Real Property. 3.8 The Leased Real Property. Part 3.8 of the Disclosure Schedule contains the street address of the Leased Real Property and an accurate description (by location, name of lessor, date of Lease and term expiry date) of the Office Lease. Seller is the sole tenant under the Office 34 Lease, and, except as contemplated by this Agreement, Seller has not assigned, transferred or hypothecated the Office Lease or any interest therein. Purchaser has been furnished a true, correct and complete copy of the Office Lease. Seller has not received any notice from Lessor modifying or changing the terms of the Office Lease in any way, except that the term of the Office Lease has been extended until December 31, 2003 and the current monthly rental is $1,100.00. Seller has obtained all consents or other instruments from the Office Lessor necessary to assign the Office Lease to Purchaser. Seller has paid all rent and expenses through Closing, including, without limitation, real estate taxes and utilities, payable by tenant under the terms of the Office Lease. Seller has performed all of its obligations under the Office Lease and is not in default under the Office Lease. To the best of Seller's Knowledge, no facts exist under which Seller may be deemed in default under the Office Lease merely upon service of notice or passage of time or both. To the best of Seller's Knowledge, (i) the Office Lessor is not in default under the Office Lease and (ii) no facts exist under which Lessor may be deemed in default under the Office Lease merely upon the service of notice or passage of time or both. To the best of Seller's Knowledge, Lessor has not assigned the Office Lease or otherwise transferred its interest in the Office Lease or its premises. 3.9 Title to Assets; Encumbrances. (a) Seller owns fee simple title to its respective estates in the Owned Real Property free and clear of any Encumbrances other than: (i) liens for Taxes for the current year which are not yet due and payable; and (ii) those described in Part 3.9(a) of the Disclosure Schedule ("Permitted Real Property Encumbrances"). Seller has delivered true and complete copies of (A) all deeds, existing title insurance policies and surveys of or pertaining to the Owned Real Property and (B) all instruments, agreements and other documents evidencing, creating or constituting any Permitted Real Property Encumbrances to Buyer. Seller warrants to Buyer that the Leased Real Property is free and clear of all Encumbrances other than Permitted Real Property Encumbrances. (b) Seller owns good and transferable title to all Assets other than Real Property free and clear of any Encumbrances other than those described in Part 3.9(b) of the Disclosure Schedule ("Permitted Non-Real Property Encumbrances" and together with Permitted Real Property Encumbrances, "Permitted Encumbrances"). (c) The Owned Real Property and Leased Real Property are the only real property owned, leased, or used by Seller. 35 3.10 Condition of Facilities. (a) To the Knowledge of Seller use of the Owned Real Property for the various purposes for which it is presently being used is permitted as of right under all applicable zoning legal requirements and is not subject to "permitted nonconforming" use or structure classifications. All Improvements on the Owned Real Property are in compliance with all applicable Legal Requirements, including those pertaining to zoning, building and the disabled, are in good repair and in good condition, ordinary wear and tear excepted, and are free from latent and patent defects. The Land included in the Owned Real Property abuts on and has direct vehicular access to a public road or has access to a public road via a permanent, irrevocable, appurtenant easement benefiting such Land is supplied with public or quasi-public utilities and other services appropriate for the operation of the Owned Real Property (as conducted or operated by Seller) located thereon. To the Knowledge of Seller, there is no existing or proposed plan to modify or realign any street or highway or any existing or proposed eminent domain proceeding that would result in the taking of all or any part of any Facility or that would prevent or hinder the continued use of any Facility as heretofore used in the conduct of the business of Seller. There are no leases or other rights of occupancy (other than Seller's right of occupancy) of the Owned Real Property. (b) Each item of Tangible Personal Property is in good repair and good operating condition, ordinary wear and tear excepted, is suitable for immediate use in the Ordinary Course of Business and is free from latent and patent defects. No item of Tangible Personal Property is in need of repair or replacement other than as part of routine maintenance in the Ordinary Course of Business. Except as disclosed in Part 3.10(b) of the Disclosure Schedule, all Tangible Personal Property used in Seller's business is in the possession of Seller. 3.11 Accounts Receivable. The Purchased Receivables represent valid obligations arising from sales actually made or services actually performed by Seller in the Ordinary Course of Business. There is no contest, claim, defense, or right of setoff, other than returns in the Ordinary Course of Business of Seller, under any Assumed Contract with any account debtor of a Purchased Receivable relating to the amount or validity of such Purchased Receivable. Part 3.11 of the Disclosure Schedule contains a complete and accurate list of the Purchased Receivables as of the date of this Agreement, which list sets forth the aging of each such Purchased Receivable. 3.12 Inventories. All items included in the Purchased Inventory consist of a quality and quantity usable and, with respect to finished goods, saleable, in the Ordinary Course of Business of Seller except for obsolete items and items of below-standard quality slow moving or excessive items, all of which (with the exception of the items set forth in Part 3.12 of the Disclosure Schedule (the "Special Inventory")) have been written off or written down to net realizable value in the Balance Sheet or the Interim Balance Sheet or on the accounting Records 36 of Seller as of the Closing Date, as the case may be. Seller is not in possession of any inventory not owned by Seller, including goods already sold. All of the Purchased Inventory has been valued at the lower of cost or market value on a first in, first out basis. Inventories now on hand that were purchased after the date of the Balance Sheet or the Interim Balance Sheet were purchased in the Ordinary Course of Business of Seller at a cost not exceeding market prices prevailing at the time of purchase. With the exception of the Special Inventory, the quantities of each item of Purchased Inventory (whether raw materials, work-in-process, or finished goods) are not excessive but are reasonable in the present circumstances of Seller. Work-in-process Inventories are valued according to GAAP, consistently applied. 3.13 No Undisclosed Liabilities. Except as set forth in Part 3.13 of the Disclosure Schedule, Seller has no Liability required to be disclosed by GAAP except for Liabilities reflected or reserved against in the Balance Sheet or the Interim Balance Sheet or reflected in the notes (including off-balance sheet liabilities) thereto and current liabilities incurred in the Ordinary Course of Business of Seller since May 31, 2003. 3.14 Taxes. (a) Tax Returns Filed and Taxes Paid. Since January 1, 1997, Seller and the Prior Owner (solely in their capacities as the prior owners and operators of the Business) have each filed or caused to be filed on a timely basis all Tax Returns, reports, or requests for extensions with respect to Taxes relating to the Business that are or were required to be filed pursuant to applicable Legal Requirements. All of such Tax Returns relating to the Business filed by Seller and the Prior Owner (solely in their capacities as the prior owners and operators of the Business) are true, correct and complete in all material respects. Seller and the Prior Owner (solely in their capacities as the prior owners and operators of the Business) as the case may be, have paid, or made provision for the payment of, all Taxes relating to the Business that have or may have become due for all periods covered by the Tax Returns or otherwise (including amounts payable as a result of any Tax Audit or similar inquiry), except such Taxes, if any, as are listed in Part 3.14(a) of the Disclosure Schedule and are being contested in good faith and as to which adequate reserves (determined in accordance with GAAP) have been provided in the Balance Sheet and the Interim Balance Sheet. Except as provided in Part 3.14(a) of the Disclosure Schedule, neither Seller nor Prior Owner is currently the beneficiary of any extension of time within which to file any Tax Return. No claim has been made by any Governmental Body in a jurisdiction where Seller does not file Tax Returns that it is or may be subject to taxation by that jurisdiction. There are no Encumbrances on any of the Assets that arose in connection with any failure (or alleged failure) to pay any Tax. (b) Delivery of Tax Returns and Information Regarding Audits and Potential Audits. Seller has made available to Buyer copies of, and Part 3.14(b) of the Disclosure Schedule contains a complete and accurate list of, all Tax 37 Returns described in the first sentence of Section 3.14(a). Part 3.14(b) of the Disclosure Schedule contains a complete and accurate list of all Tax Returns of Seller and the Prior Owner (solely in their capacities as the prior owners and operators of the Business) relating to the Business currently under audit and accurately describe any deficiencies or other amounts that were paid or are currently being contested. All deficiencies proposed as a result of such audits have been paid, reserved against, settled or are being contested in good faith by appropriate proceedings as described in Part 3.14(b) of the --------------------- Disclosure Schedule. Seller and Prior Owner have made available to Buyer, copies of any examination reports, statements or deficiencies or similar items with respect to such audits. Except as described in Part 3.14(b) of the Disclosure Schedule, neither Seller nor the Prior Owner (solely in their capacities as the prior owners and operators of the Business) have given or been requested to give waivers or extensions (or is or would be subject to a waiver or extension given by any other Person) of any statute of limitations relating to the payment of Taxes concerning the Business for which Seller or the Prior Owners (solely in such capacities) may be liable. (c) Specific Potential Tax Liabilities and Tax Situations. (i) Withholding. All Taxes that Seller is or was required by Legal Requirement to withhold, deduct or collect have been duly withheld, deducted and collected and, to the extent required, have been paid to the proper Governmental Body or other Person. (ii) Tax Sharing or Similar Agreements. There is no tax sharing agreement, tax allocation agreement, tax indemnity obligation or similar written or unwritten agreement, arrangement, understanding or practice with respect to Taxes (including any advance pricing agreement, closing agreement or other arrangement relating to Taxes) that will require any payment by Seller. (iii) Consolidated Group. Seller (A) has been a member of an affiliated group within the meaning of Code Section 1504(a) (or any similar group defined under a similar provision of state, local or foreign law) and (B) has no liability for Taxes of any person (other than itself) under Teas. Reg. Section 1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor by contract or otherwise. 3.15 No Material Adverse Change. Since May 31, 2003, except as specifically set forth in Part 3.15 of the Disclosure Schedule there has not been any material adverse change in the business, operations, assets, liabilities or results of operations of Seller. 38 3.16 Employee Benefits. (a) Set forth in Part 3.16(a) of the Disclosure Schedule is a complete and correct list of all "employee benefit plans" as defined by Section 3(3) of ERISA, all specified fringe benefit plans as defined in Section 6039D of the Code, and all other bonus, incentive-compensation, deferred-compensation, profit-sharing, security-option, security-appreciation-right, security-bonus, security-purchase, employee-security-ownership, savings, severance, change-in-control, supplemental-unemployment, layoff, salary-continuation, retirement, pension, health, life-insurance, disability, accident, group-insurance, vacation, holiday, sick-leave, fringe-benefit or welfare plan, and any other employee compensation or benefit plan, agreement, policy, practice, commitment, contract or understanding (whether qualified or non-qualified, currently effective or terminated, written or unwritten) and any trust, escrow or other agreement related thereto that (i) is currently maintained or contributed to by Seller or with respect to which Seller has liability, and (ii) provides benefits, or describes policies or procedures applicable to any current or former manager, officer, employee or service provider of Seller or the dependents of any thereof, regardless of how (or whether) liabilities for the provision of benefits are accrued or assets are acquired or dedicated with respect to the funding thereof (collectively the "Employee Plans"). Part 3.16(a) of the Disclosure Schedule identifies as such any Employee Plan that is (w) a "Defined Benefit Plan" (as defined in Section 414(1) of the Code), (x) a plan intended to meet the requirements of Section 401(a) of the Code, (y) a "Multiemployer Plan" (as defined in Section 3(37) of ERISA) or (z) a plan subject to Title IV of ERISA, other than a Multiemployer Plan. (b) Seller has delivered to Buyer true, accurate and complete copies of (i) the documents comprising each Employee Plan (or, with respect to any Employee Plan which is unwritten, a detailed written description of eligibility, participation, benefits, funding arrangements, and assets), (ii) all trust agreements, insurance contracts or any other funding instruments related to the Employee Plans, (iii) all rulings, determination letters, no-action letters or advisory opinions from the IRS, the U.S. Department of Labor, the Pension Benefit Guaranty Corporation (PBGC) or any other Governmental Body that pertain to each Employee Plan and any open requests therefor, (iv) all collective bargaining agreements pursuant to which contributions to any Employee Plan(s) have been made or obligations incurred by Seller and all collective bargaining agreements pursuant to which contributions are being made or obligations are owed by such entities, and (v) all summary plan descriptions, summaries of material modifications and memoranda, employee handbooks and other written communications regarding the Employee Plans. (c) [Intentionally Omitted] 39 (d) [Intentionally Omitted] (e) [Intentionally Omitted] (f) Seller has, at all times, complied, and currently complies, in all material respects with the applicable continuation requirements for its welfare benefit plans, including (1) Section 4980B of the Code (as well as its predecessor provision, Section 162(i) of the Code) and Sections 601 through 608, inclusive, of ERISA, which provisions are hereinafter referred to collectively as "COBRA" and (2) any applicable state statutes mandating health insurance continuation coverage for employees. (g) The form of all Employee Plans is in material compliance with the applicable terms of ERISA, the Code, and any other applicable laws, including the Americans with Disabilities Act of 1990, the Family Medical Leave Act of 1993 and the Health Insurance Portability and Accountability Act of 1996, and such plans have been operated in material compliance with such laws and the written Employee Plan documents. Neither Seller nor any fiduciary of an Employee Plan has violated the requirements of Section 404 of ERISA. All required reports and descriptions of the Employee Plans (including Internal Revenue Service Form 5500 Annual Reports, Summary Annual Reports and Summary Plan Descriptions and Summaries of Material Modifications) have been (when required) timely filed with the IRS, the U.S. Department of Labor or other Governmental Body and distributed as required, and all notices required by ERISA or the Code or any other Legal Requirement with respect to the Employee Plans have been appropriately given. (h) Each Employee Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the IRS. Each trust created under any Employee Plan has been determined to be exempt from taxation under Section 501(a) of the Code. Each Employee Welfare Benefit Plan (as defined in Section 3(1) of ERISA) that utilizes a funding vehicle described in Section 501(c)(9) of the Code or is subject to the provisions of Section 505 of the Code qualifies for tax-exempt status under Section 501(c)(9) of the Code or complies with Section 505 of the Code. (i) [Intentionally Omitted] (j) Seller has maintained workers' compensation coverage as required by applicable state law. (k) [Intentionally Omitted] (l) Except for the continuation coverage requirements of COBRA, Seller has no obligations or potential liability for benefits to employees, former employees or their respective dependents following termination of 40 employment or retirement under any of the Employee Plans that are Employee Welfare Benefit Plans. (m) Except as provided in Section 10.1(d) and except for Seller's intention to freeze its pension plan, none of the Contemplated Transactions will result in an amendment, modification or termination of any of the Employee Plans. No written or oral representations have been made to any employee or former employee of Seller promising or guaranteeing any employee payment or funding for the continuation of medical, dental, life or disability coverage for any period of time beyond the end of the current plan year (except to the extent of coverage required under COBRA). Seller has made no written or oral representations to its current employee or former employees concerning the employee benefits of Buyer. (n) Seller has no obligation to contribute to any Employee Plan that is a "multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA ("Multiemployer Plan"). 3.17 Compliance with Legal Requirements; Governmental Authorizations. (a) Except as set forth in Part 3.17(a) of the Disclosure Schedule: (i) Seller is, in all material respects, in compliance with each Legal Requirement that is applicable to the conduct or operation of the Business or the ownership or use of any of its assets, except where the failure to be in compliance would not have a material adverse effect on Seller; (ii) Since January 1, 2000, each of Seller and the Prior Owner (solely in their capacities as the prior owners and operators of the Business) has been, in all material respects, in compliance with each Legal Requirement that was applicable to it or to the conduct or operation of the Business or the ownership or use of any of its assets, except where the failure to be in compliance would not have a material adverse effect on Seller or the Prior Owner as applicable; (iii) To Seller's Knowledge, since January 1, 2000, no event has occurred or fact exists that (with or without notice or lapse of time or both) (A) may be reasonably likely to constitute or result in a material violation by Seller of, or a failure on the part of Seller to comply with, any Legal Requirement or (B) may be reasonably likely to give rise to any obligation on the part of Seller to undertake, or to bear all or any portion of the cost of, any remedial action of any nature; and (iv) Neither Seller nor the Prior Owner (solely in their capacities as the prior owners and operators of the Business) has received, at any 41 time since January 1, 2000, any written, electronic, or to Seller's Knowledge, oral notice from any Governmental Body or any other Person regarding (A) any actual, alleged, possible or potential violation of, or failure to comply with, any Legal Requirement, which, if true, may be reasonably likely to have a material adverse effect on Seller or the Business or (B) any actual, alleged, possible or potential obligation on the part of Seller to undertake, or to bear all or any portion of the cost of, any remedial action of any nature, which may be reasonably likely to have a material adverse effect on Seller or the Business. This Section 3.17(a) shall not apply to matters addressed by the representations and warranties contained in Sections 3.14 (Taxes), 3.16 (Employee Benefits), 3.22 (Environmental Matters), 3.23 (Employees) or 3.24 (Labor Disputes). (b) Part 3.17(b) of the Disclosure Schedule contains a complete and accurate list of each Governmental Authorization that is held by Seller or that otherwise relates to the Business or the Assets. Each Governmental Authorization required to be listed in Part 3.17(b) of the Disclosure Schedule is valid and in full force and effect. Except as set forth in Part 3.17(b) of the Disclosure Schedule: (i) Seller is and since January 1, 2000, Seller and Prior Owner (solely in their capacities as the prior owners and operators of the Business) have been in full compliance with all of the terms and requirements of each Governmental Authorization identified or required to be identified in Part 3.17(b) of the Disclosure Schedule except where such failure to be in compliance would not have a material adverse effect on the Seller or the Business. (ii) To Seller's Knowledge, no event has occurred or facts arisen since January 1, 2000, that is likely to (with or without notice or lapse of time or both) (A) constitute or result directly or indirectly in a violation of or a failure to comply with any term or requirement of any Governmental Authorization required to be listed in Part 3.17(b) of the Disclosure Schedule that is likely to have a material adverse effect on Seller or the Business or (B) result directly or indirectly in the revocation, withdrawal, suspension, cancellation or termination of, or any modification to, any Governmental Authorization required to be listed in Part 3.17(b) of the Disclosure Schedule; (iii) Since January 1, 2000, neither Seller nor Prior Owner (solely in their capacities as the prior owners and operators of the Business) has received any written or electronic, or to the Knowledge of Seller, oral notice from any Governmental Body or any other 42 Person regarding (A) any actual, alleged, possible or potential violation of or failure to comply with any term or requirement of any Governmental Authorization or (B) any actual, proposed, possible or potential revocation, withdrawal, suspension, cancellation, termination of or modification to any Governmental Authorization; and (iv) all applications required to have been filed since January 1, 2000, for the renewal of the Governmental Authorizations listed or required to be listed in Part 3.17(b) of the Disclosure Schedule have been duly filed on a timely basis with the appropriate Governmental Bodies, and, to the knowledge of Seller, all other filings required to have been made with respect to such Governmental Authorizations have been duly made on a timely basis with the appropriate Governmental Bodies. The Governmental Authorizations listed in Part 3.17(b) of the Disclosure Schedule collectively constitute all of the Governmental Authorizations necessary to permit Seller to lawfully conduct and operate its business in the manner in which it currently conducts and operates such business and to permit Seller to own and use its assets in the manner in which it currently owns and uses such assets. 3.18 Legal Proceedings; Orders. (a) Except as set forth in Part 3.18(a) of the Disclosure Schedule, there is no pending or, to Seller's Knowledge, threatened Proceeding: (i) by or against Seller or that otherwise relates to or may affect the Business or any of the assets owned or used by Seller; or (ii) that challenges, or that may have the effect of preventing, delaying, making illegal or otherwise interfering with, any of the Contemplated Transactions. To the Knowledge of Seller, no event has occurred or facts exist that are reasonably likely to give rise to or serve as a basis for the commencement of any such Proceeding. Seller has delivered to Buyer copies of all pleadings, correspondence and other documents relating to each Proceeding listed in Part 3.18(a) of the Disclosure Schedule (other than pleadings, correspondence and other documents relating to the Diversion Agreement which Seller has fully and accurately described to Buyer). Except as set forth on Part 3.18(a) of the Disclosure Schedule, there are no Proceedings listed or required to be listed in Part 3.18(a) of the Disclosure Schedule that would, if adversely determined, have 43 a material adverse effect on the Business as conducted by Seller or the operations or financial condition of Seller or upon the Assets. (b) Except as set forth in Part 3.18(b) of the Disclosure Schedule: (i) there is no Order to which Seller, its business or any of the Assets is subject; and (ii) to the Knowledge of Seller, no officer, manager, agent or employee of Seller is subject to any Order that prohibits such officer, manager, agent or employee from engaging in or continuing any conduct, activity or practice relating to the business of Seller. (c) Except as set forth in Part 3.18(c) of the Disclosure Schedule: (i) Each of Seller and the Prior Owners (solely in their capacities as the prior owners and operators of the Business) is, and, at all times since January 1, 2000, has been in compliance in all material respects, with all of the terms and requirements of each Order to which it or any of the Assets is or has been subject; (ii) To Seller's Knowledge, no event has occurred or facts exist that are likely to constitute or result in (with or without notice or lapse of time) a violation of or failure to comply with any term or requirement of any Order to which Seller or any of the Assets is subject; and (iii) Each of Seller and the Prior Owners (solely in their capacities as the prior owners and operators of the Business), has not received, at any time since January 1, 2000, any notice or other communication (whether written or, to the Knowledge of Seller, oral) from any Governmental Body or any other Person regarding any actual, alleged, possible or potential violation of, or failure to comply with, any term or requirement of any Order to which Seller or the Prior Owners (solely in their capacities as the prior owners and operators of the Business) or any of the Assets is or has been subject. 3.19 Absence of Certain Changes and Events. Except as set forth in Part 3.19 of the Disclosure Schedule, since May 31, 2003, Seller has conducted its business only in the Ordinary Course of Business and there has not been any: (a) amendment to the Governing Documents of Seller; (b) payment or increase (except in the Ordinary Course of Business) by Seller of any bonuses, salaries or other compensation to the Member, or any 44 manager, officer or employee or entry into any employment, severance or similar Contract with any manager, officer or employee; (c) adoption of, amendment to or increase in the payments to or benefits under, any Employee Plan; (d) damage to or destruction or loss of any asset of Seller having a value in excess of One Thousand Dollars ($1,000), whether or not covered by insurance; (e) entry into, termination of or receipt of notice of termination of (i) any license, distributorship, dealer, sales representative, joint venture, credit or similar Contract to which Seller is a party, or (ii) any Contract or transaction involving a total remaining commitment by Seller of at least Twenty Thousand Dollars ($20,000.00); (f) sale (other than sales of Inventories in the Ordinary Course of Business), lease or other disposition of any one or more of the Assets or properties of Seller (including the Intellectual Property Assets) having a value in excess of Twenty-Five Thousand Dollars ($25,000) individually or in the aggregate or the creation of any Encumbrance on any Asset; (g) cancellation or waiver of any claims or rights with a value to Seller in excess of Fifteen Thousand Dollars ($15,000.00); (h) indication by any customer or supplier having purchases from or sales to Seller of Ten Thousand Dollars ($10,000.00) or more in the twelve months ended December 31, 2002, of an intention to discontinue or change the terms of its relationship with Seller; (i) material change in the accounting methods used by Seller; or (j) contract by Seller or the Member to do any of the foregoing. 3.20 Contracts; No Defaults. (a) Part 3.20(a) of the Disclosure Schedule contains an accurate and complete list, and Seller has delivered to Buyer accurate and complete copies, of: (i) each Seller Contract that involves performance of services or delivery of goods or materials by Seller of an amount or value in excess of Twenty Thousand Dollars ($20,000.00); (ii) each Seller Contract (including outstanding purchase orders) that involves performance of services or delivery of goods or materials to Seller of an amount or value in excess of Twenty Thousand Dollars ($20,000.00); 45 (iii) each Seller Contract that was not entered into in the Ordinary Course of Business and that involves expenditures or receipts of Seller in excess of Twenty Thousand Dollars ($20,000.00); (iv) each Seller Contract affecting the ownership of, leasing of, title to, use of or any leasehold or other interest in any real or personal property (except personal property leases and installment and conditional sales agreements for personal property having a value per item or aggregate annual payments of less than Ten Thousand Dollars ($10,000.00) and with a term of less than one year; (v) each Seller Contract with any labor union or other employee representative of a group of employees relating to wages, hours and other conditions of employment; (vi) each Seller Contract (however named) involving a sharing of Seller's profits, losses, costs or liabilities by Seller with any other Person; (vii) each Seller Contract containing covenants that in any way purport to restrict Seller's business activity or limit the freedom of Seller to engage in any line of business or to compete with any Person; (viii) each Seller Contract providing for payments to or by any Person based on sales, purchases or profits, other than direct payments for goods; (ix) each power of attorney of Seller that is currently effective and outstanding; (x) each Seller Contract entered into other than in the Ordinary Course of Business that contains or provides for an express undertaking by Seller to be responsible for consequential damages; (xi) each Seller Contract for capital expenditures in excess of Twenty Thousand Dollars ($20,000.00); (xii) each Seller Contract not denominated in U.S. dollars; (xiii) each written warranty, guaranty and/or other similar undertaking with respect to contractual performance extended by Seller other than in the Ordinary Course of Business; and (xiv) each amendment, supplement and modification (whether oral or written) in respect of any of the foregoing. 46 Part 3.20(a) of the Disclosure Schedule sets forth, the amount of the remaining commitment of Seller under the Seller Contracts and the location of Seller's or Member's office where details relating to the Seller Contracts are located. (b) Except as set forth in Part 3.20(b) of the Disclosure Schedule, the Member has not and will not acquire any rights under, and the Member has not and will not become subject to any obligation or liability under, any Seller Contract that relates to the business of Seller or any of the Assets. (c) Except as set forth in Part 3.20(c) of the Disclosure Schedule: (i) each Assumed Contract is in full force and effect and is valid and enforceable in accordance with its terms except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar legal requirements affecting creditors' rights generally; (ii) each Assumed Contract is assignable by Seller to Buyer without the consent of any other Person; and (iii) to the Knowledge of Seller, no Assumed Contract would, upon completion or performance thereof, have a material adverse affect on the business, assets or condition of Seller. (d) Except as set forth in Part 3.20(d) of the Disclosure Schedule: (i) each of Seller, Member (in its capacity as Prior Owner), and GTC is, and at all times since January 1, 2000, has been, in compliance in all material respects with all applicable terms and requirements of each Assumed Contract; (ii) to the Knowledge of Seller, each other Person that has or had any obligation or liability under any Assumed Contract is currently in material compliance with all applicable terms and requirements of such Assumed Contract; (iii) no event has occurred or, to the Knowledge of Seller, circumstance exists that (with or without notice or lapse of time or both) is likely to contravene, conflict with or result in a Breach of, or give Seller or other Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or payment under, or to cancel, terminate or modify, any Assumed Contract; (iv) to the Knowledge of Seller, no event has occurred or facts exist under or by virtue of any Assumed Contract that (with or without notice or lapse of time) would cause the creation of any Encumbrance affecting any of the Assets; and 47 (v) each of Seller and Prior Owner have not given to or received from any other Person, at any time since January 1, 2000, any notice or other communication (whether written or, to Seller's Knowledge, oral) regarding any actual, alleged, possible or potential violation or Breach of, or default under, any Assumed Contract. (e) There are no renegotiations of, attempts to renegotiate or outstanding rights to renegotiate any material amounts paid or payable to Seller under current or completed Seller Contracts with any Person having the contractual or statutory right to demand or require such renegotiation and no such Person has made written demand for such renegotiation. (f) Each Seller Contract relating to the sale, design, manufacture or provision of products or services by Seller (including executory Contracts originally entered into by the Prior Owner) has been entered into in the Ordinary Course of Business of the Seller or Prior Owner and has been entered into without the commission of any act alone or in concert with any other Person, or any consideration having been paid or promised, that is or would be in violation of any Legal Requirement. (g) All contracts between the Seller and Member or any of its Related Persons have been provided to Buyer and Buyer has notified Seller of those that it will assume and those that it will not assume. 3.21 Insurance. (a) Part 3.21(a) of the Disclosure Schedule provides a summary of the kinds of insurance currently maintained by Seller, Member, or Parent insuring the Business, including the kind of coverage, the amount insured and the insurer. Seller, Member, and Parent do not self insure the Business. (b) Part 3.21(b) of the Disclosure Schedule describes all current (i) obligations of Seller to provide insurance coverage to Third Parties (for example, under Leases or service agreements) and identifies the policy under which such coverage is provided, and (ii) Contracts or arrangements, other than a policy of insurance, for the transfer or sharing of any risk to which Seller is a party or that involves the Business. (c) Part 3.21(c) of the Disclosure Schedule sets forth for the current policy year and each of the three (3) preceding policy years: (i) a summary of the loss experience under each policy of insurance maintained by Seller, Member, or Parent with respect to the Business; (ii) a statement describing each claim under any such policy of insurance for an amount in excess of Five Thousand Dollars 48 ($5,000.00) (Five Thousand Dollars ($5,000.00) in the case of workers' compensation insurance), which sets forth: (A) the name of the claimant; (B) a description of the policy by insurer, type of insurance and period of coverage; and (C) the amount and a brief description of the claim. (d) Except as set forth in Part 3.21(d) of the Disclosure Schedule: (i) all policies of insurance to which Seller, Member, or Parent is a party that provide coverage of Seller or the Business: (A) taken together, provide adequate insurance coverage for the Assets, Seller, and Business for all risks normally insured against by a Person carrying on the same business or businesses as Seller in the same location; and (B) to Seller's knowledge are sufficient for compliance with all Legal Requirements and Seller Contracts; (ii) Since January 1, 2000, neither Seller, Prior Owner, or Parent has received with respect to coverage of affecting the Business (A) any refusal of coverage (except for a notice that a defense will be afforded with reservation of rights) or (B) any notice of cancellation or any other indication that any policy of insurance is no longer in full force or effect or that the issuer of any policy of insurance is not willing or able to perform its obligations thereunder; (iii) Seller, Member, and Parent have paid all premiums due, and have otherwise performed all of their respective obligations, under each current policy of insurance to which it is a party or that provides coverage to Seller or the Business, provided that an insurer may assert a reservation of rights without regard to the payment of premiums; and (iv) Seller, Member or Parent have given notice to the insurer of all claims with respect to Seller that in Seller's, Member's, or Parent's reasonable judgment may be insured thereby. 3.22 Environmental Matters. Except as disclosed in Part 3.22 of the Disclosure Schedule or in that certain Phase II Environmental Assessment dated December 20, 2002 and prepared by The Forrester Group and all correspondence, documents and reports related thereto (collectively, the "Phase II Report"): 49 (a) Since January 1, 1997, Seller has been in material compliance with, and has not been and is not in material violation of, any Environmental Law. Seller has not received any written order, notice, warning, request for information, from (i) any Governmental Body or private citizen acting in the public interest or (ii) the current or prior owner or operator of any Facilities, of any actual or alleged violation or failure to comply with any Environmental Law or Occupational Safety or Health Law, or of any actual or threatened obligation to undertake or bear the cost of any Environmental Liabilities with respect to any Facility or, to the Knowledge of Seller, other property or asset (whether real, personal or mixed) in which Seller has or had an interest, or any property to which Hazardous Materials generated, manufactured, imported, used or processed by Seller have been transported, treated, stored, handled, transferred, disposed, recycled or received. (b) There are no pending or, to the Knowledge of Seller, threatened claims, Encumbrances, or other restrictions of any nature resulting from any Environmental Liabilities or Occupational Safety and Health Liabilities with respect to or affecting any Facility or, to the Knowledge of Seller, any other property or asset (whether real, personal or mixed) in which Seller has or had an interest. (c) Seller has not received any written citation, directive, inquiry, notice, Order, summons, or warning that relates to Hazardous Materials, or any alleged or actual violation or material failure to comply with any Environmental Law, or of any alleged or actual obligation to undertake or bear the cost of any Environmental Liabilities or Occupational Safety and Health Liabilities with respect to any Facility or with respect to any property or facility to which Hazardous Materials generated, manufactured, refined, transferred, imported, used or processed by Seller have been transported, treated, stored, handled, transferred, disposed, recycled or received. (d) [Intentionally Omitted] (e) There are no Hazardous Materials present on or in the Environment at any Facility or, to the Knowledge of Seller, at any geologically or hydrologically adjoining property, (except for such Hazardous Materials in such amounts necessary for the Ordinary Course of Business and which are in compliance with Environmental Laws). (f) There has been no Release or, to the Knowledge of Seller, Threat of Release, of any Hazardous Materials at or from any Facility or to the Knowledge of Seller, at any other location where any Hazardous Materials were generated, manufactured, refined, transferred, produced, imported, used, or processed from or by any Facility, or from any other property or asset in which Seller has or, to the Knowledge of Seller, had an interest. 