First Union National Bank
Portfolio Management
000 Xxxxx Xxxxx Xxxxxx XX0000
Xxxxxxxxxxxx. Pennsylvania 00000-0000
Fax 000 000-0000
April 9, 1997
Leak-X Environmental Corporation
Groundwater Recovery Systems, Inc.
Lexicon Environmental Associates, Inc.
000 X. Xxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxxxx, XX. 00000-4806
Attn: Xxxxx X. Xxxxx
Attn: Xxxxxx X. Xxxxx
Re: Revolving Credit Agreement and Term Loan Agreement
- Covenant Defaults
Dear Xx. Xxxxx and Xx. Xxxxx:
Reference is made to (i) that certain Revolving Credit Agreement dated June
27, 1996 between Lexicon Environmental Associates, Inc. ("Lexicon") and
Groundwater Recovery Systems, Inc. ("Groundwater") (Lexicon and Groundwater to
be referred to collectively as "Co-Borrowers"), and First Union National Bank,
formerly known as First Fidelity Bank, N.A. (the "Bank"); (ii) that certain
Term Loan Agreement dated as of September 29, 1995 between Groundwater and the
Bank; (iii) that certain Guaranty and Suretyship Agreement dated June 27, 1996
between Leak-X Environmental Corporation ("Leak-X") and the Bank (the "Leak-X
Guaranty"); and (iv) that certain Guaranty and Suretyship Agreement dated
September 25, 1995 between Leak-X, Lexicon and the Bank (the "Lexicon/Leak-X
Guaranty"). The Revolving Credit Agreement, the Term Loan Agreement, the
Leak-X Guaranty, the Lexicon/Leak-X Guaranty, and all other documents and
instruments executed and delivered in connection therewith are collectively
referred to herein as the "Loan Documents". All capitalized terms used but
not defined herein shall have the meanings assigned in the Loan Documents.
The Leak-X Guaranty provides, inter alia, that:
Leak-X must maintain Consolidated Tangible Net Worth of not less than
$450,000.00 at December 31, 1996.
Leak-X must maintain Consolidated Working Capital of not less than $275,000.00
at December 31, 1996.
The Term Loan Agreement provides, inter alia, that:
Groundwater must maintain a Minimum Tangible Net Worth of not less than
$275,000.00 at December 31, 1996.
Groundwater must maintain a Maximum Total Liabilities to Tangible Net Worth of
not more than 3.5:1 at December 31 , 1996.
April 9, 1997
Page Two (Revised)
Groundwater must maintain a Minimum Current Ratio of not less than 1.5:1 at
December 31, 1996.
Groundwater must maintain Minimum Debt Service Coverage of not less than 1.4:1
at December 31, 1996.
As of December 31, 1996, the Bank has been informed that Leak-X has violated
the above-referenced provisions of the Leak-X Guaranty. Additionally,
Groundwater was in violation of all of the above-referenced provisions of the
Term Loan Agreement.
Leak-X and the Co-Borrowers have requested the Bank's waiver of these
defaults, and in consideration of the receipt of Subordination Agreements in
form and substance acceptable to the Bank, executed by Xxxxxx X. Xxxxx and
Xxxxx X. Xxxxxxxxx, respectively, as Creditors, the Bank does hereby waive the
defaults under these provisions. Further, the Bank has agreed to modify the
covenants under the Leak-X Guaranty as follows:
Consolidated Minimum Tangible Net Worth, measured quarterly: Shall not be less
than $1.00 at March 31, 1997 and at June 30, 1997. For purposes of measuring
this covenant at March 31, 1997 only, amounts permanently subordinated by
Messrs. Xxxxx and Xxxxxxxxx under the Subordination Agreement (that is to say
$100,000.00) may be included in the calculation of Minimum Tangible Net Worth.
The Consolidated Minimum Working Capital covenant will be permanently waived
up to and including the expiration of the Revolving Credit Agreement on
7/31/97.
With respect to the Term Loan Agreement, the Bank has agreed to waive all of
the covenants through the maturity of this Agreement on December 1, 1998. The
Bank will, however, reserve its right to substitute new covenants at a later
date.
