EXHIBIT 10.7
SECOND AMENDED AND RESTATED LOAN AGREEMENT
(COMPANY LOAN)
This Second Amended and Restated Loan Agreement (this "Agreement"), dated
as of January 12, 1998, is between ▇▇▇▇▇▇▇ CORP., a Delaware corporation, and
all of its undersigned partially and wholly owned subsidiaries, as Borrowers,
and SOUTHTRUST BANK, NATIONAL ASSOCIATION, with its principal office in
Birmingham, Alabama, as lender.
BACKGROUND
Pursuant to a Loan Agreement dated August 26, 1994, Bank made available to
Borrowers three credit facilities in the aggregate amount of up to $14,000,000
allocated as follows: (1) a Revolving Loan in the amount of $5,000,000; (2) a
loan in the amount of $7,000,000 for the refinancing of Borrowers' loans from
Fleet Bank and from Chase Bank ("Term Loan"); and (3) a Real Estate Loan of
$2,000,000. Pursuant to a First Amended and Restated Loan Agreement dated
December 8, 1995, Bank renewed the Revolving Loan and increased the amount of
the Revolving Loan to $15,000,000, reduced by the outstanding principal balances
of a new loan in the amount of $5,000,000 to fund equipment and corporate
acquisitions ("Non-Revolving Line of Credit"). Bank also renewed the $7,000,000
Term Loan and the $2,000,000 Real Estate Loan. Also, pursuant to an Assignment
dated the same date as the First Amended and Restated Loan Agreement, Bank
acquired a $2,400,000 loan from Fleet Bank to an ESOP established by Borrowers,
which loan is guaranteed by Borrowers, thereby resulting in the termination of
the Intercreditor Agreement dated August 26, 1994, between Bank and Fleet Bank
and Bank's status as collateral agent for both Fleet Bank and Bank. On October
28, 1996, Borrowers repaid the $7,000,000 Term Loan. The $5,000,000
Non-Revolving Line of Credit was never funded and has been terminated. By
Amendment to Loan Documents dated as of December 30, 1996, the First Amended and
Restated Loan Agreement was amended to join as Borrowers and Guarantors two
additional partially or wholly-owned subsidiaries of ▇▇▇▇▇▇▇ Corp.
Borrowers request that Bank renew the Revolving Loan at an amount equal to
$8,000,000, subject to Borrowers' commitment to reduce this balance in
accordance with this Agreement. Bank is willing to make these credit facilities
available to Borrowers on the terms and conditions set forth in this Agreement.
OPERATIVE TERMS
The recitals set forth above are incorporated into this Agreement and Bank
and Borrowers agree as follows:
1. Defined Terms. As used in this Agreement, the following terms shall have
the following meanings:
1.1 Accounts -- has the meaning set forth in the Security Agreement.
1.2 Affiliate -- any director or officer of Borrowers or any Person who
directly, indirectly or beneficially, owns 5% or more of the capital stock of
any Borrower, or 5% of the voting stock or rights of any Borrower, or any member
of the immediate family of any such officer, director, or stockholder, or any
corporation or other entity which is controlled by, controls, or is under common
control with, any Borrower, including the Guarantor.
1.3 Agreement -- this Second Amended and Restated Loan Agreement.
1.4 Bank -- SouthTrust Bank, National Association, and its successors and
assigns, a party to this Agreement.
1.5 Base Rate -- the rate of interest designated by Bank periodically as
its Base Rate. The Base Rate is not necessarily the lowest interest rate charged
by Bank.
1.6 Borrower or Borrowers -- ▇▇▇▇▇▇▇ Corp., a Delaware corporation, ▇▇▇▇▇▇▇
Contracting Corp., a Florida corporation, Kimmins Ltd., a Canadian corporation,
Kimmins Industrial Service Corp., a Delaware corporation, Kimmins Abatement
Corp., a Delaware corporation, ThermoCor Kimmins, Inc., a Florida corporation,
TransCor Waste Services, Inc., a Florida corporation, ▇▇▇▇▇▇▇ Recycling Corp., a
Florida corporation, Kimmins Incorporated, a Texas corporation, Kimmins
International Corporation, a Florida corporation, Fourth Avenue Holdings, Inc.,
a Florida corporation, 40th Street, Inc., a Florida corporation, Lantana Eighth
Avenue Corp., a Florida corporation, Factory Street Corporation, a Tennessee
corporation, Kimmins Associates, Inc., a Delaware Corporation, Kimmins Specialty
Contracting, Inc., a Florida corporation, and ▇▇▇▇▇▇▇ Equipment Leasing Corp., a
Florida corporation, each a party to this Agreement and other Subsidiaries that
from time to time become parties to this Agreement.
1.7 Cash Capital Expenditures -- cash expenditures made for the acquisition
of any fixed assets or improvements, replacements, substitutions, or additions
thereto which have a useful life of more than one year.
1.8 Capitalized Lease Obligations -- any Debt represented by obligations
under a lease that is required to be capitalized for financial reporting
purposes in accordance with GAAP. The amount of such Debt shall be the
capitalized amount of such obligations determined in accordance with GAAP.
1.9 Chattel Paper -- has the meaning set forth in the Security Agreement.
1.10 Code -- the Uniform Commercial Code, as in effect in Florida from time
to time.
1.11 Collateral - collectively, Borrowers' Accounts, Deposit Accounts,
Documents, Instruments, Chattel Paper, Equipment, General Intangibles, and
Inventory, the Subsidiary Stock, the Notes Receivable, and Real Estate, and the
other property and interests described in the Collateral Documents and elsewhere
in the Loan Documents, wherever located and whether now owned by Borrowers or
hereafter acquired, and the parts, proceeds, products, profits, replacements,
and substitutions of each, as the case may be.
1.12 Collateral Documents -- the Mortgage, the Pledge Agreement, the
Security Agreement, this Agreement (to the extent it constitutes a security
agreement), and all other documents executed from time to time evidencing Bank's
security interest in the Collateral.
1.13 Collected Underbillings -- 50% of the amounts (net of associated legal
costs) received by Borrowers as described in Exhibit "G."
1.14 Contractual Obligation -- any provision of any security issued by a
Person or of any agreement, instrument, or undertaking to which such Person is a
party or by which it or any of its property is bound.
1.15 Current Assets -- at any date means the amount at which all of the
current assets of a Person (or Persons on a consolidated basis) would be
properly classified as current assets shown on a balance sheet at such date in
accordance with GAAP, except that amounts due from Affiliates and Subsidiaries
and investments in Affiliates and Subsidiaries shall be excluded.
1.16 Current Liabilities -- at any date means the amount of the current
liabilities of a Person (or Persons on a consolidated basis) that would be
properly classified as current liabilities on a balance sheet at such date in
accordance with GAAP.
1.17 Debt -- the sum of (a) indebtedness for borrowed money or for the
deferred purchase price of property or services, (b) Capitalized Lease
Obligations, (c) the aggregate amount of outstanding and unpaid Letters of
Credit issued by Bank, and (d) all other items which in accordance with GAAP
would be included in determining total liabilities as shown on a balance sheet
of a Person (or Persons on a consolidated basis) as at the date as of which Debt
is to be determined.
1.18 Default Rate -- the highest lawful rate of interest per annum
specified in any Note to apply after a default under such Note or, if no such
rate is specified, a rate equal to the lesser of (a) two percent over the
interest rate specified to be the applicable contract interest rate in this
Agreement or (b) the highest rate of interest allowed by law.
1.19 Agency Account -- has the meaning set forth in the Account Pledge
Agreement in the form attached as Exhibit "H", to be executed by certain of the
Borrowers in favor of Bank as secured party.
1.20 Documents -- has the meaning set forth in the Security Agreement.
1.21 Environmental Regulations -- all federal, state, and local laws,
rules, regulations, ordinances, programs, permits, guidances, orders, and
consent decrees relating to the environment or to public health, safety, and
environmental matters, including the Resource Conversation and Recovery Act, the
Comprehensive Environmental Response Compensation and Liability Act of 1980, the
Toxic Substances Control Act, the Clean Water Act, the Clean Air Act, the River
and Harbor Act, the Water Pollution Control Act, the Marine Protection Research
and Sanctuaries Act, the Deep-Water Port Act, the Safe Drinking Water Act, the
Superfund Amendments and Reauthorization Act of 1986, the Federal Insecticide,
Fungicide and Rodenticide Act, the Mineral Lands and Leasing Act, the Surface
Mining Control and Reclamation Act, the Oil Pollution Act of 1990, state and
federal super lien and environmental cleanup programs and laws, U.S. Department
of Transportation regulations, laws regulating hazardous, radioactive and toxic
materials and underground petroleum products storage tanks, and all similar
state, federal, and local laws and regulations.
1.22 Equipment -- has the meaning set forth in the Security Agreement.
1.23 ERISA -- the Employee Retirement Income Security Act of 1974 and all
rules and regulations promulgated thereunder.
1.24 ESOP -- the Employee Stock Ownership Plan of Parent, as evidenced by
the Employee Stock Ownership Trust Agreement dated December 29, 1989.
1.25 ESOP Loan -- the loan in the approximate principal amount of
$2,400,000, from Bank to the trustees of the Parent's Employee Stock Ownership
Plan, guaranteed by Borrowers, which Bank acquired from Fleet Bank pursuant to
an Assignment dated December 8, 1995.
1.26 Event of Default -- any one of the events enumerated in Article 10
("Events of Default").
1.27 Fixed Charge Coverage -- a fraction in which the numerator is the sum
of the net income of Borrowers (after provision for federal and state taxes) for
the 12-month period preceding the applicable date, plus the interest, lease, and
rental expenses of Borrowers for said period, plus the unearned employee
compensation paid to the Parent's Employee Stock Ownership Plan Trust, plus the
sum of non-cash expenses or allowances for such period (including amortization
or write-down of intangible assets, depreciation, depletion, and deferred taxes
and expenses) and the denominator is the sum of the current portion of the long
term debt of Borrowers as of the applicable date, plus the interest, lease, and
rental expenses for the 12-month period preceding the applicable date.
1.28 GAAP -- generally accepted accounting principles in the United States
of America as defined by the Financial Accounting Standards Board or its
successor, as in effect from time to time consistently applied.
1.29 General Intangibles -- has the meaning set forth in the Security
Agreement. -------------------
1.30 Governmental Authority -- means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions pertaining to
government.
1.31 Guarantor -- Cumberland Holdings, Inc., a Florida corporation.
1.32 Instrument -- has the meaning set forth in the Security Agreement.
1.33 Inventory -- has the meaning set forth in the Security Agreement.
1.34 Letters of Credit -- the Letters of Credit provided for in Section
2.11 of this Agreement.
1.35 Lien -- any interest in property (real, personal, or mixed, and
tangible or intangible) securing an obligation owed to, or a claim by, a Person
other than the owner of the property, whether such interest is based on the
common law, statute or contract, and including a security interest, security
title or Lien arising from a security agreement, mortgage, deed of trust, deed
to secure debt, encumbrance, pledge, conditional sale or trust receipt or a
lease, consignment or bailment for security purposes. The term "Lien" shall
include covenants, conditions, restrictions, leases, and other encumbrances
affecting any property. For the purpose of this Agreement, Borrowers shall be
deemed to be the owners of any property which they have acquired or hold subject
to a conditional sale agreement or other arrangement pursuant to which title to
the Property has been retained by or vested in some other Person for security
purposes.
1.36 Loan or Loans -- all loans from Bank to Borrowers, including the
Revolving Loan and the Real Estate Loan.
1.37 Loan Account -- the loan account established on the books of Bank
pursuant to Section 2.4 ("Loan Account").
1.38 Loan Documents -- this Agreement, and each and every mortgage, deed of
trust, note, security agreement, financing statement or other instrument
executed and delivered to evidence the Loans, the ESOP Loan, or any other
Obligation, to constitute collateral for the Loans, the ESOP Loan, or any other
Obligation, and any and all other agreements, instruments, and documents
heretofore, now or hereafter, executed by Borrowers and delivered to Bank in
respect to the transactions contemplated by this Agreement.
1.39 Material Adverse Effect -- with respect to a Person, a material
adverse effect on its business, assets, properties, prospects, results of
operation, or condition (financial or other).
1.40 Mortgage -- the mortgages executed by Parent granting Bank a first
lien on the Real Estate to secure repayment of the Real Estate Loan.
1.41 Multiemployer Plan -- has the meaning set forth in Section 400(a)(3)
of ERISA.
1.42 Net Income -- Net income of Borrowers for the relevant period on a
consolidated basis as set forth in Parent's financial statements.
1.43 Note(s) -- each promissory note executed and delivered by Borrowers to
Bank evidencing all or part of the Loans, as further described hereinafter.
1.44 Notes Receivable -- the following promissory notes executed in favor
of Parent: (a) Subordinated Note dated March 25, 1993, in the approximate amount
of $1,600,000, executed by TransCor Waste Services, Inc.; (b) Promissory Note
dated June 30, 1993, in the approximate principal amount of $3,588,000, executed
by Sunshadow Apartments, Ltd. and Summerbreeze Apartments, Ltd.; (c) Promissory
Note dated May 1, 1993, in the approximate principal amount of $1,204,000,
executed by Sunforest Apartments, Ltd.; and (d) Term Note dated October 1, 1992,
in the approximate initial principal amount of $4,291,049, executed by Guarantor
and all associated collateral, guarantees, and other contract rights.
