Exhibit 4.1
NORWEST-BANK MINNESOTA CREDIT AGREEMENT
NATIONAL ASSOCIATION
THIS CREDIT AGREEMENT (the "Agreement") dated as of October 13, 1997 (the
"Effective Date") is between Norwest Bank Minnesota, National Association (the
"Bank") and Research, Incorporated (the "Borrower").
BACKGROUND
The Borrower has asked the Bank to renew its existing line of credit and
increase the amount of credit available under the Line to Five Million and
00/100 Dollars ($5,000,000.00), which the Borrower intends to use for working
capital purposes. Borrowings under the Line are currently evidenced by a
promissory note dated October 28, 1996 (the "1996 Revolving Note")
The Bank is agreeable to meeting the Borrower's request, provided that the
Borrower agrees to the terms and conditions of this Agreement.
The Revolving Note (as defined below), this Agreement, and all "Security
Documents" described in Exhibit B shall be referred to collectively as the
"Documents."
In consideration of the above premises, the Bank and the Borrower agree as
follows:
LINE OF CREDIT
LINE OF CREDIT AMOUNT. During the Line Availability Period defined below, the
Bank agrees to provide a revolving line of credit (the "Line") to the
Borrower. Outstanding amounts under the Line shall not, at any one time,
exceed Five Million and 00/100 Dollars ($5,000,000.00). This is a
conditional revolving line of credit and each advance under the Line, if
made, shall be at the sole discretion of the Bank.
LINE AVAILABILITY PERIOD. The "Line Availability Period" shall mean the period
of time from the Effective Date or the date on which all conditions
precedent described in this Agreement have been met, whichever is later,
to the Line Expiration Date of January 31, 1999.
THE REVOLVING NOTE. The Borrower's obligation to repay advances under the Line
shall be evidenced by a single promissory note (the "Revolving Note")
dated as of the Effective Date, and in form and content acceptable to the
Bank. The Revolving Note shall replace, but not be deemed to satisfy, the
1996 Revolving Note. The initial balance of the Revolving Note shall be
the balance of the 1996 Revolving Note as of the Effective Date.
Reference is made to the Revolving Note for interest rate and repayment
terms.
MANDATORY PREPAYMENT. If at any time the principal outstanding under the
Revolving Note plus the face amount of any outstanding Standby Letters of
Credit and Documentary Letters of Credit (as defined below) exceed
$5,000,000.00, the Borrower must immediately prepay the Revolving Note in
an amount sufficient to eliminate the excess.
If after making this prepayment the face amount of outstanding Standby
Letters of Credit and Documentary Letters of Credit continue to exceed
this amount, then the Borrower shall deposit sufficient cash into a
non-interest bearing account to collateralize the excess. The Borrower
hereby grants the Bank a security interest in these funds as security for
all of the Borrower's obligations to the Bank.
STANDBY LETTERS OF CREDIT
Issuance and Expiration. During the Line Availability Period, the Bank agrees to
issue standby letters of credit ("Standby L/Cs") for the account of the
Borrower, provided that the Borrower is in compliance with the terms of
this Agreement. Each Standby L/C will have a maximum expiry that shall be
negotiated at the time of issuance. Prior to the issuance of a Standby
L/C, the Borrower will execute the Bank's standard Application
and Agreement for Irrevocable Standby Letter of Credit (the "Standby L/C
Agreement") and such other documents as the Bank deems necessary.
Fees. The Borrower shall pay a Standby L/C fee of 2.0% per annum on the face
amount of each Standby L/C, subject to a minimum fee of $200.00, and
calculated on the basis of total days elapsed in a 360-day year. This fee
shall be paid quarterly in advance and is in addition to all other fees
or expenses provided for the Standby L/C Application.
Reduction of Line Availability. Availability under the Line shall be reduced
dollar for dollar by the face amount of all outstanding Standby L/Cs,
plus any unreimbursed draws. Without limiting any rights and remedies
available to the Bank under any Standby L/C Agreement, any draw under a
Standby L/C may, at the Bank's option, be repaid through an automatic
advance under the Line, which shall be repayable according to the terms
of this Agreement.
Cash Collateralization of Outstanding Standby L/Cs. Should a default occur under
this Agreement, the Bank may require the Borrower to deposit with it in a
non-interest bearing account, immediately available funds equal to the
face amount of outstanding Standby L/Cs. The Borrower hereby grants the
Bank a security interest in these funds as security for all of the
Borrower's obligations to the Bank.
