FIRST UNION
LOAN AGREEMENT
First Union National Bank
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
(Hereinafter referred to as the "Bank")
Lexicon Environmental Associates, Inc.
000 Xxxx Xxxxxx Xxxxxx
Xxxx Xxxxxxx, Xxxxxxxxxxxx 00000
Groundwater Recovery Systems, Inc.
000 X Xxxxxxxx Xxxx
Xxxxx, Xxxxxxxxxxxx 00000
(Individually and collectively "Borrower")
This Loan Agreement ("Agreement") is entered into 1/5, 1998, by and between
Bank and Borrower, a Corporation (For profit) organized under the laws of
Pennsylvania.
Borrower has applied to Bank for a loan or loans (individually and
collectively, the "Loan") evidenced by one or more promissory notes (whether
one or more, the "Note") as follows:
Line of Credit - in the principal amount of $750,000.00 which is evidenced by
the Promissory Note dated 1-5, 1998 ("Line of Credit Note"), under which
Borrower may borrow, repay, and reborrow, from time to time, so long as the
total indebtedness outstanding at any one time does not exceed the principal
amount. The Loan proceeds are to be used by Borrower solely for financing
accounts receivable. Bank's obligation to advance or readvance under the Line
of Credit Note shall terminate if Borrower is in Default under the Line of
Credit Note.
This Agreement also amends and restates in its entirety that certain Revolving
Credit Agreement dated June 27, 1996 and applies to govern all of the loans
thereby.
This Agreement applies to the Loan and all Loan Documents. The terms "Loan
Documents" and "Obligations," as used in this Agreement, are defined in the
Note. The term "Borrower" shall include its Subsidiaries and Affiliates. As
used in this Agreement as to Borrower, "Subsidiary" shall mean any corporation
of which more than 50% of the issued and outstanding voting stock is owned
directly or indirectly by Borrower. As to Borrower, "Affiliate" shall have the
meaning as defined in 11 U.S.C. 101, except that the term "debtor" therein
shall be substituted by the term "Borrower" herein.
Relying upon the covenants, agreements, representations and warranties
contained in this Agreement, Bank is willing to extend credit to Borrower upon
the terms and subject to the conditions set forth herein, and Bank and
Borrower agree as follows:
REPRESENTATIONS. Borrower represents that from the date of this Agreement and
until final payment in full of the Obligations: Accurate Information. All
information now and hereafter furnished to Bank is and will be true, correct
and complete. Any such information relating to Borrower's financial condition
will accurately reflect Borrower's financial condition as of the date(s)
thereof, (including all contingent liabilities of every type), and Borrower
further represents that its financial condition has not changed materially or
adversely since the date(s) of such documents. Authorization;
Non-Contravention. The execution, delivery and performance by Borrower and any
534991 (Rev 02) guarantor, as applicable, of this Agreement and other Loan
Documents to which it is a party are within its power, have been duly
authorized by all necessary action taken by the duly authorized officers of
Borrower and any guarantors and, if necessary, by making appropriate filings
with any governmental agency or unit and are the legal, binding, valid and
enforceable obligations of Borrower and any guarantors; and do not (i)
contravene, or constitute (with or without the giving of notice or lapse of
time or both) a violation of any provision of applicable law, a violation of
the organizational documents of Borrower or any guarantor, or a default under
any agreement, judgment, injunction, order, decree or other instrument binding
upon or affecting Borrower or any guarantor, (ii) result in the creation or
imposition of any lien (other than the lien(s) created by the Loan Documents)
on any of Borrower's or guarantor's assets, or (iii) give cause for the
acceleration of any obligations of Borrower or any guarantor to any other
creditor. Asset Ownership. Borrower has good and marketable title to all of
the properties and assets reflected on the balance sheets and financial
statements supplied Bank by Borrower, and all such properties and assets are
free and clear of mortgages, security deeds, pledges, liens, charges, and all
other encumbrances, except as otherwise disclosed to Bank by Borrower in
writing ("Permitted Liens"). To Borrower's knowledge, no default has occurred
under any Permitted Liens and no claims or interests adverse to Borrower's
present rights in its properties and assets have arisen. Discharge of Liens
and Taxes. Borrower has duly filed, paid and/or discharged all taxes or other
claims which may become a lien on any of its property or assets, except to the
extent that such items are being appropriately contested in good faith and an
adequate reserve for the payment thereof is being maintained. Sufficiency of
Capital. Borrower is not, and after consummation of this Agreement and after
giving effect to all indebtedness incurred and liens created by Borrower in
connection with the Loan, will not be, insolvent within the meaning of 11
U.S.C. 101(32). Compliance with Laws. Borrower is in compliance in all
respects with all federal, state and local laws, rules and regulations
applicable to its properties, operations, business, and finances, including,
without limitation, any federal or state laws relating to liquor (including 18
U.S.C. 3617, et seq.) or narcotics (including 21 U.S.C. 801, et seq.) and/or
any commercial crimes; all applicable federal, state and local laws and
regulations intended to protect the environment; and the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), if applicable.