This waiver is limited to the defaults recited above and shall not be
construed to be a waiver of any subsequent default under the referenced
provisions, or of any defaults that may exist under any other provision of any
of the Loan Documents. Except as described in this letter, the Bank reserves
all of its rights under the Agreements, the other Loan Documents, and
applicable law.
The Co-Borrowers and Leak-X, by signature below, represent and warrant that
there exist no defaults or events of default under the Loan Documents other
than those specifically waived herein. Please evidence your acceptance of the
terms of this letter by having each party listed below sign and return to the
Bank a copy of this letter bearing original signature.April 2, 1997
Page Three
Very truly yours,
FIRST UNION NATIONAL BANK
BY: /s/ Xxxxxxx Xxxxx
Xxxxxxx Xxxxx
Senior Vice President
ACCEPTED AND AGREED TO:
Leak-X Environmental Corporation
Witness: /s/ Xxxxxx X. Xxxxxxx BY: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: President
Date: 4/14/97
Lexicon Environmental Associates, Inc.
Witness: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: President
Date: 4/14/97
Groundwater Recovery Systems, Inc.
Witness: /s/ Xxxxxx X. Xxxxxxx BY: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: President
Date: 4/14/97
FIRST UNION
SUBORDINATION AGREEMENT
This Subordination Agreement is entered into , April 14th 1997, by FIRST
UNION NATIONAL BANK, whose address is 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx ("Bank"), Xxxxxx X. Xxxxx ("Creditor") whose address is 00 Xxxxxxx
Xxxx, Xxxxxx Xxxx, Xxxxxxxxxxxx 00000, and Lexicon Environmental Associates,
Inc., ("Obligor") whose address is 000 X. Xxxxxx Xxxxxx, #000, Xxxx Xxxxxxx,
Xxxxxxxxxxxx 00000 and Groundwater Recovery Systems, Inc., ("Obligor") whose
address is 000X Xxxxxxxx Xxxx, Xxxxx, Xxxxxxxxxxxx 00000 ("Borrowers") and
LEAK-X Environmental Corporation, ("Guarantor") whose address is 000 X. Xxxxxx
Xxxxxx, #000, Xxxx Xxxxxxx, Xxxxxxxxxxxx 00000.
Bank has extended credit to Obligors under that certain Revolving Credit
Note dated June 27, 1996, in an original amount of $750,000.00, ("Bank Debt")
which Note Obligors have requested Bank extend or modify; Guarantor guaranteed
said Note to Bank under Guaranty dated June 27, 1996; Groundwater Recovery
Systems, Inc. owes Creditor $80,885.00 under that certain Promissory Note
described below. Guarantor has guaranteed payment to the Creditor of
$80,885.00 under said Promissory Note, under its Guaranty dated September 29,
1995.
Bank has agreed to modify the terms of existing credit to the Obligors on
the condition that Creditor fully subordinate repayment of that certain
Promissory Note from Groundwater Recovery Systems, Inc. to creditor in an
amount of $80,885.00 dated September 29, 1995, the ("LEAK-X Note") to
guarantors obligation to Bank under its Guaranty and to repayment in full of
obligors' Note to Bank.
In consideration of Bank's modification of credit to Obligors, Bank,
Creditor, Obligors and Guarantor agree as follows:
Subordinated Debt: debt obligations described in the attached Schedule
"A" and all renewals, extensions and modifications thereof owing by obligor,
Groundwater Recovery Systems, Inc. to and by Guarantor under its guaranty,
thereof Creditor are herein after referred to as Subordinated Debt.
Agreement to Subordinate: Creditor and Obligors agree that Bank Debt
shall be superior to and, except as otherwise provided herein, shall be fully
paid before any part of the Subordinated Debt is paid.
Payment of Subordinated Debt Prohibited: Obligors and Guarantor shall
not, directly or indirectly, make or permit any payment or transfer of
property or release any collateral for credit in reduction of Subordinated
Debt; Creditor shall not demand, accept or receive any payment in reduction of
Subordinated Debt or additional collateral for Subordinated Debt nor act to
collect (including but not limited to, making demand or commencing litigation,
bankruptcy, reorganization or liquidation proceedings against the Obligors),
cancel, set-off, forgive, release, or otherwise discharge any Subordinated
Debt. Creditor agrees that any sums or property received in reduction of the
Subordinated Debt shall be received in trust for Bank and delivered
immediately to Bank.