1.45 Obligations -- all Loans and all other advances, debts, liabilities,
obligations, covenants, and duties owing, arising, due or payable from Borrowers
or the ESOP to Bank of any kind or nature, present or future, whether or not
evidenced by any note, guaranty, or other instrument, whether arising under this
Agreement or any of the other Loan Documents or otherwise, whether direct or
indirect (including those acquired by assignment), absolute or contingent,
primary or secondary, due or to become due, now existing or hereafter arising
and however evidenced or acquired. The term includes, without limitation, all
interest, charges, expenses, fees, attorneys' fees and any other sums chargeable
to Borrowers under any of the Loan Documents and all rights Bank may at any time
or times have to reimbursement in connection with any Letter of Credit or
guaranty issued for Borrowers' benefit.
1.46 Parent -- ▇▇▇▇▇▇▇ Corp., a Delaware corporation and a party to this
Agreement.
1.47 Permitted Liens -- any Lien of a kind specified as permitted in
Section 7.2 ("Liens and Security Interests").
1.48 Person -- an individual, partnership, corporation, joint stock
company, firm, land trust, business trust, unincorporated organization, limited
liability company, or other business entity, or a government or agency or
political subdivision thereof.
1.49 Plan -- an employee benefit plan now or hereafter maintained for
employees of Borrowers that is covered by Title IV ---- of ERISA.
1.50 Pledge Agreement -- the Second Amended and Restated Pledge Security
Agreement dated December 8, 1995, executed by Parent, TransCor, Recycling, and
Guarantor in favor of Bank as secured party.
1.51 Prohibited Transaction -- any transaction set forth in Section 406 of
ERISA or Section 4975 of the Internal Revenue Code of 1986.
1.52 Quarterly Reductions -- permanent reductions in the Revolving Loan in
the amounts of $250,000 per calendar quarter, beginning July 1, 1997, described
in Section 2.1.
1.53 Real Estate -- the improved real property of Parent and described in
and encumbered by the Mortgage.
1.54 Real Estate Loan -- has the meaning set forth in Section 2.2 ("Real
Estate Loan").
1.55 Registration Rights Agreement -- the Registration Rights Agreement
dated April 30, 1993, between Fleet Bank and TransCor Waste Services, Inc.,
providing for registration of the shares of common stock of TransCor pledged by
Parent to Bank as collateral for the Loans, as assigned pursuant to the
Assignment of Registration Rights Agreement dated August 26, 1994, and as
further amended pursuant to the First Amendment to Registration Agreement dated
December 8, 1995.
1.56 Reportable Event -- any of the events set forth in Section 4043(b) of
ERISA.
1.57 Requirement of Law -- as to any Person, the articles of incorporation
and bylaws or other organizational or governing documents of the Person, and any
law, treaty, rule or regulation, or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or binding on the
Person or any of its property or to which the Person or any of its property is
subject.
1.58 Revolving Loan -- has the meaning set forth in Section 2.1 ("Revolving
Loan").
1.59 Security Agreement -- the Second Amended and Restated General Security
Agreement dated December 8,' 1995, executed by certain Borrowers in favor of
Bank as secured party.
1.60 Solvent -- as to any Person, means such Person (a) owns property,
real, personal, and mixed, whose aggregate fair saleable value is greater than
the amount required to pay all of such Person's Debt and Contingent Obligations,
and (b) is able to pay all of its Debt as such Debt matures, and (c) has capital
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage.
1.61 Subordinated Debt -- the Debt of Borrowers owed to any Affiliate, or
to any other Person which is fully subordinated to the Loans (including
principal, interest, and agreed charges) in a manner satisfactory to Bank (which
may be either according to its terms or by separate agreement) and which debt
arises from Borrowers' actual receipt of cash and not from "in-kind" or non-cash
consideration.
1.62 Subsidiary -- any corporate entity or partnership, or other business
entity, the controlling interest of which is owned by any Borrower. Subsidiary
includes every Borrower except Parent.
1.63 Subsidiary Stock -- the issued and outstanding capital stock of (i)
each Subsidiary held by Parent or a Subsidiary, including all of the stock
listed on the attached Exhibit "E," and (ii) all $2,000,000 shares of
outstanding capital stock of Cumberland Casualty and Surety Company, a Texas
corporation and a wholly-owned subsidiary of Guarantor.
1.64 Tangible Net Worth -- for any Person (or Persons on a consolidated
basis), the aggregate of the (a) par or stated value of all outstanding capital
stock; (b) capital surplus; and (c) retained earnings, less (t) any amounts due
from Affiliates; (u) any surplus resulting from any write-up of assets
subsequent to the date of this Agreement; (v) deferred assets (including
deferred development costs) other than prepaid insurance and prepaid taxes; (w)
goodwill or other amounts representing the excess of the purchase price of
assets or stock over the value assigned to them on the books of such Person; (x)
the book value of any patents, trademarks, trade names, copyrights, noncompete
agreements, franchises, experimental expenses, and other intangible assets; (y)
the amount paid for any treasury stock reflected as a reduction of the capital
surplus or retained earnings accounts, and (z) any other amounts classified as
intangible assets under GAAP. For purposes of calculating Tangible Net Worth,
cumulative unearned employee compensation from Parent's Employee Stock Ownership
Plan Trust may be eliminated as a reduction of shareholders' equity.
1.65 Certain Other Words -- All accounting terms used herein have the
respective meanings attributed to them under, and shall be construed in
accordance with, GAAP. The terms "herein," "hereof," and "hereunder," and other
words of similar import refer to this Agreement as a whole and not to any
particular section, paragraph or subdivision. Any pronouns used shall be deemed
to cover all genders. As used in this Agreement, (a) the word "including" is
always without limitation; (b) words in the singular number include words of the
plural number and vice versa; (c) the word "costs" includes all out-of-pocket
expenses, fees, costs, and expenses of experts and collection agents,
supersedeas bonds, and all attorneys' fees, costs, and expenses, whether
incurred before, during, or after demand or litigation, and whether pursuant to
trial, appellate, arbitration, bankruptcy, or judgment-execution proceedings;
and (d) the word "property" includes both tangible and intangible property,
unless the context otherwise requires. All references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations. All references to any instruments or agreements, including
references to any of the Loan Documents, shall include any and all modifications
or amendments thereto and any and all extensions or renewals thereof. All other
terms contained in this Agreement shall, unless otherwise defined herein or
unless the context otherwise indicates, have the meanings provided for by the
Uniform Commercial Code of the State of Florida.
1.66 Directly and Indirectly. When any provision of this Agreement or any
Loan Document requires or prohibits action to be taken by a Person, the
provision applies regardless of whether the action is taken directly or
indirectly by the Person.
2. The Loans.
2.1 Revolving Loans.
(a) Subject to the terms and conditions of this Agreement and provided
no Event of Default exists, Bank agrees to loan to Borrowers on a revolving
credit basis for working capital and Letter of Credit financing, when requested
by Parent or TransCor Waste Services, Inc., Revolving Loans in principal amounts
aggregating up to $8,000,000 (but subject to reduction for Quarterly Reductions,
the Collected Underbillings, the Real Estate Loan, and the outstanding and
unpaid Letters of Credit as set forth in subsection (c) below).
(b) The Borrowers shall execute and deliver to Bank one promissory
note (the "Revolving Note") in the aggregate face amount of the Revolving Loan
payable to the order of Bank, evidencing Borrowers' joint and several obligation
to repay the Revolving Loan. The principal amount of the Revolving Loans
outstanding from time to time under this Agreement shall bear interest at a
floating annual rate equal to the Base Rate plus one-half (1/2%) percent.
Borrowers shall pay interest to Bank on the amount of the Revolving Loan
outstanding monthly in arrears on the first day of each month beginning with
February 1, 1998, and continuing on the same day of each month thereafter until
the unpaid principal balance of the Revolving Loan has been paid-in-full. The
applicable interest rate on the Revolving Loan shall change as and when the Base
Rate changes from time to time. The Base Rate on the date of this Agreement is
8.5 percent.
(c) The aggregate amount of Bank's outstanding obligations for
outstanding and unpaid Letters of Credit issued for the account of all Borrowers
will be limited to $2,600,000. The total availability of advances under the
Revolving Loan will be reduced by the following: (i) the aggregate amount of
outstanding and unpaid Letters of Credit; (ii) the outstanding and unpaid amount
of the Real Estate Loan; (iii) the Collected Underbillings; (iv) to the extent
that the Collected Underbillings are less than $2,000,000 from July 1, 1997,
through December 31, 1997, the difference between $2,000,000 and the amount of
Collected Underbillings through December 31, 1997; and (v) Quarterly Reductions.
(d) Borrowers shall repay on July 31, 1999, all outstanding principal
and accrued interest with respect to the Revolving Loan not previously paid.
2.2 Real Estate Loan.
(a) Subject to the terms and conditions of this Agreement and provided
no Event of Default exists, Bank has agreed to loan to Borrowers a Real Estate
Loan of $2,000,000.
(b) The Borrowers have executed and delivered to Bank one promissory
note (the "Real Estate Note") in the face amount of the Real Estate Loan payable
to the order of Bank, evidencing Borrowers' joint and several obligation to
repay the Real Estate Loan. The outstanding principal amount of the Real Estate
Loan shall bear interest at Base Rate plus three quarters percent (3/4%).
2.3 Terms Governing All Loans.
(a) Each borrowing under a Loan shall be effected by crediting the
amount thereof to the regular checking account of a Borrower maintained with
Bank or with another bank approved by Bank.
(b) Any payments not made as and when due with respect to any Loan
(whether at stated maturity, by acceleration, or otherwise) shall bear interest
at the Default Rate from the date until paid, payable on demand.
(c) If the outstanding principal amount of the Loans at any time
exceeds the respective maximum principal amounts specified for them, Borrowers
shall immediately pay Bank such excess as a reduction of the principal amount of
the Loan. Borrowers may request and Bank may be willing in its sole and absolute
discretion to make advances in excess of such maximum principal amounts. Bank
shall enter any such advances as debits in the Loan Account. All such advances
in excess of the maximum principal amount shall be payable on demand, bear
interest as provided in this Agreement for Revolving Loans generally, and be
secured by the Collateral, excluding the Real Estate, unless the parties
otherwise agree in writing.
(d) Interest shall be calculated based on a 360-day year.
2.4 Loan Accounts. Amounts due under the Revolving Note, under the Real
Estate Note, and under this Agreement and the other Loan Documents shall be
reflected in the Loan Account. Bank shall enter disbursements hereunder or under
a Note as debits to the Loan Account and shall also record in the Loan Account
all payments made by Borrowers and all proceeds of Collateral which are finally
paid to Bank, and may record therein, in accordance with customary accounting
practice, all charges and expenses properly chargeable to Borrowers hereunder.
2.5 Prepayment. Subject to the provisions hereof (including the termination
fee in Section 2.7), Borrowers shall have the right at any time and from time to
time to prepay any Loan, in whole or in part, without premium or penalty but
with accrued interest to the date of such prepayment on the amounts prepaid.
Such prepayments shall be made to Bank in immediately available funds and, shall
be applied to the last of the installment(s) to mature. Any such prepayment
shall not affect or vary the obligation of Borrowers to pay any installment when
due.
2.6 Use of Proceeds. Borrowers shall use the proceeds of and credit
availability under the Revolving Loan to provide working capital support and to
facilitate issuance of Letters of Credit of up to $2,600,000 for bid and
performance bonds and for workers' compensation and casualty insurance programs,
or other corporate purposes approved by Bank. Borrowers shall have used the
proceeds of the Real Estate Loan to refinance a real estate mortgage loan with
NationsBank of Florida, an equipment line of credit with Fleet Bank, and any
other credit obligations for which Borrowers submit a refinancing request before
closing that is accepted by Bank. Borrowers shall not use proceeds of the Loans
for any other purposes. The use of proceeds as approved by Bank is further
described in Exhibit "F" to this Agreement.
2.7 Term. This Agreement shall remain in force and effect until all Loans,
and any renewals or extensions, and all interest thereon and costs provided for
herein with regard to either of them have been indefeasibly paid or satisfied in
full and until Bank has no further obligation to advance funds to Borrowers
hereunder. Borrowers may terminate the Revolving Loan credit facility at any
time before the scheduled maturity date by paying all outstanding principal,
interest and costs. The indemnities provided for in Article 11
("Indemnification") shall survive the payment in full of all Loans and the Other
Obligations and the termination of this Agreement.
2.8 Payments. All sums paid to Bank by Borrowers hereunder shall be paid
directly to Bank in immediately available funds. Bank shall send Parent
statements of all amounts due hereunder, which statements shall be considered
correct and conclusively binding on Borrowers unless Parent notifies Bank to the
contrary within twenty (20) days of its receipt of any statement which it deems
to be incorrect. Bank may, in its sole discretion (a) charge against any deposit
account of any Borrower all or any part of any amount due hereunder and (b)
advance to Borrowers, and charge to the respective Loan, a sum sufficient each
month to pay all interest accrued on the respective Loan and fees due under this
Agreement during or for the immediately preceding month. Borrowers shall be
deemed to have requested an advance under the Revolving Loan, upon the
occurrence of an overdraft in any of Borrowers' checking accounts maintained
with Bank or another bank owned by SouthTrust Corporation.