Organization and Authority. Each corporate or limited liability company
Borrower and any guarantor, as applicable, is duly created, validly existing
and in good standing under the laws of the state of its organization; and has
all powers, governmental licenses, authorizations, consents and approvals
required to operate its business as now conducted. Each corporate or limited
liability company Borrower and any guarantor, if any, is duly qualified,
licensed and in good standing in each jurisdiction where qualification or
licensing is required by the nature of its business or the character and
location of its property, business or customers, and in which the failure to
so qualify or be licensed, as the case may be, in the aggregate, could have a
material adverse effect on the business, financial position, results of
operations, properties or prospects of Borrower or any such guarantor. No
Litigation. There are no pending or threatened suits, claims or demands
against Borrower or any guarantor that have not been disclosed to Bank by
Borrower in writing.
AFFIRMATIVE COVENANTS. Borrower agrees that from the date of this Agreement
and until final payment in full of the Obligations, unless Bank shall
otherwise consent in writing, Borrower will: Business Continuity. Conduct its
business in substantially the same manner and locations as such business is
now and has previously been conducted. Maintain Properties. Maintain, preserve
and keep its property in good repair, working order and condition, making all
needed replacements, additions and improvements thereto, to the extent allowed
by this Agreement. Access to Books & Records. Allow Bank, or its agents,
during normal business hours, access to the books, records and such other
documents of Borrower as Bank shall reasonably require, and allow Bank to make
copies thereof at Bank's expense. Insurance, Maintain adequate insurance
coverage with respect to its properties and business against loss or damage of
the kinds and in the amounts customarily insured against by companies of
established reputation engaged in the same or similar businesses including,
without limitation, commercial general liability insurance, workers
compensation insurance, and business interruption insurance; all acquired in
such amounts and from such companies as Bank may reasonably require. Notice of
Default and Other Notices. (a) Notice of Default. Furnish to Bank immediately
upon becoming aware of the existence of any condition or event which
constitutes a Default (as defined in the Loan Documents) or any event which,
upon the giving of notice or lapse of time or both, may become a Default,
written notice specifying the nature and period of existence thereof and the
action which Borrower is taking or proposes to take with respect thereto. (b)
Other Notices. Promptly notify Bank in writing of (i) any material adverse
change in its financial condition or its business; (ii) any default under any
material agreement, contract or other instrument to which it is a party or by
which any of its properties are bound, or any acceleration of the maturity of
any indebtedness owing by Borrower; (iii) any material adverse claim against
or affecting Borrower or any part of its properties; (iv) the commencement of,
and any material determination in, any litigation with any third party or any
proceeding before any governmental agency or unit affecting Borrower; and (v)
at least 30 days prior thereto, any change in Borrower's name or address as
shown above, and/or any change in Borrower's structure. Compliance with Other
Agreements. Comply with all terms and conditions contained in this Agreement,
and any other Loan Documents, and swap agreements, if applicable, as defined
in the Note. Payment of Debts. Pay and discharge when due, and before subject
to penalty or further charge, and otherwise satisfy before maturity or
delinquency, all obligations, debts, taxes, and liabilities of whatever nature
or amount, except those which Borrower in good faith disputes. Reports and
Proxies. Deliver to Bank, promptly, a copy of all financial statements,
reports, notices, and proxy statements, sent by Borrower to stockholders, and
