Loan and Security Agreement
by and between
CONGRESS FINANCIAL CORPORATION (Florida),
as Lender
and
PERMA-FIX ENVIRONMENTAL SERVICES, INC.,
and the direct and indirect subsidiaries
named on the signature pages hereof,
jointly and severally,
as Borrowers
Dated: As of January 15, 1998
TABLE OF CONTENTS
_________________
Page
____
SECTION 1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . 1
SECTION 2. CREDIT FACILITIES. . . . . . . . . . . . . . . . . 8
2.1 Revolving Loans . . . . . . . . . . . . . . . . . 8
2.2 Intentionally Deleted . . . . . . . . . . . . . . 9
2.3 Term Loan . . . . . . . . . . . . . . . . . . . . 9
2.4 Availability Reserves . . . . . . . . . . . . . . 9
SECTION 3. INTEREST AND FEES. . . . . . . . . . . . . . . . .10
3.1 Interest. . . . . . . . . . . . . . . . . . . . .10
3.2 Closing Fee . . . . . . . . . . . . . . . . . . .11
3.3 Intentionally Deleted . . . . . . . . . . . . . .11
3.4 Servicing Fee . . . . . . . . . . . . . . . . . .11
3.5 Unused Line Fee . . . . . . . . . . . . . . . . .11
SECTION 4. CONDITIONS PRECEDENT . . . . . . . . . . . . . . .11
4.1 Conditions Precedent to Initial Loans . . . . . .11
4.2 Conditions Precedent to All Loans . . . . . . . .13
SECTION 5. GRANT OF SECURITY INTEREST . . . . . . . . . . . .13
SECTION 6. COLLECTION AND ADMINISTRATION. . . . . . . . . . .14
6.1 Borrowers' Loan Account . . . . . . . . . . . . .14
6.2 Statements. . . . . . . . . . . . . . . . . . . .14
6.3 Collection of Accounts. . . . . . . . . . . . . .15
6.4 Payments. . . . . . . . . . . . . . . . . . . . .16
6.5 Authorization to Make Loans . . . . . . . . . . .16
6.6 Use of Proceeds . . . . . . . . . . . . . . . . .17
SECTION 7 COLLATERAL REPORTING AND COVENANTS . . . . . . . .17
7.1 Collateral Reporting. . . . . . . . . . . . . . .17
7.2 Accounts Covenants. . . . . . . . . . . . . . . .17
7.3 Inventory Covenants . . . . . . . . . . . . . . .19
7.4 Equipment Covenants . . . . . . . . . . . . . . .19
7.5 Power of Attorney . . . . . . . . . . . . . . . .20
7.6 Right to Cure . . . . . . . . . . . . . . . . . .20
7.7 Access to Premises. . . . . . . . . . . . . . . .21
SECTION 8. REPRESENTATIONS AND WARRANTIES . . . . . . . . . .21
8.1 Corporate Existence, Power and Authority;
Subsidiaries. . . . . . . . . . . . . . . . . .21
8.2 Financial Statements; No Material Adverse
Change. . . . . . . . . . . . . . . . . . . . .22
8.3 Chief Executive Office; Collateral Locations . . .22
8.4 Priority of Liens; Title to Properties . . . . . .22
8.5 Tax Returns. . . . . . . . . . . . . . . . . . . .22
8.6 Litigation . . . . . . . . . . . . . . . . . . . .23
8.7 Compliance with Other Agreements and Applicable
Laws. . . . . . . . . . . . . . . . . . . . . .23
8.8 Bank Accounts. . . . . . . . . . . . . . . . . . .23
8.9 Accuracy and Completeness of Information . . . . .24
8.10 Survival of Warranties; Cumulative . . . . . . . .25
SECTION 9 AFFIRMATIVE AND NEGATIVE COVENANTS . . . . . . . .25
9.1 Maintenance of Existence . . . . . . . . . . . . .25
9.2 New Collateral Locations . . . . . . . . . . . . .25
9.3 Compliance with Laws, Regulations, Etc.. . . . . .25
9.4 Payment of Taxes and Claims. . . . . . . . . . . .27
9.5 Insurance. . . . . . . . . . . . . . . . . . . . .27
9.6 Financial Statements and Other Information . . . .28
9.7 Sale of Assets, Consolidation, Merger,
Dissolution, Etc. . . . . . . . . . . . . . . .29
9.8 Encumbrances. . . . . . . . . . . . . . . . . . .29
9.9 Indebtedness. . . . . . . . . . . . . . . . . . .30
9.10 Loans, Investments, Guarantees, Etc.. . . . . . .31
9.11 Dividends and Redemptions . . . . . . . . . . . .31
9.12 Transactions with Affiliates. . . . . . . . . . .31
9.13 Additional Bank Accounts. . . . . . . . . . . . .32
9.14 Working Capital . . . . . . . . . . . . . . . . .32
9.15 Adjusted Net Worth. . . . . . . . . . . . . . . .32
9.16 Costs and Expenses. . . . . . . . . . . . . . . .32
9.17 Further Assurances. . . . . . . . . . . . . . . .33
SECTION 10. EVENTS OF DEFAULT AND REMEDIES. . . . . . . . . .33
10.1 Events of Default . . . . . . . . . . . . . . . .33
10.2 Remedies. . . . . . . . . . . . . . . . . . . . .35
SECTION 11. JURY TRIAL WAIVER, OTHER WAIVERS AND CONSENTS,
GOVERNING LAW. . . . . . . . . . . . . . . . . . .36
11.1 Governing Law, Choice of Forum, Service of
Process, Jury Trial Waiver. . . . . . . . . . .36
11.2 Waiver of Notices. . . . . . . . . . . . . . . . .38
11.3 Amendments and Waivers . . . . . . . . . . . . . .38
11.4 Waiver of Counterclaims. . . . . . . . . . . . . .38
11.5 Indemnification. . . . . . . . . . . . . . . . . .38
SECTION 12. TERM OF AGREEMENT, MISCELLANEOUS . . . . . . . . .39
12.1 Term . . . . . . . . . . . . . . . . . . . . . . .39
12.2 Notices. . . . . . . . . . . . . . . . . . . . . .40
12.3 Partial Invalidity . . . . . . . . . . . . . . . .40
12.4 Successors . . . . . . . . . . . . . . . . . . . .41
12.5 Entire Agreement . . . . . . . . . . . . . . . . .41
ii
INDEX TO
EXHIBITS AND SCHEDULES
______________________
Exhibit A Information Certificate
Composite Exhibit B Real Property Descriptions (Mortgages)
Composite Exhibit C Other Real Property Descriptions
(Negative Pledge Agreements)
Schedule 5.2 Licenses and Permits
Schedule 8.4 Existing Liens
Schedule 8.8 Bank Accounts
Schedule 8.9 Environmental Matters
Schedule 9.9 Existing Indebtedness
Schedule 9.10 Existing Loans, Advances and Guarantees
Schedule 9.11 Dividends
iii
LOAN AND SECURITY AGREEMENT
___________________________
This Loan and Security Agreement dated as of January 15, 1998
is entered into by and between CONGRESS FINANCIAL CORPORATION
(Florida), a Florida corporation ("Lender"), and PERMA-FIX
ENVIRONMENTAL SERVICES, INC., and its direct and indirect
subsidiaries named on the signature pages hereof, jointly and
severally (the "Borrowers"; all references to Borrowers as used
herein shall mean each Borrower and all of the Borrowers,
individually and collectively, jointly and severally).
W I T N E S S E T H:
_ _ _ _ _ _ _ _ _ _
WHEREAS, Borrowers have requested that Lender enter into
certain financing arrangements with Borrowers pursuant to which
Lender may make loans and provide other financial accommodations
to Borrowers; and
WHEREAS, Lender is willing to make such loans and provide
such financial accommodations on the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS
___________
All terms used herein which are defined in Article 1 or
Article 9 of the Uniform Commercial Code shall have the meanings
given therein unless otherwise defined in this Agreement. All
references to the plural herein shall also mean the singular and
to the singular shall also mean the plural unless the context
otherwise requires. All references to Borrowers and Lender
pursuant to the definitions set forth in the recitals hereto, or
to any other person herein, shall include their respective
successors and assigns. The words "hereof", "herein",
"hereunder", "this Agreement" and words of similar import when
used in this Agreement shall refer to this Agreement as a whole
and not any particular provision of this Agreement and as this
Agreement now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced. The word
"including" when used in this Agreement shall mean "including,
without limitation". An Event of Default shall exist or continue
or be continuing until such Event of Default is waived in
accordance with Section 11.3 or is cured in a manner satisfactory
to Lender, if such Event of Default is capable of being cured as
determined by Lender. Any accounting term used herein unless
otherwise defined in this Agreement shall have the meanings
customarily given to such term in accordance with GAAP. For
purposes of this Agreement, the following terms shall have the
respective meanings given to them below:
SECTION 1.1 "Accounts" shall mean all present and future rights of
each Borrower to payment for goods sold or leased or for services
rendered, which are not evidenced by instruments or chattel paper,
and whether or not earned by performance.
SECTION 1.2 "Adjusted Net Worth" shall mean as to any Person, at any
time, in accordance with GAAP (except as otherwise specifically
set forth below), on a consolidated basis for such Person and its
subsidiaries (if any), the amount equal to: (a) the difference
between: (i) the difference between (A) the aggregate net book
value of all assets of such Person and its subsidiaries,
calculating the book value of inventory for this purpose on a
first-in-first-out basis, after deducting from such book values
all appropriate reserves in accordance with GAAP (including all
reserves for doubtful receivables, obsolescence, depreciation and
amortization), and (B) the aggregate amount of all such assets
included as capitalized research and development costs,
capitalized interest or financing costs, net leasehold
improvements, debt discount, good-will, patents, trademarks,
copyrights, franchises, prepaid expenses and such other assets
classified as "intangible assets", and amounts due from affiliated
Persons; and (ii) the aggregate amount of the indebtedness and
other liabilities of such Person and its subsidiaries (including
tax and other proper accruals) plus (b) indebtedness of such
Person and its subsidiaries which is subordinated in right of
payment to the full and final payment of all of the Obligations on
terms and conditions acceptable to Lender.
SECTION 1.3 "Availability Reserves" shall mean, as of any date of
determination, such amounts as Lender may from time to time
establish and revise in good faith reducing the amount of
Revolving Loans which would otherwise be available to Borrowers
under the lending formula(s) provided for herein: (a) to reflect
events, conditions, contingencies or risks which, as determined by
Lender in good faith, do or may affect either (i) the Collateral
or any other property which is security for the Obligations or its
value, (ii) the assets, business or prospects of a Borrower or any
Obligor or (iii) the security interests and other rights of Lender
in the Collateral (including the enforceability, perfection and
priority thereof) or (b) to reflect Lender's good faith belief
that any collateral report or financial information furnished by
or on behalf of a Borrower or any Obligor to Lender is or may have
been incomplete, inaccurate or misleading in any material respect
or (c) in respect of any state of facts which Lender determines in
good faith constitutes an Event of Default or may, with notice or
passage of time or both, constitute an Event of Default.
SECTION 1.4 "Blocked Accounts" shall have the meaning set forth in
Section 6.3 hereof.
SECTION 1.5 "Collateral" shall have the meaning set forth in
Section 5 hereof.
SECTION 1.6 "Eligible Accounts" shall mean Accounts created by each
Borrower which are and continue to be acceptable to Lender based
on the criteria set forth below. In general, Accounts shall be
Eligible Accounts if:
(a) such Accounts arise from the actual and bona
fide sale and delivery of goods by a Borrower or rendition of
services by a Borrower in the ordinary course of its business
which transactions are completed in accordance with the terms and
provisions contained in any documents related thereto;
2
(b) such Accounts are not unpaid more than
ninety (90) days after the date of the original invoice for them;
(c) such Accounts comply with the terms and
conditions contained in Section 7.2(c) of this Agreement;
(d) such Accounts do not arise from sales on
consignment, guaranteed sale, sale and return, sale on approval,
or other terms under which payment by the account debtor may be
conditional or contingent;
(e) the chief executive office of the account
debtor with respect to such Accounts is located in the United
States of America, or, at Lender's option, if either: (i) the
account debtor has delivered to the applicable Borrower an
irrevocable letter of credit issued or confirmed by a bank
satisfactory to Lender and payable only in the United States of
America and in U.S. dollars, sufficient to cover such Account, in
form and substance satisfactory to Lender and, if required by
Lender, the original of such letter of credit has been delivered
to Lender or Lender's agent and the issuer thereof notified of the
assignment of the proceeds of such letter of credit to Lender, or
(ii) such Account is subject to credit insurance payable to Lender
issued by an insurer and on terms and in an amount acceptable to
Lender, or (iii) such Account is otherwise acceptable in all
respects to Lender (subject to such lending formula with respect
thereto as Lender may determine);
(f) such Accounts do not consist of progress
▇▇▇▇▇▇▇▇ except for ▇▇▇▇▇▇▇▇ for work theretofore performed under
short term contracts entered into in the ordinary course of
business of Borrowers, ▇▇▇▇ and hold invoices or retainage
invoices, except as to ▇▇▇▇ and hold invoices, if Lender shall
have received an agreement in writing from the account debtor, in
form and substance satisfactory to Lender, confirming the
unconditional obligation of the account debtor to take the goods
related thereto and pay such invoice;
(g) the account debtor with respect to such
Accounts has not asserted a counterclaim, defense or dispute and
does not have, and does not engage in transactions which may give
rise to, any right of setoff against such Accounts (but the
portion of the Accounts of such account debtor in excess of the
amount at any time and from time to time owed by Borrowers to such
account debtor or claimed owed by such account debtor may be
deemed Eligible Accounts);
(h) there are no facts, events or occurrences
which would in Lender's judgment materially impair the validity,
enforceability or collectability of such Accounts or reduce the
amount payable or delay payment thereunder;
(i) such Accounts are subject to the first
priority, valid and perfected security interest of Lender and any
goods giving rise thereto are not, and were not at the time of the
sale thereof, subject to any liens except those permitted in this
Agreement;
3
(j) neither the account debtor nor any officer or
employee of the account debtor with respect to such Accounts is an
officer, employee or agent of or affiliated with any Borrower
directly or indirectly by virtue of family membership, ownership,
control, management or otherwise;
(k) the account debtors with respect to such
Accounts are not any foreign government, the United States of
America, any State, political subdivision, department, agency or
instrumentality thereof, unless, if the account debtor is the
United States of America, any State, political subdivision,
department, agency or instrumentality thereof, upon Lender's
request, the Federal Assignment of Claims Act of 1940, as amended
or any similar State or local law, if applicable, has been
complied with in a manner satisfactory to Lender;
(l) there are no proceedings or actions which are
threatened or pending against the account debtors with respect to
such Accounts which might result in any material adverse change in
any such account debtor's financial condition;
(m) such Accounts of a single account debtor or
its affiliates do not constitute more than twenty-five (25%)
percent of all otherwise Eligible Accounts (but the portion of the
Accounts not in excess of such percentage may be deemed Eligible
Accounts);
(n) such Accounts are not owed by an account
debtor who has Accounts unpaid more than ninety (90) days after
the date of the original invoice for them which constitute more
than fifty (50%) percent of the total Accounts of such account
debtor;
(o) such Accounts are owed by account debtors
whose total indebtedness to Borrowers, or any of them, does not
exceed the credit limit with respect to such account debtors as
determined by Lender from time to time (but the portion of the
Accounts not in excess of such credit limit may be deemed Eligible
Accounts); and
(p) such Accounts are owed by account debtors
deemed creditworthy at all times by Lender, as determined by
Lender.
