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
Xxxxx 000
Xxxx Xxxxxxx, Xxxxxxxxxxxx 00000
(Individually and collectively "Borrower")
This Loan Agreement ("Agreement") is entered into May 10, 1999, by and between
Bank
and Borrower, a Corporation (For profit) organized under the laws of New York.
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 May 10, 1999 ("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 a default in the payment of the Obligations
occurs or the Borrower is in Default (as defined in the Loan Documents) under
any Loan Document, or in any event, on the first anniversary unless renewed or
extended by Bank in writing upon such terms then satisfactory to Bank.
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. section 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 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. section 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. section 3617, et seg.) or narcotics (including 21 U.S.C. section 801,
et seg.) 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. Notices.
Promptly notify Bank in writing of (i) any material adverse change in its
financial condition or its business; (ii) any default under any materia!
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. 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: Nonpayment; Nonperformance. Fail to
pay or perform the Obligations or Default (as defined in the Loan Documents)
under any of the Loan Documents. Cross Default. Default in payment or
performance of any obligation under any other loans, contracts or agreements
of Borrower, any Subsidiary or Affiliate of Borrower ("Affiliate" shall have
the meaning as defined in 11 U.S.C. section 101, except that the term "debtor"
therein shall be substituted by the term "Borrower" herein; "Subsidiary" shall
mean any corporation of which more than 50% of the issued and outstanding
voting stock is owned directly or indirectly by Borrower), any general partner
of or the holder(s) of the majority ownership interests of Borrower with Bank
or its affiliates; Material Capital Structure or Business Alteration.
Materially alter the type or kind of Borrower's business or that of its
Subsidiaries or Affiliates, if any; or suffer or permit the acquisition of
substantially all of Borrower's business or assets, or a material portion (10%
or more) of such business or assets if such a sale is outside Borrower's
ordinary course of business, or more than 50% of its outstanding stock or
voting power in a single transaction or a series of transactions; or acquire
substantially all of the business or assets or more than 50% of the
outstanding stock or voting power of any other entity; or enter into any
merger or consolidation without prior written consent of Bank. 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, unaudited 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. Such statements shall be certified as to their
correctness by a principal financial officer of Borrower.
PERIODIC FINANCIAL STATEMENTS. Borrower shall deliver to Bank unaudited
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.
ACCOUNTS RECEIVABLE AGING. Borrower shall, deliver to Bank monthly 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 CERTIFICATE. Borrower shall deliver to Bank monthly within 20
days of month's end a borrowing base certificate.
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.
BORROWING BASE. As to the Line of Credit Note in the principal amount of
$750,000.00, 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.
CORPORATE By: /s/ Xxxxx X. Xxxxx
SEAL Xxxxx X. Xxxxx, CEO
First Union National Bank
CORPORATE By: /s/ Xxxxx X. Sek
XXXX Xxxxx Sek, Assistance Vice President