2.9 Fees. Borrowers shall pay to Bank annually in advance on the date of
this Agreement and on each anniversary of it a commitment fee of one-quarter
percent (1/4%) per annum of the maximum committed amount of the Revolving Loan
credit facility (whether or not outstanding). For the partial year preceding
maturity of the Revolving Loan, Borrowers shall pay a pro rata share of the
commitment fee. In addition, Borrowers have paid to Bank an origination fee of
one-half percent (1/2%) on the Term Loan provided for in the First Amended and
Restated Loan Agreement dated December 8, 1995, and the Real Estate Loan.
2.10 Limitation on Interest Charges. Bank and Borrowers intend to comply
strictly with applicable law regulating the maximum allowable rate or amount of
interest that Bank may charge and collect on the Loans to Borrowers pursuant to
this Agreement. Accordingly, and notwithstanding anything in the Note or in this
Agreement to the contrary, the maximum, aggregate amount of interest and other
charges constituting interest under applicable law that are payable, chargeable,
or receivable under the Note and this Agreement shall not exceed the maximum
amount of interest now allowed by applicable law or any greater amount of
interest allowed because of a future amendment to existing law. Borrowers are
not liable for any interest in excess of the maximum lawful amount, and any
excess interest charged or collected by Bank will constitute an inadvertent
mistake and, if charged but not paid, will be cancelled automatically, or, if
paid, will be either refunded to Borrowers or credited against the outstanding
principal balance of the Note, at the election of Borrowers.
2.11 Letters of Credit.
(a) Standby Letter of Credit Financing. Subject to the terms and
conditions of this Agreement, Bank agrees to issue, extend, or renew standby
Letters of Credit for the account of Borrowers through December 31, 1998. The
aggregate amount available for standby Letter of Credit financing will be
subject to limitations set forth in Section 2.1 ("Revolving Loan").
(b) Payment. All payments made by Bank under the Letters of Credit
(whether or not a Borrower is the account party or drawer) and all fees,
commissions, discounts and other amounts owed or to be owed to Bank in
connection therewith (unless otherwise paid or reimbursed to Bank by Borrowers),
shall be deemed to be advances under the Revolving Note, and shall be repaid and
bear interest in accordance with its terms and the terms of this Agreement. On
the earlier of December 31, 1998, or the termination or maturity date of the
Revolving Loan (whether at stated maturity, by acceleration, or otherwise),
Borrowers shall, on demand, deliver to Bank good funds equal to 100% of Bank's
maximum liability under all outstanding Letters of Credit, to be held as cash
collateral for Borrowers' reimbursement obligations and all other Obligations.
(c) Collateralization of Letters of Credit. Borrower shall deposit
into and maintain in a money market account established at SouthTrust Securities
and pledged to Bank (and no other creditor) as security for Bank's extensions or
renewals on Borrowers' account pursuant to the Letters of Credit amounts in the
form of cash equal to $130,000 per month, beginning July 1, 1997, and continuing
until December 31, 1998 or until all outstanding Letters of Credit are fully
collateralized. If, at any time, the Bank further issues or extends Letters of
Credit for the account of Borrowers, which further issuances or extensions are
not fully collateralized, Borrower will be obligated to begin making the monthly
cash deposits of $130,000 per month, in the same manner and subject to the same
conditions.
(d) Account Pledge Agreement. Borrowers shall execute and deliver to
Bank by January 31, 1998, as a condition precedent to Bank's issuance,
extension, or renewal for the account of Borrowers pursuant to Letters of Credit
following January 31, 1998, an Account Pledge Agreement in the form attached as
Exhibit "G."
(e) Applications and Supplemental Forms. Borrowers shall complete and
sign such applications and supplemental agreements and provide such other
documentation as Bank may require. The form and substance of all Letters of
Credit shall be subject to Bank's approval. Among other requirements, the tenor
of any Letter of Credit will not extend beyond one year.
(f) Commissions and Fees. Borrowers shall pay as a commission in
connection with the issuance of Letters of Credit an amount negotiated by the
parties when the Letter of Credit is issued, of not less than one percent (1%)
of the aggregate amount available to be drawn under the Letter of Credit. In
addition to these fees, Borrowers shall pay or reimburse bank for such normal
and customary costs and expenses that are incurred or charged by Bank in
issuing, effecting payment, or administering any Letter of Credit (including,
without limitation, amendment fees, corresponding bank fees, re-issuance costs,
and cancellation fees).
(g) Requirement of Law. If any Requirement of Law or any change in the
interpretation or application thereof by any Governmental Authority charged with
the administration thereof shall either (i) impose, modify, assess or deem
applicable any reserve, special deposit, assessment or similar requirement
against Letters of Credit issued by Bank of (ii) impose on Bank any other
condition regarding any Letter of Credit, and the result of any event referred
to in clauses (i) or (ii) above shall be to increase the cost to bank of issuing
or maintaining such Letter of Credit, or its participation therein, as the case
may be (which increase in cost shall be the result of Bank's reasonable
allocation of the aggregate of such cost increases resulting from such events),
then, upon demand by Bank, Borrowers shall immediately pay to Bank from time to
time as specified by Bank additional amounts which shall be sufficient to
compensate Bank for such increased cost, together with interest on each such
amount from the date demanded until payment in full thereof at the Base Rate. A
certificate as to the fact and amount of such increased cost incurred by Bank as
a result of any event mentioned in clauses (i) or (ii) above, submitted by Bank
to Borrowers, shall be conclusive, absent manifest error.
(h) Nature of Obligations. To induce Bank to issue Letters of Credit,
Borrowers agree that neither Bank nor its agents or correspondents will be
liable or responsible for, and Borrowers' unconditional obligation to reimburse
Bank for the obligations shall not be affected by, any event or circumstance,
including: (i) the validity, enforceability, genuineness or sufficiency of
documents or of any endorsement thereon existing in connection with any Letter
of Credit, even if such documents should in fact prove in any or all respects to
be invalid, unenforceable, insufficient, fraudulent or forged; (ii) any breach
of contract or other dispute between Borrower and any beneficiary of a Letter of
Credit or holder of a draft accepted by Bank; (iii) payment by Bank upon
presentation of a draft or documents which do not comply in any respect with the
terms of such Letter of Credit or draft; (iv) loss of or damage to any
collateral; (v) the invalidity or insufficiency of any endorsements; (vi) delay
in giving or failure to give notice of arrival or any other notice; (vii)
failure of any instrument to bear any reference or adequate reference to the
Letter of Credit or draft or to documents to accompany any instrument at
negotiation; (viii) failure of any person to note the amount of any payment on
the reverse of the Letter of Credit or to surrender to or take up the Letter of
Credit or draft or to forward documents in the manner required by the Letter of
Credit or draft; or (ix) any other matter whatsoever, except that Borrowers
shall have a claim against Bank and Bank shall be liable to Borrowers, to the
extent, but only to the extent, of any direct, as opposed to consequential,
damages suffered by Borrower that Borrowers prove was caused by the gross
negligence or willful misconduct of Bank or its agent. Borrowers agree that any
action taken or permitted to be taken by Bank or its agent under or in
connection with any Letter of Credit, including related drafts, documents, or
property, unless constituting gross negligence or willful misconduct on the part
of Bank or its agent, shall be binding on Borrowers and shall not create any
resulting liability to Borrowers on the part of Bank or its agent. Borrowers
will immediately examine a copy of the Letter of Credit (and any amendments
thereof) or draft sent to it by Bank or its agent, and Borrowers will
immediately notify Bank in writing of any claim or irregularity.
In furtherance and extension and not in limitation of the foregoing, (i)
any action taken or omitted by Bank or by any of its correspondents in
connection with any of the Letters of Credit, if taken or omitted in good faith,
shall be binding upon Borrowers and not cause the Bank or its correspondents to
incur liability to Borrowers, and (ii) Bank may accept documents that appear on
their face to be in order, without further investigation, regardless of any
notice or information to the contrary.
(i) Any Letter of Credit issued hereunder shall be governed by the
Uniform Customs of Practice for Documentary Credits (1994 Rev.), International
Chamber of Commerce Publication No. 500, as revised from time to time, except as
otherwise provided in this Agreement or in any other Loan Document.
3. Conditions of Lending.
3.1 Conditions Precedent to Initial Advance. In addition to any other
requirements set forth in this Agreement, the Bank's obligation to make any of
the Loans is contingent on the satisfaction of the following conditions:
(a) Corporate Proceedings. All proper corporate proceedings shall have
been taken by Borrowers to authorize this Agreement and the transactions
contemplated hereby.
(b) Documentation. All instruments and proceedings in connection with
the transactions contemplated by this Agreement shall be satisfactory in form
and substance to Bank, and Bank shall have received on the date of this
Agreement copies of all documents including records of corporate proceedings,
which it may have requested in connection therewith, including certified copies
of resolutions adopted by the Board of Directors of Borrowers, certificates of
good standing, and certified copies of the Certificate of Incorporation or
Articles of Incorporation and Bylaws, and all amendments thereto, of Borrowers.
(c) Loan Documents. Bank shall have received executed copies of all
instruments evidencing security for the Loans and copies of the insurance
polices and related certificates of insurance referred to in Sections 6.1
("Insurance") and 9.5 ("Insurance").
(d) No Default. No event shall have occurred or be continuing which
constitutes an Event of Default or which would constitute an Event of Default
with the giving of notice or the lapse of time or both.
(e) Security Documentation. The collateral documentation evidencing
Bank's liens on the Collateral, including the Security Agreement, the Pledge
Agreement, and the Registration Rights Agreement shall have been amended to make
Bank the sole secured party, and otherwise to be in form and substance
satisfactory to the parties.
(f) Perfection of Liens. UCC-1 financing statements shall have been
amended to name Bank as sole secured party, and, if applicable, certificates of
title covering the Collateral executed by Borrowers shall have been duly
recorded or filed (endorsed and delivered to Bank in the case of certificates of
title) in the manner and places required by law to establish, preserve, protect,
perform the interests and rights created or intended to be created by this
Agreement and any other security agreement. Bank shall have received the
original Notes Receivable, endorsed in favor of Bank. Bank shall have received
certificates evidencing the Subsidiary Stock, together with blank stock transfer
powers assigning the Subsidiary Stock to Bank.
(g) Reports. Bank shall have received all reports and information from
Borrowers called for under the Agreement a and when due.
(h) Incumbency Certificate. Bank shall have received an incumbency
certificate, dated as of the date of this Agreement, executed by the Secretary
or Assistant Secretary of Borrowers, which shall identify by name and title and
bear the signature of the officer of such Borrowers authorized to sign this
Agreement and the Notes on behalf of Borrowers. Bank shall be entitled to rely
upon such incumbency certificate in completing the transactions contemplated
herein or in any Loan Document.
(i) No Adverse Change. There shall have been no material adverse
change in the condition, financial or otherwise, of any Borrower, from such
condition as it existed on the date of the most recent financial statements of
such Person delivered prior to the date of this Agreement.
(j) Fees and Expenses. Bank has received all amounts required to be
paid by Borrowers or another Person pursuant to the commitment letter delivered
by Bank to Borrowers in connection with the Loan.
(k) Additional Documents. Bank shall have received such additional
legal opinions, certificates, proceedings, instruments, and other documents as
Bank or its counsel may reasonably request to evidence (a) compliance by
Borrowers with legal requirements, (b) the truth and accuracy, as of the date of
this Agreement, of the representations of Borrowers contained herein, and (c)
the due performance or satisfaction by Borrowers, at or prior to the date
hereof, of all agreements required to be performed and all conditions required
to be satisfied by Borrowers pursuant hereto.
3.2 Conditions Precedent to Each Advance. The following conditions, in
addition to any other requirements set forth in this Agreement, must be
satisfied or performed before each advance under the Revolving Loan:
(a) Supplementary Corporate Proceedings. Any supplementary corporate
proceedings necessary to authorize the transaction have been taken by Borrowers.
(b) Accuracy of Representations. All representations and warranties
made by Borrowers in this Agreement or otherwise in writing in connection with
this Agreement are true and correct as if made on and as of the proposed date of
the advance of Loan proceeds, and to the extent requested by Bank, Borrowers
have so certified in writing.
(c) No Default. No Event of Default has occurred and is continuing,
and to the extent requested by Bank, Borrowers have so certified in writing.
(d) Further Assurances. Borrowers have delivered such further
documentation or assurances that Bank reasonably requires.
(e) Borrowing Request. To the extent required by Bank, Borrowers have
delivered to Bank a written borrowing request.
4. Security for Loan.
4.1 Security. The Revolving Loan, the Real Estate Loan and each Note shall
be secured by each of the following:
(a) A first-priority security interest in Borrowers' Accounts,
Equipment, Instruments, Documents, Chattel Paper, General Intangibles,
Inventory, the Subsidiary Stock, and the Notes Receivable, and other properties
and interests as provided for in the Collateral Documents.
The Real Estate Loan shall be further secured by a first-priority mortgage
lien on the Real Estate pursuant to the Mortgage.
Borrowers agree to execute and deliver, or cause the execution and delivery
of, such security agreements, deeds of trust, mortgages, assignments,
guaranties, consents, subordination agreements, and financing statements as may
be required by Bank to evidence such security, all in form satisfactory to Bank,
as well as such consents and agreements of the landlords of each of the premises
leased by Borrowers on which the Collateral is located, all in form satisfactory
to Bank.