50 (g) Seller has delivered to Buyer true and complete copies and results of any reports, studies, analyses, tests, or monitoring possessed or initiated by Seller, Member, or any of their Related Persons within the past ten (10) years pertaining to Hazardous Materials in, on, or under the Facilities, or concerning compliance, by Seller, Member, with Environmental Laws in respect of the Facilities, except for the results of analyses, tests or monitoring performed in the Ordinary Course of Business pursuant to any Governmental Authorization issued under Environmental Law, which documents have been provided for the past three (3) years. 3.23 Employees. (a) Part 3.23(a) of the Disclosure Schedule contains a complete and accurate list of the following information for each employee, manager, independent contractor, consultant and agent of Seller, including each employee on leave of absence or layoff status: name; job title; date of commencement of employment or engagement; current compensation paid or payable; sick and vacation leave that is accrued but unused; service credited for purposes of vesting and eligibility to participate under any Employee Plan and, with respect to employees compensated on a salaried rather than hourly basis, any change in compensation paid by Seller or Prior Owner since January 1, 2002; (b) Part 3.23(b) of the Disclosure Schedule contains a complete and accurate list of the following information for each retired employee or manager of Seller or Prior Owner (solely in their capacities as the prior owners and operators of the Business) or their dependents, receiving benefits or scheduled to receive benefits in the future: name; pension benefits; pension option election; and other benefits. Seller and Prior Owner (solely in their capacities as the prior owners and operators of the Business) not obligated and do not provide any retiree medical or retiree life insurance coverage to any of their former employees. (c) Part 3.23(c) of the Disclosure Schedule states the number of employees terminated by Seller since December 1, 2002, and contains a complete and accurate list of the following information for each employee of Seller who has been terminated or laid off, or whose hours of work have been reduced by more than fifty percent (50%) by Seller, same December 1, 2002: (i) the date of such termination, layoff or reduction in hours; (ii) the reason for such termination, layoff or reduction in hours; and (iii) the location to which the employee was assigned. (d) Seller has not violated the Worker Adjustment and Retraining Notification Act (the "WARN Act") or any similar state or local Legal Requirement. Since April 1, 2003, Seller has not terminated any employees. 51 (e) To the Knowledge of Seller, no officer, manager, agent, employee, consultant, or contractor of Seller is bound by any Contract that purports to limit the ability of such officer, manager, agent, employee, consultant, or contractor (i) to engage in or continue or perform any conduct, activity, duties or practice relating to the business of Seller or (ii) to assign to Seller or to any other Person any rights to any invention, improvement, or discovery. 3.24 Labor Disputes; Compliance. (a) Since June 1, 2000, Seller and Prior Owner (solely in their capacities as the prior owners and operators of the Business), have complied in all material respects with all (and are not, and have not been, liable for fines peanalties or other amounts for violations of any) (i) Legal Requirements relating to employment practices, terms and conditions of employment, equal employment opportunity, nondiscrimination, immigration, wages, hours, benefits, collective bargaining, the payment of social security and similar Taxes, and the employment of individuals who are not Citizens of the United States and (ii) Occupational Safety and Health Laws. (b) Except as disclosed in Part 3.24(b) of the Disclosure Schedule: (i) neither Seller nor Prior Owner (solely in their capacities as the prior owners and operators of the Business) has been, and is not now, a party to any collective bargaining agreement or other labor contract; (ii) since January 1, 2000, there has not been, there is not presently pending or existing, and to Seller's Knowledge there is not threatened, any strike, slowdown, picketing, work stoppage or employee grievance process involving Seller or Prior Owner (solely in their capacities as the prior owners and operators of the Business); (iii) to Seller's Knowledge, no event has occurred or fact exists, that could provide the basis for any work stoppage or other labor dispute; (iv) there is not pending or, to Seller's Knowledge, threatened against or affecting Seller, any Proceeding relating to the alleged violation of any Legal Requirement pertaining to labor relations or employment matters, including any charge or complaint filed with the National Labor Relations Board or any comparable Governmental Body, and to Knowledge of Seller, there is no organizational activity or other labor dispute against or affecting Seller or the Facilities; (v) no application or petition for an election of or for certification of a collective bargaining agent is pending; (vi) no grievance or arbitration Proceeding exists that might have an adverse effect upon Seller or the conduct of its business; (vii) there is no lockout of any employees by Seller, and no such action is contemplated by Seller; and (viii) to Seller's Knowledge, there has been no charge of discrimination filed against or threatened against Seller with the Equal Employment Opportunity Commission or similar Governmental Body. 52 3.25 Intellectual Property Assets. (a) The term "Intellectual Property Assets" means all intellectual property owned or licensed (as licensor or licensee) by Seller in which Seller has a proprietary interest, including: (i) Seller's name, all assumed fictional business names, trade names, registered and unregistered trademarks, service marks and applications (collectively, "Marks"); (ii) all patents, patent applications and inventions and discoveries that may be patentable (collectively, "Patents"); (iii) all registered and unregistered copyrights in both published works and unpublished works (collectively, "Copyrights"); (iv) all rights in mask works; (v) all know-how, trade secrets, confidential or proprietary information, customer lists, Software, technical information, data, process technology, plans, drawings and blue prints (collectively, "Trade Secrets"); and (vi) all rights in internet web sites and internet domain names presently used by Seller (collectively "Net Names"). (b) Part 3.25(b) of the Disclosure Schedule contains a complete and accurate list and summary description, including any royalties paid or received by Seller, and Seller has delivered to Buyer accurate and complete copies, of all Seller Contracts relating to the Intellectual Property Assets, except for any license implied by the sale of a product and perpetual, paid-up licenses for commonly available Software programs with a value of less than Two Hundred Dollars ($200.00) under which Seller is the licensee. There are no outstanding and, to Seller's Knowledge, no threatened disputes or disagreements with respect to any such Contract. (c) (i) Except as set forth in Part 3.25(c) of the Disclosure Schedule, the Intellectual Property Assets are all those necessary for the operation of Seller's business as it is currently conducted. Seller is the owner or licensee of all right, title and interest in and to each of the Intellectual Property Assets, free and clear of all Encumbrances, and has the right to use without payment to a Third Party all of the Intellectual Property Assets, other than in respect of licenses listed in Part 3.25(c) of the Disclosure Schedule. 53 (ii) Except as set forth in Part 3.25(c) of the Disclosure Schedule, all former and current employees of Seller have executed written Contracts with Seller that assign to Seller all rights to any inventions, improvements, discoveries or information relating to the business of Seller. (d) (i) Part 3.25(d) of the Disclosure Schedule contains a complete and accurate list and summary description of all Patents. (ii) All of the issued Patents are currently in compliance with formal legal requirements (including payment of filing, examination and maintenance fees and proofs of working or use), are valid and enforceable, and are not subject to any maintenance fees or taxes or actions falling due within ninety (90) days after the Closing Date. (iii) No Patent has been or is now involved in any interference, reissue, reexamination, or opposition Proceeding. To Seller's Knowledge, there is no potentially interfering patent or patent application of any Third Party. (iv) Except as set forth in Part 3.25(d) of the Disclosure Schedule, (A) no Patent is infringed or, to Seller's Knowledge, has been challenged or threatened in any way and (B) none of the products manufactured or sold, nor any process or know-how used, by Seller infringes or is alleged to infringe any patent or other proprietary right of any other Person. (v) All products made, used or sold under the Patents have been marked with the proper patent notice. (e) (i) Part 3.25(e) of the Disclosure Schedule contains a complete and accurate list and summary description of all Marks. (ii) All Marks filed or registered with the United States Patent and Trademark Office, are currently in compliance with all formal Legal Requirements (including the timely post-registration filing of affidavits of use and incontestability and renewal applications), are not subject to any maintenance fees or taxes or actions falling due within ninety (90) days after the Closing Date, and, to Sellers Knowledge, are valid and enforceable. (iii) No Mark has been or is now involved in any opposition, invalidation or cancellation Proceeding and, to Seller's 54 Knowledge, no such action is threatened with respect to any of the Marks. (iv) To Seller's Knowledge, there is no potentially interfering trademark or trademark application of any other Person. (v) No Mark is infringed or, to Seller's Knowledge, has been challenged or threatened in any way. None of the Marks used by Seller infringes or is alleged to infringe any trade name, trademark or service mark of any other Person. (f) (i) Part 3.25(f) of the Disclosure Schedule contains a complete and accurate list and summary description of all Copyrights. (ii) All of the registered Copyrights are, to Seller's Knowledge, valid and enforceable, and are not subject to any maintenance fees or taxes or actions falling due within ninety (90) days after the date of Closing. (iii) No Copyright is infringed or, to Seller's Knowledge, has been challenged or threatened in any way. None of the subject matter of any of the Copyrights infringes or is alleged to infringe any copyright of any Third Party or is a derivative work based upon the work of any other Person. (iv) All works encompassed by the Copyrights have been marked with the proper copyright notice. (g) (i) With respect to each Trade Secret, the documentation relating to such Trade Secret is current, accurate and sufficient in detail and content to identify and explain it and to allow its full and proper use without reliance on the knowledge or memory of any individual. (ii) Seller has taken all reasonable precautions to protect the secrecy, confidentiality and value of all Trade Secrets (including the enforcement by Seller of a policy requiring each employee or contractor to execute proprietary information and confidentiality agreements substantially in Seller's standard form, and all current and former employees and contractors of Seller have executed such an agreement). (iii) Seller has good title to and an absolute right to use the Trade Secrets. The Trade Secrets are not part of the public knowledge or 55 literature and, to Seller's Knowledge, have not been used, divulged or appropriated either for the benefit of any Person (other than Seller) or to the detriment of Seller. No Trade Secret is subject to any adverse claim or has been challenged or threatened in any way or infringes any intellectual property right of any other Person. (h) (i) Part 3.25(h) of the Disclosure Schedule contains a complete and accurate list and summary description of all Net Names. (ii) All Net Names have been registered in the name of Seller and are in compliance with all formal Legal Requirements. (iii) No Net Name has been or is now involved in any dispute, opposition, invalidation or cancellation Proceeding and, to Seller's Knowledge, no such action is threatened with respect to any Net Name. (iv) To Seller's Knowledge, there is no domain name application pending of any other person which would or would potentially interfere with or infringe any Net Name. (v) No Net Name is infringed or, to Seller's Knowledge, has been challenged, interfered with or threatened in any way. No Net Name infringes, interferes with or is alleged to interfere with or infringe the trademark, copyright or domain name of any other Person. 3.26 Parent Ownership of Assets. At no time has Parent owned any of the Assets. 3.27 Compliance with the Foreign Corrupt Practices Act and Export Control and Antiboycott Laws. (a) Since January 1, 2000, Seller and the Prior Owners (solely in their capacities as the prior owners and operators of the Business) have not, to obtain or retain business, directly or indirectly, offered, paid or promised to pay, or authorized the payment of, any money or other thing of value (including any fee, gift, sample, travel expense or entertainment with a value in excess of One Hundred Dollars ($100.00) in the aggregate to any one individual in any year) or any commission payment to: (i) any person who is an official, officer, agent, employee or representative of any Governmental Body or of any existing or prospective customer (whether government owned or nongovernment owned); (ii) any political party or official thereof; 56 (iii) any candidate for political or political party office; or (iv) any other individual or entity; while knowing that all or any portion of such money or thing of value would be offered, given, or promised directly or indirectly to any such official, officer, agent, employee, representative, political party, political party official, candidate, individual, or any entity affiliated with such customer, political party or official or political office. (b) Except as set forth in Part 3.27(b) of the Disclosure Schedule, since January 1, 2002, Seller and Member (solely in its capacity as a prior owner and operator of the Business) have made all payments to Third Parties by check mailed to such Third Parties' principal place of business or by wire transfer to a bank located in the same jurisdiction as such party's principal place of business. (c) Seller maintains no off-the-books accounts. (d) Since January 1, 2000, Seller and the Prior Owner (solely in their capacities as the prior owners and operators of the Business), have at all times been in material compliance with all Legal Requirements relating to export control and trade embargoes. No product sold or service provided by Seller or the Prior Owners (solely in their capacities as the prior owners and operators of the Business) during such period has been directly sold to or performed by Seller or the Prior Owners (solely in their capacities as the prior owners and operators of the Business), on behalf of Cuba, Iraq, Iran, Libya or North Korea. (e) Except as set forth in Part 3.27(e) of the Disclosure Schedule, Seller and Prior Owner (in their capacities as the prior owners and operators of the Business) have not violated of any of the antiboycott prohibitions contained in 50 U.S.C. Section 2401 et seq. or taken any action that can be penalized under Section 999 of the Code. Except as set forth in Part 3.27(e) of the Disclosure Schedule, during the last five (5) years Seller and Prior Owner (in their capacities as the prior owners and operators of the Business) are not a party to, are not a beneficiary under and have not performed any service or sold any product under any Seller Contract or other Contract under which a product has been sold to customers in Bahrain, Iraq, Jordan, Kuwait, Lebanon, Libya, Oman, Quatar, Saudi Arabia, Sudan, Syria, United Arab Emirates or the Republic of Yemen. 3.28 Relationships With Related Persons. Except as disclosed in Part 3.28 of the Disclosure Schedule, neither Seller nor the Member nor any Related Person of either of them has, or since January 1, 2000, has had, any interest in any property (whether real, personal or mixed and whether tangible or intangible) used in or pertaining to Seller's business. Neither Seller nor the Member nor any Related Person of any of them owns, or since January 1, 2000, 57 has owned, of record or as a beneficial owner, an equity interest or any other financial or profit interest in any Person that has (a) had business dealings or a material financial interest in any transaction with Seller other than business dealings or transactions disclosed in Part 3.28 of the Disclosure Schedule, each of which has been conducted in the Ordinary Course of Business with Seller at substantially their prevailing market prices and on substantially their prevailing market terms or (b) to the Knowledge of Seller, engaged in competition with Seller with respect to any line of the products or services of Seller (a "Competing Business") in any market presently served by Seller, except for ownership of less than one percent (1%) of the outstanding capital stock of any Competing Business that is publicly traded on any recognized exchange or in the over-the-counter market. Except as set forth in Part 3.28 of the Disclosure Schedule, neither Seller nor the Member nor any Related Person of any of them is a party to any Contract with, or has any claim or right against, Seller. 3.29 Brokers or Finders. Except for McDonald Investments, Inc., neither Seller nor any of its Representatives have incurred any obligation or liability, contingent or otherwise, for brokerage or finders' fees or agents' commissions or other similar payments in connection with the sale of Seller's business or the Assets or the Contemplated Transactions. 3.30 Securities Law Matters. (a) Seller is acquiring the Promissory Note, its interest in the Earnout Agreement and, if issued, the Contingent Note for its own account and not with a view to its distribution within the meaning of Section 2(11) of the Securities Act. (b) Seller confirms that Buyer has made available to Seller and its Representatives the opportunity to ask questions of the officers and management employees of Buyer and to acquire such additional information about the business and financial condition of Buyer as Seller has requested, and all such information has been received. EXCEPT AS SET FORTH IN THIS ARTICLE 3, AS SUPPLEMENTED OR MODIFIED BY THE DISCLOSURE SCHEDULE, THE CERTIFICATES DELIVERED PURSUANT TO SECTION 2.7(a), AND THE OTHER AGREEMENTS AND INSTRUMENTS EXECUTED AND DELIVERED BY SELLER IN CONNECTION WITH THE CONTEMPLATED TRANSACTIONS, SELLER MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING ANY REPRESENTATION OR WARRANTY OF MARKETABILITY, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE. BUYER ACKNOWLEDGES AND AGREES THAT SELLER MAKE NO REPRESENTATIONS OR WARRANTY WITH RESPECT TO ANY FORECASTS, PROJECTIONS, ESTIMATES OR BUDGETS DELIVERED OR MADE AVAILABLE TO BUYER OF 58 FUTURE REVENUES, FUTURE CASH FLOWS, ETC. THE FOREGOING REPRESENTATIONS AND WARRANTIES ARE EXPRESSLY LIMITED TO THE BUSINESS AND ITS ASSETS, PROPERTIES, AND LIABILITIES. ANY REFERENCE TO MEMBER, PARENT, THE PRIOR OWNER OR THEIR RESPECTIVE RELATED PERSONS OR AFFILIATES IS LIMITED TO MATTERS CONCERNING THE BUSINESS AND ITS ASSETS, PROPERTIES, AND LIABILITIES. 4. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and warrants to Seller as follows: 4.1 Organization and Good Standing. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, with full corporate power and authority to conduct its business as it is now conducted. 4.2 Authority; No Conflict. (a) This Agreement constitutes the legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms. Upon the execution and delivery by Buyer of the Transaction Documents to which it is a party, each of which will constitute the legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its respective terms. Buyer has the absolute and unrestricted right, power and authority to execute and deliver this Agreement and the Transaction Documents to which it is a party and to perform its obligations under this Agreement and thereunder, and such action has been duly authorized by all necessary corporate action. (b) Neither the execution and delivery of this Agreement by Buyer nor the consummation or performance of any of the Contemplated Transactions by Buyer will give any Person the right to prevent, delay or otherwise interfere with any of the Contemplated Transactions pursuant to: (i) any provision of Buyer's Governing Documents; (ii) any resolution adopted by the board of directors or the shareholders of Buyer; (iii) any Legal Requirement or Order to which Buyer may be subject; or (iv) any Contract to which Buyer is a party or by which Buyer may be bound. 59 Buyer is not and will not be required to obtain any Consent from any Person in connection with the execution and delivery of this Agreement or the consummation or performance of any of the Contemplated Transactions. 4.3 Certain Proceedings. There is no pending Proceeding that has been commenced against Buyer and that challenges, or may have the effect of preventing, delaying, making illegal or otherwise interfering with, any of the Contemplated Transactions. To Buyer's Knowledge, no such Proceeding has been threatened. 4.4 Brokers or Finders. Neither Buyer nor any of its Representatives have incurred any obligation or liability, contingent or otherwise, for brokerage or finders' fees or agents' commissions or other similar payment in connection with the Contemplated Transactions. 4.5 Sufficient Funds. Buyer has sufficient funds to satisfy and discharge its obligations or promises (monetary or otherwise) under the Transaction Documents to which it is a party. 5. [Intentionally Omitted] 6. [Intentionally Omitted] 7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE Buyer's obligation to purchase the Assets and to take the other actions required to be taken by Buyer at the Closing is subject to the satisfaction, at the Closing, of each of the following conditions (any of which may be waived by Buyer, in whole or in part): 7.1 Consents. Each of the Consents identified in Exhibit 7.1 (the "Material Consents") shall have been obtained and shall be in full force and effect. 7.2 Additional Documents. Seller shall have caused the documents and instruments required by Section 2.7(a) and the following documents to be delivered (or tendered subject only to Closing) to Buyer: (a) The Certificate of Formation and all amendments thereto of Seller, duly certified as of a recent date by the Secretary of State of Delaware; (b) If requested by Buyer, any Consents or other instruments that may be required to permit Buyer's qualification in each jurisdiction in which Seller is licensed or qualified to do business as a foreign entity under the name "Greenville Tube" or any derivative thereof; (c) Releases of all Encumbrances on the Assets, other than Permitted Encumbrances; (d) Certificates dated as of a date not earlier than the third (3rd) business day prior to the Closing as to the good standing of Seller, executed by the appropriate officials of the State of Delaware and each jurisdiction in 60 which Seller is licensed or qualified to do business as a foreign corporation as specified in Part 3.1(a) of the Disclosure Schedule; (e) Certificates dated as of a date not earlier than the tenth (10th) business day before the Closing as to the payment of all applicable state Taxes executed by the appropriate officials in Pennsylvania and Arkansas; and (f) Such other documents as Buyer may reasonably request for the purpose of facilitating the consummation or performance of any of the Contemplated Transactions. 7.3 Title Insurance. Buyer shall have received unconditional and binding commitments to issue policies of title insurance, dated the Closing Date, in an aggregate amount equal to $2,000,000, deleting all requirements listed in ALTA Schedule B-1, amending the effective date to the date and time of recordation of the memorandum of the Facility Lease with no exception for the gap between Closing and recordation, deleting or insuring over Buyer's or its lenders' title objections attaching all endorsements required by Buyer in order to ensure provision of coverage required by Buyer or its lenders and otherwise in form satisfactory to Buyer insuring Buyer's leasehold interest in each parcel of Owned Real Property or interest therein. Such title insurance commitments must be acceptable to Buyer in its sole discretion. Buyer shall pay the fee for such commitments. 7.4 Governmental Authorizations. Buyer shall have received such Governmental Authorizations as are necessary or desirable to allow Buyer to operate the Assets from and after the Closing. 7.5 Employees. (a) Buyer shall have entered into employment agreements with those employees of Seller identified in Exhibit -------- 7.5. (b) Those key employees of Seller identified on Exhibit 7.5, or substitutes therefor who shall be acceptable to Buyer, in its sole discretion, shall have accepted employment with Buyer on terms mutually agreeable to the Buyer and each such respective employee, with such employment to commence on and as of the Closing Date. (c) Substantially all other employees of Seller shall be available for hiring by Buyer, in its sole discretion, on and as of the Closing Date. 7.6 Ancillary Agreements. The relevant Persons shall have entered into ancillary agreements in form and substance as set forth in Exhibit 7.6 hereto. 7.7 Financing. Buyer shall have received proceeds under its credit and subscription agreements with the providers of Buyer's debt and equity financing sufficient for Buyer to fund the consummation of the Contemplated Transactions and satisfy its working capital requirements after the Closing. 61 7.8 Management Investment. The employees listed on Exhibit 7.8 shall have purchased at least Two Hundred Ninety Thousand Dollars ($290,000) of the Buyer's common stock. 8. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE Seller's obligation to sell the Assets and to take the other actions required to be taken by Seller at the Closing is subject to the satisfaction, at the Closing, of each of the following conditions (any of which may be waived by Seller in whole or in part): 8.1 Consents. Each of the Consents identified in Exhibit 8.1 shall have been obtained and shall be in full force and effect. 9. NO TERMINATION. Buyer and Seller acknowledge and agree that the execution and delivery of this Agreement and the closing of the transactions contemplated hereby are occurring simultaneously. Accordingly, this Agreement shall not be deemed to be executed and delivered unless and until all of the conditions to Closing have been satisfied or waived, and all deliveries at Closing required hereunder have been made, and once the conditions to Closing have been satisfied or waived and all deliveries required hereunder have been made, no party hereto will have any right to terminate this Agreement. 10. ADDITIONAL COVENANTS 10.1 Employees and Employee Benefits. (a) Information on Active Employees. For the purpose of this Agreement, the term "Active Employees" shall mean all employees employed on the Closing Date by Seller in the operation of the business acquired by Buyer hereunder, including employees on temporary leave of absence, including family medical leave, military leave, temporary disability or sick leave, but excluding employees on long-term disability leave. A list of Seller's employees as of the Closing Date is attached hereto as Exhibit 10.1(a). (b) Employment of Active Employees by Buyer. (i) Attached hereto as Exhibit 10.1(b)(i) is a list of Active Employees to whom Buyer has made an offer of employment that has been accepted to be effective on the Closing Date (the "Hired Active Employees"). Effective immediately before the Closing, Seller will terminate the employment of all of its Hired Active Employees. (ii) Neither Seller nor its Related Persons shall solicit the continued employment of any Active Employee (unless and until Buyer has informed Seller in writing that the particular Active Employee will not receive any employment offer from Buyer) or the employment of any Hired Active Employee after the Closing. Set forth on 62 Exhibit 10.1(b)(ii) is a list of those Active Employees to whom Buyer will not make employment offers (the "Non-Hired Active Employees"). (iii) It is understood and agreed that (A) Buyer's expressed intention to extend offers of employment as set forth in this Section shall not constitute any commitment, Contract or understanding (expressed or implied) of any obligation on the part of Buyer to a post-Closing employment relationship of any fixed term or duration or upon any terms or conditions other than those that Buyer may establish pursuant to individual offers of employment, and (B) employment offered by Buyer is "at will" and may be terminated by Buyer or by an employee at any time for any reason (subject to any written commitments to the contrary made by Buyer or an employee and Legal Requirements). Nothing in this Agreement shall be deemed to prevent or restrict in any way the right of Buyer to terminate, reassign, promote or demote any of the Hired Active Employees after the Closing or to change adversely or favorably the title, powers, duties, responsibilities, functions, locations, salaries, other compensation or terms or conditions of employment of such employees. (iv) As of the Closing Date, each Hired Active Employee shall, without duplication of benefits, be given credit for all service with Seller before the Effective Time under all employee benefit plans (including credit for service as applicable to pre-existing conditions under Buyer's health insurance plans), programs, and arrangements maintained by or contributed to by Buyer in which the Hired Active Employee becomes a participant for the purposes of eligibility to participate, vesting, and determination of level of benefits (excluding however benefit accrual under any defined benefit plans, if any). (v) Seller shall be responsible for providing continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, for all Non-Hired Active Employees, all of Seller's former employees, and all Hired Active Employees who elect not to participate or are unable to participate in Buyer's health plans and, in each case, elects such continuation coverage, provided that Buyer will not advise Hired Active Employees who are eligible for coverage by Buyer's health plans to elect to receive such continuation coverage. (vi) Effective as of the Closing Date, Hired Active Employees who are participants in Seller's 401(k) plan shall become fully vested in their account balances in such plan (the "Seller Savings Plan") and distributions of such account balance shall be made available to 63 such Hired Active Employees as soon as reasonably practicable following the Closing Date, in accordance with the provisions of the Seller Savings Plan and Legal Requirements. As soon as reasonably practicable after the Closing Date, Buyer will establish a 401(k) plan that will accept rollover contributions from the Seller Savings Plan. (vii) Buyer and Seller will cooperate as necessary to effect the requirements of this Section 10.1. (c) Salaries and Benefits. (i) Seller shall be responsible for (A) the payment of any termination or severance payments (excluding all retention and salary continuation bonuses or payments) and the provision of health plan continuation coverage in accordance with the requirements of COBRA and Sections 601 through 608 of ERISA, (B) any and all payments to employees required under the WARN Act, and (D) payment of all retention payments or salary continuation payments to which Seller is contractually obligated. (ii) Seller shall be liable for any claims made or incurred by Active Employees and their beneficiaries through the Closing Date under the Employee Plans. For purposes of the immediately preceding sentence, a charge will be deemed incurred, in the case of hospital, medical or dental benefits, when the services that are the subject of the charge are performed and, in the case of other benefits (such as disability or life insurance), when an event has occurred or when a condition has been diagnosed that entitles the employee to the benefit. (d) Seller's Retirement and Savings Plans. All Hired Active Employees who are participants in Seller's or Member's retirement plans shall retain their accrued benefits under such retirement plans as of the Closing Date, and Seller or Member (or Seller's or Member's retirement plans) shall retain sole liability for the payment of such benefits as and when such Hired Active Employees become eligible therefor under such plans. All Hired Active Employees shall become fully vested in their accrued benefits under Seller's or Member's retirement plans as of the Closing Date, and Seller or Member will so amend such plans if necessary to achieve this result. (e) No Transfer of Assets. Neither Seller nor Member nor their respective Related Persons will make any transfer of pension or other employee benefit plan assets to Buyer. 64 (f) General Employee Provisions. (i) Seller and Buyer shall give any notices required by Legal Requirements and take whatever other actions with respect to the plans, programs and policies described in this Section 10.1 as may be necessary to carry out the arrangements described in this Section 10.1. (ii) Seller and Buyer shall provide each other with such plan documents and summary plan descriptions, employee data or other information as may be reasonably required to carry out the arrangements described in this Section 10.1. (iii) If any of the arrangements described in this Section 10.1 are determined by the IRS or other Governmental Body to be prohibited by law, Seller and Buyer shall modify such arrangements to as closely as possible reflect their expressed intent and retain the allocation of economic benefits and burdens to the parties contemplated herein in a manner that is not prohibited by law. (iv) On the Closing Date, Seller shall provide Buyer with completed I-9 forms and attachments with respect to all Hired Active Employees, except for such employees as Seller certifies in writing to Buyer are exempt from such requirement. (v) Buyer shall not have any responsibility, liability or obligation, whether to Active Employees, former employees, their beneficiaries or to any other Person, with respect to any employee benefit plans, practices, programs or arrangements (including the establishment, operation or termination thereof and the notification and provision of COBRA coverage extension) maintained by Seller. 10.2 Payment of Certain Taxes. Buyer shall pay all personal property taxes due on the Assets for 2003. Seller shall pay all personal property taxes that are due on the Assets for 2002. 10.3 Payment of Other Retained Liabilities. In addition to payment of Taxes pursuant to Section 10.2, Seller shall pay, or make adequate provision for the payment, in full all of the Retained Liabilities and other Liabilities of Seller under this Agreement, except to the extent being reasonably contested in good faith by Seller. If any such Liabilities are not so paid or provided for, and are not being reasonably contested in good faith by Seller, or if Buyer reasonably determines that failure to make any payments will impair Buyer's use or enjoyment of the Assets or conduct of the Business, Buyer may, at any time after the Closing Date, elect to make all such payments directly (but shall have no obligation to do so) and pursuant to Section 11.8 set off and deduct the amount of all such payments then remaining from the first one or more maturing installments of the unpaid principal balance of the Promissory Note, each 65 effective as of the date such payments are actually made by Buyer. Buyer shall receive full credit under the Promissory Note and this Agreement for all payments so made. 10.4 Financial Information. For as long as Buyer has any monetary obligations to Seller under any of the Transaction Documents, Buyer shall furnish Seller with its unaudited quarterly and audited annual financial statements at the time and in the format it delivers such financial statements to its senior secured lender. 10.5 Removing Excluded Assets. Not later than thirty (30) days after the Closing Date, Seller shall remove all Excluded Assets from the Real Property. Buyer shall provide Seller and its Representatives with reasonable access during normal business hours and upon reasonable advance notice to the Real Property to effect the removal of any Excluded Assets. Such removal shall be done in such manner as to avoid any damage to the Facilities and other properties to be occupied by Buyer and any disruption of the business operations to be conducted by Buyer after the Closing. Seller shall promptly reimburse Buyer for any damage to the Assets or to the Real Property resulting from such removal. Should Seller fail to remove the Excluded Assets as required by this Section, Buyer shall have the right, but not the obligation, (a) to remove the Excluded Assets at Seller's sole cost and expense, (b) to treat the Excluded Assets as unclaimed and to proceed to dispose of the same under the laws governing unclaimed property or (c) to exercise any other right or remedy conferred by this Agreement or otherwise available at law or in equity. Seller shall promptly reimburse Buyer for all costs and expenses incurred by Buyer in connection with any Excluded Assets not removed by Seller as provided in this Section 10.5. 10.6 Reports and Returns. Seller shall reasonably promptly after the Closing prepare and file all reports and returns required by Legal Requirements relating to the Business as conducted by Seller using the Assets, to and including the Effective Time, and when required after the Closing Seller, and Buyer shall prepare and file all reports and returns required by Legal Requirements with respect to the Contemplated Transactions. 10.7 Assistance in Proceedings. The parties hereto will cooperate with other parties and their counsel in the contest or defense of, and make available its personnel and provide any testimony and access to its books and Records in connection with, any Proceeding involving or relating to (a) any Contemplated Transaction or (b) any action, activity, circumstance, condition, conduct, event, fact, failure to act, incident, occurrence, plan, practice, situation, status or transaction on or before the Closing Date involving Seller or its business, Member, or Buyer. 