General criteria for Eligible Accounts may be established and
revised from time to time by Lender in good faith. Any Accounts
which are not Eligible Accounts shall nevertheless be part of the
Collateral.
SECTION 1.7 "Environmental Laws" shall mean all foreign, Federal,
State and local laws (including common law), legislation, rules,
codes, licenses, permits (including any conditions imposed
therein), authorizations, judicial or administrative decisions,
injunctions or agreements between Borrowers, or any of them, and
any governmental authority, (a) relating to pollution and the
protection, preservation or restoration of the environment
(including air, water vapor, surface water, ground water, drinking
water, drinking water supply, surface land, subsurface land, plant
and animal life or any other natural resource), or to human health
or safety, (b) relating to the exposure to, or the use, storage,
recycling, treatment, generation, manufacture, processing,
4
distribution, transportation, handling, labeling, production,
release or disposal, or threatened release, of Hazardous
Materials, or (c) relating to all laws with regard to
recordkeeping, notification, disclosure and reporting requirements
respecting Hazardous Materials. The term "Environmental Laws"
includes (i) the Federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Federal Superfund
Amendments and Reauthorization Act, the Federal Water Pollution
Control Act of 1972, the Federal Clean Water Act, the Federal
Clean Air Act, the Federal Resource Conservation and Recovery Act
of 1976 (including the Hazardous and Solid Waste Amendments
thereto), the Federal Solid Waste Disposal and the Federal Toxic
Substances Control Act, the Federal Insecticide, Fungicide and
Rodenticide Act, and the Federal Safe Drinking Water Act of 1974,
(ii) applicable state counterparts to such laws, and (iii) any
common law or equitable doctrine that may impose liability or
obligations for injuries or damages due to, or threatened as a
result of, the presence of or exposure to any Hazardous Materials.
SECTION 1.8 "Equipment" shall mean all of each Borrower's now owned
and hereafter acquired equipment, machinery, computers and
computer hardware and software (whether owned or licensed),
vehicles, tools, furniture, fixtures, all attachments, accessions
and property now or hereafter affixed thereto or used in
connection therewith, and substitutions and replacements thereof,
wherever located.
SECTION 1.9 "Event of Default" shall mean the occurrence or
existence of any event or condition described in Section 10.1
hereof.
SECTION 1.10 "Excess Availability" shall mean the amount, as
determined by Lender, calculated at any time, equal to: (d) the
lesser of: (iv) the amount of the Revolving Loans available to
Borrowers as of such time based on the applicable lending formulas
multiplied by the Net Amount of Eligible Accounts, as determined
by Lender, and subject to the sublimits and Availability Reserves
from time to time established by Lender hereunder, and (v) the
Maximum Credit (less the then outstanding principal amount of the
Term Loan), minus (e) the sum of: (i) the amount of all then
outstanding and unpaid Obligations (but not including for this
purpose the then outstanding principal amount of the Term Loan),
plus (ii) the aggregate amount of all then outstanding and unpaid
trade payables of Borrower which are more than ninety (90) days
past due as of such time, plus (iii) the amount of checks issued
by Borrower to pay trade payables, but not yet sent and the book
overdraft of Borrower.
SECTION 1.11 "Existing Unencumbered Real Property" shall mean all
Real Property of any Borrower not subject of the Mortgages,
including the Real Property described on Composite Exhibit "C" to
this Agreement owned by Perma-Fix of Memphis, Inc., and Perma-Fix
of Ft. Lauderdale, Inc. and Perma-Fix Treatment Services, Inc. and
located in Tulsa, Oklahoma, respectively, but excluding the Real
Property located at ▇▇▇▇▇▇ Street in Memphis, Tennessee owned by
Perma-Fix of Memphis, Inc. (the "▇▇▇▇▇▇ Street Property").
SECTION 1.12 "Expiration Date" shall have the meaning set forth in
Section 12.1(a).
5
SECTION 1.13 "Financed Equipment" shall mean the Equipment subject of
the MB Appraisal, all accessions thereto, all replacements,
substitutions therefor, and all proceeds thereof, including
proceeds of insurance.
SECTION 1.14 "Financing Agreements" shall mean, collectively, this
Agreement and all notes, guarantees, security agreements and other
agreements, documents and instruments now or at any time hereafter
executed and/or delivered by Borrowers or any Obligor in
connection with this Agreement, as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced and the Mortgages.
SECTION 1.15 "GAAP" shall mean generally accepted accounting
principles in the United States of America as in effect from time
to time as set forth in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of
Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board which are applicable
to the circumstances as of the date of determination consistently
applied, except that, for purposes of Sections 9.14 and 9.15
hereof, GAAP shall be determined on the basis of such principles
in effect on the date hereof and consistent with those used in the
preparation of the audited financial statements delivered to
Lender prior to the date hereof.
SECTION 1.16 "Hazardous Materials" shall mean any hazardous, toxic or
dangerous substances, materials and wastes, including hydrocarbons
(including naturally occurring or man-made petroleum and
hydrocarbons), flammable explosives, asbestos, urea formaldehyde
insulation, radioactive materials, biological substances,
polychlorinated biphenyls, pesticides, herbicides and any other
kind and/or type of pollutants or contaminants (including
materials which include hazardous constituents), sewage, sludge,
industrial slag, solvents and/or any other similar substances,
materials, or wastes and including any other substances, materials
or wastes that are or become regulated under any Environmental Law
(including any that are or become classified as hazardous or toxic
under any Environmental Law).
SECTION 1.17 "Information Certificate" shall mean the Information
Certificate of each Borrower constituting Exhibit A hereto
containing material information with respect to the applicable
Borrower, its business and assets, provided by or on behalf of
Borrowers to Lender in connection with the preparation of this
Agreement and the other Financing Agreements and the financing
arrangements provided for herein.
SECTION 1.18 "Inventory" shall mean all of each Borrower's now owned
and hereafter existing or acquired raw materials, work in process,
finished goods and all other inventory of whatsoever kind or
nature, wherever located.
SECTION 1.19 "Loans" shall mean the Revolving Loans and the Term
Loan.
SECTION 1.20 "Maximum Credit" shall mean, on any date of
determination by Lender, the amount of $4,500,000, plus the then
outstanding principal balance of the Term Loan.
6
SECTION 1.21 "MB Appraisal" shall mean that certain appraisal
conducted by MB Valuation Services, Inc. dated October 23, 1997 of
the auction value of the Equipment of the Borrowers, or certain of
them, described in such appraisal.
SECTION 1.22 "Mortgages" shall mean, individually and collectively,
each of the following (as the same now exist or may hereafter be
amended, modified, supplemented, extended, renewed, restated or
replaced): (a) the Mortgage, Assignment of Rents and Security
Agreement, dated of even date herewith, by Perma-Fix of Florida,
Inc. in favor of Lender with respect to the Real Property and the
related assets of Perma-Fix of Florida, Inc. located in Alachua
County, Florida, more fully described on Composite Exhibit "B" to
this Agreement, and (b) the Mortgage, Assignment of Rents and
Security Agreement, dated of even date herewith, by Perma-Fix of
Dayton, Inc. in favor of Lender with respect to the Real Property
and related assets of Perma-Fix of Dayton, Inc. located in
▇▇▇▇▇▇▇▇▇▇ County, Ohio more fully described on Composite Exhibit
"B" to this Agreement.
SECTION 1.23 "Net Amount of Eligible Accounts" shall mean the gross
amount of Eligible Accounts less (a) sales, excise or similar
taxes included in the amount thereof and (b) returns, discounts,
claims, credits and allowances of any nature at any time issued,
owing, granted, outstanding, available or claimed with respect
thereto.
SECTION 1.24 "Obligations" shall mean any and all Revolving Loans,
the Term Loan, and all other obligations, liabilities and
indebtedness of every kind, nature and description owing by
Borrowers, or any of them to Lender and/or its affiliates,
including principal, interest, charges, fees, costs and expenses,
however evidenced, whether as principal, surety, endorser,
guarantor or otherwise, whether arising under this Agreement or
otherwise, whether now existing or hereafter arising, whether
arising before, during or after the initial or any renewal term of
this Agreement or after the commencement of any case with respect
to the Borrowers, or any of them, under the United States
Bankruptcy Code or any similar statute (including the payment of
interest and other amounts which would accrue and become due but
for the commencement of such case, whether or not such amounts are
allowed or allowable in whole or in part in such case), whether
direct or indirect, absolute or contingent, joint or several, due
or not due, primary or secondary, liquidated or unliquidated,
secured or unsecured, and however acquired by Lender.
SECTION 1.25 "Obligor" shall mean any guarantor, endorser, acceptor,
surety or other person liable on or with respect to the
Obligations or who is the owner of any property which is security
for the Obligations, other than Borrowers. As of the date of this
Agreement there are no Obligors.
SECTION 1.26 "Payment Account" shall have the meaning set forth in
Section 6.3 hereof.
SECTION 1.27 "Person" or "person" shall mean any individual, sole
proprietorship, partnership, corporation (including any
corporation which elects subchapter S status under the Internal
Revenue Code of 1986, as amended), limited liability company,
7
limited liability partnership, business trust, unincorporated
association, joint stock corporation, trust, joint venture or
other entity or any government or any agency or instrumentality or
political subdivision thereof.
SECTION 1.28 "Permanent Availability Reserve" shall have the meaning
set forth in Section 2.4.
SECTION 1.29 "Prime Rate" shall mean the rate from time to time
publicly announced by CoreStates Bank, N.A., or its successors, at
its office in Philadelphia, Pennsylvania, as its prime rate,
whether or not such announced rate is the best rate available at
such bank.
SECTION 1.30 "Real Property" shall mean all now owned and hereafter
acquired real property of Borrowers, including, without
limitation, the real properties respectively owned by Perma-Fix of
Florida, Inc. and Perma-Fix of Dayton, Inc., including leasehold
interests, together with all buildings, structures, and other
improvements located thereon and all licenses, easements and
appurtenances relating thereto, wherever located, including the
real property and related assets more particularly described in
the respective Mortgages.
SECTION 1.31 "Records" shall mean all of each Borrower's present and
future books of account of every kind or nature, purchase and sale
agreements, invoices, ledger cards, bills of lading and other
shipping evidence, statements, correspondence, memoranda, credit
files and other data relating to the Collateral or any account
debtor, together with the tapes, disks, diskettes and other data
and software storage media and devices, file cabinets or
containers in or on which the foregoing are stored (including any
rights of each Borrower with respect to the foregoing maintained
with or by any other person).
SECTION 1.32 "Revolving Loans" shall mean the loans now or hereafter
made by Lender to or for the benefit of Borrowers on a revolving
basis (involving advances, repayments and readvances) as set forth
in Section 2.1 hereof.
SECTION 1.33 "Term Loan" shall mean the term loan made by Lender to
Borrowers as provided for in Section 2.3 hereof.
SECTION 1.34 "Term Loan Amount" shall have the meaning set forth in
Section 2.3 of this Agreement.
SECTION 2. CREDIT FACILITIES
_________________
Section 2.1 Revolving Loans.
(a) Subject to and upon the terms and conditions
contained herein, Lender agrees to make Revolving Loans to
Borrowers, jointly and severally, from time to time in amounts
requested by Borrowers up to the amount equal to the sum of:
8
(i) eighty percent (80%) of the Net Amount of Eligible
Accounts,
less
____
(ii) any Availability Reserves.
(b) Lender may, in its discretion, from time to
time, upon not less than five (5) days prior notice to the
Borrowers, (i) reduce the lending formula with respect to Eligible
Accounts to the extent that Lender determines in good faith that:
(A) the dilution with respect to the Accounts for any period
(based on the ratio of (1) the aggregate amount of reductions in
Accounts other than as a result of payments in cash to (2) the
aggregate amount of total sales) has increased in any material
respect or may be reasonably anticipated to increase in any
material respect above historical levels, or (B) the general
creditworthiness determined with respect to the Borrowers' account
debtors collectively has declined. In determining whether to
reduce the lending formula(s), Lender may consider events,
conditions, contingencies or risks which are also considered in
determining Eligible Accounts or in establishing Availability
Reserves.
(c) Except in Lender's discretion, the aggregate
amount of the Loans outstanding at any time shall not exceed the
Maximum Credit and the amount of the Revolving Loans shall not
exceed $4,500,000 at any time outstanding. In the event that the
outstanding amount of any component of the Loans, or the aggregate
amount of the outstanding Loans exceed the amounts available under
the lending formulas or the Maximum Credit or the aforesaid
limitation on Revolving Loans outstanding at any time, as
applicable, such event shall not limit, waive or otherwise affect
any rights of Lender in that circumstance or on any future
occasions and Borrowers shall, upon demand by Lender, which may be
made at any time or from time to time, immediately repay to Lender
the entire amount of any such excess(es) for which payment is
demanded.
Section 2.2 Intentionally Deleted.
Section 2.3 Term Loan. Lender is making a Term Loan to Borrowers in
the original principal amount of the lesser of $2,500,000 or
eighty percent (80%) of the auction value of the Financed
Equipment, as determined by Lender based on the MB Appraisal (such
lesser original principal amount of the Term Loan is referred to
as the "Term Loan Amount"). The Term Loan is (a) evidenced by a
Term Promissory Note in such original principal amount duly
executed and delivered by Borrowers to Lender concurrently
herewith; (b) to be repaid, together with interest and other
amounts, in accordance with this Agreement, the Term Promissory
Note, and the other Financing Agreements and (c) secured by all of
the Collateral.
