NOTE AND LOAN AND SECURITY
AGREEMENT MODIFICATION AGREEMENT NO. 6
This Agreement dated this 17th day of June, 1997, between
ENVIRONMENT-ONE CORPORATION, a New York corporation with its principal place of
business at P. O. Xxx 000, 0000 Xxxxxxxx Xxxx, Xxxxxxxxxxx, Xxx Xxxx 00000
(hereinafter called the "Borrower"), and FLEET BANK f/k/a FLEET BANK OF NEW
YORK, a bank organized and existing under the laws of the State of New York
having its principal banking house located at 00 Xxxxx Xxxxxx, Xxxxxx, Xxx Xxxx
00000 (hereinafter called the "Lender" or the "Bank").
W I T N E S S E T H:
WHEREAS, the Borrower did execute and deliver to the Lender a Three
Million and no/100 Dollar ($3,000,000.00) Business Promissory Note dated
December 30, 1992 (hereinafter called the "Note"); and
WHEREAS, the Note was subject to the terms and conditions in a Loan and
Security Agreement also dated the 30th day of December, 1992 between the
Borrower and the Lender (hereinafter called the "Loan and Security Agreement");
and
WHEREAS, the Note and the Loan and Security Agreement were modified by
the parties pursuant to the terms of a Note and Loan and Security Agreement
Modification Agreement by and between the Borrower and the Lender dated the 23rd
day of March, 1994 (the "Modification Agreement"); and
WHEREAS, the Note and the Loan and Security Agreement were modified by
the parties pursuant to the terms of a Note and Loan and Security Agreement
Modification Agreement No. 2 by and between the Borrower and the Lender dated
the 20th day of March, 1995 (the "Modification Agreement No. 2"); and
WHEREAS, the Note and the Loan and Security Agreement were modified by
the parties pursuant to the terms of a Note and Loan and Security Agreement
Modification Agreement No. 3 by and between the Borrower and the Lender dated
the 30th day of March, 1995 (the "Modification Agreement No. 3"); and
WHEREAS, the Note and the Loan and Security Agreement were modified by
the parties pursuant to the terms of a Note and Loan and Security Agreement
Modification Agreement No. 4 by and between the Borrower and the Lender dated
the 18th day of October, 1995 (the "Modification Agreement No. 4"); and
WHEREAS, the Note and the Loan and Security Agreement were modified by
the parties pursuant to the terms of a Note and Loan and Security Agreement
Modification Agreement No. 5 by and between the Borrower and the Lender dated
the 17th day of June, 1996 (the "Modification Agreement No. 5"); and
WHEREAS, the Borrower and the Lender desire to further modify certain
terms of the Note and the Loan and Security Agreement, but only pursuant to the
terms and conditions of this Note and Loan and Security Agreement Modification
Agreement No. 6.
NOW, THEREFORE, in pursuance of said agreement and in consideration of
the mutual promises, covenants and agreements herein contained and other good
and valuable consideration, receipt of which is acknowledged by the parties
hereto, the Borrower and the Lender mutually agree and covenant as follows:
1. The interest rate set forth in the first paragraph of the Note is
hereby modified as follows:
"The Borrower agrees to pay interest on the disbursed, unpaid
principal from the date hereof, computed on a 360 day basis, but
chargeable on actual days, at a per annum rate equal to .50% above the
"Fleet Bank Prime Rate", adjusted as of the date said "Fleet Bank Prime
Rate" is changed at the Lender. The "Fleet Bank Prime Rate" is that
rate announced from time to time by the Lender as a reference point for
determining interest rates charged on certain loans and is not
necessarily the lowest rate at which the Lender lends. At the option of
the Borrower, the Borrower may make a one time election to choose a
fixed rate of interest equal to the thirty (30) day LIBOR Rate, plus
two hundred basis points (the "LIBOR Fixed Rate") to apply to the
outstanding principal balance due under this Note for the balance of
the term hereof. The LIBOR Rate is a rate per annum equal to the rate
as determined on the basis of the offered rates for deposit in United
States dollars for a period of time closest to the maturity of the
thirty day interest period which appears on the Telerate page 3750 as
of 11:00 a.m. London time as of the day that is three Banking Days
preceding the first day of the period during which interest is to
accrue at the LIBOR Fixed Rate (hereinafter the "Interest Period"). If
such rate does not appear on the Telerate page, the rate for that date
will be determined on the basis of the offered rates for deposits in
United States dollars for a period of time comparable to the Interest
Period which are offered by four major banks in the London Interbank
Market at approximately 11:00 a.m. London time as of the day that is
three Banking Days preceding the first day of the Interest Period in
question. The principal London office of each of the four major London
banks will be requested to provide a quotation of its United States
dollar deposit offered rate. If at least two such quotations are
provided, the rate for that date will be the arithmetic mean of the
quotations. If fewer than two quotations are provided as requested, the
rate for that date will be determined on the basis of the rates quoted
for loans in United States dollars to leading European banks for a
period of time comparable to the Interest Period offered by major banks
in New York City at approximately 11:00 a.m. New York City time as of
the day that is three Banking Days preceding the first day of the