10.8 Noncompetition, Nonsolicitation and Nondisparagement. (i) Noncompetition. For a period of five (5) years after the Closing Date, neither Seller nor its Related Persons shall, anywhere in the United States, directly or indirectly invest in, own, manage, operate, finance, control, advise, render services to or guarantee the obligations of any Person engaged in or planning to become engaged in the business of manufacturing steel and stainless steel tubing ("Competing Business"), provided, however, that Seller or its Related Persons may purchase or otherwise acquire up to (but 66 not more than) one percent (1%) of any class of the securities of any Person (but may not otherwise participate in the activities of such Person) if such securities are listed on any national or regional securities exchange or have been registered under Section 12(g) of the Exchange Act. (b) Nonsolicitation. For a period of five (5) years after the Closing Date, neither Seller nor its Related Persons shall, directly or indirectly: (i) cause, induce or attempt to cause or induce any customer, supplier, licensee, licensor, franchisee, employee, consultant or other business relation of Buyer to cease doing business with Buyer, to deal with any competitor of Buyer or in any way interfere with its relationship with Buyer; (ii) cause, induce or attempt to cause or induce any customer, supplier, licensee, licensor, franchisee, employee, consultant or other business relation of Seller on the Closing Date or within the year preceding the Closing Date to cease doing business with Buyer, to deal with any competitor of Buyer or in any way interfere with its relationship with Buyer; or (iii) hire, retain or attempt to hire or retain any employee or independent contractor of Buyer or in any way interfere with the relationship between Buyer and any of its employees or independent contractors. (c) Nondisparagement. After the Closing Date, none of the parties hereto will disparage either of the other parties' shareholders, members, managers, directors, officers, employees, agents or Representatives. (d) Modification of Covenant. If a final judgment of a court or tribunal of competent jurisdiction determines that any term or provision contained in Section 10.8(a) through (c) is invalid or unenforceable, then the parties agree that the court or tribunal will have the power to reduce the scope, duration or geographic area of the term or provision, to delete specific words or phrases or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision. This Section 10.8 will be enforceable as so modified after the expiration of the time within which the judgment may be appealed. This Section 10.8 is reasonable and necessary to protect and preserve Buyer's legitimate business interests and the value of the Assets and to prevent any unfair advantage conferred on Seller. 10.9 Customer and Other Business Relationships. After the Closing, Seller at no additional cost or expense to Seller, will cooperate with Buyer in its efforts to continue and 67 maintain for the benefit of Buyer those business relationships of Seller existing prior to the Closing and relating to the business to be operated by Buyer after the Closing, including relationships with lessors, employees, regulatory authorities, licensors, customers, suppliers and others. Seller will refer to Buyer all inquiries relating to the Business. Neither Seller nor its officers or Related Persons shall, and Seller shall instruct its managers, employees, and agents not to, intentionally or recklessly take any action that would diminish the value of the Assets after the Closing or that would interfere with the business of Buyer to be engaged in after the Closing, including disparaging the name or business of Buyer. Notwithstanding the foregoing, Seller will not be in breach of this Section 10.9 if its Member has a dispute with a supplier or customer who is or was a customer or supplier of Seller or Buyer if the dispute is not related to Seller or the business that Seller or Buyer have conducted or is conducting with the Acquired Assets and Assumed Liabilities. 10.10 Retention of and Access to Records. After the Closing Date, Buyer shall retain for a period of not less than six (6) years those Records of Seller delivered to Buyer. Buyer also shall provide Seller and its Representatives reasonable access thereto, during normal business hours and on at least three (3) days' prior written notice, to enable them to prepare financial statements or tax returns or deal with tax audits. After the Closing Date, Seller shall provide Buyer and its Representatives reasonable access to Records that are Excluded Assets, during normal business hours and on at least three days' prior written notice, for any reasonable business purpose specified by Buyer in such notice. 10.11 Further Assurances. The parties shall cooperate reasonably with each other and with their respective Representatives in connection with any steps required to be taken as part of their respective obligations under this Agreement, and shall (a) furnish upon request to each other such further information, (b) execute and deliver to each other such other documents and (c) do such other acts and things, all as the other party may reasonably request for the purpose of carrying out the intent of this Agreement and the Contemplated Transactions. 10.12 TCE Sealant. While it is the lessee under the Facility Lease, Buyer shall be responsible for applying and maintaining, in accordance with the sealant manufacturer's specifications, at least the current sealant on the TCE degreaser sump and the area in which degreasing operation occur, and Buyer shall reseal such area from time to time as its environmental consultant shall recommend. 10.13 Master Lease Payments. Seller and its Affiliates lease vehicles and equipment under that certain Master Lease Agreement dated on or about August 1, 2001, among Amembal Capital Corporation, as lessor, and Chart Leasing, Inc. ("CLI"), and Parent, as lessees (the "Master Lease"). Following the Closing, Buyer will possess, and will operate certain equipment that is subject to the Master Lease (the "Leased Equipment"). Seller shall provide Buyer with detail of the portion of the monthly lease payments under the Master Lease that are allocable to the Leased Equipment thereunder and Notice of the date upon which the lessees under the Master Lease must make lease payments at least ten (10) days prior to such payment date, and Buyer shall pay to Seller the amount of the Buyer's portion of the payment not later than five (5) days before the date lessee's payment is due. Seller agrees that it shall promptly pay over the amount it receives from Buyer to CLI and Parent. If at the end of the term of the Master Lease, the Buyer desires to exercise the purchase option for any of the leased equipment, Buyer shall 68 give Seller notice of such exercise at least six (6) months before the end of such lease term, and Buyer shall pay to Seller the amount of any applicable option exercise price. 10.14 Effective Date. The effective date of this Agreement shall be July 1, 2003. If the Closing does not occur on July 1, 2003, Buyer shall reimburse Seller, Parent, or Member (as applicable) for all self-insured medical insurance costs it incurs with respect to the Hired Active Employees during the period commencing July 1, 2003, and ending on the Closing Date. Seller shall provide Buyer with evidence of all such costs and its payment thereof. Buyer shall reimburse Seller for all payroll expenses it incurs with respect to Hired Active Employees during the period commencing July 1, 2003, and ending on the Closing Date. Seller shall provide Buyer with evidence of such payroll expenses. 11. INDEMNIFICATION; REMEDIES. 11.1 Survival. All representations, warranties, covenants and obligations in this Agreement, the Disclosure Schedule, and the Transaction Documents shall survive the Closing and the consummation of the Contemplated Transactions, subject to Section 11.7. The right to indemnification, reimbursement or other remedy based upon such representations, warranties, covenants and obligations shall not be affected by any investigation (including any environmental investigation or assessment or any due diligence review or investigation) conducted with respect to, or any Knowledge acquired (or capable of being acquired) at any time before the execution and delivery of this Agreement on the Closing Date, with respect to the accuracy or inaccuracy of or compliance with any such representation, warranty, covenant or obligation. 11.2 Indemnification and Reimbursement by Seller. Subject to the limitations described herein, Seller will indemnify and hold harmless Buyer, and its shareholders, subsidiaries, officers, directors and employees (collectively, the "Buyer Indemnified Persons"), and will reimburse the Buyer Indemnified Persons for any loss, liability, claim, damage, expense (including costs of investigation and defense and reasonable attorneys' fees and expenses) or diminution of value, whether or not involving a Third-Party Claim (collectively, "Damages"), arising from or in connection with: (a) any Breach of any representation or warranty made by Seller in (i) this Agreement, or (ii) the Transaction Documents (excluding the Facility Lease); (b) any Breach of any covenant or obligation of Seller in this Agreement or the Transaction Documents (excluding the Facility Lease); (c) any brokerage or finder's fees or commissions or similar payments based upon any agreement or understanding made, or alleged to have been made, by any Person with Seller or the Member (or any Person acting on their behalf) in connection with any of the Contemplated Transactions; (d) any product or component thereof manufactured by or shipped, or any services provided by, Seller, in whole or in part, prior to the Closing Date, provided that Buyer shall be responsible for the first Ten Thousand 69 Dollars ($10,000) of product warranty claims arising in the eighteen (18) months immediately following the Closing and product warranty claims specifically assumed under Section 2.4(a)(iv); (e) any matter disclosed in Part 11.2(e) of the Disclosure Schedule; (f) any noncompliance with any Bulk Sales Laws or fraudulent transfer law in respect of the Contemplated Transactions; (g) any liability under the WARN Act or any similar state or local Legal Requirement that may result from an "Employment Loss", as defined by 29 U.S.C. Section 2101(a)(6), caused by any action of Seller prior to the Closing; (h) any Employee Plan established or maintained by Seller; or (i) any Retained Liabilities. Notwithstanding any provision in this Agreement to the contrary, Buyer agrees that it shall be prohibited from asserting any claims for indemnification for expenses it incurs (i) for replacing any "shrink wrap" software programs that Seller is unable to assign to Buyer because Seller cannot obtain the consent of the software licensor to the assignment, or (ii) for Damages with respect to the Special Inventory. 11.3 Indemnification and Reimbursement by Seller - Environmental Matters. (a) TCE Matters. (i) Subject to the material compliance by Buyer with its obligations in Section 11.3(f) herein, Seller will indemnify and hold harmless Buyer and the other Buyer Indemnified Persons, and will reimburse Buyer and the other Buyer Indemnified Persons, for any Damages (including costs of any other Remedial Action) arising from or in connection with: (A) the TCE Contamination, provided, however, that as between Buyer and Seller, and without limiting the Buyer's right to indemnification with respect to the matters described in Section 11.3(a)(i)(B) through 11.3(a)(i)(D) herein, upon a determination by the Arkansas Department of Environmental Quality ("ADEQ") that Seller has complied with the ADEQ Consent Order to the full extent required by ADEQ, the TCE Contamination, referenced in this Section 11.3(a)(i)(A), will be considered a Non-TCE Environmental Condition, as provided in Section 11.3(b); 70 (B) any Environmental Claim related to the TCE Contamination; (C) the failure of the Seller to comply with the ADEQ Consent Order; and (D) any bodily injury (including illness, disability and death, regardless of when any such bodily injury manifested itself), personal injury, property damage (including trespass, nuisance, diminution in property value, wrongful eviction and deprivation of the use of real property) or other damage of or to any Person, property (real or personal), or any Assets from the TCE Contamination. (ii) For purposes of Section 11.3(a), there shall be a rebuttable presumption, subject to Section 11.3(a)(iii), that any TCE Contamination that was present in the Environment at, on or emanating from the Facilities or present in Facility building components (e.g., concrete flooring) was present at or prior to the Closing Date provided that, so long as Buyer uses TCE, Buyer complies with the following requirements set forth in this Section 11.3(a)(ii): (A) maintain the trichloroethylene-resistant sealant currently on the Facility floor pursuant to the sealant manufacturer's instructions; (B) provide written notification to Seller of any Release of fifty (50) pounds of TCE to soil and/or groundwater at, on or from the Greenville Property; (C) provide a certification to Seller within one (1) year of the Closing Date and annually thereafter as to whether there have been any Releases of greater than fifty (50) pounds of TCE to soil and/or groundwater at, on or from the Greenville Property during the preceding year and, if applicable, a description of any such Releases, including, without limitation, the date, location and circumstances of the Release, the estimated amount of TCE Released, a description of remedial measures taken to address such TCE Release(s) and a statement as to whether such TCE Release was reported to any Governmental Body and the date of such report, if applicable; and (D) provide to Seller written notice at least ten (10) days prior to the performance of regularly scheduled preventative maintenance on the TCE degreaser involving transfer of 71 TCE from the degreaser to and from an in-line aboveground storage tank or any similar container; and provide Parent, Member, Seller or their respective Representatives an opportunity to observe any activities related thereto. (iii) Subject to the provisions contained in this Section 11.3(a)(iii), Buyer may assign its rights under Section 11.3(a) without Seller's consent, provided, that Buyer, its successors and assigns, shall provide written notice to Seller within five (5) days of any such assignment. A Buyer Change of Control shall affect assignment of the rebuttable presumption as follows: (A) Following the consummation of a Buyer Change of Control, the rebuttable presumption that the TCE Contamination pre-dated the Closing Date shall terminate and not apply and Buyer shall not be entitled to rely upon the same; provided, that, (x) members of the Investor Group, in their capacities as Buyer Indemnified Parties, and (y) Buyer, in the event the Buyer Change of Control was a sale of assets and the Investor Group, or any combination of the members of the Investor Group or their Affiliates continues to own in excess of 50% of the voting power of Buyer, shall, subject to Section 11.3(a)(ii), continue to be entitled to the benefit of the rebuttable presumption. (B) Other than as provided in the immediately preceding Section 11.3(a)(iii)(A), the right of the Buyer Indemnified Parties to indemnification and reimbursement, and Seller's obligation to provide the same, under Section 11.3(a), including, without limitation, indemnification for any Third-Party Claim shall continue and the rebuttable presumption discussed above, shall not be impaired. (b) Non-TCE Matters. (i) Subject to the material compliance by Buyer with its obligations in Sections 11.3(c), (d), (e) and (f) herein, Seller will indemnify and hold harmless Buyer and the other Buyer Indemnified Persons, and will reimburse Buyer and the other Buyer Indemnified Persons, for any Damages (including costs of any other Remedial Action) arising from or in connection with any Environmental Claims arising out of or relating to: (A) any Breach of any representation or warranty made by Seller in Section 3.22 of this Agreement, provided that such Breach is not a result of fraud; 72 (B) ownership or operation at any time on or prior to the Closing Date of any of the Facilities, Assets, the Business or the Greenville Property; (C) any Hazardous Materials that are present on, under, or emanating from the Facilities, Assets, or the Greenville Property or that were disposed or transferred from the Facilities, Assets or the Greenville Property at any time by Seller on or prior to the Closing Date, (D) any bodily injury (including illness, disability and death, regardless of when any such bodily injury manifested itself), personal injury, property damage (including trespass, nuisance, diminution in property value, wrongful eviction and deprivation of the use of real property) or other damage of or to any Person, property (real or personal), or any Assets prior to the Closing Date or from any Hazardous Material that was (i) present or reasonably suspected to be present on or before the Closing Date on or at the Facilities (or present or reasonably suspected to be present on any other property, if such Hazardous Material emanated from any Facility or the Greenville Property and was present or reasonably suspected to be present on any Facility or the Greenville Property, on or prior to the Closing Date), or (ii) Released by any Person on or at any Facilities, Assets, or the Greenville Property at any time on or prior to the Closing Date, and (E) any Remedial Actions taken by Seller at the Facilities. (ii) The circumstances and conditions described in Sections 11.3(b)(i)(A) through 11.3(b)(i)(E) are collectively referred to herein as "Non-TCE Environmental Conditions." The parties acknowledge and agree that Section 11.3(b) shall not include obligations with respect to TCE Contamination, except as provided in Section 11.3(a)(i)(A). In the event of a Buyer Change of Control, the right of the Buyer Indemnified Parties to indemnification and reimbursement under Section 11.3(b) shall terminate automatically and be void and of no force and effect; Notwithstanding the foregoing sentence, (x) the Buyer Indemnified Parties (excluding Charles E. Downs, Richard L. Vareha, Harry R. Holstead, and Larry B. McGaslin), and (y) Buyer, in the event the Buyer Change of Control was a sale of assets and the Investor Group, or any combination of its members, continues to own in excess of 50% of the voting power of Buyer, shall be permitted to assert a claim against Seller under Section 11.3(b); provided that in the event that such claim is made against the Buyer Indemnified 73 Parties by a successor owner of Buyer or its assets, the right to indemnification or reimbursement is limited to claims substantially similar to those in Section 11.3(b)(i). (c) In the event of an Environmental Claim related to Non-TCE Environmental Conditions initiated by any Third Party related to any Environmental Liabilities in connection with a proposed acquisition of assets from Buyer or a proposed loan to Buyer (the "Acquisition Environmental Claim"), Seller shall have no obligation of indemnification or reimbursement under Section 11.3(b) herein if the concentrations of constituents identified by such Third Party are at or below the screening levels for industrial land use developed by U.S. EPA-Region 6 pursuant to its Corrective Action Strategy ("SLs"), any similar standards applicable in Arkansas subsequently adopted in the event U.S. EPA-Region 6 withdraws or revokes the SLs. In the event that the concentrations of constituents exceed such levels or no applicable limit exists for a particular constituent, Seller will perform a risk assessment for that constituent, in compliance with any applicable protocols or guidance acceptable to the Arkansas Department of Environmental Quality and U.S. EPA, Region 6 at the time of the risk assessment at Seller's sole cost, and will perform such Remedial Action, if any, reasonably necessary to meet the risk level acceptable to the Arkansas Department of Environmental Quality and the U.S. EPA Region 6 for an industrial facility at the time of the risk assessment. Input parameters into the risk assessment must be consistent with the then current use of the Facilities, as long as such use is industrial. (d) In the event of an Environmental Claim related to Non-TCE Environmental Conditions initiated by any Governmental Body or for which a Governmental Body requires a response, Seller will be responsible for any Remedial Action required by such Governmental Body under Environmental Law with respect to such Non-TCE Environmental Conditions. Upon completion of Remedial Action to the satisfaction of any Governmental Body having jurisdiction over any Non-TCE Environmental Condition, Seller shall have no further indemnity or reimbursement obligation with respect to any such Environmental Claim. (e) Buyer shall not be entitled to indemnification or reimbursement under Section 11.3(b) with respect to any Non-TCE Environmental Condition in the absence of an Environmental Claim. (f) The procedure described in Section 11.9 will apply to any claim (whether for monetary damages or injunctive relief) relating to a matter covered by Section 11.3 and as provided in Section 11.4(g), subject to the following: Seller shall be entitled to control any Proceeding with respect to which indemnity may be sought under this Section 11.3. Buyer shall be prohibited from undertaking any TCE Remedial Action or any other 74 Remedial Action arising out of an Environmental Claim related to any Non-TCE Environmental Condition without the prior written consent of Seller; provided, however, if Seller refuses or neglects to perform a Remedial Action after notice from Buyer, as provided in Section 11.9, and Buyer has a reasonable, good faith belief that it will be subject to damages, penalties, fines or action taken by a Governmental Body in response to Seller's failure to undertake the TCE Remedial Action or any other Remedial Action, Buyer may control the Proceeding. Buyer hereby grants to Seller, its employees, managers, agents, consultants, contractors and subcontractors, access to such portions of the Real Property as may be reasonably required so as to permit Seller to perform the TCE Remedial Action or any other Remedial Action. In the course of any Remedial Action performed by Seller at the Facilities pursuant to this Agreement or in relation to the TCE Remedial Action, the following conditions shall apply: (i) Seller shall provide Buyer with copies of any and all analysis results, workplans, reports and any correspondence with a Governmental Body associated with such Remedial Action; (ii) Seller shall not unreasonably or unnecessarily interfere in any way with Buyer's operation of the Facilities; (iii) Seller follow all reasonable safety rules communicated to Seller in writing by Buyer, but in no event shall Buyer be responsible for the safety of Seller, its employees, contractors or invitees; (iv) Seller shall inform Buyer in writing at least five (5) days in advance of any activity that is to take place at the Facilities; (v) Seller shall perform all such Remedial Actions during normal business hours, except with the written permission of Buyer (such permission not to be unreasonably withheld, delayed, denied or conditioned); (vi) Seller shall not communicate to any Governmental Body, a neighboring property owner, or any other Person that Buyer is responsible for the TCE Remedial Action or the TCE Contamination, provided Buyer maintains the trichloroethylene-resistant sealant on the Facility floor; (vii) Seller shall provide copies to Buyer of any such Remedial Action workplan at least ten (10) days in advance of the submittal of any such workplan to any Governmental Body and revise such Remedial Action workplan to incorporate any reasonable comments made by Buyer; 75 (viii) all of Seller's contractors or subcontractors operating at the Facilities shall have in force during any such Remedial Action performed by that contractor or subcontractor on the Facilities insurance coverage of the following types, in at least the following amounts: (A) Workers'compensation in accordance with all applicable statutory requirements; (B) Comprehensive general liability insurance with a combined single limit of not less than $1,000,000 per occurrence for bodily injury and property damage; (C) Comprehensive automobile liability, including coverage for all owned and non-owned vehicles used in connection with any Remedial Action, with a combined single limit of not less than $1,000,000 per occurrence for bodily injury and property damage; (D) Employers' liability insurance with limits of not less than $1,000,000 per occurrence; (E) Environmental impairment liability insurance with limits of not less than $1,000,000 per occurrence and $1,000,000 aggregate, or higher if required by state or federal Law; and (F) Any such insurance policy shall name Buyer as an additional insured and shall contain an agreement or endorsement that it will not be canceled or materially modified by the insurer without at least thirty (30) days prior written notice to Buyer. (ix) the TCE Remedial Action or any such Remedial Action at the Facilities shall be performed in conformance with all applicable Environmental Laws; (x) Seller shall be responsible for the handling, storage and disposal of any Hazardous Materials created, collected or otherwise generated in connection with the TCE Remedial Action or any such Remedial Action performed pursuant to this Agreement; (xi) Seller shall take all precautions necessary to prevent damage to the Facilities and shall promptly repair or replace any and all damage to the Facilities caused by any Remedial Action. At the conclusion of the Remedial Action, Seller shall restore the Facilities substantially the same condition it was in prior to the commencement of the Remedial Action; 76 (xii) if required by any Governmental Body having jurisdiction over the TCE Remedial Action or if required in conformance with Occupational Safety and Health Laws, Seller shall perform such Remedial Actions as are necessary to reduce exposures by workers at the Facilities to the levels required pursuant to Occupational Health and Safety Law; (xiii) Seller shall provide Buyer in advance with the name of any contractor to perform any such Remedial Action or activity in relation to the TCE Remedial Action, provided, however, that Buyer shall be deemed to have approved those contractors identified on Exhibit 11.3(f)(xiii). Buyer may reasonably reject a contractor not identified on Exhibit 11.3(f)(xiii), provided, however, that in the event that Buyer fails to notify Seller of such rejection in writing within ten (10) days of receipt of notice from Seller of the name of any contractor, Buyer will be deemed to have approved such contractor; (xiv) Seller shall provide Buyer, at Buyer's sole cost and expense, with split samples of any environmental media sampled, if requested by Buyer. In no event shall Buyer be deemed the generator or the arranger for disposal of any wastes or materials generated by or during any such Remedial Action; (xv) Buyer shall cooperate with Seller in the conduct of any such Remedial Action, including, without limitation, providing reasonable access to any necessary services, such as water, sewer and electricity, provided that Seller reimburses Buyer promptly for the additional out-of-pocket costs of such services; (xvi) Buyer shall not initiate any communication with any Governmental Body with respect to any Remedial Action performed under this Agreement without Seller's prior written consent, except in the event that Buyer: (A) notifies Seller, in writing, at least seven (7) days prior to such communication, which notification shall include a description of the agenda or topics for discussion; and (B) provides Seller the opportunity to participate in such communication. In such case, Seller may, by written notice to Buyer prior to the date of the proposed communication, postpone the communication for up to fourteen (14) days. If, following the expiration of the period of twenty-one (21) days from the date of Buyer's notice to Seller, Seller has not agreed to the proposed communication, with or without Seller's participation (in Seller's 77 sole discretion), Buyer may proceed to contact the Governmental Body pursuant to its original notice to Seller. (xvii) Buyer may initiate any communication with any Governmental Body with respect to any Environmental Liability performed under this Agreement other than a Remedial Action without Seller's prior written consent, provided that, in the event that Buyer has a reasonable belief that Seller is obligated to indemnify it with respect to such Environmental Liability, Seller must notify Buyer and afford Buyer an opportunity to participate in any such communication pursuant to Section 11.3(f)(xvi) of this Agreement. (xviii) In the case of any Remedial Action performed under this Agreement other than the TCE Remedial Action, the clean-up standards selected shall reflect the least stringent remediation standards acceptable under Environmental Law, assuming such Remedial Action is conducted using the most cost-effective commercially reasonable methods for investigation, remediation and/or containment, including, without limitation, the use of "institutional" or "engineering" controls or deed restrictions limiting the use of the relevant Facility to industrial purposes, provided that such controls or restrictions: (A) are consistent with applicable Environmental Law; and (B) do not materially preclude Buyer from using such Facility in the manner it was used in as of the Closing Date. (g) Without limiting the generality of the foregoing, absent fraud, the provisions of this Section 11.3 shall exclusively govern the rights and obligations of the parties and shall be the only remedies available to the parties hereto in respect of any matter arising hereunder with respect to the matters expressed herein, provided, however, that this Section 11.3(g) shall have no force and effect for Non-TCE Environmental Conditions on the first day following the expiration of the "Non-TCE Survival Period" (as defined in Section 11.7 herein). Following the expiration of the Non-TCE Survival Period, the Buyer Indemnified Parties may, subject to Section 11.3(b)(ii), pursue all other remedies for Non-TCE Environmental Conditions, whether statutory, regulatory, common law or otherwise. 11.4 Indemnification and Reimbursement by Buyer. Buyer will indemnify and hold harmless Seller and its shareholders, directors, officers and employees (the "Seller Indemnified Persons") and will reimburse Seller and Seller Indemnified Persons, for any Damages arising from or in connection with: (a) any Breach of any representation or warranty made by Buyer in this Agreement or the Transaction Documents (excluding the Facility Lease); 78 (b) any Breach of any covenant or obligation of Buyer in this Agreement or the Transaction Documents (excluding the Facility Lease); (c) any claim by any Person for brokerage or finder's fees or commissions or similar payments based upon any agreement or understanding alleged to have been made by such Person with Buyer (or any Person acting on Buyer's behalf) in connection with any of the Contemplated Transactions; (d) any Assumed Liabilities; (e) any liability resulting or arising from Buyer's ownership and operation of the Assets or business after the Closing that is not a Liability for which Seller otherwise indemnifies Buyer under Sections 11.2 or 11.3 hereof; or (f) any liability under WARN Act caused by Buyer's decision not to hire the requisite number of Active Employees so as to avoid liability under the WARN Act; (g) any Environmental Claims arising out of or relating to: (i) operation by Buyer at any time subsequent to the Closing Date of any of the Facilities, Assets, the Business or the Greenville Property; (ii) any Hazardous Materials that Buyer causes to be present on, under, or emanating from the Facilities, Assets, or the Greenville Property or that Buyer disposes or transfers from the Facilities, Assets or the Greenville Property at any time subsequent to the Closing Date, and (iii) any bodily injury (including illness, disability and death, regardless of when any such bodily injury manifested itself), personal injury, property damage (including trespass, nuisance, diminution in property value, wrongful eviction and deprivation of the use of real property) or other damage of or to any Person, property (real or personal), or any Assets subsequent to the Closing Date or from any Hazardous Material that Buyer causes to be (i) present or reasonably suspected to be present subsequent to the Closing Date on or at the Facilities (or present or reasonably suspected to be present on any other property, if such Hazardous Material emanated from any Facility or the Greenville Property and Buyer caused the Hazardous Material to be present on the Facility or the Greenville Property, subsequent to the Closing Date), or (ii) Released on or at any Facilities, Assets, or the Greenville Property at any time subsequent to the Closing Date any liability arising under Environmental Law, including, without limitation, any Environmental Liabilities, resulting or arising from the acts or omissions of Buyer or the ownership or operation of the Facilities, 79 Assets, the Business or the Greenville Property after the Closing Date; and (h) any damage or destruction to the Leased Equipment, normal wear and tear excepted and further excepting any existing wear, tear, and damage existing on the Closing Date. The circumstances and conditions described in Sections 11.4(g)(i)-(iii) are collectively referred to herein as "Seller Environmental Claims." Seller shall not be entitled to indemnification or reimbursement under this Section 11.4 (g) with respect to any Seller Environmental Claim in the absence of an Environmental Claim. In the event of an Environmental Claim related to Seller Environmental Claims, the provisions of Section 11.3 (d) and (f) (except Section 11.3 (f)(vi)) shall apply, with the term "Seller Environmental Claims" substituted for "Non-TCE Environmental Claims," the term "Buyer" substituted for "Seller," "Seller" substituted for "Buyer" and Section 11.4(g) substituted for Section 11.3. 11.5 Limitations on Amount - Seller. Seller shall have no liability (for indemnification or otherwise) with respect to claims under Section 11.2(a), 11.2(f), 11.2(g), 11.2(i), and 11.3(b) until the total of all Damages with respect to such matters exceeds $150,000.00 (the "Threshold") and then only for the amount by which such Damages exceed the Threshold. However, the --------- Threshold will not apply to claims under Sections 11.2(b), 11.2(c), 11.2(d), 11.2(e) and 11.2(h) or to matters arising in respect of Sections 3.9, 3.14, 3.22, 3.29, 3.30, 11.3(a) or fraud. Subject to the immediately preceding sentence: (a) Seller's aggregate liability for Damages under Section 11.2(a) 11.2(f), 11.2(g) and 11.2(i) shall not exceed $2,000,000 provided that this Section 11.5(a) shall not apply to Sections 2.4(b)(iii), (v), (vi), (vii) (ix), (xii) and (xv); and (b) Seller's aggregate liability for Damages for Non-TCE Contamination under Section 11.3(b) shall not exceed $13,500,000 provided, however, that the limitation under this Section 11.5(b) shall not apply to Damages for Non-TCE Contamination under Section 11.3(b)(i)(D). 11.6 Limitations on Amount - Buyer. Buyer will have no liability (for indemnification or otherwise) with respect to claims under Section 11.4(a) until the total of all Damages with respect to such matters exceeds $150,000.00 and then only for the amount by which such Damages exceed $150,000.00. However, this Section 11.6 will not apply to claims under Section 11.4(b) through Section 11.4(h) or matters arising in respect of Sections 4.4 or 4.5, fraud, or to any Breach of any of Buyer's representations and warranties of which Buyer had Knowledge at any time before the date on which such representation and warranty is made or any intentional Breach by Buyer of any covenant or obligation, and Buyer will be liable for all Damages with respect to such Breaches. 11.7 Time Limitations. Seller will have liability (for indemnification or otherwise) with respect to any Breach of (i) a covenant or obligation to be performed or complied with (other than those in Sections 2.1 80 and 2.4(b), (v)(except as provided in Section 11.3(b)), (ix), (xi), (xii), and (xv), and Articles 10, 12, and 13, as to which a claim may be made at any time and those in Sections 2.4(b)(iii), (vi), and (vii) as to which a claim may be made during the period before the applicable statute of limitations, including extensions thereof, becomes effective to bar claims), or (ii) a representation or warranty (other than those in Sections 3.9, and 3.22 (except for nonfraudulent Breaches as provided in Section 11.3(b)), as to which a claim may be made at any time and Section 3.14, and 3.16, as to which a claim may be made during the period before the applicable statute of limitations, including extensions thereof, becomes effective to bar claims), only if on or before January 1, 2005, Buyer notifies Seller in writing of a claim specifying the factual basis of the claim in reasonable detail to the extent then known by Buyer. Nothing in the preceding sentences shall constitute or be construed as an assumption of any of Seller's Retained Liabilities by Buyer. Seller's obligation to indemnify the Buyer Indemnified Parties for Non-TCE Environmental Conditions in Section 11.3(b) shall expire on the twenty-fifth (25) anniversary of the Closing Date (the "Non-TCE Survival Period"). Thereafter, the Buyer Indemnified Parties may, subject to Section 11.3(b)(ii), pursue all other remedies for Non-TCE Environmental Conditions, whether statutory, regulatory, common law or otherwise. Buyer will have liability (for indemnification or otherwise) with respect to any Breach of (i) a covenant or obligation to be performed or complied with (other than those in Articles 10, 12, and 13 as to which a claim may be made at any time) or (ii) a representation or warranty (other than that set forth in Section 4.4, as to which a claim may be made at any time), only if on or before January 1, 2005, Seller notifies Buyer in writing of a claim specifying the factual basis of the claim in reasonable detail to the extent then known by Seller. 11.8 Right of Setoff. Upon notice to Seller specifying in reasonable detail the basis therefor, Buyer shall set off any amount to which it may be entitled under this Article 11 against amounts otherwise remaining payable under the Promissory Note. If the Buyer's Damages exceed amounts available for setoff, Buyer may recover the excess from Seller directly. The exercise of such right of setoff by Buyer in good faith, whether or not ultimately determined to be justified, will not constitute an event of default under the Promissory Note or any instrument securing the Promissory Note. Neither the exercise of nor the failure to exercise such right of setoff will constitute an election of remedies or limit Buyer in any manner in the enforcement of any other remedies that may be available to it. If Seller disputes an exercise of Buyer's right of set off against the Promissory Note, Seller shall give Buyer written notice of such dispute and its basis in fact and law, and Buyer and Seller shall have thirty (30) days after Buyer's receipt of Seller's notice to negotiate a resolution of such dispute, which shall be evidenced in a written agreement signed by Buyer and Seller. If Buyer and Seller are unable to settle such dispute within such period, either Buyer or Seller will have the right, exercisable during the next thirty (30) day period, to refer the dispute to arbitration pursuant to the Commercial Arbitration Rules of the American Arbitration Association. If no such referral is made within the thirty (30) day period, the dispute shall be deemed to have been conclusively resolved in favor of the Buyer. If the dispute is referred to arbitration, each of (i) Buyer and (ii) Seller shall within thirty (30) days after the date of the referral, designate one arbitrator, and the two arbitrators shall select a third arbitrator, and the decision of a majority of the arbitrators shall be final and binding upon the parties to the arbitration and such decision may be enforced by a court of competent jurisdiction. 81 The decision of the arbitrators shall be in writing and shall be delivered within thirty days after the parties to the arbitration have been afforded an opportunity to present evidence and examine and cross-examine witnesses before the arbitrators. Buyer and Seller shall each pay one half of the arbitrators' fees and expenses. 