SECTION 2.4 Availability Reserves. All Revolving Loans otherwise
available to Borrowers pursuant to the lending formulas and
subject to the Maximum Credit and other applicable limits
hereunder shall be subject to Lender's continuing right to
establish and revise Availability Reserves. Without limiting the
generality of the foregoing, the Borrowers acknowledge and agree
that (a) from and after the date of this Agreement until all
Obligations are paid and this Agreement has been terminated, the
Lender is imposing at all times an Availability Reserve in the
9
amount of $125,000 (the "Permanent Availability Reserve"); and (b)
additionally, the Lender is imposing an Availability Reserve in an
amount equal to, on any date of determination by Lender, the
amount of the actual estimate of Borrowers on a weekly basis for
unbilled Accounts for direct services provided by Borrowers, such
Availability Reserve to remain in effect unless and until
Borrowers are able to establish reporting procedures acceptable to
Lender to provide Lender with an accurate breakdown of the amounts
of such estimates on an account-debtor by account-debtor basis.
Lender acknowledges that Borrowers have advised it that the
Borrowers may elect to discontinue business operations of Perma-
Fix of Memphis, Inc. after the date hereof. Lender agrees that it
shall not impose an Availability Reserve solely as a result of the
Borrower's election to discontinue such business operations but
expressly reserves the right to impose Availability Reserves (or
otherwise exercise rights under this Agreement) in the event of a
consequential liability or occurrence arising out of any such
discontinuance.
SECTION 3. INTEREST AND FEES
_________________
SECTION 3.1 Interest.
(a) Borrowers shall pay to Lender interest on the
outstanding principal amount of the Obligations at the rate of one
and three-quarters percent (1 3/4%) per annum in excess of the Prime
Rate (subject to reduction as provided hereinbelow), except that,
at Lender's option, without notice, Borrowers shall pay to Lender
interest at the rate of three and three-quarters percent (3 3/4%) per
annum in excess of the Prime Rate: (i) on the Obligations for (A)
the period from and after the date of termination hereof until
such time as Lender has received full and final payment of all
such Obligations (notwithstanding entry of any judgment against
Borrowers), and (B) the period from and after the date of the
occurrence of an Event of Default for so long as such Event of
Default is continuing as determined by Lender and (ii) on the
Revolving Loans at any time outstanding in excess of the amounts
available to Borrowers under Section 2 (whether or not such
excess(es), arise or are made with or without Lender's knowledge
or consent and whether made before or after an Event of Default);
provided, however, that if no Event of Default shall have
occurred, if net income for Borrowers for fiscal year 1998 is at
least $1,000,000, as reflected in Borrowers' annual audited
financial statements furnished to Lender pursuant to Section 9.6
of this Agreement, from and after the date of receipt by Lender of
such financial statements, the second sentence of this Section
3.1(a) shall be deemed amended in part by substituting the phrase
. . . "one and one-half percent (1 1/2%)" . . . for the phrase . . .
"one and three-quarters percent (1 3/4%)" . . . .
(b) Interest shall be payable by Borrowers to
Lender monthly in arrears not later than the first day of each
calendar month and shall be calculated on the basis of a three
hundred sixty (360) day year and actual days elapsed. The
interest rate shall increase or decrease by an amount equal to
each increase or decrease in the Prime Rate effective on the first
day of the month after any change in such Prime Rate is announced.
The increase or decrease shall be based on the Prime Rate in
effect on the last day of the month in which any such change
occurs. All interest accruing hereunder on and after an Event of
Default or termination or non-renewal hereof shall be payable on
demand. In no event shall charges constituting interest payable
10
by Borrowers to Lender exceed the maximum amount or the rate
permitted under any applicable law or regulation, and if any part
or provision of this Agreement is in contravention of any such law
or regulation, such part or provision shall be deemed amended to
conform thereto.
SECTION 3.2 Closing Fee. Borrowers shall pay to Lender as a closing
fee the amount of $70,000, which shall be fully earned as of and
payable on the date hereof.
SECTION 3.3 Intentionally Deleted.
SECTION 3.4 Servicing Fee. Borrowers shall pay to Lender monthly a
servicing fee in an amount equal to $1,500 in respect of Lender's
services for each month (or part thereof) while this Agreement
remains in effect and for so long thereafter as any of the
Obligations are outstanding, which fee shall be fully earned as of
and payable in advance on the date hereof and on the first day of
each month hereafter.
SECTION 3.5 Unused Line Fee. Borrowers shall pay to Lender monthly
an unused line fee at a rate equal to one-half of one percent (2%)
per annum calculated upon the amount by which $4,500,000 exceeds
the average daily principal balance of the outstanding Revolving
Loans during the immediately preceding month (or part thereof)
while this Agreement is in effect and for so long thereafter as
any of the Obligations are outstanding, which fee shall be payable
on the first day of each month in arrears.
SECTION 4. CONDITIONS PRECEDENT
____________________
Section 4.1 Conditions Precedent to Initial Loans. Each of the
following is a condition precedent to Lender making the initial
Loans hereunder:
(a) Lender shall have received evidence, in form
and substance satisfactory to Lender, that Lender has valid
perfected and first priority security interests in and liens upon
the Collateral and any other property which is intended to be
security for the Obligations or the liability of any Obligor in
respect thereof, subject only to the security interests and liens
permitted herein or in the other Financing Agreements;
(b) Lender shall have received, in form and
substance satisfactory to Lender, all releases, terminations and
such other documents as Lender may request to evidence and
effectuate the termination by ▇▇▇▇▇▇ Financial, Inc., of its
financing arrangements with Borrowers and the termination and
release by it of any interest in and to any assets and properties
of Borrowers and each Obligor, duly authorized, executed and
delivered by it or each of them, including, but not limited to,
(i) UCC termination statements for all UCC financing statements
previously filed by it or its predecessors, as secured party and
Borrowers, or any of them, or any Obligor, as debtor and (ii) to
the extent not permitted by the terms of this Agreement,
satisfactions and discharges of any mortgages, deeds of trust or
deeds to secure debt by each Borrower or any Obligor, as debtor in
favor of such existing lender, in form acceptable for recording in
the appropriate government office;
11
(c) all requisite corporate action and proceedings
in connection with this Agreement and the other Financing
Agreements shall be satisfactory in form and substance to Lender,
and Lender shall have received all information and copies of all
documents, including records of requisite corporate action and
proceedings which Lender may have requested in connection
therewith, such documents where requested by Lender or its counsel
to be certified by appropriate corporate officers or governmental
authorities;
(d) no material adverse change shall have occurred
in the assets, business or prospects of Borrowers since the date
of Lender's latest field examination and no change or event shall
have occurred which would impair the ability of Borrowers or any
Obligor to perform its obligations hereunder or under any of the
other Financing Agreements to which it is a party or of Lender to
enforce the Obligations or realize upon the Collateral;
(e) Lender shall have completed a field review of
the Records and such other information with respect to the
Collateral as Lender may require to determine the amount of
Revolving Loans available to Borrowers, the results of which shall
be satisfactory to Lender, not more than three (3) business days
prior to the date hereof;
(f) Lender shall have received, in form and
substance satisfactory to Lender, all consents, waivers,
acknowledgments and other agreements from third persons which
Lender may deem necessary or desirable in order to permit, protect
and perfect its security interests in and liens upon the
Collateral or to effectuate the provisions or purposes of this
Agreement and the other Financing Agreements, including
acknowledgments by lessors, mortgagees and warehousemen of
Lender's security interests in the Collateral, waivers by such
persons of any security interests, liens or other claims by such
persons to the Collateral and agreements permitting Lender access
to, and the right to remain on, the premises to exercise its
rights and remedies and otherwise deal with the Collateral;
(g) Lender shall have received evidence of
insurance and loss payee endorsements required hereunder and under
the other Financing Agreements, in form and substance satisfactory
to Lender, and certificates of insurance policies and/or
endorsements naming Lender as loss payee;
(h) Lender shall have received, in form and
substance satisfactory to Lender, such opinion letters of counsel
to Borrowers with respect to the Financing Agreements and such
other matters as Lender may request;
(i) the Excess Availability as determined by
Lender, as of the date hereof, shall be not less than $600,000
after giving effect to the initial Loans made or to be made in
connection with the initial transactions hereunder;
(j) Lender shall have received, in form and
substance satisfactory to Lender, a valid and effective title
insurance policy issued by a company and agent acceptable to
Lender (i) insuring the priority, amount and sufficiency of the
Mortgages, (ii) insuring against matters that would be disclosed
12
by surveys and (iii) containing any legally available
endorsements, assurances or affirmative coverage requested by
Lender for protection of its interests; and
(k) the other Financing Agreements and all
instruments and documents hereunder and thereunder shall have been
duly executed and delivered to Lender, in form and substance
satisfactory to Lender.
SECTION 4.2 Conditions Precedent to All Loans. Each of the
following is an additional condition precedent to Lender making
Loans to Borrowers, including the initial Loans and any future
Loans:
(a) all representations and warranties contained
herein and in the other Financing Agreements shall be true and
correct in all material respects with the same effect as though
such representations and warranties had been made on and as of the
date of the making of each such Loan and after giving effect
thereto; and
(b) no Event of Default and no event or condition
which, with notice or passage of time or both, would constitute an
Event of Default, shall exist or have occurred and be continuing
on and as of the date of the making of such Loan and after giving
effect thereto.
SECTION 5. GRANT OF SECURITY INTEREST
__________________________
To secure payment and performance of all Obligations, each
Borrower hereby grants to Lender a continuing security interest
in, a lien upon, and a right of set off against, and hereby
assigns to Lender as security, the following property and
interests in its property, whether now owned or hereafter acquired
or existing, and wherever located (collectively, the
"Collateral"):
SECTION 5.1 Accounts;
SECTION 5.2 all present and future contract rights, general
intangibles (including tax and duty refunds, registered and
unregistered patents, trademarks, service marks, copyrights, trade
names, applications for the foregoing, trade secrets, goodwill,
processes, drawings, blueprints, customer lists, licenses, and
permits including, without limitation, the respective
environmental permits and licenses of the Borrowers described on
Schedule 5.2 to this Agreement dated on or about the date hereof,
and all renewals, additions or replacements to such licenses and
permits, to the extent same are permitted to be collaterally
assigned (and without creating any obligations of Lender
thereunder), whether as licensor or licensee, choses in action and
other claims and existing and future leasehold interests in
equipment, real estate and fixtures), chattel paper, documents,
instruments, securities and other investment property, letters of
credit, bankers' acceptances and guaranties;
SECTION 5.3 all present and future monies, securities, credit
balances, deposits, deposit accounts and other property of each
Borrower now or hereafter held or received by or in transit to
Lender or its affiliates or at any other depository or other
institution from or for the account of Borrowers, or any of them,
whether for safekeeping, pledge, custody, transmission, collection
13
or otherwise, and all present and future liens, security
interests, rights, remedies, title and interest in, to and in
respect of Accounts and other Collateral, including (a) rights and
remedies under or relating to guaranties, contracts of suretyship,
letters of credit and credit and other insurance related to the
Collateral, (b) rights of stoppage in transit, replevin,
repossession, reclamation and other rights and remedies of an
unpaid vendor, lienor or secured party, (c) goods described in
invoices, documents, contracts or instruments with respect to, or
otherwise representing or evidencing, Accounts or other
Collateral, including returned, repossessed and reclaimed goods,
and (d) deposits by and property of account debtors or other
persons securing the obligations of account debtors;
SECTION 5.4 Inventory;
SECTION 5.5 Equipment;
SECTION 5.6 Real Property subject of the Mortgages;
SECTION 5.7 Records; and
SECTION 5.8 all products and proceeds of the foregoing, in any form,
including insurance proceeds and all claims against third parties
for loss or damage to or destruction of any or all of the
foregoing.
SECTION 6. COLLECTION AND ADMINISTRATION
_____________________________
SECTION 6.1 Borrowers' Loan Account. Lender shall maintain one or
more loan account(s) on its books in which shall be recorded
(a) all Loans and other Obligations and the Collateral, (b) all
payments made by or on behalf of Borrowers, and (c) all other
appropriate debits and credits as provided in this Agreement,
including, without limitation, fees, charges, costs, expenses and
interest. All entries in the loan account(s) shall be made in
accordance with Lender's customary practices as in effect from
time to time.
SECTION 6.2 Statements. Lender shall render to Borrowers each month
a statement setting forth the balance in the Borrowers' loan
account(s) maintained by Lender for Borrowers pursuant to the
provisions of this Agreement, including principal, interest, fees,
costs and expenses. Each such statement shall be subject to
subsequent adjustment by Lender but shall, absent manifest errors
or omissions, be considered correct and deemed accepted by
Borrowers and conclusively binding upon Borrowers as an account
stated except to the extent that Lender receives a written notice
from Borrowers of any specific exceptions of Borrowers thereto
within thirty (30) days after the date such statement has been
mailed by Lender. Until such time as Lender shall have rendered
to Borrowers a written statement as provided above, the balance in
Borrowers' loan account(s) shall be presumptive evidence of the
amounts due and owing to Lender by Borrowers.
14
SECTION 6.3 Collection of Accounts.
(a) Borrowers shall establish and maintain, at
their expense, blocked accounts or lockboxes and related blocked
accounts (in either case, "Blocked Accounts"), as Lender may
specify, with such banks as are acceptable to Lender into which
Borrowers shall promptly deposit and direct its account debtors to
directly remit all payments on Accounts and all payments
constituting proceeds of Inventory or other Collateral in the
identical form in which such payments are made, whether by cash,
check or other manner, including all proceeds of insurance from
time to time received by any Borrower, including business
interruption and other insurance proceeds payable to Perma-Fix of
Memphis, Inc. on account of the damage to its plant prior to the
date of this Agreement. The banks at which the Blocked Accounts
are established shall enter into an agreement, in form and
substance satisfactory to Lender, providing that all items
received or deposited in the Blocked Accounts are the property of
Lender, that the depository bank has no lien upon, or right to
setoff against, the Blocked Accounts, the items received for
deposit therein, or the funds from time to time on deposit therein
and that the depository bank will wire, or otherwise transfer, in
immediately available funds, on a daily basis, all funds received
or deposited into the Blocked Accounts to such bank account of
Lender as Lender may from time to time designate for such purpose
("Payment Account"). Borrowers agree that all payments made to
such Blocked Accounts or other funds received and collected by
Lender, whether on the Accounts or as proceeds of Inventory or
other Collateral or otherwise shall be the property of Lender.
