<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED June 30, 1996 COMMISSION FILE NUMBER 0-14229
---------------------- -----------
CROWN ANDERSEN INC.
----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 58-1653577
- -----------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
306 Dividend Drive, Peachtree City, Georgia 30269
----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 486-2000
-------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
filing such requirements for the past 90 days. Yes X No
--- ---
=============================================================================
Class Outstanding at June 30, 1996
---------------------------------- ----------------------------
Common Stock, $0.10 Par Value 1,561,635 shares
<PAGE>
CROWN ANDERSEN INC.
-------------------
INDEX
-----
<TABLE>
<CAPTION>
PAGE NO.
--------
Part I. FINANCIAL INFORMATION:
<S> <C>
Consolidated Balance Sheets--
June 30, 1996 and September 30, 1995 3
Consolidated Statements of Income--
Three Months and Nine Months Ended June 30, 1996
and 1995 4
Consolidated Statements of Cash Flows--
Nine Months Ended June 30, 1996 and 1995 5
Notes to Consolidated Financial Information 6
Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 12
</TABLE>
2
<PAGE>
CROWN ANDERSEN INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
1996 1995
------------ --------------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
CURRENT:
Cash and cash equivalents $ 4,578,223 $ 3,751,637
Receivables:
Trade, less allowance of $136,029 and $166,192 for
possible losses 2,089,373 5,415,756
Other 110,041 92,848
Income taxes 264,274 157,094
Costs and estimated earnings in excess of billings on
uncompleted contracts 4,915,932 5,859,652
Inventories 2,712,154 671,672
Prepaid expenses 90,156 43,018
Current maturities of long-term note receivable 200,000 100,000
Deferred income taxes 289,785 289,785
----------- -----------
TOTAL CURRENT ASSETS 15,249,938 16,381,462
RESTRICTED CASH 2,916,000 -
NOTE RECEIVABLE, less current maturities 940,000 1,090,000
EQUIPMENT HELD FOR RESALE 1,121,554 1,396,954
PROPERTY AND EQUIPMENT, less accumulated depreciation 1,778,867 1,815,541
DEFERRED INCOME TAXES 157,700 157,700
OTHER ASSETS 195,399 143,035
----------- ----------
$22,359,458 $20,984,692
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ - $ -
Accounts payable 4,841,204 4,678,832
Accruals:
Income taxes - 201,000
Compensation 321,614 414,993
Warranty 430,000 476,000
Miscellaneous 403,050 414,125
Billings on uncompleted contracts in excess of cost and
estimated earnings 38,806 190,889
Current maturities of long-term debt 636,385 579,987
Deferred income taxes 321,071 327,114
----------- -----------
TOTAL CURRENT LIABILITIES 6,992,130 7,282,940
LONG-TERM DEBT, less current maturities 1,690,779 621,253
DEFERRED INCOME TAXES 190,970 190,970
----------- -----------
TOTAL LIABILITIES
8,873,879 8,095,163
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common Stock, $.10 par; shares authorized 5,000,000;
outstanding 1,561,635 156,164 156,164
Additional paid-in capital 2,905,801 2,905,801
Retained earnings 10,119,844 9,426,252
Foreign currency translation adjustment 303,770 401,312
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 13,485,579 12,889,529
----------- -----------
$22,359,458 $20,984,692
=========== ===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
3
<PAGE>
CROWN ANDERSEN INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED JUNE 30, ENDED JUNE 30,
------------------------ --------------------------
1996 1995 1996 1995
--------- --------- -------- ---------
<S> <C> <C> <C> <C>
REVENUES:
Contracts $5,545,603 $4,694,764 $15,662,817 $13,946,105
Sales 528,733 409,412 1,459,749 1,015,080
Other - 4,800 32,047 14,400
---------- ----------- ---------- -----------
6,074,336 5,108,976 17,154,613 14,975,585
---------- ----------- ---------- ------------
COSTS AND EXPENSES:
Cost of contracts and sales 4,969,982 3,649,506 13,312,565 11,242,937
Selling, general and administrative 961,936 789,986 2,828,637 2,308,671
Interest and other (92,923) 9,475 (86,082) (42,752)
---------- ----------- ----------- -----------
5,838,995 4,448,967 16,055,120 13,508,856
---------- ----------- ----------- -----------
Income from operations before
taxes on income 235,341 660,009 1,099,493 1,466,729
TAXES ON INCOME 85,600 248,600 405,900 554,600
---------- ----------- ----------- -----------
NET INCOME $ 149,741 $ 411,409 $ 693,593 $ 912,129
========== =========== ============ ===========
AVERAGE SHARES AND EQUIVALENT SHARES
OUTSTANDING 1,561,635 1,561,635 1,561,635 1,561,635
========== =========== =========== ==========
EARNINGS PER SHARE $0.10 $0.26 $0.44 $0.58
========== =========== =========== ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
4
<PAGE>
CROWN ANDERSEN INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended June 30,
----------------------------
1996 1995
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) from continuing operations $ 693,593 $ 912,129
Items in income from operations not affecting cash:
Depreciation and amortization 209,338 243,570
Provision for valuation of soil processor unit 270,000 270,000
Deferred income taxes 13,687 (644,950)
Loss (gain) on sales of fixed assets - (20,992)
Cash provided by (used for)
Trade and other receivables 3,247,544 (191,726)
Refundable income taxes 46,280 7,016
Costs and estimated earnings in excess of billings on
uncompleted contracts 943,720 534,738
Inventories (1,046,017) (405,863)
Prepaid expenses (49,278) 114,904
Accounts payable 219,481 (74,592)
Accrued expenses (501,008) 181,969
Billings on uncompleted contracts in excess of costs and
estimated earnings (151,923) (17,945)
Other (64,095) (34,816)
----------- ----------
Cash provided by operating activities 3,831,322 873,442
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in restricted cash (2,916,000) -
Proceeds on sale of plastics segment, net of selling and
costs of $254,780 in fiscal 1995 - 4,960,260
Collection of note receivable 50,000 -
Proceeds from sale of fixed assets 3,298 93,222
Capital expenditures (232,916) (72,845)
----------- ----------
Cash provided by (used for) investing activities (3,095,618) 4,980,637
----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Reduction in notes payable - (349,132)
Increase (reduction) in long-term debt 127,713 (430,761)
----------- ----------
Cash provided by (used for) financing activities 127,713 (779,893)
----------- ----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (36,831) 30,888
----------- -----------
CASH AND CASH EQUIVALENTS:
Net increase (decrease) during the year 826,586 5,105,074
Balance at beginning of year 3,751,637 137,659
----------- ----------
BALANCE AT END OF PERIOD $ 4,578,223 $5,242,733
=========== ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
5
<PAGE>
CROWN ANDERSEN INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL INFORMATION
===========================================
1. Condensed footnotes:
-------------------
As contemplated by the Securities and Exchange Commission instructions to
Form 10-Q, the following footnotes have been condensed and therefore do not
contain all disclosures required in connection with annual financial statements.