5. Representations, Warranties, and General Covenants.
Borrowers jointly and severally represent, warrant, and covenant to and
with Bank, which representations, warranties, and covenants shall survive until
the Obligations are indefeasibly satisfied in full, that:
5.1 Organization and Qualification. Each Borrower is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation, has the corporate power to own its properties and to carry on its
business as now being conducted; and is duly qualified to do business and is in
good standing in every jurisdiction in which the character of the properties
owned by it or in which the transaction of its business makes it qualification
necessary.
5.2 Corporate Power and Authorization; Compliance with Law. Each Borrower
has full power and authority to enter into this Agreement, to borrow hereunder,
to execute and deliver the Notes and the other Loan Documents, and to incur the
obligations provided for herein, all of which have been authorized by all proper
and necessary corporate action. Each Borrower further (a) is in compliance with
all Requirements of Law applicable to it and 9b) possesses all governmental
franchises, licenses, and permits that are necessary to own or lease its assets
and to carry on its business as now conducted.
5.3 Enforceability; No Legal Bar. This Agreement has been, and each other
Loan Document to which it is a party will be, duly executed and delivered to
Bank on behalf of each Borrower. This Agreement and each of the other Loan
Documents constitute, and each Note when executed and delivered for value
received will constitute, a valid and legally binding obligation of each
Borrower enforceable in accordance with their respective terms. The execution,
delivery, and performance by Borrowers of this Agreement and the other Loan
Documents to which it is a party, each Borrower's borrowings pursuant to this
Agreement, and use of the loan proceeds, will not violate any Requirement of Law
applicable to Borrowers or constitute a breach or violation of, a default under,
or require any consent under (except for consents that have been obtained), any
of its Contractual Obligations, and will not result in a breach or violation of,
or require the creation or imposition of any Lien on any of its properties or
revenues pursuant to, any Requirement of Law or Contractual Obligation.
5.4 Pending Actions. Except as disclosed in Schedule 5.4, no action or
investigation is pending or, so far as Borrowers' officers and directors know,
threatened, before or by any court or administrative agency against any Borrower
or against any of its businesses, properties or revenues (a) with respect to any
of the Loan Documents or any of the transactions contemplated by them, or (b)
which might result in any Material Adverse Effect on any Borrower.
5.5 Financial Statements. The financial statements of Borrowers dated June
30, 1997 (unaudited) (the "Financial Statement Date"), December 31, 1996,
December 31, 1995, and December 31, 1994, heretofore delivered to Bank, and all
other financial statements and reports furnished by each Borrower to Bank are
complete and correct and fairly present the financial condition of the Borrower
and the results of its operations and transactions as of the dates and for the
periods referred to and have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved. There are no liabilities,
direct or indirect, fixed or contingent, of any Borrower as of the date of such
financial statements which are not reflected therein or in the notes thereto.
Neither said financial statements nor any other financial statements, reports,
and information furnished by Borrowers to Bank, when considered with the SEC
filings referenced in Section 5.7 ("SEC Filings"), contains any untrue statement
of a material fact or omits a material fact necessary to make the statements
contained therein or herein not misleading. There is no fact which Borrowers
have failed to disclose to Bank in writing which materially affects adversely
or, so far as Borrowers can now foresee, will materially affect adversely the
Collateral, business, prospects, profits, or condition (financial or otherwise)
of any Borrower or the ability of any Borrower to perform this Agreement.
5.6 No Change. Since the Financial Statement Date there has not been: (a)
any material adverse change in the assets, liabilities, business, or condition
(financial or other) of any Borrower, (b) any loss, damage, or destruction,
whether or not covered by insurance, that materially adversely affected the
assets or property of any Borrower; (c) any distribution by any Borrower to its
shareholders in cash, securities, or other property; (d) any change in any of
Borrowers' accounting methods, practices, or principles or depreciation and
amortization rates or policies, except as required by law or to conform with
GAAP; or (e) except in the usual and ordinary course of business, any of the
following: (i) any breach, execution, extension, modification, or termination by
any Borrower of any Contractual Obligation; (ii) any disposition by any Borrower
of, or the imposition of a Lien on, any asset of the Borrower, except for a Lien
permitted under Section 5.8 ("Title to Properties"); (iii) any cancellation of a
debt owed to, or a claim held by, any Borrower, or (iv) any Event of Default. No
Contractual Obligation of any Borrower and no Requirement of Law materially
adversely affects, or to the extent that the Borrower can reasonably foresee
might so affect, the business, operations, property, or condition (financial or
other) of any Borrower.
5.7 SEC Filings. Each of Parent, Guarantor and TransCor Waste Services,
Inc. previously has furnished or made available to Bank accurate and complete
copies of its forms, reports, and documents filed with the Securities and
Exchange Commission ("SEC") since January 1, 1993 (the "SEC Documents"), which
include all reports, schedules, proxy statements, and registration statements
filed or required by it to be filed with the SEC since January 1, 1993. As of
their respective dates, the SEC Documents did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated in
those documents or necessary to make the statements in those documents not
misleading, in light of the circumstances in which they were made.
5.8 Title to Properties. Each Borrower has good and marketable title to all
of its assets (including the Collateral), subject to no Lien, except inchoate
Liens arising by operation of law for obligations which are not yet due and
except for the Liens and security interests described on Exhibit "C" to this
Agreement. Except for the security interests granted herein or reflected on
Exhibit "C" to this Agreement, Borrowers will be the sole owner of the
Collateral to be acquired after the date hereof free from any adverse Liens,
security interests or other encumbrances. Borrowers shall defend the Collateral
against all claims and demands of all other parties who at any time claim any
interest in the Collateral. Borrowers enjoy peaceable and undisturbed possession
under all leases under which they are operating, and none of such leases contain
any provisions which may materially and adversely affect or impair the
operations of Borrowers, and all of such leases are valid and subsisting and in
full force and effect.
5.9 Pension Plans. Except as set forth on Schedule 5.9, Borrowers have not
established and are not parties to any Plan or to any stock option or deferred
compensation plan or contract for the benefit of its employees or officers, any
pension, profit sharing or retirement plan, stock redemption agreement, or any
other agreement or arrangement with any officer, director, or stockholder,
members of their families, or trusts for their benefit. Borrowers are in
compliance with all applicable provisions of ERISA. Neither any Borrower nor any
Subsidiary of a Borrower has received any notice to the effect that it is not in
full compliance with any of the requirements of ERISA and the regulations
promulgated thereunder. No fact or situation that could result in a material
adverse change in the financial condition of any Borrower, including, but not
limited to, any Reportable Event or Prohibited Transaction, exists in connection
with any Plan. Neither any Borrower nor any Subsidiary of a Borrower has any
withdrawal liability in connection with a Multiemployer Plan.
5.10 Taxes. Borrowers have filed all federal, state, and local tax returns
which are required to be filed and has paid, or made adequate provision for the
payment of, all taxes which have or may become due pursuant to said returns or
to assessments received by Borrowers. No Contractual Obligation of any Borrower
and no Requirement of Law materially adversely affects, or to the extent that
any Borrower can reasonably foresee might so affect, the business, operations,
property, or condition (financial or other) of any Borrower. Borrowers have paid
all withholding, FICA and other payments required by federal, state or local
governments with respect to any wages paid to employees.
5.11 Collateral. The security interests granted to Bank herein and pursuant
to any other security agreement (a) constitute and, as to subsequently acquired
property included in the Collateral covered by the security agreement, will
constitute, a security interest under the Code entitled to all of the rights,
benefits and priorities provided by the Code and(b) are, and as to such
subsequently acquired Collateral will be, fully perfected, superior and prior to
the rights of all third parties, now existing or hereafter arising, subject only
to Liens permitted pursuant to Section 5.8 ("Title to Properties"). All of the
Collateral is intended for use solely in Borrowers' business.
5.12 Labor Law Matters. No goods or services have been or will be produced
by Borrowers in violation of any applicable labor laws or regulations or any
collective bargaining agreement or other labor agreements or in violation of any
minimum wage, wage-and-hour, or other similar laws or regulations. No collective
bargaining agreement concerning any of Borrowers' employees exists or is being
negotiated.
5.13 Judgment Liens. Neither Borrowers nor any of their assets are subject
to more than $50,000 in the aggregate of unpaid judgments (whether or not
stayed) or judgment liens in any jurisdiction.
5.14 Place of Business. Each Borrower's chief executive office is located
at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇; and it has not changed the location
of its chief executive office from a location in a different state within the
last five (5) years; provided, however, that the chief executive office of
▇▇▇▇▇▇▇ Associates, Inc. is and has been, since ▇▇▇▇▇▇▇ Associates was formed,
located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. Borrowers' places of
business are set forth on the attached Exhibit "D." Except as indicated on said
exhibit, the real estate constituting each said location is owned by Borrowers.
With respect to locations not owned by Borrowers, said exhibit sets forth the
name and address of each landlord, the location of the property, and the
remaining term of the lease. Borrowers have separately furnished to Bank true
and correct copies of the lease agreements for each said parcel.
5.15 Full Disclosure. All information furnished by Borrowers to Bank
concerning Borrowers, their financial condition, the Collateral, or otherwise
for the purpose of obtaining credit or an extension of credit is, or will be at
the time the same is furnished, accurate and correct in all material respects
and complete insofar as completeness may be necessary to give Bank a true and
accurate knowledge of the subject matter. The books of account, minute books,
and stock record books of Borrowers are complete and correct and have been
maintained in accordance with good business practices, and there have been no
transactions adversely affecting the business of Borrowers that should have been
set forth therein and have not been so set forth.
5.16 Borrowers' Name. Except as set forth in Schedule 5.16, Borrowers have
not changed their names or been known by any other names within the last five
(5) years (except for TransCor Waste Services, Inc., which has changed its name
during the past five years, but always from a name that commenced with
"TransCor" and except for ▇▇▇▇▇▇▇ Environmental Service Corp., which has changed
its name to ▇▇▇▇▇▇▇ Corp.), nor have they been the surviving corporation in a
merger effected within the last five (5) years.
5.17 Existing Debt. Except as set forth on Schedule 5.17(a), Borrowers are
not in default with respect to any of their existing Debt or with respect to any
Contractual Obligation to which Borrowers are a party, (b) Borrowers are not
subject to any federal, state or local tax Liens, nor has such Person received
any notice of deficiency or other official notice to pay any taxes, and (c) each
Borrower has paid all sales and excise taxes payable by it.
5.18 Insolvency. Each Borrower is now and, after giving effect to the
transactions contemplated hereby, at all times will be, Solvent.
5.19 Intellectual Property. Each Borrower owns or is licensed to use, all
trademarks, trade names, copyrights, technology, know-how, and processes
necessary for the conduct of its business as currently conducted (the
"Intellectual Property"). Borrower does not have any material licenses of
Intellectual Property. No claim has been asserted and is pending by any Person
with respect to the use of any such Intellectual Property and Borrowers do not
know of any valid basis for any such claim. The use of the Intellectual Property
by Borrowers does not infringe on the rights of any Person.
5.20 Subsidiaries. Borrowers have no Subsidiaries, except as indicated on
Exhibit "E" to this Agreement.
5.21 Environmental Matters. Except as set forth in Schedule 5.21 and except
for matters that are not known to Borrowers' officers and that will not have a
Material Adverse Effect on any Borrower, Borrowers are in compliance with all
Environmental Regulations and with all other federal, state, and local laws and
regulations relating to the environment and pollution, including such laws and
regulations regulating hazardous, radioactive and toxic materials and
underground petroleum products storage tanks. Except as set forth in Schedule
5.21, no assessment, notice of (primary or secondary) liability or notice of
financial responsibility, or the amount thereof, or to impose civil penalties
has been received by Borrowers, and there are no facts, conditions, or
circumstances known to Borrowers which could result in any investigation or
inquiry if all such facts, conditions, and circumstances, if any, were fully
disclosed to the applicable governmental authority. Borrowers have paid any
environmental excise taxes due and payable, including without limitation, those
imposed pursuant to Sections 4611, 4661, or 4681 of the Internal Revenue Code of
1986, as amended from time to time. Borrowers represent and warrant that
Borrowers have obtained any permits, licenses, or similar authorizations
required to construct, occupy, operate, or use any buildings, improvements,
fixtures, or equipment in connection with their businesses by reason of any
Environmental Regulations. Borrowers represent and warrant that no oil, toxic or
hazardous substances, or solid wastes have been disposed of or released by
Borrowers in connection with the operation of its business and that Borrowers
will not dispose of or release oil, toxic or hazardous substances, or solid
wastes at any time in its operation of its business, except in full compliance
with all the foregoing laws (the terms "hazardous substance" and "release" shall
have the meanings specified in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), and the terms
"solid waste" and "disposal," "dispose," or "disposed" shall have the meanings
specified in the Resource Conservation and Recovery Act of 1976, as amended
("RCRA"), except that if such acts are amended to broaden the meanings thereof,
the broader meaning shall apply herein).
5.22 Ownership. All issued and outstanding capital stock of Borrowers is
owned as set forth in Exhibit "E." Except as set forth in the foregoing
schedule, there are not outstanding any warrants, options, or rights to purchase
any shares of capital stock of Borrowers, not does any Person have a Lien upon
any of the capital stock of Borrowers.