all regular or periodic reports required to be filed by Borrower with any
governmental agency or authority. Other Financial Information. Deliver
promptly such other information regarding the operation, business affairs, and
financial condition of Borrower which Bank may reasonably request. Non-Default
Certificate From Borrower. Deliver to Bank, with the Financial Statements
required herein, a certificate signed by Borrower, if Borrower is an
individual, or by a principal financial officer of Borrower warranting that no
"Default" as specified in the Loan Documents nor any event which, upon the
giving of notice or lapse of time or both, would constitute such a Default,
has occurred. Estoppel Certificate. Furnish, within 15 days after request by
Bank, a written statement duly acknowledged of the amount due under the Loan
and whether offsets or defenses exist against the Obligations.
NEGATIVE COVENANTS. Borrower agrees that from the date of this Agreement and
until final payment in full of the Obligations, unless Bank shall otherwise
consent in writing, Borrower will not: Default on Other Contracts or
Obligations. Default on any material contract with or obligation when due to a
third party or default in the performance of any obligation to a third party
incurred for money borrowed. Judgment Entered. Permit the entry of any
monetary judgment or the assessment against, the filing of any tax lien
against, or the issuance of any writ of garnishment or attachment against any
property of or debts due Borrower. Government Intervention. Permit the
assertion or making of any seizure, vesting or intervention by or under
authority of any government by which the management of Borrower or any
guarantor is displaced of its authority in the conduct of its respective
business or such business is curtailed or materially impaired. Prepayment of
Other Debt. Retire any long-term debt entered into prior to the date of this
Agreement at a date in advance of its legal obligation to do so. Retire or
Repurchase Capital Stock. Retire or otherwise acquire any of its capital
stock. Encumbrances. Create, assume, or permit to exist any mortgage, security
deed, deed of trust, pledge, lien, charge or other encumbrance on any of its
assets, whether now owned or hereafter acquired, other than: (i) security
interests required by the Loan Documents; (ii) liens for taxes contested in
good faith; (iii) liens accruing by law for employee benefits; or (iv)
Permitted Liens.
ANNUAL FINANCIAL STATEMENTS. Borrower shall deliver to Bank, within 120 days
after the close of each fiscal year, management prepared financial statements
reflecting its operations during such fiscal year, including, without
limitation, a balance sheet, profit and loss statement and statement of cash
flows, with supporting schedules; all on a consolidated and consolidating
basis and in reasonable detail, prepared in conformity with generally accepted
accounting principles, applied on a basis consistent with that of the
preceding year. All such statements shall be examined by an independent
certified public accountant acceptable to Bank. The opinion of such
independent certified public accountant shall not be acceptable to Bank if
qualified due to any limitations in scope imposed by Borrower or its
Subsidiaries, if any. Any other qualification of the opinion by the accountant
shall render the acceptability of the financial statements subject to Bank's
approval.
PERIODIC FINANCIAL STATEMENTS. Borrower shall deliver to Bank management
prepared quarterly financial statements, including, without limitation, a
balance sheet, profit and loss statement and statement of cash flows, with
supporting schedules, as soon as available and in any event within 60 days
after the close of each such period; all in reasonable detail and prepared in
conformity with generally accepted accounting principles, applied on a basis
consistent with that of the preceding year. Such statements shall be certified
as to their correctness by a principal financial officer of Borrower and in
each case, if audited statements are required, subject to audit and year-end
adjustments.