11.9 Third-Party Claims. Promptly after receipt by a Person entitled to indemnity under Section 11.2, 11.3, or 11.4 (an "Indemnified Person") of notice of the assertion of a Third-Party Claim against it, such Indemnified Person shall give notice to the Person obligated to indemnify under such Section (an "Indemnifying Person") of the assertion of such Third-Party Claim, provided that the failure to notify the Indemnifying Person will not relieve the Indemnifying Person of any liability that it may have to any Indemnified Person, except to the extent that the Indemnifying Person demonstrates that the defense of such Third-Party Claim is prejudiced by the Indemnified Person's failure to give such notice. If an Indemnified Person gives notice to the Indemnifying Person pursuant to Section 11.9 of the assertion of a Third-Party Claim, the Indemnifying Person shall be entitled to participate in the defense of such Third-Party Claim and, to the extent that it wishes (unless (i) the Indemnifying Person is also a Person against whom the Third-Party Claim is made and the Indemnified Person determines in good faith that joint representation would be in appropriate or (ii) the Indemnifying Person fails to provide reasonable assurance to the Indemnified Person of its financial capacity to defend such Third-Party Claim and provide indemnification with respect to such Third-Party Claim), to assume the defense of such Third-Party Claim with counsel reasonably satisfactory to the Indemnified Person. After notice from the Indemnifying Person to the Indemnified Person of its election to assume the defense of such Third-Party Claim, the Indemnifying Person shall not, so long as it diligently conducts such defense, be liable to the Indemnified Person under this Article 11 for any fees of other counsel or any other expenses with respect to the defense of such Third-Party Claim, in each case subsequently incurred by the Indemnified Person in connection with the defense of such Third-Party Claim. If the Indemnifying Person assumes the defense of a Third-Party Claim, (i) such assumption will conclusively establish for purposes of this Agreement that the claims made in that Third-Party Claim are within the scope of and subject to indemnification, provided, however, that the right of the Indemnifying Person to contest the right of the Indemnified Person to indemnification with respect to Third-Party Claims arising under Section 11.3 or 11.4(g) of the Agreement shall not be extinguished until thirty (30) days after the assumption, and (ii) no compromise or settlement of such Third-Party Claims may be effected by the Indemnifying Person without the Indemnified Person's Consent unless (A) there is no finding or admission of any violation of Legal Requirement or any violation of the rights of any Person, (B) the sole relief provided is monetary damages that are paid in full by the Indemnifying Person, and (C) the Indemnified Person shall have no liability with respect to any compromise or settlement of such Third-Party Claims effected without its Consent. If notice is given to an Indemnifying Person of the assertion of any Third-Party Claim and the Indemnifying Person does not, within ten (10) days after the Indemnified Person's notice is given, give notice to the Indemnified Person of its election to assume the defense of such Third-Party Claim, the Indemnifying Person will be bound by any determination made in such Third-Party Claim or any compromise or settlement effected by the Indemnified Person. 82 Notwithstanding the foregoing, if an Indemnified Person determines in good faith that there is a reasonable probability that a Third-Party Claim may adversely affect it or its Related Persons other than as a result of monetary damages for which it would be entitled to indemnification under this Agreement, the Indemnified Person may, by notice to the Indemnifying Person, assume the exclusive right to defend, compromise or settle such Third-Party Claim, but the Indemnifying Person will not be bound by any determination of any Third-Party Claim so defended for the purposes of this Agreement or any compromise or settlement effected without its Consent (which may not be unreasonably withheld, delayed or conditioned). Notwithstanding the provisions of Section 13.4, each of Buyer and Seller hereby consents to the nonexclusive jurisdiction of any court in which a Proceeding in respect of a Third-Party Claim is brought against any Indemnified Person for purposes of any claim that a Indemnified Person may have under this Agreement with respect to such Proceeding or the matters alleged therein and agree that process may be served on such party with respect to such a claim anywhere in the world. With respect to any Third-Party Claim subject to indemnification under this Article 11: (i) both the Indemnified Person and the Indemnifying Person, as the case may be, shall keep the other Person fully informed of the status of such Third-Party Claim and any related Proceedings at all stages thereof where such Person is not represented by its own counsel, and (ii) the parties agree (each at its own expense) to render to each other such assistance as they may reasonably require of each other and to cooperate in good faith with each other in order to ensure the proper and adequate defense of any Third-Party Claim. With respect to any Third-Party Claim subject to indemnification under this Article 11, the parties agree to cooperate in such a manner as to preserve in full (to the extent possible) the confidentiality of all Confidential Information and the attorney-client and work-product privileges. In connection therewith, each party agrees that: (i) it will use its Best Efforts, in respect of any Third-Party Claim in which it has assumed or participated in the defense, to avoid production of Confidential Information (consistent with applicable law and rules of procedure), and (ii) all communications between any party hereto and counsel responsible for or participating in the defense of any Third-Party Claim shall, to the extent possible, be made so as to preserve any applicable attorney-client or work-product privilege. 11.10 Direct Claims. If an Indemnified Person may have a claim under Section 11.2 or 11.4 other than a Third Party Claim (a "Direct Claim"), the Indemnified Person shall provide written notice to the Indemnifying Person of such Direct Claim promptly after such Direct Claim becomes known to the Indemnified Person. A delay in giving such notice shall relieve the Indemnifying Person of liability for the Direct Claim only to the extent Indemnifying Person suffers actual prejudice because of delay. Upon receipt of notice of the Direct Claim, the Indemnified Party and Indemnifying Person shall in good faith promptly seek to resolve such Direct Claim. If the Parties cannot resolve the Direct Claim within sixty (60) days following receipt of the notice of Direct Claim, the Indemnified Person or Indemnified Person may elect to enforce their rights under this Agreement 11.11 Insurance; Tax. Any indemnification shall be (i) net of any reasonably anticipated federal or state income tax benefit specifically arising from the facts or circumstances 83 giving rise to the Damages, realizable by the Indemnified Person by a reduction in Taxes payable, or by the receipt of a refund of Taxes, by the Indemnified Person (or such Affiliate); and (ii) net of any amounts recovered or recoverable from any surety, insurance carrier or third party obligor, including any customer (and shall not include the cost of maintaining any surety or insurance policies). The Indemnified Party shall submit in a timely manner to any applicable surety, insurance carrier or third party obligor, including any customer, all claims for indemnifiable Damages for which it is reasonably likely that such entity would have a payment obligation to any such indemnified party (or its predecessors) and the indemnifying party shall be subrogated to the rights of such Indemnified Person to claim against such surety, insurance carrier or third party; provided, however, that any failure to collect any such amounts shall not constitute a defense to an obligation to indemnify for any such Damages. Any Tax benefit shall be determined in good faith by the independent public accountants of the indemnified party and shall apply to the earliest year reasonably permissible. 11.12 Limitation on Consequential Damages. Neither Buyer nor Seller shall be entitled to indemnification under this Article 11 for Consequential Damages related to Direct Claims. If a Third Party Claim includes claims by the third party for Consequential Damages, the Indemnifying Person shall indemnify and hold Indemnified Person harmless against the claims for Consequential Damages but only to the extent actually paid to the third party by the Indemnified Person pursuant to a non-appealable final Order 11.13 Payment of Claims. After (i) any Order of a Governmental Authority that is non-appealable (or for which the time for appeal has passed) shall have been entered with respect to a Direct Claim or Third Party Claim, or (ii) the Indemnified Person and Indemnifying Person shall have agreed to a mutually binding settlement with respect to a Direct Claim or Third Party Claim, the Indemnified Person shall give the Indemnifying Person notice of any amount payable by the Indemnifying Person to the Indemnified Person pursuant to this Agreement, and the Indemnifying Person shall pay such amount by wire transfer to the Indemnified Person within five Business Days after receipt of such notice. 11.14 Exclusive Means. Except for claims alleging fraud, this Section 11 provides the exclusive means by which Seller or Buyer may assert claims for indemnification. 11.15 Indemnification in Case of Strict Liability or Indemnitee Negligence. THE INDEMNIFICATION PROVISIONS IN THIS ARTICLE 11 SHALL BE ENFORCEABLE REGARDLESS OF WHETHER THE LIABILITY IS BASED UPON PAST, PRESENT OR FUTURE ACTS, CLAIMS OR LEGAL REQUIREMENTS (INCLUDING ANY PAST, PRESENT OR FUTURE BULK SALES LAW, ENVIRONMENTAL LAW, FRAUDULENT TRANSFER ACT, OCCUPATIONAL SAFETY AND HEALTH LAW OR PRODUCTS LIABILITY, SECURITIES OR OTHER LEGAL REQUIREMENT) AND REGARDLESS OF WHETHER ANY PERSON (INCLUDING THE PERSON FROM WHOM INDEMNIFICATION IS SOUGHT) ALLEGES OR PROVES THE SOLE, CONCURRENT, CONTRIBUTORY OR COMPARATIVE NEGLIGENCE OF THE PERSON SEEKING INDEMNIFICATION OR THE SOLE OR CONCURRENT STRICT LIABILITY IMPOSED UPON THE PERSON SEEKING INDEMNIFICATION. 84 11.16 Facility Lease. The various temporal and monetary limitations disclosed in Sections 11.4, 11.5, 11.6 and 11.7 shall not apply to any claim (whether or not for Damages) asserted by Buyer (as tenant) or Seller (as landlord) in connection with any breach or alleged breach of any representation, warranty, covenant, or promises contained in the Facility Lease. 12. CONFIDENTIALITY. 12.1 Definition of Confidential Information. As used in this Article 12, the term "Confidential Information" includes any and all of the following information of Seller or Buyer that has been or hereafter may be disclosed in any form, whether in writing, orally, electronically or otherwise, or otherwise made available by observation, inspection or otherwise by either party (Buyer on the one hand or Seller on the other hand) or its Representatives (collectively, a "Disclosing Party") to the other party or its Representatives (collectively, a "Receiving Party"): (i) all information that is a trade secret under applicable trade secret or other law; (ii) all information concerning product specifications, data, know-how, formulae, compositions, processes, designs, sketches, photographs, graphs, drawings, samples, inventions and ideas, past, current and planned research and development, current and planned manufacturing or distribution methods and processes, customer lists, current and anticipated customer requirements, price lists, market studies, business plans, computer hardware, Software and computer software and database technologies, systems, structures and architectures; (iii) all information concerning the business and affairs of the Disclosing Party (which includes historical and current financial statements, financial projections and budgets, tax returns and accountants' materials, historical, current and projected sales, capital spending budgets and plans, business plans, strategic plans, marketing and advertising plans, publications, client and customer lists and files, contracts, the names and backgrounds of key personnel and personnel training techniques and materials, however documented), and all information obtained from review of the Disclosing Party's documents or property or discussions with the Disclosing Party regardless of the form of the communication; and (iv) all notes, analyses, compilations, studies, summaries and other material prepared by the Receiving Party to the extent containing or based, in whole or in part, upon any information included in the foregoing. 85 Any trade secrets of a Disclosing Party shall also be entitled to all of the protections and benefits under applicable trade secret law and any other applicable law. If any information that a Disclosing Party deems to be a trade secret is found by a court of competent jurisdiction not to be a trade secret for purposes of this Article 12, such information shall still be considered Confidential Information of that Disclosing Party for purposes of this Article 12 to the extent included within the definition. In the case of trade secrets, each of Buyer and Seller hereby waives any requirement that the other party submit proof of the economic value of any trade secret or post a bond or other security. 12.2 Restricted Use of Confidential Information. Each Receiving Party acknowledges the confidential and proprietary nature of the Confidential Information of the Disclosing Party and agrees that such Confidential Information (i) shall be kept confidential by the Receiving Party, (ii) shall not be used for any reason or purpose other than to evaluate and consummate the Contemplated Transactions and (iii) without limiting the foregoing, shall not be disclosed by the Receiving Party to any Person, except in each case as otherwise expressly permitted by the terms of this Agreement or with the prior written consent of an authorized representative of Seller with respect to Confidential Information of Seller (each, a "Seller Contact") or an authorized representative of Buyer with respect to Confidential Information of Buyer (each, a "Buyer Contact"). Each of Buyer and Seller shall disclose the Confidential Information of the other party only to its Representatives who require such material for the purpose of evaluating the Contemplated Transactions and are informed by Buyer or Seller, as the case may be, of the obligations of this Article 12 with respect to such information. Each of Buyer and Seller shall use their Best Efforts to enforce the terms of this Article 12 as to its respective Representatives. Seller shall maintain as confidential any Confidential Information (including for this purpose any information of Seller of the type referred to in Sections 12.1(a)(i), (ii) and (iii), whether or not disclosed to Buyer) of the Seller relating to any of the Assets or the Assumed Liabilities. Notwithstanding the preceding sentence, Seller may use any Confidential Information of Seller before the Closing in the Ordinary Course of Business in connection with the transactions permitted by Section 5.2. From and after the Closing, the provisions of Section 12.2(a) above shall not apply to or restrict in any manner Buyer's use of any Confidential Information of the Seller relating to any of the Assets or the Assumed Liabilities. 12.3 Exceptions. Sections 12.2(a) and (b) do not apply to that part of the Confidential Information of a Disclosing Party that a Receiving Party demonstrates (a) was, is or becomes generally available to the public other than as a result of a breach of this Article 12 or the Confidentiality Agreement by the Receiving Party or its Representatives, (b) was or is developed by the Receiving Party independently of and without reference to any Confidential Information of the Disclosing Party or (c) was, is or becomes available to the Receiving Party on a nonconfidential basis from a Third Party not bound by a confidentiality agreement or any legal, fiduciary or other obligation restricting disclosure. Seller shall not disclose any Confidential Information of Seller relating to any of the Assets or the Assumed Liabilities in reliance on the exceptions in clauses (b) or (c) above. 86 12.4 Legal Proceedings. If a Receiving Party becomes compelled in any Proceeding or is requested by a Governmental Body having regulatory jurisdiction over the Contemplated Transactions to make any disclosure that is prohibited or otherwise constrained by this Article 12, that Receiving Party shall provide the Disclosing Party with prompt notice of such compulsion or request so that it may seek an appropriate protective order or other appropriate remedy or waive compliance with the provisions of this Article 12. In the absence of a protective order or other remedy, the Receiving Party may disclose that portion (and only that portion) of the Confidential Information of the Disclosing Party that, based upon advice of the Receiving Party's counsel, the Receiving Party is legally compelled to disclose or that has been requested by such Governmental Body, provided, however, that the Receiving Party shall use reasonable efforts to obtain reliable assurance that confidential treatment will be accorded by any Person to whom any Confidential Information is so disclosed. The provisions of this Section 12.4 do not apply to any Proceedings between the parties to this Agreement. 12.5 Return or Destruction of Confidential Information. If this Agreement is terminated, each Receiving Party shall (a) destroy all Confidential Information of the Disclosing Party prepared or generated by the Receiving Party without retaining a copy of any such material, (b) promptly deliver to the Disclosing Party all other Confidential Information of the Disclosing Party, together with all copies thereof, in the possession, custody or control of the Receiving Party with all copies thereof, in the possession, custody or control of the Receiving Party or, alternatively, with the written consent of a Seller Contact or a Buyer Contact (whichever represents the Disclosing Party) destroy all such Confidential Information and (c) certify all such destruction in writing to the Disclosing Party, provided, however, that the Receiving Party may retain a list that contains general descriptions of the information it has returned or destroyed to facilitate the resolution of any controversies after the Disclosing Party's Confidential Information is returned. 12.6 Attorney-Client Privilege. The Disclosing Party is not waiving, and will not be deemed to have waived or diminished, any of its attorney work product protections, attorney-client privileges or similar protections and privileges as a result of disclosing its Confidential Information (including Confidential Information related to pending or threatened litigation) to the Receiving Party, regardless of whether the Disclosing Party has asserted, or is or may be entitled to assert, such privileges and protections. The parties (a) share a common legal and commercial interest in all of the Disclosing Party's Confidential Information that is subject to such privileges and protections, (b) are or may become joint defendants in Proceedings to which the Disclosing Party's Confidential Information covered by such protections and privileges relates, (c) intend that such privileges and protections remain intact should either party become subject to any actual or threatened Proceeding to which the Disclosing Party's Confidential Information covered by such protections and privileges relates and (d) intend that after the Closing the Receiving Party shall have the right to assert such protections and privileges. No Receiving Party shall admit, claim or contend, in Proceedings involving either party or otherwise, that any Disclosing Party waived any of its attorney work-product protections, attorney-client privileges or similar protections and privileges with respect to any information, documents or other material not disclosed to a Receiving Party due to the Disclosing Party disclosing its Confidential Information (including Confidential Information related to pending or threatened litigation) to the Receiving Party. 87 12.7 Tax Disclosure. Notwithstanding anything in this Section 12 to the contrary, each party to the transactions contemplated herein (and each Affiliate and person acting on behalf of any such party) agree that each party (and each employee, representative, and other agent of such party) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated herein and all materials of any kind (including opinions or other tax analyses) that are provided to such party or such person relating to such tax treatment and tax structure, except to the extent necessary to comply with any applicable federal or state securities laws. This authorization is not intended to permit disclosure of any other information including (without limitation) (i) any portion of any materials to the extent not related to the tax treatment or tax structure of the transaction, (ii) the identities of participants or potential participants in the transaction, (iii) the existence or status of any negotiations, (iv) any pricing or financial information (except to the 3extent such pricing or financial information is related to the tax treatment or tax structure of the transaction), or (v) any other term or detail not relevant to the tax treatment or the tax structure of the transactions contemplated herein. 13. GENERAL PROVISIONS. 13.1 Expenses. Except as otherwise provided in this Agreement, each party to this Agreement will bear its respective fees and expenses incurred in connection with the preparation, negotiation, execution and performance of this Agreement and the Contemplated Transactions, including all fees and expense of its Representatives. 13.2 Public Announcements. Except as required by Legal Requirement or Governmental Body due to Parent's status as a publicly-traded company, any public announcement, press release or similar publicity with respect to this Agreement or the Contemplated Transactions will be issued, if at all, at such time and in such manner as Buyer determines. Except with the prior consent of Buyer or as permitted by this Agreement, neither Seller nor any of its Representatives shall disclose to any Person (a) the fact that any Confidential Information of Seller has been disclosed to Buyer or its Representatives, that Buyer or its Representatives have inspected any portion of the Confidential Information of Seller, that any Confidential Information of Buyer has been disclosed to Seller or its Representatives or that Seller or its Representatives have inspected any portion of the Confidential Information of Buyer or (b) any information about the Contemplated Transactions, including the status of such discussions or negotiations, the execution of any documents (including this Agreement) or any of the terms of the Contemplated Transactions or the related documents (including this Agreement). Seller and Buyer will consult with each other concerning the means by which Seller's employees, customers, suppliers and others having dealings with Seller will be informed of the Contemplated Transactions, and Buyer will have the right to be present for any such communication. 13.3 Notices. All notices, Consents, waivers and other communications required or permitted by this Agreement shall be in writing and shall be deemed given to a party when (a) delivered to the appropriate address by hand or by nationally recognized overnight courier service (costs prepaid), (b) sent by facsimile or e-mail with confirmation of transmission by the transmitting equipment or (c) received or rejected by the addressee, if sent by certified mail, return receipt requested, in each case to the following addresses, facsimile numbers or e-mail addresses and marked to the attention of the person (by name or title) designated below (or to 88 such other address, facsimile number, e-mail address or person as a party may designate by notice to the other parties): Seller: Greenville Tube, LLC c/o Chart Industries, Inc. 5885 Landerbrook Drive Cleveland, OH 44124 Attention: Chief Financial Officer Fax no.: 440-753-1491 E-mail address: michael.biehl@Chart-ind.com With a mandatory copy to: Calfee, Halter & Griswold, LLP 800 Superior Avenue Cleveland, OH 44114 Attention Thomas F. McKee, Esq. Fax no.: 216-241-0816 E-mail address: tmckee@calfee.com Buyer: GT Acquisition Company c/o CFB Venture Fund III, L.P. Eleven South Meramec, Suite 1430 St. Louis, Missouri 63105 Attention: Stephen B. Broun Fax no.: 314-746-8739 E-mail address: steve.broun@capitalforbusiness.com With a mandatory copy to: Husch & Eppenberger, LLC 190 Carondelet Plaza, Suite 600 St. Louis, Missouri 63105 Attention: James V. Stepleton, Esq. Fax no.: 314-480-1505 E-mail address: james.stepleton@husch.com 13.4 Jurisdiction; Service of Process. Any Proceeding arising out of or relating to this Agreement or any Contemplated Transaction may be brought in the courts of the State of Delaware, County of New Castle or, if it has or can acquire jurisdiction, in the United States District Court for the District of Delaware, and each of the parties irrevocably submits to the exclusive jurisdiction of each such court in any such Proceeding, waives any objection it may now or hereafter have to venue or to convenience of forum, agrees that all claims in respect of the Proceeding shall be heard and determined only in any such court and agrees not to bring any Proceeding arising out of or relating to this Agreement or any Contemplated Transaction in any other court. The parties agree that either or both of them may file a copy of this paragraph with any court as written evidence of the knowing, voluntary and bargained agreement between the parties irrevocably to waive any objections to venue or to convenience of forum. Process in any Proceeding referred to in the first sentence of this section may be served on any party anywhere in the world. 89 13.5 Enforcement of Agreement. The parties acknowledge and agree that the other parties would be irreparably damaged if any of the provisions of this Agreement are not performed in accordance with their specific terms and that any Breach of this Agreement by such other parties could not be adequately compensated in all cases by monetary damages alone. Accordingly, in addition to any other right or remedy to which a party may be entitled, at law or in equity, it shall be entitled to enforce any provision of this Agreement by a decree of specific performance and to temporary, preliminary and permanent injunctive relief to prevent Breaches or threatened Breaches of any of the provisions of this Agreement, without posting any bond or other undertaking. 13.6 Waiver; Remedies Cumulative. The rights and remedies of the parties to this Agreement are cumulative and not alternative. Neither any failure nor any delay by any party in exercising any right, power or privilege under this Agreement or any of the documents referred to in this Agreement will operate as a waiver of such right, power or privilege, and no single or partial exercise of any such right, power or privilege or the exercise of any other right, power or privilege. To the maximum extent permitted by applicable law, (a) no claim or right arising out of this Agreement or any of the documents referred to in this Agreement can be discharged by one party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other party; (b) no waiver that may be given by a party will be applicable except in the specific instance for which it is given; and (c) no notice to or demand on one party will be deemed to be a waiver of any obligation of that party or of the right of the party giving such notice or demand to take further action without notice or demand as provided in this Agreement or the documents referred to in this Agreement. 13.7 Entire Agreement and Modification. This Agreement supersedes all prior agreements, whether written or oral, between the parties with respect to its subject matter (including any letter of intent and any confidentiality agreement between Buyer and Seller) and constitutes (along with the Disclosure Schedule, Exhibits and other documents delivered pursuant to this Agreement) a complete and exclusive statement of the terms of the agreement between the parties with respect to its subject matter. This Agreement may not be amended, supplemented, or otherwise modified except by a written agreement executed by the party to be charged with the amendment. 13.8 Disclosure Schedule. The information in the Disclosure Schedule constitutes (i) exceptions to particular representations, warranties, covenants and obligations of Seller as set forth in this Agreement or (ii) descriptions or lists of assets and liabilities and other items referred to in this Agreement. If there is any inconsistency between the statements in this Agreement and those in the Disclosure Schedule(other than an exception expressly set forth as such in the Disclosure Schedule with respect to a specifically identified representation or warranty), the statements in this Agreement will control. The statements in the Disclosure Schedule relate only to the provisions in the Section of this Agreement to which they expressly relate and not to any other provision in this Agreement, provided that Seller may use cross references to one section containing the original disclosure of a matter without repeating the disclosure. 13.9 Assignments, Successors and No Third-Party Rights. Except as otherwise provided in this Agreement no party may assign any of its rights or delegate any of its 90 obligations under this Agreement without the prior written consent of the other parties, except that either Buyer or Seller may assign any of its rights and delegate any of its obligations under this Agreement to any of its Subsidiaries and may collaterally assign its rights hereunder to any of its respective financial institutions (and, without limiting the foregoing, Seller may collaterally assign its rights hereunder to JPMorgan Chase Bank (including any successors thereto), in its capacity as Administrative Agent under that certain Credit Agreement dated as of April 12, 1999 between Chart Industries, Inc., the Subsidiary Borrowers party thereto, the lenders party thereto and such Administrative Agent for such lenders, as amended, restated, supplemented or otherwise modified from time to time, or any refinancing thereof), provided that no such permitted assignment shall release the assignor from its obligations and liabilities hereunder. Subject to the preceding sentence, this Agreement will apply to, be binding in all respects upon and inure to the benefit of the successors and permitted assigns of the parties. Nothing expressed or referred to in this Agreement will be construed to give any Person other than the parties to this Agreement any legal or equitable right, remedy or claim under or with respect to this Agreement or any provision of this Agreement, except such rights as shall inure to a successor or permitted assignee pursuant to this Section 13.9. 13.10 Severability. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable. 13.11 Construction. The headings of Articles and Sections in this Agreement are provided for convenience only and will not affect its construction or interpretation. All references to "Articles," "Sections," and "Parts" refer to the corresponding Articles, Sections and Parts of this Agreement and the Disclosure Letter. 13.12 Time of Essence. With regard to all dates and time periods set forth or referred to in this Agreement, time is of the essence. 13.13 Governing Law. This Agreement will be governed by and construed under the laws of the State of Delaware without regard to conflicts-of-laws principles that would require the application of any other law. 13.14 Execution of Agreement. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. The exchange of copies of this Agreement and of signature pages by facsimile transmission shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by facsimile shall be deemed to be their original signatures for all purposes. [Remainder of this Page Intentionally Left Blank. Next Page is Signature Page.] 91 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. GT ACQUISITION COMPANY By: /s/ Stephen B. Broun ------------------------------- Name: Stephen B. Broun Title: President GREENVILLE TUBE, LLC By: /s/ Michael F. Biehl ------------------------------- Name: Michael F. Biehl ----------------------------- Title: Assistant Secretary ---------------------------- 92 GUARANTY 1. Chart Industries, Inc. and Chart, Inc. (collectively, the "Guarantor") hereby jointly and severally, unconditionally and irrevocably guarantee to GT Acquisition Company ("GTAC") the punctual payment and performance when due of the indebtedness and other obligations of Greenville Tube, LLC ("GTLLC") to GTAC pursuant to the Asset Purchase Agreement between GTAC and GTLLC to which this Guaranty is attached ("APA") and the Lease between GTAC as lessee and GTLLC as lessor of real estate located in Clarksville, Arkansas, dated the date of the APA (the "Lease" with such indebtedness and obligations under the APA and Lease hereinafter referred to as "Obligations"). This Guaranty is a present and continuing guaranty of payment and not of collectibility, and GTAC shall not be required to prosecute collection, enforcement or other remedies against GTLLC before calling on Guarantor for payment. If for any reason GTLLC shall fail or be unable to pay or perform, punctually and fully, any of the Obligations it is required to satisfy in accordance with the APA or Lease, Guarantor shall, jointly and severally with GTLLC, be obligated to pay such obligations to GTAC in full immediately upon demand. One or more successive actions may be brought against Guarantor, as often as GTAC deems advisable, until all of the Obligations are paid and performed in full. The Obligations, together with all other payment and performance obligations of Guarantor hereunder are referred to herein as "Guarantor's Obligations". 2. Guarantor agrees that performance of Guarantor's obligations hereunder by Guarantor shall be a primary obligation, shall not be subject to any counterclaim, set-off, abatement, deferment or defense based upon any claim that any Guarantor may have against GTAC or any other person or entity, and shall remain in full force and effect without regard to, and shall not be released, discharged or affected in any way by, any circumstance or condition (whether or not any Guarantor shall have any knowledge thereof), including without limitation: a. any lack of validity or enforceability of the APA or Lease; b. any termination, amendment, modification or other change in the APA or Lease; c. any failure, omission or delay on the part of GTLLC, any Guarantor, or GTAC to conform or comply with any term of the APA or Lease or any failure of GTAC to give notice of any event of default or breach under the APA or Lease; d. any waiver, compromise, release, settlement or extension of time of payment or performance or observance of any of the obligations or agreements contained in the APA or Lease; e. any action or inaction by GTAC under or in respect of the APA or Lease, any failure, lack of diligence, omission or delay on the part of GTAC to enforce, assert or exercise any right, power or remedy conferred on it in the APA or Lease, or any other action or inaction on the part of GTAC; f. any voluntary or involuntary bankruptcy, insolvency, reorganization, arrangement, readjustment, assignment for the benefit of creditors, composition, receivership, liquidation, marshalling of assets and liabilities or similar events or proceedings with respect to GTLLC or Guarantor or any of their respective property or creditors, or any action taken by any trustee or receiver or by any court in any such proceeding; g. any merger or consolidation of GTLLC into or with any entity, or any sale, lease or transfer of any of the assets of GTLLC or Guarantor to any other person or entity; h. any change in the ownership of GTLLC or any change in the relationship between GTLLC or Guarantor or any termination of any such relationship; i. any release or discharge by operation of law of GTLLC or Guarantor from any obligation or agreement contained in the APA or Lease; or j. any other occurrence, circumstance, happening or event, whether similar or dissimilar to the foregoing and whether foreseen or unforeseen, which otherwise might constitute a legal or equitable defense or discharge of the liabilities of a guarantor or surety or which otherwise might limit recourse against GTLLC or Guarantor to the fullest extent permitted by law. 3. To the extent permitted by applicable law, Guarantor expressly and unconditionally waives (i) notice of any of the matters referred to in Section 2 above, (ii) all notices which may be required by statute, rule of law or otherwise, now or hereafter in effect, to preserve intact any rights against Guarantor, including, without limitation, any demand, presentment and protest, proof of notice of non-performance or non-payment under the APA or Lease and notice of any event of default or breach under or any failure on the part of GTLLC or Guarantor to perform or comply with any covenant, agreement, term or condition of the APA or Lease, (iii) any right to the enforcement, assertion or exercise against GTLLC or Guarantor of any right or remedy conferred under the APA or Lease, (iv) any requirement of diligence on the part of any person or entity, (v) to the fullest extent permitted by law and except as otherwise expressly provided in this Guaranty, the APA or Lease, any claims based on allegations that GTAC has failed to act in a commercially reasonable manner or failed to exercise GTAC's so-called obligation of good faith and fair dealing, and (vi) any requirement to exhaust any remedies or to mitigate the damages resulting from any default under the APA or Lease. 4. Until Guarantor's Obligations are paid in full and all periods under applicable bankruptcy law for the contest of any payment by Guarantor or GTLLC as a preferential or fraudulent payment have expired, each Guarantor knowingly, and with advice of counsel, waives, relinquishes, releases and abandons all rights and claims to indemnification, contribution, reimbursement, subrogation and payment which any Guarantor may now or hereafter have by and from GTLLC and the successors and assigns of GTLLC, for any payments made by Guarantor to GTAC, including, without limitation, any rights which might allow GTLLC, GTLLC's successors, a creditor of GTLLC, or a trustee in bankruptcy of GTLLC to claim in bankruptcy or any other similar proceedings that any payment made by GTLLC or GTLLC's successors and assigns to GTAC was on behalf of or for the benefit of Guarantor and that such payment is recoverable by GTLLC, a creditor or trustee in bankruptcy of GTLLC as a preferential payment, fraudulent conveyance, payment of an insider or any other classification of payment which may otherwise be recoverable from GTAC. 5. The obligations of Guarantor pursuant to this Guaranty shall continue to be effective or automatically be reinstated, as the case may be, if at any time payment of any of Guarantor's Obligations under this Guaranty is rescinded or otherwise must be restored or returned by GTAC upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of any Guarantor or GTLLC or otherwise, all as though such payment had not been made. Dated: July 1, 2003. CHART INDUSTRIES, INC. By: /s/ Michael F. Biehl ----------------------------------- Name: Michael F. Biehl Title: Chief Financial Officer and Treasurer CHART, INC. By: /s/ Michael F. Biehl ----------------------------------- Name: Michael F. Biehl Title: Chief Financial Officer and Treasurer EX-4.2 4 dex42.txt SPECIMEN CERTIFICATE OF THE COMMON STOCK OFTHE COMPANY Exhibit 4.2 COMMON STOCK [LOGO] COMMON STOCK NUMBER CHART INDUSTRIES, INC. SHARES INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE NC- THIS CERTIFICATE IS TRANSFERABLE CUSIP 16115Q 20 9 IN THE CITY OF NEW YORK OR CLEVELAND, OHIO SEE REVERSE FOR CERTAIN DEFINITIONS This is to certify that -S P E C I M E N- is the owner of FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE, OF CHART INDUSTRIES, INC. transferable on the books of the Corporation by the holder hereof in person or by duly authorized attorney upon surrender of this certificate properly endorsed. This Certificate and the shares represented hereby are issued and shall be held subject to all of the provisions of the Certificate of Incorporation of the Corporation (copies of which are on file with the Transfer Agents), filed in the office of Secretary of State of Delaware, to all of which the holder, by acceptance hereof, assents. This certificate is not valid until countersigned by a Transfer Agent and registered by a Registrar. WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers. Dated: CHART INDUSTRIES, INC. [CORPORATE SEAL DELAWARE] /s/ Michael F. Biehl VICE PRESIDENT COUNTERSIGNED AND REGISTERED: NATIONAL CITY BANK (CLEVELAND, OHIO) TRANSFER AGENT AND REGISTRAR /s/ Thomas F. McKee SECRETARY BY AUTHORIZED SIGNATURE