Reference should be made to the notes to Crown Andersen Inc.'s annual financial
statements set forth in its Form 10-K for the year ended September 30, 1995.
2. Discontinued operations:
-----------------------
During 1994, the Company sold the net assets of Crown and Roanoke to a
single buyer for $7.1 million ($5.9 million in cash and $1.2 million under a
note agreement. This note of $1.2 million bears interest at 7% per annum,
payable in two equal installments each year. The principal is payable in seven
installments over 60 months, requiring two payments of $50,000 each due on March
30 and September 29, 1996. Four additional payments of $150,000 are due on March
30, 1997; September 30, 1997; March 29, 1998; and September 29, 1998. The
seventh and final principal payment of $490,000 is due on September 29, 1999.
3. Earnings per share:
------------------
Earnings per share were computed by dividing consolidated net earnings by
the number of shares of common stock outstanding during the period. The stock
options outstanding during 1995 and 1996 were antidilutive and thus did not
affect earnings per share.
4. Stock options:
-------------
As of June 30, 1996, options to purchase 82,400 shares at an average price
of $8.4442 were outstanding under the Company's stock option plan.
The Company also has outstanding purchase warrants of 25,000 shares of
common stock under the Directors Stock Warrant Plan at $11.15 per share.
5. Revenue recognition:
-------------------
Revenues from contracts are reported on the percentage-of-completion
method. Under this method, the percentage of contract revenue to be recognized
currently is based on the ratio of costs incurred to date to total estimated
contract costs, after giving effect to the most recent estimate of costs to
complete. Revenues other than contracts are recorded when the product is shipped
or the service is rendered to the customers.
6. Inventories:
-----------
Inventories were $2,712,154 and $671,672 as of June 30, 1996 and September
30, 1995, respectively. The amount of $2,712,154 at June 30, 1996 includes
$2,020,000 of incineration equipment acquired from a former competitor on
December 28, 1995. This equipment is compatible with the Company's existing
products. The Company paid $1,000,000 in cash for this equipment inventory and
the balance of $1,020,000 is payable in three installments over a two-year
period under a non-interest bearing promissory note.
7. Restricted cash:
---------------
As of June 30, 1996, $2,916,000 of the Company's short-term investments
were held by banks as collateral for outstanding letters of credit.
8. Equipment held for resale:
-------------------------
On September 30, 1992, the Company sold a soil processor unit under a
financing-type lease arrangement. As a result of the customer's default, the
Company, during 1994, terminated the lease and repossessed the equipment. On
September 30, 1994, the Company
6
<PAGE>
reclassified this asset as equipment held for resale and reduced its carrying
value from approximately $2.1 million to $1.8 million. As of June 30, 1996, the
Company had further reduced the equipment carrying value to $1.1 million.
9. Commitments and contingencies:
------------------------------
There are no significant changes to the information discussed in the
Company's annual report on Form 10K for the year ended September 30, 1995 (Note
11 to the Consoli-dated Financial Statements).
* * *
-----
The financial information included in this report has not been certified
and should not be relied upon to the same extent as certified financial
statements. The financial information included in this report reflects all
adjustments which are, in the opinion of management, necessary for a fair
presentation of the results for the interim period. Nevertheless, the results
shown are for interim periods and are not necessarily indicative of results to
be expected for the year.
7
<PAGE>
CROWN ANDERSEN INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
================================================
Introduction:
------------
Crown Andersen Inc. (Crown Andersen or the Company) is a publicly-traded
holding company for Andersen 2000 Inc. (Andersen) and, through Andersen, owns
all of the outstanding stock of Montair Andersen bv (Montair). As used
herein, unless otherwise indicated, the term "Company" refers to Crown
Andersen and the above-referenced two subsidiaries and "Andersen" refers to
Andersen and Montair.
Late in fiscal 1994, the Company sold the assets of Crown Rotational
Molded Products, Inc. (Crown) and its subsidiary, Roanoke Industries, Inc.
(Roanoke) to Snyder Industries, Inc. The Crown sale was approved by the
shareholders in September, 1994. The Company is no longer involved in the
plastics business. Its two remaining subsidiaries are engaged exclusively in
the pollution control and waste processing equipment businesses.
Liquidity and Capital Resources:
-------------------------------
Cash and cash equivalents of $4,578,223 at June 30, 1996 increased
$826,586 from the September 30, 1995 balance of $3,751,637. The increase was
primarily attributable to a reduction in accounts receivable and costs and
estimated earnings in excess of billings on uncompleted contracts which offset
$2,916,000 in restricted cash and a $1,000,000 cash payment made for the
purchase of equipment inventory. Cash provided by operating activities
amounted to $3,831,322. Net income plus depreciation and amortization of
$1,172,931, a decrease in receivables of $3,247,544, and a decrease in costs
and estimated earnings in excess of billings on uncompleted contracts of
$943,720 more than offset increases in inventories and decreases in short-term
liabilities.