Scheduled Payments Excepted: Notwithstanding the foregoing, Groundwater
Recovery Systems, Inc. may make and Creditor may receive regularly scheduled
interest payments and principal payments in the maximum amounts set forth on
Schedule B in reduction of Subordinated Debt, so long as, at the time of each
payment, all sums then due and payable under the Bank Debt shall have been
fully paid in full, and no event or condition which constitutes or which, with
notice or the lapse of time, or both, would constitute an event of default
with respect to the Bank Debt shall be continuing. In no event shall
Subordinated Debt be reduced to a principal amount of less than $50,000.00.
Assignment of Subordinated Debt and Collateral: Creditor hereby grants
Bank a security interest in and assigns to Bank all Subordinated Debt and all
collateral of any kind and guarantees therefor including all instruments
evidencing Subordinated Debt. Bank may file financing statements concerning
the security interest hereby created.
Bank appointed attorney-in-fact: Bank is hereby irrevocably appointed
attorney-in-fact for Creditor with full power to act instead of Creditor to
sign financing statements reflecting the assignment of Subordinated Debt and
collateral and guarantees therefor and to act in all matters concerning the
Subordinated Debt including the right to make, present, file and vote proofs
of claim against Obligors on account of all or part of the Subordinated Debt
and receive and collect any dividends thereon, foreclose under any mortgage or
security agreements or otherwise take possession of and sell collateral and
collect against any guarantees and apply proceeds of such dividends, sale or
collection to reduction of Subordinated Debt and to compromise or settle any
claim related thereto.
Subordinated Legend: The parties hereto will cause any note and any
other instrument which may evidence Subordinated Debt from time to time to be
endorsed with the following legend:
The indebtedness evidenced by this instrument is subordinated to the
prior payment of the Bank Debt (as defined in the Subordination Agreement
hereinafter referred to) pursuant to, and to the extent provided in, the
Subordination Agreement dated April 14, 1997, in favor of FIRST UNION
NATIONAL BANK."
The parties hereto each will further mark the appropriate books of
account to reflect the effect of this Agreement. Creditor agrees to deliver
to Bank, upon written request, all instruments evidencing Subordinated Debt or
collateral or guarantees therefor endorsed in blank.
Subordinated Instrument to Bank: Creditor shall deliver any note and any
other instrument which may evidence Subordinated Debt or collateral or
guarantees therefor to Bank to hold in its possession under the assignment
granted herein. Such instruments shall be returned to Creditor when the
subordination granted herein terminates.
Limitation on Modification of Subordinated Debt: Groundwater Recovery
Systems, Inc. and Creditor shall not, without the prior written consent of
Bank, modify, extend, supplement or increase Subordinated Debt.
Further Assurance: Creditor, Obligors and Guarantor shall execute and
deliver to Bank such further instruments and shall take such further action as
Bank may from time to time reasonably request in order to carry out the
provisions and intent of this Agreement and to confirm that Bank Debt is
entitled to the benefits of this Agreement and shall not act or permit any
action prejudicial to or inconsistent with the priority position of Bank Debt
over Subordinated Debt created by this Agreement.
Rights of Subrogation: Creditor agrees that no payment or distribution to
Bank pursuant to the provisions of this Agreement shall entitle the Creditor
to exercise any rights of subrogation in respect thereof until Bank Debt is
finally and unavoidably paid in full.
Representations, Warranties and Covenants: Creditor represents, warrants
and covenants that now and until all Bank Debt is fully paid, the Subordinated
Debt is owned solely by Creditor and shall not be subject to any set off,
security interests, liens, charges, subordinations other than this Agreement,
assignments or encumbrances; is payable solely to the Creditor; is not and
shall not be subject to any guaranty or surety; and is not in default.
Creditor covenants that Creditor shall not sell, assign or otherwise transfer
Subordinated Debt. Groundwater Recovery Systems, Inc. represents and warrants
that the Subordinated Debt is due and payable according to its terms.