CHART INDUSTRIES, INC. Chart Industries, Inc. will furnish without charge to each stockholder who so requests a statement of the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof which the Corporation is authorized to issue and the qualifications, limitations or restrictions of such preferences and/or rights. Any such request should be addressed to the Secretary of the Corporation. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations: ___________________________ TEN COM -as tenants in common UNIF TRAN MIN ACT- ____________ Custodian ___________ (Cust) (Minor) TEN ENT -as tenants by the entireties JT TEN -as joint tenants with right of under Uniform Gifts to survivorship and not as tenants Minors Act in common __________________________________ (State)

Additional abbreviations may also be used though not in the above list. For Value Received ________________________________________, hereby sell, assign and transfer unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE _______________________________________ _______________________________________ ________________________________________________________________________________ (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE) ________________________________________________________________________________ ________________________________________________________________________________ __________________________________________________________________ shares of the capital stock represented by the within Certificate, and do hereby irrevocably constitute and appoint ________________________________________________________________________________ Attorney to transfer the said stock on the books of the within named Corporation with full power of substitution in the premises. Dated___________________ ____________________________________________________ NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER. EX-10.6 5 dex106.txt ESCROW AGREEMENT EXHIBIT 10.6 ESCROW AGREEMENT THIS ESCROW AGREEMENT, dated as of July 10, 2003 (the "Escrow Agreement"), is entered into by and among JP Morgan Chase Bank (the "Lender"), each of the directors and senior officers of Chart Industries, Inc., a Delaware corporation ("Chart"), identified on Exhibit A hereto (the "Directors and Officers") and Christiana Corporate Services, Inc., as Escrow Agent (the "Escrow Agent"). W I T N E S S E T H WHEREAS, Chart, certain subsidiaries of Chart, JP Morgan Chase Bank, as Administrative Agent (the "Agent"), National City Bank, as Documentation Agent, and the lenders thereunder are parties to that certain Credit Agreement, dated as of April 12, 1999 (as amended and modified from time to time, the "Credit Agreement"), Chart, certain subsidiaries of Chart, the Agent and the lenders thereunder are parties to that certain Series 1 Incremental Revolving Credit Agreement, dated November 29, 2000 (as amended and modified from time to time, the "First Incremental Revolver"), and Chart, certain subsidiaries of Chart, the Agent and the lenders thereunder are parties to that certain Series 2 Incremental Revolving Credit Agreement, dated April 17, 2001 (as amended and modified from time to time, the "Second Incremental Revolver" and, collectively with the Credit Agreement and the First Incremental Revolver, the "Credit Facilities") (the Agent and the lenders under the Credit Facilities hereinafter are referred to collectively as the "Lender Group"); and WHEREAS, Chart and certain of Chart's U.S. subsidiaries (collectively, the "Company") intend to commence Chapter 11 bankruptcy cases and file a Chapter 11 plan to effect a financial and capital structure reorganization of the Company, including the restructuring of the obligations under the Credit Facilities (the "Restructuring"); and WHEREAS, in connection with the Restructuring, Chart and certain members of the Lender Group have entered into Lockup Agreements (the "Lockup Agreements") and have agreed in the Lockup Agreements and the related Plan Term Sheet, dated April 30, 2003 (the "Term Sheet"), that, among other things, the indemnification and expense advancement and reimbursement obligations in favor of the Directors and Officers contained in the charter and by-laws of Chart currently in effect will remain in effect after the Restructuring and Chart will assume the obligations of Chart under the indemnification agreements currently in effect between Chart and the Directors and Officers (such obligations under the charter, by-laws and indemnification agreements are collectively referred to herein as the "Chart Obligations"), and the Lockup Agreements and Term Sheet contemplate that an escrow in the amount of $1,000,000 (the "Escrow Amount") in favor of the Directors and Officers will be established to fund the Chart Obligations and to fund the amounts incurred or to be incurred by any Director or Officer in pursuing claims for coverage under Chart's existing directors and officers liability insurance policies ("Coverage Claim Expenses"). NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and on the terms and subject to the conditions herein set forth, the parties to this Escrow Agreement hereby agree as follows: 1. Escrow. 1.1 Escrow Agent. The Lender and the Directors and Officers hereby appoint the Escrow Agent, and the Escrow Agent agrees to serve, as the escrow agent hereunder for purposes of receiving, holding, investing and disbursing the Escrow Fund (as defined below) in accordance with the terms and conditions hereof. 1.2 Establishment of Escrow Fund. Concurrently with the execution and delivery of this Escrow Agreement by the parties hereto, the Lender is delivering to the Escrow Agent the Escrow Amount by wire transfer of immediately available funds. As used in this Escrow Agreement, "Escrow Fund" shall mean the Escrow Amount, plus all proceeds and income derived (directly or indirectly) from it, less any disbursements made pursuant to this Escrow Agreement. The Escrow Agent may hold any portion of the Escrow Fund which is not then invested pursuant to Section 1.4 hereof in a non-interest bearing account. 1.3 Receipt of Escrow Amount. The Escrow Agent hereby acknowledges receipt of the Escrow Amount and agrees to hold, invest and disburse the Escrow Fund in accordance with the terms and conditions set forth herein. 1.4 Investments. The Escrow Fund shall be invested and re-invested by the Escrow Agent in (a) short-term obligations of the U.S. government, (b) short-term certificates of deposit issued by a bank or trust company having combined capital and surplus of at least $100,000,000 (which may include the Escrow Agent), (c) the SEI Class B Treasury Fund or (d) such other manner as the Lender and the Directors and Officers may agree in writing (a copy of which shall be provided to the Escrow Agent as an investment instruction) and which shall be acceptable to the Escrow Agent. The Escrow Agent shall have the right, from time to time, to liquidate any investments held, in order to provide funds necessary to make required distributions of the Escrow Fund under this Escrow Agreement. The Escrow Agent in its capacity as escrow agent hereunder shall not have any liability for any loss sustained as a result of any investment made pursuant to the terms of this Escrow Agreement or the instructions of the parties hereto or as a result of any liquidation of any investment prior to its maturity or for the failure of the parties to give the Escrow Agent instructions to invest or reinvest the Escrow Fund or any earnings thereon. 2. Delivery of Escrow Fund by Escrow Agent. The Escrow Agent shall hold the Escrow Fund in escrow in accordance with the terms of this Escrow Agreement, until authorized hereunder to deliver the same or any portion thereof, as follows: 2.1 Distribution Date. (a) On that date (the "Distribution Date") which is the second business day after the earlier to occur of: (i) the Closing (as defined in the Term Sheet) in which the Chart Obligations are treated in the manner described in the Term Sheet; (ii) the termination of that certain Lockup Agreement between Chart and the Lender, dated April 30, 2003 (the "Lender Lockup Agreement") pursuant to paragraph (vii) thereof, provided, however, that this clause (ii) shall not apply, and the Distribution Date shall not be deemed to have occurred as a result of any such termination, if the Lender is then in breach of any of its obligations under the Lender Lockup Agreement or the Term Sheet; (iii) the first anniversary of the termination of the Lender Lockup Agreement pursuant to paragraph (vii) thereof, provided, however, that this clause (iii) shall not apply, and the Distribution Date shall not be deemed to have occurred on the first anniversary of such termination if any suit, action or proceeding against any of the Directors and Officers is then pending by or before any judicial, regulatory or administrative body, court or authority; and (iv) the final resolution of all suits, actions or proceedings against any of the Directors and Officers that were pending by or before any judicial, regulatory or administrative body, court or authority as of the first anniversary of the termination of the Lender Lockup Agreement pursuant to paragraph (vii) thereof; the Escrow Agent shall deliver the then remaining Escrow Fund to the Lender, free and clear of any interest of the Directors and Officers and this Escrow Agreement shall terminate at the time of such delivery, unless terminated earlier pursuant to Section 5.1 hereof. Such delivery shall be effected by wire transfer by the Escrow Agent of immediately available funds to an account designated by the Lender. Notwithstanding the foregoing, the Escrow Agent shall not have any obligation to deliver the Escrow Fund to the Lender, until the Escrow Agent has received written notice from the parties, in form and substance reasonably satisfactory to the Escrow Agent in its sole discretion, that the events and conditions set forth in Section 2.1(a)(i), Section 2.1(a)(ii), Section 2.1(a)(iii) or Section 2.1(a)(iv), as the case may be, have occurred. (b) In the event that a Distribution Date pursuant to Section 2.1(a)(ii) hereof occurs and the Escrow Agent has disbursed Escrow Funds to or for the account of the Directors and Officers pursuant to the terms hereof, any Director or Officer to whom Escrow Funds were disbursed, or for whose account Escrow Funds were disbursed, shall promptly pay to the Lender funds in an amount equal to the amount of Escrow Funds paid to or on behalf of such Director or Officer. The obligations of the Directors and Officers pursuant to this Section 2.1(b) shall be several, and not joint, and no Director or Officer shall be responsible for the obligations of any other Director or Officer. 2.2 Claims. Upon a reasonable, good faith determination at any time prior to the Distribution Date by any Director or Officer that there exists (a) a claim for indemnification, reimbursement or advancement of expenses, or other fulfillment of obligations of Chart pursuant to the Chart Obligations which (i) has not been reimbursed, paid or fulfilled by Chart within the period required under the Chart Obligations and (ii) is subject to deductible or retention limitations under, or otherwise is not fully covered by, Chart's insurance policies in force at such time or (b) a claim for reimbursement or advancement of Coverage Claim Expenses (any such claim under (a) or (b) hereinafter being referred to as a "Claim"), such Director or Officer (a "Claiming Director or Officer") shall cause to be delivered to the Lender and the Escrow Agent written notice of such Claim substantially in the form of Exhibit B attached hereto (the "Claim Notice") setting forth, in reasonable detail, the basis of such Claim and the amount of damages or settlement amounts sustained (collectively, "Damages"), and expenses of investigations, judicial, arbitratorial or administrative proceedings or appeals, attorneys' fees and disbursements, and other expenses and disbursements incurred or to be incurred (collectively, "Expenses"), in connection therewith (or a good faith estimate of such amount). Each Claim Notice, other than any Claim Notice for Coverage Claim Expenses, shall include evidence reasonably satisfactory to the Escrow Agent, in its sole discretion, that (A) Chart has not reimbursed, paid or fulfilled such Claim within the period required under the Chart Obligations and (B) such Claim is subject to deductible or retention limitations under, or otherwise is not fully covered by, Chart's insurance policies in force at such time. Upon receipt of such Claim Notice, the Escrow Agent shall set aside a portion of the Escrow Fund equal to the amount of Damages and Expenses set forth in such Claim Notice (together with all similar amounts set aside pursuant to all other such Claim Notices previously delivered by or on behalf of any Claiming Director or Officer, the "Reserve"), provided, however, that the Reserve shall not include any such amounts with respect to which either a Payment (as hereinafter defined) has been made to any Claiming Director or Officer or a Determination (as defined in Sections 3.1 and 4.4. hereof) in favor of the Lender has been made (and no amount is payable to the Claiming Director or Officer pursuant to such Determination and the Escrow Agent is notified in writing of such Determination) and, provided, further, that the aggregate amount of all Claims submitted by any Claiming Director or Officer pursuant hereto (the "Claim Amount Limitation") shall not exceed the sum of (x) $200,000, (y) the aggregate of all amounts claimed by such Director or Officer with respect to which a Determination in favor of the Lender has been made (and the Escrow Agent is notified in writing of such Determination), and (z) any amount with respect to which another Director or Officer could submit a Claim (assuming the existence of such Claim) hereunder and for the allocation of which to such Claiming Director or Officer such other Director or Officer consents in a writing delivered to the Escrow Agent (a "Traded Claim Allocation"); and thereafter the Claim Amount Limitation that applies to such consenting Director or Officer shall be reduced by the amount of such Traded Claim Allocation (the "Reduction Amount"), but in no case shall such consenting Director or Officer have any obligation to pay to the Lender any amount of such Traded Claim Allocation under Section 2.1(b). Any amounts set-aside as provided above shall be held in Reserve until the earlier of (i) a Payment of the full amount of the Damages and Expenses set forth in such Claim Notice, (ii) a Determination of such Claim and a Payment, if any, has been made to the Claiming Director or Officer in full satisfaction of such Determination or (iii) the Distribution Date. 2.3 Payment of Claims. (a) Upon receipt by the Escrow Agent of a Claim Notice and a Determination made in accordance with this Escrow Agreement that the Claiming Director or Officer is entitled to some or all of the Damages and Expenses claimed in such Claim Notice (the amount to which the Claiming Director or Officer is entitled being referred to herein as the "Entitlement Amount"), the Claiming Director or Officer shall be entitled, subject to the provisions set forth below, to receive from the Escrow Fund an amount (a "Payment") equal to the lesser of (i) the Entitlement Amount and (ii) the remaining balance of the Escrow Fund. (b) Delivery of a Payment to the Claiming Director or Officer shall be effected by wire transfer as soon as reasonably practicable after the Determination by the Escrow Agent of immediately available funds to an account designated in writing by the Claiming Director or Officer. (c) If the Lender believes in good faith that (i) the Claiming Director or Officer has not sustained the Damages, or has not incurred and does not reasonably expect to incur the Expenses set forth in any Claim Notice, (ii) the amount of the Damages or Expenses set forth in any Claim Notice is materially incorrect, or (iii) the Claim is not covered by or made in accordance with the provisions of the Chart Obligations and is not for Coverage Claim Expenses, then the Lender may give written notice (a "Claim Dispute Notice") to the Claiming Director or Officer and the Escrow Agent within seven (7) calendar days, and if such seventh calendar day is not a business day, on or before the next succeeding business day, after the receipt of such Claim Notice by the Lender (the "Notice Period"). The Claim Dispute Notice must set forth the reasons for such objection in reasonable detail and a statement of whether or not any portion of the proposed Damages or Expenses is undisputed (and, if undisputed, the undisputed amount thereof (such specified undisputed amount being hereinafter referred to as the "Undisputed Amount")). (d) If the Escrow Agent does not receive a Claim Dispute Notice relating to a proposed Payment within the Notice Period, then the Escrow Agent shall deliver to the Claiming Director or Officer (by wire transfer of immediately available funds to an account designated in writing by the Claiming Director or Officer) the Payment, as soon as reasonably practicable after expiration of the Notice Period. (e) If the Escrow Agent receives one or more Claim Dispute Notices relating to a Claim within the Notice Period, then the Escrow Agent shall deliver to the Claiming Director or Officer (by wire transfer of immediately available funds to an account designated in writing by the Claiming Director or Officer) the Undisputed Amount, if any, as soon as reasonably practicable after expiration of the Notice Period, to the extent assets in the Escrow Fund are available. To the extent assets in the Escrow Fund are available, the Escrow Agent shall retain in the Reserve an amount equal to the Damages and Expenses specified in the Claim Notice less any such Undisputed Amount distributed to the Claiming Director or Officer (the "Disputed Amount"). Any Disputed Amounts shall be released only in accordance with (i) written instructions to the Escrow Agent signed by the Claiming Director or Officer and the Lender or (ii) a Determination of the Claim to which such Disputed Amount relates, pursuant to Section 4 hereof upon written notice of such Determination being delivered to the Escrow Agent. (f) Notwithstanding any other provision hereof to the contrary, the aggregate amount of all Payments made to and received by any Director or Officer pursuant hereto shall not exceed the difference between (i) the sum of (x) $200,000 plus (y) the aggregate amount of all Traded Claim Allocations allocated to such Director or Officer, minus (ii) the aggregate of all Reduction Amounts consented to by such Director or Officer. 2.4 Claims Submitted to Chart After Distribution Date. If any Claim is asserted as contemplated by Section 2.2 and such Claim does not result in either a Payment of the full amount of Damages or Expenses (subject to Section 2.3(f)) or a Determination of such Claim prior to the Distribution Date, such Claim shall be submitted to Chart by the Claiming Director or Officer after the Distribution Date in accordance with the terms of the Chart Obligations. 3. Determination of Claims; Settlement of Disputes. 3.1 Determination of Claims. The determination of the amount due the Claiming Director or Officer as a result of a Claim asserted pursuant to Section 2.2 (a "Determination"), shall be made as follows: The Claim asserted pursuant to Section 2.2 shall be deemed to have resulted in a Determination in favor of the Claiming Director or Officer in the full amount set forth in the Claim Notice upon expiration of the Notice Period, unless prior thereto the Escrow Agent has received a Claim Dispute Notice. 3.2 Disputes. Any dispute relating to a Claim which may arise between the Lender and any of the Directors or Officers under this Escrow Agreement shall be settled pursuant to the procedures set forth in Section 4 hereof. The Escrow Agent shall be under no duty to institute or defend any such proceedings, and none of the costs or expenses of any such proceedings shall be borne by the Escrow Agent. If the terms of a settlement of any dispute hereunder increase the duties or liabilities of the Escrow Agent and the Escrow Agent has not participated in such settlement so as to be bound thereby, then such settlement shall be effective as to the Escrow Agent in respect of such increase in its duties or liabilities only upon the Escrow Agent's written consent thereto. Prior to the settlement of any dispute, the Escrow Agent is authorized and directed to retain in its possession, without liability to any party, that portion of the Escrow Fund that the Escrow Agent has been notified in writing is the subject of or involved in the dispute. 4. Resolution of Disputes. 4.1 Good Faith Negotiations. Each of the Claiming Directors or Officers and the Lender agrees to use his or its reasonable best efforts to resolve any and all disputes arising under or in connection with the Determination of any Claims by a good faith negotiated resolution between the Claiming Director or Officer and the Lender. Any such resolution shall be evidenced by appropriate instructions in writing to the Escrow Agent signed by the Claiming Director or Officer and the Lender. 4.2 Submission to Arbitration. Not later than fourteen (14) calendar days after the commencement of good-faith negotiations pursuant to Section 4.1 hereof, if the parties do not agree to a resolution of the dispute, then the matter in dispute shall be submitted for resolution forthwith to binding arbitration in accordance with Section 4.3 hereof. 4.3 Binding Arbitration. A Claim in dispute hereunder submitted for resolution by arbitration shall be finally settled by arbitration in accordance with the then existing commercial arbitration rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof, subject to (a) through (h) below. Neither party shall have the right to appeal any aspect of the arbitrator's award or the ability to seek redress in any court of law other than to enforce the award of the arbitrator. (a) Upon the request of either the Claiming Director or Officer or the Lender, the arbitration shall be conducted under the expedited rules of the American Arbitration Association for commercial arbitrations. (b) The arbitrators shall be three (3) independent arbitrators, with one appointed by the Claiming Director or Officer, the second appointed by the Lender and the two appointees selecting the third arbitrator in accordance with such rules. If either or the Claiming Director or Officer or the Lender fails to select an arbitrator within seven (7) calendar days after notice of such failure from the other party or the American Arbitration Association, then the American Arbitration Association shall appoint such arbitrator. If the two appointees are unable to agree on the third arbitrator, then the American Arbitration Association shall select the same using the foregoing rules and in accordance with the following qualifications. Each arbitrator shall be a competent and reputable individual with experience as a judge, a chief executive officer or chief financial officer and shall have no prior relationship with the Claiming Director or Officer, the Company, the Agent or any member of the Lender Group. (c) The arbitration hearing shall be held in Cleveland, Ohio at such date, time and place as established by the Arbitrators. (d) The Arbitrators shall have power to rule on their own competency and on the validity of this Escrow Agreement to make reference to arbitration. (e) Not later than seven (7) calendar days after the conclusion of the arbitration hearing, but prior to the rendering of any arbitral decision and award, each party may submit to the Arbitrators a written statement of such party's (i) understanding of and view on the parties' respective positions on the Claim and (ii) recommendation as to an appropriate resolution of the Claim and the reasons why it believes such resolution is appropriate. In reaching a decision on any Claim hereunder, the Arbitrators may take into account such statement. (f) The parties shall use their reasonable best efforts to cause the Arbitrators to render their arbitral decision and award (a copy of which shall be delivered to the Escrow Agent) and give a written opinion setting forth the basis of their decision, all not later than twenty-one (21) calendar days after the conclusion of the Arbitration. (g) Each party shall take or cause to be taken all reasonable action to facilitate the conduct of the arbitration and the rendering of the arbitral award at the earliest possible date. (h) The costs of the Arbitration shall be borne and paid by the Lender, or as the Arbitrators otherwise direct. If an award is made by the Arbitrators to the Claiming Director or Officer, then all expenses of the Claiming Officer or Director incurred in connection with the Arbitration, including attorneys' fees and disbursements, will be paid by the Lender. 4.4 Resolution Is a Determination. The resolution of any disputed Claim pursuant to the provisions of Sections 4.1, 4.2 and 4.3 hereof shall be deemed to be a "Determination" for all other purposes hereof. 5. General Provisions. 5.1 Termination. This Escrow Agreement shall continue in force until the final distribution of the Escrow Fund in accordance with the terms hereof, unless earlier terminated by order of a court of competent jurisdiction. 5.2 Compensation. Upon execution of this Escrow Agreement, the Escrow Agent shall be entitled to compensation for its services hereunder, including the reimbursement of expenses, as set forth on Exhibit C hereto which shall be deducted from the Escrow Fund by the Escrow Agent and paid over to the Escrow Agent when due. In addition, the Escrow Agent shall be reimbursed for all reasonable out-of-pocket expenses, disbursements and advancements, including attorneys' fees, incurred or made by it in connection with resolution of any disputes arising under this Escrow Agreement, which shall be deducted from the Escrow Fund by the Escrow Agent and paid over to the Escrow Agent when due. 5.3 Expenses. Except as otherwise expressly provided herein, each of the Directors and Officers and the Lender shall be responsible for its own expenses incurred in connection with any Determination of Claims pursuant to Section 4 or, subject to Section 5.2 hereof, any other provision of this Escrow Agreement. 5.4 Taxes. (a) All income earned with respect to the Escrow Fund shall be for the account of the Lender, and all federal, state and local income taxes imposed with respect to the escrow earnings shall be paid by the Lender. Concurrently with the execution and delivery of this Escrow Agreement, the Tax Identification Number (TIN) as assigned by the Internal Revenue Service for the Lender is being provided to the Escrow Agent and a fully executed Internal Revenue Service form W-9 is being delivered to the Escrow Agent by the Lender. The Escrow Agent shall not have any responsibility pursuant to this Escrow Agreement for tax reporting to any federal, state or local governmental authority. (b) Each of the Directors and Officers, the Lender and the Escrow Agent shall report the transactions contemplated by this Escrow Agreement and any other ancillary agreements to which they are a party for all purposes consistent with this Section 5.4. 5.5 Transfer Instructions. (a) In the event funds transfer instructions are given (other than in writing at the time of execution of this Escrow Agreement), whether in writing, by telecopier or otherwise, the Escrow Agent is authorized to seek confirmation of such instructions by telephone call-back to the appropriate Directors and Officers designated on Exhibit A hereto or person or persons designated by the Lender on Exhibit D hereto, and the Escrow Agent may rely upon the confirmations of anyone purporting to be the person or persons so designated. The persons and telephone numbers for call-backs may be changed only in a writing actually received and acknowledged by the Escrow Agent. The parties to this Escrow Agreement acknowledge that such security procedure is commercially reasonable. (b) It is understood that the Escrow Agent, the Directors and Officers' banks and the Lender in any funds transfer may rely solely upon any account numbers or similar identifying number provided by any of the Directors and Officers to identify (i) such Director or Officer, (ii) such Director or Officers' bank, or (iii) an intermediary bank and by the Lender to identify (x) the Lender, (y) the Lender's bank, if any, or (z) an intermediary bank. The Escrow Agent may apply any of the Escrow Funds for any payment order it executes using any such identifying number, even where its use may result in a person other than the appropriate Director or Officer or the Lender being paid, or the transfer of funds to a bank other than the bank of the appropriate Director or Officer or the Lender, the Lender's bank, if any, or an intermediary bank designated. (c) The Escrow Agent shall not incur any liability for following the instructions herein contained or expressly provided for, or written instructions given by the parties hereto. 5.6 Obligations of Escrow Agent. The obligations of the Escrow Agent under this Escrow Agreement are subject to the following terms and conditions: (a) The Escrow Agent is not a party to and is not bound by any agreement relating to the subject matter hereof other than this Escrow Agreement. (b) The Escrow Agent acts hereunder as a depository only and is not responsible for or liable in any manner whatsoever for the sufficiency, correctness, genuineness or validity of any funds, documents or other materials deposited with it. Each of the parties hereto agrees to and hereby does waive any suit, claim, demand or cause of action of any kind which they may have or may assert against the Escrow Agent arising out of or relating to the execution or performance by the Escrow Agent of this Escrow Agreement, unless such suit, claim, demand or cause of action is based upon the willful misconduct, gross negligence or bad faith of the Escrow Agent or any of its officers, employees or agents. (c) The Escrow Agent shall not have any responsibility for the genuineness or validity of any notice, instruction, evidence or other document or item delivered to it, and the Escrow Agent shall be entitled to rely upon and shall be protected in acting or refraining from acting upon any written notice, instruction, waiver, consent, receipt or other evidence or paper document which the Escrow Agent reasonably believes to be genuine and to be signed by the proper person. The Escrow Agent shall not have any responsibility to solicit funds for deposit pursuant to this Escrow Agreement. (d) The Escrow Agent shall not be liable for any error of judgment or for any acts done or steps taken or omitted by it or for any mistake of facts or law or for anything which the Escrow Agent may do or refrain from doing in connection herewith except for the Escrow Agent's own willful misconduct, gross negligence or bad faith or that of its officers, employees or agents. (e) As to any legal questions arising in connection with the administration of this Escrow Agreement, the Escrow Agent may rely absolutely upon the advice or opinions given to it by its counsel (provided such counsel is not also counsel to any other party hereto in connection with the subject matter hereof) and shall be free of liability for acting in reliance on such advice or opinions. In the administration of the Escrow Funds pursuant to this Escrow Agreement, the Escrow Agent may execute any of its powers and perform its duties hereunder directly or through its officers, employees, agents or representatives (including, without limitation, accountants and attorneys). The Escrow Agent shall not be responsible for any misconduct or negligence on the part of any representative appointed by it with due care. (f) In the event that the Escrow Agent shall be uncertain as to its duties or rights hereunder, is unable to decide between alternative courses of action permitted or required by the terms of hereof or shall receive instructions, Claims or demands from any party hereto which, in its opinion, conflict with any of the provisions of this Escrow Agreement or any instructions, Claims or demands received from any party hereto, the Escrow Agent (i) may request written instructions from the parties hereto as to the course of action to be adopted, (ii) shall be entitled to refrain from taking any action until it shall be directed otherwise in writing by all of the parties hereto or by a final order or judgment of a court of competent jurisdiction, and (iii) shall have no liability for failing to take any action or for taking any action pursuant to Section 5.6(f)(ii). In the event that the foregoing occurs, the Escrow Agent's sole obligation prior to receiving direction as set forth in Section 5.6(f)(ii) shall be to keep safely all property held in escrow. (g) The Escrow Agent shall never be required to use or advance its own funds or otherwise incur personal financial liability in its performance of its duties or the exercise of any of its rights and powers hereunder. (h) The duties and responsibilities of the Escrow Agent hereunder shall be determined solely by the express provisions of this Escrow Agreement, and no other or further duties or responsibilities shall be implied. The Escrow Agent shall not have any liability under, nor duty to inquire into the terms and provisions of, any agreement, documents or instructions, other than as expressly provided in the Escrow Agreement. (i) The Lender agrees to indemnify and hold harmless the Escrow Agent and its officers, directors, employees and agents from any costs, damages, expenses or claims, including attorneys' fees, which the Escrow Agent or its officers, directors, employees or agents may incur or sustain as a result of or arising out of this Escrow Agreement or the Escrow Agent's duties relating thereto. Anything in this Escrow Agreement to the contrary notwithstanding, in no event shall the Escrow Agent be liable for special, indirect or consequential loss or damage of any kind whatsoever (including, but not limited to, lost profits). The Lender acknowledges that the foregoing indemnities shall survive the resignation or removal of the Escrow Agent or the termination of this Escrow Agreement. (j) Notwithstanding any other provision hereof to the contrary, the Escrow Agent may, from time to time, deduct from the Escrow Fund and pay over to itself any amounts owed to the Escrow Agent hereunder which have not otherwise been timely paid to the Escrow Agent pursuant to the provisions of this Escrow Agreement. 5.7 Successor Escrow Agent. (a) The parties hereto agree that the Lender and the Directors and Officers may, by mutual agreement among all of them at any time, remove the Escrow Agent as escrow agent hereunder, and substitute another therefor. In such event, the Escrow Agent shall, upon receipt of written notice of such removal, account for and deliver to such substituted escrow agent the Escrow Fund after deducting payment to itself for all monies owing to it in accordance with the terms hereof and the Escrow Agent shall thereafter be discharged of all duties and liabilities hereunder. (b) The parties hereto agree that the Escrow Agent may resign and be discharged from its duties hereunder at any time by giving notice of such resignation to the Lender and each Director and Officer, which shall specify a date (not less than thirty (30) days following the date of such notice) when such resignation shall take effect. Upon such notice, a successor escrow agent shall be selected by the Lender and the Directors and Officers, such successor escrow agent to become the Escrow Agent hereunder upon the resignation date specified in such notice and the Escrow Agent shall account for and deliver to such substituted escrow agent the Escrow Funds (after deducting payment to itself for all monies owed to it in accordance with the terms of this Escrow Agreement) and the Escrow Agent shall thereafter be discharged of all duties and liabilities hereunder. If the Lender and the Directors and Officers are unable to agree upon a successor escrow agent within fifteen (15) calendar days after the date of such notice or the agreed upon successor escrow agent has refused to accept such appointment, the Escrow Agent shall be entitled to (i) appoint its successor, which shall be a state or national bank or trust company having combined capital and surplus of at least $100,000,000, or (ii) petition any court of competent jurisdiction for the appointment of its successor. The Escrow Agent shall continue to serve hereunder until its successor accepts the escrow and acknowledges receipt of the Escrow Funds. 5.8 Notices. All notices or other communications required or permitted to be given hereunder shall be in writing and shall be delivered by hand or sent by telecopy, or sent, postage prepaid by registered, certified or express mail, or reputable overnight courier service and shall be deemed given when so delivered by hand, telecopied (provided that the telecopy is promptly confirmed by electronic confirmation of the receipt thereof) or, if mailed, three (3) days after mailing (one (1) business day in the case of express mail or overnight courier service) to a party at the address set forth below, or such other address as may be designated in writing hereafter in the same manner as follows, except with respect to the Escrow Agent as to which notices and other communications shall be deemed to have been given on the date received by the Escrow Agent: (a) If to the Lender, to: JP Morgan Chase Bank 270 Park Avenue 20th Floor New York NY 10017 Attention: Roger Odell Facsimile: (212) 270-0506 with a copy (which shall not constitute notice) to: Millbank, Tweed, Hadley & McCloy LLP 601 South Figueroa Street Los Angeles, CA 90017 Attention: Neil Wertlieb Facsimile: (213) 629-5063 (b) If to the Escrow Agent, to: Christiana Corporate Services, Inc. 1314 King Street P.O. Box 957 Wilmington, DE 19899-0957 Attention: James M. Young Facsimile: 302-421-9015 (c) If to any Director or Officer, to such Director or Officer at the address set forth on Exhibit A hereto. 5.9 Assignment. (a) This Escrow Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns, but neither this Escrow Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties without the prior written consent of the other parties. If any Director of Officer should die while any amounts would still be payable to him hereunder, all such amounts shall be paid in accordance with the terms of this Escrow Agreement to his spouse, or if his spouse does not survive him, to his estate. (b) Notwithstanding the foregoing, any entity into which the Escrow Agent in its individual capacity may be merged or converted or with which it may be consolidated, or any entity resulting from any merger, conversion or consolidation to which the Escrow Agent in its individual capacity shall be a party, or any entity to which substantially all the corporate trust business of the Escrow Agent in its individual capacity may be transferred, shall be the Escrow Agent under this Escrow Agreement without further act. 5.10 Governing Law. This Escrow Agreement and any claim related directly or indirectly to this Escrow Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to the principles of conflicts of law thereof. The parties hereby consent to the non-exclusive jurisdiction of the courts of the State of Delaware and service of process by mail to the addresses specified by Section 5.8 hereof. 5.11 Amendment. Subject to applicable law, this Escrow Agreement may be amended, modified and supplemented by written agreement of each of the parties hereto with respect to any of the terms contained herein. 5.12 Counterparts; Execution. This Escrow Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. All signatures of the parties to this Escrow Agreement may be transmitted by facsimile, and such facsimile will, for all purposes, be deemed to be the original signature of such party whose signature it reproduces and will be binding upon such party. 5.13 Waiver. Each party to this Escrow Agreement shall have the right to waive, in writing, any condition or term of this Escrow Agreement which is for the benefit of such party. No waiver of any condition or term hereunder by any party hereto shall operate as a continuing waiver of any condition or term under this Escrow Agreement. 5.14 Severability. If any provision or clause in this Escrow Agreement or application thereof to any person or circumstances is held invalid or unenforceable, such invalidity or unenforceability shall not affect other provisions or applications of this Escrow Agreement which can be given effect without the invalid or unenforceable provision or application, and to this end the provisions of this Escrow Agreement are declared to be severable. 