DOCUMENTARY LETTERS OF CREDIT
Issuance and Expiration. During the Line Availability Period, the Bank agrees to
issue documentary letters of credit ("Documentary L/Cs") for the account
of the Borrower, provided that the Borrower is in compliance with the
terms of this Agreement. Each Documentary L/C must expire prior to the
Line Expiration Date and must require drafts payable at sight.
Prior to the issuance of a Documentary L/C, the Borrower will execute the
Bank's standard Application and Agreement for Irrevocable Documentary
Letters of Credit (the "Documentary L/C Agreement") and such other
documents as the Bank deems necessary.
Fees and Expenses. Fees and expenses related to each Documentary L/C will be
agreed upon at issuance.
Reduction of Line Availability. Availability under the Line shall be reduced
dollar for dollar by the face amount of all outstanding Documentary L/Cs,
plus any unreimbursed draws. Without limiting any rights and remedies
available to the Bank under the Documentary L/C Agreement and related
documents, any draw under a Documentary L/C may, at the Bank's option, be
repaid through an automatic advance under the Line, which shall be
repayable according to the terms of this Agreement.
Cash Collateralization of Outstanding Documentary L/Cs. Should a default occur
under this Agreement the Bank may require the Borrower to deposit with it
in a non-interest bearing account immediately available funds equal to
the face amount of outstanding Documentary L/Cs. The Borrower hereby
grants the Bank a security interest in these funds as security for all of
the Borrower's obligations to the Bank.
FEES AND EXPENSES
DOCUMENTATION EXPENSE. The Borrower agrees to reimburse the Bank for its
reasonable expenses relating to the preparation of the Documents and any
possible future amendments to the Documents, which reimbursement may
include, but shall not be limited to, reimbursement of reasonable
attorneys' fees, including the allocated costs of the Bank's in-house
counsel, which shall not be in excess of $375.00. Despite such
reimbursement the Borrower acknowledges that the Bank's counsel is
engaged solely to represent the Bank and does not represent the Borrower.
COLLECTION EXPENSE. In the event the Borrower fails to pay the Bank any amounts
due under this Agreement or under the Documents, the Borrower shall pay
all costs of collection, including reasonable attorneys' fees and legal
expenses incurred by the Bank.
ADVANCES AND PAYMENTS
REQUESTS FOR ADVANCES. Any Line advance requested under the terms of this
Agreement shall be requested by telephone or in a writing delivered to
the Bank (or transmitted via facsimile) by any person reasonably
believed by the Bank to be authorized by the Borrower to do so. The
Bank will not consider any such request following an event which is, or
with notice or the lapse of time would be, an event of default under
this Agreement. Proceeds shall be deposited into the Borrower's account
at the Bank or disbursed in such other manner as the parties may agree.
LIBOR INTEREST RATE OPTION. In addition to interest rates based on the Base Rate
Option defined in the Term Note, the Borrower may elect a fixed rate of
interest for a fixed time period and principal amount agreeable to the
Bank and Borrower that is based upon the margin stated in the Revolving
Note and an interest rate derived from the current LIBOR rate available
to the Bank on national or international money markets for a similar time
period and dollar amount.
To elect the LIBOR Interest Rate Option, as defined in the Revolving
Note, the Borrower must request a quote from the Bank two days prior to
funding, which must be accepted by the Borrower following quotation by
the Bank as a condition to fixing. This request must designate an amount
(the "LIBOR Interest Rate Portion") and a period (the "LIBOR Interest
Rate Period"). The LIBOR Interest Rate Portion must be at least
$100,000.00 and the LIBOR Interest Rate Period will be for 30, 60 or 90
days or any other period to which the parties may agree. The Bank shall
not be obligated to provide a LIBOR Interest Rate quote if it determines
that no deposits with an amount and maturity equal to those for which a
quotation has been requested are available to it in the London Interbank
Market. The Borrower must orally accept a quote when received or it will
be deemed rejected. If accepted, the LIBOR Interest Rate Option will
remain in effect for the LIBOR Interest Rate Period specified in the
quote. At the end of each LIBOR Interest Rate Period the principal amount
subject to the LIBOR Interest Rate Option shall bear interest at the Base
Rate Option (as defined in the Revolving Note).
