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THIRTEENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
AND LOAN DOCUMENTS
THIS THIRTEENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT AND LOAN DOCUMENTS
(this "Amendment"), dated as of October 4,1999, is between NATIONAL BANK OF
CANADA, a Canadian chartered bank ("Lender"), and CET ENVIRONMENTAL
SERVICES, INC., a California corporation ("Borrower").
Recitals
A. Lender and Borrower entered into a Loan and Security Agreement dated
May 29, 1997, as amended by the first through twelfth amendments (as
amended, the "Loan Agreement"). Defined terms used herein and not
defined herein shall have the meaning set forth in the Loan
Agreement.
B. The Loans are secured by the Collateral.
C. Pursuant to a letter from Lender to Borrower dated September 21, 1999,
Lender notified Borrower of numerous Events of Default under the Loan
Agreement, and in connection therewith, Lender provided to Borrower a
forbearance letter dated September 23, 1999 (the "Forbearance
Letter").
D. The Borrower and Lender desire to enter into this Amendment in order
to make certain other revisions to the Loan Agreement.
Agreement
IN CONSIDERATION of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Lender and Borrower agree as follows:
1. Maximum Loan Availability. Without in any way limiting the rights of
the Lender under this Agreement or the Forbearance Letter, or the sole
discretion of Lender to elect whether or not to make Advances,
Section 1(u) of the Loan Agreement is hereby amended by replacing the
phrase "Five Million Five Hundred Thousand Dollars ($5,500,000)" as
follows:
a. From the date hereof up to and including October 21, 1999, with
the phrase "Four Million Five Hundred Thousand Dollars
(S4,500,000)";
b. From October 22, 1999 through October 31, 1999, with the phrase
"Four Million Dollars ($4,000,000)"; and
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c. From November 1, 1999 up to and including the Maturity Date, with
the phrase "Three Million Five Hundred Thousand Dollars
($3,500,000)".
On October 22, 1999, Borrower shall pay to Lender the amount by which
the outstanding amount of the Revolving Loan plus the aggregate
undrawn face-amount of all Letters of Credit exceeds the lesser of
S4,000,000 or the Revolving Loan Availability.
On November 1, 1999, Borrower shall pay to Lender the amount by which
the outstanding amount of the Revolving Loan plus the aggregate
undrawn face amount of all Letters of Credit exceeds the lesser of
$3,500,000 or the Revolving Loan Availability.
2. Eligible Accounts. The definition of "Eligible Accounts" is hereby
amended by amending and restating Section 1(i) in its entirety to
read as follows:
(i) "Eligible Accounts" shall mean those Accounts of Borrower which
are unpaid less than ninety (90) days from invoice date, and
which Lender, in its sole discretion determines to be eligible.
Without limiting Lender's discretion, unless otherwise agreed by
Lender, the following Accounts of Borrower are not Eligible
Accounts: (i) all Accounts owing by a single Account Debtor,
including currently scheduled Accounts, if twenty-five percent
(25%) or more of the balance owing by such Account Debtor to
Borrower is unpaid more than ninety (90) days from the invoice
date or is ineligible under clauses (iv) or (v) below; (ii)
Accounts with respect to which the Account Debtor is an officer,
director, employee, Subsidiary or Affiliate of Borrower; (iii)
Accounts with respect to which the Account Debtor is not a
resident of the United States unless the Account Debtor has
supplied Borrower with an irrevocable letter of credit, in form
and substance satisfactory to Lender, issued by a U.S. financial
institution satisfactory to Lender, to cover the full amount of
such Account, and such letter of credit is assigned and delivered
to Lender; (iv) Accounts in dispute or with respect to which the
Account Debtor asserted a counterclaim or has asserted a right of
setoff; (v) Accounts with respect to which the prospect of
payment or performance by the Account Debtor is or will be
impaired, as determined by Lender in the exercise of its sole
discretion; (vi) Accounts with respect to which Lender does not
have a first and valid fully perfected security interest; (vii)
Accounts with respect to which the Account Debtor is the subject
of bankruptcy or a similar insolvency proceeding or has made an
assignment for the benefit of creditors or whose assets have been
conveyed to a receiver or trustee; (viii) Accounts with respect
to which the Account Debtor's obligation to pay the Account is
conditional upon the Account Debtor's approval or is otherwise