5.15 Force Majeure. In the event that any party to this Escrow Agreement is unable to perform its obligations under the terms of this Escrow Agreement because of acts of God, strikes, equipment or transmission failure or damage reasonably beyond its control, or other cause reasonably beyond its control, such party shall not be liable for damages to the other parties for any unforeseeable damages resulting from such failure to perform. Performance under this Escrow Agreement shall resume when and to the extent the affected party is able to perform such party's duties. [SIGNATURE PAGE FOLLOWS] IN WITNESS WHEREOF, the parties have caused this Escrow Agreement to be executed and delivered as of the day and year first above written. JP MORGAN CHASE BANK By: /s/ Roger A. Odell ------------------------------------- Name: Roger A. Odell Title: Managing Director CHRISTIANA CORPORATE SERVICES, INC., as Escrow Agent By: /s/ James M. Young ------------------------------------- Name: James M. Young Title: Assistant Vice President /s/ Arthur S. Holmes ------------------------------------- Arthur S. Holmes /s/ Thomas F. McKee ------------------------------------- Thomas F. McKee /s/ Lazzaro G. Modigliani ------------------------------------- Lazzaro G. Modigliani /s/ Robert G. Turner, Jr. ------------------------------------- Robert G. Turner, Jr. /s/ Michael F. Biehl ------------------------------------- Michael F. Biehl EX-10.7 6 dex107.txt FORM OF AMENDED AND RESTATED MORTGAGE Exhibit 10.7 [Form of Mortgage] Recording requested by: [NAME OF TITLE INSURANCE COMPANY] This Mortgage was prepared by and when recorded should be mailed to: William J. Mahoney, Esq. Milbank, Tweed, Hadley & McCloy LLP 1 Chase Manhattan Plaza New York, New York 10005 -------------------------------------------------------------- Space above this line for recorder's use [AMENDED AND RESTATED]/1 / MORTGAGE, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE FILING KNOW ALL PERSONS BY THESE PRESENTS: THIS [AMENDED AND RESTATED]/2/ MORTGAGE, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE FILING (this "Mortgage") is made as of the [__]th day of [______], [____] by [__________], a corporation duly organized and validly existing under the laws of the State of [__________] and having an office at [___________] (the "Mortgagor"), in favor of JPMORGAN CHASE BANK, a New York State banking corporation having its principal office at 270 Park Avenue, New York, New York 10017, as collateral agent for the holders of the Secured Obligations (as defined below) (in such capacity, together with its successors in such capacity, the "Mortgagee"). All capitalized terms used herein without being defined shall have the meanings assigned to such terms in the Credit Agreements referred to below. - ---------- /1/ INSERT BRACKETED LANGUAGE ONLY IF THIS IS AN AMENDED AND RESTATED MORTGAGE. /2/ INSERT BRACKETED LANGUAGE ONLY IF THIS IS AN AMENDED AND RESTATED MORTGAGE. Mortgage -------- - 2 - W I T N E S S E T H: WHEREAS, Chart Industries, Inc., a Delaware corporation (the "Borrower"), certain of its Subsidiaries as guarantors (the "Subsidiary Guarantors"), the lenders party thereto and JPMorgan Chase Bank, as administrative agent for such lenders, are parties to a Credit Agreement dated as of April 12, 1999 (as heretofore amended, supplemented or otherwise modified, the "1999 Credit Agreement") pursuant to which such lenders extended credit (by means of making loans and the issuance of letters of credit) to or for account of the Borrower and certain of its subsidiaries; WHEREAS, on July 8, 2003 the Borrower and the Subsidiary Guarantors filed a voluntary petition with the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") initiating cases under chapter 11 of the Bankruptcy Code and continued in their possession of their respective assets and in the management of their respective businesses pursuant to Sections 1107 and 1108 of the Bankruptcy Code. [WHEREAS, the Mortgagor has secured all of its obligations under or in respect of the 1999 Credit Agreement, including principal, interest, fees, expenses, indemnities and reimbursement obligations, and certain other obligations owing to the lenders party to the Credit Agreement (and their affiliates), by granting in favor of the Mortgage as agent for certain parties including such lenders and affiliates, a mortgage lien upon the properties described herein pursuant to a Mortgage, Assignment of Rents, Security Agreement and Fixture Filing dated as of [April 12, 1999] (as heretofore amended, supplemented or otherwise modified, the "Existing Mortgage");]/3/ WHEREAS, the Borrower and the Subsidiary Guarantors party thereto (each as debtor and debtor in possession under chapter 11 of the Bankruptcy Code), the lenders party thereto and JPMorgan Chase Bank, as administrative agent for such lenders are party to a Revolving Credit Agreement dated as of July 17, 2003 (as heretofore amended, supplemented or otherwise modified, the "DIP Credit Agreement"), providing for revolving credit loans and letters of credit to the Borrower (including the continuation of the outstanding letters of credit issued for account of the Borrower under the 1999 Credit Agreement) in an aggregate principal or face amount not exceeding $40,000,000, and pursuant to an order of the Bankruptcy Court all obligations of the Borrower and the Subsidiary Guarantors in respect of the DIP Credit Agreement, including principal, interest, fees, expenses, indemnities and reimbursement obligations, are secured by a first-priority security interest in and lien upon their respective existing and after-acquired personal and real property; WHEREAS, the Borrower and the Subsidiary Guarantors have filed a plan of reorganization with the Bankruptcy Court which has been confirmed by a final order of the Bankruptcy Court entered on September 4, 2003 (as supplemented from time to time, the - ---------- /3/ INSERT BRACKETED RECITAL ONLY IF THIS IS AN AMENDED AND RESTATED MORTGAGE. Mortgage -------- - 3 - "Reorganization Plan"). Pursuant to the Reorganization Plan, the Borrower and the Subsidiary Guarantors [(including the Mortgagor)]/4/ (collectively, the "Obligors") are concurrently herewith entering into: (a) an Amended and Restated Revolving Credit Agreement dated as of September 15, 2003 (as from time to time amended, restated, supplemented, deferred, renewed, extended, increased, refunded, refinanced, replaced or otherwise modified, the "Revolving Credit Agreement") with the lenders party to the DIP Credit Agreement as of the date hereof (collectively, including any assignees thereof or new lenders from time to time, the "Revolving Credit Lenders") and JPMorgan Chase Bank, as administrative agent for such lenders (together with its successors in such capacity, the "Revolving Credit Agent"), which will amend and restate the DIP Credit Agreement and provide for revolving credit loans to, and letters of credit for account of, the Borrower (and the continuation of the revolving credit loans and letters of credit made, continued or issued under the DIP Credit Agreement and the continuation of the letters of credit issued under the 1999 Credit Agreement for account of Chart Heat Exchangers Limited, in each case outstanding on the date thereof ) in an aggregate principal or face amount not exceeding $40,000,000; and (b) a Term Loan Agreement dated as of September 15, 2003 (as from time to time amended, restated, supplemented, deferred, renewed, extended, increased, refunded, refinanced, replaced or otherwise modified, the "Term Loan Agreement" and, together with the Revolving Credit Agreement, the "Credit Agreements") with the lenders party to the 1999 Credit Agreement as of the date hereof (collectively, including any assignees thereof or new lenders from time to time, the "Term Lenders" and, together with the Revolving Credit Lenders, the "Lenders") and JPMorgan Chase Bank, as administrative agent for such lenders (together with its successors in such capacity, the "Term Loan Agent" and, together with the Revolving Credit Agent, the "Agents"), pursuant to which all outstanding obligations (including principal, accrued interest and fees) of the Borrower and the Subsidiary Guarantors in respect of the 1999 Credit Agreement (other than the obligations in respect of the letters of credit issued thereunder for account of the Borrower that were continued under the DIP Credit Agreement and other than the obligations in respect of the letters of credit originally issued by Bank One, NA under the 1999 Credit Agreement for account of CHEL) shall be restructured into term loans held by such lenders in an aggregate principal amount of $120,000,000; [WHEREAS, pursuant to the Credit Agreements the Mortgagor has unconditionally guaranteed the principal of and interest on, and all other amounts from time to time owing under the Credit Agreements;]/5/ WHEREAS, the Borrower, the Revolving Credit Agent (on behalf of the Revolving Credit Lenders) and the Term Loan Agent (on behalf of the Term Lenders) are concurrently herewith entering into a Collateral Agency and Intercreditor Agreement dated as of September 15, 2003 (as from time to time amended, restated, supplemented, replaced or otherwise modified, the "Collateral Agency and Intercreditor Agreement"), pursuant to which, among other things, the Collateral Agent shall be appointed to act as collateral agent hereunder and under the other Collateral Documents (as defined therein); - ---------- /4/ INSERT BRACKETED PROVISIONS IF THE MORTGAGOR IS ONE OF THE SUBSIDIARY GUARANTORS. /5/ INSERT BRACKETED PROVISIONS IF THE MORTGAGOR IS ONE OF THE SUBSIDIARY GUARANTORS. Mortgage -------- - 4 - NOW, THEREFORE, to induce the lenders party to the Revolving Credit Agreement to agree to the terms of the Revolving Credit Agreement and to extend and continue credit thereunder, and to induce the lenders party to the Term Loan Agreement to agree to the terms of the Term Loan Agreement and to restructure the loans under the 1999 Credit Agreement as contemplated thereby, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and FOR THE PURPOSE OF SECURING the following (collectively, the "Obligations"): (a) the payment or performance of all obligations in respect of loans and other extensions of credit (including in respect of letters of credit issued or continued) under, and all other obligations of the [Borrower/Mortgagor/6/] under, the Credit Agreements (including, without limitation, principal, premium (if any), interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the [Borrower/Mortgagor/7/] whether or not a claim for post-filing interest is allowed in such proceedings), fees, charges, expenses, indemnities, reimbursement obligations, guarantees and all other amounts payable thereunder or in respect thereof); (b) the payment or performance of all obligations of any Obligor in respect of overdrafts and related liabilities owed to any Lender party to the Revolving Credit Agreement (or any affiliate thereof) that arise from treasury, depositary or cash management services in connection with any automated clearing house transfers of funds or any similar transactions; [(c) the payment or performance of all obligations of the Mortgagor in respect of its guarantee under or in respect of the Credit Agreements]/8/; and (d) the performance and payment of the covenants, agreements and obligations hereinafter contained and all other monies secured hereby, including, without limitation, any and all sums expended by the Mortgagee pursuant to Section 1.13, together with interest thereon, the Mortgagor hereby [agrees to amend and restate the Existing Mortgage, in its entirety pursuant hereto, and]/9/ irrevocably grants, bargains, sells, releases, conveys, warrants, assigns, transfers, mortgages, pledges, sets over and confirms unto the Mortgagee, under and subject to the terms and conditions hereinafter set forth, all of the following described properties: - ---------- /6/ USE "MORTGAGOR" ONLY IF BORROWER IS MORTGAGOR; OTHERWISE USE "BORROWER'". /7/ USE "MORTGAGOR" ONLY IF BORROWER IS MORTGAGOR; OTHERWISE USE "BORROWER'". /8/ INSERT BRACKETED PROVISIONS IF THE MORTGAGOR IS ONE OF THE SUBSIDIARY GUARANTORS. /9/ INSERT BRACKETED RECITAL ONLY IF THIS IS AN AMENDED AND RESTATED MORTGAGE. Mortgage -------- - 5 - (A) the land and premises (collectively, the "Fee Property") more particularly described in Schedule I; and (B) the [lease/lease agreement] (the "Lease") more particularly described in Schedule II affecting the land and premises (collectively, the "Leasehold Property" and, together with the Fee Property, the "Properties") described in Schedule II; TOGETHER WITH all interests, estates or other claims, both in law and in equity, that the Mortgagor now has or may hereafter acquire in (a) the Properties, (b) all easements, rights-of-way and rights used in connection therewith or as a means of access thereto and (c) all tenements, hereditaments and appurtenances in any manner belonging, relating or appertaining thereto (all of the foregoing interests, estates and other claims being hereinafter collectively called "Easements and Rights of Way"); and TOGETHER WITH all estate, right, title and interest of the Mortgagor, now owned or hereafter acquired, in and to any land lying within the right-of-way of any streets, open or proposed, adjoining the Properties, and any and all sidewalks, alleys and strips and gores of land adjacent to or used in connection therewith (all of the foregoing estate, right, title and interest being hereinafter called "Adjacent Rights"); and TOGETHER WITH all estate, right, title and interest of the Mortgagor, now owned or hereafter acquired, in and to any and all buildings and other improvements now or hereafter located on the Properties and all building materials, building equipment and fixtures of every kind and nature located on the Properties or, attached to, contained in or used in any such buildings and other improvements, and all appurtenances and additions thereto and betterments, substitutions and replacements thereof (all of the foregoing estate, right, title and interest being hereinafter collectively called, "Improvements"); and TOGETHER WITH all estate, right, title and interest of the Mortgagor in and to all such tangible property now owned or hereafter acquired by the Mortgagor (including all machinery, apparatus, equipment, fittings and articles of personal property) and now or hereafter located on or at or attached to the Properties that an interest in such tangible property arises under applicable real estate law, and any and all products and accessions to any such property that may exist at any time (all of the foregoing estate, right, title and interest, and products and accessions, being hereinafter called "Fixtures"); and TOGETHER WITH all estate, right, title and interest of the Mortgagor in and to all rights, royalties and profits in connection with all minerals, oil and gas and other hydrocarbon substances on or in the Properties, development rights or credits, air rights, water, water rights (whether riparian, appropriative, or otherwise and whether or not appurtenant) and water stock (all of the foregoing estate, right, title and interest being hereinafter collectively called "Mineral and Related Rights"); and TOGETHER WITH all reversion or reversions and remainder or remainders of the Properties and Improvements and all estate, right, title and interest of the Mortgagor in and to Mortgage -------- - 6 - any and all present and future leases of space in the Properties and Improvements, and all rents, revenues, proceeds, issues, profits, royalties, income and other benefits now or hereafter derived from the Properties, the Improvements and the Fixtures, subject to the right, power and authority hereinafter given to the Mortgagor to collect and apply the same (all of the foregoing reversions, remainders, leases of space, rents, revenues, proceeds, issues, profits, royalties, income and other benefits being hereinafter collectively called "Rents"); and TOGETHER WITH all estate, right, title and interest and other claim or demand that the Mortgagor now has or may hereafter acquire with respect to any damage to the Properties, the Improvements or the Fixtures and any and all proceeds of insurance in effect with respect to the Improvements or the Fixtures, and any and all awards made for the taking by eminent domain, or by any proceeding or purchase in lieu thereof, of the Properties, the Improvements or the Fixtures, including without limitation any awards resulting from a change of grade of streets or as the result of any other damage to the Properties, the Improvements or the Fixtures for which compensation shall be given by any governmental authority (all of the foregoing estate, right, title and interest and other claims or demand, and any such proceeds or awards, being hereinafter collectively, called "Damage Rights"); and TOGETHER WITH all the estate, right, title, interest and other claim of the Mortgagor with respect to any parking facilities located other than on the Properties and used or intended to be used in connection with the operation, ownership or use of the Properties, any and all replacements and substitutions for the same, and any other parking rights, easements, covenants and other interests in parking facilities acquired by the Mortgagor for the use of tenants or occupants of the Improvements (all of the foregoing estate, right, title, interest and other claim being hereinafter collectively called "Parking Rights"); and TOGETHER WITH all estate, right, title and interest of the Mortgagor with respect to any and all air rights, development rights, zoning rights or other similar rights or interests that benefit or are appurtenant to the Properties or the Improvements (all of the foregoing estate, right, title and interest being hereinafter collectively called "Air and Development Rights"); All of the foregoing Easements and Rights of Way, Adjacent Rights, Improvements, Fixtures, Minerals and Related Rights, Rents, Damage Rights, Parking Rights and Air and Development Rights being sometimes hereinafter referred to collectively as the "Ancillary Rights and Properties" and the Lease, Properties and Ancillary Rights and Properties being sometimes hereinafter referred to collectively as the "Mortgage Estate"; TO HAVE AND TO HOLD the Mortgage Estate with all privileges and appurtenances thereunto belonging, to the Mortgagee and its successors and assigns, forever, upon the terms and conditions and for the uses hereinafter set forth; PROVIDED ALWAYS, that if the principal of and interest on the extensions of credit under the Credit Agreements and all of the other Obligations shall be paid in full, and the Mortgagor shall abide by and comply with each and every covenant contained herein and in the Mortgage -------- - 7 - Credit Agreements, then this Mortgage and the estate hereby granted shall cease, terminate and become void. This Mortgage, the Credit Agreements and any other instrument given to evidence or further secure the payment and performance of any Obligation are sometimes hereinafter collectively referred to as the "Loan Instruments". TO PROTECT THE SECURITY OF THIS MORTGAGE, THE MORTGAGOR HEREBY COVENANTS AND AGREES AS FOLLOWS: ARTICLE 1 Particular Covenants and Agreements of the Mortgagor ---------------------------------------------------- Section 1.01. Payment of Secured Obligations. The Mortgagor shall pay when due all Obligations. Section 1.02. Title, Etc. The Mortgagor represents and warrants that it has good and marketable fee simple title in and to the Fee Property, and that it has a valid interest in the Ancillary Rights and Properties related to the Properties, in each case subject to no mortgage, deed of trust, lien, pledge, charge, security interest or other encumbrance or adverse claim of any nature, except those listed as exceptions to title in the title policy insuring the lien or estate created by this Mortgage and the Liens permitted under the Credit Agreements. The Mortgagor represents and warrants that (a) the Lease is in full force and effect and, to the Mortgagor's knowledge, there are no defaults thereunder that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect and no event has occurred and is continuing that with notice or lapse of time or both could reasonably be expected to result in such a default and (b) the Mortgagor is lawfully seized and possessed of a valid and subsisting leasehold estate in and to the Leasehold Properties and is the owner of the related Ancillary Rights and Properties with respect to the Lease, in each case subject to no mortgage, deed of trust, lien, pledge, charge, security interest or other encumbrance or adverse claim of any nature (including, without limitation, any thereof affecting the fee title to the Leasehold Properties), except those listed as exceptions to title in the title policy insuring the lien or estate created by this Mortgage and the Liens permitted under the Credit Agreements. The Mortgagor represents and warrants that it has the full power and lawful authority to grant, bargain, sell, release, convey, warrant, assign, transfer, mortgage, pledge, set over and confirm unto the Mortgagee the Mortgage Estate as hereinabove provided and warrants that it will forever defend the title to the Mortgage Estate and the validity and priority of the lien or estate hereof against the claims and demands of all persons whomsoever, subject to exceptions to title in the title policy insuring the lien or estate created by this Mortgage and the Liens permitted under the Credit Agreements. Mortgage -------- - 8 - Section 1.03. Further Assurances; Filing; Re-Filing; Etc. (a) Further Instruments. The Mortgagor shall execute, acknowledge and deliver, from time to time, such further instruments as the Mortgagee may reasonably require to accomplish the purposes of this Mortgage. (b) Filing and Refiling. The Mortgagor, immediately upon the execution and delivery of this Mortgage, and thereafter from time to time, shall cause this Mortgage, any security agreement or mortgage supplemental hereto and each instrument of further assurance reasonably required by the Mortgagee under Section 1.03(a) of this Mortgage to be filed, registered or recorded and refiled, re-registered or re-recorded in such manner and in such places as may be required by any present or future law in order to publish notice of and perfect the lien or estate of this Mortgage upon the Mortgage Estate. (c) Fees and Expenses. The Mortgagor shall pay all filing, registration and recording fees, all refiling, re-registration and re-recording fees, and all expenses incident to the execution, filing, recording and acknowledgment of this Mortgage, any security agreement or mortgage supplemental hereto and any instrument of further assurance reasonably required by the Mortgagee under Section 1.03(a) of this Mortgage, and all Federal, state, county and municipal stamp taxes and other taxes, duties, imposts, assessments and charges arising out of or in connection with the execution, delivery, filing and recording of this Mortgage or any of the other Loan Instruments, any security agreement or mortgage supplemental hereto or any instruments of further assurance reasonably required by the Mortgagee under Section 1.03(a) of this Mortgage. Section 1.04. Liens. Except as otherwise provided in the Credit Agreements, but without limiting the obligations of the Mortgagor under Section 1.07 of this Mortgage, the Mortgagor shall not create or suffer to be created any mortgage, deed of trust, lien, security interest, charge or encumbrance upon the Mortgage Estate prior to, on a parity with, or subordinate to the lien of this Mortgage. The Mortgagor shall pay and promptly discharge at the Mortgagor's cost and expense, any such mortgages, deeds of trust, liens, security interests, charges or encumbrances upon the Mortgage Estate or any portion thereof or interest therein. Section 1.05. Insurance. The Mortgagor will maintain insurance, with respect to the Mortgage Estate, issued by financially sound and reputable insurers against loss or damage by reason of any Peril (as defined below) in such amounts (subject to such deductibles as shall be reasonably satisfactory to the Mortgagor) as shall be reasonable and customary and sufficient to avoid the insured named therein from becoming a co-insurer of any loss under such policy but in any event in an amount at least equal to 100% of the actual replacement cost of the Mortgage Estate (including, without limitation, foundation, footings and excavation costs), subject to deductibles as aforesaid. In addition, the Mortgagor will maintain insurance (i) against claims for bodily injury, death or property damage occurring on, in or about the Mortgage Estate (and adjoining streets, sidewalks and waterways), in such amounts as are then reasonable and customary for property similar in use in the jurisdictions where the Mortgage Estate is located Mortgage -------- - 9 - and (ii) such other insurance, including, without limitation, War-Risk Insurance when and to the extent obtainable from the United States Government, in each case as generally carried by owners of properties similar to the Mortgage Estate in the jurisdictions where the Mortgage Estate is located, in such amounts and against such risks as are then reasonable and customary for property similar in use. The Mortgagor expressly assumes all risk of loss, including a decrease in the use, enjoyment or value of the Mortgage Estate from any Peril, whether or not insurable or insured against. Such insurance shall be written by financially responsible companies selected by the Mortgagor and having an A.M. Best rating of "A+" or better and being in a financial size category of XIV or larger, or by other companies reasonably acceptable to the Mortgagee, and shall name the Mortgagee as loss payee (to the extent covering risk of loss or damage to tangible property) and as an additional named insured as its interests may appear (to the extent covering any other risk). Each policy referred to in this Section 1.05 shall provide that it will not be canceled or reduced, or allowed to lapse without renewal, except after not less than thirty days notice to the Mortgagee and shall also provide that the interests of the Mortgagee, the Agents and the Lenders shall not be invalidated by any act or negligence of the Mortgagor or any Person having an interest in the Mortgage Estate nor by occupancy or use of any of the Mortgage Estate for purposes more hazardous than permitted by such policy nor by any foreclosure or other proceedings relating to the Mortgage Estate. The Mortgagor will advise the Mortgagee promptly of any policy cancellation, reduction or material amendment. On or before the date hereof, the Mortgagor will deliver to the Mortgagee certificates of insurance satisfactory to the Mortgagee evidencing the existence of all insurance required to be maintained by the Mortgagor hereunder setting forth the respective coverages, limits of liability, carrier, policy number and period of coverage and showing that such insurance will remain in effect through the December 31 falling at least six months after the date hereof, subject only to the payment of premiums as they become due (and attaching copies of any policies with respect to casualty insurance). Thereafter, on each November 15 in each year (commencing with the first November 15 after the date hereof) the Mortgagor will deliver to the Mortgagee certificates of insurance evidencing that all insurance required to be maintained by the Mortgagor hereunder will be in effect through the December 31 of the calendar year following the calendar year of the current November 15, subject only to the payment of premiums as they become due. In addition, the Mortgagor will not modify in any material respect any of the provisions of any policy with respect to casualty insurance without delivering a copy of the endorsement reflecting such modification to the Mortgagee accompanied by a written report of independent insurance brokers reasonably acceptable to Mortgagee, stating that, in their opinion, such policy (as so modified) adequately protects the interests of the Mortgagee, the Agents and the Lenders, is in compliance with the provisions of this Section 1.05, and is comparable in all material respects with insurance carried by responsible owners and operators of properties similar to the Mortgage Estate. The Mortgagor will not obtain or carry separate insurance concurrent in form or contributing in the event of loss with that required by this Section 1.05 unless the Mortgagee is the named insured thereunder, with loss payable as provided herein. The Mortgagor will immediately notify the Mortgagee whenever any such Mortgage -------- - 10 - separate insurance is obtained and shall deliver to the Mortgagee the certificates evidencing the same. Without limiting the obligations of the Mortgagor under the foregoing provisions of this Section 1.05, in the event the Mortgagor shall fail to maintain in full force and effect insurance as required by the foregoing provisions of this Section 1.05, then the Mortgagee may, but shall have no obligation so to do, procure insurance covering the interests of the Mortgagee, the Agents and the Lenders in such amounts and against such risks as the Mortgagee shall deem appropriate and the Mortgagor shall reimburse the Mortgagee in respect of any premiums paid by the Mortgagee in respect thereof. For purposes hereof, the term "Peril" means, collectively, fire, lightning, flood, windstorm, hail, earthquake, explosion, riot and civil commotion, vandalism and malicious mischief, damage from aircraft, vehicles and smoke and all other perils covered by the "all-risk" endorsement then in use in the jurisdictions where the Mortgage Estate is located. Nothing in this Section 1.05 shall be deemed to limit in any respect the obligations of the Mortgagor under any applicable provision of the Credit Agreements. Section 1.06. Casualty and Condemnation Events. (a) Casualty and Condemnation. Should the Mortgage Estate or any part thereof be taken or damaged by reason of any fire or other casualty (collectively, a "Casualty"), or by reason of any public improvement or condemnation proceeding (collectively, a "Condemnation") or should the Mortgagor receive any notice or other information regarding any such proceeding, the Mortgagor shall give prompt notice thereof to the Mortgagee. The Mortgagee shall, subject to the rights of the lessor under the Lease, be entitled to receive all insurance or other amounts payable as a result of any such Casualty (collectively, the "Casualty Proceeds"), and all compensation, awards, damages and other payments or relief arising out of any such condemnation or any part thereof (collectively, "Condemnation Proceeds"), and all such insurance and other amounts, and compensation, awards, damages and other payments or relief, together with all rights and causes of action relating thereto or arising out of any such Casualty or Condemnation, are hereby assigned to the Mortgagee. The Mortgagor shall execute such further assignments of the Casualty Proceeds and Condemnation Proceeds as the Mortgagee may from time to time require. (b) Restoration Account. Following the occurrence of any Casualty or Condemnation involving the Mortgage Estate or any part thereof resulting in a loss in excess of $[_______], the Mortgagor shall give prompt notice thereof to the Mortgagee and shall cause all Casualty or Condemnation Proceeds, as the case may be, to be paid to the Mortgagee as additional collateral security hereunder subject to the lien of this Mortgage. Upon receipt by the Mortgagee of any such proceeds (including, without limitation, any Casualty Proceeds payable directly to the Mortgagee as loss payee under the respective policies maintained pursuant to Section 1.05), the Mortgagee shall deposit the same into a cash collateral account (the "Restoration Account") in the name and under the control of the Mortgagee. The balance from Mortgage -------- - 11 - time to time in the Restoration Account shall constitute part of the Mortgage Estate hereunder and shall not constitute payment of the Obligations until applied as hereinafter provided. (c) Application of Proceeds. Following the occurrence of any Casualty or Condemnation involving the Mortgage Estate or any part thereof, any Casualty or Condemnation Proceeds must be applied to the extent and in the manner required by the Credit Agreements. (d) Compromise, Adjustment or Settlement. The Mortgagee shall, subject to the rights of the lessor under the Lease, be entitled at its option to participate in any compromise, adjustment or settlement in connection with any claims for loss, damage or destruction under any policy or policies of insurance, in excess of $[_______], and the Mortgagor shall within five Business Days after request therefor reimburse the Mortgagee for all out-of-pocket expenses (including reasonable attorneys' fees and disbursements) incurred by the Mortgagee in connection with such participation. The Mortgagor shall not make any compromise, adjustment or settlement in connection with any such claim without the approval of the Mortgagee. (e) Foreclosure, Etc. In the event of foreclosure of the lien of this Mortgage or other transfer of title or assignment of the Mortgage Estate in extinguishment, in whole or in part, of the Obligations, all right, title and interest of the Mortgagor in and to all policies of casualty insurance covering all or any part of the Mortgage Estate shall, subject to the rights of the lessor under the Lease, inure to the benefit of and pass to the successors in interest to the Mortgagor or the purchaser or grantee of the Mortgage Estate or any part thereof. Section 1.07. Impositions. (a) Payment of Impositions. Except to the extent otherwise permitted under any applicable provision of the Credit Agreements, the Mortgagor shall pay or cause to be paid, before any fine, penalty, interest or cost attaches thereto, all taxes, assessments, water and sewer rates, utility charges and all other governmental or nongovernmental charges or levies now or hereafter assessed or levied against any part of the Mortgage Estate (including, without limitation, nongovernmental levies or assessments such as maintenance charges, owner association dues or charges or fees, levies or charges resulting from covenants, conditions and restrictions affecting the Mortgage Estate) or upon the lien or estate of the Mortgagee therein (collectively, "Impositions"), as well as all claims for labor, materials or supplies that, if unpaid, might by law become a prior lien thereon, and within ten days after request by the Mortgagee will exhibit receipts showing payment of any of the foregoing; provided, however, that if by law any such Imposition may be paid in installments (whether or not interest shall accrue on the unpaid balance thereof), the Mortgagor may pay the same in installments (together with accrued interest on the unpaid balance thereof) as the same respectively become due, before any fine, penalty or cost attaches thereto. (b) Right to Contest Impositions. To the extent not inconsistent with any applicable provisions of the Credit Agreement, the Mortgagor at its expense may, after prior notice to the Mortgagee, contest by appropriate legal, administrative or other proceedings conducted in good faith and with due diligence, the amount or validity or application, in whole or Mortgage -------- - 12 - in part, of any Imposition or lien therefor or any claims of mechanics, materialmen, suppliers or vendors or lien thereof, and may withhold payment of the same pending such proceedings if permitted by law, so long as (i) in the case of any Impositions or lien therefor or any claims of mechanics, materialmen, suppliers or vendors or lien thereof, such proceedings shall suspend the collection thereof from the Mortgage Estate, (ii) neither the Mortgage Estate nor any part thereof or interest therein will be sold, forfeited or lost if the Mortgagor pays the amount or satisfies the condition being contested, and the Mortgagor would have the opportunity to do so, in the event of the Mortgagor's failure to prevail in the contest, (iii) neither the Mortgagee nor any of the Agents or the Lenders would, by virtue of such permitted contest, be exposed to any risk of any civil liability for which the Mortgagor has not furnished additional security as provided in clause (iv) below, or to any risk of criminal liability, and neither the Mortgage Estate nor any interest therein would be subject to the imposition of any lien for which the Mortgagor has not furnished additional security as provided in clause (iv) below, as a result of the failure to comply with such law or of such proceeding and (iv) the Mortgagor shall have furnished to the Mortgagee additional security in respect of the claim being contested or the loss or damage that may result from the Mortgagor's failure to prevail in such contest in such amount as may be reasonably requested by the Mortgagee, but only to the extent that such claim or contest and all other then-current claims or contests involve an aggregate amount greater than $[_______]. Section 1.08. Maintenance of the Improvements and Fixtures. The Mortgagor shall not permit the Improvements or Fixtures to be removed or demolished (provided, however, that, subject to the applicable provisions of the Credit Agreements, the Mortgagor may remove or alter such Improvements and Fixtures that become obsolete in the usual conduct of the Mortgagor's business and the removal or alteration of which do not materially detract from the operation of the Mortgagor's business); shall maintain the Mortgage Estate in good repair, working order and condition, except for reasonable wear and use; and shall restore and repair the Improvements and Fixtures or any part thereof now or hereafter affected by any Casualty or Condemnation. Section 1.09. Compliance With Laws. (a) Representation. The Mortgagor represents and warrants that, except as otherwise previously disclosed in writing to the Mortgagee, the Mortgagor and its operations at the Properties currently comply with all laws, ordinances, orders, rules and regulations of all Federal, state, and local governments and of the appropriate departments, commissions, boards and offices thereof, and the orders, rules and regulations of the American Insurance Association or any other body now or hereafter constituted exercising similar functions, that at any time are applicable to the Mortgage Estate, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. (b) Notification of Notices and Orders. The Mortgagor shall notify the Mortgagee promptly of any notice or order that the Mortgagor receives from any agency or instrumentality of the Federal, or any state or local, government with respect to the Mortgagor's compliance with any laws or regulations referred to in this Section 1.09 and promptly take any and all actions necessary to bring its operations at the Properties into compliance with such laws Mortgage -------- - 13 - or regulations (and shall fully comply with the requirements of such laws or regulations that at any time are applicable to its operations at the Properties) all to the extent required under the applicable provisions of the Credit Agreements; provided that to the extent not inconsistent with the Credit Agreements, the Mortgagor at its expense may, after prior notice to the Mortgagee, contest by appropriate legal, administrative or other proceedings conducted in good faith and with due diligence, the validity or application, in whole or in part, of any such laws or regulations so long as (i) neither the Mortgage Estate nor any part thereof or any interest therein, will be sold, forfeited or lost if the Mortgagor pays the amount or satisfies the condition being contested, and the Mortgagor would have the opportunity to do so, in the event of the Mortgagor's failure to prevail in the contest, (ii) neither the Mortgagee nor any of the Agents or the Lenders would, by virtue of such permitted contest, be exposed to any risk of any civil liability for which the Mortgagor has not furnished additional security as provided in clause (iii) below, or to any risk of criminal liability, and neither the Mortgage Estate nor any interest therein would be subject to the imposition of any lien for which the Mortgagor has not furnished additional security as provided in clause (iii) below as a result of the failure to comply with such law or of such proceeding and (iii) the Mortgagor shall have furnished to the Mortgagee additional security in respect of the claim being contested or the loss or damage that may result from the Mortgagor's failure to prevail in such contest in such amount as may be reasonably requested by the Mortgagee, but only to the extent that such claim or contest and all other then-current claims or contests involve an aggregate amount greater than $[________]. (c) Right to Cure Non-Compliance with Environmental Laws. The Mortgagee, at its election and in its sole discretion