PAYMENTS. All principal, interest and fees due under the Documents shall be paid
by the direct debit of available funds deposited in the Borrower's
account with the Bank. The Bank shall debit the account on the dates the
payments become due. If a due date does not fall on a day on which the
Bank is open for substantially all of its business (a "Banking Day",
except as otherwise provided), the Bank shall debit the account on the
next Banking Day, and interest shall continue to accrue during the
extended period. If there are insufficient funds in the account on the
day the Bank enters any debit authorized by this Agreement, the debit
will be reversed and the payment shall be due immediately without
necessity of demand by direct remittance of immediately available funds.
For amounts bearing interest at the LIBOR Rate (if any) a Banking Day is
a day on which the Bank is open for business and on which dealings in
U.S. dollar deposits are carried on in the London interbank market.
SECURITY
During the time period that credit is available under this Agreement, and
afterward until all amounts due under the Documents are paid in full,
unless the Bank shall otherwise agree in writing, all amounts due under
this Agreement and the Documents shall be secured at all times as
provided in Exhibit A. The Borrower also hereby grants the Bank a
security interest (independent of the Bank's right of set-off) in its
deposit accounts at the Bank and in any other debt obligations of the
Bank to the Borrower.
CONDITIONS PRECEDENT
The Borrower must deliver to the Bank the documents described in Exhibit
A, properly executed and in form and content acceptable to the Bank,
prior to the Bank's initial advance or disbursement under this Agreement.
REPRESENTATIONS AND WARRANTIES
To induce the Bank to enter into this Agreement, the Borrower, to the
best of its knowledge and upon due inquiry, makes the representations and
warranties contained in Exhibit B. Each request for an advance or a
disbursement under this Agreement following the Effective Date
constitutes a reaffirmation of these representations and warranties.
COVENANTS
FINANCIAL INFORMATION AND REPORTING
Except as otherwise stated in this Agreement, all financial information
provided to the Bank shall be compiled using generally accepted
accounting principles consistently applied.
During the time period that credit is available under this Agreement, and
afterward until all amounts due under the Documents are paid in full,
unless the Bank shall otherwise agree in writing, the Borrower agrees to:
Annual Financial Statements. Provide the Bank within 90 days of the Borrower's
fiscal year end, the Borrower's annual financial statements. The
statements must be audited with an unqualified opinion by a certified
public accountant acceptable to the Bank.
Interim Financial Statements. Provide the Bank within 45 days of each fiscal
quarter end, the Borrower's interim financial statements for the interim
period then ending. The statements must be current through the end of
that period and must be certified as correct by an officer of the
Borrower in form acceptable to the Bank.
Compliance Certificate. Provide the Bank concurrently with the interim financial
statements required above, a Compliance Certificate in the form of
Exhibit C, that has been signed by an officer of the Borrower, which: 1)
certifies that the statements have been accurately prepared in accordance
with generally accepted accounting principles applied consistently with
the last annual financial statements provided by the Borrower; 2)
certifies that the officer has no knowledge of any event which has or
might, after the lapse of time or the giving of notice, or both,
constitute an event of default under this Agreement or any of the other
Documents; and 3) demonstrates that the Borrower remains in compliance
with all financial covenants that must be complied with as of the date of
the financial statements.
Projected Financial Statements. Provide the Bank within 90 days of the
Borrower's fiscal year end, a projected balance sheet, income statement,
and statement of cash flow for the upcoming fiscal year.
SEC Reporting. Provide the Bank within 90 days of filing with the Securities and
Exchange Commission, copies of its Form 10-K Annual Report, and within 45
days of each quarter end, copies of its Form 10-Q Quarterly Report.
Notices of Default. Provide the Bank prompt written notice of: 1) any event
which has or might, after the lapse of time or the giving of notice, or
both, constitute an event of default under any of this Agreement or any
of the other Documents; or 2) any future event that would cause the
representations and warranties contained in this Agreement to be untrue
when applied to the Borrower's circumstances as of the date of such
event.
Additional Information. Provide the Bank with such other information as it may
reasonably request, and permit the Bank to visit and inspect its
properties and examine its books and records.
