AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT IS AN AMENDMENT AND RESTATEMENT, BUT NOT A NOVATION,
OF THAT CERTAIN LOAN AGREEMENT, EXECUTED BY AND BETWEEN THE INITIAL BORROWERS AND BANK, DATED AS OF
AUGUST 3, 2000, AS AMENDED BY THAT CERTAIN AMENDMENT TO LOAN AGREEMENT DATED AS OF JUNE 14, 2001,
AS FURTHER AMENDED BY THAT CERTAIN SECOND AMENDMENT TO LOAN AGREEMENT DATED AS OF MAY 6, 2002, AS
FURTHER AMENDED BY THAT CERTAIN THIRD AMENDMENT TO LOAN AGREEMENT DATED AS OF AUGUST 30, 2002, AS
FURTHER AMENDED BY THAT CERTAIN FOURTH AMENDMENT TO LOAN AGREEMENT DATED AS OF DECEMBER 31, 2002,
AS FURTHER AMENDED BY THAT CERTAIN FIFTH AMENDMENT TO LOAN AGREEMENT DATED AS OF FEBRUARY 28, 2003,
AS FURTHER AMENDED BY THAT CERTAIN SIXTH AMENDMENT TO LOAN AGREEMENT DATED AS OF JULY 22, 2003, AS
FURTHER AMENDED BY THAT CERTAIN SEVENTH AMENDMENT TO LOAN AGREEMENT DATED AS OF JANUARY 28, 2004,
AS FURTHER AMENDED BY THAT CERTAIN EIGHTH AMENDMENT TO LOAN AGREEMENT DATED JULY 8, 2004, AS
FURTHER AMENDED BY THAT CERTAIN NINTH AMENDMENT TO LOAN AGREEMENT DATED NOVEMBER 3, 2004, AS
FURTHER AMENDED BY THAT CERTAIN TENTH AMENDMENT TO LOAN AGREEMENT DATED DECEMBER 21, 2004, AS
FURTHER AMENDED BY THAT CERTAIN ELEVENTH AMENDMENT TO LOAN AGREEMENT DATED JUNE 22, 2005, AS
FURTHER AMENDED BY THAT CERTAIN TWELFTH AMENDMENT TO LOAN AGREEMENT DATED SEPTEMBER 30, 2005, AS
FURTHER AMENDED BY THAT LETTER AGREEMENT DATED JUNE 13, 2005, AND AS FURTHER AMENDED BY THAT
CERTAIN THIRTEENTH AMENDMENT TO LOAN AGREEMENT DATED DECEMBER 30, 2005.
AMENDED AND RESTATED LOAN AGREEMENT
This Amended and Restated Loan Agreement (this “Loan Agreement” or “Agreement”), dated as of
the 14th day of June, 2006, by and between PDG Environmental, Inc., a Delaware corporation
(“Parent”), Project Development Group, Inc., a Pennsylvania corporation (“Project”), Enviro-Tech
Abatement Services, Co., a North Carolina corporation (“Enviro-Tech”), and PDG, Inc., a
Pennsylvania corporation (“PDG”), (Parent, Project, Enviro-Tech and PDG collectively, the “Initial
Borrowers”), Flagship Restoration, Inc., a Delaware corporation (“Flagship”), and Servestec, Inc.,
a Florida corporation (Initial Borrowers, Flagship and Servestec, collectively, the “Borrowers”)
and Sky Bank, an Ohio banking institution, having an office at 000 Xxxx Xxxxxxxxxx Xxxxxx, Xxx
Xxxxxx, Xxxxxxxxxxxx 00000 (“Bank”).
W I T N E S S E T H:
WHEREAS, Initial Borrowers and Bank entered into a Loan Agreement dated as of August 3, 2000
(the “2000 Loan Agreement”), as amended by that certain Amendment to Loan Agreement dated as of
June 14, 2001 (the “First Amendment”), that certain Second Amendment to Loan Agreement dated as of
May 6, 2002 (the “Second Amendment”), that certain Third Amendment to Loan Agreement dated as of
August 30, 2002 (the “Third Amendment”), that certain Fourth Amendment to Loan Agreement dated as
of December 31, 2002 (the “Fourth Amendment”), that certain Fifth Amendment to Loan Agreement dated
as of February 28, 2003 (the “Fifth Amendment”), that certain Sixth Amendment to Loan Agreement
dated as of July 22, 2003 (the “Sixth Amendment”), that certain Seventh Amendment to Loan Agreement
dated as of January 28, 2004 (the “Seventh Amendment”), that certain Eighth Amendment to Loan
Agreement dated July 8, 2004 (the “Eighth Amendment”), that certain Ninth Amendment to Loan
Agreement dated November 3, 2004 (the “Ninth Amendment”), that
certain Tenth Amendment to Loan Agreement dated December 21, 2004 (the “Tenth Amendment”), that
certain Eleventh Amendment to Loan Agreement dated June 22, 2005 (the “Eleventh Amendment”), that
certain Twelfth Amendment to Loan Agreement dated September 30, 2005 (the “Twelfth Amendment”), as
further amended by letter agreement dated June 13, 2005 and accepted by Initial Borrowers on June
15, 2005, and that certain Thirteenth Amendment to Loan Agreement dated December 30, 2005 (the
“Thirteenth Amendment”) (collectively the “Amended 2000 Loan Agreement”), pursuant to which
Initial Borrowers requested Bank (i) to extend credit to Initial Borrowers in an amount not to
exceed $400,000, the proceeds of which were made available as working capital and to refinance
certain debt (“Facility A”), (ii) to extend credit to Initial Borrowers in an amount not to exceed
$1,000,000.00, the proceeds of which were made available as working capital and to refinance
certain other debt (“Facility B”), (iii) to extend credit to Initial Borrowers in an amount not to
exceed $300,000, the proceeds of which were made available to finance a portion of certain capital
asset purchases (“Facility C”), (iv) to extend credit to Initial Borrowers in an original amount
not to exceed $5,250,000 and subsequently reducing to an amount not to exceed $4,600,000, which
included a temporary overline loan (as created in the Second Amendment and terminated in the Sixth
Amendment) in the amount of $750,000, and subsequently increased to $5,000,000, then to $5,500,000,
then to $6,500,000, then to $7,500,000 through a second overline note (as created in the Ninth
Amendment), then to $8,000,000 through a $500,000 increase to the second overline note (as
authorized in the Tenth Amendment), then to $11,000,000 (as authorized in the Twelfth Amendment),
then to $13,000,000 through the issuance of a third overline note in the amount of $2,000,000 (as
created in the Thirteenth Amendment), the proceeds of which were made available to refinance an
existing line of credit and to provide working capital (“Facility D”), (v) to extend credit to the
Initial Borrowers in an amount not to exceed $300,000, the proceeds of which were used to purchase
equipment (“Facility E”), and (vi) to extend credit to the Initial Borrowers in an amount not to
exceed $400,000, the proceeds of which were made available to purchase equipment (“Facility F”);
and
WHEREAS, Facilities B, C and E have expired pursuant to the terms of the Amended 2000 Loan
Agreement; and
WHEREAS, the Bank and Initial Borrowers desire to amend and restate the Amended 2000 Loan
Agreement on the terms and conditions set forth in this Agreement, including an increase of
Facility D to $15,000,000, and to extend credit to the Borrowers on the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants contained in this
Agreement, the receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
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1.01 Certain Definitions. In addition to other words and terms defined elsewhere in
this Agreement, the following words and terms have the following meanings, respectively, unless the
context otherwise clearly requires:
“Affiliate” shall mean, as of the date hereof or any time during the term of this Agreement,
any Person which directly or indirectly controls, is controlled by, or is under common control
with, any of the Borrowers. The term “control” shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
“Agreement” shall mean this Loan Agreement as the same may be further amended, modified or
supplemented from time to time.
“Bank” shall mean Sky Bank, an Ohio banking institution, with an office located at 000 Xxxx
Xxxxxxxxxx Xxxxxx, Xxx Xxxxxx, Xxxxxxxxxxxx 00000.
“Borrowers” shall mean collectively, Parent, Project, Enviro-Tech, PDG, Flagship and
Servestec, each corporation with its principal place of business located at 0000 Xxxxxx Xxxx,
Xxxxxxxx 000, Xxxxxxxxxx, XX 00000.
“Borrowing Base” shall have the meaning assigned to that term in Section 2.02(c) of this
Agreement.
“Change of Control” shall mean any Person or group of Persons (as used in Sections 13 and 14
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and
regulations thereunder) shall have become the beneficial owner (as defined in Rules 13d-3 and 13d-5
promulgated by the Securities and Exchange Commission (the “SEC”) under the Exchange Act) of 50% or
more of the combined voting power of all the outstanding voting securities of Parent.
“Change of Management” shall mean that Xxxx X. Xxxxx shall be terminated from employment with
Borrowers (voluntarily or involuntarily), or for any reason shall cease to serve as Chairman of the
Board of Directors and Chief Executive Officer of each of the Borrowers, having duties and
responsibilities substantially similar to those held by him on the date hereof.
“Closing” shall mean the closing of the transactions provided for in this Agreement on the
Closing Date.
“Closing
Date” shall mean , 2006, or such other date upon which the parties may
agree.
“Code” shall mean the Internal Revenue Code of 1986 as amended along with the rules,
regulations, decisions and other official interpretations in connection therewith.
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“Compensating Balances” shall mean, for the period of determination, that percentage
determined by dividing (i) the average balance maintained by Borrowers in deposit accounts with
Bank that are not subject to any liens or rights of third parties, over such period, divided by
(ii) the average balance of the outstanding principal amount all of the Loans.
“Debt” shall mean collectively (A) all Indebtedness, whether of principal, interest, fees,
expenses or otherwise, of the Borrowers or any of them to Bank, whether now existing or hereafter
incurred including, but not limited to, future loans and advances, if any, under this Agreement,
the Notes and the other Loan Documents, as the same may from time to time be amended, together with
any and all extensions, renewals, refinancings or refundings thereof in whole or in part; (B) all
other obligations for repayment of borrowed money, whether of principal, interest, fees, expenses
or otherwise, of the Borrowers or any of them to Bank, now existing or hereafter incurred, whether
under letters or advices of credit, lines of credit, other financing arrangements or otherwise
(including, but not limited to, any obligations arising as a result of any overdrafts), whether or
not related to this Agreement or to the Notes, whether or not contemplated by Bank or any of the
Borrowers at the date hereof and whether direct, indirect, matured or contingent, joint or several,
or otherwise, together with any and all extensions, renewals, refinancings or refundings thereof in
whole or in part; (C) all costs and expenses including, without limitation, to the extent permitted
by law, reasonable attorneys’ fees and legal expenses, incurred by Bank in the collection of any of
the indebtedness referred to in clauses (A) or (B) above in amounts due and owing to Bank under
this Agreement; and (D) any advances made by Bank for the maintenance, preservation, protection or
enforcement of, or realization upon, any property or assets now or hereafter made subject to a
mortgage, pledge, lien or security interest granted pursuant hereto or pursuant to this Agreement
or the other Loan Documents or pursuant to any agreement, instrument or note relating to any of the
Debt, including, without limitation, advances for taxes, insurance, repairs and the like.
“Debt Service Coverage Ratio” shall mean, for the period of determination, with respect to the
Borrowers, (i) net income plus interest expense, depreciation and amortization (excluding
non-recurring or extraordinary items) for such period, divided by (ii) the sum of Interest Expense,
all scheduled principal payments with respect to Indebtedness and all payments under or with
respect to leases (whether direct or contingent) for such period, all as determined on a
consolidated basis in accordance with GAAP.
“Debt to Worth Ratio” shall mean, as of the date of determination, with respect to the
Borrowers, the ratio of (i) Total Liabilities at such date to (ii) Net Worth at such date.
“EBITDA” means, as of the date of determination, Net Income for such period, (i) plus Interest
Expense and all provisions for taxes, (ii) plus provisions for depreciation and amortization that
were deducted from Net Income, (iii) less non-cash credit to Net Income if any, (iv) plus (or less)
gain (or loss) on sales of assets other than sales of inventory in the ordinary course of business,
all as determined in accordance with GAAP.
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as in effect as of the
date of this Agreement and as amended from time to time in the future.
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“ERISA Affiliate” shall mean a Person which is under common control with any Borrower within
the meaning of Section 414(b) of the Code including, but not limited to, a Subsidiary of any
Borrower.
“Event of Default” shall mean any of the Events of Default described in Section 7.01 of this
Agreement.
“Facility A Expiry Date” shall mean August 1, 2015.
“Facility A Loan” shall mean as set forth in Section 2.01(a) of this Agreement.
“Facility A Note” shall mean as set forth in Section 2.01(b) of this Agreement.
“Facility A Rate” shall mean an annual rate of interest equal to (i) during the period from
and including the Closing Date through July 31, 2006, 7.25% and (ii) thereafter, during each three
year period commencing on a Facility A Rate Change Date, 2.75% above the then current weekly
average yield (rounded to one-eighth of one percent (1/8th %)) on three (3) year U.S. Treasury
securities “Constant Maturities” as published 45 days prior to such Facility A Rate Change Date by
the Federal Reserve in its weekly statistical release (the “Index”). If the Index becomes
unavailable during the term of the Facility A Loan, Bank may designate a substitute Index after
notice to Borrower.
“Facility A Rate Change Dates” shall mean August 1, 2006, August 1, 2009, and August 1, 2012.
“Facility D Expiry Date” shall mean June 6, 2008.
“Facility D Loan” shall mean as set forth in Section 2.02(a) of this Agreement.
“Facility D Note” shall mean as set forth in Section 2.02(b) of this Agreement.
“Facility F Expiry Date” shall mean June 30, 2009.
“Facility F Loan” shall mean as set forth in Section 2.03(a) of this Agreement.
“Facility F Notes” shall mean as set forth in Section 2.03(b) of this Agreement.
“GAAP” means generally accepted accounting principles (as such principles may change from time
to time) applied on a consistent basis (except for changes in application in which Parent’s
independent certified public accountants concur).
“Inactive Subsidiary” shall mean a Subsidiary of a Borrower that exists on the date hereof and
is totally inactive, carrying on no business or operations, having no assets, obligations or
liabilities and having no revenues, expenses, income, losses or taxes.
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“Indebtedness” shall mean (i) all obligations for borrowed money (including, without
limitation, all notes payable and drafts accepted representing extensions of credit, all
obligations evidenced by bonds, debentures, notes or similar instruments, all obligations on which
interest charges are customarily paid, all obligations under conditional sale or other title
retention agreements and all obligations issued or assumed as full or partial payment for property
whether or not any such notes, drafts or obligations are obligations for borrowed money), (ii) all
obligations secured by any mortgage, lien, pledge, charge or security interest or encumbrance
existing on property owned or acquired subject thereto, whether or not the obligations secured
thereby shall have been assumed, (iii) all obligations to repay amounts drawn down by beneficiaries
of letters of credit, (iv) all indebtedness and other obligations for the payment or purchase of
which any Borrower has agreed contingently or otherwise to advance or supply funds and (v)
indebtedness represented by obligations under a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP and the amount of such indebtedness shall be
the capitalized amount of such obligations as determined in accordance with such principles.
“Indemnity Agreement” shall mean that certain Amended and Restated Hazardous Materials
Certificate and Indemnity Agreement, dated the date hereof, made by Borrowers in favor of Bank, as
the same made be modified, amended, or supplemented from time to time.
“Interest Expense” shall mean, for the period of the determination, with respect to the
Borrowers, all interest accrued on Indebtedness during such period, including without limitation
all interest required under GAAP to be capitalized during such period, as determined on a
consolidated basis in accordance with GAAP.
“Landlord Waivers” shall have the meaning given to such term in Section 3.09 of this
Agreement.
“Law” shall mean any law (including common law), constitution, statute, treaty, regulation,
rule, ordinance, order, injunction, writ, decree or award of any Official Body.
“Libor Rate” for any day shall mean the one (1) month Libor Rate selected by the Bank, in its
sole discretion, on the first London Banking Day of each calendar month to be in effect for such
calendar month as its one-month Libor Rate product.
“Lien” shall mean any mortgage, deed of trust, pledge, lien, security interest, charge or
other encumbrance or security arrangement of any nature including, but not limited to, any
conditional sale or title retention arrangement, and any assignment, deposit arrangement or lease
intended as, or having the effect of, security.
“Loan” or “Loans” shall mean Facility A, Facility D, including, without limitation, Facility F
and any other credit to Borrower extended by Bank in accordance with Article II hereof as evidenced
by the Notes, as the case may be.
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“Loan Document” or “Loan Documents” mean, singularly or collectively as the context may
require, the Lockbox Agreement dated as of the 2000 Loan Agreement and this Agreement, the Notes,
the Security Agreements, the Mortgage, the Indemnity Agreement, dated as of the date hereof between
Initial Borrowers and/or Borrowers and Bank, and any and all other documents, instruments,
certificates and agreements executed and delivered in connection with this Agreement, as any of
them may be amended, modified, extended or supplemented from time to time.
“London Banking Day” means a day for dealing in deposits in United States dollars by and among
banks in the London interbank market.
“Mortgage” shall mean that certain Open-End Mortgage and Security Agreement dated August 3,
2000, as modified by that certain Modification of Open-End Mortgage and Security Agreement dated
June 14, 2001, that certain Second Modification of Open End Mortgage dated May 6, 2002, that
certain Third Modification of Open End Mortgage and Security Agreement dated as of August 30, 2002,
that certain Fourth Modification of Open End Mortgage and Security Agreement dated as of February
28, 2003, that certain Fifth Modification of Open End Mortgage and Security Agreement dated July
22, 2003, that certain Sixth Modification of Open End Mortgage and Security Agreement dated January
28, 2004, that certain Seventh Modification of Open End Mortgage and Security Agreement dated July
8, 2004, that certain Eighth Modification of Open End Mortgage and Security Agreement dated
November 3, 2004, that certain Ninth Modification of Open End Mortgage and Security Agreement dated
December 21, 2004, that certain Tenth Modification of Open End Mortgage and Security Agreement
dated June 22, 2005, that certain Eleventh Modification of Open End Mortgage and Security Agreement
dated September 30, 2005, that certain Twelfth Modification of Open End Mortgage and Security
Agreement dated December 30, 2005, and that certain Thirteenth Modification of Open End Mortgage
and Security Agreement dated as of the date hereof, and all other modifications and amendments
thereto, each by Project in favor of Bank.