Termination of Subordination: This Agreement and the subordination
granted herein shall terminate when Bank Debt is finally and unavoidably
paid. Bank Debt shall be deemed not to be paid in full, for purposes of this
Agreement, so long as the Bank has any obligation with respect to the Bank
Debt, to make further advances to Obligors. However, this Agreement and the
subordination granted herein shall continue to be effective or be reinstated
if any payment of Bank Debt is rescinded, avoided, or for any reason returned
by Bank because of any adverse claim or threatened action as though such
payment had not been made.
Remedies: Upon violation of this Agreement by Creditor, Guarantor or
Obligors, the Bank may accelerate the maturity of Bank Debt and Subordinated
Debt so that all Bank Debt and Subordinated Debt is immediately due and
payable. Creditor shall pay to Bank all sums received by Creditor paid in
violation of this agreement and Bank shall have all remedies of Creditor
against collateral for Subordinated Debt. Bank is entitled to specific
performance of this Agreement and Obligors and Creditor waive any defense
based upon adequacy of remedy at law which may be asserted as a bar to the
remedy of specific performance. No failure on the part of Bank to exercise or
delay in exercising any right or remedy hereunder shall operate as a waiver
thereof nor shall any partial exercise of any rights or remedies hereunder
preclude any other or further exercise of such or additional rights or
remedies. The remedies provided herein are cumulative of any other remedies
provided by law or otherwise held against Creditor, Obligors or Guarantor.
Miscellaneous: Waiver of Notice: Creditor waives notice of the
acceptance of this Agreement by Bank. Severability: If any provision of this
Agreement is found to be invalid or unenforceable, the remainder of such
provision and all other provisions of this Agreement shall be valid and
enforceable as if such unenforceable provision were not written. Notices: Any
notices, demands or requests shall be sufficiently given Creditor or Bank if
in writing and mailed or delivered to the address shown above or to another
address as provided herein and in the event either party hereto changes its
address at prior to the date Bank Debt paid in full, that party shall promptly
give written notice to the other party of such change of address by registered
or certified mail, return receipt requested, all charges prepaid. Continuing
Agreement: This Agreement shall be binding upon the parties and their
respective successors and assigns. Assignment: Bank may assign or transfer
its rights with respect to any Bank Debt to any person or entity, and such
transferee shall thereupon become vested with all the rights in respect
thereof granted to Bank herein. Modification: This Agreement is irrevocable
and no waiver or modification of any provision of this Agreement shall be
valid unless in writing and signed by all parties hereto.
WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW OBLIGORS,
GUARANTOR AND CREDITOR BY EXECUTION HEREOF AND BANK BY ACCEPTANCE HEREOF,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON THIS NOTE, OR ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS NOTE OR ANY AGREEMENT CONTEMPLATED TO BE
EXECUTED IN CONNECTION WITH THIS NOTE, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY WITH
RESPECT HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TO BANK TO ACCEPT THIS
NOTE.
OBLIGORS, GUARANTOR, CREDITOR AND BANK AGREE THAT THEY SHALL NOT HAVE A
REMEDY OF PUNITIVE OR EXEMPLARY DAMAGES AGAINST THE OTHER IN ANY DISPUTE AND
HEREBY WAIVE ANY RIGHT OR CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES THEY HAVE NOW
OR WHICH MAY ARISE IN THE FUTURE IN CONNECTION WITH ANY DISPUTE WHETHER THE
DISPUTE IS RESOLVED BY ARBITRATION OR JUDICIALLY.
IN WITNESS WHEREOF, Bank, Creditor, Guarantor and Obligors have signed
and sealed this instrument as of the day and year first above written.