Cash used for investment activities totaled $3,095,618. This amount
includes restricted cash of $2,916,000 held as collateral by banks against
outstanding letters of credit plus capital expenditures of $232,916 (primarily
at Andersen).
Cash provided by financing activities totaled $127,713 and reflects a net
increase in long-term debt.
As disclosed in Note 8 to the Consolidated Financial Statements, the
Company repossessed certain equipment sold under a lease arrangement. The
Company has reduced the carrying value of this asset to approximately $1.1
million as of June 30, 1996 and it is reflected as equipment held for resale
in the accompanying consolidated balance sheet. During the first quarter of
1996, the Company leased this equipment on a short-term basis and received
$5,400. This amount was offset against the net carrying value of the
equipment.
As indicated in Note 11 of the Notes to the Consolidated Financial
Statements of the Company's annual report on Form 10K for the year ended
September 30, 1995, the Company is one of several defendants in a legal action
brought by various holders of Industrial Revenue Bonds issued by the cities of
Winfield and Arkansas City, Kansas concerning the development of industrial
property near Winfield, Kansas. The Company believes that it has meritorious
defenses to the litigation due to the fact that Crown Andersen was not a party
to the bondholder's agreement, such agreement having been entered into by
Struthers Thermo-Flood Corporation ("STFC") prior to STFC being acquired by
the Company. In
8
<PAGE>
response to the lawsuit, STFC filed a liquidation proceeding under Chapter 7
of the Federal Bankruptcy Act. The Trustee in Bankruptcy abandoned the
property on September 17, 1992. The Bankruptcy Court entered an order of no
distribution on February 10, 1994. STFC was dissolved in March 1995. The
Company and its counsel believe that there is a strong likelihood of a
favorable outcome with no adverse financial results for the Company. Another
less likely outcome could result in the bondholders obtaining a judgement
against the Company in an amount not exceeding $500,000 plus attorneys' fees.
If a judgement were to be rendered against the Company for such amount,
payment would be made using the Company's existing cash reserves or from funds
available under its credit facility.
On June 28, 1996, the Company signed financing agreements with a U.S.
bank under which the Company was granted a $5 million revolving line of credit
and a $1 million term loan. As of June 30, 1996, the Company had borrowed
$0.3 million against its $5.0 million line of credit and the $0.9 million
credit facility available to the Montair operation. Because of this credit
facility, profitable operations, and $4.5 million received from the sale of
the plastics business, the Company has adequate cash reserves to meet its
short-term cash needs.
Under the current loan agreement, the Company is required to obtain the
bank's consent to pay cash dividends or to sell assets which constitute
collateral.
Results of Operations:
---------------------
Revenues.
---------
Revenues for the first nine months of fiscal 1996 were $17,154,613
compared with $14,975,585 for the first nine months of fiscal 1995. For the
third quarter of fiscal 1996, revenues were $6,074,336 compared with
$5,108,976 for the comparable figure in 1995 and $5,833,078 for the second
quarter of fiscal 1996. Foreign sales (including export sales by Andersen and
sales by the Netherlands subsidiary) were $14.2 million and $13.0 million for
the first nine months of fiscal 1996 and 1995, respectively, and accounted for
83.1% and 87.0% of revenues. All the changes in revenues are related to the
quantity of product sold, not to pricing changes.
The increase in revenues of $2,179,028 (14%) was attributable to a
$1,413,390 increase at Andersen (12%) and an increase of $765,638 (24%) at
Montair.
The Company's revenue levels in the United States continued to be
adversely affected by the absence of any new hazardous waste incineration
facility permits in the United States. The Company estimates that U.S.
revenues have been reduced by approximately $2-$3 million per year as a result
of the Federal government's failure to review permit applications for such
facilities. The Company anticipates that foreign revenues will continue to
offset these domestic revenue losses. Because of the uncertainty in changes
in United States regulations, it is impossible to predict changes in demands
for the Company's products in the domestic market.
The Company has been successful and will continue to rely on the
international market to replace most, if not all, of the lost U.S. business
over the next two years. The Company expects to at least maintain the current
revenue levels throughout fiscal 1996.
Third quarter 1996 revenues increased $965,360 (19%) from the comparable
period in 1995. This increase was entirely attributable to products sold at
Andersen.
9
<PAGE>
Third quarter 1996 revenues exceeded the preceding fiscal quarter by
$241,258 (4%), primarily as a result of higher revenues generated at Andersen
of $695,795. Montair's revenues were $454,537 lower than in the second fiscal
quarter of 1996.
Cost of Sales.
--------------
For the first nine months of fiscal 1996, cost of sales were $13,312,565
as compared with $11,242,937 for the first nine months of fiscal 1995. Third
quarter costs of sales were $4,969,982 as compared with $3,649,506 for the
third quarter of 1995 and $4,397,197 for the second quarter of 1996.
The increase in cost of sales of $2,069,628 (18%) was partly the result
of the increase in revenues, but also reflected a decrease in margins of 2.5%.
A large warranty expense at Montair and substantial cost overruns at Andersen
on a project in Thailand caused most of the margin decrease. Third quarter
1996 costs of sales increased $1,320,476 (36%) from the comparable period of
1995 as a result of higher revenues, but again reflected a large decrease in
margins caused by the cost overruns mentioned above.
Third quarter 1996 costs of sales increased $572,785 (13%) over the
preceding fiscal quarter as a result of higher revenues and a decrease in
margins.
Selling, General and Administrative Costs.
------------------------------------------
Selling, general and administrative costs for the first nine months of
fiscal 1996 were $2,828,637 compared with $2,308,671 for the first nine months
of 1995. For the third quarter of 1996, selling, general and administrative
costs were $961,936, as compared with $789,986 in the comparable quarter of
1995 and $962,793 for the second quarter of 1996. As a percentage of
revenues, selling, general and administrative costs were 16.5%, 15.4%, 15.8%,
15.5% and 16.5% of revenues for the first nine months of 1996 and 1995; the
third quarter of 1996 and 1995; and the second quarter of 1996, respectively.