“Net Income” means, for the period of determination, net income (after taxes) as determined in
accordance with GAAP (excluding any extraordinary items).
“Net Worth” shall mean, as of the date of determination, the excess of total assets over total
liabilities of the Borrowers at such date, as determined on a consolidated basis in accordance with
GAAP.
“Notes” shall collectively mean the (i) the Facility A Note, (iv) the Facility D Note, (vi)
the Facility F Notes and any other note of Borrowers executed and delivered pursuant to this
Agreement, together with all extensions, renewals, refinancings or refundings in whole or in part.
“Office”, when used in connection with Bank, means its designated office located at 000 Xxxx
Xxxxxxxxxx Xxxxxx, Xxx Xxxxxx, Xxxxxxxxxxxx 00000, or such other office of Bank as Bank may
designate in writing from time to time.
7
“Official Body” means any government or political subdivision or any agency, authority,
bureau, central bank, commission, department or instrumentality of either, or any court, tribunal,
grand jury or arbitrator, in each case whether foreign or domestic.
“Operating Leverage Ratio” means for any period as of the date of determination the ratio of
(a) Total Liabilities for such period to (b) EBITDA for such period, as calculated on a rolling
four quarter basis as determined in accordance with GAAP.
“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant to Title IV of
ERISA.
“Person” shall mean an individual, corporation, partnership, limited liability company, joint
venture, trust, or unincorporated organization or government or agency or political subdivision
thereof.
“Plan” means any deferred compensation program, including both single and multi-employer
plans, subject to Title IV of ERISA and established and maintained for employees of any Borrower or
any Subsidiary or any controlled group of trades or businesses under common control as defined
respectively in Sections 1563 and 414(c) of the Code, of which any Borrower or any Subsidiary is or
becomes a part.
“Potential Default” shall mean any event or condition which with notice, passage of time or
determination by Bank, or any combination of the foregoing, would constitute an Event of Default.
“Prime Rate” shall mean that rate of interest per annum announced by Bank from time to time as
its Prime Rate which may not represent the lowest rate charged by Bank to other borrowers at any
time or from time to time.
“Prime Rate Loan” shall mean any Loan or portion of any Loan that bears interest with
reference to the Prime Rate.
“Prohibited Transaction” shall mean any transaction which is prohibited under Section 4975 of
the Code or Section 406 of ERISA and not exempt under Section 4975 of the Code or Section 408 of
ERISA.
“Qualified Accounts” means an account receivable (net of any prepayments, progress payments,
deposits and retentions) owing to a Borrower which, as determined by Bank in its sole discretion
exercised in good faith, met the specifications established from time to time by Bank, in its
reasonable discretion, at the time it came into existence and continues to meet such specifications
until it is collected in full. As of the date of this Agreement, an account receivable, to be a
Qualified Account, must meet the following specifications at the time it comes into existence and
continue to meet such specifications until it is collected in full:
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(a) The account is not more than ninety (90) days from the due date thereof or one hundred
twenty (120) days from the date of the invoice therefor;
(b) The account arose from the performance of services or an outright sale of goods by such
Borrower in the ordinary course of such Borrower’s business and such goods have been shipped, or
services provided, to the account debtor and such Borrower has possession of, or has delivered to
Bank, in the case of goods, shipping and delivery receipts evidencing such shipment;
(c) The account is not subject to any prior assignment, claim, lien, or security interest, and
such Borrower will not make any further assignment of the account or create any further security
interest in the account (other than unperfected security interests granted to sureties issuing
surety bonds for Borrowers in the ordinary course of business of Borrowers, provided such security
interests are and at all times remain subject and subordinate to Bank’s security interests in such
accounts), nor permit its rights in the account to be reached by attachment, levy, garnishment or
other judicial process;
(d) The account is not subject to set-off, credit, allowance or adjustment by the account
debtor, and the account debtor has not complained as to its liability on the account and has not
(i) returned, or retained the right to return, any of the goods from the sale of which the account
arose or (ii) complained as to or disputed, any of the services from which the account arose;
(e) The account does not arise from a sale of goods to an account debtor domiciled outside of
the United States of America, Canada, or Puerto Rico, unless such Borrower has arranged letter of
credit facilities or foreign credit insurance satisfactory to Bank;
(f) The account arose in the ordinary course of such Borrower’s business and did not arise
from the performance of services or a sale of goods to a supplier, an employee, a stockholder or an
Affiliate of any Borrower;
(g) The account does not arise with respect to an account debtor from whom more than 15% of
whose accounts are more than ninety (90) days from the due date thereof or one hundred twenty (120)
days from the date of the invoice therefor;
(h) The account does not arise out of contracts with the United States, any state or any
department, agency, or instrumentality thereof, unless such Borrower has executed all instruments
and taken all steps required by Bank including, but not limited to, steps to ensure that all monies
due and to become due under such contracts shall be assigned to Bank and notice thereof given to
the government under the Federal Assignment of Claims Act, and an agreement by such account debtor
to make payment directly to Bank;
(i) The account does not constitute a finance charge or lease receivable;
9
(j) No notice of bankruptcy, insolvency or material adverse change of the account debtor has
been received by or is known to Borrower;
(k) Bank has not notified Borrowers that Bank has determined, in its reasonable discretion,
that the account or account debtor is unsatisfactory;
(l) The account is not such that such Borrower is or may become liable to the account debtor
for any reason; and
(m) The account is not an account with respect to which the account debtor is located in New
Jersey, Minnesota, or any other state denying creditors access to its courts in the absence of a
Notice of Business Activities Report or other similar filing unless such Borrower has either
qualified as a foreign corporation authorized to transact business in such state or has filed a
Notice of Business Activities Report or similar filing with the applicable state agency for the
current year.
“Qualified Inventory” shall mean Inventory (as such term is defined in the UCC) which is owned
by a Borrower and held for sale in the ordinary course of such Borrower’s business which, as
determined by Bank in its sole discretion exercised in good faith, meet the specifications
established by Bank in its reasonable discretion from time to time including, but not limited to:
(a) Bank has a perfected first priority security interest in such Inventory;
(b) such Inventory is not subject to a security interest, lien or other encumbrance in favor
of any other Person;
(c) such Inventory is of good and merchantable quality free from defects;
(d) such Inventory is raw materials, work in process or finished goods ready and able to be
sold;
(e) the Inventory is not out of date, broken or otherwise unsaleable;
(f) the Inventory is not finished goods held pursuant to a consignment arrangement;
(g) the Inventory is not stored with a bailee or warehouseman and does not include
inventory-in-transit or inventory not otherwise in such Borrower’s possession at one of the
locations set forth in the Security Agreements;
(h) the Inventory was not produced in violation of the Fair Labor Standards Act and subject to
the “hot goods” provision contained in Title 29 U.S.C., § 215(a)(1);
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(i) the Inventory is not allocated or identified to purchase orders or contracts received from
any customer of such Borrower, as to which such inventory such customer has filed or intends to
file UCC-1 financing statements or to otherwise perfect a security interest; and
(j) Bank has not notified Borrowers that the Inventory is unsatisfactory in its reasonable and
good faith judgment.
“Preferred Stock Termsheet” shall mean the executive summary attached as Exhibit “A” to the
consent letter agreement between Bank and the Initial Borrowers dated June 13, 2005 and accepted by
Borrowers on June 15, 2005.
“Reportable Event” shall mean any of the events set forth in Section 4043(b) of ERISA or the
regulations thereunder, except any such event as to which the provision for thirty (30) days notice
to the PBGC is waived under applicable regulations.
“Security Agreements” means (i) the four Security Agreements, each between an Initial Borrower
and Bank, dated August 3, 2000, as amended by the Amendment No. 1 to Security Agreement dated June
22, 2005, as further amended by the Amendment No. 2 to Security Agreement dated September 30, 2005,
as further amended by the Amendment No. 3 to Security Agreement dated December 30, 2005, and as
further amended by the Amendment No. 4 to Security Agreement dated as of the date hereof, (ii) the
Security Agreement dated June 22, 2005 by and between Servestec and Bank, as amended by the
Amendment No. 1 to Security Agreement dated September 30, 2005, as further amended by the Amendment
No. 2 to Security Agreement dated December 30, 2005, and as further amended by the Amendment No. 3
to Security Agreement dated as of the date hereof, and (iii) the Security Agreement dated June 22,
2005 by and between Flagship and Bank dated as of the date hereof, each of the aforementioned
agreements as may be modified, amended or supplemented from time to time.
“Subsidiary” of a Person at any time means any corporation of which a majority of the
outstanding capital stock entitled to vote for the election of directors is at such time owned by
such Person and/or one or more of its Subsidiaries.
“Termination Event” shall mean (i) a “Reportable Event, (ii) the termination of a single
employer Plan or the treatment of a single employer Plan amendment as the termination of such Plan
under Section 4041 of ERISA, or the filing of a notice of intent to terminate a single employer
Plan, or (iii) the institution of proceedings to terminate a single employer Plan by the PBGC under
Section 4042 of ERISA, or (iv) the appointment of a trustee to administer any single employer Plan.
“Total Liabilities” shall mean as of the date of determination with respect to the Borrowers,
all items (including taxes accrued) included as liabilities on a balance sheet, less the Series C
Redeemable Convertible Preferred Stock, as determined on a consolidated basis in accordance with
GAAP.
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“UCC” shall mean the Uniform Commercial Code as in effect on the date of this Agreement and as
amended from time to time, of the state or states having jurisdiction with respect to all or any
portion of the collateral granted or assigned to Bank from time to time under or in connection with
this Agreement.
ARTICLE II
THE CREDIT FACILITIES
2.01 Facility A.
(a) Facility A Loan. Subject to the terms and conditions and relying upon the
representations and warranties set forth in this Agreement and the other Loan Documents, Bank
agrees to make a term loan (“Facility A Loan”) to Borrowers on the Closing Date in the principal
amount of Four Hundred Thousand and 00/100 Dollars ($400,000.00).
(b) Facility A Note. The obligations of Borrowers to repay the unpaid principal
amount of the Facility A Loan and to pay interest on the unpaid principal amount thereof shall be
joint and several and shall be evidenced in part by the Amended and Restated Facility A Note dated
the Closing Date, in substantially the form attached as Exhibit “A” to this Agreement, with
the blanks appropriately filled (the “Facility A Note”), with the blanks appropriately filled. The
executed Facility A Note will be delivered by Borrowers to Bank on the Closing Date.
(c) Payments of Principal and Interest; Maturity. Commencing on July 1, 2006, and
continuing on the first day of each calendar month thereafter, through and including August 1,
2015, Borrowers shall make a payment on the Facility A Loan in the amount of Three Thousand Two
Hundred Seventy Seven and 10/00 Dollars ($3,277.10), such payment to be applied first to accrued
interest and the balance to the reduction of principal. Upon each Facility A Rate Change Date,
effective with the first payment thereafter, the amount of the monthly installment of principal and
interest shall be adjusted by Bank to that amount which
would fully amortize the then principal balance of the Facility A Loan at the new interest
rate over the remaining term of the Facility A Loan ending on the Facility A Expiry Date. All
remaining unpaid principal, accrued interest and all other sums and costs incurred by Bank,
pursuant to this Agreement, the Facility A Note or the making of the Facility A Loan, shall be
immediately due and payable on the Facility A Expiry Date without notice, presentment or demand.
2.02 Facility D.
(a) Facility D Loan. Subject to the terms and conditions and relying upon the
representations and warranties set forth in this Agreement and the other Loan Documents, Bank
agrees to make loans (“Facility D Loans”) any of the Borrowers at any time or from time to time on
or after the Closing Date and to and including the day immediately
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preceding the Facility D Expiry
Date, in an aggregate principal amount not exceeding at any one time outstanding the Borrowing
Base. Each Borrower may borrow, repay and reborrow under this Section 2.02. All remaining unpaid
principal, accrued interest and all other sums and costs incurred by Bank, pursuant to the Facility
D Note or the making of the Facility D Loans, shall be due and payable on the Facility D Expiry
Date without notice, presentment or demand.
(b) Facility D Note. The obligations of Borrowers to repay the unpaid principal
amount of the Facility D Loans made to any Borrower by Bank and to pay interest on the unpaid
principal amount thereof shall be joint and several and shall be evidenced by the Sixth Amended and
Restated Facility D Note dated as of the Closing Date by Borrowers in favor of Bank, in
substantially the form attached as Exhibit “B” to this Agreement, with the blanks
appropriately filled (the “Facility F Note”).
(c) Borrowing Base. Subject to the terms and conditions of this Agreement, the
maximum borrowing availability under this Agreement applicable to the Facility D Loans shall be
equal to the lesser of (i) Fifteen Million and 00/00 Dollars ($15,000,000) or (ii) eighty percent
(80%) of the aggregate gross amount of Qualified Accounts plus fifty percent (50%) of the aggregate
value of Qualified Inventory (the lesser of the amounts described in clauses (i) and (ii) of this
sentence is sometimes referred to in this Agreement as the “Borrowing Base”).
(d) Making of Facility D Loans. (i) Subject to the terms and conditions of this
Agreement and the other Loan Documents, no Facility D Loans shall be made until Borrowers have
satisfied all applicable conditions specified in Article IV hereof, and Bank has received, reviewed
and approved a completed borrowing base certificate, in the form attached as Exhibit “D” to
this Agreement (the “Borrowing Base Certificate”), setting forth the Borrowing Base calculations
for Borrowers, together with the appropriate backup documentation and evidence.
(ii) Each Facility D Loan that is made shall be made on such Business Day and in such amount
as the Borrower to whom such Loan is to be made shall
request by written notice received by Bank no later than 2:00 p.m. (New Castle, Pennsylvania
time) on the date of requested disbursement for such Loan (the “Loan Disbursement Date”). Subject
to Bank’s review, approval and processing of the Borrowing Base Certificate and any other
information requested by Bank, Bank shall make the proceeds of such Loan available to such Borrower
at Bank’s Office in immediately available funds not later than 3:00 p.m., New Castle, Pennsylvania,
time on the Loan Disbursement Date.
(e) Maximum Principal Balance of Revolving Credit Loans. The aggregate principal
amount of all Facility D Loans shall not exceed the Borrowing Base. Borrowers agree that if at any
time the aggregate principal amount of all Facility D Loans outstanding exceeds the Borrowing Base,
Borrowers shall promptly pay to Bank such amount as may be necessary to eliminate such excess
together with all accrued interest on the amount of such excess. If not sooner paid, all of the
Facility D Loans, all unpaid accrued interest thereon and all other sums and costs incurred by Bank
pursuant to this Agreement with respect to the
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Facility D Loans, shall be immediately due and
payable on the Facility D Expiry Date, without notice, presentment or demand.
2.03 Facility F
(a) Facility F Loans. Subject to the terms and conditions and relying upon the
representations and warranties set forth in this Agreement and the other Loan Documents, Bank
agrees to make a term loan (“Facility F Loan”) to Borrowers on the Closing Date in the principal
amount of Four Hundred Thousand and 00/100 Dollars ($400,000.00), the proceeds of which are to be
used only to purchase equipment to be used by such Borrower.
(b) Facility F Note. The obligations of Borrowers to repay the unpaid principal
amount of each Facility F Loan made to any Borrower by Bank and to pay interest on the unpaid
principal amount thereof shall be joint and several and shall be evidenced in part by an Amended
and Restated Facility F Note of Borrowers, dated the Closing Date, in substantially the form
attached as Exhibit “C” to this Agreement, with the blanks appropriately filled (the
“Facility F Note”). Each executed Facility F Note shall be delivered by Borrowers to Bank on the
date the related Facility F Loan is made by Bank.
(c) Payments of Principal and Maturity. On the first day of the first calendar month
after the date a Facility F Loan is made, through and including June 1, 2009, Borrowers shall make
a payment of principal and interest on the Facility F Loan in that amount, as determined by Bank at
the time such Loan is made, which would fully amortize the then principal balance of such Loan in
equal monthly installments, at the interest rate applicable to such Loan at the time of
determination, over the term of such Loan ending on the Facility F Expiry Date. Each such payment
shall be applied first to accrued interest and the balance to the reduction of principal. All
remaining unpaid principal, accrued interest and all other sums and costs incurred by Bank,
pursuant to this Agreement, the Facility F Notes or the making of the Facility F Loans, shall be
immediately due and payable on the Facility F Expiry Date without notice, presentment or demand.
2.04 Intentionally Deleted
2.05 Interest Rates.
(a) Interest on Facility A. Subject to the terms and conditions of this Agreement,
the aggregate outstanding principal balance of the Facility A Loan shall bear interest at a rate
per annum equal to the Facility A Rate.
(b) Interest on Facilities D and F. (i) the aggregate outstanding principal balance
of the Facility D Loans shall bear interest at a rate per annum equal to the Prime Rate, and (ii)
the aggregate outstanding principal balance of the Facility F Loans shall bear interest at a rate
per annum equal to seven and twenty-five hundredths percent (7.25%).