/s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx, Creditor
Address: 00 Xxxxxxx Xxxx
Xxxxxx Xxxx Xxxxxxxxxxxx 00000
LEAK-X Environmental Corporation, Guarantor
By: /s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx, Chief Executive Officer
Lexicon Environmental Associates Inc., Obligor
By: /s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx, President
Groundwater Recovery Systems, Inc., Obligor
BY: /s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx, President
FIRST UNION NATIONAL BANK
By: /s/ Xxxxxxx Xxxxx
Xxxxxxx X. Storm, Senior Vice President
SCHEDULE A
SUBORDINATED DEBT
Xxxxxx X. Xxxxx in the amount of $80,885.00
SCHEDULE B
PRINCIPAL AND INTEREST PAYMENTS
Xxxxxx X. Xxxxx
Month Principal Interest Balance on Note
March 1997 $4,412.14 $2,022.13 $80,885.00
April 1997 4,412.14 0.00 76,472.86
May 1997 4,412.14 0.00 72,060.72
June 1997 4,412.14 1,801.52 67,648.58
July 1997 4,412.14 0.00 63,236.44
August 1997 4,412.14 0.00 58,824.30
September 1997 4,412.14 1,470.61 54,412.16
Total $30,884.98 $5,294.26 $50,000.02
FIRST UNION
SUBORDINATION AGREEMENT
This Subordination Agreement is entered into April 14, 1997, by FIRST
UNION NATIONAL BANK, whose address is 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx ("Bank"), Xxxxx X. Xxxxxxxxx ("Creditor") whose address is P. O.
Box 37, Unionville, Pennsylvania 19375, and Lexicon Environmental
Associates, Inc., ("Obligor") whose address is 000 X. Xxxxxx Xxxxxx, #000,
Xxxx Xxxxxxx, Xxxxxxxxxxxx 19382 and Groundwater Recovery Systems, Inc.,
("Obligor") whose address is 000X Xxxxxxxx Xxxx, Xxxxx, Xxxxxxxxxxxx 00000
("Borrowers") and LEAK-X Environmental Corporation, ("Guarantor") whose
address is 000 X. Xxxxxx Xxxxxx, #000, Xxxx Xxxxxxx, Xxxxxxxxxxxx 00000.
Bank has extended credit to Obligors under that certain Revolving Credit
Note dated June 27, 1996, in an original amount of $750,000.00, ("Bank Debt")
which Note Obligors have requested Bank extend or modify; Guarantor guaranteed
said Note to Bank under Guaranty dated June 27, 1996; Groundwater Recovery
Systems, Inc. owes Creditor $80,885.00 under that certain Promissory Note
described below. Guarantor has guaranteed payment to the Creditor of
$80,885.00 under said Promissory Note, under its Guaranty dated September 29,
1995.
Bank has agreed to modify the terms of existing credit to the Obligors on
the condition that Creditor fully subordinate repayment of that certain
Promissory Note from Groundwater Recovery Systems, Inc. to creditor in an
amount of $80,885.00 dated September 29, 1995, the ("LEAK-X Note") to
guarantors obligation to Bank under its Guaranty and to repayment in full of
obligors' Note to Bank.
In consideration of Bank's modification of credit to Obligors, Bank,
Creditor, Obligors and Guarantor agree as follows:
Subordinated Debt: debt obligations described in the attached Schedule
"A" and all renewals, extensions and modifications thereof owing by obligor,
Groundwater Recovery Systems, Inc. to and by Guarantor under its guaranty,
thereof Creditor are herein after referred to as Subordinated Debt.
Agreement to Subordinate: Creditor and Obligors agree that Bank Debt
shall be superior to and, except as otherwise provided herein, shall be fully
paid before any part of the Subordinated Debt is paid.
Payment of Subordinated Debt Prohibited: Obligors and Guarantor shall
not, directly or indirectly, make or permit any payment or transfer of
property or release any collateral for credit in reduction of Subordinated
Debt; Creditor shall not demand, accept or receive any payment in reduction of
Subordinated Debt or additional collateral for Subordinated Debt nor act to
collect (including but not limited to, making demand or commencing litigation,
bankruptcy, reorganization or liquidation proceedings against the Obligors),
cancel, set-off, forgive, release, or otherwise discharge any Subordinated
Debt. Creditor agrees that any sums or property received in reduction of the
Subordinated Debt shall be received in trust for Bank and delivered
immediately to Bank.
Scheduled Payments Excepted: Notwithstanding the foregoing, Groundwater
Recovery Systems, Inc. may make and Creditor may receive regularly scheduled
interest payments and principal payments in the maximum amounts set forth on
Schedule B in reduction of Subordinated Debt, so long as, at the time of each
payment, all sums then due and payable under the Bank Debt shall have been
fully paid in full, and no event or condition which constitutes or which, with
notice or the lapse of time, or both, would constitute an event of default
with respect to the Bank Debt shall be continuing. In no event shall
Subordinated Debt be reduced to a principal amount of less than $50,000.00.