may, without obligation to do so, and upon reasonable prior notice to the Mortgagor (except in an emergency), cure any failure on the part of the Mortgagor to comply with any laws or regulations referred to in this Section 1.09 to the extent such failure results in an Event of Default that is continuing and could reasonably be expected to result in a Material Adverse Effect, and without limitation, may take any of the following actions: (i) arrange for the prevention of any Release or threat of Release of Hazardous Substances at any of the Properties, and pay any costs associated with such prevention; (ii) arrange for the removal or remediation of Hazardous Substances that may be Released or result from a Release at any of the Properties, and pay any costs associated with such removal and/or remediation; (iii) pay, on behalf of the Mortgagor, any costs, fines or penalties imposed on the Mortgagor by the Federal, or any state or local, government or any representative thereof in connection with such Release of Hazardous Substances; or (iv) make any other payment or perform any other act that will prevent a lien in favor of any governmental agency from attaching to any of the Properties or the Mortgage Estate. Mortgage -------- - 14 - Any partial exercise by the Mortgagee of the remedies hereinafter set forth, or any partial undertaking on the part of the Mortgagee to cure the Mortgagor's failure to comply with such laws or regulations, shall not obligate the Mortgagee to complete the actions taken or require the Mortgagee to expend further sums to cure the Mortgagor's noncompliance; nor shall the exercise of any such remedies operate to place upon the Mortgagee any responsibility for the operation, control, care, management or repair of any of the Properties or make the Mortgagee the "operator" of any of the Properties within the meaning of any Environmental Laws. Any amount paid or costs incurred by the Mortgagee as a result of the exercise by the Mortgagee of any of the rights hereinabove set forth, together with interest thereon at the Post-Default Rate, shall be immediately due and payable by the Mortgagor to the Mortgagee, and until paid shall be added to and become a part of the Obligations secured hereby; and the Mortgagee, by making any such payment or incurring any such costs, shall be subrogated to any rights of the Mortgagor to seek reimbursement from any third parties, including, without limitation, a predecessor-in-interest to the Mortgagor's title who may be a "responsible party" or otherwise liable under any Environmental Law in connection with any such Release or threat of Release of Hazardous Substances. (d) Environmental Survey and Risk Assessment. If after the occurrence and during the continuance of any Event of Default the Mortgagee, if it has reason to believe that a violation of applicable Environmental Laws has occurred that if not remedied could reasonably be expected to result in a Material Adverse Effect, desires that an environmental survey and risk assessment with respect to any of the Properties be prepared, the Mortgagor agrees to supply such a survey and risk assessment by an independent engineering firm selected by the Mortgagor and satisfactory to the Mortgagee, in form and detail satisfactory to the Mortgagee (including test borings of the ground and chemical analyses of air, water and waste discharges), estimating current liabilities and assessing potential sources of future liabilities of the Mortgagor or any other owner or operator of the Properties under applicable Environmental Laws. Section 1.10. Limitations of Use. The Mortgagor shall not initiate, join in or consent to any change in any private restrictive covenant, zoning ordinance or other public or private restrictions limiting or defining the uses that may be made of any of the Properties and the Improvements or any part thereof that would have a material adverse effect on the value of any of the Properties or the Improvements. The Mortgagor shall comply with the provisions of all leases, licenses, agreements and private covenants, conditions and restrictions that at any time are applicable to the Mortgage Estate. Section 1.11. Inspection of the Properties. The Mortgagor will keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities. The Mortgagor will permit any representatives designated by the Mortgagee or any Agent, upon reasonable prior notice, to visit and inspect the Properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers, employees and independent accountants, all at such reasonable times and as often as reasonably requested (which visits and inspections shall be at the Mortgagor's sole expense after the occurrence and during the Mortgage -------- - 15 - continuance of any Event of Default or in the case of any visit or inspection by the Mortgagee and at such Agent's sole expense at any other time). Section 1.12. Estoppel Certificates. The Mortgagor, within ten business days upon request in person or within fifteen business days upon request by mail, shall furnish the Mortgagee a written statement, duly acknowledged, of the amount of the Obligations then secured by this Mortgage and whether any offsets or defenses exist against any such Obligations. Section 1.13. Actions to Protect Mortgage Estate. If the Mortgagor shall fail to (a) perform and observe any of the terms, covenants or conditions required to be performed or observed by it under the Lease, (b) effect the insurance required by Section 1.06, (c) make the payments required by Section 1.07 or (d) perform or observe any of its other covenants or agreements hereunder, the Mortgagee may, without obligation to do so, and upon notice to the Mortgagor (except in an emergency) effect or pay the same. To the maximum extent permitted by law, all sums, including reasonable attorneys' fees and disbursements, so expended or expended to sustain the lien or estate of this Mortgage or its priority, or to protect or enforce any of the rights hereunder, or to recover any of the Obligations, shall be a lien on the Mortgage Estate, shall be deemed to be added to the Obligations secured hereby, and shall be paid by the Mortgagor within ten days after demand therefor, together with interest thereon at the Post-Default Rate. Section 1.14. Insurance and Condemnation Proceeds; Restoration Account. Any Casualty or Condemnation Proceeds, shall, as provided in Section 1.06, be held by the Mortgagee in the Restoration Account and any interest or other amounts, if any, actually earned on the balance held by the Mortgagee in the Restoration Account shall be credited to the Restoration Account, for the benefit of the Mortgagor. So long as no Event of Default shall have occurred and be continuing, at the written request of the Mortgagor, any monies held in the Restoration Account shall be invested or reinvested in such Permitted Investments as the Mortgagor shall from time to time specify. Such Permitted Investments shall be held by the Mortgagee pursuant to this Section 1.14; but, upon request of the Mortgagor, the Mortgagee shall sell all or any designated part of the same and the proceeds of such sale shall be held by the Mortgagee in the Restoration Account subject to the provisions hereof in the same manner as the cash used by it to purchase the Permitted Investments so sold. The Mortgagor agrees to pay the Mortgagee, on demand, amounts equal to any loss resulting from any investment or reinvestment pursuant to this Section 1.14 (and any such payments made by the Mortgagor shall be deposited by the Mortgagee into the Restoration Account), it being understood that the Mortgagee shall not be liable or responsible for any such loss. Notwithstanding anything herein or at law or in equity to the contrary, none of the Casualty or Condemnation Proceeds paid to the Mortgagee as herein provided, and none of the other amounts from time to time held in the Restoration Account, shall be deemed trust funds, and the Mortgagee shall be entitled to advance amounts from time to time held in the Restoration Account to the Mortgagor, or to apply the same to the prepayment of the loans or other indebtedness constituting the Obligations hereunder, as provided in Section 1.06(c). Mortgage -------- - 16 - Section 1.15. Leasehold Interests. (a) Leasehold Interests Generally. The Mortgagor shall (i) timely perform and observe all of the terms, covenants and conditions required to be performed and observed by the Mortgagor under the Lease and do all things reasonably necessary to preserve and to keep unimpaired its rights thereunder, except to the extent that failure to perform, observe or do such things could not reasonably be expected to have a Material Adverse Effect, (ii) promptly notify the Mortgagee of any default by the Mortgagor under the Lease in the performance of any of the terms, covenants or conditions on the part of the Mortgagor to be performed or observed thereunder or of the giving of any notice by the lessor to the Mortgagor of any default under the Lease or of the lessor's intention to exercise any remedy reserved to the lessor thereunder, provided that the same could not reasonably be expected to result in a Material Adverse Effect, and (iii) promptly cause a copy of each such notice given by the lessor under the Lease to the Mortgagor to be delivered to the Mortgagee. (b) Right to Cure Defaults. If the Mortgagor shall fail promptly to perform or observe any of the terms, covenants or conditions required to be performed by it under the Lease, which if not performed could reasonably be expected to result in a Material Adverse Effect, including, without limitation, payment of all rent and other charges due thereunder, the Mortgagee may, without obligation to do so, and upon reasonable prior notice to the Mortgagor (except in an emergency), take such action as is appropriate to cause such terms, covenants or conditions to be promptly performed or observed on behalf of the Mortgagor but no such action by the Mortgagee shall release the Mortgagor from any of its obligations under this Mortgage. Upon receipt by the Mortgagee from the lessor under the Lease of any notice of default by the Mortgagor thereunder, the Mortgagee may rely thereon and take any action as aforesaid to cure such default even though the existence of such default or the nature thereof be questioned or denied by the Mortgagor or by any party on behalf of the Mortgagor. (c) No Modification Without Consent. The Mortgagor shall not surrender its leasehold estate and interests under the Lease, nor terminate or cancel the Lease, and the Mortgagor shall not modify, change, supplement, alter or amend the Lease orally or in writing, if such modification, change, supplement, alteration or amendment could reasonably be expected to result in a Material Adverse Effect, and, except as provided above, the Mortgagor does hereby expressly release, relinquish and surrender unto the Mortgagee all its right, power and authority, if any, to modify, change, supplement, alter or amend the Lease in any way, and any attempt on the part of the Mortgagor to exercise any such right without the consent of the Mortgagee shall be null and void. (d) Release or Forbearance. No release or forbearance of any of the Mortgagor's obligations under the Lease, pursuant to the terms thereof or otherwise, shall release the Mortgagor from any of its obligations under this Mortgage. (e) No Merger of Interests. Neither the fee title to the property demised by the Lease nor the leasehold estate created by the Lease shall merge, but shall always remain separate and distinct, notwithstanding the union of the aforesaid estates either in the lessor or the Mortgage -------- - 17 - Mortgagor under the Lease or in a third party by purchase or otherwise, unless the Mortgagee shall, at its option, execute and record a document evidencing its intent to merge such estates. If the Mortgagor acquires the fee title or any other estate, title or interest in any Leasehold Property covered by the Lease, this Mortgage shall attach to, be a lien upon and spread to the fee title or such other estate so acquired, and such fee title or other estate shall, without further assignment, mortgage or conveyance, become and be subject to the lien of this Mortgage. The Mortgagor shall notify the Mortgagee of any such acquisition by the Mortgagor and, on written request by the Mortgagee, shall cause to be executed and recorded all such other and further assurances or other instruments in writing as may in the reasonable opinion of the Mortgagee be required to carry out the intent and meaning hereof. (f) Obligations of Lessor. The Mortgagor shall enforce the obligations of the lessor under the Lease to the end that the Mortgagor may enjoy all of the rights granted to it under the Lease, which if unavailable to Mortgagor could reasonably be expected to have a Material Adverse Effect, and shall promptly notify the Mortgagee of any default by the lessor under the Lease, in the performance or observance of any of the material terms, covenants and conditions on the part of the lessor to be performed or observed under the Lease and the Mortgagor shall promptly advise the Mortgagee of the occurrence of any event of default under the Lease that could reasonably be expected to have a Material Adverse Effect. (g) No-Default Certificates. The Mortgagor shall use reasonable efforts to obtain from the lessor under the Lease and deliver to the Mortgagee, within twenty days after demand from the Mortgagee, a statement in writing certifying that the Lease is unmodified and in full force and effect and the dates to which the rent and other charges, if any, have been paid in advance, and stating whether or not, to the best knowledge of the signer of such certificate, the Mortgagor is in default in the performance of any covenant, agreement or condition contained in the Lease, and, if so, specifying each such default of which the signer may have knowledge. (h) Renewals and Extensions. Unless the exercise of any option, now existing or hereafter created, to renew or extend the term of the Lease would, in the Mortgagor's reasonable business judgment, be inadvisable, the Mortgagor shall, at least ninety days prior to the last day upon which the Mortgagor may validly exercise such option, (i) exercise such option in such manner as will cause the term of the Lease to be effectively renewed or extended for the period provided by such option and (ii) give immediate notice thereof to the Mortgagee, it being understood that in the event of the failure of the Mortgagor to do so, the Mortgagee shall have, and is hereby granted, the irrevocable right to exercise any such option, either in its own name and behalf, or in the name and behalf of the Mortgagor, as the Mortgagee shall in its reasonable discretion determine. (i) Notifications of Changes in Rent. The Mortgagor shall promptly notify the Mortgagee of any change in the rent or other charges payable under the Lease, except for changes made pursuant to the provisions of the Lease. (j) Notifications Concerning Proceeds. In the event that any proceeds of insurance on any part of the Mortgage Estate, or any Condemnation Proceeds, shall be deposited Mortgage -------- - 18 - with any person pursuant to the requirements of the Lease, the Mortgagor shall promptly notify the Mortgagee of the name and address of the person with whom such proceeds have been deposited and of the amount so deposited. Section 1.16. Notice Regarding Special Flood Hazards. The Mortgagor hereby acknowledges that it realizes that the following Properties are in zones identified by the Director of the Federal Emergency Management Agency as special flood hazard zones described in 12 C.F.R. Section 22.2 and that it has received, prior to the making of the Loans and the incurrence of any other indebtedness constituting part of the Obligations secured by this Mortgage, the notice regarding Federal disaster relief assistance referred to in the Appendix to 12 C.F.R. Part 22: [List Properties located in special flood hazard zones]. ARTICLE 2 Assignment of Rents, Issues and Profits --------------------------------------- Section 2.01. Assignment of Rents, Issues and Profits. The Mortgagor hereby assigns and transfers to the Mortgagee, FOR THE PURPOSE OF SECURING the Obligations, all Rents, and hereby gives to and confers upon the Mortgagee the right, power and authority to collect the same. The Mortgagor irrevocably appoints the Mortgagee its true and lawful attorney-in-fact, at its option at any time and from time to time following the occurrence and during the continuance of an Event of Default, to demand, receive and enforce payment, to give receipts, releases and satisfactions, and to sue, in the name of the Mortgagor or otherwise, for Rents and apply the same to the Obligations as provided in paragraph (a) of Section 4.02; provided, however, that the Mortgagor shall have the right to collect Rents at any time prior to the occurrence of an Event of Default (but not more than one month in advance, except in the case of security deposits). Section 2.02. Collection Upon Default. To the extent permitted by law, upon the occurrence of any Event of Default, the Mortgagee may, at any time without notice, either in person, by agent or by a receiver appointed by a court, and without regard to the adequacy of any security for the Obligations or the solvency of the Mortgagor, enter upon and take possession of the Properties, the Improvements and the Fixtures or any part thereof, in its own name, sue for or otherwise collect Rents including those past due and unpaid, and, apply the same, less costs and expenses of operation and collection, including attorneys' fees and disbursements, to the payment of the Obligations as provided in paragraph (a) of Section 4.02, and in such order as the Mortgagee may determine. The collection of Rents or the entering upon and taking possession of the Properties, the Improvements or the Fixtures or any part thereof, or the application thereof as aforesaid, shall not cure or waive any Event of Default or notice thereof or invalidate any act done in response to such Event of Default or pursuant to notice thereof. ARTICLE 3 Mortgage -------- - 19 - Security Agreement ------------------ Section 3.01. Creation of Security Interest. The Mortgagor hereby grants to the Mortgagee a security interest in the Fixtures for the purpose of securing the Obligations. The Mortgagee shall have, in addition to all rights and remedies provided herein and in the other Loan Instruments, all the rights and remedies of a secured party under the Uniform Commercial Code of the state in which the applicable portion of the Fixtures is located. Section 3.02. Warranties, Representations and Covenants. The Mortgagor hereby warrants, represents and covenants that: (a) the Fixtures will be kept on or at the related Properties and the Mortgagor will not remove any Fixtures from the related Properties, except such portions or items of the Fixtures that are consumed or worn out in ordinary usage, all of which shall be promptly replaced by the Mortgagor, except as otherwise expressly provided in Section 1.08, (b) all covenants and obligations of the Mortgagor contained herein relating to the Mortgage Estate shall be deemed to apply to the Fixtures whether or not expressly referred to herein and (c) this Mortgage constitutes a security agreement and "fixture filing" as those terms are used in the applicable Uniform Commercial Code. Information relative to the security interest created hereby may be obtained by application to the Mortgagee (secured party) c/o to JPMorgan Chase Bank, , 270 Park Avenue, 20th Floor, New York, New York 10017, Attention of Roger Odell (Telecopy No. (212) 270-0433; Telephone No. (212) 270-0506), with a copy to JPMorgan Chase Bank, 270 Park Avenue, 20th Floor, New York, New York 10017, Attention of Steven Hawkins (Telecopy No. (212) 270-0433; Telephone No. (212) 270-0376). The mailing address of the Mortgagor is set forth on Page 1 hereof. ARTICLE 4 Defaults; Remedies ------------------ Section 4.01. Default Remedies. (a) Remedies Generally. If an Event of Default shall have occurred and be continuing, this Mortgage may, to the maximum extent permitted by law, be enforced, and the Mortgagee may exercise any right, power or remedy permitted to it hereunder, under the Credit Agreements or under any of the other Loan Instruments or by law, and, without limiting the generality of the foregoing, the Mortgagee may, personally or by its agents, to the maximum extent permitted by law: (i) enter into and take possession of the Mortgage Estate or any part thereof, exclude the Mortgagor and all persons claiming under the Mortgagor whose claims are junior to this Mortgage, wholly or partly therefrom, and use, operate, manage and control the same either in the name of the Mortgagor or otherwise as the Mortgagee shall deem best, and upon such entry, from time to time at the expense of the Mortgagor and the Mortgage Estate, make all such repairs, replacements, alterations, additions or Mortgage -------- - 20 - improvements to the Mortgage Estate or any part thereof as the Mortgagee may deem proper and, whether or not the Mortgagee has so entered and taken possession of the Mortgage Estate or any part thereof, collect and receive all Rents and apply the same to the payment of all expenses that the Mortgagee may be authorized to make under this Mortgage, the remainder to be applied to the payment of the Obligations until the same shall have been repaid in full; if the Mortgagee demands or attempts to take possession of the Mortgage Estate or any portion thereof in the exercise of any rights hereunder, the Mortgagor shall promptly turn over and deliver complete possession thereof to the Mortgagee; and (ii) personally or by agents, with or without entry, if the Mortgagee shall deem it advisable: (x) sell the Mortgage Estate at a sale or sales held at such place or places and time or times and upon such notice and otherwise in such manner as may be required by law, or, in the absence of any such requirement, as the Mortgagee may deem appropriate, and from time to time adjourn any such sale by announcement at the time and place specified for such sale or for such adjourned sale without further notice, except such as may be required by law; (y) proceed to protect and enforce its rights under this Mortgage, by suit for specific performance of any covenant contained herein or in the Loan Instruments or in aid of the execution of any power granted herein or in the Loan Instruments, or for the foreclosure of this Mortgage (as a mortgage or otherwise) and the sale of the Mortgage Estate under the judgment or decree of a court of competent jurisdiction, or for the enforcement of any other right as the Mortgagee shall deem most effectual for such purpose, provided that in the event of a sale, by foreclosure or otherwise, of less than all of the Mortgage Estate, this Mortgage shall continue as a lien on, and security interest in, the remaining portion of the Mortgage Estate; or (z) exercise any or all of the remedies available to a secured party under the applicable Uniform Commercial Code, including, without limitation: (1) either personally or by means of a court appointed receiver, take possession of all or any of the Fixtures and exclude therefrom the Mortgagor and all persons claiming under the Mortgagor, and thereafter hold, store, use, operate, manage, maintain and control, make repairs, replacements, alterations, additions and improvements to and exercise all rights and powers of the Mortgagor in respect of the Fixtures or any part thereof; if the Mortgagee demands or attempts to take possession of the Fixtures in the exercise of any rights hereunder, the Mortgagor shall promptly turn over and deliver complete possession thereof to the Mortgagee; Mortgage -------- - 21 - (2) without notice to or demand upon the Mortgagor, make such payments and do such acts as the Mortgagee may deem necessary to protect its security interest in the Fixtures, including, without limitation, paying, purchasing, contesting or compromising any encumbrance that is prior to or superior to the security interest granted hereunder, and in exercising any such powers or authority paying all expenses incurred in connection therewith; (3) require the Mortgagor to assemble the Fixtures or any portion thereof, at a place designated by the Mortgagee and reasonably convenient to both parties, and promptly to deliver the Fixtures to the Mortgagee, or an agent or representative designated by it; the Mortgagee, and its agents and representatives, shall have the right to enter upon the premises and property of the Mortgagor to exercise the Mortgagee's rights hereunder; and (4) sell, lease or otherwise dispose of the Fixtures, with or without having the Fixtures at the place of sale, and upon such terms and in such manner as the Mortgagee may determine (and the Mortgagee or any Lender may be a purchaser at any such sale). (b) Appointment of Receiver. If an Event of Default shall have occurred and be continuing, the Mortgagee, to the maximum extent permitted by law, shall be entitled, as a matter of right, to the appointment of a receiver of the Mortgage Estate, without notice or demand, and without regard to the adequacy of the security for the Obligations or the solvency of the Mortgagor. The Mortgagor hereby irrevocably consents to such appointment and waives notice of any application therefor. Any such receiver or receivers shall have all the usual powers and duties of receivers in like or similar cases and all the powers and duties of the Mortgagee in case of entry and shall continue as such and exercise all such powers until the date of confirmation of sale of the Mortgage Estate, unless such receivership is sooner terminated. (c) Rents. If an Event of Default shall have occurred and be continuing, the Mortgagor shall, to the maximum extent permitted by law, pay monthly in advance to the Mortgagee, or to any receiver appointed at the request of the Mortgagee to collect Rents, the fair and reasonable rental value for the use and occupancy of the Properties, the Improvements and the Fixtures or of such part thereof as may be in the possession of the Mortgagor. Upon default in the payment thereof, the Mortgagor shall vacate and surrender possession of the Properties, the Improvements and the Fixtures to the Mortgagee or such receiver, and upon a failure so to do may be evicted by summary proceedings. (d) Sale. In any sale under any provision of this Mortgage or pursuant to any judgment or decree of court, the Mortgage Estate, to the maximum extent permitted by law, may be sold in one or more parcels or as an entirety and in such order as the Mortgagee may elect, without regard to the right of the Mortgagor or any person claiming under the Mortgagor to the marshalling of assets. The purchaser at any such sale shall take title to the Mortgage Estate or Mortgage -------- - 22 - the part thereof so sold free and discharged of the estate of the Mortgagor therein, the purchaser being hereby discharged from all liability to see to the application of the purchase money. Any person, including the Mortgagee or any Lender, may purchase at any such sale. Upon the completion of any such sale by virtue of this Section 4.01 the Mortgagee shall execute and deliver to the purchaser an appropriate instrument that shall effectively transfer all of the Mortgagor's estate, right, title, interest, property, claim and demand in and to the Mortgage Estate or portion thereof so sold, but without any covenant or warranty, express or implied. The Mortgagee is hereby irrevocably appointed the attorney-in-fact of the Mortgagor in its name and stead to make all appropriate transfers and deliveries of the Mortgage Estate or any portions thereof so sold and, for that purpose, the Mortgagee may execute all appropriate instruments of transfer, and may substitute one or more persons with like power, the Mortgagor hereby ratifying and confirming all that said attorneys or such substitute or substitutes shall lawfully do by virtue hereof. Nevertheless, the Mortgagor shall ratify and confirm, or cause to be ratified and confirmed, any such sale or sales by executing and delivering, or by causing to be executed and delivered, to the Mortgagee or to such purchaser or purchasers all such instruments as may be advisable, in the judgment of the Mortgagee, for such purpose, and as may be designated in such request. Any sale or sales made under or by virtue of this Mortgage, to the extent not prohibited by law, shall operate to divest all the estate, right, title, interest, property, claim and demand whatsoever, whether at law or in equity, of the Mortgagor in, to and under the Mortgage Estate, or any portions thereof so sold, and shall be a perpetual bar both at law and in equity against the Mortgagor and against any and all persons claiming or who may claim the same, or any part thereof, by, through or under the Mortgagor. The powers and agency herein granted are coupled with an interest and are irrevocable. (e) Possession of Loan Instruments Not Necessary. All rights of action under the Loan Instruments and this Mortgage may be enforced by the Mortgagee without the possession of the Loan Instruments and without the production thereof at any trial or other proceeding relative thereto. Section 4.02. Application of Proceeds. (a) Application of Proceeds Generally. The proceeds of any sale made either under the power of sale hereby given or under a judgment, order or decree made in any action to foreclose or to enforce this Mortgage, or of any monies held by the Mortgagee hereunder shall, to the maximum extent permitted by law, be applied: (i) first to the payment of all costs and expenses of such sale, including the Mortgagee's attorneys' fees and disbursements; (ii) then to the payment of all charges, expenses and advances incurred or made by the Mortgagee in order to protect the lien and estate of this Mortgage or the security afforded hereby; (iii) then to the payment in full of the Obligations, in accordance with the Credit Agreements; Mortgage -------- - 23 - and after payment in full of all Obligations any surplus remaining shall be paid to the Mortgagor or to whomsoever may be lawfully entitled to receive the same. (b) Liability for Deficiencies. No sale or other disposition of all or any part of the Mortgage Estate pursuant to Section 4.01 shall be deemed to relieve the Mortgagor of its obligations under the Credit Agreements or any other Loan Instrument except to the extent the proceeds thereof are applied to the payment of such obligations. If the proceeds of sale, collection or other realization of or upon the Mortgage Estate are insufficient to cover the costs and expenses of such realization and the payment in full of the Obligations, the Mortgagor shall remain liable for any deficiency. Section 4.03. Right to Sue. The Mortgagee shall have the right from time to time to sue for any sums required to be paid by the Mortgagor under the terms of this Mortgage as the same become due, without regard to whether or not the Obligations shall be, or have become, due and without prejudice to the right of the Mortgagee thereafter to bring any action or proceeding of foreclosure or any other action upon the occurrence of any Event of Default existing at the time such earlier action was commenced. Section 4.04. Powers of the Mortgagee. The Mortgagee may at any time or from time to time in accordance with the Credit Agreements renew or extend this Mortgage or (with the agreement of the Mortgagor) alter or modify the same in any way, or waive any of the terms, covenants or conditions hereof or thereof, in whole or in part, and may release any portion of the Mortgage Estate or any other security, and grant such extensions and indulgences in relation to the Obligations, or release any person liable therefor as the Mortgagee may determine without the consent of any junior lienor or encumbrancer, without any obligation to give notice of any kind thereto, without in any manner affecting the priority of the lien and estate of this Mortgage on or in any part of the Mortgage Estate, and without affecting the liability of any other person liable for any of the Obligations. Section 4.05. Remedies Cumulative. (a) Remedies Cumulative. No right or remedy herein conferred upon or reserved to the Mortgagee is intended to be exclusive of any other right or remedy, and each and every right and remedy shall be cumulative and in addition to any other right or remedy under this Mortgage, or under applicable law, whether now or hereafter existing; the failure of the Mortgagee to insist at any time upon the strict observance or performance of any of the provisions of this Mortgage or to exercise any right or remedy provided for herein or under applicable law, shall not impair any such right or remedy nor be construed as a waiver or relinquishment thereof. (b) Other Security. To the maximum extent permitted by applicable law: (i) the Mortgagee shall be entitled to enforce payment and performance of any of the obligations of the Mortgagor and to exercise all rights and powers under this Mortgage or under any Loan Instrument or any laws now or hereafter in force, notwithstanding that some or all of the Mortgage -------- - 24 - Obligations may now or hereafter be otherwise secured, whether by mortgage, deed of trust, pledge, lien, assignment or otherwise; (ii) neither the acceptance of this Mortgage nor its enforcement, whether by court action or pursuant to the power of sale or other powers herein contained, shall prejudice or in any manner affect the Mortgagee's right to realize upon or enforce any other security now or hereafter held by the Mortgagee, it being stipulated that the Mortgagee shall be entitled to enforce this Mortgage and any other security now or hereafter held by the Mortgagee in such order and manner as the Mortgagee, in its sole discretion, may determine; and (iii) every power or remedy given by the Credit Agreements, this Mortgage or any of the other Loan Instruments to the Mortgagee, or to which the Mortgagee is otherwise entitled, may be exercised, concurrently or independently, from time to time and as often as may be deemed expedient by the Mortgagee, and the Mortgagee may pursue inconsistent remedies. Section 4.06. Waiver of Stay, Extension, Moratorium Laws; Equity of Redemption. To the maximum extent permitted by law, the Mortgagor shall not at any time insist upon, or plead, or in any manner whatever claim or take any benefit or advantage of any applicable present or future stay, extension or moratorium law, that may adversely affect the observance or performance of the provisions of this Mortgage; nor claim, take or insist upon any benefit or advantage of any present or future law providing for the valuation or appraisal of the Mortgage Estate or any portion thereof prior to any sale or sales thereof that may be made under or by virtue of Section 4.01; and the Mortgagor, to the extent that it lawfully may, hereby waives all benefit or advantage of any such law or laws. The Mortgagor for itself and all who may claim under it, hereby waives, to the maximum extent permitted by applicable law, any and all rights and equities of redemption from sale under the power of sale created hereunder or from sale under any order or decree of foreclosure of this Mortgage and (if an Event of Default shall have occurred) all notice or notices of seizure, and all right to have the Mortgage Estate marshalled upon any foreclosure hereof. The Mortgagee shall not be obligated to pursue or exhaust its rights or remedies as against any other part of the Mortgage Estate and the Mortgagor hereby waives any right or claim of right to have the Mortgagee proceed in any particular order. ARTICLE 5 Miscellaneous ------------- Section 5.01. Release by the Mortgagee. Upon the termination of the Commitments under and as defined in the Credit Agreements and the payment in full of the Obligations, the Mortgagee shall release the lien of this Mortgage, or upon the request of the Mortgagor, and at the Mortgagor's expense, assign this Mortgage without recourse to the Mortgagor's designee, or to the person or persons legally entitled thereto, by an instrument duly acknowledged in form for recording. Section 5.02. Notices. All notices, demands, consents, requests or other communications that are permitted or required to be given by any party to the other hereunder shall be in writing and given in the manner specified in Section 10.01 of the Credit Agreements. Mortgage -------- - 25 - Section 5.03. Amendments; Waivers; Etc. This Mortgage cannot be modified, changed or discharged except by an agreement in writing, duly acknowledged in form for recording, signed by the Mortgagor and the Mortgagee with the consent of the requisite percentage of the Lenders as provided in the Credit Agreements. For purposes hereof, a statement by the Mortgagee in any modification or supplement to this Mortgage to the effect that such modification or supplement has been consented to by the Lenders as provided in Credit Agreements shall be conclusive evidence of such consent and it shall not be necessary for a copy of such consent to be recorded with such modification or supplement as a condition to such modification or supplement being recorded in the appropriate real estate records. Section 5.04. Successors and Assigns. This Mortgage applies to, inures to the benefit of and binds the Mortgagor and the Mortgagee and their respective successors and assigns and shall run with the Properties. Section 5.05. Captions. The captions or headings at the beginning of Articles, Sections and paragraphs hereof are for convenience of reference and are not a part of this Mortgage. Section 5.06. Severability. If any term or provision of this Mortgage or the application thereof to any person or circumstance shall to any extent be invalid or unenforceable, the remainder of this Mortgage, or the application of such term or provision to persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each term and provision of this Mortgage shall be valid and enforceable to the maximum extent permitted by law. If any portion of the Obligations shall for any reason not be secured by a valid and enforceable lien upon any part of the Mortgage Estate, then any payments made in respect of the Obligations (whether voluntary or under foreclosure or other enforcement action or procedure or otherwise) shall, for purposes of this Mortgage (except to the extent otherwise required by applicable law) be deemed to be made (i) first, in respect of the portion of the Obligations not secured by the lien of this Mortgage, (ii) second, in respect of the portion of the Obligations secured by the lien of this Mortgage, but which lien is on less than all of the Mortgage Estate, and (iii) last, to the portion of the Obligations secured by the lien of this Mortgage, and which lien is on all of the Mortgage Estate. Mortgage -------- - 26 - IN WITNESS WHEREOF, this Mortgage has been duly executed by the Mortgagor as of the day and year first above written. [NAME OF MORTGAGOR] By ------------------------------------- Title: Signed and acknowledged in the presence of: - ------------------------------------ - ------------------------------------ Mortgage -------- - 27 - STATE OF NEW YORK ) ) ss: COUNTY OF NEW YORK ) On this __ day of _______, 1999, before me, the undersigned, a notary public in and for said state, personally appeared ______________, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument, and acknowledged to me that he/she executed the same in his/her capacity and that by his/her signature on the instrument the individual or the person upon behalf of which the individual acted executed the instrument. --------------------------- Notary Public [SEAL] Mortgage -------- SCHEDULE I DESCRIPTION OF FEE PROPERTY --------------------------- The following land and premises located in ___________________ County, ____________: [Insert metes and bounds description] Schedule I ---------- SCHEDULE II DESCRIPTION OF LEASE -------------------- AND LEASEHOLD PROPERTY ---------------------- That certain [lease/lease agreement] dated as of ____________ __, 19__ between the Mortgagor [as successor by merger] [assignment] to ____________, a [corporation] [partnership] duly organized and validly existing under the laws of the State of _____________, as lessee, and __________, a [corporation] [partnership] duly organized and validly existing under the laws of the State of _____________, as lessor, and recorded in volume ___ at page ___ of the ________ Records of ________ County, __________ on ______________, 19__, and the leasehold estate created thereby affecting the following land and premises located in ______________ County, _________: [Insert metes and bounds description] Collateral Agency and Intercreditor Agreement --------------------------------------------- EX-31.1 7 dex311.htm SECTION 302 CERTIFICATION OF CEO Section 302 Certification of CEO