The current period increases of $519,966 (22.5%) and $171,950 (21.7%) over the
comparable nine months and third quarter periods of fiscal 1995 were incurred
by U.S. operations, and reflect increases in commissions, professional fees,
major building maintenance work, and travel expenses.
Third quarter of 1996 selling, general and administrative expenses
increased $857 from the preceding fiscal quarter.
Interest and Other (Income) Expenses.
-------------------------------------
Interest and other (income) expenses for the first nine months of fiscal
1996 amounted to a credit of $86,082, compared with a credit of $42,752 for
the comparable period in 1995. For the third quarter of 1996, interest and
other expenses amounted to a credit of $92,923, compared with an expense of
$9,475 for the third quarter of 1995 and an expense of $21,695 for the second
quarter of 1996. The decrease in expenses of $43,330 and $102,398 for the
current nine months and third quarter from the comparable periods of 1996
reflect an increase in interest income.
The decrease in expenses of $114,618 in the third quarter of 1996 from
the preceding fiscal quarter also reflects an increase in interest income in
the current quarter.
10
<PAGE>
Taxes on Income.
----------------
The effective tax rates for all periods are:
<TABLE>
<CAPTION>
<S> <C>
First 9 months of 1996 36.92%
First 9 months of 1995 37.81%
Third quarter of 1996 36.37%
Third quarter of 1995 37.66%
Second quarter of 1996 36.87%
</TABLE>
Net Income.
-----------
Net income for the first nine months of 1996 was $693,593 or $0.44 per
share, compared with $912,129 or $0.58 per share for the first nine months of
1995. For the third quarter of 1996, net income was $149,741 or $0.10 per
share compared with $411,409 or $0.26 per share for the third quarter of 1995
and $284,993 or $0.18 per share for the second quarter of 1996.
The decline in net income of $218,536 (24%) in the current nine month
period from the comparable period of 1995 is the result of cost overruns which
reduced margins and higher selling, general and administrative expenses. Cost
overruns on two international projects and warranty costs on another project
all contributed to the decrease in margins. Operations at Andersen accounted
for 90% of this decrease. In the third quarter of 1996, net income decreased
$261,668 (64%) from the third quarter of 1995. The decrease was the result of
the same factors mentioned above. Operations at Andersen accounted for 91% of
this decrease. Operations at Montair reflected a slight margin decline from
1995 levels.
Third quarter 1996 net income decreased $135,252 (47%) from the preceding
fiscal quarter as a result of the lower margins. Operations at Andersen and
Montair contributed equally to the earnings decline.
Shares Outstanding.
-------------------
The average shares and equivalent shares outstanding were 1,561,635 in
the first nine months and third quarter of 1996 and 1995 and in the second
quarter of 1996. The unexercised options and warrants are antidilutive for
all periods.
11
<PAGE>
CROWN ANDERSEN INC. AND SUBSIDIARIES
------------------------------------
PART II
OTHER INFORMATION
====================================
ITEM 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibit 10. Commercial Loan Agreements, General Security
Agreement, Commercial Promissory Note, and Revolving Note
dated June 28, 1996 between South Trust Bank of Georgia, N.A.
and Crown Andersen Inc. and Andersen 2000 Inc.
(b) Exhibit 27. Financial Data Schedule
(c) No reports were filed on Form 8K during the quarter ended June
30, 1996.
SIGNATURES
==========
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CROWN ANDERSEN INC.
Dated: August 9, 1996 By: /s/ Jack D. Brady
------------------ -----------------------------
Jack D. Brady
Chairman of the Board
(Duly Authorized Officer)
Dated: August 9, 1996 By: /s/ Milton Emmanuelli
------------------ -----------------------------
Milton Emmanuelli
Controller and Treasurer
(Principal Financial Officer)
12
<PAGE>
SOUTHTRUST
COMMERCIAL LOAN AGREEMENT
THIS COMMERCIAL LOAN AGREEMENT is made and entered into this 28th day of June,
1996, by and between CROWN ANDERSEN INC., a Delaware corporation, and ANDERSEN
2000 INC., a Delaware corporation, with their principal place of business and
chief executive offices located at 306 Dividend Drive, Peachtree City, Georgia
30269 ( hereinafter collectively referred to as "Borrower"), and SOUTHTRUST BANK
OF GEORGIA, N.A., a national banking association (hereinafter referred to as
"Bank").
W I T N E S E T H :
For and in consideration of the mutual promises, undertakings and covenants
set forth herein, and for other valuable consideration, the receipt, adequacy
and sufficiency of which are hereby acknowledged, Bank and Borrower, intending
to be legally bound, agree as follows:
1. DEFINITIONS. As used in this Agreement and in addition to those terms
defined elsewhere in this Agreement, the following terms shall have the meanings
set forth below, unless the context otherwise requires:
Accounting terms used in this Agreement, such as "current assets,"
"current liabilities," "LIFO reserve," "net income," and "total liabilities,"
shall have the meanings normally given them by, and shall be calculated, both as
to amounts and classification of items, in accordance with, generally accepted
accounting principles ("GAAP") in the United States.
"Agreement" shall mean this Commercial Loan Agreement, together with any
amendments or supplements hereto and any schedules or exhibits hereto.
"Billing on Uncompleted Contracts in Excess of Costs and Estimated
Earnings" shall mean that liability as shown on the audited financial statements
of Borrower prepared by BDO Seidman and provided to Lender.
"Borrower" shall mean the person or entity named in the first sentence of
this Agreement and who executes this Agreement below as "Borrower." For
purposes of Sections 7(m) and 8(h), "Borrower" also includes any member of a
"control group" (as defined in ERISA) of which the named Borrower is a member.
"Borrowing Base" shall mean eighty percent (80.00%) of Eligible Accounts,
plus forty percent (40.00%) of Eligible Inventory, plus sixty-five percent
- ---- ----
(65.00%) of Cost and Estimated Earnings in Excess of Billings on Uncompleted
Contracts less Billings on Uncompleted Contracts in Excess of Costs and
Estimated Earnings, plus eighty percent (80.00%) of cash on deposit in United
----
States depositories, except for cash held as collateral for other obligations.