subject to any prepurchase obligation or return right, as with
sales made on a xxxx-and-hold, guaranteed sale, sale-or-return,
sale on approval or consignment basis; (ix) Accounts to the
extent that the Account Debtor's indebtedness to Borrower exceeds
a credit limit determined by Lender in Lender's discretion; (x)
Accounts with respect to which the Account Debtor is
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located in New Jersey or Minnesota unless Borrower (a) with
respect to each such state, has received a certificate of
authority to do business and is in good standing in such state,
or (b) has filed a Notice of Business Activities Report with the
New Jersey Division of Taxation or the Minnesota Department of
Revenue, as applicable, for the then current year; (xi) Accounts
which arise out of sales not made in the ordinary course of
Borrower's business, including, without limitation, any Accounts
arising out of the sale of any assets of Borrower other than
Inventory; (xii) Accounts with respect to which the Account
Debtor has returned to Borrower any portion of the Inventory the
sale of which gave rise to such Accounts; (xiii) Accounts with
respect to which any document or agreement executed or delivered
in connection therewith, or any procedure used in connection with
any such document or agreement, fails in any material respect to
comply with the requirements of applicable law; (xiv) Accounts
which arise out of sales generated by or under the control or
supervision of, or services performed by or under the control or
supervision of offices of Borrower which have been sold or
closed, if such Accounts remain outstanding 45 days after such
office's closing date, even if such Accounts would otherwise be
deemed eligible; and (xv) bonded accounts.
3. Eligible Unbilled Accounts. The definition of "Eligible Unbilled Accounts"
in Section 1(j) is hereby deleted in its entirety. In addition, any
reference to Eligible Unbilled Accounts in the Loan Agreement is hereby
deleted in its entirety.
4. Revolving Loan Availability. The definition of "Revolving Loan
Availability" is hereby amended by amending and restating Section 1(cc) in
its entirety to read as follows:
(cc) Revolving Loan Availability" shall mean at any time, up to eighty
percent (80%) of the face amount (less maximum discounts, credits and
allowances which may be taken by or granted to Account Debtors in
connection therewith) then outstanding under existing Eligible
Accounts at such time, less such reserves as Lender in its sole
discretion elects to establish.
Lender may at any time and from time to time in its sole discretion
change the advance percentage as set forth above.
5. Fees and Charges. Section 3(d) of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:
(d)
Borrower shall pay to Lender all audit fees, travel and other
out-of-pocket expenses, in connection with any audit of Borrower
conducted by Lender or any agent of Lender, including, without
limitation, those fees required to continually test Accounts for
eligibility and prepare the cash flow schedules and any other reports
required by the Lender.
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6. Additional Covenants of Borrower. Section 12 of the Loan Agreement is
hereby amended by amending and restating Section 12(q) in its entirety and
by adding a new Section 12(v) and 12(w) to read as follows:
(q) Borrower shall reimburse Lender for all costs and expenses, including,
without limitation, (1) legal expenses and attorney's fees, incurred
by Lender in connection with documentation and consummation of this
transaction and any other transactions between Borrower and Lender,
including, without limitation, Uniform Commercial Code and other
public record searches, lien filings, Federal Express or other similar
express or messenger delivery, (2) appraisal costs, surveys, title
insurance and environmental audit or review costs, (3) all costs
incurred by Lender from accountants, auditors, consultants, or other
financial advisors of Lender in connection with the Loans, Lender's
administration of the Loans or the Collateral (whether before, during
or after an Event of Default), any default or any workout of the
Loans, and (4) in seeking to administer, collect, protect or enforce
any rights in or to the Collateral or incurred by Lender in seeking to
collect any Liabilities and to administer, participate, assign and/or
enforce any of Lender's rights under this Agreement and the Other
Agreements. All such costs, expenses and charges shall constitute
Revolving Loans hereunder, shall be payable by Borrower to Lender on
demand, and, until paid, shall bear interest at the rate then
applicable to Loans hereunder.