FINANCIAL COVENANTS
During the time period that credit is available under this Agreement, and
afterward until all amounts due under the Documents are paid in full,
unless the Bank shall otherwise agree in writing, the Borrower agrees to
comply with the financial covenants described below, which shall be
calculated using generally accepted accounting principles consistently
applied, except as they may be otherwise modified by the following
capitalized definitions:
"Tangible Net Worth" means total assets less total liabilities and less
the following types of assets: (1) leasehold improvements; (2)
receivables and other investments in or amounts due from any shareholder,
director, officer, employee or other person or entity related to or
affiliated with the Borrower; (3) goodwill,
patents, copyrights, mailing lists, trade names, trademarks, servicing
rights, organizational and franchise costs, bond underwriting costs and
other like assets properly classified as intangible.
Tangible Net Worth. Maintain a minimum Tangible Net Worth of at least
$5,500,000.00 as of the end of each fiscal quarter through and including
June 30, 1998, and of at least $6,000,000.00 as of the end of the fiscal
year ending September 30, 1998 and the end of each fiscal quarter
thereafter.
Total Liabilities to Tangible Net Worth. Maintain a ratio of total liabilities
to Tangible Net Worth of less than 1.3 to 1.0 as of the end of each
fiscal quarter, through and including June 30, 1998, and of less than 1.3
to 1.0 as of the end of the fiscal year ending September 30, 1998, and
the end of each fiscal quarter thereafter.
Net Profit. Achieve a minimum pre-tax net profit of $750,000 as of September 30,
1997, and of $700,000.00 as of September 30, 1998.
OTHER COVENANTS
During the time period that credit is available under this Agreement, and
afterward until all amounts due under the Documents are paid in full,
unless the Bank shall otherwise agree in writing, the Borrower agrees to:
Additional Borrowings. Refrain from incurring any indebtedness except: 1) trade
credit incurred in the ordinary course of business; 2) indebtedness
expressly subordinated to the Bank in a writing acceptable to the Bank;
3) indebtedness in existence on the date of this Agreement and disclosed
in advance to the Bank in writing.
Other Liens, Assignments, and Subordinations. Refrain from allowing any security
interest or lien on property it owns now or in the future, except: 1)
liens, assignments, or subordinations in favor of the Bank; 2) liens,
assignments, or subordinations outstanding on the date of this Agreement
and disclosed in advance to the Bank in writing; 3) liens for taxes not
delinquent or which the Borrower is contesting in good faith.
Change of Ownership. Refrain from permitting or suffering any change, direct or
indirect, in its capital ownership in excess of 15%.
Change in Management. Refrain from permitting or suffering any material change
in its management personnel or management structure.
Nature of Business. Refrain from engaging in any line of business materially
different from that presently engaged in by the Borrower.
Guaranties. Refrain from assuming, guaranteeing, endorsing or otherwise becoming
contingently liable for any obligations of any other person, except for
those guaranties outstanding as of the Effective Date and disclosed to
the Bank in writing.
Sale of Assets. Refrain from selling or leasing during any fiscal year assets
with a cumulative value in excess of $200,000.00 other than sales of
inventory in the ordinary course of business.
Deposit Accounts. Maintain its principal deposit accounts with the Bank.
Form of Organization and Mergers. Refrain from changing its legal form of
organization, or consolidating, merging, pooling, syndicating or
otherwise combining with any other entity.
Maintenance of Properties. Make all repairs, renewals or replacements necessary
to keep its plant, properties and equipment in good working condition.
Books and Records. Maintain adequate books and records, refrain from making any
material changes in its accounting procedures for tax or other purposes,
and permit the Bank to inspect same upon reasonable notice.
Compliance with Laws. Comply in all material respects with all laws applicable
to its form of organization, business, and the ownership of its property.
Preservation of Rights. Maintain and preserve all permits, licenses, rights,
privileges, charters and franchises that it now owns.
These covenants were negotiated by the Bank and Borrower based on
information provided to the Bank by the Borrower. A breach of a covenant
is an indication that the risk of the transaction has increased. As
consideration for any waiver or modification of these covenants, the Bank
may require: additional collateral, guaranties or other credit support;
higher fees or interest rates; and possible modifications to the
Documents and the monitoring of the Agreement. The waiver or modification
of any covenant that has been violated by the Borrower shall be made at
the sole discretion of the Bank. These options do not limit the Bank's
right to exercise its rights under Section 8 of this Agreement.