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(c) Adjustment to Prime Rate, Calculation of Interest. In the event of any change in
the Prime Rate, the rate of interest upon each Prime Rate Loan shall be adjusted to immediately
correspond with such change, except any interest rate charged hereunder shall not exceed the
highest rate permitted by law. Interest on Loans, unpaid fees and other sums payable hereunder,
shall be computed on the basis of a year of three hundred sixty (360) days and paid for the actual
number of days elapsed.
2.06 Interest After Default; Usury. Whenever the unpaid principal amount of the
Loans, accrued interest thereon, any fees, or any other sums payable hereunder shall become due and
payable and remain unpaid (whether at maturity, upon the occurrence of an Event of Default, by
acceleration, demand or otherwise) the amount thereof shall thereafter until paid in full bear
interest at a rate per annum equal to the interest rate otherwise applicable to such Loan, plus
five percent (5.00%). In the event the rates of interest provided for herein are finally
determined by any Official Body to exceed the maximum rate of interest permitted by applicable
usury or similar laws, their or its application will be suspended and there will be charged instead
the maximum rate of interest permitted by such laws.
2.07 Late Charge. Upon the occurrence of an Event of Default with respect to the
payment of any installment of interest or principal or principal and interest on the Notes for more
than ten (10) days after the said installment becomes due, in addition to making a payment of the
installment due and any interest thereon at the applicable default interest rate, Borrowers shall
pay to Bank a late charge in an amount equal to five percent (5%) of any such overdue installment.
2.08 Facility D Origination Fee. Borrowers shall pay to Bank a commitment fee for
Facility D payable in advance on the Closing Date and on each June 6 thereafter to but excluding
the Facility D Expiry Date, each in the amount of Thirty Thousand Dollars ($30,000).
2.09 Additional Costs. If either (i) the introduction of, or any change in, or in the
interpretation of, any law or regulation or (ii) the compliance with any guideline or request
from any central bank or other governmental authority (whether or not having the force of
law), affects or would affect the amount of capital required or expected to be maintained by Bank
or any corporation controlling Bank and Bank determines that the amount of such capital is
increased by or based upon the existence of the Loans (or commitment to make the Loans) and other
extensions of credit (or commitments to extend credit) of similar type, then, within 30 days
following demand by Bank, Borrowers shall pay to Bank from time to time as specified by Bank
additional amounts sufficient to compensate Bank in the light of such circumstances, to the extent
that Bank reasonably determines such increase in capital to be allocable to the existence of the
Loans (or commitment to make the Loans). A certificate of Bank in good faith submitted to
Borrowers as to such amounts shall be conclusive and binding for all purposes, absent manifest
error. Bank will not retroactively assess Borrowers for such costs unless Bank is retroactively
charged or such guideline or request applicable to Bank is retroactive in its application.
2.10 Payments. All payments to be made with respect to principal, interest, fees or
other amounts due from Borrowers under this Agreement or under the Notes are payable
15
at 12:00 noon
(New Castle, Pennsylvania Time), on the day when due, without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived, and an action for the payments will
accrue immediately. All such payments must be made to Bank at its Office in U.S. Dollars and in
funds immediately available at such Office, without setoff, counterclaim or other deduction of any
nature. Bank may in its discretion deduct such payments from any Borrower’s demand or deposit
accounts with Bank after an Event of Default. All such payments shall be applied at the option of
Bank to accrued and unpaid interest, outstanding principal and other sums due under this Agreement
in such order as Bank, in its sole discretion, shall elect. All such payments shall be made
absolutely net of, without deduction or offset, and altogether free and clear of any and all
present and future taxes, levies, deductions, charges, and withholdings and all liabilities with
respect thereto, excluding income and franchise taxes imposed on Bank under the laws of the United
States or any state or political subdivision thereof. If any Borrower is compelled by law to
deduct any such taxes or levies (other than such excluded taxes) or to make any such other
deductions, charges, or withholdings, it will pay such additional amounts as may be necessary in
order that the net payments after such deduction, and after giving effect to any United States
federal or state income taxes required to be paid by Bank in respect of such additional amounts,
shall equal the amount of such payment without such tax, deduction or withholding.
2.11 Loan Account. Bank will open and maintain on its books a loan account (the “Loan
Account”) for Borrowers with respect to Loans made, repayments, prepayments, the computation and
payment of interest and fees and the computation and final payment of all other amounts due and
sums paid to Bank under this Agreement. Except in the case of manifest error in computation, the
Loan Account for Borrowers will be conclusive and binding on Borrowers as to the amount at any time
due to Bank from Borrowers under this Agreement or the Notes.
2.12 Financing Statements. Promptly upon request by Bank, Borrowers agree to execute
or cause to be executed all financing statements describing the property in which Bank has a
security interest under the Security Agreements. Borrowers irrevocably appoint
Bank as their agent and attorney to execute any such financing statements in Borrowers’ name
if Borrowers fail to execute the same after a request from Bank to do so. Borrowers further agree
that a carbon, photographic or other reproduction of a financing statement or a Security Agreement
is sufficient as a financing statement and may be filed as such.
2.13 Security. The Loans shall be secured by a first lien perfected security interest
in all personal property and fixtures of Borrowers, as set forth in the Security Agreements, the
first lien in real property set forth in the Mortgage, and all UCC-1 financing statements executed
and recorded with respect thereto.
2.14 Interest Rate Incentive Pricing.
(a) If, based on the 10-Q filed with the Securities and Exchange Commission, the Operating
Leverage Ratio at the end of each fiscal quarter is equal to or less than 3.0 but greater than 2.5
as calculated on a rolling four quarter basis, then, during the subsequent fiscal quarter (and only
the subsequent fiscal quarter unless the foregoing condition is
16
satisfied again), interest on the
Facility D Loans shall be reduced to an annual rate equal to two hundred seventy five (275) basis
points above the Libor Rate.
(b) If, based on the 10-Q filed with the Securities and Exchange Commission, the Operating
Leverage Ratio at the end of each fiscal quarter is equal to or less than 2.5 but greater than 2.0
as calculated on a rolling four quarter basis, then, during the subsequent fiscal quarter (and only
the subsequent fiscal quarter unless the foregoing condition is satisfied again), interest on the
Facility D Loans shall be reduced to an annual rate equal to two hundred fifty (250) basis points
above the Libor Rate.
(c) If, based on the 10-Q filed with the Securities and Exchange Commission, the Operating
Leverage Ratio at the end of each fiscal quarter is equal to or less than 2.0 as calculated on a
rolling four quarter basis, then, during the subsequent fiscal quarter (and only the subsequent
fiscal quarter unless the foregoing condition is satisfied again), interest on the Facility D Loans
shall be reduced to an annual rate equal to two hundred twenty-five (225) basis points above the
Libor Rate.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to Bank that:
3.01 Organization and Qualification. Each Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the state of its incorporation. Parent is
duly qualified to do business as a foreign corporation in and is in good standing in the
Commonwealth of Pennsylvania. Each Borrower is duly qualified or licensed to do business as a
foreign corporation and is in good standing in all jurisdictions in which the ownership of its
properties or the nature of its activities or both makes such qualification or licensing necessary.
3.02 Power to Carry on Business; Licenses. Each Borrower has all requisite power and
authority to own and operate its properties and to carry on its business as now conducted and as
presently planned to be conducted. Each Borrower has all licenses, permits, consents and
governmental approvals or authorizations necessary to carry on its business as now conducted or as
presently planned to be conducted.
3.03 Execution and Binding Effect. This Agreement, the Notes, the Mortgage, the
Security Agreements and the other Loan Documents to which Borrowers or any of them is a party have
been duly and validly executed and delivered by such Borrower or Borrowers, and each such document
or agreement constitutes a legal, valid and binding obligation of such Borrower or Borrowers,
enforceable in accordance with its terms.
3.04 Absence of Conflicts. Neither the execution and delivery of this Agreement, the
Notes, the Mortgage, the Security Agreements or the other Loan Documents, nor the consummation of
the transactions contemplated in any of them, nor the performance of or
17
compliance with their terms
and conditions will (a) violate any Law, (b) conflict with or result in a breach of or a default
under the articles of incorporation or by-laws of any Borrower, (c) conflict with or result in a
breach or a default under any material agreement or instrument to which any Borrower is a party or
by which any of them or any of their properties (now owned or acquired in the future) may be
subject or bound or (d) result in the creation or imposition of any Lien upon any property (owned
or leased) of any Borrower.
3.05 Authorizations and Filings. No authorization, consent, approval, license,
exemption or other action by, and no registration, qualification, designation, declaration or
filing with, any Official Body is or will be necessary or advisable in connection with the
execution and delivery of this Agreement, the Notes, the Security Agreements or the other Loan
Documents, the consummation of the transactions contemplated in any of them, or the performance of
or compliance with the terms and conditions of this Agreement, the Notes, the Mortgage, the
Security Agreements or the other Loan Documents.
3.06 Ownership and Control. Schedule 3.06 to this Agreement states as of the Closing
Date the authorized capitalization of each Borrower (including capital stock of such Borrower held
in treasury), the number of shares of each class of capital stock issued and outstanding of such
Borrower, the number and percentage of outstanding shares of each such class of capital stock. The
outstanding shares have been duly authorized and validly issued and are fully paid and
nonassessable. Schedule 3.06 to this Agreement describes as of the Closing Date all outstanding
options, rights and warrants issued by each Borrower for the acquisition of shares of the capital
stock of such Borrower, all outstanding securities or obligations convertible into such shares and
all agreements by such Borrower to issue or sell such shares. Schedule 3.06 to this Agreement
describes as of the Closing Date all options, sale agreements, pledges, proxies, voting trusts,
powers of attorney and other agreements or instruments binding upon any of its
shareholders with respect to beneficial or record ownership of or voting rights with respect
to shares of the capital stock of each Borrower.
3.07 Officers and Directors of Borrower. Schedule 3.07 to this Agreement states as of
the Closing Date the officers and directors of each Borrower.
3.08 Business. Schedule 3.08 to this Agreement describes the business of each
Borrower as presently conducted and presently planned to be conducted.
3.09 Title to Property. Each Borrower has good and marketable title in fee simple to
all real property and good and marketable title to all other property purported to be owned by it,
including that reflected in the most recent balance sheet referred to in Section 3.10 of this
Agreement or submitted pursuant to Section 5.01(a) of this Agreement (except as sold or otherwise
disposed of in the ordinary course of business), subject only to Liens not forbidden by Section
6.01 of this Agreement. No property of Borrowers is stored with a bailee or warehouseman. Except
as set forth on Schedule 3.09, no Borrower leases any real property and Borrowers have delivered
valid landlord’s waivers from the landlord of each location listed on Schedule 3.09, in form and
substance acceptable to the Bank (the “Landlord Waivers”).
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3.10 Financial Statements.
(a) Borrowers have delivered to Bank a consolidated balance sheet and related consolidated
statements of income and retained earnings and cash flow of Borrowers for the fiscal year ending
January 31, 2006 as audited by Malin, Xxxxxxxx & Company, LLP with only such qualifications as are
set forth in such audit. Such financial statements (including the notes) present fairly in all
material respect the financial condition of Borrowers as of the end of such fiscal periods and
results of their operations and the changes in financial position for the fiscal periods then
ended, all in conformity with GAAP applied on a basis consistent with that of the preceding fiscal
periods.
(b) Borrowers have delivered to Bank internally prepared consolidated balance sheets and
related consolidated statements of income, cash flow and retained earnings of Borrowers as of, and
for the portion of the fiscal year and fiscal quarter ending, April 30, 2006, respectively. Such
financial statements provided by Borrowers present fairly in all material respect the financial
condition of Borrowers as of the end of such period and the results of their operations for the
period then ended, all in conformity with GAAP, subject to year end adjustments applied on a basis
consistent with that of the preceding fiscal year’s audited financial statements.
3.11 Taxes. All tax returns required to be filed by any Borrower have been properly
prepared, executed and filed. All taxes, assessments, fees and other governmental charges upon any
Borrower or upon any of their respective properties, income, sales or franchises which are due and
payable have been paid. The reserves and provisions for taxes on the books of each Borrower are
adequate for all open years and for their current fiscal period.
No Borrower knows of any proposed additional assessment or basis for any assessment for
additional taxes (whether or not reserved against).
3.12 Contracts. Except as described in Schedule 3.12 to this Agreement and except for
purchase orders with suppliers or purchase orders with customers, no Borrower is a party to or
subject to any agreement, lease or instrument of any kind other than agreements, leases or
instruments which are terminable at will upon not more than ninety (90) days notice by such
Borrower without penalty or which are not material to the assets, business, operations or financial
condition of such Borrower in the aggregate. No Borrower shall modify any of the terms and
conditions of any material agreements to which it is a party in a manner which will have a material
adverse affect on such Borrower.
3.13 Litigation. Except as described in Schedule 3.13 to this Agreement, there is no
pending, or to the best knowledge of any Borrower, contemplated or threatened, action, suit or
proceeding by or before any Official Body against or affecting any Borrower, at law or equity,
which, if adversely decided, would have a material adverse effect on the assets, business,
operations or financial condition of any Borrower or on the ability of any Borrower to perform its
obligations under the Loan Documents.
19
3.14 Compliance with Laws. No Borrower is in violation of or subject to any material
contingent liability on account of any Law.
3.15 Pension Plans. Except as described in Schedule 3.15 to this Agreement, (a) each
Plan has been and will be maintained and funded in accordance with its terms and with all
provisions of ERISA and other applicable laws; (b) no Reportable Event as defined in ERISA has
occurred and is continuing with respect to any Plan; (c) no liability to the PBGC has been incurred
with respect to any Plan, other than for premiums due and payable; (d) no Plan has been terminated,
no proceedings have been instituted to terminate any Plan, and there exists no intent to terminate
or institute proceedings to terminate any Plan; (e) no withdrawal, either complete or partial, has
occurred or commenced with respect to any multi-employer Plan, and there exists no intent to
withdraw either completely or partially from any multi-employer Plan; and (f) there has been no
cessation of, and there is no intent to cease, operations at a facility or facilities where such
cessation could reasonably be expected to result in a separation from employment of more than 20%
of the total number of employees who are participants under a Plan.
3.16 Patents, Licenses, Franchises. Each Borrower owns or possesses all of the
patents, trademarks, service marks, trade names, copyrights, licenses, franchises and permits and
rights with respect to the foregoing necessary to own and operate its properties and to carry on
its business as presently conducted and presently planned to be conducted without conflict with the
rights of others. Schedule 3.16 to this Agreement sets forth a true and correct list and
description of each such patent, trademark, service xxxx, trade name, copyright, license, franchise
and permit and right with respect to the foregoing. Except as described in Schedule 3.16 to this
Agreement, no patent, trademark, service xxxx, trade name, copyright, license, franchise or permit
or right with respect to the foregoing is of material importance to the assets, business,
operations or financial condition of any Borrower and there is no reason to anticipate any
material liability to any Borrower in respect to any claim of infringement of any of the foregoing.
3.17 Environmental Matters. (a) No Borrower is in violation of The Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”), the Superfund Amendments
and Reauthorization Act of 1986, The Resource Conservation and Recovery Act of 1976, as amended by
the Hazardous and Solid Waste Amendments of 1984, The Clean Water Act, The Toxic Substances Control
Act and The Clean Air Act or any rule or regulation promulgated pursuant to any of the foregoing
statutes, or any other federal, state or local environmental law, statute, rule, regulation or
ordinance applicable to any Borrower or their respective properties (all of the foregoing are
sometimes collectively referred to in this Section 3.17 as the “Environmental Laws”);
(b) Neither any Borrower nor any of their respective directors, officers, employees, agents or
independent contractors have arranged, by contract, agreement or otherwise, (i) for the disposal or
treatment of, or (ii) with a transporter for the transport, disposal or treatment of, any Hazardous
Substance (as defined by CERCLA, as amended), owned, used or possessed by any Borrower, whether or
not to a location identified by the EPA on the National Priorities List, 40 C.F.R. Part 300, (or
proposed by the EPA in the Federal Register for listing on such National Priorities List) or
identified under any corresponding state statute or regulation
20
concerning cleanup of waste disposal
sites (a “State Superfund Law”), at any location except Hazardous Substances used in the ordinary
course of such Borrower’s business in compliance with Laws;
(c) To the best knowledge of each Borrower after due inquiry, no Predecessor (as defined by
CERCLA, as amended) has arranged by contract, agreement or otherwise, (i) for the disposal or
treatment of, or (ii) with a transporter for transport for the disposal or treatment of, any
Hazardous Substance (as defined by CERCLA, as amended), owned, used or possessed by any Predecessor
at any location except Hazardous Substances used in the ordinary course of Predecessor’s business
in compliance with Laws;
(d) No Borrower is an “owner” or “operator” of a “facility”, as defined by CERCLA, as amended,
or any State Superfund Law; and
(e) No Borrower “owned” or “operated” any “facility” at the time any Hazardous Substances were
disposed of within the meaning of CERCLA, as amended, or any State Superfund Law.
3.18 Proceeds. Borrowers will use the proceeds of the Loans as set forth in the
Preamble of this Agreement.
3.20 Margin Stock. Borrowers will make no borrowing under this Agreement for the
purpose of buying or carrying any “margin stock”, as such term is used in Regulation U and related
regulations of the Board of Governors of the Federal Reserve System, as amended
from time to time. No Borrower owns any “margin stock”. No Borrower is engaged in the
business of extending credit to others for such purpose, and no part of the proceeds of any
borrowing under this Agreement will be used to purchase or carry any “margin stock” or to extend
credit to others for the purpose of purchasing or carrying any “margin stock”.
3.21 No Event of Default; Compliance with Agreements. No event has occurred and is
continuing and no condition exists which constitutes an Event of Default or Potential Default. No
Borrower is (i) in violation of any term of any charter instrument or bylaw or (ii) in default
under any material agreement, lease or instrument to which such Borrower is a party or by which it
or any of its properties (owned or leased) may be subject or bound.