(b) For purposes of calculating the amount of the
Loans available to Borrowers, such payments will be applied
(conditional upon final collection) to the Obligations on the
business day of receipt by Lender of immediately available funds
in the Payment Account provided such payments and notice thereof
are received in accordance with Lender's usual and customary
practices as in effect from time to time and within sufficient
time to credit Borrowers' loan account on such day, and if not,
then on the next business day. For the purposes of calculating
interest on the Obligations, such payments or other funds received
will be applied (conditional upon final collection) to the
Obligations two (2) business day(s) following the date of receipt
of immediately available funds by Lender in the Payment Account
provided such payments or other funds and notice thereof are
received in accordance with Lender's usual and customary practices
as in effect from time to time and within sufficient time to
credit Borrowers' loan account on such day, and if not, then on
the next business day.
(c) Borrowers and all of their affiliates,
subsidiaries, shareholders, directors, employees or agents shall,
acting as trustee for Lender, receive, as the property of Lender,
any monies, checks, notes, drafts or any other payment relating to
and/or proceeds of Accounts or other Collateral which come into
their possession or under their control and immediately upon
receipt thereof, shall deposit or cause the same to be deposited
in the Blocked Accounts, or remit the same or cause the same to be
remitted, in kind, to Lender. In no event shall the same be
commingled with Borrowers', or any of their, own funds. Borrowers
agree to reimburse Lender on demand for any amounts owed or paid
to any bank at which a Blocked Account is established or any other
bank or person involved in the transfer of funds to or from the
15
Blocked Accounts arising out of Lender's payments to or
indemnification of such bank or person. The obligation of
Borrowers to reimburse Lender for such amounts pursuant to this
Section 6.3 shall survive the termination or non-renewal of this
Agreement.
SECTION 6.4 Payments. All Obligations shall be payable to the
Payment Account as provided in Section 6.3 or such other place as
Lender may designate from time to time. Lender may apply payments
received or collected from Borrowers or for the account of
Borrowers, or any of them (including the monetary proceeds of
collections or of realization upon any Collateral), to such of the
Obligations, whether or not then due, in such order and manner as
Lender determines. At Lender's option, all principal, interest,
fees, costs, expenses and other charges provided for in this
Agreement or the other Financing Agreements may be charged
directly to the loan account(s) of Borrowers. Borrowers shall
make all payments to Lender on the Obligations free and clear of,
and without deduction or withholding for or on account of, any
setoff, counterclaim, defense, duties, taxes, levies, imposts,
fees, deductions, withholding, restrictions or conditions of any
kind. If after receipt of any payment of, or proceeds of
Collateral applied to the payment of, any of the Obligations,
Lender is required to surrender or return such payment or proceeds
to any Person for any reason, then the Obligations intended to be
satisfied by such payment or proceeds shall be reinstated and
continue and this Agreement shall continue in full force and
effect as if such payment or proceeds had not been received by
Lender. Borrowers shall be liable to pay to Lender, and does
hereby indemnify and hold Lender harmless for the amount of any
payments or proceeds surrendered or returned. This Section 6.4
shall remain effective notwithstanding any contrary action which
may be taken by Lender in reliance upon such payment or proceeds.
This Section 6.4 shall survive the payment of the Obligations and
the termination or non-renewal of this Agreement.
SECTION 6.5 Authorization to Make Loans. Lender is authorized to
make the Loans based upon telephonic or other instructions
received from any person purporting to be the President or the
Chief Financial Officer, or purporting to be other person(s) of
Perma-Fix Environmental Services, Inc. ("Perma-Fix") authorized by
the President or Chief Financial Officer from time to time after
delivery by the Chief Financial Officer or the President to Lender
of written notice thereof, on behalf of the Borrowers, as their
agent or, at the discretion of Lender, if such Loans are necessary
to satisfy any Obligations. All requests for Loans hereunder
shall specify the date on which the requested advance is to be
made (which day shall be a business day) and the amount of the
requested Loan. Requests received after 11:00 a.m. Eastern time
on any day shall be deemed to have been made as of the opening of
business on the immediately following business day. All Loans
under this Agreement shall be conclusively presumed to have been
made to, and at the request of and for the benefit of, and are
Obligations of all of the Borrowers, jointly and severally, when
deposited to the credit of Borrowers or otherwise disbursed or
established in accordance with the instructions of Borrowers or
Perma-Fix, on their behalf, or in accordance with the terms and
conditions of this Agreement.
SECTION 6.6 Use of Proceeds. Borrowers shall use the initial
proceeds of the Loans provided by Lender to Borrowers hereunder
only for: (a) payments to each of the persons listed in the
disbursement direction letter furnished by Borrowers to Lender on
16
or about the date hereof and (b) costs, expenses and fees in
connection with the preparation, negotiation, execution and
delivery of this Agreement and the other Financing Agreements.
All other Loans by Lender to Borrowers pursuant to the provisions
hereof shall be used by Borrowers only for general operating,
working capital and other proper corporate purposes of Borrowers
not otherwise prohibited by the terms hereof. None of the
proceeds will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin security or for the purposes of
reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security or for any other
purpose which might cause any of the Loans to be considered a
"purpose credit" within the meaning of Regulation G of the Board
of Governors of the Federal Reserve System, as amended.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
__________________________________
SECTION 7.1 Collateral Reporting. Borrowers shall provide Lender
with the following documents in a form satisfactory to Lender: (a)
on a regular basis as required by Lender, a schedule of Accounts,
sales made, credits issued and cash received; (b) on a monthly
basis or more frequently as Lender may request agings of accounts
payable, (c) upon Lender's request, (i) copies of customer
statements and credit memos, remittance advices and reports, and
copies of deposit slips and bank statements, (ii) copies of
shipping and delivery documents, if applicable, and (iii) copies
of purchase orders, invoices and delivery documents for Equipment
acquired by Borrowers, or any of them; (d) agings of accounts
receivable on a monthly basis or more frequently as Lender may
request; and (e) such other reports as to the Collateral as Lender
shall request from time to time. If any of any Borrower's records
or reports of the Collateral are prepared or maintained by an
accounting service, contractor, shipper or other agent, Borrowers
hereby irrevocably authorize such service, contractor, shipper or
agent to deliver such records, reports, and related documents to
Lender and to follow Lender's instructions with respect to further
services at any time that an Event of Default exists or has
occurred and is continuing.
SECTION 7.2 Accounts Covenants.
(a) Borrowers shall notify Lender promptly of:
(i) any material delay in any Borrower's performance of any of its
obligations to any account debtor or the assertion of any claims,
offsets, defenses or counterclaims by any account debtor, or any
disputes with account debtors, or any settlement, adjustment or
compromise thereof, (ii) all material adverse information relating
to the financial condition of any account debtor and (iii) any
event or circumstance which, to any Borrower's knowledge would
cause Lender to consider any then existing Accounts as no longer
constituting Eligible Accounts. No credit, discount, allowance or
extension or agreement for any of the foregoing shall be granted
to any account debtor without Lender's consent, except in the
ordinary course of each Borrower's business. So long as no Event
of Default exists or has occurred and is continuing, each Borrower
shall settle, adjust or compromise any claim, offset, counterclaim
or dispute with any account debtor. At any time that an Event of
Default exists or has occurred and is continuing, Lender shall, at
its option, have the exclusive right to settle, adjust or
compromise any claim, offset, counterclaim or dispute with account
debtors or grant any credits, discounts or allowances.
17
(b) Intentionally deleted.
(c) With respect to each Account:(i) the amounts
shown on any invoice delivered to Lender or schedule thereof
delivered to Lender shall be true and complete, (ii) no payments
shall be made thereon except payments immediately delivered to
Lender pursuant to the terms of this Agreement, (iii) no credit,
discount, allowance or extension or agreement for any of the
foregoing shall be granted to any account debtor except as
reported to Lender in accordance with this Agreement and except
for credits, discounts, allowances or extensions made or given in
the ordinary course of the applicable Borrower's business, (iv)
there shall be no setoffs, deductions, contras, defenses,
counterclaims or disputes existing or asserted with respect
thereto except as reported to Lender in accordance with the terms
of this Agreement, (v) none of the transactions giving rise
thereto will violate any applicable State or Federal laws or
regulations, all documentation relating thereto will be legally
sufficient under such laws and regulations and all such
documentation will be legally enforceable in accordance with its
terms.
(d) Lender shall have the right at any time or
times, in Lender's name or in the name of a nominee of Lender, to
verify the validity, amount or any other matter relating to any
Account or other Collateral, by mail, telephone, facsimile
transmission or otherwise.
(e) Each Borrower shall deliver or cause to be
delivered to Lender, with appropriate endorsement and assignment,
with full recourse to each Borrower, all chattel paper and
instruments which each Borrower now own or may at any time acquire
immediately upon any Borrower's receipt thereof, except as Lender
may otherwise agree.
(f) Lender may, at any time or times that an Event
of Default exists or has occurred and is continuing, (i) notify
any or all account debtors that the Accounts have been assigned to
Lender and that Lender has a security interest therein and Lender
may direct any or all accounts debtors to make payment of Accounts
directly to Lender, (ii) extend the time of payment of,
compromise, settle or adjust for cash, credit, return of
merchandise or otherwise, and upon any terms or conditions, any
and all Accounts or other obligations included in the Collateral
and thereby discharge or release the account debtor or any other
party or parties in any way liable for payment thereof without
affecting any of the Obligations, (iii) demand, collect or enforce
payment of any Accounts or such other obligations, but without any
duty to do so, and Lender shall not be liable for its failure to
collect or enforce the payment thereof nor for the negligence of
its agents or attorneys with respect thereto and (iv) take
whatever other action Lender may deem necessary or desirable for
the protection of its interests. At any time that an Event of
Default exists or has occurred and is continuing, at Lender's
request, all invoices and statements sent to any account debtor
shall state that the Accounts and such other obligations have been
assigned to Lender and are payable directly and only to Lender and
Borrowers shall deliver to Lender such originals of documents
evidencing the sale and delivery of goods or the performance of
services giving rise to any Accounts as Lender may require.
SECTION 7.3 Inventory Covenants. With respect to the Inventory:
(a) Borrowers shall not remove any Inventory from the locations
set forth or permitted herein, without the prior written consent
18
of Lender, except for sales or use of Inventory in the ordinary
course of each Borrower's business and except to move Inventory
directly from one location set forth or permitted herein to
another such location; (b) Borrowers shall produce, use, store
and maintain the Inventory with all reasonable care and caution
and in accordance with applicable standards of any insurance and
in conformity with applicable laws (including all Environmental
Laws); and (c) Borrowers assume all responsibility and liability
arising from or relating to the production, use, sale or other
disposition of the Inventory.
SECTION 7.4 Equipment Covenants. With respect to the Equipment:
(a) upon Lender's request, Borrowers shall, at their expense, at
any time or times as Lender may request on or after an Event of
Default, deliver or cause to be delivered to Lender written
reports or appraisals as to the Equipment in form, scope and
methodology acceptable to Lender and by an appraiser acceptable to
Lender; (b) Borrowers shall keep the Equipment in good order,
repair, running and marketable condition (ordinary wear and tear
excepted); (c) Borrowers shall use the Equipment with all
reasonable care and caution and in accordance with applicable
standards of any insurance and in conformity with all applicable
laws, including all Environmental Laws; (d) the Equipment is and
shall be used in the applicable Borrower's business and not for
personal, family, household or farming use; (e) Borrowers shall
not remove any Equipment from the locations set forth or permitted
herein, except to the extent (i) necessary to have any Equipment
repaired or maintained in the ordinary course of the business of
the applicable Borrower or to move Equipment directly from one
location set forth or permitted herein to another such location
and except for the movement of motor vehicles used by or for the
benefit of the applicable Borrower in the ordinary course of
business and (ii) subject as provided hereinbelow, as may be
utilized on a temporary basis from time to time at locations of
account debtors in the business operations of a Borrower; (f) the
Equipment is now and shall remain personal property and Borrowers
shall not permit any of the Equipment to be or become a part of or
affixed to real property; (g) without limiting or abrogating any
covenants contained in this Agreement or any other Financing
Agreement in respect of Equipment generally, Borrowers shall not
sell or otherwise dispose of the Financed Equipment, or any of it,
without the prior written consent of Lender, in its sole
discretion; and (h) Borrowers assume all responsibility and
liability arising from the use of the Equipment. Borrowers agree
that at any time Equipment of Borrowers with an aggregate auction
value of $200,000 or more is utilized off-site for more than a 90-
day period or if any such Equipment in any amount is used for 60
days in any location in which Lender has not taken all requisite
action to perfect a lien upon and security interest in such
Equipment, it shall on the ninetieth or sixtieth day, as the case
may be provide Lender with a list of such Equipment and the
location(s) thereof, and shall take all action as Lender deems
appropriate to continue the perfection of its lien upon and
security interest in such Equipment.
SECTION 7.5 Power of Attorney. Borrowers hereby irrevocably
designate and appoint Lender (and all persons designated by
Lender) as each Borrower's true and lawful attorney-in-fact, and
authorizes Lender, in Borrowers', or any of their, or Lender's
names, to: (a) at any time an Event of Default or event which with
notice or passage of time or both would constitute an Event of
Default exists or has occurred and is continuing (i) demand
19
payment on Accounts or proceeds of Collateral, (ii) enforce
payment of Accounts by legal proceedings or otherwise,
(iii) exercise all of each Borrower's rights and remedies to
collect any Account or other Collateral, (iv) sell or assign any
Account upon such terms, for such amount and at such time or times
as the Lender deems advisable, (v) settle, adjust, compromise,
extend or renew an Account, (vi) discharge and release any
Account, (vii) prepare, file and sign the names of any or all of
the Borrowers on any proof of claim in bankruptcy or other similar
document against an account debtor, (viii) notify the post office
authorities to change the address for delivery of any Borrower's
mail to an address designated by Lender, and open and dispose of
all mail addressed to Borrowers, or any of them, and (ix) do all
acts and things which are necessary, in Lender's determination, to
fulfill Borrowers' obligations under this Agreement and the other
Financing Agreements and (b) at any time to (i) take control in
any manner of any item of payment or proceeds thereof, (ii) have
access to any lockbox or postal box into which the mail of any or
all of the Borrowers, is deposited,(iii) endorse the names of any
or all of the Borrowers upon any items of payment or proceeds
thereof and deposit the same in the Lender's account for
application to the Obligations, (iv) endorse the names of any or
all of the Borrowers upon any chattel paper, document, instrument,
invoice, or similar document or agreement relating to any Account
or any goods pertaining thereto or any other Collateral, (v) sign
the names of any or all of the Borrowers on any verification of
Accounts and notices thereof to account debtors and (vi) execute
in the names of any or all of the Borrowers, and file any UCC
financing statements or amendments thereto. Borrowers hereby
release Lender and its officers, employees and designees from any
liabilities arising from any act or acts under this power of
attorney and in furtherance thereof, whether of omission or
commission, except as a result of Lender's own gross negligence or
willful misconduct as determined pursuant to a final non-
appealable order of a court of competent jurisdiction.