Assignment of Subordinated Debt and Collateral: Creditor hereby grants
Bank a security interest in and assigns to Bank all Subordinated Debt and all
collateral of any kind and guarantees therefor including all instruments
evidencing Subordinated Debt. Bank may file financing statements concerning
the security interest hereby created.
Bank appointed attorney-in-fact: Bank is hereby irrevocably appointed
attorney-in-fact for Creditor with full power to act instead of Creditor to
sign financing statements reflecting the assignment of Subordinated Debt and
collateral and guarantees therefor and to act in all matters concerning the
Subordinated Debt including the right to make, present, file and vote proofs
of claim against Obligors on account of all or part of the Subordinated Debt
and receive and collect any dividends thereon, foreclose under any mortgage or
security agreements or otherwise take possession of and sell collateral and
collect against any guarantees and apply proceeds of such dividends, sale or
collection to reduction of Subordinated Debt and to compromise or settle any
claim related thereto.
Subordinated Legend: The parties hereto will cause any note and any
other instrument which may evidence Subordinated Debt from time to time to be
endorsed with the following legend:
The indebtedness evidenced by this instrument is subordinated to the
prior payment of the Bank Debt (as defined in the Subordination Agreement
hereinafter referred to) pursuant to, and to the extent provided in, the
Subordination Agreement dated April 14, 1997, in favor of FIRST UNION
NATIONAL BANK."
The parties hereto each will further mark the appropriate books of
account to reflect the effect of this Agreement. Creditor agrees to deliver
to Bank, upon written request, all instruments evidencing Subordinated Debt or
collateral or guarantees therefor endorsed in blank.
Subordinated Instrument to Bank: Creditor shall deliver any note and any
other instrument which may evidence Subordinated Debt or collateral or
guarantees therefor to Bank to hold in its possession under the assignment
granted herein. Such instruments shall be returned to Creditor when the
subordination granted herein terminates.
Limitation on Modification of Subordinated Debt: Groundwater Recovery
Systems, Inc. and Creditor shall not, without the prior written consent of
Bank, modify, extend, supplement or increase Subordinated Debt.
Further Assurance: Creditor, Obligors and Guarantor shall execute and
deliver to Bank such further instruments and shall take such further action as
Bank may from time to time reasonably request in order to carry out the
provisions and intent of this Agreement and to confirm that Bank Debt is
entitled to the benefits of this Agreement and shall not act or permit any
action prejudicial to or inconsistent with the priority position of Bank Debt
over Subordinated Debt created by this Agreement.
Rights of Subrogation: Creditor agrees that no payment or distribution to
Bank pursuant to the provisions of this Agreement shall entitle the Creditor
to exercise any rights of subrogation in respect thereof until Bank Debt is
finally and unavoidably paid in full.
Representations, Warranties and Covenants: Creditor represents, warrants
and covenants that now and until all Bank Debt is fully paid, the Subordinated
Debt is owned solely by Creditor and shall not be subject to any set off,
security interests, liens, charges, subordinations other than this Agreement,
assignments or encumbrances; is payable solely to the Creditor; is not and
shall not be subject to any guaranty or surety; and is not in default.
Creditor covenants that Creditor shall not sell, assign or otherwise transfer
Subordinated Debt. Groundwater Recovery Systems, Inc. represents and warrants
that the Subordinated Debt is due and payable according to its terms.
Termination of Subordination: This Agreement and the subordination
granted herein shall terminate when Bank Debt is finally and unavoidably
paid. Bank Debt shall be deemed not to be paid in full, for purposes of this
Agreement, so long as the Bank has any obligation with respect to the Bank
Debt, to make further advances to Obligors. However, this Agreement and the
subordination granted herein shall continue to be effective or be reinstated
if any payment of Bank Debt is rescinded, avoided, or for any reason returned
by Bank because of any adverse claim or threatened action as though such
payment had not been made.