3.22 No Material Adverse Change. Since April 30, 2006, there has been no material
adverse change in the assets, business, operations, management or financial condition of Borrowers
or any of them.
3.23 Subsidiaries. Project, Enviro-Tech, PDG, Flagship and Servestec are wholly owned
Subsidiaries of Parent. No Borrower has or will have any other Subsidiaries, other than Inactive
Subsidiaries.
3.24 Labor Controversies. There are no labor controversies pending or, to the best
knowledge of any Borrower, threatened against any Borrower which, if adversely
21
determined, would
have a material adverse effect on the assets, business, operations, management or financial
condition of Borrowers or any of them.
3.25 Solvency. After the making of the Loans, each Borrower (a) will be able to pay
its debts as they become due, (b) will have funds and capital sufficient to carry on its business
and all business in which it is about to engage, and (c) will own property having a value at both
the fair valuation and at fair salable value in the ordinary course of such Borrower’s business
greater than the amount required to pay such Borrower’s debts as they become due. No Borrower was
insolvent immediately prior to the date of this Agreement and no Borrower will be rendered
insolvent by the execution and delivery of this Agreement, the borrowings hereunder and/or the
consummation of any transactions contemplated by this Agreement, the Notes or the other Loan
Documents.
3.26 Accurate and Complete Disclosure. No representation or warranty made by any
Borrower under this Agreement, the Notes, the Security Agreements, the Mortgage or the other Loan
Documents and no statement made by any Borrower in any financial statement (furnished pursuant to
Sections 3.10 or 5.01 or otherwise), certificate, report, exhibit or document furnished by any
Borrower to Bank pursuant to or in connection with this Agreement is false or misleading in any
material respect (including by omission of material information necessary to make such
representation, warranty or statement not misleading). No Borrower is aware of any facts which it
has not disclosed to Bank in writing which materially and adversely affects, and would materially
and adversely affect, the assets, business, operations or financial condition of Borrowers or any
of them or the ability of Borrowers or any of them to perform
their obligations under this Agreement, the Notes, the Security Agreements, the Mortgage and
the other Loan Documents.
3.27 Security Interest. The security interest in the Collateral (as defined in the
Security Agreements) granted to Bank pursuant to the Security Agreements and the Mortgage, (i)
constitutes and will continue to constitute a perfected security interest under the UCC entitled to
all of the rights, benefits and priorities provided by the UCC and (ii) except as otherwise
permitted under Section 6.01 of this Agreement, is and will continue to be superior and prior to
the rights of all third parties existing on the date of this Agreement or arising after the date of
this Agreement whether by lien or otherwise, to the full extent provided by Law. All such action
as is necessary or advisable to establish such rights of Bank has been taken or will be taken at or
prior to the time required for such purpose and there will be upon execution and delivery of the
Loan Documents no necessity of any further action in order to preserve, protect and continue such
rights except the filing of continuation statements with respect to filed financing statements
within six months prior to each five year anniversary of the filing of such financing statements.
All filing fees and other expenses in connection with each such action shall be paid by Borrowers
and Bank shall be reimbursed by Borrowers for any such fees and expenses incurred by Bank.
3.28 Account Warranties. With respect to all accounts from time to time scheduled,
listed or referred to in any certificate, statement or report delivered to Bank by Borrowers or any
of them pursuant to this Agreement or the Loan Documents, each Borrower warrants and represents to
Bank that as of the date of such certificate, statement or report: (a) the
22
accounts are genuine,
are in all respects what they purport to be, and are not evidenced by a note, instrument or
judgment; (b) the accounts represent undisputed bona fide transactions completed in accordance with
the terms and provisions contained in the documents delivered to Bank with respect to the accounts,
if any; (c) there are no material setoffs, counterclaims or disputes existing or asserted with
respect to the accounts and no Borrower has made any agreement with any account debtor for any
deduction from any account; (d) there are no facts, events or occurrences which in any way impair
the validity or enforcement of any account or tend to reduce the amount payable under any account
as shown on the respective certificates and statements, Borrower’s books and records and all
invoices and statements delivered to Bank with respect to any account; (e) to each Borrower’s
knowledge, all account debtors have the capacity to contract and are solvent; (f) the services
furnished and/or goods sold giving rise to any account are not subject to any lien, claim,
encumbrance or security interest except that of Bank; (g) to each Borrower’s knowledge, there are
no proceedings or actions which are threatened or pending against any account debtor which might
result in any material adverse change in such account debtor’s financial condition; (h) the account
is not an account with respect to which the account debtor is an Affiliate or a director, officer
or employee of any Borrower; (i) the account does not arise with respect to goods which have not
been shipped or arise with respect to services which have not been fully performed and accepted as
satisfactory by the account debtor; (j) the account is not an account 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 repurchase obligation or return right, as with sales made on a
xxxx-and-hold, guaranteed sale, sale-and-return, or sale on approval basis; and (k) the amounts
shown on the applicable certificates, statements,
Borrower’s books and records and all invoices and statements which may be delivered to Bank
with respect to such accounts are actually and absolutely owing to such Borrower and are not in any
way contingent. Borrowers shall promptly but in any event within five (5) Business Days, notify
Bank in the event that any such account ceases to satisfy the above representations and warranties.
3.29 Inventory Warranties. With respect to all inventory from time to time scheduled,
listed or referred to in any certificate, statement or report delivered to Bank, each Borrower
warrants and represents that as of the date of such certificate, statement or report: (a) such
inventory is located on the premises listed in a Security Agreement and is not in transit; (b) the
applicable Borrower has good, indefeasible and merchantable title to such inventory and such
inventory is not subject to any lien or security interest whatsoever except for the security
interest granted to Bank; (c) such inventory is of good and merchantable quality, free from any
defects or obsolescence; (d) such inventory is not subject to any licensing, patent, royalty,
trademark, tradename or copyright agreement with any third party; and (e) the completion of the
manufacture and sale or other disposition of such inventory by Bank following an Event of Default
shall not require the consent of any Person and shall not constitute a breach or default under any
contract or agreement to which any Borrower is a party or to which the inventory is subject.
Borrowers shall promptly, but in any event within five (5) Business Days, notify Bank that such
inventory ceases to satisfy the above representations and warranties.
3.30 Commonality of Economic Purpose. Borrowers regularly transact business with each
other and provide working capital for each other as well as other services and
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benefits. Borrowers
have certain common officers and directors. As a result, Borrowers, although separate
corporations, are one economic unit and business entity for all practical purposes and the
effective continuance of the business of each of the Borrowers is dependent on the continuance and
success of each other Borrower. The final success of each of the Borrowers directly benefits the
other Borrowers and the transactions contemplated under this Agreement will be to the mutual
benefit of Borrowers. Each Borrower understands that the Bank’s willingness to make the Loans
under this Agreement is predicated upon, and therefore the Bank has relied upon, the truth of the
foregoing representation by Borrowers.
ARTICLE IV
CONDITIONS OF LENDING
The obligation of Bank to make any Loan is subject to the accuracy as of the Closing Date of
the representations and warranties contained in this Agreement and the other Loan Documents, to the
performance by Borrowers of their respective obligations to be performed under this Agreement and
under the other Loan Documents on or before the date of such Loan and to the satisfaction of the
following further conditions:
4.01 Representations and Warranties; Events of Default and Potential Defaults. The
representations and warranties contained in Article III shall be true and correct on and as of the
date of each Loan with the same effect as though made on and as of each such date. On the date of
each Loan, no Event of Default and no Potential Default shall have occurred and be continuing or
exist or shall occur or exist after giving effect to the Loan to be made on such date. Each
request by a Borrower for any Loan shall constitute a representation and warranty by the Borrowers
that the conditions set forth in this Section 4.01 and all other conditions to such Loan have been
satisfied.
4.02 Proceedings and Incumbency. On the Closing Date, each Borrower shall have
delivered to Bank a certificate, in form and substance satisfactory to Bank, dated the Closing Date
and signed on behalf of such Borrower by the Secretary of such Borrower, certifying as to (a) true
copies of the articles of incorporation and bylaws of such Borrower and any shareholders agreement
concerning such Borrower, all as in effect on such date, (b) true copies of all corporate action
taken by such Borrower relative to this Agreement, the Notes and the other Loan Documents
including, but not limited to, that described in Section 3.03 of this Agreement, (c) the names,
true signatures and incumbency of the officers of such Borrower authorized to execute and deliver
this Agreement, the Notes and the other Loan Documents, and (d) a list of all fictitious or trade
names of such Borrower. Bank may conclusively rely on each such certificate unless and until a
later certificate revising the prior certificate has been furnished to Bank.
4.03 Agreement and Notes. On the Closing Date, this Agreement and the Notes,
satisfactory in terms, form and substance to Bank, shall have been executed and delivered by
Borrowers to Bank.
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4.04 Security Documents. On the Closing Date, the Mortgage, the Security Agreements
and the Indemnity Agreement shall have been executed and delivered by Borrowers to Bank, and shall
be in effect and all filings contemplated thereto shall have been made.
4.05 Other Loan Documents. On the Closing Date, all other Loan Documents,
satisfactory in terms, form and substance to Bank, shall have been executed and delivered by
Borrowers to Bank.
4.06 UCC Financing Statements. On or before the Closing Date, all UCC-l financing
statements to be filed pursuant to the Security Agreements and the other Loan Documents shall have
been duly filed and shall be in effect.
4.07 Opinion of Counsel. On the Closing Date, there shall have been delivered to Bank
a written opinion, dated the Closing Date, of Xxxxx & Xxxxxxx, counsel to Borrowers, in form and
substance satisfactory to Bank and its counsel.
4.08 Other Documents and Conditions. On or before the Closing Date, the following
documents and conditions shall have been delivered to Bank or satisfied by or on behalf of
Borrowers:
(a) Good Standing and Tax Lien Certificates. As to each Borrower, a good standing
certificate of such Borrower certifying to the good standing and corporate status of such Borrower,
good standing/foreign qualification certificates from other jurisdictions in which such Borrower is
qualified to do business and tax lien certificates of such Borrower from its jurisdiction of
incorporation and each jurisdiction in which such Borrower is qualified to do business.
(b) Financial Statements. The financial statements described in Section 3.10 of this
Agreement.
(c) Insurance. Evidence, in form and substance satisfactory to Bank, that the
business and all assets of such Borrower is adequately insured and that Bank has been named as loss
payee, entitled to thirty (30) days notice of cancellation or modification, on all policies of
insurance covering the Collateral (as defined in the Security Agreements) and the Mortgage.
(d) Lockbox Agreement. A fully executed Lockbox Agreement.
(e) Lien Search. Copies of record searches (including UCC searches, real property
title reports, and judgment, suits, tax and other lien searches) evidencing that Bank has a first
priority security interest in the Collateral except for those Liens permitted pursuant to Section
6.01 hereof.
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(f) No Material Adverse Change. Evidence satisfactory to Bank that no material
adverse change has occurred with respect to each Initial Borrower since April 30, 2006.
(g) Termination Statements — Releases. Evidence satisfactory to Bank that UCC
termination or release statements with respect to the Liens on the property of any Borrower not
permitted under Section 6.01 of this Agreement have been filed or satisfactory arrangements have
been made for such filing.
(h) Leases. Certified copies of all of the real property leases of each Borrower in
which such Borrower is a tenant.
(i) Other Documents and Conditions. Such other documents and conditions as may be
required to be submitted to Bank by the terms of this Agreement or of any Loan Document or set
forth on the Closing Checklist with respect to the transaction contemplated by this Agreement.
4.09 Details Proceedings and Documents. All legal details and proceedings in
connection with the transactions contemplated by this Agreement shall be satisfactory to Bank and
Bank shall have received all such counterpart originals or certified or other copies of such
documents and proceedings in connection with such transactions, in form and substance satisfactory
to Bank, as Bank may from time to time request.
4.10 Fees and Expenses. Borrowers shall have paid all fees and charges as required
for the Closing and relating to the Closing, including without limitation, survey costs, title
insurance premiums, environmental investigation fees, appraisal fees, reasonable legal fees,
closing costs, filing and notary fees and any other matters pertinent to the Closing.
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ARTICLE V
AFFIRMATIVE COVENANTS
Borrowers jointly and severally covenant to Bank as follows:
5.01 Reporting and Information Requirements.
(a) Annual Audited Reports. As soon as practicable, and in any event within one
hundred twenty (120) days after the close of each fiscal year of Borrowers, Borrowers will furnish
to Bank (i) consolidated statements of income, retained earnings and cash flow of Borrowers for
such fiscal year and a consolidated balance sheet of Borrowers as of the close of such fiscal year,
and notes to each, all in reasonable detail, setting forth in comparative form the corresponding
figures for the preceding fiscal year, prepared in accordance with GAAP applied on a basis
consistent with that of the preceding fiscal year (except for changes in application in which such
accountants concur) with such statements and balance sheet to be audited by Malin, Xxxxxxxx &
Company, LLP, or other independent certified public accountants of recognized standing selected by
Borrowers and satisfactory to Bank. The report of such accountants shall not set forth exceptions
or qualifications not acceptable to Bank. Such opinion in any event shall contain a written
statement of such accountants substantially to the effect that (i) such accountants examined such
financial statements in accordance with generally accepted auditing standards and accordingly made
such tests of accounting records and such other auditing procedures as such accountants considered
necessary in the circumstances and (ii) in the opinion of such accountants such financial
statements present fairly the financial position of the Borrowers as of the end of such fiscal year
and the results of their operations and their cash flows and changes in stockholders’ equity for
such fiscal year, in conformity with GAAP.
(b) Intentionally deleted
(c) Officer’s Certificate. Each set of statements and balance sheets delivered
pursuant to Section 5.01(a) of this Agreement shall be accompanied by a compliance
certificate, substantially in the form of Exhibit “E” attached hereto and made a part
hereof, executed by the President or any Vice President of Parent, stating that no Event of Default
or Potential Default exists and that Borrower is in compliance with the financial covenants set
forth in Sections 5.13, 5.14 and 5.15 of this Agreement. Such certificate shall include all
figures necessary to calculate Borrowers’ compliance with such financial covenants. If an Event of
Default or Potential Default has occurred and is continuing or exists, such certificate shall
specify in detail the nature and period of existence of the Event of Default or Potential Default
and any action taken or contemplated to be taken by Borrowers.
(d) Other Reports. Promptly upon receipt thereof, Borrowers will deliver to Bank one
copy of each other report submitted to any Borrower by independent accountants, including comment
or management letters, in connection with any annual, interim or special report made by them of the
books of any Borrower.
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(e) Borrowing Base Certificates and Other Reports. Borrowers shall furnish to Bank a
Borrowing Base Certificate within ten (10) days after the end of each calendar month. In addition,
within fifteen (15) days after the end of each calendar month, Borrowers will deliver to Bank a
schedule of all of their accounts receivable, identifying all accounts, and the aging thereof by
open invoice for each customer of each Borrower and such other reports concerning the accounts
receivable as Bank shall require, all certified as to accuracy by the President or any Vice
President of Parent and all in such form as Bank shall require. Borrowers shall also promptly
provide Bank with all information requested by Bank with respect to any account debtor. In
addition, within twenty (20) days after the end of each calendar month, Borrowers shall provide
Bank with a schedule containing a description or recap of the inventory purchased and sold by each
Borrower for such month, and such other reports concerning the inventory of each Borrower as Bank
shall require, all certified as to accuracy by the appropriate officer of Parent and all in such
form as Bank shall require.
(f) Visitation: Audits. Borrowers will permit, upon reasonable notice, such persons
as Bank may designate to visit and inspect any of the properties of Borrowers, to examine, and to
make copies and extracts from, the books and records of Borrowers, and to discuss their affairs
with their officers, employees and independent accountants during normal business hours. Each
Borrower authorizes its officers, employees and independent accountants to discuss with Bank its
affairs.
(g) Notice of Event of Default. Promptly upon any Borrower becoming aware of an Event
of Default or Potential Default, Borrowers will give Bank notice of the Event of Default or
Potential Default, together with a written statement of the President, Treasurer or Chief Financial
Officer of Parent setting forth the details of the Event of Default or Potential Default and any
action taken or contemplated to be taken by Borrowers.
(h) Notice of Material Adverse Change. Promptly upon any Borrower becoming aware
thereof, Borrowers will give Bank telephonic or telegraphic notice (with written confirmation sent
on the same or next Business Day) with respect to any material adverse change
in the assets, business, operations, management or financial condition of Borrowers or any of
them or any development or occurrence which would materially and adversely affect Borrowers or any
of them.
(i) Notice of Proceedings. Promptly upon any Borrower becoming aware thereof,
Borrowers will give Bank notice of the commencement, existence or threat of all proceedings by or
before any Official Body against or affecting any Borrower which, if adversely decided, would have
a material adverse effect on the assets, business, operations, management or financial condition of
Borrowers or any of them, or which relates to any Environmental Law or any hazardous substance or
other substance or material regulated thereunder.
(j) Further Information. Borrowers will promptly furnish to Bank such other
information, and in such form, as Bank may reasonably request from time to time.
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5.02 Preservation of Existence and Franchises. Each Borrower will maintain its
corporate existence, rights and franchises in full force and effect in its jurisdiction of
incorporation. Each Borrower will qualify and remain qualified as a foreign corporation in each
jurisdiction in which failure to receive or retain qualification would have a material adverse
effect on the assets, business, operations or financial condition of Borrowers or any of them.
5.03 Insurance. Each Borrower will maintain, at its own cost and expense, insurance
with respect to its properties and business against such liabilities, casualties and contingencies,
of such types, with such insurers and in such amounts as is reasonably satisfactory to Bank from
time to time and in any case as is customary in the case of corporations or other entities engaged
in the same or similar business or having similar properties similarly situated. Without
limitation on the foregoing, Borrowers shall maintain the insurance required by the Mortgage and
the Security Agreements.