"Borrowing Base Certificate" shall mean a certificate, in form and
substance satisfactory to Bank, setting forth in detail the Borrowing Base and
certified by Borrower to be true and correct as of its date.
"Compliance Certificate" shall mean a certificate, in form and substance
satisfactory to Bank, assuring Bank of Borrower's compliance with all of the
<PAGE>
terms and conditions of this Agreement and certified by Borrower to be true and
correct as of its date.
"Cost and Estimated Earnings in Excess of Billings on Uncompleted
Contracts" shall mean that asset as shown on the audited financial statements of
Borrower prepared by BDO Seidman and provided to Lender.
"Eligible Accounts" shall mean the aggregate of the outstanding balances
of all of Borrower's accounts (as such term is defined by Article 9 of the
Uniform Commercial Code) that conform to the representations and warranties of
Borrower contained in each and every document and instrument executed in
connection with the Revolving Loans; provided that no account owing by any
account debtor of Borrower shall be deemed to be included in Eligible Accounts
if (i) the account is unpaid more than one hundred twenty (120) days after the
invoice date thereof; (ii) twenty-five percent (25%) or more of the aggregate
balances of all accounts owed to Borrower by said account debtor are unpaid more
than one hundred twenty (120) days after the invoice dates thereof; (iii) such
account would make all accounts owing by said account debtor to Borrower
aggregate more than twenty-five percent (25%) of all accounts owed to Borrower
by all account debtors; (iv) the account debtor is a division, subsidiary,
affiliate or employee of Borrower or is any other person, corporation,
partnership or other legal entity related through common stock ownership or
otherwise related directly or indirectly to Borrower or any of the Borrower's
shareholders or is an employee of Borrower; (v) the account debtor is a creditor
of Borrower or otherwise has available with respect to the account any offset,
recoupment, credit, charge or defense (to the extent of such offset, recoupment,
credit, charge or defense); (vi) Borrower has received any notice of the death
of the account debtor or any partner thereof, or of the dissolution, termination
of existence, insolvency, business failure, appointment of a receiver for any
part of the property of, assignment for the benefit of creditors by, or the
filing of a petition in bankruptcy or the commencement of any proceeding under
any bankruptcy or insolvency laws by or against, the account debtor; (vii) Bank
has deemed the account to be ineligible because of uncertainty about the credit
worthiness of the account debtor or because Bank otherwise reasonably considers
the collateral value thereof to Bank to be impaired or Borrower's or Bank's
ability to realize such value to be insecure; (viii) the location of the account
debtor to which the goods generating the account were sent is outside the United
States and such account debtor has not provided to Borrower a letter of credit
satisfactory to Bank, unless the account debtor is a wholly owned foreign
subsidiary of a major United States corporation, or the account debtor is a
major international financial entity to which Borrower has extended credit and
the account has been approved by Lender, in which event no letter of credit
shall be required; (ix) the goods generating the account have not been delivered
to the account debtor; or (x) Bank, in its sole discretion, determines in good
faith that such account is ineligible.
"Eligible Inventory" shall mean the lower of the fair market value or cost
of all Borrower's inventory (as such term is defined by Article 9 of the Uniform
Commercial Code) held at locations which are under the exclusive control of
Borrower or by a bonded warehouseman who has issued warehouse receipts therefor
which have been delivered to Bank with any necessary endorsement, excluding
inventory which (i) is contaminated, obsolete, damaged or defective in any way;
(ii) consists of finished goods which are not readily saleable in the ordinary
course of Borrower's business; (iii) is sold or segregated for sale; (iv) is
consigned to Borrower by another; (v) consists of supplies not used in the
manufacturing of merchandise; (vi) consists of work in process; or (vii) was
manufactured by Borrower in violation of the federal Fair Labor Standards Act;
provided, however, that, Bank may exclude from Eligible Inventory all or a
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proportionate part of any particular portion of Borrower's inventory which Bank
reasonably deems ineligible because its market value has declined or because
Bank otherwise reasonably considers the collateral value thereof to Bank to be
impaired or Borrower's or Bank's ability to realize such a value to be insecure.
"Event of Default" shall mean any default or event of default under the
Note or any Security Instrument (as hereinafter defined).
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"Fixed Charge Coverage" at any date shall mean a fraction the numerator of
which is the sum of net income for any period ending on such date, plus the
interest, lease and rental expenses of Borrower for the period, plus the sum of
non-cash expenses or allowances for the period (including, without limitation,
amortization or write-down of intangible assets, and depreciation), and the
denominator of which is the sum of the current portion of the long-term debt as
of such date, plus the interest, lease and rental expenses for the period.
"Guarantor" shall mean any person or entity who endorses the Note or who
now or hereafter guarantees the payment, performance or collection of this
Agreement, the Note or the Obligations, in whole or in part.
"Loan" shall mean the following: If Section 2(a) of this Agreement is
applicable, "Loan" means each and every Term Loan; if Section 2(b) of this
Agreement is applicable, "Loan" means each and every Revolving Loan; and if both
Section 2(a) and Section 2(b) are applicable, "Loan" means each and every Term
Loan and each and every Revolving Loan.
"Loan Documents" shall mean this Agreement, the Note and all documents,
instruments and agreements executed in connection therewith or pursuant thereto.
"Note" shall mean the following: If Section 2(a) of this Agreement is
applicable, "Note" means each Term Note; if Section 2(b) of this Agreement is
applicable, "Note" means the Revolving Note; and if both Section 2(a) and
Section 2(b) are applicable, "Note" means each Term Note and the Revolving Note.