5.23 Inventory. All Inventory is marketable in the ordinary course of
business. All Inventory has been produced, and during the term hereof will be
produced, in compliance with the requirements of the Federal Fair Labor
Standards Act. No Inventory is now, nor shall any Inventory at any time or times
hereafter be, stored with a bailee, warehouseman or similar party without Bank's
prior written consent and, if Bank gives such consent, Borrowers will
concurrently therewith cause any such bailee, warehouseman, or similar party to
issue and deliver to Bank, in form and substance acceptable to Bank, warehouse
receipts therefor in Bank's name. No Inventory is or will be consigned to any
Person without Bank's prior written consent, and if such consent is given,
Borrowers shall, prior to the delivery of any Inventory on consignment, (a)
provide Bank with all consignment agreements to be used in connection with such
consignment, all of which shall be acceptable to Bank, (b) prepare, execute, and
file appropriate financing statements with respect to any consigned Inventory,
showing Bank as assignee, (c) conduct a search of all filings made against the
consignee in all jurisdictions in which any consigned Inventory is to be located
and deliver to Bank copies of the results of all such searches, and (d) notify,
in writing, all the creditors of the consignee which are or may be holders of
Liens in the Inventory to be consigned that Borrowers expect to deliver certain
Inventory to the consignee, all of which Inventory shall be described in such
notice by item or type.
5.24 Representations True. No representation or warranty by Borrowers
contained herein or in any certificate or other document furnished by Borrowers
pursuant hereto contains any untrue statement of material fact or omits to state
a material fact necessary to make such representation or warranty not misleading
in light of the circumstances under which it was made.
6. Affirmative Covenants. Borrowers agree and covenant that until the
Obligations have been indefeasibly paid in full and until Bank has no further
obligation to make advances under the loan, each Borrower shall:
6.1 Insurance. Maintain insurance with insurance companies satisfactory to
Bank on such of its properties, in such amounts and against such risks as is
customarily maintained in similar businesses operating in the same vicinity, in
similar businesses operating in the same vicinity, and shall file with Bank upon
request, from time. to time, a detailed list of the insurance then in effect,
stating the names of the insurance companies, the amounts and rates of the
insurance, dates of expiration thereof, and the properties and risks covered
thereby, and, within 10 days after notice in writing from Bank, shall obtain
such additional insurance as Bank may reasonably request. All such policies
shall provide that any losses payable thereunder shall (pursuant to loss payable
clauses, in form and content acceptable to Bank, to be attached to each policy)
be payable to Bank to the extent of its interest in the Collateral, and provide
that the insurance provided thereby, as to the interest of Bank, shall not be
invalidated by any act or neglect of Borrowers, nor by the commencing of any
proceedings by or against Borrowers in bankruptcy, insolvency, receivership, or
any other proceedings for the relief of a debtor, nor by any foreclosure,
repossession, or other proceedings relating to the property insured, nor by any
occupation of such property or the use of such property for purpose more
hazardous than permitted in the policy. Borrowers hereby assign to Bank all
right to receive proceeds of the Collateral, direct any insurer to pay all
proceeds directly to Bank, and authorize Bark to endorse any check or draft for
such proceeds and apply the same toward satisfaction of the Obligations,
Borrowers shall furnish to Bank insurance certificates, in form and substance
satisfactory to Bank, evidencing compliance by it with the terms of this section
and, upon the request of Bank at any time, Borrowers shall furnish Bank with
photostatic copies of the policies required by the terms of this section.
Borrowers will cause each insurer under each of the policies to agree (either by
endorsement upon such policy or by letter addressed to Bank) to give Bank at
least 10 days' prior written notice of the cancellation of such policies in
whole or in part or the lapse of any coverage thereunder. Borrowers agree that
they will not take any action or fail to take any action which action or
inaction would result in the invalidation of any insurance policy required
hereunder. At renewal or no later than 10 days following the date each such
policy or policies shall expire, Borrowers shall furnish to Bank evidence of
renewal. Borrowers shall furnish to Bank such evidence of insurance as Bank may
require.
6.2 Corporate Existence; Qualification. Maintain its corporate existence
and, in each jurisdiction in which the character of the property owned by it or
in which the transaction of its business makes its qualification necessary,
maintain good standing.
6.3 Taxes. During its fiscal year, accrue all current tax liabilities of
all kinds, all required withholding of income taxes of employees, all required
old age and unemployment contributions, all required payments to employee
benefit plans,. and pay the same when they become due.
6.4 Compliance with Laws. Comply with all Requirements of Law, including
Environmental Regulations, and pay all taxes, assessments, charges, claims for
labor, supplies, rent, and other obligations which, if unpaid, might give rise
to a Lien against its property, except claims being contested in good faith by
appropriate proceedings (provided the Borrower promptly notifies Bank in writing
of such contest), and against which reserves deemed adequate by Bank have been
set up. Specifically, each Borrower shall pay when due all taxes and assessments
upon the Collateral, this Agreement, the Notes, or any Loan Document, including
without limitation, any stamp taxes or intangibles taxes imposed by virtue of
the transaction outlined herein.
6.5 Annual Financial Statements. Within 120 days after the close of each
fiscal year, furnish Bank with annual audited financial statements of Borrowers
on a consolidated and consolidating basis, consisting of balance sheets,
operating statements and such other statements as Bank may reasonably request,
for the period(s) involved, prepared in accordance with GAAP consistently
applied for the period involved and for the preceding fiscal year and certified
as correct by independent certified public accountants acceptable to Bank.
6.6 Interim Financial Statements. Within 30 days after the close of each
calendar month, furnish Bank with unaudited monthly and quarterly-to-date
financial statements of Borrowers on a consolidated and consolidating basis and
of Guarantor on a consolidated and consolidating basis, consisting of balance
sheets and operating statements and a listing of all contingent liabilities of
Borrowers and Guarantor for the periods involved and such other statements as
Bank may request prepared in accordance with GAAP applied on a basis consistent
with the financial statements previously furnished to Bank, taken from the books
and records of the Borrowers and Guarantor, and certified as correct by the
Chief Financial Officer of Parent and Guarantor, respectively.
Within 45 days after the close of each calendar quarter, furnish Bank with
unaudited quarterly and year-to-date financial statements of Borrowers on a
consolidated and consolidating basis and of Guarantor on a consolidated and
consolidating basis, consisting of balance sheets and operating statements and a
listing of all contingent liabilities of Borrowers and Guarantor for the periods
involved and such other statements as Bank may request, prepared in accordance
with GAAP applied on a basis consistent with the financial statement(s)
previously furnished to Bank, taken from the books and records of Borrowers and
Guarantor, and certified as correct by the Chief Financial Officer of Parent and
Guarantor, respectively. Borrowers shall also deliver to Bank statutory
statements for Guarantor and its subsidiaries.
6.7 Certificates; Other Information. Furnish to Bank:
(a) concurrently with the delivery of the financial statements
referred to in Sections 6.5 and 6.6. a certificate from the President or Chief
Financial Officer of Parent and Guarantor (i) containing computations confirming
Borrowers' compliance with Section 6.21 ("Affirmative Financial Covenants");
(ii) stating that after diligent investigation, they have determined that
Borrowers and Guarantors, respectively, during the period have observed or
performed all of their covenants in this Agreement and in the other Loan
Documents, and (iii) stating that the officers do not know of any default or
Event or Default by any Borrower or Guarantor, respectively, under this
Agreement or the other Loan Documents; and
(b) all other information regarding the affairs of Borrowers and
Guarantor that Bank from time to time reasonably requests.
6.8 Collateral Reports; Job Status Reports. Furnish to Bank, for each
Borrower whenever requested by Bank a detailed accounts receivable aging report
as of the last day of the previous month, a detailed accounts payable agent
aging report, and an inventory report, all in form and substance, and containing
such detail and information as Bank shall request, and furnish to Bank copies of
all physical inventory listings when prepared by Borrower. Borrowers shall also
furnish to Bank job status reports for each Borrower, whenever requested by
Bank.
6.9 SEC Filings. Within ten (10) days following the date each of Parent,
Guarantor, and TransCor Waste Services, Inc. makes the filing with the SEC, (a)
a copy of its Annual Report on Form 10-K, as filed with the SEC; (b) a copy of
its Quarterly Report on Form 10-Q; and (c) promptly on becoming available, any
other report or statement that it files with the SEC or mails to its
shareholders. Each of the foregoing reports shall be filed with the SEC when due
as specified by the applicable instruction to the report (for example,
Instruction A to the Form 10-K and Form 10-Q).
6.10 Visits and Inspections. (a) give agents and representatives of Bank
full and unrestricted access from time to time during normal business hours to
its business premises, offices, properties, books, records, and information; (b)
permit agents and representatives of Bank to make such audit and examination
thereof (including an examination of the Equipment), and conduct such other
investigation, as they consider appropriate to determine and verify its business
properties, operation, or condition (financial or other) and to consummate the
transactions contemplated by this Agreement; and (c) furnish to Bank and its
agents and representatives such additional information with respect to its
business and affairs as Bank or they reasonably request from time to time.
Borrowers shall bear the costs of such audits, reports, and inspections.
Each Borrower shall keep true books, records, and accounts that completely,
accurately, and fairly reflect all dealings and transactions relating to its
assets, business, and activities and shall record all transactions in such
manner as is necessary to permit preparation of ifs financial statements in
accordance with GAAP.
6.11 Pavements on Note. Duly and punctually pay the principal and interest
on the Notes, in accordance with the terms of this Agreement and of the Notes,
and pay all other Debt of the Borrower reflected on the financial statements
delivered to Bank and referred to in Section 5.5 ("Financial Statements") and
all other Debt incurred after the date hereof in accordance with the terms of
such debt.
6.12 Conduct of Business. Conduct its business as now conducted and do all
things necessary to preserve, renew, and keep in full force and effect its
rights, patents, permits, licenses, franchises, and trade names necessary to
continue its business. Each Borrower shall comply with all Contractual
Obligations applicable to it and its business and properties.
6.13 Maintenance of Properties. Keep its properties in good repair, working
order and condition, reasonable wear and tear excepted, and from time to time
make all needed and proper repairs, renewals, replacements, additions, and
improvements thereto and comply with the provisions of all leases to which it is
a party or under which it occupies property so as to prevent any loss or
forfeiture thereof or thereunder.
6.14 Additional Documents. Join Bank in executing any security agreements,
assignments, consents, financing statements or other instruments, in form
satisfactory to Bank, as Bank may from time to time request in connection with
the Collateral and the other security for the Loan.
6.15 Notice to Bank. Promptly notify Bank of: (a) any default or Event of
Default, (b) the acceleration of the maturity of any Debt or Contractual
Obligation; (c) a default in the performance of, or compliance with, any
Requirement of Law or Environmental Regulation, or Contractual Obligation of any
Borrower that might have a Material Adverse Effect on any Borrower; (d) any
litigation, dispute, or proceeding that is pending or known by any Borrower's
officers to be threatened against the Borrower and that might involve a claim
for damages or a request for injunctive, enforcement, or other relief that, if
granted, might reasonably be expected to have a Material Adverse Effect on the
Borrower; (e) a change in either the name or the principal place of business of
any Borrower or the office where its books and records are kept; (f) any change
in its accounting methods, policies, or practices for financial reporting
purposes or any material change in its accounting methods, policies, or
practices for tax reporting purposes; (g) a material adverse change in the
business, operations, assets, property, or condition (financial or other) of any
Borrower; and (h) any matter regarding which Borrowers are required to notify
Bank pursuant to the ESOP Loan. Each Borrower shall provide with each notice
pursuant to this section a statement of an officer of the Borrower setting forth
details of the occurrence referred to in the notice and stating what action the
Borrower proposes to take with respect to it.
6.16 Subordination of Debt. Except for any Debt set forth on Schedule 6.16,
provide Bank with a debt subordination agreement, in form and substance
satisfactory to Bank, executed by each Borrower and any Person who is an
officer, director, shareholder, or Affiliate of the Borrower to whom the
Borrower is or hereafter becomes indebted, subordinating in right of payment and
claim all of such Debt and any future advances thereon to the full and final
payment of the Obligations.
6.17 Collection of Accounts. Diligently pursue collection of all Accounts
and other amounts due any Borrower from others, including Affiliates of
Borrower.
6.18 Landlord and Storage Agreements. Provide Bank with copies of all
agreements between any Borrower and any landlord or warehouseman, which owns any
premises at which any Inventory or other Collateral may, from time to time, be
kept.
6.19 Auditors' Letters. Furnish Bank with a copy of each letter written to
any Borrower by its independent certified public accountant concerning internal
controls and management review immediately upon receipt of same.
6.20 ERISA Compliance.
(a) At all times make prompt payment of contributions required to meet
the minimum funding standards set forth in ERISA with respect to each Plan;
(b) Promptly after the filing thereof, furnish to Bank copies of an
annual report required to be filed pursuant to ERISA in connection with each
Plan and any Other employee benefit plan of it and its Affiliates;
(c) Notify Bank as soon as practicable of any Reportable Event and of
any additional act or condition arising in connection with any Plan which any
Borrower believes might constitute grounds for the termination thereof by the
Pension Benefit Guaranty Corporation or for the appointment by the appropriate
United States District Court of a trustee to administer the Plan; and
(d) Furnish to Bank, promptly upon Bank's request therefor, such
additional information concerning any Plan or any other such employee benefit
plan as may be reasonably requested.