5.04 Maintenance of Properties. Each Borrower will maintain or cause to be maintained
in good repair, working order and condition, the properties now or in the future owned, leased or
otherwise possessed by such Borrower and necessary in the operation of its business and shall make
or cause to be made all needful and proper repairs, renewals, replacements and improvements to the
properties so that the business carried on in connection with the properties may be properly and
advantageously conducted at all times. Each Borrower shall notify Bank prior to the creation of a
new location for any of its properties or businesses (other than those disclosed to Bank in
connection with the execution and delivery of this Agreement).
5.05 Payment of Liabilities. Each Borrower will pay or discharge:
(a) on or prior to the date on which penalties attach, all taxes, assessments and other
governmental charges or levies imposed upon it or any of its properties or income;
(b) on or prior to the date when due, all lawful claims of materialmen, mechanics, carriers,
warehousemen, landlords and other like persons which, if unpaid, might result in the creation of a
Lien upon any of its property;
(c) on or prior to the date when due, all other lawful claims which, if unpaid, might result
in the creation of a Lien upon any of its property; and
(d) all other current liabilities so that none is unpaid more than ninety (90) days after the
due date for such liability.
5.06 Financial Accounting Practices. Each Borrower will make and keep books, records
and accounts which, in reasonable detail, accurately and fairly reflect its transactions and
dispositions of assets and maintain a system of internal accounting controls sufficient to provide
reasonable assurances that (a) transactions are executed in accordance with management’s general or
specific authorization, (b) transactions are recorded as necessary (i) to
29
permit preparation of
financial statements in conformity with GAAP and (ii) to maintain accountability for assets, (c) to
ensure access to assets is permitted only in accordance with management’s general or specific
authorization and (d) to ensure the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken with respect to any
differences.
5.07 Compliance with Laws. Borrowers shall comply with all applicable Laws the
non-compliance with which would have a material adverse affect on the assets, business, operations
or financial condition of Borrowers or any of them, and with all Environmental Laws.
5.08 Pension Plans. Borrowers shall (a) keep in full force and effect any and all
Plans which are presently in existence or may, from time to time, come into existence under ERISA,
unless such Plans can be terminated without material liability to Borrowers or any of them in
connection with such termination; (b) make contributions to each of its Plans in a timely manner
and in a sufficient amount to comply with the requirements of ERISA; (c) comply with all material
requirements of ERISA which relate to such Plans so as to preclude the occurrence of any Reportable
Event, Prohibited Transaction (other than a Prohibited Transaction subject to an exemption under
ERISA) or material accumulated funding deficiency as such term is defined in ERISA; and (d) notify
Bank immediately upon receipt by any Borrower of any notice of the institution of any proceeding or
other action which may result in the termination of any Plan. Borrowers shall deliver to Bank,
promptly after the filing or receipt thereof, copies of all reports or notices which any Borrower
files or receives under ERISA with or from the Internal Revenue Service, the PBGC, or the U.S.
Department of Labor, other than reports or notices which do not materially or adversely affect the
businesses, assets or financial condition of Borrowers or any of them, or the ability to perform
their obligations under this Agreement.
5.09 Use of Proceeds. Borrowers shall use the proceeds of the Loans in the manner set
forth in Section 3.18 hereof.
5.10 Continuation of and Change in Business. Borrowers will continue to engage in the
business and activities described in Schedule 3.08 to this Agreement and Borrowers will not engage
in any other business or activities without the prior written consent of Bank.
5.11 Lien Searches. Bank may, but shall not be obligated to, conduct lien searches of
Borrowers and their assets and properties on an annual basis and at such other times as Bank, in
its sole discretion, may determine to be necessary. Borrowers shall reimburse Bank for Bank’s out
of pocket costs in connection with such lien searches.
5.12 Further Assurances. Borrowers, at their own cost and expense, will cause to be
promptly and duly taken, executed, acknowledged and delivered all such further acts, documents and
assurances as Bank may from time to time request in order to more effectively carry out the intent
and purposes of this Agreement and the transactions contemplated by this Agreement and to cause the
security interest or interests, the liens or conveyances granted under the Security Agreements, the
Mortgage or any other Loan Document to be, at all times, valid,
30
perfected and enforceable against
Borrowers and all third parties. All expenses of such filings, recordings, refilings and
rerecordings, shall be borne by Borrowers.
5.13 Debt Service Coverage Ratio. Borrowers shall maintain a Debt Service Coverage
Ratio for each fiscal year of the Borrowers after the Closing Date in the amount of (a) at least
1.3 to 1.0 for the fiscal year ending on January 31, 2007 and (b) at least 1.35 to 1.0 and for each
fiscal year thereafter.
5.14 Debt to Worth Ratio. Borrowers shall maintain a Debt to Worth Ratio of not
greater than 2 to 1 at January 31, 2007 and at each January 31 thereafter.
5.15 Net Worth. Borrowers shall maintain a Net Worth at all times in the amount of at
least $15,000,000.
5.16 Depository Accounts. Each Borrower shall maintain its primary depository
account(s) with Bank.
5.17 Leases. At all times during the term of the Loan Agreement, the Borrowers,
either individually or collectively, and their Subsidiaries shall be prohibited from entering into
leases or loans for equipment without Bank’s prior approval, the total value of which exceeds (i)
$50,000 per transaction, or (ii) $750,000 per annum (for any fiscal year) aggregated for all
transactions.
5.18 Equipment. At all times during the term of the Loan Agreement, the Borrowers
shall cause Project, and no other Borrower or entity, to own the equipment purchased with the
proceeds of the Facility F Loan (the “Facility F Equipment”). The Borrowers represent and warrant
to the Bank that none of the Facility F Equipment constitutes Fixtures, as defined in
the Code, and ownership of the Facility F Equipment is not evidenced by one or more vehicle
titles or similar indicia of ownership.
5.19 Compliance with Anti-Terrorism Laws.
(a) The following terms shall have the meanings set forth in this subsection when used in this
Section:
“Anti-Terrorism Law” means any law, rule or regulation relating to terrorism
or money-laundering, including Executive Order No. 13224 and the USA Patriot
Act.
“Executive Order No. 13224” means the Executive Order No. 13224 on Terrorist
Financing, effective September 24, 2001, relating to “Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or
Support Terrorism.”
“Prohibited Person” means any person or entity:
31
(i) | listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224; | ||
(ii) | owned or controlled by, or acting for or on behalf of, any person or entity listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224; | ||
(iii) | with whom Bank is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law; | ||
(iv) | who commits, threatens or conspires to commit or supports “terrorism” as defined in Executive Order No. 13224; | ||
(v) | named as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website, xxxx://xxx.xxxxx.xxx/xxxx/xxxxxx.xxx, or at any replacement website or other official publication of such list; or | ||
(vi) | who is affiliated with a person or entity described in clauses (i)-(v) of this definition. |
“USA Patriot Act” means the “Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001”
(Public Law 107-56).
b. Borrowers represent, warrant, covenant and agree that:
(i) | None of Borrowers, nor any subsidiary of Borrowers is or will be in violation of any Anti-Terrorism Law; | ||
(ii) | None of Borrowers, any subsidiary of Borrowers, any of their respective brokers, nor any other agent of the foregoing acting or benefiting in any capacity in connection with the Loan is or will be a Prohibited Person; | ||
(iii) | None of Borrowers, any subsidiary of Borrowers, any of their respective brokers, nor any other agent of the foregoing acting or benefiting in any capacity in connection with the Loan (x) conducts or will conduct any business or engage in any transaction or dealing with any Prohibited Person, including the making or receiving of any contribution of funds, goods or services to or for the benefit of any Prohibited Person, (y) deals in or will deal in any property or interests in property blocked pursuant to Executive Order No. 13224 (or otherwise engages, or will engage in any transaction related thereto); or (z) engages in or will engage in (or conspires, or will conspire to, engage in) any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law; |
32
(iv) | Borrowers shall deliver to Bank any certification or other evidence requested from time to time by Bank in its sole discretion, confirming Borrowers’ compliance with this Section; and | ||
(v) | To the extent a transfer of any property of Borrowers is otherwise permitted, Borrowers shall not transfer such property (i) to any person controlled by, controlling or under common control with a Prohibited Person, or (ii) in violation of any Anti-Terrorism Law, and Borrowers shall provide a certification and indemnification to Bank (in form and content acceptable to Bank) to such effect in connection with any transfer of such property. |
Any breach of the foregoing representations, warranties, covenants and agreements of
Borrowers shall constitute an immediate Event of Default hereunder and each of the Security
Agreements. Borrowers hereby agree to indemnify Bank against (and hold Bank harmless from)
any losses suffered and/or expenses incurred by Bank arising out of or otherwise related to
a breach of this Section by Borrowers or any person controlled by, controlling or under
common control with Borrowers.
ARTICLE VI
NEGATIVE COVENANTS
Borrowers jointly and severally covenant to Bank as follows:
6.01 Liens. No Borrower shall, at any time incur, create, assume or permit to exist,
any Lien on any of its assets or property, tangible or intangible, now or hereafter owned, or agree
to become liable to do so, except:
(a) such Liens existing on the Closing Date and described in Schedule 6.01 to this Agreement;
(b) Liens granted in favor of Bank;
(c) pledges or deposits under worker’s compensation, unemployment insurance and social
security laws, or to secure the performance of bids, tenders, contracts (other than for the
repayment of borrowed money) or leases or to secure statutory obligations or surety or similar
bonds used in the ordinary course of business;
(d) any unfiled materialmen’s, mechanic’s, workmen’s, and repairmen’s liens (provided, that if
such a lien shall be perfected, it shall be discharged of record immediately by payment, bond or
otherwise); and
33
(e) liens arising from taxes, assessments, charges, levies or claims described in Section 5.05
of this Agreement that are not yet due and payable.
6.02 Indebtedness. No Borrower shall, at any time, create, incur, assume or suffer to
exist any Indebtedness, except:
(a) Indebtedness under this Agreement, the Notes, the other Loan Documents or under any other
document, instrument or agreement between Borrower and Bank;
(b) Indebtedness existing on the date hereof, and described in Schedule 6.02 to this
Agreement, provided, however, that none of such Indebtedness shall be extended, renewed or
refinanced without the prior written consent of Bank; and
(c) Current accounts payable, accrued expenses and other current items arising out of
transactions (other than borrowings) in the ordinary course of business.
6.03 Guarantees and Contingent Liabilities. Except as set forth in Schedule 6.03, no
Borrower shall at any time directly or indirectly assume, guarantee, endorse or otherwise agree,
become or remain directly or contingently liable upon or with respect to any obligation or
liability of any other Person except that any Borrower may endorse negotiable or
other instruments in any amount for deposit or collection or similar transactions in the
ordinary course of its business.
6.04 Loans and Investments. No Borrower shall at any time make or suffer to remain
outstanding any loan or advance to, or purchase, acquire, or own any stock, bonds, notes or
securities of, or any partnership interest (whether general or limited) in, or any other interest
in, or make any capital contribution or loan to, any other Person, or agree, become or remain
liable to do any of the foregoing, except:
(a) Trade accounts receivable resulting from a Borrower’s sale of goods or services made in
the ordinary course of its business;
(b) obligations backed by the full faith and credit of the United States of America maturing
not in excess of nine months from the date of acquisition;
(c) demand deposits, time deposits or certificates of deposit in Bank or in United States FDIC
insured commercial banks having shareholders’ equity of at least $100,000,000 and maturing not in
excess of nine months from the date of acquisition; and
(d) commercial paper maturing not in excess of six months from the date of acquisition and
either issued by Bank or rated P-1 by Xxxxx’x Investors Service, Inc. or A-1 by Standard & Poor’s
Corporation on the date of acquisition.
6.05 Dividends and Related Distributions. Except as provided in the immediately
succeeding sentence, Parent will not declare, make, pay, or agree, become or remain
34
liable to make
or pay, any dividend or other distribution of any nature (whether in cash, property, securities or
otherwise) on account of or in respect of any shares of the capital stock of Parent or on account
of the purchase, redemption, retirement or acquisition of any shares of the common, any series of
preferred or other shares of capital stock (or warrants, options or rights for any shares of the
capital stock) of Parent without the prior written consent of Bank, which consent will not be
unreasonably withheld. Notwithstanding the foregoing, the Parent shall be permitted to be liable
to make and pay dividends in kind (e.g. additional issuances of Series C Preferred Stock) in
accordance with the terms of the Preferred Stock Termsheet. In no event shall Parent redeem the
Series C Preferred Stock or any other capital stock of the Parent if after giving effect to such
redemption any Event of Default or Potential Default would or could reasonably be expected to be in
existence or occur. Parent shall immediately deliver to Bank a copy of any notice or request for
redemption of the Series C Preferred Stock or any other capital stock of the Parent that is
delivered to the Parent by or on behalf of any holder of such stock of the Parent.
6.06 Merger; Consolidation; Business Acquisitions. No Borrower will merge or agree to
merge with or into or consolidate with any other Person without the prior written consent of Bank.
No Borrower will acquire any material portion of the stock or assets or business of any other
Person without the prior written consent of Bank, which consent will not be unreasonably withheld.
6.07 Dispositions of Assets. No Borrower will sell, convey, pledge, assign, lease,
abandon or otherwise transfer or dispose of, voluntarily or involuntarily (any of the foregoing
being referred to in this Section as a transaction and any series of related transactions
constituting but a single transaction), any of its properties or assets, tangible or intangible
(including stock of Subsidiaries), except for sales of inventory in the ordinary course of business
and except sales of equipment which is replaced with equipment of equal or higher value and other
dispositions of equipment in an aggregate amount not to exceed $25,000 in aggregate net book value
in any fiscal year.
6.08 Margin Stock. No Borrower will use the proceeds of any Loans directly or
indirectly to purchase or carry any “margin stock” (within the meaning of Regulations U, G, T, or X
of the Board of Governors of the Federal Reserve System) or to extend credit to others for the
purpose of purchasing or carrying, directly or indirectly, any margin stock.
6.09 Changes in Ownership or Control. Project, Enviro-Tech, PDG, Flagship and
Servestec shall at all times remain wholly owned Subsidiaries of Parent and no Borrower shall at
any time have any other Subsidiaries other than Inactive Subsidiaries. Parent will not transfer
any of its interest in the Mortgaged Property (as defined in the Mortgage).
6.10 Self Dealing. No Borrower shall enter into or carry out any loan, advance or
other transaction (including, without limitation, purchasing property or services or selling
property or services) with any Affiliate except that shareholders, directors or officers of any
Borrower may render services to any Borrower for compensation at the same rates generally paid by
corporations engaged in the same or similar businesses for the same or similar services.
35
ARTICLE VII
DEFAULTS
7.01 Events of Default. An Event of Default means the occurrence or existence of one
or more of the following events or conditions (whatever the reason for such Event of Default and
whether voluntary involuntary or effected by operation of Law):
(a) Borrowers shall fail to pay principal on any of the Notes when due and such failure shall
continue for five (5) days; or
(b) Borrowers shall fail to pay interest on the Loans or any fees payable pursuant to Article
II of this Agreement when due and such failure shall continue for five (5) days; or
(c) Any Borrower shall fail to pay any other fee, or other amount payable pursuant to this
Agreement, the Notes, the Security Agreements or any of the other Loan Documents when due and such
failure shall continue for five (5) days; or
(d) Any representation or warranty made by any Borrower under this Agreement, the Notes, or
any of the other Loan Documents, or any statement made by any Borrower in any financial statement,
certificate, report, exhibit or document furnished by any Borrower to Bank pursuant to this
Agreement or the other Loan Documents, shall prove to have been false or misleading in any material
respect as of the time when made; or
(e) Bank’s security interest under any Security Agreement or any of the other Loan Documents
is or shall become unperfected; or
(f) Any Borrower shall default in the performance or observance of any covenant, agreement or
duty contained in Article VI hereof or in Sections 5.01(g), 5.09, 5.10, 5.13, 5.14, 5.15 or 5.16
hereof; or
(g) Any Borrower shall (i) default (as principal or guarantor or other surety) in any payment
of principal of or interest on any obligation (or set of related obligations) for borrowed money in
excess of $50,000, beyond any period of grace with respect to the payment or, if any obligation (or
set of related obligations) for borrowed money in excess of $50,000 is or are payable or repayable
on demand, fails to pay or repay such obligation or obligations when demanded, or (ii) default in
the observance of any other covenant, term or condition contained in any agreement or instrument by
which an obligation (or set of related obligations) for borrowed money in excess of $50,000 is or
are created, secured or evidenced, if the effect of such default is to cause, or commit the holder
or holders of such obligation or obligations (or a trustee or agent on behalf of such holder or
holders) to cause, all or part of such obligation or obligations to become due before its or their
otherwise stated maturity, or (iii) Parent shall be obligated to redeem any shares of its capital
stock, including, without limitation,
36
shares of Series C Preferred Stock in violation of Section
6.05 of this Agreement, or any holder of shares of capital stock of the Parent, including shares of
Series C Preferred Stock, shall have an exercisable right to demand redemption of any such shares
of stock if at such time the Bank believes that an Event of Default or Potential Default shall
occur or be in existence after giving effect to such redemption; or
(h) Any Borrower shall default in the performance or observance of any other covenant,
agreement or duty under this Agreement, the Notes or the other Loan Documents and such default
shall continue for 30 days, or an Event of Default as defined in any other Loan Document shall
occur; or
(i) One or more judgments for the payment of money in excess of $50,000 shall have been
entered against any Borrower; or
(j) A writ or warrant of attachment, garnishment, execution, distraint or similar process
shall have been issued against any Borrower or any of their respective properties; or
(k) (i) A Termination Event with respect to a Plan shall occur, (ii) any Person shall engage
in any prohibited transaction involving any Plan, (iii) an accumulated funding deficiency, whether
or not waived, shall exist with respect to any Plan, (iv) any Borrower or any ERISA Affiliate shall
be in “Default” (as defined in Section 4219(c)(5) of ERISA with respect to payments due to a
multi-employer Plan resulting from any Borrower’s or any ERISA affiliate’s, complete or partial
withdrawal (as described in Section 4203 or 4205 of ERISA) from such Plan, or (v) any other event
or condition shall occur or exist with respect to a single employer Plan, except that no such event
or condition shall constitute an Event of Default if it, together with all other events or
conditions at the time existing, would not subject any Borrower or any of its Subsidiaries to any
tax, penalty, debt or liability which, alone or in the aggregate, would have a material adverse
effect on Borrowers or any of them; or
(l) A Change of Control or Change of Management shall occur; or
(m) A proceeding shall be instituted in respect of any Borrowers:
(i) seeking to have an order for relief entered in respect of such Borrower, or seeking a
declaration or entailing a finding that such Borrower is insolvent or a similar declaration or
finding, or seeking dissolution, winding-up, charter revocation or forfeiture, liquidation,
reorganization, arrangement, adjustment, composition or other similar relief with respect to such
Borrower, its assets or debts under any law relating to bankruptcy, insolvency, relief of debtors
or protection of creditors, termination of legal entities or any other similar law now or in the
future which shall not have been dismissed or stayed within sixty (60) days after such proceedings
were instituted; or
(ii) seeking appointment of a receiver, trustee, custodian, liquidator, assignee, sequestrator
or other similar official for such Borrower or for all or any
37
substantial part of its property
which shall not have been dismissed or stayed within sixty (60) days after such proceedings were
instituted; or
(n) Any Borrower shall become insolvent, shall become generally unable to pay its debts as
they become due, shall voluntarily suspend transaction of its businesses, shall make a general
assignment for the benefit of creditors, shall institute a proceeding described in Section
7.01(l)(i) of this Agreement or shall consent to any order for relief, declaration, finding or
relief described in Section 7.01(l)(i) of this Agreement, shall institute a proceeding described in
Section 7.01(l)(ii) of this Agreement or shall consent to the appointment or to the taking of
possession by any such official of all or any substantial part of its property whether or not any
proceeding is instituted, dissolve, wind-up or liquidate itself or any substantial part of their
property, or shall take any action in furtherance of any of the foregoing.