SECTION 7.6 Right to Cure. Lender may, at its option, (a) cure any
default by Borrowers, or any of them, under any agreement with a
third party or pay or bond on appeal any judgment entered against
Borrowers, or any of them, (b) discharge taxes, liens, security
interests or other encumbrances at any time levied on or existing
with respect to the Collateral and (c) pay any amount, incur any
expense or perform any act which, in Lender's judgment, is
necessary or appropriate to preserve, protect, insure or maintain
the Collateral and the rights of Lender with respect thereto.
Lender may add any amounts so expended to the Obligations and
charge each Borrower's account therefor, such amounts to be
repayable by Borrowers on demand. Lender shall be under no
obligation to effect such cure, payment or bonding and shall not,
by doing so, be deemed to have assumed any obligation or liability
of Borrowers, or any of them. Any payment made or other action
taken by Lender under this Section shall be without prejudice to
any right to assert an Event of Default hereunder and to proceed
accordingly.
SECTION 7.7 Access to Premises. From time to time as requested
by Lender, at the cost and expense of Borrowers, (a) Lender or its
designee shall have complete access to all of each Borrower's
premises during normal business hours and after notice to
Borrowers, or at any time and without notice to Borrowers if an
Event of Default exists or has occurred and is continuing, for the
purposes of inspecting, verifying and auditing the Collateral and
20
all of each Borrower's books and records, including the Records,
and (b) Borrowers shall promptly furnish to Lender such copies of
such books and records or extracts therefrom as Lender may
request, and (c) use during normal business hours such of
Borrowers' personnel, equipment, supplies and premises as may be
reasonably necessary for the foregoing and if an Event of Default
exists or has occurred and is continuing for the collection of
Accounts and realization of other Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES
______________________________
Borrowers hereby represent and warrant to Lender the
following (which shall survive the execution and delivery of this
Agreement), the truth and accuracy of which are a continuing
condition of the making of Loans by Lender to Borrowers:
SECTION 8.1 Corporate Existence, Power and Authority; Subsidiaries.
Each Borrower is a corporation duly organized and in good standing
under the laws of its state of incorporation and is duly qualified
as a foreign corporation and in good standing in all states or
other jurisdictions where the nature and extent of the business
transacted by it or the ownership of assets makes such
qualification necessary, except for those jurisdictions in which
the failure to so qualify would not have a material adverse effect
on the Borrower's financial condition, results of operation or
business or the rights of Lender in or to any of the Collateral.
The execution, delivery and performance of this Agreement, the
other Financing Agreements and the transactions contemplated
hereunder and thereunder are all within each Borrower's corporate
powers, have been duly authorized and are not in contravention of
law or the terms of the applicable Borrower's certificate of
incorporation, by-laws, or other organizational documentation, or
any indenture, agreement or undertaking to which Borrowers, or any
of them, are a party or by which a Borrower or its property are
bound. This Agreement and the other Financing Agreements
constitute legal, valid and binding obligations of Borrowers
enforceable in accordance with their respective terms. No
Borrower has any subsidiaries except as set forth on the
Information Certificate.
SECTION 8.2 Financial Statements; No Material Adverse Change. All
financial statements relating to Borrowers which have been or may
hereafter be delivered by Borrowers to Lender have been prepared
in accordance with GAAP and fairly present the financial condition
and the results of operation of each Borrower as at the dates and
for the periods set forth therein. Except as disclosed in any
interim financial statements furnished by Borrowers to Lender
prior to the date of this Agreement, there has been no material
adverse change in the assets, liabilities, properties and
condition, financial or otherwise, of Borrowers, or any of them,
since the date of the most recent audited financial statements
furnished by Borrowers to Lender prior to the date of this
Agreement. Further, no such material adverse affect which would
result if GAAP as in effect on the date of this Agreement, were to
be applied to the annual and interim statements heretofore
delivered to Lender, including, by application of AICPA Statement
of Position 96-1.
SECTION 8.3 Chief Executive Office; Collateral Locations. The chief
executive office of each Borrower and each Borrower's Records
concerning Accounts are located only at the address set forth
below and its only other places of business and the only other
21
locations of Collateral, if any, are the addresses set forth in
the Information Certificate, subject to the right of Borrowers to
establish new locations in accordance with Section 9.2 below. The
Information Certificate correctly identifies any of such locations
which are not owned by Borrowers and sets forth the owners and/or
operators thereof and to the best of Borrowers' knowledge, the
holders of any mortgages on such locations.
SECTION 8.4 Priority of Liens; Title to Properties. The security
interests and liens granted to Lender under this Agreement and the
other Financing Agreements constitute valid and perfected first
priority liens and security interests in and upon the Collateral
subject only to the liens indicated on Schedule 8.4 hereto and the
other liens permitted under Section 9.8 hereof. Each Borrower has
good and marketable title to all of its properties and assets
subject to no liens, mortgages, pledges, security interests,
encumbrances or charges of any kind, except those granted to
Lender and such others as are specifically listed on Schedule 8.4
hereto or permitted under Section 9.8 hereof.
SECTION 8.5 Tax Returns. To the best of the knowledge and belief of
Borrowers, Borrowers have filed, or caused to be filed, in a
timely manner all tax returns, reports and declarations which are
required to be filed by it (without requests for extension except
as previously disclosed in writing to Lender). All information in
such tax returns, reports and declarations is complete and
accurate in all material respects. Each Borrower has paid or
caused to be paid all taxes due and payable or claimed due and
payable in any assessment received by it, except taxes the
validity of which are being contested in good faith by appropriate
proceedings diligently pursued and available to each Borrower and
with respect to which adequate reserves have been set aside on its
books. Adequate provision has been made for the payment of all
accrued and unpaid Federal, State, county, local, foreign and
other taxes whether or not yet due and payable and whether or not
disputed.
SECTION 8.6 Litigation. Except as set forth on the Schedule 8.9
hereto, there is no present investigation by any governmental
agency pending, or to the best of each Borrower's knowledge
threatened, against or affecting Borrowers, or any of them, their
assets or business and there is no action, suit, proceeding or
claim by any Person pending, or to the best of Borrowers'
knowledge threatened, against any Borrower or its assets or
goodwill, or against or affecting any transactions contemplated by
this Agreement, which if adversely determined against Borrowers,
or any of them, would result in any material adverse change in the
assets, business or prospects of Borrowers, or any of them, or
would impair the ability of Borrowers, or any of them, to perform
their obligations hereunder or under any of the other Financing
Agreements to which it is a party or of Lender to enforce any
Obligations or realize upon any Collateral.
SECTION 8.7 Compliance with Other Agreements and Applicable Laws.
Except as set forth on Schedule 8.9 hereto, no Borrower is in
default in any material respect under, or in violation in any
material respect of any of the terms of, any agreement, contract,
instrument, lease or other commitment to which it is a party or by
which it or any of its assets are bound and Borrowers are in
compliance in all material respects with all applicable provisions
22
of laws, rules, regulations, licenses, permits, approvals and
orders of any foreign, Federal, State or local governmental
authority.
SECTION 8.8 Bank Accounts. All of the deposit accounts, investment
accounts or other accounts in the name of or used by Borrowers
maintained at any bank or other financial institution are set
forth on Schedule 8.8 hereto, subject to the right of Borrowers to
establish new accounts in accordance with Section 9.13 below.
SECTION 8.9 Environmental Compliance.
(a) Except as set forth on Schedule 8.9 hereto, no
Borrower has generated, used, stored, treated, transported,
manufactured, handled, produced or disposed of any Hazardous
Materials, on or off its premises (whether or not owned by it) in
any manner which at any time violates any applicable Environmental
Law or any license, permit, certificate, approval or similar
authorization thereunder and the operations of each Borrower
complies in all material respects with all Environmental Laws and
all licenses, permits, certificates, approvals and similar
authorizations thereunder.
(b) Except as set forth on Schedule 8.9 hereto,
there has been no investigation, proceeding, complaint, order,
directive, claim, citation or notice by any governmental authority
or any other person nor is any pending or to the best of
Borrowers' knowledge threatened, with respect to any
non-compliance with or violation of the requirements of any
Environmental Law by any Borrower or the release, spill or
discharge, threatened or actual, of any Hazardous Material or the
generation, use, storage, treatment, transportation, manufacture,
handling, production or disposal of any Hazardous Materials or any
other environmental, health or safety matter, which affects any
Borrower or its business, operations or assets or any properties
at which Borrower has transported, stored or disposed of any
Hazardous Materials.
(c) Except as set forth on Schedule 8.9 hereto, no
Borrower has any material liability (contingent or otherwise) in
connection with a release, spill or discharge, threatened or
actual, of any Hazardous Materials or the generation, use,
storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials.
(d) Each Borrower has all licenses, permits,
certificates, approvals or similar authorizations required to be
obtained or filed in connection with the operations of such
Borrower under any Environmental Law and all of such licenses,
permits, certificates, approvals or similar authorizations are
valid and in full force and effect.
SECTION 8.10 Solvency. As of, and from and after, the date of this
Agreement, each of the Borrowers: (a) owns and will own assets the
fair saleable value of which are (i) greater than the total amount
of its liabilities (including contingent liabilities) and (ii)
greater than the amount that will be required to pay its probable
liabilities as they mature; (b) has capital that is not
unreasonably small in relation to its business as presently
23
conducted or any contemplated or undertaken transaction; and (c)
does not intend to incur and does not believe that it will incur
debts beyond its ability to pay such debts as they become due.
There is no material fact known to any Borrower that has or could
have a material adverse effect on the business or operations of
the Borrowers or the prospect of payment and performance of the
Obligations, which has not been fully disclosed herein or in such
other documents, certificates and statements furnished to Lender
for use in connection with the transactions contemplated hereby.
SECTION 8.11 Accuracy and Completeness of Information; Certain
Disclosures. (a) All information furnished by or on behalf of
each Borrower in writing to Lender in connection with this
Agreement or any of the other Financing Agreements or any
transaction contemplated hereby or thereby, including, without
limitation, all information on the Information Certificate is true
and correct in all material respects on the date as of which such
information is dated or certified and does not omit any material
fact necessary in order to make such information not misleading.
No event or circumstance has occurred which has had or could
reasonably be expected to have a material adverse affect on the
business, assets or prospects of Borrowers, or any of them, which
has not been fully and accurately disclosed to Lender in writing.
(b) Notwithstanding anything to the contrary contained
in this Agreement, or otherwise, the making of the disclosures set
forth on Schedule 8.9 to this Agreement (or any other disclosures
to Lender), shall not obviate any breach of term, covenant, or
Event of Default which may hereafter arise out of or in connection
with the matters described therein, including without limitation,
any judgments which may be rendered, or liens which may be
imposed, in respect of such matters.
SECTION 8.12 Survival of Warranties; Cumulative. All representations
and warranties contained in this Agreement or any of the other
Financing Agreements shall survive the execution and delivery of
this Agreement and shall be deemed to have been made again to
Lender on the date of each additional borrowing or other credit
accommodation hereunder and shall be conclusively presumed to have
been relied on by Lender regardless of any investigation made or
information possessed by Lender. The representations and
warranties set forth herein shall be cumulative and in addition to
any other representations or warranties which Borrowers shall now
or hereafter give, or cause to be given, to Lender.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
__________________________________
SECTION 9.1 Maintenance of Existence. Each Borrower shall at all
times preserve, renew and keep in full, force and effect its
corporate existence and rights and franchises with respect thereto
and maintain in full force and effect all permits, licenses,
trademarks, trade names, approvals, authorizations, leases and
contracts necessary to carry on the business as presently or
proposed to be conducted. Borrowers shall give Lender thirty (30)
days prior written notice of any proposed change of the name of
any Borrower, which notice shall set forth the new name and
Borrowers shall deliver to Lender a copy of the amendment to the
Certificate of Incorporation of the applicable Borrower providing
24
for the name change certified by the Secretary of State of the
jurisdiction of incorporation of the applicable Borrower as soon
as it is available.
SECTION 9.2 New Collateral Locations. Any Borrower may open any new
location within the continental United States provided the
applicable Borrower (a) gives Lender thirty (30) days prior
written notice of the intended opening of any such new location
and (b) executes and delivers, or causes to be executed and
delivered, to Lender such agreements, documents, and instruments
as Lender may deem reasonably necessary or desirable to protect
its interests in the Collateral at such location, including UCC
financing statements.
SECTION 9.3 Compliance with Laws, Regulations, Etc.
(a) Borrowers shall, at all times, comply in all
material respects with all laws, rules, regulations, licenses,
permits, approvals and orders applicable to each Borrower and duly
observe all requirements of any Federal, State or local
governmental authority, including the Employee Retirement Security
Act of 1974, as amended, the Occupational Safety and Health Act of
1970, as amended, the Fair Labor Standards Act of 1938, as
amended, and all statutes, rules, regulations, orders, permits and
stipulations relating to environmental pollution and employee
health and safety, including all of the Environmental Laws.
(b) Borrowers shall establish and maintain, at its
expense, a system to assure and monitor its continued compliance
with all Environmental Laws in all of their operations, which
system shall include annual reviews of such compliance by
employees or agents of Borrowers who are familiar with the
requirements of the Environmental Laws. Copies of all
environmental surveys, audits, assessments, feasibility studies
and results of remedial investigations shall be promptly
furnished, or caused to be furnished, by Borrowers to Lender.