EVENTS OF DEFAULT AND REMEDIES
DEFAULT
The Line is a conditional line of credit, which means that the Bank is
not obligated to make advances under the Line even if the Borrower is in
compliance with the terms of this Agreement, and the Revolving Note
evidencing borrowings under the Line shall be payable by the Borrower
upon DEMAND by the Bank.
Despite this reservation of rights, upon the occurrence of any one or
more of the following events of default, or at any time afterward unless
the default has been cured, the Bank may declare the Line to be
terminated and in its discretion accelerate and declare the unpaid
principal, accrued interest and all other amounts payable under the
Revolving Note and the Documents to be immediately due and payable:
Failure by the Borrower to make any payment of principal or interest due under
any one of the Revolving Note or any Standby Letter of Credit Agreement
or Documentary Letter of Credit Agreement which continues for 10 days
after its due date, or failure to make the mandatory payment required
under Section 1.4 of this Agreement.
Default by the Borrower in the observance or performance of any covenant or
agreement contained in this Agreement, and continuance for more than 15
days.
Default by the Borrower in the observance or performance of any covenant or
agreement contained in any of the Documents (excepting defaults under
this Agreement, which are addressed in the preceeding subsection), after
giving effect to any grace period agreed to in any such Documents, if
applicable.
Default by the Borrower with respect to any indebtedness or obligation owed to
the Bank, which is unrelated to any loan or facility subject to the terms
of this Agreement, or to any third party creditor, which would allow the
maturity of any such indebtedness or obligation to be accelerated.
Failure by the Borrower to obtain a release of the security interest of Mep
▇▇▇▇▇▇▇▇▇▇ in all company assets on January 15, 1998 following repayment
of the $766,000.00 promissory note dated May 28, 1997.
Any representation or warranty made by the Borrower to the Bank in this
Agreement, or in any financial statement or report submitted to the Bank
by or on behalf of the Borrower is untrue or misleading in any material
respect.
A garnishment, levy or writ of attachment, or any local, state, or federal
notice of tax lien or levy is made or issues against the Borrower, or any
post judgment process or procedure is commenced or any supplementary
remedy for the enforcement of a judgment is employed against the Borrower
or the Borrower's property.
A material adverse change occurs in the Borrower's financial condition or
ability to repay its obligations to the Bank.
IMMEDIATE DEFAULT
If, with or without the Borrower's consent, a custodian, trustee or
receiver is appointed for any of the Borrower's properties, or if a
petition is filed by or against the Borrower under the United States
Bankruptcy Code, or the Borrower is dissolved, liquidated, or winds up
its business then each revolving facility documented in this Agreement
shall immediately terminate without notice, and the unpaid principal,
accrued interest, and all other amounts payable under the Revolving Note
and the Documents shall become immediately due and payable without notice
or demand.
SUPPLEMENTARY CROSS DEFAULT OF OTHER PROMISSORY NOTES
The Borrower agrees that each promissory note evidencing indebtedness of the
Borrower to the Bank which is not otherwise documented in this Agreement,
and regardless of whether delivered before or after the Effective Date,
shall hereby be amended on a supplementary basis to provide that each
such promissory note may be accelerated by the Bank in its discretion
following the occurrence of any event of default agreed to in Section
8.1, or shall be accelerated and become immediately due and payable
without notice by the Bank following the occurrence of any event of
default agreed to in Section 8.2, which events of default and rights of
acceleration are in addition to, and not exclusive of, any events of
default and rights of acceleration agreed to in the promissory note
itself.
MISCELLANEOUS.
No Waiver; Cumulative Remedies. No failure or delay by the Bank in exercising
any rights under this Agreement shall be deemed a waiver of those rights.
The remedies provided for in the Agreement are cumulative and not
exclusive of any remedies provided by law.
Amendments or Modifications. Any amendment or modification of this Agreement
must be in writing and signed by the Bank and Borrower. Any waiver of any
provision in this Agreement must be in writing and signed by the Bank.
Binding Effect: Assignment. This Agreement and the Documents are binding on the
successors and assigns of the Borrower and Bank. The Borrower may not
assign its rights under this Agreement and the Documents without the
Bank's prior written consent. The Bank may sell participations in or
assign this Agreement and the Documents and exchange financial
information about the Borrower with actual or potential participants or
assignees.