7.02 Consequences of an Event of Default.
(a) If an Event of Default specified in subsections (a) through (l) of Section 7.01 of this
Agreement occurs, Bank will be under no further obligation to make Loans and may at its option
demand the unpaid principal amount of the Notes, interest accrued on the unpaid principal amount
and all other amounts owing by any Borrower under this Agreement, the Notes and the other Loan
Documents to be immediately due and payable without presentment, demand, protest or further notice
of any kind, all of which are expressly waived, and an action for any amounts due shall accrue
immediately.
(b) If an Event of Default specified in subsections (m) or (n) of Section 7.01 of this
Agreement occurs and continues or exists, Bank will be under no further obligation to make Loans
and the unpaid principal amount of the Notes, interest accrued on the unpaid principal amount and
all other amounts owing by any Borrower under this Agreement, the Notes and the other Loan
Documents shall automatically become immediately due and
payable without presentment, demand, protest or notice of any kind, all of which are expressly
waived, and an action for any amounts due shall accrue immediately.
7.03 Set-Off. If the unpaid principal amount of the Notes, interest accrued on the
unpaid principal amount or other amount owing by any Borrower under this Agreement, the Notes or
the other Loan Documents shall have become due and payable (at maturity, by acceleration or
otherwise), Bank and the holder of any participation in any Loan will each have the right, in
addition to all other rights and remedies available to it, without notice to Borrower, to set-off
against and to appropriate and apply to such due and payable amounts any debt owing to, and any
other funds held in any manner for the account of, any Borrower by Bank or by such holder
including, without limitation, all funds in all deposit accounts (whether time or demand, general
or special, provisionally credited or finally credited, or otherwise) now or in the future
maintained by any Borrower with Bank or such holder. Each Borrower consents to and confirms the
foregoing arrangements and confirms Bank’s rights and such holder’s rights of banker’s lien and
set-off. Nothing in this Agreement will be deemed a waiver or prohibition of or restriction on
Bank’s rights or any such holder’s rights of banker’s lien or set-off.
38
ARTICLE VIII
MISCELLANEOUS
8.01 Business Days. Except as otherwise provided in this Agreement, whenever any
payment or action to be made or taken under this Agreement, or under the Notes or under any of the
other Loan Documents is stated to be due on a day which is not a Business Day, such payment or
action will be made or taken on the next following Business Day and such extension of time will be
included in computing interest or fees, if any, in connection with such payment or action.
8.02 Records. The unpaid principal amount of the Notes, the unpaid interest accrued
thereon, the interest rate or rates applicable to such unpaid principal amount and the duration of
such applicability shall at all times be ascertained from the records of Bank, which shall be
conclusive absent manifest error.
8.03 Amendments and Waivers. Bank and Borrowers may from time to time enter into
agreements amending, modifying or supplementing this Agreement, the Notes or any other Loan
Document or changing the rights of Bank or of Borrowers under this Agreement, under the Notes or
under any other Loan Document and Bank may from time to time grant waivers or consents to a
departure from the due performance of the obligations of Borrowers under this Agreement, under the
Notes or under any other Loan Document. Any such agreement, waiver or consent must be in writing
and will be effective only to the extent specifically set forth in such writing. In the case of any
such waiver or consent relating to any provision of this Agreement, any Event of Default or
Potential Default so waived or consented to will be deemed to be cured and not continuing, but no
such waiver or consent will extend to any other or
subsequent Event of Default or Potential Default or impair any right consequent to any other
or subsequent Event of Default or Potential Default or impair any right consequent thereto.
8.04 No Implied Waiver: Cumulative Remedies. No course of dealing and no delay or
failure of Bank in exercising any right, power or privilege under this Agreement, the Notes or any
other Loan Document will affect any other or future exercise of any such right, power or privilege
or exercise of any other right, power or privilege except as and to the extent that the assertion
of any such right, power or privilege shall be barred by an applicable statute of limitations; nor
shall any single or partial exercise of any such right, power or privilege or any abandonment or
discontinuance of steps to enforce such a right, power or privilege preclude any further exercise
of such right, power or privilege or of any other right, power or privilege. The rights and
remedies of Bank under this Agreement, the Notes or any other Loan Document are cumulative and not
exclusive of any rights or remedies which Bank would otherwise have.
8.05 Notices. All notices, requests, demands, directions and other communications
(collectively notices) under the provisions of this Agreement or the Notes must be in writing
(including telexed or telecopied communication) unless otherwise expressly permitted under this
Agreement and must be sent by first-class or first-class express mail, private
39
overnight or next
Business Day courier or by telex or telecopy with confirmation in writing mailed first class, in
all cases with charges prepaid, and any such properly given notice will be effective when received.
All notices will be sent to the applicable party at the addresses stated below or in accordance
with the last unrevoked written direction from such party to the other parties.
If to Borrowers | ||||
or any of them: | PDG Environmental, Inc. | |||
0000 Xxxxxx Xxxx, Xxxxxxxx 000 | ||||
Xxxxxxxxxx, XX 00000 | ||||
Attention: Xxxx X. Xxxxx | ||||
and a copy to: | Xxxxx X. Xxxxxxxxx, Esq. | |||
Xxxxx & Xxxxxxx, P.C. | ||||
00 Xxxxxxx Xxxxxx | ||||
Xxxxxxxxxx, XX 00000 | ||||
If to Bank: | Commercial Loan Department | |||
Sky Bank | ||||
Xxxxxxx X. Xxxx, Vice President | ||||
000 Xxxx Xxxxxxxxxx Xxxxxx | ||||
Xxx Xxxxxx, Xxxxxxxxxxxx 00000 | ||||
and copy to: | Xxxxxx X. Gacse | |||
c/o Sky Bank | ||||
000 Xxxx Xxxxxxxxxx Xxxxxx | ||||
Xxx Xxxxxx, Xxxxxxxxxxxx 00000 |
8.06 Expenses; Taxes; Attorneys Fees. Borrowers agree to pay or cause to be paid and
to save Bank harmless against liability for the payment of all reasonable expenses, including, but
not limited to reasonable fees and expenses of counsel and paralegals for Bank, incurred by Bank
from time to time (i) arising in connection with the preparation, execution, delivery and
performance of this Agreement, the Notes and the other Loan Documents, (ii) relating to any
requested amendments, waivers or consents to this Agreement, the Notes or any of the other Loan
Documents and (iii) arising in connection with Bank’s enforcement or preservation of rights under
this Agreement, the Notes or any of the other Loan Documents, including but not limited to such
expenses as may be incurred by Bank in the collection of the outstanding principal amount of the
Loans. Borrowers agree to pay all stamp, document, transfer, recording or filing taxes or fees and
similar impositions now or in the future determined by Bank to be payable in connection with this
Agreement, the Notes or any other Loan Document. Borrowers agree to save Bank harmless from and
against any and all present or future claims, liabilities or losses with respect to or resulting
from any omission to pay or delay in paying any such taxes, fees or impositions. In the event of
any action at law or suit in equity in relation to this Agreement, the Notes or the other Loan
Documents, Borrowers will pay, in addition to all other sums which Borrowers may be required to
pay, a reasonable sum for attorneys and
40
paralegals fees incurred by Bank or the holder of the Notes
in connection with such action or suit. All payments due from Borrowers under this Section will be
added to and become part of the Loans until paid in full.
8.07 Severability. The provisions of this Agreement are intended to be severable. If
any provision of this Agreement is held invalid or unenforceable in whole or in part in any
jurisdiction, the provision will, as to such jurisdiction, be ineffective to the extent of such
invalidity or unenforceability without in any manner affecting the validity or enforceability of
the provision in any other jurisdiction or the remaining provisions of this Agreement in any
jurisdiction.
8.08 Governing Law: Consent to Jurisdiction. This Agreement will be deemed to be a
contract under the laws of the Commonwealth of Pennsylvania and for all purposes will be governed
by and construed and enforced in accordance with the substantive laws, and not the laws of
conflicts, of said Commonwealth. Borrower consents to the exclusive jurisdiction and venue of the
federal and state courts located in Xxxxxxxx County or Allegheny County, Pennsylvania, in any
action on, relating to or mentioning this Agreement, the Notes, the other Loan Documents, or any
one or more of them.
8.09 Prior Understandings. This Agreement, the Notes and the other Loan Documents
supersede all prior understandings and agreements, whether written or oral, among the parties
relating to the transactions provided for in this Agreement, the Notes and the other Loan
Documents, except that the commitment letter dated July 14, 2000 issued by Bank and accepted by
Parent shall survive the execution and delivery hereof and shall be binding upon Borrowers with the
same force and effect as though accepted by all of them. To the extent of any inconsistencies
between the provisions of this Agreement and the provisions of said commitment letter, the
provisions of this Agreement shall control.
8.10 Duration: Survival. All representations and warranties of Borrowers contained in
this Agreement or made in connection with this Agreement or any of the other Loan Documents shall
survive the making of and will not be waived by the execution and delivery of this Agreement, the
Notes or the other Loan Documents, by any investigation by Bank, or the making of any Loan.
Notwithstanding termination of this Agreement or an Event of Default, all covenants and agreements
of Borrowers will continue in full force and effect from and after the date of this Agreement so
long as Borrowers may borrow under this Agreement and until payment in full of the Notes, interest
thereon, and all fees and other obligations of Borrowers under this Agreement, the Notes or the
other Loan Documents. Without limitation, it is understood that all obligations of Borrowers to
make payments to or indemnify Bank will survive the payment in full of the Notes and of all other
obligations of Borrower under this Agreement, the Notes, the Security Agreements and the other Loan
Documents.
8.11 Counterparts. This Agreement may be executed in any number of counterparts and
by the different parties to this Agreement on separate counterparts each of which, when so
executed, will be deemed an original, but all such counterparts will constitute but one and the
same instrument.
41
8.12 Successors and Assigns. This Agreement will be binding upon and inure to the
benefit of Bank, Borrowers and their successors and assigns, except that Borrowers may not assign
or transfer any of their rights under this Agreement without the prior written consent of Bank.
All obligations of Borrowers under this Agreement are joint and several.
8.14 No Third Party Beneficiaries. The rights and benefits of this Agreement and the
other Loan Documents are not intended to, and shall not, inure to the benefit of any third party.
8.15 Participation. Bank may from time to time sell, assign or grant one or more
participation in all or any part of the Loans made by Bank or which may be made by Bank, or its
right, title and interest in the Loans in or to this Agreement, to another lending officer, lender
or financial institution. With respect to such participation, Bank shall act as lead bank or
managing agent. Except to the extent otherwise required by the context of this Agreement, the word
“Bank” where used in this Agreement means and includes any holder of a note originally issued to
Bank and each such holder of a note will be bound by and have the benefits of this Agreement, the
same as such holder had been a signatory to this Agreement. In connection with any such sale,
assignment or grant of participation, Bank may make available to any prospective purchaser,
assignee or participant any information relative to Borrowers in Bank’s possession.
8.16 Construction. Unless the context of this Agreement otherwise clearly requires,
references to the plural include the singular, the singular the plural, the part the whole and “or”
has the inclusive meaning represented by the phrase “and/or”. References in this Agreement to
“judgments” of Bank include good faith estimates by Bank (in the case of quantitative judgments)
and good faith beliefs by a Bank (in the case of qualitative judgments).
8.17 Exhibits. All exhibits and schedules attached to this Agreement are incorporated
and made a part of this Agreement.
8.18 Headings. The section headings contained in this Agreement are for convenience
only and do not limit or define or affect the construction or interpretation of this Agreement in
any respect.
8.19 WAIVER OF TRIAL BY JURY.
BORROWERS AND BANK EXPRESSLY,
KNOWINGLY AND VOLUNTARILY WAIVE ALL
BENEFIT AND ADVANTAGE OF ANY RIGHT TO A
TRIAL BY JURY, AND NEITHER WILL AT ANY TIME
INSIST UPON, OR PLEAD OR IN ANY MANNER
WHATSOEVER CLAIM OR TAKE THE BENEFIT OR
ADVANTAGE OF A TRIAL BY JURY IN ANY ACTION
ARISING IN CONNECTION WITH THIS AGREEMENT,
THE NOTES OR ANY OF THE LOAN DOCUMENTS.
42
IN WITNESS WHEREOF, and intending to be legally bound, the parties, by their duly authorized
officers, have executed and delivered this Agreement as of the date set forth at the beginning of
this Agreement.
ATTEST: | PDG Environmental, Inc. | |||||
By:
|
Xxxxx X. Chaifullo | By: | Xxxx X Xxxxx | |||
Secretary | Title: | President and CEO | ||||
ATTEST: | Project Development Group, Inc. | |||||
By:
|
Xxxxx X. Chaifullo | By: | Xxxx X Xxxxx | |||
Secretary | Title: | President and CEO | ||||
ATTEST: | Enviro-Tech Abatement Services, Co. | |||||
By:
|
Xxxxx X. Chaifullo | By: | Xxxx X Xxxxx | |||
Secretary | Title: | President and CEO | ||||
ATTEST: | PDG, Inc. | |||||
By:
|
Xxxxx X. Chaifullo | By: | Xxxx X Xxxxx | |||
Secretary | Title: | President and CEO | ||||
ATTEST: | Flagship Restoration, Inc. | |||||
By:
|
Xxxxx X. Chaifullo | By: | Xxxx X Xxxxx | |||
Secretary | Title: | President and CEO | ||||
ATTEST: | Servestec, Inc. | |||||
By:
|
Xxxxx X. Chaifullo | By: | Xxxx X Xxxxx | |||
Assistant Secretary | Title: | President and CEO | ||||
Sky Bank | ||||||
By: | Xxxxxxx Xxxx | |||||
Title: | Vice President |
43
Exhibit “A”
THIS AMENDED AND RESTATED FACILITY A NOTE IS AN AMENDMENT, RESTATEMENT, MODIFICATION AND INCREASE,
BUT NOT A NOVATION OF THE FACILITY A NOTE BY THE INITIAL BORROWERS IN FAVOR OF THE BANK DATED
AUGUST 3, 2000. THIS AMENDED AND RESTATED FACILITY A NOTE CONSOLIDATES AND REPLACES THE EXISTING
FACILITY A NOTE.
AMENDED AND RESTATED FACILITY A NOTE
$400,000 | Pittsburgh, Pennsylvania | |
June 14, 2006 |
FOR VALUE RECEIVED, the undersigned, PDG Environmental, Inc., a Delaware corporation, Project
Development Group, Inc., a Pennsylvania corporation, Enviro-Tech Abatement Services, Co., a North
Carolina corporation, PDG, Inc., a Pennsylvania corporation (collectively, “Initial Borrowers”),
Flagship Restoration, Inc., a Delaware corporation (“Flagship”) and Servestec, Inc. a Florida
corporation (“Servestec”) (Initial Borrowers, Flagship and Servestec, collectively, the
“Borrowers”) hereby jointly and severally promise to pay to the order of Sky Bank, an Ohio banking
institution, having an office at 000 Xxxx Xxxxxxxxxx Xxxxxx, Xxx Xxxxxx, Xxxxxxxxxxxx 00000
(“Bank”), on or before the Facility A Loan Expiry Date, and at such earlier dates as may be
required by the Loan Agreement (as defined below), the principal sum of Four Hundred Thousand and
00/100 Dollars ($400,000.00). Borrowers hereby further jointly and severally promise to pay to the
order of Bank interest on the unpaid principal amount of this Amended and Restated Facility A Note
from time to time outstanding at the rate or rates per annum determined pursuant to Article II of,
or as otherwise provided in, the Loan Agreement, and with such amounts being payable on the dates
set forth in Article II of, or as otherwise provided in, the Loan Agreement.