6.21 Financial Covenants. Maintain as of the end of each calendar quarter:
(a) total Tangible Net Worth of not less than the following: (i) $7,500,000 for
the calendar quarters ending December 31, 1997, March 31, 1998, June 30, 1998,
and September 30, 1998; (ii) $11,000,000 for the calendar quarter ending
December 31, 1998, and all calendar quarters thereafter during the term of this
Agreement; (b) a ratio of Debt less Subordinated Debt to Tangible Net Worth
(less equity in Affiliates) plus Subordinated Debt as of the end of each
calendar quarter of not more than: (i) 8:1 for the calendar quarter ending March
31, 1998; (ii) 7.5:1 for the calendar quarter ending June 30, 1998; (iii) 7.0:1
for the calendar quarter ending September 30, 1998; and (iv) 6.5:1 for the
calendar quarter ending December 31, 1998, and each calendar quarter thereafter
during the term of this Agreement; (c) Fixed Charge Coverage of not less than
1.0, beginning the calendar quarter ending December 31, 1997 and for each
calendar quarter thereafter during the term of this Agreement; and (d) Net
Income of at least $3,000,000 million during the twelve-month period preceding
each calendar quarter end, beginning December 31, 1998, and continuing for each
similar twelve-month period ending on each quarter and thereafter. Bank will
begin monitoring the debt to Tangible Net Worth ratio, and the Fixed Charge
Covenants beginning on January 1, 1998. Each of the foregoing covenants will be
measured on a consolidated basis for all Borrowers.
6.22 Physical Inventory. At least one time during each fiscal year, conduct
a physical inventory of all of its equipment, machinery, rolling stock, and
containers and shall promptly certify to Bank the results of such inventory in
detail satisfactory to Bank.
6.23 Subsidiary Stock Ownership. Parent shall continue to own directly or
indirectly 100% of the stock of all of its Subsidiaries (other than TransCor
Waste Services, Inc. and its subsidiaries); Parent shall continue to own
directly no less than a majority of the Aggregate Outstanding Shares (as defined
herein) of TransCor Waste Services, Inc.; all of the shares of Stock of TransCor
Waste Services, Inc. owned by Parent shall be pledged to Bank as Collateral;
TransCor Waste Services, Inc. shall continue to own directly or indirectly 100%
of the stock of all of its Subsidiaries; TransCor Waste Services, Inc. shall not
issue shares of a different class of stock from its currently outstanding common
stock; and no shares of the stock of TransCor Waste Services, Inc. shall be
issued at a price less than the fair market of such shares at the time of
issuance of such shares and TransCor Waste Services, Inc. shall grant no
warrants or options to purchase shares of its stock at an exercise price less
than the fair market value of such shares at the time such warrants or options
are granted. For the purposes of this section, "Aggregate Outstanding Shares"
shall mean the aggregate of the issued and outstanding shares of the stock of
TransCor Waste Services, Inc. and the shares of stock that may be purchased
currently or in the future by the exercise of all warrants, options and rights
at any time outstanding.
7. Negative Covenants. Until the Obligations have been indefeasibly repaid
in full and until Bank has no further obligation to make advances under the
Loan, without the prior written consent of Bank, each Borrower shall not:
7.1 Indebtedness. Except as permitted or contemplated by this Agreement,
create, incur, assume, or suffer to exist any Debt or obligation for money
borrowed, or guarantee, or endorse, or otherwise be or become contingently
liable in connection with the obligations of any person, firm, or corporation
(including any Affiliate), except:
7.1.1 Indebtedness for taxes not at the time due and payable or which
are being actively contested in good faith by appropriate proceedings and
against which reserves deemed adequate by Bank have been established by
Borrowers, but only if the non-payment of such taxes does not result in a Lien
upon any property of the Borrower that has priority over the Lien held by Bank;
7.1.2 Contingent liabilities arising out of the endorsement of
negotiable, instruments in the ordinary course of collection or similar
transactions in the ordinary course of business.
7.1.3 Debt other than for borrowed money, incurred in the ordinary
course of business, including that evidenced by trade promissory notes with a
maturity of less than one year;
7.1.4 Debt to third parties other than Bank for borrowing incurred in
connection with the purchase money financing of capital assets used in the
business of Borrowers or to reimburse Borrowers for purchases of capital assets
made within six months of the time the debt is incurred, not to exceed $5
million on a consolidated basis during any fiscal year of Borrowers;
7.1.5 Debt for money borrowed from Bank;
7.1.6 Debt incurred prior to the date of this Agreement and reflected
on the financial statements referred to in Section 5.5 ("Financial Statements")
which is not to be repaid with the proceeds of the Loans, including the ESOP
Loan;
7.1.7 Debt, the proceeds of which are used to repay the Debt described
in Sections 7.1.4 and 7.1.6.
7.1.8 Debt of any Borrower to any other Borrowers incurred from time
to time in consideration for the purchase by a Borrower from any other Borrowers
of accounts receivable and/or other intangible assets.
7.1.9 Debt owed by Borrower ▇▇▇▇▇▇▇ Construction Corp. to Caterpillar
Financial Services Corporation ("CFSC"), to which Bank is subordinated pursuant
to Subordination Agreement dated on or about November 18, 1997 between CFSC and
Bank.
7.2 Liens and Security Interests. Create, incur, assume, or suffer to exist
any Lien (including charges on property purchased under conditional sales or
other title-retention agreements) on any of its property or assets, now owned or
hereafter acquired, except:
7.2.1 Liens for taxes not yet due or which are being contested in good
faith by appropriate proceeding and against which reserves deemed adequate by
Bank have been set up (excluding any Lien imposed pursuant to any of the
provisions of ERISA);
7.2.2 Other Liens incidental to the conduct of its business or the
ownership of its property and assets;
7.2.3 Liens created to secure the Debt permitted by Section 7.1.4 or
to secure Debt that refinances the Debt permitted by Section 7.1.4, so long as
in each case the Liens encumber only the capital assets acquired with the
proceeds of the permitted purchase money Debt;
7.2.4 Liens in favor of Bank; and
7.2.5 Liens reflected on Exhibit "C" to this Agreement.
7.2.6 Subordinated security interests in accounts receivable and other
intangible assets that may be granted from time to time by any Borrower to any
other Borrower to secure promissory notes issued by the First Borrower in
consideration for the purchase by the First Borrower of such accounts receivable
and/or other intangible assets, but only to the extent that such subordinated
security interest has been approved in advance by the Lender.
7.3 Dividends and Distributions. Except for transactions benefiting another
Borrower as shareholder, declare any dividends on any shares of any class of its
capital stock, or apply any of its property or assets to the purchase,
redemption or other retirement of, or set apart any sum for the payment of any
dividends on, or for the purchase, retirement of, or make any other distribution
by reduction of capital or otherwise in respect of, any shares of any class of
capital stock of any Borrower.
7.4 Affiliate Transactions. Purchase, acquire or lease property from, or
sell, transfer or lease any property to, or engage in any other transaction or
arrangement with, any Affiliate of any Borrower, except for such transactions
with other Borrowers and except in the ordinary course of Borrowers' business
and under terms and conditions which would apply if disinterested parties were
involved.
7.5 Financing Statements. Permit any financing statement to be on file with
respect to the Collateral, except for a financing statement that pertains to a
Permitted Lien.
7.6 Location of Collateral. Change the locations at which the Collateral is
maintained to a location outside of the United States; change the name,
identity, or corporate structure of Borrowers; or change the location of its
chief executive office.
7.7 Destruction of Collateral. Waste or destroy the Collateral or use it in
violation of any statute or ordinance.
7.8 Liquidation, Merger or Consolidation. Liquidate, wind up, or dissolve
itself (or suffer any liquidation or dissolution), or enter into any merger or
consolidation, or acquire all or substantially all of the assets of any Person;
or sell, lease, or otherwise dispose of any of its assets in an aggregate amount
exceeding $100,000 during any fiscal year, except for sales of assets associated
with the Tennessee operations of TransCor Waste Services, Inc., disposition of
the Lantana site by ▇▇▇▇▇▇▇ Recycling Corporation, sales of Equipment in
accordance with the Security Agreement, and sales of Inventory in the ordinary
course of its business, or disposition of the Note Receivable payable by
Guarantor or of the assets or outstanding stock of ThermoCor ▇▇▇▇▇▇▇, Inc. in
accordance with Section 6.10 of the Security Agreement and Section 5(c) of the
Pledge Agreement or sales of accounts receivable and/or other intangible assets
from one Borrower to another Borrower, provided that such accounts receivable
and/or other intangible assets remain subject to a prior perfected security
interest in favor of Lender.
7.9 Loans or Advances and Other Investments. Make or permit to remain
outstanding loans or advances or pay any management or similar fees to any
Person other than another Borrower, except for such loans, advances, or payments
that do not exceed $100,000 in the aggregate during any calendar year; or until
the Loans have been paid in full, own, purchase or make any commitment to
purchase any stock, bonds, notes, debentures or other securities of, or any
stock, bonds, notes, debentures or other securities of, or any interest in, or
make any capital contributions to (all of which are sometimes collectively
referred to herein as "Investments") in any Person (other than the securities of
another Borrower) except for (a) purchases of direct obligations of the federal
government, (b) deposits in commercial banks, (c) commercial paper of any U.S.
corporation having the highest ratings then given by ▇▇▇▇▇'▇ Investors Service,
Inc. or Standard & Poor's Corporation, (d) endorsement of negotiable instruments
for collection in the ordinary course of business; (e) trade credit advanced in
the ordinary course of business; (f) advances to employees in the ordinary
course of business; (g) any other Investment outstanding on the date of this
Agreement and disclosed to Bank; (h) other Investments approved in writing by
Bank; (j) any renewals or extensions of the foregoing Investments; and (j)
purchases or acquisitions or Investments that do not exceed $100,000 on a
consolidated basis in the aggregate during any calendar year.
7.10 Capital Expenditures. Make any Cash Capital Expenditures in any fiscal
year exceeding a total of $500,000 on a consolidated basis, that are not
financed within six months.
7.11 Prepayment of Debt. If an Event of Default or an event that with
notice or the passage of time would constitute a default has occurred, prepay
any Debt, except Debt to Bank.
7.12 Lease Transactions. Enter into any sale and lease-back arrangement.
7.13 Subordinated Debt. Make any payment (principal or interest) with
respect to Subordinated Debt to any Person not a Borrower, or with respect to
any Debt that would be Subordinated Debt but for the absence of a subordination
agreement in effect with respect thereto.
7.14. Change in Business; Fiscal Year. Enter into any business which is
substantially different from the business or businesses in which it is presently
engaged or change the fiscal year of any Borrower.
7.15 Accounts. Sell, assign, or discount any of its Accounts, Chattel
Paper, or any promissory notes held by it other than discount of such Accounts,
Chattel Paper, or notes in the ordinary course of business for collection and
other than sales of Accounts from one Borrower to another Borrower, provided
that such Accounts remain subject to a prior perfected security interest in
favor of Lender.
7.16 Margin Stock. Use any proceeds of the Loan to purchase or carry any
margin stock (within the meaning of Regulation U of the Board of governors of
the Federal Reserve System) or extend credit to others for the purpose of
purchasing or carrying on margin stock.
7.17 Subsidiaries. Acquire, form or dispose of any Subsidiaries, or permit
any Subsidiary to issue capital stock except to its parent. Each Borrower shall
maintain at least the percentage of ownership of each Subsidiary shown on the
attached Exhibit "E".
7.18 Amendment to Article or Bylaws. Amend the articles of incorporation or
bylaws of any Borrower in any manner that adversely affects the rights or
interests of Bank.
8. Environmental Provisions.
8.1 Contamination. Borrowers acknowledge that certain soil and groundwater
in (i) the northwestern portion of the parcel of Real Estate having a street
address of ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇ ▇▇▇"), (▇▇) the vicinity of the underground
storage tank formerly located on the parcel of Real Estate having a street
address of ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ("Area Two"), and (iii) the vicinity of the
maintenance building situated on the parcel of Real Estate having a street
address of ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ("Area Three"), may have been impacted by petroleum
hydrocarbon and/or other containment substances (collectively, the
"Contamination"). Borrowers further acknowledge that, as of the date of this
Agreement, Bank's knowledge concerning the Contamination is limited to the
information set forth in the Phase I Environmental Site Assessment prepared in
August 1994 by EnviroAssessments, Inc. (the "Report"). Without limiting the
generality of Borrowers' obligations under this Amendment to maintain the Real
Estate in compliance with applicable Environmental Regulations, Borrowers
specifically agree to conduct such assessment and remediation work as may be
necessary to bring Area One, Area Two, and Area three into compliance with
applicable Environmental Regulations and otherwise satisfy the requirements of
the Florida Department of Environmental Protection, the Hillsborough County
Environmental Protection Commission, or any other local, state, or federal
agency with jurisdiction regarding the environmental condition of the Real
Estate (collectively, the "Regulating Agencies").
8.2 Environmental Assessment and Remediation Obligation of Borrowers.
Borrowers agree to promptly undertake and diligently proceed with the assessment
and remediation of the Contamination at their sole cost and expense. Borrowers
shall select and utilize only qualified engineers, contractors, and consultants
(collectively, the "Consultants") to conduct the assessment and remediation
required under this Agreement. All Consultants must be approved in writing by
Bank before they initiate work in connection with the Contamination. For
purposes of this Agreement, the term "assessment" shall mean the identification
of the types and concentrations of contaminants present in the soil and
groundwater, the delineation of the horizontal and vertical extent of those
contaminants, and the evaluation of the appropriate remedial action necessary to
bring Area One, Area Two, and Area Three, as well as any other property impacted
by the Contamination, into compliance with applicable Environmental Regulations
or comply with the requirements of the Regulating Agencies. For purposes of this
Agreement, the term "remediation" shall mean any response, removal, or other
remedial action required by or initiated pursuant to the mandate of any
Environmental Regulation or Regulating Agency. Borrowers shall keep Bank fully
apprised at all times of the status of the assessment and remediation of the
Contamination. Without limiting the generality of the foregoing, Borrowers shall
provide to Bank within ten days after receipt copies of all reports and testing
data generated by or on behalf of Borrowers or the consultants with respect to
the assessment and remediation of the Contamination. Additionally, Borrowers
shall submit monthly written reports to Bank, in form and substance satisfactory
to Bank, apprising Bank of the status of those activities and all material
developments relating to the Contamination. Bank reserves the right to have an
independent environmental consultant and/or Bank's legal counsel review such
reports and data and Borrowers agree to pay the reasonable cost of that review.