Borrowers shall take prompt and appropriate action to respond to
any non-compliance with any of the Environmental Laws and shall
regularly report to Lender on such response.
(c) Borrowers shall give both oral and written
notice to Lender immediately upon any Borrower's receipt of any
notice of, or any Borrower's otherwise obtaining knowledge of, (i)
the occurrence of any event involving the release, spill or
discharge, threatened or actual, of any Hazardous Material or (ii)
any investigation, proceeding, complaint, order, directive,
claims, citation or notice with respect to: (A) any non-compliance
with or violation of any Environmental Law by any Borrower or (B)
the release, spill or discharge, threatened or actual, of any
Hazardous Material or (C) the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of
any Hazardous Materials or (D) any other environmental, health or
safety matter, which affects any Borrower or its business,
operations or assets or any properties at which any Borrower
transported, stored or disposed of any Hazardous Materials.
(d) Without limiting the generality of the
foregoing, whenever Lender reasonably determines that there is
material non-compliance, or any condition which requires any
action by or on behalf of any Borrower in order to avoid any
material non-compliance, with any Environmental Law, Borrowers
25
shall, at Lender's request and Borrowers' expense: (i) cause an
independent environmental engineer acceptable to Lender to conduct
such tests of the site where the Borrowers' non-compliance or
alleged non-compliance with such Environmental Laws has occurred
as to such non-compliance and prepare and deliver to Lender a
report as to such non-compliance setting forth the results of such
tests, a proposed plan for responding to any environmental
problems described therein, and an estimate of the costs thereof
and (ii) provide to Lender a supplemental report of such engineer
whenever the scope of such non-compliance, or the applicable
Borrower's response thereto or the estimated costs thereof, shall
change in any material respect.
(e) Borrowers shall, jointly and severally,
indemnify and hold harmless Lender, its directors, officers,
employees, agents, invitees, representatives, successors and
assigns, from and against any and all losses, claims, damages,
liabilities, costs, and expenses (including attorneys' fees and
legal expenses) directly or indirectly arising out of or
attributable to the use, generation, manufacture, reproduction,
storage, release, threatened release, spill, discharge, disposal
or presence of a Hazardous Material, including the costs of any
required or necessary repair, cleanup or other remedial work with
respect to any property of any Borrower and the preparation and
implementation of any closure, remedial or other required plans.
All representations, warranties, covenants and indemnifications in
this Section 9.3 shall survive the payment of the Obligations and
the termination of this Agreement and shall not in any wise limit
or abrogate any other indemnification or similar agreement in
favor of Lender under any other Financing Agreement.
SECTION 9.4 Payment of Taxes and Claims. Each Borrower shall duly
pay and discharge all taxes, assessments, contributions and
governmental charges upon or against it or its properties or
assets, except for taxes the validity of which are being contested
in good faith by appropriate proceedings diligently pursued and
available to each Borrower and with respect to which adequate
reserves have been set aside on its books. Borrowers shall be
liable for any tax or penalties imposed on Lender as a result of
the financing arrangements provided for herein and Borrowers agree
to indemnify and hold Lender harmless with respect to the
foregoing, and to repay to Lender on demand the amount thereof,
and until paid by Borrowers such amount shall be added and deemed
part of the Loans, provided, that, nothing contained herein shall
be construed to require Borrowers to pay any income or franchise
taxes attributable to the income of Lender from any amounts
charged or paid hereunder to Lender. The foregoing indemnity
shall survive the payment of the Obligations and the termination
or non-renewal of this Agreement.
SECTION 9.5 Insurance. Borrowers shall, at all times, maintain with
financially sound and reputable insurers insurance with respect to
the Collateral against loss or damage and all other insurance of
the kinds and in the amounts customarily insured against or
carried by corporations of established reputation engaged in the
same or similar businesses and similarly situated. Said policies
of insurance shall be satisfactory to Lender as to form, amount
and insurer. Borrowers shall furnish certificates, policies or
endorsements to Lender as Lender shall require as proof of such
insurance, and, if Borrowers fail to do so, Lender is authorized,
but not required, to obtain such insurance at the expense of
Borrowers. All policies shall provide for at least thirty (30)
26
days prior written notice to Lender of any cancellation or
reduction of coverage and that Lender may act as attorney for
Borrowers, or any of them, in obtaining, and at any time an Event
of Default exists or has occurred and is continuing, adjusting,
settling, amending and canceling such insurance. Borrowers shall
cause Lender to be named as a loss payee and an additional insured
(but without any liability for any premiums) under such insurance
policies and Borrowers shall obtain non-contributory lender's loss
payable endorsements to all insurance policies in form and
substance satisfactory to Lender. Such lender's loss payable
endorsements shall specify that the proceeds of such insurance
shall be payable to Lender as its interests may appear and further
specify that Lender shall be paid regardless of any act or
omission by Borrowers, or any of them, or any of their affiliates.
Except in the case of casualty and condemnation losses in respect
of Collateral consisting of real property subject of the Mortgages
(which Mortgages shall govern as to the use of such insurance
proceeds), in the case of casualty losses of Collateral which do
not exceed the $150,000 in the aggregate for any fiscal year of
Borrowers, so long as no Event of Default shall have occurred,
upon payment to the Blocked Account of the insurance proceeds in
respect of each such casualty loss, Lender agrees that such
payments shall be applied in reduction of Revolving Loans;
provided further, that Borrower shall immediately replace such
Collateral with property, in the determination of Lender, of at
least equal value to that subject to the loss. In all other
cases, including upon the occurrence of an Event of Default, at
its option, Lender may apply any insurance proceeds received by
Lender at any time to the cost of repairs or replacement of
Collateral including, without limitation, the Financed Equipment,
and/or to payment of the Obligations, whether or not then due, in
any order and in such manner as Lender may determine or hold such
proceeds as cash collateral for the Obligations. Borrowers shall
provide Lender with a copy of all audit, compliance or discrepancy
reports in respect of its business operations from time to time
issued by its insurers or by any governmental agency, promptly
upon any Borrower's receipt of such reports from the insurer or
governmental agency.
SECTION 9.6 Financial Statements and Other Information
(a) Borrowers shall keep proper books and records
in which true and complete entries shall be made of all dealings
or transactions of or in relation to the Collateral and the
businesses of Borrowers and their subsidiaries (if any) in
accordance with GAAP and Borrowers shall furnish or cause to be
furnished to Lender: (i) (A) within thirty (30) days after the
end of each fiscal month, monthly unaudited consolidated and
consolidating financial statements (including in each case balance
sheets, statements of income and loss, statements of cash flow,
and statements of shareholders' equity), all in reasonable detail,
fairly presenting the financial position and the results of the
operations of Borrowers and their respective subsidiaries as of
the end of and through such fiscal month, and (B) within forty
five (45) days after the end of each fiscal quarter (or fifty (50)
days after the end of each fiscal quarter for which Borrowers have
obtained a five day filing extension from the Securities and
Exchange Commission) of Borrowers, a copy of the corresponding 10-
Q report for such fiscal quarter filed with the Securities and
Exchange Commission, (ii) within ninety (90) days after the end of
each fiscal year (or one hundred and five (105) days for any
fiscal year for which Borrowers have obtained a fifteen day filing
27
extension from the Securities and Exchange Commission), audited
consolidated and consolidating financial statements (including in
each case balance sheets, statements of income and loss,
statements of cash flow and statements of shareholders' equity),
and the accompanying notes thereto, all in reasonable detail,
fairly presenting the financial position and the results of the
operations of Borrowers and their respective subsidiaries as of
the end of and for such fiscal year, together with the unqualified
opinion of independent certified public accountants, and a copy of
the corresponding 10-K report filed with the Securities and
Exchange Commission, which accountants shall be an independent
accounting firm selected by Borrowers and reasonably acceptable to
Lender, that such financial statements have been prepared in
accordance with GAAP, and present fairly the results of operations
and financial condition of Borrowers and their respective
subsidiaries as of the end of and for the fiscal year then ended;
and (iii) promptly after the same are filed, copies of all Federal
income tax returns which Borrowers or any of them, may file with
the Internal Revenue Service and promptly after the same are
prepared, copies of all management reports, briefs, memoranda or
other writings prepared for the Borrower by its auditors,
accountants, and management or financial consultants. Lender
acknowledges that Borrowers' current accounting firm, BDO ▇▇▇▇▇▇▇,
is acceptable to Lender for purposes of Section 9.6(a)(ii).
(b) Borrowers shall promptly notify Lender in
writing of the details of (i) any loss, damage, investigation,
action, suit, proceeding or claim relating to the Collateral or
any other property which is security for the Obligations or which
would result in any material adverse change in the businesses,
properties, assets, goodwill or condition, financial or otherwise,
of Borrowers, or any of them, and (ii) the occurrence of any Event
of Default or event which, with the passage of time or giving of
notice or both, would constitute an Event of Default.
(c) Borrowers shall promptly after the sending or
filing thereof furnish or cause to be furnished to Lender copies
of all reports which Borrowers, or any of them, send to their
stockholders generally and copies of all reports, registration
statements, and proxy statements which Borrowers, or any of them,
file with the Securities and Exchange Commission, any national
securities exchange or the National Association of Securities
Dealers, Inc.
(d) Borrowers shall furnish or cause to be
furnished to Lender such budgets, forecasts, projections and other
information respecting the Collateral and the business of each
Borrower, as Lender may, from time to time, reasonably request.
Lender is hereby authorized to deliver a copy of any financial
statement or any other information relating to the business of
Borrowers, or any of them, to any court or other government agency
or to any participant or assignee or prospective participant or
assignee. Borrowers hereby irrevocably authorize and direct all
accountants or auditors to deliver to Lender, at Borrowers'
expense, copies of the financial statements of Borrowers and any
reports or management letters prepared by such accountants or
auditors on behalf of Borrowers and to disclose to Lender such
information as they may have regarding the businesses of
Borrowers. Any documents, schedules, invoices or other papers
delivered to Lender may be destroyed or otherwise disposed of by
Lender one (1) year after the same are delivered to Lender, except
as otherwise designated by Borrowers to Lender in writing.
28
SECTION 9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc.
No Borrower shall, directly or indirectly, (a) merge into or with
or consolidate with any other Person or permit any other Person to
merge into or with or consolidate with it, or (b) sell, assign,
lease, transfer, abandon or otherwise dispose of any stock or
indebtedness to any other Person or any of its assets to any other
Person, including any Financed Equipment or Real Property (other
than the ▇▇▇▇▇▇ Street Property), or (c) form or acquire any
subsidiaries, or (d) wind up, liquidate or dissolve or (e) agree
to do any of the foregoing.
SECTION 9.8 Encumbrances. No Borrower shall create, incur, assume
or suffer to exist any security interest, mortgage, pledge, lien,
charge or other encumbrance of any nature whatsoever on any of its
assets or properties, including the Collateral and all Real
Property whether or not encumbered by the Mortgages, including the
Existing Unencumbered Real Property, except: (a) liens and
security interests of Lender; (b) liens securing the payment of
taxes, either not yet overdue or the validity of which are being
contested in good faith by appropriate proceedings diligently
pursued and available to the applicable Borrower and with respect
to which adequate reserves have been set aside on its books; (c)
non-consensual statutory liens (other than liens securing the
payment of taxes) arising in the ordinary course of the applicable
Borrower's business to the extent: (i) such liens secure
indebtedness which is not overdue or (ii) such liens secure
indebtedness relating to claims or liabilities which are fully
insured and being defended at the sole cost and expense and at the
sole risk of the insurer or being contested in good faith by
appropriate proceedings diligently pursued and available to the
applicable Borrower, in each case prior to the commencement of
foreclosure or other similar proceedings and with respect to which
adequate reserves have been set aside on its books; (d) zoning
restrictions, easements, licenses, covenants and other
restrictions affecting the use of real property which do not
interfere in any material respect with the use of such real
property or ordinary conduct of the business of the applicable
Borrower as presently conducted thereon or materially impair the
value of the real property which may be subject thereto; (e)
purchase money security interests in Equipment (including capital
leases) (other than the Financed Equipment) and purchase money
mortgages on real estate not to exceed $2,500,000 in the aggregate
at any time outstanding, plus any amounts Borrowers expends to
acquire Equipment if, pursuant to Section 9.5, Lender elects to
apply the proceeds of insurance received in the Blocked Account in
reduction of the Term Loan or hold same as Collateral as permitted
thereunder, so long as such security interests and mortgages do
not apply to any property of the applicable Borrower other than
the Equipment or real estate so acquired, and the indebtedness
secured thereby does not exceed the cost of the Equipment or real
estate so acquired, as the case may be; and (f) the security
interests and liens set forth on Schedule 8.4 hereto.
SECTION 9.9 Indebtedness. No Borrower shall incur, create, assume,
become or be liable in any manner with respect to, or permit to
exist, any obligations or indebtedness, except: (a) the
Obligations; (b) trade obligations and normal accruals in the
ordinary course of business not yet due and payable, or with
respect to which a Borrower is contesting in good faith the amount
or validity thereof by appropriate proceedings diligently pursued
and available to such Borrower, and with respect to which adequate
reserves have been set aside on its books; (c) purchase money
29
indebtedness (including capital leases) to the extent not incurred
or secured by liens (including capital leases) in violation of any
other provision of this Agreement; and (d) the indebtedness set
forth on Schedule 9.9 hereto; provided, that,(i) Borrowers may
only make regularly scheduled payments of principal and interest
in respect of such indebtedness in accordance with the terms of
the agreement or instrument evidencing or giving rise to such
indebtedness as in effect on the date hereof, (ii) Borrowers shall
not, directly or indirectly, (A) amend, modify, alter or change
the terms of such indebtedness or any agreement, document or
instrument related thereto as in effect on the date hereof, or
(B) redeem, retire, defease, purchase or otherwise acquire such
indebtedness, or set aside or otherwise deposit or invest any sums
for such purpose, and (iii) Borrowers shall furnish to Lender all
notices or demands in connection with such indebtedness either
received by Borrowers, or any of them, or on their behalf,
promptly after the receipt thereof, or sent by Borrowers, or any
of them, or on their behalf, concurrently with the sending
thereof, as the case may be.