All payments and prepayments to be made in respect of principal, interest, or other amounts
due from Borrowers under this Amended and Restated Facility A Note shall be payable at 12:00 noon,
New Castle, Pennsylvania time, on the day when due, without presentment, demand, protest or notice
of any kind, all of which are expressly waived, and an action therefor shall immediately accrue.
All such payments shall be made to Bank at its designated office located at 000 Xxxx Xxxxxxxxxx
Xxxxxx, Xxx Xxxxxx, Xxxxxxxxxxxx, in lawful money of the United States of America in immediately
available funds without setoff, counterclaim or other deduction of any nature.
Except as otherwise provided in the Loan Agreement, if any payment of principal or interest
under this Amended and Restated Facility A Note shall become due on a day which is not a Business
Day, such payment shall be made on the next following Business Day and such extension of time shall
be included in computing interest in connection with such payment.
This Amended and Restated Facility A Note is one of the Notes referred to in, and is entitled
to the benefits of, that certain Amended and Restated Loan Agreement of even date
A-1
herewith by and between Borrowers and Bank (as such agreement may be amended, modified or
supplemented from time to time, the “Loan Agreement”), which among other things provides for the
acceleration of the maturity hereof upon the occurrence of certain events and may provide for
prepayments in certain circumstances and upon certain terms and conditions. This Amended and
Restated Facility A Note is secured by, and is entitled to the benefits of, the Loan Documents, as
the same may be amended, modified or supplemented from time to time. Capitalized terms used in
this Amended and Restated Facility A Note which are defined in the Loan Agreement shall have the
meanings assigned to them therein unless otherwise defined in this Amended and Restated Facility A
Note.
This Amended and Restated Facility A Note shall be governed by, and shall be construed and
enforced in accordance with, the laws of the Commonwealth of Pennsylvania without regard to the
principles of the conflicts of laws thereof. Each Borrower hereby consents to the jurisdiction and
venue of the Court of Common Pleas of Allegheny County, Pennsylvania, Court of Common Pleas of
Xxxxxxxx County, Pennsylvania and the United States District Court for the Western District of
Pennsylvania with respect to any suit arising out of or mentioning this Amended and Restated
Facility A Note.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
A-2
CONFESSION OF JUDGMENT. EACH BORROWER HEREBY
IRREVOCABLY AUTHORIZES AND EMPOWERS THE PROTHONOTARY,
ANY ATTORNEY OR ANY CLERK OF ANY COURT OF RECORD, TO
APPEAR FOR AND CONFESS JUDGMENT AGAINST SUCH BORROWER,
UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, FOR SUCH
SUMS AS ARE DUE AND/OR MAY BECOME DUE UNDER THIS
AMENDED AND RESTATED FACILITY A NOTE, THE LOAN
AGREEMENT AND THE OTHER LOAN DOCUMENTS, WITH OR
WITHOUT DECLARATION, WITH COSTS OF SUIT, WITHOUT STAY
OF EXECUTION AND WITH AN AMOUNT EQUAL TO TEN PERCENT
(10%) OF THE AMOUNT OF SUCH JUDGMENT, BUT NOT LESS
THAN ONE THOUSAND DOLLARS ($1,000), ADDED FOR
ATTORNEYS’ COLLECTION FEES. NOTWITHSTANDING THE
ATTORNEY’S COMMISSION PROVIDED FOR IN THE PRECEDING
SENTENCE (WHICH IS INCLUDED IN THE WARRANT FOR
PURPOSES OF ESTABLISHING A SUM CERTAIN), THE AMOUNT OF
ATTORNEYS’ FEES THAT THE BANK MAY RECOVER FROM SUCH
BORROWER SHALL NOT EXCEED THE ACTUAL ATTORNEYS’ FEES
INCURRED BY THE BANK. TO THE EXTENT PERMITTED BY LAW,
EACH BORROWER RELEASES ALL ERRORS IN SUCH PROCEEDINGS.
IF A COPY OF THIS AMENDED AND RESTATED FACILITY A
NOTE, VERIFIED BY AFFIDAVIT BY OR ON BEHALF OF THE
HOLDER OF THIS AMENDED AND RESTATED FACILITY A NOTE
SHALL HAVE BEEN FILED IN SUCH ACTION, IT SHALL NOT BE
NECESSARY TO FILE THE ORIGINAL AMENDED AND RESTATED
FACILITY A NOTE AS A WARRANT OF ATTORNEY. THE
AUTHORITY AND POWER TO APPEAR FOR AND CONFESS JUDGMENT
AGAINST BORROWERS SHALL NOT BE EXHAUSTED BY THE
INITIAL EXERCISE THEREOF AND MAY BE EXERCISED AS OFTEN
AS THE HOLDER SHALL FIND IT NECESSARY AND DESIRABLE
AND THIS AMENDED AND RESTATED FACILITY A NOTE SHALL BE
A SUFFICIENT WARRANT THEREFOR. THE HOLDER HEREOF MAY
CONFESS ONE OR MORE JUDGMENTS IN THE SAME OR DIFFERENT
JURISDICTIONS FOR ALL OR ANY PART OF THE AMOUNT OWING
HEREUNDER, WITHOUT REGARD TO WHETHER JUDGMENT HAS
THERETOFORE BEEN CONFESSED ON MORE THAN ONE OCCASION
FOR THE SAME AMOUNT. IN THE EVENT ANY JUDGMENT
CONFESSED AGAINST ANY BORROWER HEREUNDER IS STRICKEN
OR OPENED UPON APPLICATION BY OR ON SUCH BORROWER’S
BEHALF FOR ANY REASON, HOLDER IS HEREBY AUTHORIZED AND
EMPOWERED TO AGAIN APPEAR FOR AND CONFESS JUDGMENT
AGAINST SUCH BORROWER FOR ANY PART OR ALL OF THE
AMOUNTS OWING HEREUNDER, AS PROVIDED FOR HEREIN, IF
DOING SO WILL CURE ANY ERRORS OR DEFECTS IN SUCH PRIOR
PROCEEDINGS.
|
Borrowers’ Initials |
A-3
WAIVER OF TRIAL BY JURY. EACH
BORROWER EXPRESSLY, KNOWINGLY AND
VOLUNTARILY WAIVES ALL BENEFIT AND
ADVANTAGE OF ANY RIGHT TO A TRIAL BY
JURY, AND IT WILL NOT AT ANY TIME
INSIST UPON, OR PLEAD OR IN ANY
MANNER WHATSOEVER CLAIM OR TAKE THE
BENEFIT OR ADVANTAGE OF A TRIAL BY
JURY IN ANY ACTION ARISING IN
CONNECTION WITH THIS AMENDED AND
RESTATED FACILITY A NOTE, THE LOAN
AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS.
|
Borrowers’ Initials |
|
NOTICE - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF
YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND
THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIM YOU MAY HAVE AGAINST
THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON ITS PART TO COMPLY WITH THE
AGREEMENT, OR ANY OTHER CAUSE.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, and intending to be jointly and severally and legally bound hereby, each
Borrower, by its duly authorized officers, has executed, issued and delivered this Amended and
Restated Facility A Note in Pittsburgh, Pennsylvania on the day and year written above.
ATTEST: | PDG Environmental, Inc. | |||||
By:
|
Xxxxx X. Chaifullo | By: | Xxxx X Xxxxx | |||
Secretary | Title: | President and CEO | ||||
ATTEST: | Project Development Group, Inc. | |||||
By:
|
Xxxxx X. Chaifullo | By: | Xxxx X Xxxxx | |||
Secretary | Title: | President and CEO |
A-4
ATTEST: | Enviro-Tech Abatement Services, Co. | |||||
By:
|
Xxxxx X. Chaifullo | By: | Xxxx X Xxxxx | |||
Secretary | Title: | President and CEO | ||||
ATTEST: | PDG, Inc. | |||||
By:
|
Xxxxx X. Chaifullo | By: | Xxxx X Xxxxx | |||
Secretary | Title: | President and CEO | ||||
ATTEST: | Flagship Restoration, Inc. | |||||
By:
|
Xxxxx X. Chaifullo | By: | Xxxx X Xxxxx | |||
Secretary | Title: | President and CEO | ||||
ATTEST: | Servestec, Inc. | |||||
By:
|
Xxxxx X. Chaifullo | By: | Xxxx X Xxxxx | |||
Assistant Secretary | Title: | President and CEO | ||||
ATTEST: | Servestec, Inc. | |||||
By:
|
Xxxxx X. Chaifullo | By: | Xxxx X Xxxxx | |||
Secretary | Title: | President and CEO |
A-5
Exhibit “B”
THIS SIXTH AMENDED AND RESTATED FACILITY D NOTE IS AN AMENDMENT, RESTATEMENT, MODIFICATION AND
INCREASE, BUT NOT A NOVATION OF THE FIFTH AMENDED AND RESTATED FACILITY D NOTE BY THE INITIAL
BORROWERS IN FAVOR OF THE BANK DATED JULY 8, 2004. THIS SIXTH AMENDED AND RESTATED FACILITY D NOTE
CONSOLIDATES AND REPLACES THE EXISTING FACILITY D NOTE.
SIXTH AMENDED AND RESTATED FACILITY D NOTE
$15,000,000
|
Pittsburgh, Pennsylvania | |
June 14, 2006 |
FOR VALUE RECEIVED, the undersigned, PDG Environmental, Inc., a Delaware corporation, Project
Development Group, Inc., a Pennsylvania corporation, Enviro-Tech Abatement Services, Co., a North
Carolina corporation, PDG, Inc., a Pennsylvania corporation (collectively, the “Initial
Borrowers”), Flagship Restoration, Inc., a Delaware corporation (“Flagship”) and Servestec, Inc. a
Florida corporation (“Servestec”) (Initial Borrowers, Flagship and Servestec, collectively, the
“Borrowers”) hereby jointly and severally promise to pay to the order of Sky Bank, an Ohio banking
institution having an office at 000 Xxxx Xxxxxxxxxx Xxxxxx, Xxx Xxxxxx, Xxxxxxxxxxxx 00000
(“Bank”), on or before the Facility D Expiry Date, and at such earlier dates as may be required by
the Loan Agreement (as defined below), the lesser of (i) the principal sum of Fifteen Million and
00/100 Dollars ($15,000,000.00), or (ii) the aggregate unpaid principal amount of all Facility D
Loans made by Bank to Borrower pursuant to the Loan Agreement. Borrowers hereby further jointly
and severally promise to pay to the order of Bank interest on the unpaid principal amount of this
Sixth Amended and Restated Facility D Note from time to time outstanding at the rate or rates per
annum determined pursuant to Article II of, or as otherwise provided in, the Loan Agreement, and
with such amounts being payable on the dates set forth in Article II of, or as otherwise provided
in, the Loan Agreement.
All payments and prepayments to be made in respect of principal, interest, or other amounts
due from Borrowers under this Sixth Amended and Restated Facility D Note shall be payable at 12:00
noon, New Castle, Pennsylvania time, on the day when due, without presentment, demand, protest or
notice of any kind, all of which are expressly waived, and an action therefor shall immediately
accrue. All such payments shall be made to Bank at its designated office located at 000 Xxxx
Xxxxxxxxxx Xxxxxx, Xxx Xxxxxx, Xxxxxxxxxxxx, in lawful money of the United States of America in
immediately available funds without setoff, counterclaim or other deduction of any nature.
Except as otherwise provided in the Loan Agreement, if any payment of principal
A-1
or interest under this Sixth Amended and Restated Facility D Note shall become due on a day which
is not a Business Day, such payment shall be made on the next following Business Day and such
extension of time shall be included in computing interest in connection with such payment.
This Sixth Amended and Restated Facility D Note is one of the Notes referred to in, and is
entitled to the benefits of, that certain Amended and Restated Loan Agreement of even date herewith
by and between Borrowers and Bank (as such agreement may be amended, modified or supplemented from
time to time, the “Loan Agreement”), which among other things, provides for the acceleration of the
maturity hereof upon the occurrence of certain events and may provide for prepayments in certain
circumstances and upon certain terms and conditions. This Sixth Amended and Restated Facility D
Note is secured by, and is entitled to the benefits of, the Loan Documents, as the same may be
amended, modified or supplemented from time to time. Capitalized terms used in this Sixth Amended
and Restated Facility D Note which are defined in the Loan Agreement shall have the meanings
assigned to them therein unless otherwise defined in this Sixth Amended and Restated Facility D
Note.
This Sixth Amended and Restated Facility D Note shall be governed by, and shall be construed
and enforced in accordance with, the laws of the Commonwealth of Pennsylvania without regard to the
principles applicable to the conflicts of laws thereof. Each Borrower hereby consents to the
jurisdiction and venue of the Court of Common Pleas of Allegheny County, Pennsylvania, Court of
Common Pleas of Xxxxxxxx County, Pennsylvania and the United States District Court for the Western
District of Pennsylvania with respect to any suit arising out of, relating to or mentioning this
Sixth Amended and Restated Facility D Note.
(Remainder of page intentionally left blank — continued on the following page)
A-2
CONFESSION OF JUDGMENT. EACH BORROWER HEREBY IRREVOCABLY
AUTHORIZES AND EMPOWERS THE PROTHONOTARY, ANY ATTORNEY OR ANY
CLERK OF ANY COURT OF RECORD, TO APPEAR FOR AND CONFESS
JUDGMENT AGAINST SUCH BORROWER, UPON THE OCCURRENCE OF AN
EVENT OF DEFAULT, FOR SUCH SUMS AS ARE DUE AND/OR MAY BECOME
DUE UNDER THIS SIXTH AMENDED AND RESTATED FACILITY
D NOTE, THE LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS, WITH
OR WITHOUT DECLARATION, WITH COSTS OF SUIT, WITHOUT STAY OF
EXECUTION AND WITH AN AMOUNT EQUAL TO TEN PERCENT (10%) OF
THE AMOUNT OF SUCH JUDGMENT, BUT NOT LESS THAN ONE THOUSAND
DOLLARS ($1,000), ADDED FOR ATTORNEYS’ COLLECTION FEES.
NOTWITHSTANDING THE ATTORNEY’S COMMISSION PROVIDED FOR IN THE
PRECEDING SENTENCE (WHICH IS INCLUDED IN THE WARRANT FOR
PURPOSES OF ESTABLISHING A SUM CERTAIN), THE AMOUNT OF
ATTORNEYS’ FEES THAT THE BANK MAY RECOVER FROM SUCH BORROWER
SHALL NOT EXCEED THE ACTUAL ATTORNEYS’ FEES INCURRED BY THE
BANK. TO THE EXTENT PERMITTED BY LAW, EACH BORROWER RELEASES
ALL ERRORS IN SUCH PROCEEDINGS. IF A COPY OF THIS SIXTH
AMENDED AND RESTATED FACILITY D NOTE, VERIFIED BY
AFFIDAVIT BY OR ON BEHALF OF THE HOLDER OF THIS SIXTH AMENDED
AND RESTATED FACILITY D NOTE SHALL HAVE BEEN FILED
IN SUCH ACTION, IT SHALL NOT BE NECESSARY TO FILE THE
ORIGINAL SIXTH AMENDED AND RESTATED FACILITY D NOTE
AS A WARRANT OF ATTORNEY. THE AUTHORITY AND POWER TO APPEAR
FOR AND CONFESS JUDGMENT AGAINST BORROWERS SHALL NOT BE
EXHAUSTED BY THE INITIAL EXERCISE THEREOF AND MAY BE
EXERCISED AS OFTEN AS THE HOLDER SHALL FIND IT NECESSARY AND
DESIRABLE AND THIS SIXTH AMENDED AND RESTATED
FACILITY D NOTE SHALL BE A SUFFICIENT WARRANT THEREFOR.
THE HOLDER HEREOF MAY CONFESS ONE OR MORE JUDGMENTS IN THE
SAME OR DIFFERENT JURISDICTIONS FOR ALL OR ANY PART OF THE
AMOUNT OWING HEREUNDER, WITHOUT REGARD TO WHETHER JUDGMENT
HAS THERETOFORE BEEN CONFESSED ON MORE THAN ONE OCCASION FOR
THE SAME AMOUNT. IN THE EVENT ANY JUDGMENT CONFESSED AGAINST
ANY BORROWER HEREUNDER IS STRICKEN OR OPENED UPON APPLICATION
BY OR ON SUCH BORROWER’S BEHALF FOR ANY REASON, HOLDER IS
HEREBY AUTHORIZED AND EMPOWERED TO AGAIN APPEAR FOR AND
CONFESS JUDGMENT AGAINST SUCH BORROWER FOR ANY PART OR ALL OF
THE AMOUNTS OWING HEREUNDER, AS PROVIDED FOR HEREIN, IF DOING
SO WILL CURE ANY ERRORS OR DEFECTS IN SUCH PRIOR PROCEEDINGS.
|
Borrowers Initials |
A-3
WAIVER OF TRIAL BY JURY. EACH BORROWER EXPRESSLY, KNOWINGLY
AND VOLUNTARILY WAIVES ALL BENEFIT AND ADVANTAGE OF ANY RIGHT
TO A TRIAL BY JURY, AND IT WILL NOT AT ANY TIME INSIST UPON,
OR PLEAD OR IN ANY MANNER WHATSOEVER CLAIM OR TAKE THE
BENEFIT OR ADVANTAGE OF A TRIAL BY JURY IN ANY ACTION ARISING
IN CONNECTION WITH THIS SIXTH AMENDED AND RESTATED
FACILITY D NOTE, THE LOAN AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS.
|
Borrowers Initials |
|
NOTICE - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO
NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE
POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIM YOU MAY HAVE AGAINST THE
CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON ITS PART TO COMPLY WITH THE
AGREEMENT, OR ANY OTHER CAUSE.