Remedies: Upon violation of this Agreement by Creditor, Guarantor or
Obligors, the Bank may accelerate the maturity of Bank Debt and Subordinated
Debt so that all Bank Debt and Subordinated Debt is immediately due and
payable. Creditor shall pay to Bank all sums received by Creditor paid in
violation of this agreement and Bank shall have all remedies of Creditor
against collateral for Subordinated Debt. Bank is entitled to specific
performance of this Agreement and Obligors and Creditor waive any defense
based upon adequacy of remedy at law which may be asserted as a bar to the
remedy of specific performance. No failure on the part of Bank to exercise or
delay in exercising any right or remedy hereunder shall operate as a waiver
thereof nor shall any partial exercise of any rights or remedies hereunder
preclude any other or further exercise of such or additional rights or
remedies. The remedies provided herein are cumulative of any other remedies
provided by law or otherwise held against Creditor, Obligors or Guarantor.
Miscellaneous: Waiver of Notice: Creditor waives notice of the
acceptance of this Agreement by Bank. Severability: If any provision of this
Agreement is found to be invalid or unenforceable, the remainder of such
provision and all other provisions of this Agreement shall be valid and
enforceable as if such unenforceable provision were not written. Notices: Any
notices, demands or requests shall be sufficiently given Creditor or Bank if
in writing and mailed or delivered to the address shown above or to another
address as provided herein and in the event either party hereto changes its
address at prior to the date Bank Debt paid in full, that party shall promptly
give written notice to the other party of such change of address by registered
or certified mail, return receipt requested, all charges prepaid. Continuing
Agreement: This Agreement shall be binding upon the parties and their
respective successors and assigns. Assignment: Bank may assign or transfer
its rights with respect to any Bank Debt to any person or entity, and such
transferee shall thereupon become vested with all the rights in respect
thereof granted to Bank herein. Modification: This Agreement is irrevocable
and no waiver or modification of any provision of this Agreement shall be
valid unless in writing and signed by all parties hereto.
WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW OBLIGORS,
GUARANTOR AND CREDITOR BY EXECUTION HEREOF AND BANK BY ACCEPTANCE HEREOF,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON THIS NOTE, OR ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS NOTE OR ANY AGREEMENT CONTEMPLATED TO BE
EXECUTED IN CONNECTION WITH THIS NOTE, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY WITH
RESPECT HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TO BANK TO ACCEPT THIS
NOTE.
OBLIGORS, GUARANTOR, CREDITOR AND BANK AGREE THAT THEY SHALL NOT HAVE A
REMEDY OF PUNITIVE OR EXEMPLARY DAMAGES AGAINST THE OTHER IN ANY DISPUTE AND
HEREBY WAIVE ANY RIGHT OR CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES THEY HAVE NOW
OR WHICH MAY ARISE IN THE FUTURE IN CONNECTION WITH ANY DISPUTE WHETHER THE
DISPUTE IS RESOLVED BY ARBITRATION OR JUDICIALLY.
IN WITNESS WHEREOF, Bank, Creditor, Guarantor and Obligors have signed
and sealed this instrument as of the day and year first above written.
/s/ Xxxxx X. Xxxxxxxxx
Name: Xxxxx X. Xxxxxxxxx, Creditor
Address: P. O. Box 37
Unionville, Pennsylvania 19375
LEAK-X Environmental Corporation, Guarantor
By: /s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx, Chief Executive Officer
Lexicon Environmental Associates Inc., Obligor
By: /s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx, President
Groundwater Recovery Systems, Inc., Obligor
BY: /s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx, President
FIRST UNION NATIONAL BANK
By: /s/ Xxxxxxx Xxxxx
Xxxxxxx X. Storm, Senior Vice President
SCHEDULE A
SUBORDINATED DEBT
Xxxxx X. Xxxxxxxxx in the amount of $80,885.00
SCHEDULE B
PRINCIPAL AND INTEREST PAYMENTS
Xxxxx X. Xxxxxxxxx
Month Principal Interest Balance on Note
March 1997 $4,412.14 $2,022.13 $80,885.00
April 1997 4,412.14 0.00 76,472.86
May 1997 4,412.14 0.00 72,060.72
June 1997 4,412.14 1,801.52 67,648.58
July 1997 4,412.14 0.00 63,236.44
August 1997 4,412.14 0.00 58,824.30
September 1997 4,412.14 1,470.61 54,412.16
Total $30,884.98 $5,294.26 $50,000.02