Borrowers further agree to allow Bank's consultant and other Bank
representatives access to the Real Estate for purposes of conducting site
inspections and verifications. For purposes of this Agreement, Borrowers shall
be deemed to have completed all required assessment and remediation efforts with
respect to the Contamination when all regulatory mandates with respect to the
assessment and remediation have been satisfied as evidenced by the delivery to
Bank of (1) a written certification issued by Borrower's Consultants in form and
substance acceptable to Bank, and its independent consultant and legal counsel,
that all required assessment or remediation has been completed with respect to
the Contamination, or (2) a "No Further Action Letter" issued by the appropriate
Regulatory Agency, as determined by Bank and its independent consultant and
legal counsel.
8.3 Indemnification. Borrowers, jointly, severally, and unconditionally,
indemnify and hold Bank harmless from and against any and all loss, cost, claim,
damage, expense, liability, or cause of action arising out of or relating to the
contamination or the breach of any of Borrowers' obligations under this
Agreement relating to the Contamination or the assessment or remediation of the
Contamination, including, without limitation, all costs or remediation or
"clean-up" relating to the Contamination, all costs of determining whether the
Real Estate is in compliance with applicable Environmental Regulations, all
costs of bringing the Real Estate into compliance with all applicable
Environmental Regulations, and all of Bank's attorneys' fees, consultants' fees,
and court costs associated with the existence, assessment, or remediation of the
Contamination. The obligations of Borrowers under this section shall survive any
termination of this Agreement.
8.4 Environmental Management of Mortgaged Property Facility. The parties to
this Agreement acknowledge that, as of the date of this Agreement, Bank has not
participated in the operation or management of the Real Estate of any facilities
located on it and has not otherwise been in a position to influence financial
management, environmental remediation, hazardous waste disposal, or hazardous
material treatment affecting or relating to the Real Estate. Moreover, the
parties acknowledge that nothing contained in this Agreement would grant to Bank
the right or ability to meaningfully direct, influence, or control future
decisions regarding environmental remediation on the Real Estate, the disposal
or treatment of hazardous waste delivered to or otherwise present on the Real
Estate, or the financial management of the Real Estate. The parties also
acknowledge that the obligations of Borrowers and the limited rights of Bank
under this Agreement with respect to the assessment and remediation of the
Contamination are intended only to protect the value of the Collateral securing
Bank's Loans.
9. Additional Representations, Covenants, and Agreements Relating to
Collateral.
9.1 Affirmation of Representations. Each request for a loan or advancement
made by Borrowers pursuant to this Agreement or any of the other Loan Documents
shall constitute (a) an automatic representation and warranty by Borrowers to
Bank that there does not then exist any default or Event of Default and (b) a
reaffirmation as of the date of said request that all of the representations and
warranties of Borrowers contained in this Agreement and the other Loan Documents
are true in all material respects, except for any changes in the nature of
Borrowers' business or operations that would render the information contained in
any exhibit attached hereto either inaccurate or incomplete, so long as Bank has
consented to such changes or such changes are expressly permitted by this
Agreement.
9.2 Waivers. Borrowers hereby waive any and all causes of action and claims
which they may ever have against Bank as a result of any possession, collection,
settlement, compromise, or sale by Bank of any of the Accounts upon the
occurrence of an Event of Default hereunder, notwithstanding the effect of such
possession, collection, settlement, compromise, or sale upon the business of
Borrowers, except to the extent arising from gross negligence or willful
misconduct. Said waiver shall include all causes of action and claims which may
result from the existence of the power of attorney conferred upon Bank in
Section 8.10 ("Attorney-In-Fact"). The failure at any time or times hereafter to
require strict performance by Borrowers of any of the provisions, warranties,
terms, and conditions contained in this Agreement or any other agreement,
document, or instrument now or hereafter executed by Borrowers, and delivered to
Bank, shall not waive, affect, or diminish any right of Bank thereafter to
demand strict compliance and performance therewith and with respect to any other
provisions, warranties, terms, and conditions contained in such agreements,
documents or instruments, and any waiver of default shall not waive or affect
any other default, whether prior or subsequent thereto, and whether the same are
of a different type. None of the warranties, conditions, provisions, and terms
contained in the Agreement or any other agreement, documents, or instrument now
or hereafter executed by Borrowers and delivered to Bank shall be deemed to have
been waived by any act or knowledge of Bank, its agents, officers, or employees,
but only by an instrument in writing signed by an officer of Bank and directed
to Borrowers specifying such waiver.
9.3 Discharge of Taxes and Liens. At its option, Bank may discharge taxes,
Liens, security interests, or other encumbrances at any time levied or placed on
the Collateral and may pay for the maintenance and preservation of the
Collateral. Borrowers agree to reimburse Bank, on demand, for any payment made
or expense incurred by Bank pursuant to the foregoing authorization, including,
without limitation, attorneys' fees.
9.4 Insurance. Without limiting any other provision hereof, each Borrower
shall keep the Collateral insured in amounts equal to its full insurable value,
with companies, and against such risks as may be satisfactory to Bank. Borrowers
will pay the costs of all such insurance and deliver policies evidencing such
insurance to Bank with mortgagee loss payable clauses in favor of Bank.
Borrowers hereby assign to Bank all right to receive proceeds, direct any
insurer to pay all proceeds directly to Bank, and authorize Bank to endorse any
check or draft for such proceeds and apply the same toward satisfaction of the
Loans and other Obligations secured hereby.
9.5 Complete Records. Borrowers will at all times keep accurate and
complete records of the Collateral, and Bank or its agents shall have the right
to call at Borrowers' place or places of business at intervals to be determined
by Bank, upon reasonable notice and during borrowers' regular business hours,
and without hindrance or delay, to inspect and examine the Inventory and the
Equipment and to inspect, audit, check, and make abstracts from the books,
records, journals, orders, receipts, computer printouts, correspondence, and
other data relating to the Collateral or to any other transactions between the
parties hereto. If requested by Bank, borrowers agree to make its books,
records, journals, orders, receipts, computer printouts, correspondence, and
other data relating to the Collateral available at Bank's main office for
inspection, audit, and checking by Bank or its agents.
9.6 U.C.C. Financing Statement. Borrowers agree that a carbon,
photographic, or other reproduction of this Agreement or of a signed financing
statement with respect to the Collateral shall be sufficient as a financing
statement and may be filed as such by Bank.
10. Events of Default.
The occurrence of any one or more of the following events shall constitute
an Event of Default (unless and except to the extent that the same is cured to
the satisfaction of Bank within the applicable cure period, if any, or, at the
sole discretion of Bank, at any time thereafter).
10.1 Payment Default. If Borrowers shall fail to make any payment of any
installment of principal (including a mandatory prepayment under Section 2.6(b))
or interest on any Note within ten (10) days after the same shall become due and
payable, whether at stated maturity, by declaration, upon acceleration, or
otherwise; or
10.2 Fees and Expenses. If borrower shall fail to pay when due any expense,
fee or charge provided for in this Agreement and such failure shall continue for
a period of ten (10) days; or
10.3 Certain Agreement Defaults. If Borrower defaults in the observance or
performance of any agreement contained in Article 7 of this Agreement ("Negative
Covenants") or in the observance or performance of the agreements set forth in
Sections 6.1 ("Insurance"), 6.2 ("Corporate Existence") (with respect to
existence only), 6.4 ("Compliance with Laws"), 6.6 ("Subordination of Debt"),
6.17 ("Collection of Accounts"), 6.20 ("ERISA Compliance"), and 6.21 ("Financial
Covenants"); or
10.4 Other Defaults. If Borrower shall fail to perform, keep, or observe
any other covenant, agreement, or provision of any Note or of this Agreement not
provided for elsewhere in this Article 10 or of any other Loan Document and any
such default is not cured within 30 days after notice from Bank, except in the
case of a default under Sections 6.3 ("Taxes"), 6.12 ("Conduct of Business"),
6.15 ("Notice to Bank"), and 6.18 ("Landlord and Storage Agreements"), which
must be remedied within 30 days of its occurrence, even in the absence of
notice; or
10.5 Representations False. If any warranty, representation, or other
statement made or furnished to Bank by or on behalf of Borrowers or any
Guarantor for in any of the Loan Documents proves to be false or misleading in
any material respect when made or furnished; or
10.6 Financial Difficulties. If Borrowers shall be involved in financial
difficulties as evidenced
(a) by its admission in writing of its inability to pay its debts
generally as they become due or of its ceasing to be Solvent;
(b) by its commencing a voluntary case under the United States
Bankruptcy Code or any similar law regarding debtor's rights and remedies or an
admission seeking the relief therein provided;
(c) by its making a general assignment for the benefit of its
creditors; or
(d) by its voluntarily liquidating or terminating operations or
applying for or consenting to the appointment of, or the taking of possession
by, a receiver, custodian, trustee or liquidator of such Person or of all or of
a substantial part of its assets; or
10.7 Involuntary Proceedings. If without its application, approval, or
consent, a proceeding shall be commended, in any court of competent
jurisdiction, seeking in respect of such Person any remedy under the United
States Bankruptcy Code, the liquidation, reorganization, dissolution,
winding-up, or composition or readjustment of debt, the appointment of a
trustee, receiver, liquidator or the like of such Person, or of all or any
substantial part of the assets of such Person, or other like relief under any
law relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts, which results in the entry of an order for
relief or such adjudication or appointment remains undismissed or undischarged
for a period of 30 days; or
10.8 ERISA. If a Reportable Event shall occur which Bank, in its sole
discretion, shall determine in good faith constitute grounds for the termination
by the Pension Benefit Guaranty Corporation of any Plan or for the appointment
by the appropriate United States district court of a trustee for any Plan or if
any Plan shall be terminated or any such trustee shall be requested or
appointed, or of Borrowers are in "default" (as defined in Section 4219(c)(5) of
ERISA) with respect to payments to a Multiemployer Plan resulting from
Borrowers' complete or partial withdrawal from such Plan; or
10.9 Cancellation of Guaranty. If the cancellation, termination or
limitation of any guaranty of Borrowers' obligations under this Agreement or the
Loans shall occur, or if any such Guarantor shall be in default under or breach
the terms of any guaranty agreement between Bank and such Guarantor, or if any
such Guarantor should die; or if any Guarantor's financial condition as
represented in the last personal financial statement delivered to and received
by Bank before the date of this Agreement is substantially impaired; or
10.10 Default on Other Obligations. If the ESOP or the Borrowers shall
default on the ESOP Loan or any other obligation, or if Borrowers or Guarantor
shall default in payment of amounts due on Debt of Borrowers or Guarantor to
persons other than Bank, or any loan or security agreement with others, or under
any material lease, and the aggregate amount of such Debt, agreements, and
leases exceeds $50,000 in the aggregate, and any such default shall not be cured
or permanently waived within any applicable contractual grace period, not to
exceed 30 days; or
10.11 Judgments. If a final judgment for the payment of money in excess of
450,000 shall be rendered against Borrowers and the same shall remain
undischarged for a period of 30 days during which execution shall not be
effectively stayed, unless such judgment is fully covered by collectible
insurance; or
10.12 Actions. If Borrowers or any Guarantor or any officer or director of
a Borrower or Guarantor shall be criminally indicted or convicted under any law
that could lead to a forfeiture of any property of Borrowers or such Guarantor;
or
10.13 Collateral. If a creditor of any Borrower shall obtain possession of
any of the Collateral by any legal means; or
10.14 Change in Control. If ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ceases to control a
majority of the outstanding shares of Parent, or if Parent ceases to control a
majority of the outstanding shares of TransCor Waste Services, Inc., or
10.15 Subordination Agreements. If a breach or default shall occur with
respect to any subordination agreement executed by any creditor of Borrowers
(including any Affiliate), or if any said agreement shall otherwise terminate or
cause to have legal effect; or
10.16 Priority of Security Interest. If any security interest or Lien of
Bank hereunder or under any other Security Agreement shall not constitute a
perfected security interest of first priority in the Collateral thereby
encumbered, subject only to Permitted Liens; or
10.17 Loss of Collateral. If there shall occur any material loss, theft,
damage or destruction of any of the Collateral, which loss is not fully insured;
or
10.18 Material Adverse Change. If Borrowers suffer a material adverse
change in their businesses, assets, properties, prospects, results of operation,
or conditions (financial or other); then and in each and every such case, Bank
or the holder of each Note may at its option proceed to protect and enforce its
rights by suit in equity, action at law and/or the appropriate proceeding either
for specific performance of any covenant or condition contained in the Note or
in any Loan Document, and/or declare the unpaid balance of the Loans and Note
together with all accrued interest to be forthwith due and payable, and
thereupon such balance shall become so due and payable without presentation,
protest or further demand or notice of any kind, all of which are hereby
expressly waived.