FINANCIAL AND OTHER INFORMATION. Borrower shall deliver to Bank such
information as Bank may reasonably request from time to time, including
without limitation, financial statements and information pertaining to
Borrower's financial condition. Such information shall be true, complete, and
accurate. Accounts Receivable Aging. Borrower shall, from time to time
hereafter but not less than monthly, deliver to First Union within 20 days of
the end of each such period, a detailed aging of accounts by total, a summary
aging of accounts by customer and customer address, and a reconciliation
statement. Said aging should also include the original date of each invoice.
BORROWING BASE. As to the Line of Credit Note in the principal amount of
5750,000.00, the following provisions shall apply:
Borrowing Limitation. The maximum principal amount that Borrower may borrow
shall be the lesser of the principal amount stated in the Line of Credit Note
or the maximum principal amount allowed under this addendum (the "Maximum
Principal Amount").
The Maximum Principal Amount shall be an amount equal to 60% of the net amount
of Eligible Accounts, less the amount of any Reserve required by Bank.
"Eligible Account" refers to an account receivable not more than 90 days from
the date of the original invoice that arises in the ordinary course of
Borrower's business and meets the following eligibility requirements: (a) the
sale of goods or services reflected in such account is final and such goods
and services have been delivered or provided and accepted by the account
debtor and payment for such is owing; (b) the invoices comprising an account
are not subject to any claims, returns or disputes of any kind; (c) the
account debtor is not insolvent; (d) the account debtor has its principal
place of business in the United States; (e) the account debtor is not an
affiliate of Borrower and is not a supplier to Borrower and the account is not
otherwise exposed to risk of set-off; (f) not more than thirty percent of the
original invoices owing Borrower by the account debtor are more than ninety
days from the date of the original invoice.
"Reserves" may be required at any time and from time to time by Bank without
prior notice to Borrower in amounts deemed by Bank to be adequate to reserve
against outstanding letter of credit, outstanding bankers acceptances,
Borrower's obligations to Bank or its affiliates or any guaranties or other
contingent debt of Borrower.
Required Reports. Borrower shall certify to Bank by the twentieth day of each
month, the amount of Eligible Accounts as of the first day of each month, on
forms required by Bank together with all detail and supporting documents
requested by Bank. Bank may at any time and from time to time, during Bank's
normal business hours, enter upon any business premises of Borrower and audit
Borrower's accounts. Bank's determination of the amount of Eligible Accounts
shall at all times be indisputable and deemed correct. The Borrower, at all
times, shall cooperate with Bank without limitation by providing Bank
information and access to Borrower's premises and business records and shall
be courteous to Bank's agents.
Continuing Representations. Borrower warrants and represents as a continuing
warranty, that so long as principal is outstanding under the Line of Credit
Note, the outstanding principal balance shall not exceed the lesser of the
Maximum Principal Amount or the principal amount stated in the Line of Credit
Note (the "Borrowing Limit"). Borrower agrees to pay any advances in excess of
the Borrowing Limit immediately upon receipt by Borrower of written notice
that the Borrowing Limit has been exceeded.
CONDITIONS PRECEDENT. The obligations of Bank to make the Loan and any
advances pursuant to this Agreement are subject to the following conditions
precedent: Additional Documents. Receipt by Bank of such additional supporting
documents as Bank or its counsel may reasonably request.
IN WITNESS WHEREOF, Borrower and Bank, on the day and year first written
above, have caused this Agreement to be executed under seal.
Lexicon Environmental Associates, Inc.
Taxpayer Identification Number: 00-0000000
CORPORATE SEAL By: /s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx, CEO
Groundwater Recovery Systems, Inc.
Taxpayer Identification Number: 00-0000000
CORPORATE SEAL By: /s Xxxxxx X. Xxxxx
Xxxxxx,/A: Xxxxx, President
First Union National Bank
CORPORATE SEAL /s/ Xxxxxxx Xxxxx
Xxxxxxx Xxxxx, Senior Vice President