Exhibit 31.1

CERTIFICATION

I, Samuel F. Thomas, Chief Executive Officer of Chart Industries, Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Chart Industries, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 19, 2003

/s/ Samuel F. Thomas

Samuel F. Thomas,

Chief Executive Officer

EX-31.2 8 dex312.htm SECTION 302 CERTIFICATION OF CFO Section 302 Certification of CFO

Exhibit 31.2

CERTIFICATION

I, Michael F. Biehl, Chief Financial Officer and Treasurer of Chart Industries, Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Chart Industries, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 19, 2003

/s/ Michael F. Biehl

Michael F. Biehl,

Chief Financial Officer and Treasurer

EX-32.1 9 dex321.htm SECTION 906 CERTIFICATION OF CEO Section 906 Certification of CEO

Exhibit 32.1

Certification

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officer of Chart Industries, Inc., a Delaware corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:

(a) The Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2003 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(b) The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 19, 2003

/s/ Samuel F. Thomas

Samuel F. Thomas

Chief Executive Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Form 10-Q or as a separate disclosure document.
EX-32.2 10 dex322.htm SECTION 906 CERTIFICATION OF CFO Section 906 Certification of CFO

Exhibit 32.2

Certification

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officer of Chart Industries, Inc., a Delaware corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:

(a) The Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2003 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(b) The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 19, 2003

/s/ Michael F. Biehl

Michael F. Biehl

Chief Financial Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Form 10-Q or as a separate disclosure document.
~~-----END PRIVACY-ENHANCED MESSAGE-----~~

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		/s/ Samuel F. Thomas

		Samuel F. Thomas, Chief Executive Officer


		/s/ Michael F. Biehl

		Michael F. Biehl, Chief Financial Officer and Treasurer


Dated: November 19, 2003				/s/ Samuel F. Thomas

				Samuel F. Thomas Chief Executive Officer