Borrowers agree that default under any Loan Document shall constitute
default with respect to all Loan Documents.
Without limiting the foregoing, upon the occurrence of any Event of
Default, and at any time thereafter, Bank shall have the rights and remedies of
a secured party under the Code (and the Uniform Commercial Code of any other
applicable jurisdiction) in addition to the rights and remedies provided herein
or in any other instrument or paper executed by Borrowers.
In addition to any other remedy available to it, Bank shall have the right
to the extent provided by law, upon the occurrence of an Event of Default, to
seek and obtain the appointment of a receiver to take possession of and operate
and/or dispose of the business and assets of Borrowers and any costs and
expenses incurred by Bank in connection with such receivership shall bear
interest at the Default Rate.
11. Indemnification.
11.1 General. Borrowers agreed to defend, indemnify and hold harmless Bank,
its directors, officers, employees, accountants, attorneys, and agents (the
"Indemnitees") from and against any and all claims, demands, judgments, damages,
actions, causes of action, injuries, orders, penalties, costs and expenses
(including attorneys' fees and costs of court) of any kind whatsoever arising
out of or relating to any breach or default by Borrowers or any other Person
(including Guarantors) under this Agreement or any Loan Document or the failure
of Borrowers to observe, perform or discharge Borrowers' duties hereunder or
thereunder. Without limiting the generality of the foregoing, Borrowers'
obligation to indemnify Bank shall include indemnity from any and all claims,
demands, judgments, damages, actions, causes of action, injuries, orders,
penalties, costs, and expenses arising out of or in connection with the
activities of Borrowers, its predecessors in interest, third parties who have
trespassed on Borrowers' property, or parties in a contractual relationship with
Borrowers, whether or not occasioned wholly or in part by any condition,
accident or event caused by an act or omission of the Indemnitees, which: (a)
arise out of the actual, alleged or threatened discharge, dispersal, release,
storage, treatment, generation, disposal, or escape of radioactive materials,
radioactivity, pollutants or other toxic or hazardous substances, including any
solid, liquid, gaseous, or thermal irritant or contaminant, including smoke,
vapor, soot, fumes, acids, alkalis, chemicals, and waste 9including materials to
be recycled, reconditioned or reclaimed); or (b) actually or allegedly arise out
of the use, specification, or inclusion of any product, material, or process
containing chemicals or radioactive material, the failure to detect the
existence or proportion of chemicals or radioactive material in the soil, air,
surface water or groundwater, or the performance or failure to perform the
abatement of any pollution source or the replacement or removal of any soil,
water, surface water, or groundwater containing chemicals or radioactive
material; or (c) arises out of or relates to breach by Borrowers of any of the
provisions of Section 5.21 ("Environmental Matters").
12. Costs and Expenses.
Borrowers shall bear all expenses of Bank (including fees and expenses of
its counsel) in connection with the preparation of this Agreement and the Loan
Documents, and the issuance and delivery of the Notes to Bank and also in
connection with any amendment or modification thereto. Borrowers agree to
indemnify and save Bank harmless against all broker's and finder's fees, if any.
If, at any time or times hereafter, whether before or after the occurrence of an
Event of Default, Bank employs counsel to advise or provide other representation
with respect to this Agreement, or to collect the balance of the Loans, or to
take any action in or with respect to any suit or proceeding relating to this
Agreement or any of the Loan Documents, or to protect, collect, or liquidate the
Collateral or to attempt to enforce any security interest or Lien granted to
Bank by Borrowers; then in any such events, all of the reasonable attorneys'
fees arising from such services and any expenses, costs and charges relating
thereto shall constitute additional obligations of Borrowers payable on demand
of Bank. Without limiting the foregoing, Borrowers shall pay or reimburse Bank
for all recording and filing fees, intangibles taxes, documentary and revenue
stamps, other taxes or other expenses and charges payable in connection with
this Agreement, the Notes or any Loan Document, or the filing of any Loan
Document, financing statements or other instruments required by Bank in
connection with the Loans.
12.1 No Waiver. No waiver of any Event of Default hereunder, and no waiver
of any default or Event of Default under any other Loan Document shall extend to
or shall affect any subsequent or other than existing default or shall impair
any rights, remedies or powers of Bank. No delay or omission of Bank or any
subsequent holder of the Notes to exercise any right, remedy, power or privilege
hereunder after the occurrence of such default or Event of Default shall be
construed as a waiver of any such default, or acquiescence therein.
12.1 Headings; Exhibits. Except for the definitions set forth in Article 1,
the headings of the articles, sections, paragraphs and subdivisions of this
Agreement are for convenience of reference only, are not to be considered a part
hereof, and shall not limit or otherwise affect any of the terms hereof. Unless
otherwise expressly indicated, all references in this Agreement to a section or
an exhibit are to a section or an exhibit of this Agreement. All exhibits
referred to in this Agreement are an integral part of it and are incorporated by
reference in it.
12.3 Right of Setoff. Upon and after the occurrence of any Event of
Default, Bank may, and is hereby authorized by each Borrower, at any time and
from time to time, to the fullest extent permitted by applicable laws, and
without advance notice to Borrower (any such notice being expressly waived by
Borrowers), setoff and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and any other indebtedness at any
time owing by Bank to, or for the credit or the account of, Borrower against any
or all of the Obligations of any Borrower now or hereafter existing whether or
not such Obligations have matured and irrespective of whether Bank has exercised
any other rights that it has or may have with respect to such Obligations,
including, without limitation, any acceleration rights. The aforesaid right of
setoff may be exercised by Bank against any Borrower or against any trustee in
bankruptcy, debtor in possession, assignee for the benefit of the creditors,
receiver, or execution, judgment or attachment creditor of Borrowers, or such
trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receiver, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of setoff shall not have been exercised
by Bank prior to the making, filing or issuance, or service upon Bank of, or of
notice of, any such petition; assignment for the benefit of creditors;
appointment or application for the appointment of a receiver; or issuance of
execution, subpoena, order or warrant. Bank agrees to notify the relevant
Borrower after any such setoff and application, provided that the failure to
give such notice shall not affect the validity of such setoff and application.
The rights of Bank under this section are in addition to the other rights and
remedies (including, without limitation, other rights of setoff) which Bank may
have.
12.4 Survival of Covenants. All covenants, agreements, representations and
warranties made herein and in certificates or reports delivered pursuant hereto
shall be deemed to have been material and relied on by Bank, notwithstanding any
investigation made by or on behalf of Bank, and shall survive the execution and
delivery to Bank of any Note or Loan Document.
12.5 Addresses. Any notice or demand which by any provision of this
Agreement is required or provided to be given shall be deemed to have been
sufficiently given or served for all purposes by being delivered in person or by
facsimile to the party to whom the notice or demand is directed or by being sent
as first class mail, postage prepaid, to the following address: If to Borrowers:
▇▇▇▇▇▇▇ Corp., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇; or if any other address shall at any time be designated by Borrowers
in writing to the holders of record of the Note at the time of such designation
to such other address; and if to Bank: SouthTrust Bank, National Association,
▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Asset-Based Lending
Department (telecopy no. 205-254-4369), and with a copy to; SouthTrust Bank of
Alabama, National Association, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Sie Kamide (telecopy no. 813-229-8280); or if any
other address shall at any time be designated in writing to Borrowers, to such
other address.
12.6 Venue and Jurisdiction. Borrowers agree that any legal action brought
by Bank to collect the Loans or any Obligation or to assert any claim against
Borrowers under any Loan Document, or any part thereof, may be brought in any
court in the State of Alabama having subject matter jurisdiction and that any
such court will have non-exclusive jurisdiction, waives its right to object to
any such action on grounds it is brought in the improper venue, and irrevocably
consents that any legal action or proceeding against it under, arising out of,
or in any manner relating to the Loans, the Obligations, or any Loan Document
may be brought in the Circuit Court of Jefferson County, Alabama, or in any
other Circuit Court of the State of Alabama or in the U.S. District Court for
the Northern District of Alabama. Any judicial proceeding by any Borrower
against Bank under any Loan Document, or any part thereof, shall be brought only
in one of the foregoing courts in Alabama. Borrowers, by the execution of this
Agreement, expressly and irrevocably assent and submit to the non-exclusive
personal jurisdiction of any such court in any such action or proceeding.
Borrowers consent to the service of process relating to any such action or
proceeding by mail to the address set forth in this Agreement.
12.7 Benefits. All of the terms and provisions of this Agreement shall bind
and inure to the benefit of the parties hereto and their respective successors
and assigns. Borrowers may not assign any of their rights or obligations
hereunder without the prior written consent of Bank.
12.8 Controlling Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida; provided, however, that if any
of the Collateral shall be located in any jurisdiction other than Florida, the
laws of such jurisdiction shall govern the method, manner and procedure for
foreclosure of Bank's lien upon such Collateral and the enforcement of Bank's
other remedies in respect of such Collateral to the extent that the laws of such
jurisdiction are different from or inconsistent with the laws of Florida.
12.9 Participation. Borrowers acknowledge that Bank may, at its option,
sell participation interests in the Loans to participating banks. The amounts of
any such participations shall be determined solely by the Bank. Borrowers agree
with each present and future participant in the Loans, the names and addresses
of which will be furnished to Borrowers, that if an Event and Default should
occur, each present and future participant shall have all of the rights and
remedies of Bank with respect to any deposit due from any participant to
Borrowers. The execution by a participant of a participation agreement with
Bank, and the execution by Borrowers of this Agreement, regardless of the order
of execution, shall evidence an agreement between Borrowers and said participant
in accordance with the terms of this section.
12.10 Miscellaneous. Time is of the essence with respect to this Agreement.
This Agreement and the instruments and agreements referred to herein or called
for hereby supersede and incorporate all representations, promises, and
statements, oral or written, made by Bank in connection with the Loans. This
Agreement may not be varied, altered, or amended except by a written instrument
executed by an authorized officer of Bank. In the event of a conflict between
this Agreement and any other Loan Document, the terms of this Agreement will
control. This Agreement may be executed in any number of counterparts, each of
which, when executed and delivered, shall be an original, but such counterparts
shall together constitute one and the same instrument. Any provision in this
Agreement which may be unenforceable or invalid under any law shall be
ineffective to the extent of such unenforceability or invalidity without
affecting the enforceability or validity of any other provisions hereof.
12.11 Joint and Several Liability. All obligations of each Person named as
Borrower shall be joint and several obligations of all such Persons. The
obligations of each Borrower pursuant to this Agreement, the Revolving Credit
Note, the Term Note, the Pledge Agreements, and the Registration Rights
Agreement, and all other instruments, documents thereof and the obligations of
each Borrower hereunder and thereunder shall not be impaired or avoided due to
(i) the unenforceability of such obligations against any other party which is
any Borrower or (ii) the incapacity or lack of authority of any signatory of any
Borrower; and Bank may compromise or settle, extend the time for payment,
discharge or waive performance of or refuse to enforce or release all or any
part of any and all of the Obligations and Collateral and may grant other
indulgences to one of more Borrowers in respect thereof or release or substitute
any one or more of Borrowers, all without otherwise affecting or impairing the
joint and several obligations of Borrowers hereunder and thereunder.
12.12 Limitation of Grant. Nothing in this Agreement, whether express or
implied, is intended or should be construed to confer upon, or to grant to, any
person, except Bank and Borrowers, any right, remedy, or claim under or because
of either this Agreement or any provision of it. The rights, duties, and
obligations of Borrowers under this Agreement are not assignable or delegable.
12.13 WAIVER OR RIGHT TO TRIAL BY JURY. BORROWERS AND BANK HEREBY WAIVE ANY
RIGHT TO TRIAL BY JURY ON ANY CLAIM, COUNTERCLAIM, SETOFF, DEMAND, ACTION OR
CAUSE OF ACTION (A) ARISING OUT OF OR IN ANY WAY PERTAINING OR RELATING TO THIS
AGREEMENT, THE NOTES, THE LOAN DOCUMENTS, OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION WITH THIS AGREEMENT OR (B) IN ANY
WAY CONNECTED WITH OR PERTAINING OR RELATED TO OR INCIDENTAL TO ANY DEALINGS OF
THE PARTIES HERETO WITH RESPECT TO THIS AGREEMENT, THE NOTES, THE LOAN
DOCUMENTS, OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED
IN CONNECTION HEREWITH OR IN CONNECTION WITH THE TRANSACTIONS RELATED THERETO OR
CONTEMPLATED THEREBY OR THE EXERCISE OF EITHER PARTY'S RIGHTS AND REMEDIES
THEREUNDER, IN ALL OF THE FOREGOING CASES WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. BORROWER AND BANK
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 TRIAL BY JURY, AND THAT ANY DISPUTE OR
CONTROVERSY WHATSOEVER BETWEEN THEM SHALL INSTEAD BE TRIED IN A COURT OF
COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
IN WITNESS WHEREOF, each Borrower and Bank has caused this instrument to be
executed by its duly authorized officer.
BORROWERS:
▇▇▇▇▇▇▇ CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President/Chief Financial Officer
TRANSCOR WASTE SERVICES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President/Chief Financial Officer
▇▇▇▇▇▇▇ RECYCLING CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President/Chief Financial Officer
FOURTH AVENUE HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President/Chief Financial Officer
LANTANA EIGHTH AVENUE CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President/Chief Financial Officer
1223510v1