IN WITNESS WHEREOF, and intending to be jointly and severally and legally bound hereby, each
Borrower, by its duly authorized officers, has executed, issued and delivered this Sixth Amended
and Restated Facility D Note in Pittsburgh, Pennsylvania on the day and year written above.
ATTEST: | PDG Environmental, Inc. | |||||||
By:
|
Xxxxx X. Chaifullo | By: | Xxxx X Xxxxx | |||||
Secretary | Title: President and CEO | |||||||
ATTEST: | Project Development Group, Inc. | |||||||
By:
|
Xxxxx X. Chaifullo | By: | Xxxx X Xxxxx | |||||
Secretary | Title: President and CEO | |||||||
ATTEST: | Enviro-Tech Abatement Services, Co. | |||||||
By:
|
Xxxxx X. Chaifullo | By: | Xxxx X Xxxxx | |||||
Secretary | Title: President and CEO | |||||||
ATTEST: | PDG, Inc. | |||||||
By:
|
Xxxxx X. Chaifullo | By: | Xxxx X Xxxxx | |||||
Secretary | Title: President and CEO |
A-4
ATTEST: | Flagship Restoration, Inc. | |||||||
By:
|
Xxxxx X. Chaifullo | By: | Xxxx X Xxxxx | |||||
Secretary | Title: President and CEO | |||||||
ATTEST: | Servestec, Inc. | |||||||
By:
|
Xxxxx X. Chaifullo | By: | Xxxx X Xxxxx | |||||
Assistant Secretary | Title: President and CEO | |||||||
ATTEST: | Servestec, Inc. | |||||||
By:
|
Xxxxx X. Chaifullo | By: | Xxxx X Xxxxx | |||||
Secretary | Title: President and CEO |
A-5
Exhibit “C”
THIS AMENDED AND RESTATED FACILITY F NOTE IS AN AMENDMENT, RESTATEMENT, MODIFICATION AND INCREASE,
BUT NOT A NOVATION OF THE FACILITY F NOTE DATED BY THE INITIAL BORROWERS IN FAVOR OF THE BANK DATED
JUNE 22, 2005. THIS AMENDED AND RESTATED FACILITY F NOTE CONSOLIDATES AND REPLACES THE EXISTING
FACILITY F NOTE.
FACILITY F NOTE
$400,000.00
|
Pittsburgh, Pennsylvania | |
June 14, 2006 |
FOR VALUE RECEIVED, the undersigned, PDG Environmental, Inc., a Delaware corporation, Project
Development Group, Inc., a Pennsylvania corporation, Enviro-Tech Abatement Services, Co., a North
Carolina corporation, and PDG, Inc., a Pennsylvania corporation (collectively and jointly and
severally, “Initial Borrowers”), and Flagship Restoration, Inc., a Delaware corporation
(“Flagship”) and Servestec, Inc., a Florida corporation (“Servestec”) (Initial Borrowers, Flagship
and Servestec, collectively, the “Borrowers”) hereby jointly and severally promise to pay to the
order of Sky Bank, an Ohio banking institution having an office at 000 Xxxx Xxxxxxxxxx Xxxxxx, Xxx
Xxxxxx, Xxxxxxxxxxxx 00000 (“Bank”), on or before the Facility F Expiry Date, and at such earlier
dates as may be required by the Loan Agreement (as defined below), the lesser of (i) the principal
sum of Four Hundred Thousand Dollars and 00/100 Dollars ($400,000.00), or (ii) the aggregate unpaid
principal amount of all Facility F Loans made by Bank to Borrowers pursuant to the Loan Agreement.
Borrowers hereby further jointly and severally promise to pay to the order of Bank interest on the
unpaid principal amount of this Amended and Restated Facility F Note from time to time outstanding
at the rate or rates per annum determined pursuant to Article II of, or as otherwise provided in,
the Loan Agreement, and with such amounts being payable on the dates set forth in Article II of, or
as otherwise provided in, the Loan Agreement.
All payments and prepayments to be made in respect of principal, interest, or other amounts
due from Borrowers under this Amended and Restated Facility F Note shall be payable at 12:00 noon,
New Castle, Pennsylvania time, on the day when due, without presentment, demand, protest or notice
of any kind, all of which are expressly waived, and an action therefor shall immediately accrue.
All such payments shall be made to Bank at its designated office located at 000 Xxxx Xxxxxxxxxx
Xxxxxx, Xxx Xxxxxx, Xxxxxxxxxxxx, in lawful money of the United States of America in immediately
available funds without setoff, counterclaim or other deduction of any nature.
Except as otherwise provided in the Loan Agreement, if any payment of principal or interest
under this Amended and Restated Facility F Note shall become due on a day which is
A-1
not a Business Day, such payment shall be made on the next following Business Day and such
extension of time shall be included in computing interest in connection with such payment.
This Amended and Restated Facility F Note is one of the Notes referred to in, and is entitled
to the benefits of, that certain Amended and Restated Loan Agreement of even date herewith by and
between Borrowers and Bank (as such agreement may be amended, modified or supplemented from time to
time, the “Loan Agreement”), which among other things, provides for the acceleration of the
maturity hereof upon the occurrence of certain events and may provide for prepayments in certain
circumstances and upon certain terms and conditions. This Amended and Restated Facility F Note is
secured by, and is entitled to the benefits of, the Loan Documents, as the same may be amended,
modified or supplemented from time to time. Capitalized terms used in this Amended and Restated
Facility F Note which are defined in the Loan Agreement shall have the meanings assigned to them
therein unless otherwise defined in this Amended and Restated Facility F Note.
This Amended and Restated Facility F Note shall be governed by, and shall be construed and
enforced in accordance with, the laws of the Commonwealth of Pennsylvania without regard to the
principles applicable to the conflicts of laws thereof. Each Borrower hereby consents to the
jurisdiction and venue of the Court of Common Pleas of Allegheny County, Pennsylvania, Court of
Common Pleas of Xxxxxxxx County, Pennsylvania and the United States District Court for the Western
District of Pennsylvania with respect to any suit arising out of, relating to or mentioning this
Amended and Restated Facility F Note.
(Remainder of page intentionally left blank — continued on the following page)
A-2
CONFESSION OF JUDGMENT. EACH BORROWER HEREBY IRREVOCABLY
AUTHORIZES AND EMPOWERS THE PROTHONOTARY, ANY ATTORNEY OR ANY
CLERK OF ANY COURT OF RECORD, TO APPEAR FOR AND CONFESS JUDGMENT
AGAINST SUCH BORROWER, UPON THE OCCURRENCE OF AN EVENT OF DEFAULT,
FOR SUCH SUMS AS ARE DUE AND/OR MAY BECOME DUE UNDER THIS AMENDED AND
RESTATED FACILITY F NOTE, THE LOAN AGREEMENT AND THE OTHER LOAN
DOCUMENTS, WITH OR WITHOUT DECLARATION, WITH COSTS OF SUIT,
WITHOUT STAY OF EXECUTION AND WITH AN AMOUNT EQUAL TO TEN PERCENT (10%)
OF THE AMOUNT OF SUCH JUDGMENT, BUT NOT LESS THAN ONE THOUSAND DOLLARS
($1,000), ADDED FOR ATTORNEYS’ COLLECTION FEES. NOTWITHSTANDING
THE ATTORNEY’S COMMISSION PROVIDED FOR IN THE PRECEDING SENTENCE (WHICH
IS INCLUDED IN THE WARRANT FOR PURPOSES OF ESTABLISHING A SUM
CERTAIN), THE AMOUNT OF ATTORNEYS’ FEES THAT THE BANK MAY RECOVER FROM
SUCH BORROWER SHALL NOT EXCEED THE ACTUAL ATTORNEYS’ FEES INCURRED BY
THE BANK. TO THE EXTENT PERMITTED BY LAW, EACH BORROWER RELEASES ALL
ERRORS IN SUCH PROCEEDINGS. IF A COPY OF THIS AMENDED AND RESTATED
FACILITY F NOTE, VERIFIED BY AFFIDAVIT BY OR ON BEHALF OF THE
HOLDER OF THIS AMENDED AND RESTATED FACILITY F NOTE SHALL HAVE BEEN
FILED IN SUCH ACTION, IT SHALL NOT BE NECESSARY TO FILE THE ORIGINAL
AMENDED AND RESTATED FACILITY F NOTE AS A WARRANT OF ATTORNEY. THE
AUTHORITY AND POWER TO APPEAR FOR AND CONFESS JUDGMENT AGAINST
BORROWERS SHALL NOT BE EXHAUSTED BY THE INITIAL EXERCISE THEREOF AND MAY
BE EXERCISED AS OFTEN AS THE HOLDER SHALL FIND IT NECESSARY AND
DESIRABLE AND THIS AMENDED AND RESTATED FACILITY F NOTE SHALL BE A
SUFFICIENT WARRANT THEREFOR. THE HOLDER HEREOF MAY CONFESS ONE OR
MORE JUDGMENTS IN THE SAME OR DIFFERENT JURISDICTIONS FOR ALL OR
ANY PART OF THE AMOUNT OWING HEREUNDER, WITHOUT REGARD TO WHETHER
JUDGMENT HAS THERETOFORE BEEN CONFESSED ON MORE THAN ONE OCCASION
FOR THE SAME AMOUNT. IN THE EVENT ANY JUDGMENT CONFESSED AGAINST ANY
BORROWER HEREUNDER IS STRICKEN OR OPENED UPON APPLICATION BY OR ON
SUCH BORROWER’S BEHALF FOR ANY REASON, HOLDER IS HEREBY AUTHORIZED
AND EMPOWERED TO AGAIN APPEAR FOR AND CONFESS JUDGMENT AGAINST SUCH
BORROWER FOR ANY PART OR ALL OF THE AMOUNTS OWING HEREUNDER, AS PROVIDED
FOR HEREIN, IF DOING SO WILL CURE ANY ERRORS OR DEFECTS IN SUCH PRIOR
PROCEEDINGS.
|
Borrowers’ Initials |
A-3
WAIVER OF TRIAL BY JURY. EACH BORROWER EXPRESSLY, KNOWINGLY AND
VOLUNTARILY WAIVES ALL BENEFIT AND ADVANTAGE OF ANY RIGHT TO A TRIAL BY
JURY, AND IT WILL NOT AT ANY TIME INSIST UPON, OR PLEAD OR IN ANY
MANNER WHATSOEVER CLAIM OR TAKE THE BENEFIT OR ADVANTAGE OF A TRIAL BY
JURY IN ANY ACTION ARISING IN CONNECTION WITH THIS AMENDED AND
RESTATED FACILITY F NOTE, THE LOAN AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS.
|
Borrowers’ Initials |
|
NOTICE - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF
YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND
THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIM YOU MAY HAVE AGAINST
THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON ITS PART TO COMPLY WITH THE
AGREEMENT, OR ANY OTHER CAUSE.
IN WITNESS WHEREOF, and intending to be jointly and severally and legally bound hereby, each
Borrower, by its duly authorized officers, has executed, issued and delivered this Amended and
Restated Facility F Note in Pittsburgh, Pennsylvania on the day and year written above.
ATTEST: | PDG Environmental, Inc. | |||||||
By:
|
Xxxxx X. Chaifullo | By: | Xxxx X Xxxxx | |||||
Secretary | Title: President and CEO | |||||||
ATTEST: | Project Development Group, Inc. | |||||||
By:
|
Xxxxx X. Chaifullo | By: | Xxxx X Xxxxx | |||||
Secretary | Title: President and CEO | |||||||
ATTEST: | Enviro-Tech Abatement Services, Co. |
A-4
By:
|
Xxxxx X. Chaifullo | By: | Xxxx X Xxxxx | |||||
Secretary | Title: President and CEO | |||||||
ATTEST: | PDG, Inc. | |||||||
By:
|
Xxxxx X. Chaifullo | By: | Xxxx X Xxxxx | |||||
Secretary | Title: President and CEO | |||||||
ATTEST: | Flagship Restoration, Inc. | |||||||
By:
|
Xxxxx X. Chaifullo | By: | Xxxx X Xxxxx | |||||
Secretary | Title: President and CEO | |||||||
ATTEST: | Servestec, Inc. | |||||||
By:
|
Xxxxx X. Chaifullo | By: | Xxxx X Xxxxx | |||||
Assistant Secretary | Title: President and CEO | |||||||
ATTEST: | Servestec, Inc. | |||||||
By:
|
Xxxxx X. Chaifullo | By: | Xxxx X Xxxxx | |||||
Secretary | Title: President and CEO |
A-5
Exhibit “D”
BORROWING BASE CERTIFICATE
PDG Environmental, Inc. & Subsidiaries
PDG Environmental, Inc. & Subsidiaries
Borrowing Base Certificate No.
COLLATERAL ACTIVITY | ||||||||
Activity from: Through: | ||||||||
1.
|
Accounts Receivable Balance as of beginning of period | $ | — | |||||
2.
|
ADD: New Xxxxxxxx (Sales) | $ | — | |||||
3.
|
Other Adjustments (Explanation Attached) | $ | — | |||||
4.
|
LESS: Collections | $ | — | |||||
5.
|
Other Adjustments (Explanation Attached) | $ | — | |||||
6.
|
Total Accounts Receivable as of end of period | $ | — | |||||
7.
|
LESS: Ineligible Accounts as of end of period | $ | — | |||||
8.
|
TOTAL QUALIFIED ACCOUNTS (6-7) | $ | — | |||||
9.
|
MULTIPLIED by Eligibility percentage | X | 80 | % | ||||
10.
|
TOTAL BORROWING BASE FROM QUALIFIED ACCOUNTS | $ | — | |||||
11.
|
Qualified Inventory at End of Period | $ | — | |||||
12.
|
Multiplied by eligibility percentage | X | 50 | % | ||||
13.
|
Available borrowing Base from Qualified Inventory | $ | — | |||||
14.
|
TOTAL BORROWING BASE FROM QUALIFIED INVENTORY | $ | — | |||||
15.
|
TOTAL BORROWING BASE (10 + 14) | $ | — |
Exhibit D-1
BORROWING ACTIVITY | ||||||||
16.
|
LOAN BALANCE AS OF LAST REQUEST | $ | 0.00 | |||||
17.
|
LESS: Loan Reduction Since Last Report | $ | 0.00 | |||||
18.
|
PLUS: Advance Requested with this Report | $ | 0.00 | |||||
19.
|
PLUS OR MINUS: Other Adjustments | $ | 0.00 | |||||
20.
|
NEW LOAN BALANCE AS OF (19-20+21) | $ | 0.00 | |||||
21.
|
MAXIMUM LOAN AMOUNT | $ | 15,000,000.00 | |||||
22.
|
EXCESS BORROWING BASE | $ | 0.00 | |||||
(lesser of $3,000,000 minus 20 or 15 minus 20) |
PDG Environmental, Inc., a Delaware Corporation, and Subsidiaries (“Borrowers”) hereby (1) confirm
the first priority security interest of SKY BANK (“Bank”), in all the collateral as defined and
granted by the Security Agreement, dated August 3, 2000, as amended by the Amendment No. 1 to
Security Agreement dated June 22, 2005, the Amendment No. 2 to Security Agreement dated September
30, 2005, the Amendment No. 3 to Security Agreement dated December 30, 2005, as and further amended
by that Amendment No. 4 to Security Agreement dated June ___, 2006, between Borrowers and Bank,
including, but not limited to, all the accounts and inventory listed above; (2) certifies all
information above or attached to be a true, correct and complete statement of all Borrowers
accounts and inventory as of the date shown and (3) certifies as true, correct and performed all
representations, warranties and agreements made under that certain Amended and Restated Loan
Agreement dated June ___, 2006 by and between Borrowers and Bank (the “Loan Agreement”), which Loan
Agreement is supplemented by all information above or attached hereto.
PDG Environmental, Inc.
By: |
||||
, Controller & Treasurer | ||||
Exhibit D-2
Exhibit “E”
COMPLIANCE CERTIFICATE
The undersigned (the “Undersigned”) President or Vice President of PDG Environmental, Inc., a
Delaware corporation (“Parent”) hereby certifies to Sky Bank (together with its successors and
assigns, the “Bank”) that:
1. The representations and warranties made by the Parent, Project Development Group, Inc., a
Pennsylvania corporation, Enviro-Tech Abatement Services, Co., a North Carolina corporation and
PDG, Inc., a Pennsylvania corporation (the “Borrowers”) in that certain Amended and Restated Loan
Agreement by and among Borrowers and the Bank dated as of June ___, 2006 (the “Loan Agreement”) are
true and correct in all material respects.
2. The financial information of Borrowers furnished in Schedule 1 attached hereto has been
prepared in accordance with GAAP and fairly presents the financial condition of Borrowers.
3. The Undersigned has reviewed the terms of the Loan Agreement and has made, or caused to be
made under his/her supervision, a review in reasonable detail of the transactions and condition of
Borrowers during the accounting period covered by financial statements delivered pursuant to
Section 5.01(a) of the Loan Agreement.
4. Such review has not disclosed the existence on and as of the date hereof, and the
undersigned does not have knowledge of the existence as of the date hereof of any event or
condition that constitutes a Default or Event of Default, except for such conditions or events
listed on Schedule 2 attached hereto, specifying the nature and period thereof and what action each
Borrower has taken, is taking or proposed to take with respect thereto.
5. On January 31, 20___, the Borrowers’ Debt Service Coverage Ratio was ___to 1.0.
6. On January 31, 20___, the Borrowers’ Debt to Worth Ratio was ___to 1.0.
IN WITNESS WHEREOF, this Compliance Certificate is executed by the undersigned this
day of .
PDG ENVIRONMENTAL, INC. | ||||||
By: | ||||||
Name: | ||||||
[Vice] President |
Exhibit E-1