Interest Period in question. In the event the Bank is unable to obtain
any such quotation as provided above, it will be deemed that a LIBOR
Rate cannot be determined. In the event the Board of Governors of the
Federal Reserve System shall impose a reserve percentage with respect
to Eurodollar deposits of the Bank, then for any period during which
such reserve percentage shall apply, the LIBOR Rate shall be equal to
the amount determined above divided by an amount equal to up to one (1)
minus such reserve percentage. If the Borrower elects to have the
outstanding principal balance due under this Note bear interest at the
LIBOR Fixed Rate, three days prior to the end of each thirty (30) day
Interest Period, interest on this Note shall automatically be repriced
at the then thirty day LIBOR Fixed Rate, as such LIBOR Fixed Rate
changes every thirty days. At any time that (i) the interest rate on
the Note is the LIBOR Fixed Rate and (ii) the Bank in its sole
discretion should determine that current market conditions can
accommodate a prepayment request, the Borrower shall have the right at
any time and from time to time to prepay the Note, in whole (but not in
part), and the Borrower shall pay to the Bank a yield maintenance fee
in an amount computed as follows:
The current rate for United States Treasury securities (Bills on a
discounted basis shall be converted to a bond equivalent) with a
maturity date closest to the last day of the Interest Period as to
which the prepayment is made shall be subtracted from the "cost of
funds" component of the LIBOR Fixed Rate in effect at the time of
prepayment. If the result is zero or a negative number, there shall be
no yield maintenance fee. If the result is a positive number, then the
resulting percentage shall be multiplied by the amount of the principal
balance being prepaid. The resulting amount will be divided by three
hundred sixty (360) and multiplied by the number of days remaining in
the Interest Period as to which the prepayment is made. Said amount
shall be reduced to present value calculated by using the above
referenced United States Treasury security rate and the number of days
remaining in said Interest Period as to which the prepayment is made.
The resulting amount shall be the yield maintenance fee due to the Bank
upon the prepayment of the Loan. If by reason of an Event of Default
the Bank elects to declare the Note to be immediately due and payable,
than any yield maintenance fee with respect to the Note shall become
due and payable in the same manner as though the Borrower had
voluntarily exercised such right of prepayment. If an event of default
should occur under this Note and be continuing, interest shall accrue
hereunder at the Fleet Bank Prime Rate plus two and one-half of one
percent until the earlier of (i) the event of default is cured, or (ii)
this Note has been paid in full."
2. The minimum "current ratio" financial covenant set forth in Schedule
A (1) to the Loan and Security Agreement, as previously modified, is hereby
modified to read in its entirety as follows:
"(1) The Borrower must maintain a minimum "current ratio" of 1.60 to
1.00. For the purposes of this subparagraph, minimum current ratio
shall mean the ratio of the Borrower's current assets to the Borrower's
current liabilities as would be determined from the fiscal quarter and
fiscal year end financial statements of the Borrower referenced in
Schedule B hereof."
3. The minimum "working capital" financial covenant set forth in
Schedule A (2) to the Loan and Security Agreement, as previously modified, is
hereby modified to read in its entirety as follows:
"During the term of the Loan, the Borrower must maintain a minimum
working capital of at least Two Million Five Hundred Thousand and
no/100 Dollars ($2,500,000.00). For the purposes of this subparagraph,
working capital shall be defined as the amount by which the current
assets of the Borrower exceed the current liabilities of the Borrower,
as would be determined from the fiscal year end financial statements of
the Borrower referenced in Schedule B hereof."
4. The minimum "net worth" (a/k/a Total Shareholders' Equity) financial
covenant set forth in Schedule A (3) to the Loan and Security Agreement, as
previously modified, is hereby modified to read in its entirety as follows:
"During the term of the Loan, the Borrower must maintain a minimum net
worth (a/k/a Total Shareholders' Equity) of at least Five Million and
no/100 Dollars ($5,000,000.00), as would be shown on the quarterly and
fiscal year end financial statements of the Borrower referenced in
Schedule B hereof. Beginning December 31, 1997 and on each of the
Borrower's fiscal year ends thereafter during the term of this
Agreement, the Borrower's aforementioned minimum net worth (a/k/a Total
Shareholders' Equity) requirement will increase by Five Hundred
Thousand and no/100 Dollars ($500,000.00) over the previous fiscal
year's net worth. For the purposes of this subparagraph, net worth
(a/k/a Total Shareholders' Equity) shall mean, as of any date of
determination thereof, the sum of the following for the Borrower as
would be determined (without duplication) on a balance sheet of the
Borrower prepared in accordance with GAAP:
(i) the amount of common stock, plus
(ii) the amount of additional paid-in capital, plus
(iii) the amount of surplus and retained earnings or, in the
case of a surplus or retained earnings deficit, minus the amount of such
deficit, less
(iv) the cost of common shares in Treasury."