"Obligations" shall mean any and all indebtedness, liabilities and
obligations of Borrower to Bank whatsoever, including, without limiting the
generality of the foregoing: any and all indebtedness, liabilities and
obligations of Borrower to Bank arising out of the Loan; all Bank's fees,
charges and expenses of or incidental to the preparation, renewal, modification
or enforcement of Borrower's obligations arising out of the Loan and any and all
extensions or renewals thereof in whole or in part; and any indebtedness,
liabilities or obligations of Borrower to Bank under any later or future
advances or loans made by Bank to Borrower, and any and all extensions or
renewals thereof in whole or in part, joint or several, and in any event whether
existing as of the date hereof or hereafter arising and whether direct,
indirect, absolute or contingent, as maker, endorser, guarantor or otherwise,
including, without limitation, Bank's participation in others' loans and all
charges, interest, expenses, and costs of collection in connection with the
foregoing, including, without limitation, reasonable attorneys' fees (if
collected by or through an attorney) and other legal and court costs.
"Obligor" shall mean Borrower, Guarantor and each other individual or
entity primarily or secondarily, directly or indirectly, liable for, whether as
maker, endorser, surety, guarantor or otherwise, or directly or indirectly
securing, any of the Obligations, together with his, her, its or their heirs,
administrators, executors, successors and assigns, including, without
limitation, any resulting or surviving corporation following any merger or any
other reorganization, any debtor in possession or similar entity following the
filing of a petition for relief by or against such Obligor under any chapter of
the Federal Bankruptcy Code, as amended, or in any similar proceeding under any
state or federal law, and any proprietorship, partnership, corporation, trust or
other entity resulting from or arising out of the dissolution, liquidation or
change in form of business organization by such Obligor or following any change
of name or domicile by such Obligor.
"Tangible Net Worth" of an entity shall mean the total of all items and
categories of property of such entity, which, in accordance with generally
accepted accounting principles in the United States, would be included in
determining total assets as shown on the assets side of such entity's balance
sheet at the date as of which such total assets are determined (excluding any
value for receivables owing by officers, directors, employees or affiliates of
such entity, and any value for intangible assets, including, without limitation,
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good will, trademarks, patents, copyrights, going concern value, organization
expense and other similar items), PLUS any LIFO reserve, if applicable, all
deferred taxes, and the current portion of long term note receivables, LESS the
total of all items and categories of indebtedness, obligations and liabilities
of such entity which, in accordance with GAAP, would be included in determining
total liabilities as shown on the liabilities side of such entity's balance
sheet at the date as of which such total liabilities are to be determined (but
excluding the indebtedness of such entity, if any, payment of which has been
subordinated to the payment in full of the Obligations pursuant to a written
instrument in form and substance satisfactory to Bank), equipment held for sale,
long term note receivables, prepaid expenses, and long term investments.
2. THE LOAN. Upon the execution of this Agreement and provided that Borrower
is in compliance with its terms and conditions:
(a) TERM LOAN. Borrower may from time to time request from Bank, and Bank in
its discretion may make to Borrower, upon the terms and conditions set forth in
this Agreement, a term loan, a "Term Loan"). The Term Loan, if made, together
with interest thereon and loan fees and commitment fees, as applicable, shall be
evidenced by, and shall be repayable in accordance with, the terms and
conditions of a Commercial Promissory Note (such note, together with any and all
amendments thereto and renewals thereof, a "Term Note") made by Borrower to the
order of Bank and in form and substance satisfactory to Bank. Proceeds of the
Term Loan will be used by Borrower solely for purposes approved by Bank.
(b) REVOLVING LOAN. Borrower may from time to time request from Bank, and
Bank in its discretion may extend to Borrower, a line of credit in the maximum
amount of up to an aggregate principal sum outstanding equal to the face amount
of a Commercial Revolving Note (which note, together with any and all amendments
thereto and renewals thereof, the "Revolving Note") made by Borrower to the
order of Bank and in form and substance satisfactory to Bank (the "Maximum
Sum"), which sum may, at Bank's discretion, be borrowed, and which Borrower
shall repay, together with interest thereon and loan fees and commitment fees,
as applicable, in accordance with the terms and conditions of the Revolving
Note, which shall evidence Borrower's obligation to repay each advance made
under the line of credit, together with such interest and fees, if applicable
(each such advance a "Revolving Loan" and all such advances collectively the
"Revolving Loans"). If at any time the outstanding principal balance of the
Revolving Note exceeds the Borrowing Base, Borrower shall pay Bank immediately,
without notice or demand, the amount of such excess, regardless of the
stipulated date of maturity, if not payable on demand. Proceeds of the
Revolving Loans will be used by Borrower solely for its working capital needs in
its present line of business and for only such other purposes as may be
specifically approved by Bank in writing.
3. SECURITY. As security for the full payment and performance of the
Obligations, Borrower hereby assigns, conveys, and grants a security interest to
Bank in all property, real and personal, in which Borrower has an interest and
which is in or comes into the possession, control or custody of Bank (including,
but not limited to, balances, credits, deposits, accounts and monies), all
property in which Borrower has heretofore granted or hereinafter grants to Bank
a security interest or has heretofore conveyed or hereinafter conveys to Bank
security title to secure any obligation pursuant to each and every mortgage,
deed to secure debt, security agreement or other instrument, agreement or
document heretofore or hereinafter executed by Borrower in favor of Bank
(collectively the "Security Instruments"), and all proceeds and products of the
foregoing property and all books and records relating thereto and all property
of Borrower in which Bank has acquired or hereafter otherwise acquires a lien,
encumbrance or other right (all of the aforesaid property collectively the
"Collateral"), and Borrower hereby agrees that Bank may, at any time and without
notice, apply any balances, credits, deposits, accounts, monies or other
indebtedness now or hereafter owing by Bank to Borrower in satisfaction of any
of the Obligations, whether or not due.
4. CONDITIONS TO INITIAL REVOLVING LOAN AND EACH TERM LOAN. Bank shall not
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be obligated to make the initial Revolving Loan, if applicable, or any Term
Loan, if applicable, unless:
(a) Each of the conditions set forth in Section 5 hereof have been
satisfied;
(b) Bank shall have received payment in full of all fees, charges, and
expenses due in connection with this Agreement, including, without limitation,
any loan fees, commitment fees, service fees and attorneys' fees; and
(c) Bank shall have received all loan documentation deemed reasonably
necessary or desirable by Bank or its counsel, satisfactory in form and
substance to Bank, providing for the Loan to be extended, secured and
guaranteed.