Minnesota Law. This Agreement and the Documents shall be governed by the
substantive laws of the State of Minnesota.
Severability of Provisions. If any part of this Agreement or the Documents are
unenforceable, the rest of this Agreement or the Documents may still be
enforced.
Integration. This Agreement and the Documents describes the entire understanding
and agreement of the parties and supersedes all prior agreements between
the Bank and the Borrower relating to each credit facility subject to
this Agreement, whether verbal or in writing.
Address for notices to Bank: Address for notices to Borrower:
Norwest Bank Minnesota, Research, Incorporated
National Association 6425 Flying Cloud Drive
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▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Attention: ▇▇▇▇ Van Metre President
Vice President
NORWEST BANK MINNESOTA, RESEARCH, INCORPORATED
NATIONAL ASSOCIATION
BY: /S/ ▇▇▇▇▇▇▇ ▇. VAN METRE BY: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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ITS VICE PRESIDENT ITS PRESIDENT AND CEO
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BY: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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ITS TREASURER
EXHIBIT A
CONDITIONS PRECEDENT AND SECURITY
PLEASE NOTE: This Exhibit describes the Note or Notes, and all Security
Documents, Authorizations, Organizational Documents, and all other miscellaneous
documents, reports, certificates and other information required as a condition
to each advance or disbursement under the Agreement, whether or not they have
previously been delivered to the Bank.
Each Security Document described below must continue in full force and effect at
all times in accordance with its terms during the time period that credit is
available under this Agreement, and afterward until all amounts due under the
Documents are paid in full. The failure of any Security Document to meet these
requirements may result in an event of default under the Agreement and the
acceleration of all of the Borrower's obligations to the Bank evidenced by the
Documents.
NOTES
The Revolving Note
AUTHORIZATION
Certificate of Authority of Borrower. A Certificate of Authority executed by
such person or persons authorized by the Borrower's organizational documents
and/or agreements to do so, certifying the incumbency and signatures of the
officers or other persons authorized to execute the Documents, and authorizing
the execution of the Documents and performance in accordance with their terms.
ORGANIZATION
Articles of Incorporation and By-Laws. A recently certified copy of the
Borrower's Articles of Incorporation and By-laws, and any amendments, if
applicable.
Certificate of Good Standing. A recently certified copy of the Borrower's
Certificate of Good Standing.
OTHER
Arbitration Agreement. The Bank's standard form of Arbitration Agreement signed
by the Bank and Borrower, subjecting potential controversies between them to
binding arbitration, including but not limited to those relating to the
Documents and this Agreement.
EXHIBIT B
REPRESENTATIONS AND WARRANTIES
Organizational Status. The Borrower is a Corporation duly formed and in good
standing under the laws of the State of Minnesota.
Authorization. This Agreement, and the execution and delivery of the Documents,
is within the Borrower's powers, has been duly authorized and does not conflict
with any of the Borrower's organizational documents or any other agreement by
which the Borrower is bound, and has been signed by all persons authorized and
required to do so under its organizational documents.
Financial Reports. The Borrower has provided the Bank with the Borrower's annual
audited financial statement dated September 30, 1996 and its interim financial
statement dated August 31, 1997, and these statements fairly represent the
financial condition of the Borrower as of their respective dates and were
prepared in accordance with generally accepted accounting principals
consistently applied.
Litigation. There is no litigation or governmental proceeding pending or
threatened against the Borrower which could have a material adverse effect on
the Borrower's financial condition or business.
Taxes. The Borrower has paid when due all federal, state and local taxes.
No Default. There is no event which is, or with notice or the lapse of time
would be, an event of default under this Agreement.
ERISA. The Borrower is in compliance in all material respects with the Employee
Retirement Income Security Act of 1974 and has received no notice to the
contrary from the Pension Benefit Guaranty Corporation or any related
governmental entity.
Environmental Matters. 1) The Borrower is in compliance in all material respects
with all health and environmental laws applicable to the Borrower and its
operations and knows of no conditions or circumstances that could interfere with
such compliance in the future; 2) the Borrower has obtained all environmental
permits and approvals required by law for the operation of its business; and 3)
the Borrower has not identified any "recognized environmental conditions", as
that term is defined by the American Society for Testing and Materials in its
standards for environmental due diligence, which could subject the Borrower to
enforcement action if brought to the attention of appropriate governmental
authorities.