SECTION 9.10 Loans, Investments, Guarantees, Etc. No Borrower shall,
directly or indirectly, make any loans or advance money or
property to any person, or invest in (by capital contribution,
dividend or otherwise) or purchase or repurchase the stock or
indebtedness or all or a substantial part of the assets or
property of any person, or guarantee, assume, endorse, or
otherwise become responsible for (directly or indirectly) the
indebtedness, performance, obligations or dividends of any Person
or agree to do any of the foregoing, except: (a) the endorsement
of instruments for collection or deposit in the ordinary course of
business; (b) investments in: (i) short-term direct obligations
of the United States Government, (ii) negotiable certificates of
deposit issued by any bank satisfactory to Lender, payable to the
order of the applicable Borrower or to bearer and delivered to
Lender, and (iii) commercial paper rated A1 or P1; provided, that,
as to any of the foregoing, unless waived in writing by Lender,
each Borrower shall take such actions as are deemed necessary by
Lender to perfect the security interest of Lender in such
investments; (c) the contemplated purchase of assets of Action
Environmental Corp. by Perma-Fix of Ft. Lauderdale, Inc., upon the
prior written consent of Congress, which consent shall not be
unreasonably withheld, so long as such action as Lender may
require in respect of the Collateral shall be taken by Borrowers;
and (d) the loans, advances and guarantees set forth on
Schedule 9.10 hereto; provided, that, as to such loans, advances
and guarantees, (i) no Borrower shall, directly or indirectly,
(A) amend, modify, alter or change the terms of such loans,
advances or guarantees or any agreement, document or instrument
related thereto, or (B) as to such guarantees, redeem, retire,
defease, purchase or otherwise acquire the obligations arising
pursuant to such guarantees, or set aside or otherwise deposit or
invest any sums for such purpose, and (ii) Borrowers shall furnish
to Lender all notices or demands in connection with such loans,
advances or guarantees or other indebtedness subject to such
guarantees either received by Borrowers or on its behalf, promptly
after the receipt thereof, or sent by any Borrower or on its
behalf, concurrently with the sending thereof, as the case may be.
SECTION 9.11 Dividends and Redemptions. No Borrower shall, directly
or indirectly, declare or pay any dividends (except for mandatory
dividends required to be paid in respect of preferred stock issued
and outstanding on the date of this Agreement as set forth on
30
Schedule 9.11 hereto), on account of any shares of class of
capital stock of any Borrower now or hereafter outstanding, or set
aside or otherwise deposit or invest any sums for such purpose, or
redeem, retire, defease, purchase or otherwise acquire any shares
of any class of capital stock (or set aside or otherwise deposit
or invest any sums for such purpose) for any consideration other
than common stock or apply or set apart any sum, or make any other
distribution (by reduction of capital or otherwise) in respect of
any such shares or agree to do any of the foregoing.
SECTION 9.12 Transactions with Affiliates. No Borrower shall,
directly or indirectly, (a) purchase, acquire or lease any
property from, or sell, transfer or lease any property to, any
officer, director, agent or other person affiliated with
Borrowers, except in the ordinary course of and pursuant to the
reasonable requirements of the applicable Borrower's business and
upon fair and reasonable terms no less favorable to the applicable
Borrower than such Borrower would obtain in a comparable arm's
length transaction with an unaffiliated person or (b) make any
payments of management, consulting or other fees for management or
similar services, or of any indebtedness owing to any officer,
employee, shareholder, director or other person affiliated with
Borrowers except reasonable compensation to officers, employees
and directors for services rendered to Borrowers in the ordinary
course of business.
SECTION 9.13 Additional Bank Accounts. No Borrower shall, directly
or indirectly, open, establish or maintain any deposit account,
investment account or any other account with any bank or other
financial institution, other than the Blocked Accounts and the
accounts set forth in Schedule 8.8 hereto, except: (a) as to any
new or additional Blocked Accounts and other such new or
additional accounts which contain any Collateral or proceeds
thereof, with the prior written consent of Lender and subject to
such conditions thereto as Lender may establish and (b) as to any
accounts used by a Borrower to make payments of payroll, taxes or
other obligations to third parties, including operating accounts,
provided, however that in all such cases written notice of
establishing such account(s) shall be given to Lender no later
than ten (10) days after establishing any such account(s).
SECTION 9.14 Adjusted Net Worth. Borrowers shall, at all times,
maintain Adjusted Net Worth on a consolidated basis in respect of
Borrowers of not less than $3,000,000.
SECTION 9.15 Costs and Expenses. Borrowers shall pay to Lender on
demand all costs, expenses, filing fees and taxes paid or payable
in connection with the preparation, negotiation, execution,
delivery, recording, administration, collection, liquidation,
enforcement and defense of the Obligations, Lender's rights in the
Collateral, this Agreement, the other Financing Agreements and all
other documents related hereto or thereto, including any
amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect
hereof and thereof, including: (a) all costs and expenses of
filing or recording (including Uniform Commercial Code financing
statement filing taxes and fees, documentary taxes, intangibles
taxes and mortgage recording taxes and fees, if applicable);
(b) all title insurance and other insurance premiums,
environmental audits, surveys, assessments, engineering reports
and inspection, appraisal and search fees and costs; (c) costs and
expenses of remitting loan proceeds, collecting checks and other
items of payment, and establishing and maintaining the Blocked
31
Accounts, together with Lender's customary charges and fees with
respect thereto; (d) costs and expenses of preserving and
protecting the Collateral; (e) costs and expenses paid or incurred
in connection with obtaining payment of the Obligations, enforcing
the security interests and liens of Lender, selling or otherwise
realizing upon the Collateral, and otherwise enforcing the
provisions of this Agreement and the other Financing Agreements or
defending any claims made or threatened against Lender arising out
of the transactions contemplated hereby and thereby (including
preparations for and consultations concerning any such matters);
(f) all out-of-pocket expenses and costs heretofore and from time
to time hereafter incurred by Lender during the course of periodic
field examinations of the Collateral and Borrowers' operations,
plus a per diem charge at the rate of $650 per person per day for
Lender's examiners in the field and office; and (g) the fees and
disbursements of counsel (including legal assistants) to Lender in
connection with any of the foregoing.
SECTION 9.16 Further Assurances. At the request of Lender at any
time and from time to time, each Borrower shall, at its expense,
duly execute and deliver, or cause to be duly executed and
delivered, such further agreements, documents and instruments, and
do or cause to be done such further acts as may be necessary or
proper to evidence, perfect, maintain and enforce the security
interests and the priority thereof in the Collateral and to
otherwise effectuate the provisions or purposes of this Agreement
or any of the other Financing Agreements. Lender may at any time
and from time to time request a certificate from an officer of
Borrowers representing that all conditions precedent to the making
of Loans contained herein are satisfied. In the event of such
request by Lender, Lender may, at its option, cease to make any
further Loans until Lender has received such certificate and, in
addition, Lender has determined that such conditions are
satisfied. Where permitted by law, each Borrower hereby
authorizes Lender to execute and file one or more UCC financing
statements signed only by Lender.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
______________________________
SECTION 10.1 Events of Default. The occurrence or existence of any
one or more of the following events are referred to herein
individually as an "Event of Default", and collectively as "Events
of Default":
(a) (i) Borrower fails to pay any of the
Obligations after the same becomes due and payable or (ii)
Borrower or any Obligor fails to perform any of the covenants
contained in Sections 9.1, 9.3, 9.4, 9.5, or 9.6 of this Agreement
and such failure shall continue for five (5) days; provided, that,
such ten (10) day period shall not apply in the case of (A) any
failure to observe any such covenant which is not capable of being
cured at all or within such ten (10) day period or which has been
the subject of a prior failure within a six (6) month period or
(B) an intentional breach of Borrower or any obligor of any such
covenant, or (iii) Borrower fails to perform any of the terms,
covenants, conditions or provisions contained in this Agreement or
any of the other Financing Agreements other than those described
in Sections 10.1(a)(i) and 10.1(a)(ii) above;
32
(b) any representation, warranty or statement of
fact made by Borrowers, or any of them, to Lender in this
Agreement, the other Financing Agreements or any other agreement,
schedule, confirmatory assignment or otherwise shall when made or
deemed made be false or misleading in any material respect;
(c) any Obligor revokes, terminates or fails to
perform any of the terms, covenants, conditions or provisions of
any guarantee, endorsement or other agreement of such party in
favor of Lender;
(d) any judgment for the payment of money is
rendered against Borrowers, or any of them, or any Obligor in
excess of $100,000 in any one case or in excess of $100,000 in the
aggregate and shall remain undischarged or unvacated for a period
in excess of thirty (30) days or execution shall at any time not
be effectively stayed, or any judgment other than for the payment
of money, or injunction, attachment, garnishment or execution is
rendered against the Borrowers, or any of them, or any Obligor or
any of their assets;
(e) any Obligor (being a natural person or a
general partner of an Obligor which is a partnership) dies or any
Borrower or any Obligor, which is a partnership, limited liability
company, limited liability partnership or a corporation, dissolves
or suspends or discontinues doing business;
(f) any Borrower or any Obligor becomes insolvent
(however defined or evidenced), makes an assignment for the
benefit of creditors, makes or sends notice of a bulk transfer or
calls a meeting of its creditors or principal creditors;
(g) a case or proceeding under the bankruptcy laws
of the United States of America now or hereafter in effect or
under any insolvency, reorganization, receivership, readjustment
of debt, dissolution or liquidation law or statute of any
jurisdiction now or hereafter in effect (whether at law or in
equity) is filed against Borrowers, or any of them, or any Obligor
or all or any part of its properties and such petition or
application is not dismissed within thirty (30) days after the
date of its filing or the applicable Borrower or any Obligor shall
file any answer admitting or not contesting such petition or
application or indicates its consent to, acquiescence in or
approval of, any such action or proceeding or the relief requested
is granted sooner;
(h) a case or proceeding under the bankruptcy laws
of the United States of America now or hereafter in effect or
under any insolvency, reorganization, receivership, readjustment
of debt, dissolution or liquidation law or statute of any
jurisdiction now or hereafter in effect (whether at a law or
equity) is filed by Borrowers, or any of them, or any Obligor or
for all or any part of its property; or
(i) any default by Borrowers, or any of them, or
any Obligor under any agreement, document or instrument relating
to any indebtedness for borrowed money owing to any person other
than Lender, or any capitalized lease obligations, contingent
33
indebtedness in connection with any guarantee, letter of credit,
indemnity or similar type of instrument in favor of any person
other than Lender, in any case in an amount in excess of $100,000,
which default continues for more than the applicable cure period,
if any, with respect thereto, or any default by Borrowers, or any
of them, or any Obligor under any material contract, lease,
license or other obligation to any person other than Lender, which
default continues for more than the applicable cure period, if
any, with respect thereto;
(j) any change in the controlling ownership of
Borrowers, or any of them;
(k) the indictment or threatened indictment of
Borrowers, or any of them, or any Obligor under any criminal
statute, or commencement or threatened commencement of criminal or
civil proceedings against Borrowers, or any of them, or any
Obligor, pursuant to which statute or proceedings the penalties or
remedies sought or available include forfeiture of any of the
property of Borrowers, or any of them, or such Obligor;
(l) there shall be a material adverse change in
the business, assets or prospects of Borrowers, or any of them, or
any Obligor after the date hereof; or
(m) there shall be an event of default under any
of the other Financing Agreements.
SECTION 10.2 Remedies.
(a) At any time an Event of Default exists or has
occurred and is continuing, Lender shall have all rights and
remedies provided in this Agreement, the other Financing
Agreements, the Uniform Commercial Code and other applicable law,
all of which rights and remedies may be exercised without notice
to or consent by Borrowers or any Obligor, except as such notice
or consent is expressly provided for hereunder or required by
applicable law. All rights, remedies and powers granted to Lender
hereunder, under any of the other Financing Agreements, the
Uniform Commercial Code or other applicable law, are cumulative,
not exclusive and enforceable, in Lender's discretion,
alternatively, successively, or concurrently on any one or more
occasions, and shall include, without limitation, the right to
apply to a court of equity for an injunction to restrain a breach
or threatened breach by Borrowers of this Agreement or any of the
other Financing Agreements. Lender may, at any time or times,
proceed directly against Borrowers, or any of them, or any Obligor
to collect the Obligations without prior recourse to the
Collateral.
(b) Without limiting the foregoing, at any time an
Event of Default exists or has occurred and is continuing, Lender
may, in its discretion and without limitation, (i) accelerate the
payment of all Obligations and demand immediate payment thereof to
Lender (provided, that, upon the occurrence of any Event of
Default described in Sections 10.1(g) and 10.1(h), all Obligations
shall automatically become immediately due and payable), (ii) with
or without judicial process or the aid or assistance of others,
enter upon any premises on or in which any of the Collateral may
be located and take possession of the Collateral or complete
34
processing, manufacturing and repair of all or any portion of the
Collateral, (iii) require Borrowers, at Borrowers' expense, to
assemble and make available to Lender any part or all of the
Collateral at any place and time designated by Lender, (iv)
collect, foreclose, receive, appropriate, setoff and realize upon
any and all Collateral, (v) remove any or all of the Collateral
from any premises on or in which the same may be located for the
purpose of effecting the sale, foreclosure or other disposition
thereof or for any other purpose, (vi) sell, lease, transfer,
assign, deliver or otherwise dispose of any and all Collateral
(including entering into contracts with respect thereto, public or
private sales at any exchange, broker's board, at any office of
Lender or elsewhere) at such prices or terms as Lender may deem
reasonable, for cash, upon credit or for future delivery, with the
Lender having the right to purchase the whole or any part of the
Collateral at any such public sale, all of the foregoing being
free from any right or equity of redemption of Borrowers, which
right or equity of redemption is hereby expressly waived and
released by Borrowers and/or (vii) terminate this Agreement. If
any of the Collateral is sold or leased by Lender upon credit
terms or for future delivery, the Obligations shall not be reduced
as a result thereof until payment therefor is finally collected by
Lender. If notice of disposition of Collateral is required by
law, five (5) days prior notice by Lender to Borrowers designating
the time and place of any public sale or the time after which any
private sale or other intended disposition of Collateral is to be
made, shall be deemed to be reasonable notice thereof and each
Borrower waives any other notice. In the event Lender institutes
an action to recover any Collateral or seeks recovery of any
Collateral by way of prejudgment remedy, Borrowers waive the
posting of any bond which might otherwise be required.