5. CONDITIONS TO ALL LOANS. Bank shall not be obligated to make any Loan,
unless:
(a) The representations and warranties made by or on behalf of Borrower in
connection with the Loan and the representations and warranties contained in
this Agreement are true and correct on and as of the date of the request for the
Loan;
(b) If the request is for a Revolving Loan, the amount of the Revolving
Loan requested, when aggregated with the unpaid principal balance of all
Revolving Loans, does not exceed the lesser of the Borrowing Base or the Maximum
Sum;
(c) At the time of the request for the Loan, no Event of Default or an
event that upon notice or lapse of time or both would constitute an Event of
Default shall have occurred, and there is no claim, action, suit or proceeding
pending or threatened against Borrower, or any other fact or circumstance, that
would, in Bank's sole opinion, materially affect any of Borrower's assets or
result in a material adverse change in the business condition, affairs, or
operations of Borrower; and
(d) Bank, in its sole discretion, determines to make the Loan.
6. REPRESENTATIONS AND WARRANTIES OF BORROWER. In order to induce Bank to
enter into this Agreement and to make or extend Loans as contemplated hereby,
Borrower represents and warrants to Bank, each of which representations and
warranties is deemed to be material, that:
(a) Each entity comprising Borrower is a, duly organized, validly existing
and in good standing under the laws of the State of Delaware, and each other
Obligor, if any, which is a corporation, partnership or other legal entity is
duly organized, validly existing and in good standing under the laws of the
state of its incorporation or organization, and Borrower and each other Obligor,
if any, has full right, power and authority to conduct its business as currently
conducted and is qualified to do business in all jurisdictions in which it
conducts its business; Borrower's principal place of business and chief
executive office is located at the address set forth above.
(b) Each Obligor has full right, power and authority to enter into the
Loan Documents to which it or he is a party and to consummate the transactions
contemplated thereby and has taken all necessary action to authorize the
execution, delivery and performance of such Loan Documents and the documents
contemplated to be executed and delivered thereby.
(c) The execution, delivery and performance by each Obligor of the Loan
Documents to which such Obligor is a party have been duly authorized by all
requisite action on the part of such Obligor and do not and will not (i) violate
any provision of such Obligor's articles of incorporation, by-laws, partnership
agreement or other organizational documents, or any law, judgment, order or
ruling of any court or governmental agency, or (ii) be in conflict with, result
in a breach of, or constitute, following notice or lapse of time or both, a
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<PAGE>
default under any mortgage, indenture, security agreement, contract or other
instrument, agreement or undertaking to which any Obligor is a party or which
purports to be binding on any Obligor or any of its property.
(d) This Agreement and each of the Loan Documents constitutes or will
constitute upon execution thereof the legal, valid and binding obligation of the
party executing the same, enforceable against it or him in accordance with its
terms, and each Obligor possesses all permits, memberships, franchises,
contracts, licenses, trademark rights, trade names, patents, and other
authorizations necessary to enable it or him to conduct its or his business
operations as now conducted, and no filing with, and no consent, approval,
permission, authorization, order or license of, any individual, entity, or
governmental authority, bureau or agency is necessary in connection with the
execution, delivery, performance, validity or enforceability of the Loan
Documents.
(e) There is no litigation, action, proceeding or investigation pending or
threatened before any court or administrative or governmental agency that may,
individually or collectively, adversely affect the financial condition or
business operations of any Obligor or any of its or their properties or assets
or that questions the validity of any action taken or to be taken by any Obligor
pursuant to or in connection with the transactions contemplated by this
Agreement, nor does Borrower know or have any reasonable grounds to know the
basis for the institution of such litigation, action, proceeding or
investigation.
(f) The most recent financial statements of each Obligor delivered to Bank
are complete and correct and fairly and accurately present the financial
condition of such Obligor and the results of operations as of such date and for
such period to which such statements relate and have been prepared in accordance
with generally accepted accounting principles applied in a manner consistent
with any financial statement previously furnished to Bank, except as noted in
such statements. Since the date of those most recent financial statements of
each Obligor, there has been no material adverse change in the financial
condition of such Obligor and, after due inquiry, there exists no material
liability or obligation, direct or indirect, fixed or contingent, assertable
against such Obligor that is not reflected in its most recent financial
statements or in the notes thereto.
(g) All federal, state and other tax returns of Borrower required by law
to be filed have been completed in full and have been duly filed with the
appropriate governmental agency. All taxes, assessments and withholdings shown
on such returns or billed to Borrower have been paid, and Borrower maintains
adequate reserves and accruals in respect of all such federal, state and other
taxes, assessments and withholdings. There are no unpaid assessments pending or
threatened against Borrower for any taxes or withholdings, and Borrower knows of
no basis therefor; and no waivers of the Statute of Limitations have been
granted to the Commissioner of Internal Revenue or any other taxing authority by
Borrower.
(h) The minimum funding standards of Section 302 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), have been met at
all times with respect to all "plans" (if any) of each Obligor to which such
standards apply; no Obligor has made a "partial withdrawal" or a "complete
withdrawal" from any "multi- employer plan"; no "reportable event" or
"prohibited transaction" has occurred with respect to any such "plan" (as all
quoted terms are defined in ERISA); no Obligor has incurred any material
liability to the Pension Benefit Guaranty Corporation established under ERISA in
connection with any "plan."