(v) Immediately upon the receipt of any proceeds derived from the sale of
any assets of Borrower other than Inventory, Borrower shall pay such
proceeds to Lender to be applied first to any unpaid principal or
interest (in such order as Lender shall determine) on the Tern Loan,
and, upon full satisfaction of the Tern Loan, to be applied to the
Revolving Loan as permanent reductions to the Maximum Loan
Availability. Such reductions to the Maximum Loan Availability shall
be in addition to the scheduled reductions described in Section 1(u)
above.
(w) The reporting requirements set forth in Sections 4(a), 4(b) and 4(e)
of the Forbearance Letter are hereinafter incorporated by reference
into the Loan Agreement.
7. Loan Documents.
a. Lender and Borrower agree that any and all notes or other documents
executed in connection with the Loans (collectively, the "Loan
Documents") are hereby amended to reflect the amendments set forth
herein and that no further amendments to any Loan Documents are
required to reflect the foregoing.
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b. All references in any document to the Loan Agreement or any other Loan
Document shall refer to the Loan Agreement or such Loan Document as
amended pursuant to this Amendment.
8. Representations and Warranties. Borrower hereby certifies to the Lender
that as of the date of this Amendment (taking into consideration the
transactions contemplated by this Amendment), all of Borrower's
representations and warranties contained in the Loan Agreement and all Loan
Documents are true, accurate and complete in all material respects, and no
Event of Default (other than as set forth in the Forbearance Letter) or
event that with notice or the passage of time or both would constitute an
Event of Default has occurred under the Loan Agreement or any Loan
Document. Without limiting the generality of the foregoing, Borrower
represents and warrants that the execution and delivery of this Amendment
has been authorized by all necessary action on the part of Borrower, that
the person executing this Amendment on behalf of Borrower is duly
authorized to do so and that this Amendment constitutes the legal, valid,
binding and enforceable obligation of Borrower.
9. Additional Documents. Borrower shall execute and deliver to Lender at any
time and from time to time such additional amendments to the Loan Agreement
and the Loan Documents as the Lender may request to confirm and carry out
the transactions contemplated hereby or to confirm, correct and clarify the
security for the Loan.
10. Continuation of the Loan Agreement, Etc. Except as specified in this
Amendment, the provisions of the Loan Agreement and the Loan Documents (as
previously amended) shall remain in full force and effect, and if there is
a conflict between the terms of this Amendment and those of the Loan
Agreement or the Loan Documents (as previously amended), the terms of this
Amendment shall control.
11. Miscellaneous.
a. This Amendment shall be governed by and construed under the laws of
the State of Colorado and shall be binding upon and inure to the
benefit of the parties hereto and their successors and permissible
assigns.
b. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original and all of which together shall
constitute one instrument.
c. This Amendment and all documents to be executed and delivered
hereunder may be delivered in the form of a facsimile copy,
subsequently confirmed by delivery of the originally executed
document.
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d. This Amendment constitutes the entire agreement between Borrower and
the Lender concerning the subject matter of this Amendment. This
Amendment may not be amended or modified orally, but only by a written
agreement executed by Borrower and the Lender and designated as an
amendment or modification of the Loan Agreement as amended by this
Amendment.
e. Execution of this Amendment is not intended to and shall not
constitute a waiver by the Lender of any Event of Default or event
that with notice or the passage of time, or both, would constitute an
Event of Default, including, without limitation, any Events of Default
set forth in the Forbearance Letter.
EXECUTED as of the date first set forth above.
BORROWER:
CET ENVIRONMENTAL SERVICES,
INC., a California corporation
By: /s/ XXXX X. XXXXX
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Name: Xxxx X. Xxxxx
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Title: CFO
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LENDER:
NATIONAL BANK OF CANADA, a
Canadian chartered bank
By:
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Xxxx X. Xxxx
Vice President
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