(c) Lender may apply the cash proceeds of
Collateral actually received by Lender from any sale, lease,
foreclosure or other disposition of the Collateral to payment of
the Obligations, in whole or in part and in such order as Lender
may elect, whether or not then due. Borrowers shall remain liable
to Lender for the payment of any deficiency with interest at the
highest rate provided for herein and all costs and expenses of
collection or enforcement, including attorneys' fees and legal
expenses.
(d) Without limiting the foregoing, upon the
occurrence of an Event of Default or an event which with notice or
passage of time or both would constitute an Event of Default,
Lender may, at its option, without notice, (i) cease making Loans
or reduce the lending formulas or amounts of Revolving Loans
available to Borrowers and/or (ii) terminate any provision of this
Agreement providing for any future Loans to be made by Lender to
Borrowers.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS, CONSENTS AND
ACKNOWLEDGEMENTS; GOVERNING LAW
_______________________________________________
SECTION 11.1 Governing Law; Choice of Forum; Service of Process; Jury
Trial Waiver; Contribution by Other Borrowers
(a) The validity, interpretation and enforcement
of this Agreement and the other Financing Agreements and any
dispute arising out of the relationship between the parties
35
hereto, whether in contract, tort, equity or otherwise, shall be
governed by the internal laws of the State of Florida (without
giving effect to principles of conflicts of law).
(b) Borrowers and Lender irrevocably consent and
submit to the non-exclusive jurisdiction of the Circuit Court of
Dade County, Florida, and the United States District Court for the
Southern District and waive any objection based on venue or forum
non conveniens with respect to any action instituted therein
arising under this Agreement or any of the other Financing
Agreements or in any way connected with or related or incidental
to the dealings of the parties hereto in respect of this Agreement
or any of the other Financing Agreements or the transactions
related hereto or thereto, in each case whether now existing or
hereafter arising, and whether in contract, tort, equity or
otherwise, and agree that any dispute with respect to any such
matters shall be heard only in the courts described above (except
that Lender shall have the right to bring any action or proceeding
against Borrowers, or any of them, or their properties in the
courts of any other jurisdiction which Lender deems necessary or
appropriate in order to realize on the Collateral or to otherwise
enforce its rights against Borrowers, or any of them, or their
properties).
(c) Each Borrower hereby waives personal service
of any and all process upon it and consents that all such service
of process may be made by certified mail (return receipt
requested) directed to its address set forth on the signature
pages hereof and service so made shall be deemed to be completed
five (5) days after the same shall have been so deposited in the
U.S. mails, or, at Lender's option, by service upon Borrowers in
any other manner provided under the rules of any such courts.
Within thirty (30) days after such service, Borrowers shall appear
in answer to such process, failing which each Borrower shall be
deemed in default and judgment may be entered by Lender against
Borrowers for the amount of the claim and other relief requested.
(d) Each of the Borrowers recognizes that, to the
extent that a Borrower shall have paid more than its proportionate
share of any payment made under the Loan Agreement, such Borrower
shall be entitled to seek and receive contribution from and
against the other Borrowers, to the extent that such other
Borrowers have not paid their proportionate shares of such
payment. The provisions of this paragraph shall in no respect
limit the obligations and liabilities of the Borrower entitled to
such contribution (or any other Borrower to Lender), and each
Borrower shall remain liable to Lender for the full amount of the
obligations of all of the Borrowers.
(e) EACH OF THE BORROWERS AND LENDER EACH HEREBY
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT OR ANY OF THE
OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN
RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS
OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT,
36
EQUITY OR OTHERWISE. EACH OF THE BORROWERS AND LENDER EACH HEREBY
AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE
OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT
BORROWERS OR LENDER MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF
THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT
OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY
JURY.
(f) Lender shall not have any liability to
Borrowers, or any of them (whether in tort, contract, equity or
otherwise), for losses suffered by Borrowers, or any of them, in
connection with, arising out of, or in any way related to the
transactions or relationships contemplated by this Agreement, or
any act, omission or event occurring in connection herewith,
unless it is determined by a final and non-appealable judgment or
court order binding on Lender, that the losses were the result of
acts or omissions constituting gross negligence or willful
misconduct. In any such litigation, Lender shall be entitled to
the benefit of the rebuttable presumption that it acted in good
faith and with the exercise of ordinary care in the performance by
it of the terms of this Agreement.
SECTION 11.2 Waiver of Notices. Borrowers hereby expressly waive
demand, presentment, protest and notice of protest and notice of
dishonor with respect to any and all instruments and commercial
paper, included in or evidencing any of the Obligations or the
Collateral, and any and all other demands and notices of any kind
or nature whatsoever with respect to the Obligations, the
Collateral and this Agreement, except such as are expressly
provided for herein. No notice to or demand on Borrowers, or any
of them, which Lender may elect to give shall entitle Borrowers,
or any of them, to any other or further notice or demand in the
same, similar or other circumstances.
SECTION 11.3 Amendments and Waivers. Neither this Agreement nor any
provision hereof shall be amended, modified, waived or discharged
orally or by course of conduct, but only by a written agreement
signed by an authorized officer of Lender, and as to amendments,
as also signed by authorized officers of Borrowers. Lender shall
not, by any act, delay, omission or otherwise be deemed to have
expressly or impliedly waived any of its rights, powers and/or
remedies unless such waiver shall be in writing and signed by an
authorized officer of Lender. Any such waiver shall be
enforceable only to the extent specifically set forth therein. A
waiver by Lender of any right, power and/or remedy on any one
occasion shall not be construed as a bar to or waiver of any such
right, power and/or remedy which Lender would otherwise have on
any future occasion, whether similar in kind or otherwise.
SECTION 11.4 Waiver of Counterclaims. Each Borrower waives all
rights to interpose any claims, deductions, setoffs or
counterclaims of any nature (other then compulsory counterclaims)
in any action or proceeding with respect to this Agreement, the
Obligations, the Collateral or any matter arising therefrom or
relating hereto or thereto.
SECTION 11.5 Indemnification. Borrowers shall indemnify and hold
Lender, and its directors, agents, employees and counsel, harmless
from and against any and all losses, claims, damages, liabilities,
37
costs or expenses imposed on, incurred by or asserted against any
of them in connection with any litigation, investigation, claim or
proceeding commenced or threatened related to the negotiation,
preparation, execution, delivery, enforcement, performance or
administration of this Agreement, any other Financing Agreements,
or any undertaking or proceeding related to any of the
transactions contemplated hereby or any act, omission, event or
transaction related or attendant thereto, including amounts paid
in settlement, court costs, and the fees and expenses of counsel.
To the extent that the undertaking to indemnify, pay and hold
harmless set forth in this Section may be unenforceable because it
violates any law or public policy, Borrowers shall pay the maximum
portion which it is permitted to pay under applicable law to
Lender in satisfaction of indemnified matters under this Section.
Without limiting the generality of the foregoing, or any other
provision or any Financing Agreement, Borrowers shall pay all
stamp, document, transfer, recording or filing taxes or fees and
similar impositions, now or hereafter determined by Lender to be
payable in connection with this Agreement or any other Financing
Agreement, and Borrowers shall indemnify Lender (and the persons
described above) for, and shall hold Lender harmless from and
against any and all present or future claims, liabilities or
losses, including, without limitation, all interest, fines, and
penalties in any wise related to the foregoing, with respect to or
resulting from any omission to pay or delay in paying any such
taxes, fees or impositions. The foregoing indemnities shall
survive the payment of the Obligations and the termination or non-
renewal of this Agreement.
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS
________________________________
SECTION 12.1 Term.
(a) This Agreement and the other Financing
Agreements shall become effective as of the date set forth on the
first page hereof and shall continue in full force and effect for
a term ending on the date three (3) years from the date hereof
(the "Expiration Date"), unless sooner terminated pursuant to the
terms hereof; provided, that, this Agreement and all other
Financing Agreements must be terminated simultaneously. Upon the
effective date of termination or non-renewal of the Financing
Agreements (whether on the Expiration Date or otherwise),
Borrowers shall pay to Lender, in full, all outstanding and unpaid
Obligations and shall furnish cash collateral to Lender in such
amounts as Lender determines are reasonably necessary to secure
Lender from loss, cost, damage or expense, including attorneys'
fees and legal expenses, in connection with any Obligations and
checks or other payments provisionally credited to the Obligations
and/or as to which Lender has not yet received final and
indefeasible payment. Such payments in respect of the Obligations
and cash collateral shall be remitted by wire transfer in Federal
funds to such bank account of Lender, as Lender may, in its
discretion, designate in writing to Borrowers for such purpose.
Interest shall be due until and including the next business day,
if the amounts so paid by Borrowers to the bank account designated
by Lender are received in such bank account later than 12:00 noon,
Eastern time.
(b) No termination of this Agreement or the other
Financing Agreements shall relieve or discharge Borrowers of their
respective duties, obligations and covenants under this Agreement
or the other Financing Agreements until all Obligations have been
38
fully and finally discharged and paid, and Lender's continuing
security interest in the Collateral and the rights and remedies of
Lender hereunder, under the other Financing Agreements and
applicable law, shall remain in effect until all such Obligations
have been fully and finally discharged and paid.
(c) If for any reason this Agreement is terminated
prior to the end of the then current term of this Agreement, in
view of the impracticality and extreme difficulty of ascertaining
actual damages and by mutual agreement of the parties as to a
reasonable calculation of Lender's lost profits as a result
thereof, Borrowers agree to pay to Lender, upon the effective date
of such termination, an early termination fee in the amount set
forth below if such termination is effective in the period
indicated:
Amount Period
______ ______
(i) 3.0% of Maximum From the date hereof to and
Credit including January 14, 1999
(ii) 1.5% of Maximum From January 15, 1999 to
Credit and including January 14, 2000
(iii) 1.0% of Maximum Thereafter
Credit
Such early termination fee shall be presumed to be the amount of
damages sustained by Lender as a result of such early termination
and Borrowers agree that it is reasonable under the circumstances
currently existing. In addition, Lender shall be entitled to such
early termination fee upon the occurrence of any Event of Default
described in Sections 10.1(g) and 10.1(h) hereof, even if Lender
does not exercise its right to terminate this Agreement, but
elects, at its option, to provide financing to Borrowers or permit
the use of cash collateral under the United States Bankruptcy
Code. The early termination fee provided for in this Section 12.1
shall be deemed included in the Obligations.
SECTION 12.2 Notices. All notices, requests and demands hereunder
shall be in writing and (a) made to Lender at its address set
forth below and to Borrowers at their chief executive offices set
forth below, or to such other address as either party may
designate by written notice to the other in accordance with this
provision, and (b) deemed to have been given or made: if delivered
in person, immediately upon delivery; if by telex, telegram or
facsimile transmission, immediately upon sending and upon
confirmation of receipt; if by nationally recognized overnight
courier service with instructions to deliver the next business
day, one (1) business day after sending; and if by certified mail,
return receipt requested, five (5) days after mailing.
SECTION 12.3 Partial Invalidity. If any provision of this Agreement
is held to be invalid or unenforceable, such invalidity or
unenforceability shall not invalidate this Agreement as a whole,
but this Agreement shall be construed as though it did not contain
the particular provision held to be invalid or unenforceable and
the rights and obligations of the parties shall be construed and
enforced only to such extent as shall be permitted by applicable
law.
39
SECTION 12.4 Successors. This Agreement, the other Financing
Agreements and any other document referred to herein or therein
shall be binding upon and inure to the benefit of and be
enforceable by Lender, Borrowers and their respective successors
and assigns, except that Borrowers may not assign their rights
under this Agreement, the other Financing Agreements and any other
document referred to herein or therein without the prior written
consent of Lender. Lender may, after notice to Borrowers, assign
its rights and delegate its obligations under this Agreement and
the other Financing Agreements and further may assign, or sell
participations in, all or any part of the Loans or any other
interest herein to another financial institution or other person,
in which event, the assignee or participant shall have, to the
extent of such assignment or participation, the same rights and
benefits as it would have if it were the Lender hereunder, except
as otherwise provided by the terms of such assignment or
participation.
SECTION 12.5 Entire Agreement. This Agreement, the other Financing
Agreements, any supplements hereto or thereto, and any instruments
or documents delivered or to be delivered in connection herewith
or therewith represents the entire agreement and understanding
concerning the subject matter hereof and thereof between the
parties hereto, and supersede all other prior agreements,
understandings, negotiations and discussions, representations,
warranties, commitments, proposals, offers and contracts
concerning the subject matter hereof, whether oral or written. In
the event of any inconsistency between the terms of this Agreement
and any schedule or exhibit hereto, the terms of this Agreement
shall govern.
IN WITNESS WHEREOF, Lender and Borrowers have caused these
presents to be duly executed as of the day and year first above
written.
LENDER: BORROWERS:
CONGRESS FINANCIAL PERMA-FIX ENVIRONMENTAL
CORPORATION, a Florida SERVICES, INC., a Delaware
corporation corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
_______________________ _____________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, President
____________________
Title: First Vice President
______________________
Address:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
INDUSTRIAL WASTE MANAGEMENT, INC.,
a Missouri corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇,
Vice President
40
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇, INC.,
a Missouri corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇,
Vice President
PERMA-FIX TREATMENT SERVICES, INC.,
an Oklahoma corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, President
PERMA-FIX, INC., an Oklahoma
corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, President
MINTECH, INC., an Oklahoma
corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇,
Vice President
RECLAMATION SYSTEMS, INC., an
Oklahoma corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇,
Vice President
41
PERMA-FIX OF NEW MEXICO, INC.,
a New Mexico corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, President
PERMA-FIX OF FLORIDA, INC.,
a Florida corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, President
PERMA-FIX OF MEMPHIS, INC.,
a Tennessee corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, President
PERMA-FIX OF DAYTON, INC.,
an Ohio corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, President
PERMA FIX OF FT. LAUDERDALE, INC.,
a Florida corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, President
CHIEF EXECUTIVE OFFICES OF
BORROWERS ARE SET FORTH IN THE
INFORMATION CERTIFICATE
42
STATE OF IDAHO )
__________ ) ss:
COUNTY OF BONNEVILLE )
__________
On this 14th day of January, 1998, personally appeared ▇▇.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, as an officer as indicated above of the above-
listed corporations, signer and sealer of the foregoing
instrument, and acknowledged the same to be his free act and deed
and the free act and deed of said corporations, before me. He is
personally known to me or has produced a driver's license as
identification.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
_________________________________
Print Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
______________________
Notary Public
Commission No.____________________
My Commission Expires: 9-3-98
________
43