5. The minimum "debt service coverage ratio" financial covenant set
forth in Schedule A (5) to the Loan and Security Agreement, as previously
modified, is hereby modified to read in its entirety as follows:
"During the term of the Loan, the Borrower must maintain a minimum debt
service coverage ratio of 1.75 to 1.00. Debt service coverage ratio
shall be defined as the sum of the Borrower's net income, plus
depreciation, plus amortization and interest less dividends divided by
the sum of the Borrower's current maturities of long term debt plus
interest expense, as would be determined from the fiscal year end
financial statements of the Borrower referenced in Schedule B hereof."
6. The requirement that the Borrower submit to the Bank quarterly
backlog reports is hereby eliminated.
7. Except as expressly modified hereunder, all the terms and conditions
of the Note, as previously modified pursuant to the terms of the Modification
Agreement, the Modification Agreement No. 2, the Modification Agreement No. 3,
the Modification Agreement No. 4 and the Modification Agreement No. 5, remain in
full force and effect, with the exception of the modifications set forth in
paragraph 1 above. All the terms and conditions of the Loan and Security
Agreement, as previously modified pursuant to the terms of the Modification
Agreement, the Modification Agreement No. 2, the Modification Agreement No. 3,
the Modification Agreement No. 4 and the Modification Agreement No. 5 and as
modified pursuant to the terms of paragraphs 2 through 6 above shall continue to
apply to the Note as further modified hereunder.
8. The Borrower hereby warrants and covenants to the Lender that as of
the date of this Agreement, there are no disputes, offsets, claims or
counterclaims of any kind or nature whatsoever under the Note, the Loan and
Security Agreement, the Modification Agreement, the Modification Agreement No.
2, the Modification Agreement No. 3, the Modification Agreement No. 4, the
Modification Agreement No. 5 or any of the documents executed in connection
therewith or herewith or the obligations represented or evidenced thereby or
hereby.
IN WITNESS WHEREOF, the parties hereto have executed this Note
and Loan and Security Agreement Modification Agreement No. 6 as of the 17th day
of June, 1997.
FLEET BANK ENVIRONMENT-ONE CORPORATION
By:/s/Xxxxx X. Xxxxxxxx By: /s/Xxxxxxx X. Xxxxx
-------------------- -------------------
Xxxxx X. Xxxxxxxx, Name: Xxxxxxx X. Xxxxx
Vice President Title: Chairman, President & CEO
By: /s/Xxxxxx X. Xxxxx
------------------
Name: Xxxxxx X. Xxxxx
Title: Treasurer
STATE OF NEW YORK )
) ss.:
COUNTY OF )
On this 17th day of June, 1997, before me personally appeared
Xxxxxxx X . Xxxxx, to me known, who being by me duly sworn, did depose and say
that he resides at e Xxxx Xxxx Xxxxxx, Xxxxxxxxxxx, XX 00000 , that he is the
Chairman, President & CEO of ENVIRONMENT-ONE CORPORATION, the corporation
described in and which executed the above instrument; and that he signed his
name thereto by order of the Board of Directors of said corporation.
/s/Xxxxxxxx X. Xxxxx
--------------------
Xxxxxxxx X. Xxxxx
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF )
On this 17th day of June, 1997, before me personally appeared
Xxxxxx X. Xxxxx, to me known, who being by me duly sworn, did depose and say
that he resides at 00 Xxxxxxxxxx Xxx Xx., Xxxxxxx Xxxx, XX 00000 that he is the
Treasurer of ENVIRONMENT-ONE CORPORATION, the corporation described in and which
executed the above instrument; and that he signed his name thereto by order of
the Board of Directors of said corporation.
/s/Xxxxxxxx X. Xxxxx
--------------------
Xxxxxxxx X. Xxxxx
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF ALBANY )
On this 21st day of May, 1997, before me personally appeared
Xxxxx X. Xxxxxxxx, to me known, who being by me duly sworn, did depose and say
that he resides at 000 Xxxxxx Xxx, Xxxxxxxxxxx, Xxx Xxxx 00000, that he is a
Vice President of FLEET BANK, the corporation described in and which executed
the above instrument; and that he signed his name thereto by order of the Board
of Directors of said corporation.
/s/Xxxxxx X. Xxxxxxx
--------------------
Xxxxxx X. Xxxxxxx
Notary Public