(i) Except as otherwise expressly disclosed by Borrower to Bank in writing
on the date of this Agreement, no "hazardous substance" (as that term is defined
in Section 101 of the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ["CERCLA"]) has been released, discharged,
disposed of, or stored on any Obligor's owned or leased real or personal
property whether by any Obligor, by any third party or by any predecessor in
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<PAGE>
interest or title to such Obligor; each Obligor and all of such Obligor's
properties are in compliance with all applicable local, state and federal
environmental laws and regulations; no notice has been served on any Obligor by
any governmental authority or any individual or entity claiming violation of any
environmental protection law or regulation, or demanding compliance with any
environmental protection law or regulation, or demanding payment, indemnity, or
contribution for any environmental damage or injury to natural resources; no
"hazardous substance" (as defined in CERCLA) is produced or used in any
Obligor's business; and no improvement on any real property owned or leased by
any Obligor contains any asbestos, including, without limitation, asbestos
insulation on ceilings, piping or structural members or supports.
(j) No representation or warranty by Borrower made herein and no statement
or certificate to be furnished to Bank pursuant hereto in connection with the
transactions contemplated hereby contains or will contain any untrue statement
of a material fact or will omit to state a material fact necessary to make the
statements therein not misleading.
7. AFFIRMATIVE COVENANTS OF BORROWER. Borrower covenants and agrees that
from and after the date hereof, and so long as the Obligations remain unpaid or
this Agreement remains in effect, as follows:
(a) Borrower shall deliver to Bank, in form and content satisfactory to
Bank, within one hundred twenty (120) days after the last day of each fiscal
year of Borrower, ANNUAL FINANCIAL STATEMENTS of Borrower including statements
of income, expenses, retained earnings and cash flows for the just-ended fiscal
year and a balance sheet as of the end of such fiscal year, such statements to
be audited by a certified public accountant acceptable to Bank.
(b) Borrower shall deliver to Bank, in form and content satisfactory to
Bank, within ninety (90) days after the last day of each fiscal quarter, INTERIM
FINANCIAL STATEMENTS of Borrower, including an income and expense statement and
balance sheet, such statements to present fairly the financial condition and
results of operations as of and for the periods specified, to set forth all
material claims and liabilities, contingent or otherwise, and fully to disclose
any Event of Default, including the nature and period of existence thereof, and
such statements to be prepared and certified by the chief financial officer of
Borrower.
(c) Borrower shall deliver to Bank, in form and content satisfactory to
Bank, within thirty (30) days after the last day of each fiscal quarter, such
data, information and reports of or concerning Borrower and each Obligor as Bank
may reasonably request and the following additional documents and information:
an AGING OF BORROWER'S ACCOUNTS RECEIVABLE, a STATEMENT OF BORROWER'S INVENTORY
ON HAND and a COMPLIANCE CERTIFICATE. Additionally, Borrower shall deliver to
Bank, in form and content satisfactory to Bank, within thirty (30) days after
the last day of each calendar month, a Borrowing Base Certificate and Job Status
Report.
(d) Borrower shall keep adequate records and books of accounts, in which
complete entries will be made, reflecting all its financial transactions, and
shall maintain its books, accounts and records, including, without limitation,
all books and records evidencing or relating to Collateral, in accordance with
generally accepted accounting principles, at Borrower's chief executive office
as set forth in this Agreement, and shall not remove said books and records from
such address without the prior written consent of Bank.
(e) Upon 48 hours prior notice if no Event of Default exists, and without
prior notice if an Event of Default exists, Borrower shall permit Bank or any
persons duly designated by Bank to call at the places of business of Borrower at
any reasonable time agreed to by Borrower and Lender, and without hindrance or
delay to visit, inspect, audit and check any of Borrower's properties, books,
records, journals, orders, receipts and any correspondence or other data
relating to Borrower's business or any other transactions between or among the
parties hereto, and to make copies thereof and take extracts therefrom, and to
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discuss Borrower's financial affairs with Borrower's financial officers and
accountants.
(f) Borrower shall pay and discharge or cause to be paid and discharged
promptly all taxes, assessments, fees, withholdings and other governmental
charges or levies imposed upon it, or upon its income and profits, or upon any
property belonging to it, as well as all claims of any kind (including claims
for labor, materials and supplies), which, if unpaid, might by law become a lien
or charge against said property; provided, however, that Borrower shall not be
required to pay any such tax, assessment, fee, withholding, charge, levy or
claim if the amount, applicability or validity thereof shall currently be
contested in good faith by appropriate proceedings, and if it shall have either:
(i) set aside on its books reserves (segregated to the extent required by sound
accounting practice) deemed by Bank adequate with respect thereto, or (ii)
established a deposit with Bank sufficient to pay or discharge such tax,
assessment, fee, withholding, charge, levy or claim, if such proceedings are
adversely determined.
(g) Borrower shall maintain its existence in good standing in the state of
its organization or incorporation, maintain its qualification to conduct
business and good standing in all jurisdictions where, under applicable law, the
failure so to qualify could have a material adverse effect on Borrower's
business or its ability to perform the Loan Documents, and conduct its business
in the manner in which it is now conducted subject only to changes made in the
ordinary course of business.
(h) Borrower shall promptly, and in any event within five (5) business
days after it becomes aware thereof, notify Bank in writing of the occurrence of
any material adverse change in its or any Obligor's business, properties,
operations or conditions (financial or other) which could reasonably be expected
to impair substantially its or such Obligor's ability to perform its or his
obligations pursuant to this Agreement, or any of the other Loan Documents, the
occurrence of any Event of Default or the occurrence of any pending or
threatened litigation claiming damages in excess of $10,000 or seeking relief
that, if granted, would adversely affect the financial condition or business
operations of Borrower or any Obligor.
(i) Borrower shall pay or cause to be paid the principal of, and, if any,
the interest and premium on all indebtedness heretofore or hereafter incurred or
assumed by it when and as the same shall become due and payable, unless such
indebtedness be renewed or extended; and faithfully observe, perform and
discharge all the covenants, conditions and obligations that are imposed upon it
by any and all indentures and other agreements securing or evidencing such
indebtedness or pursuant to which such indebtedness is issued, and not permit
the continuance of any act or omission that is, or pursuant to the provisions
thereof may be declared to be, a default in the payment of principal and
interest, unless waived, pursuant to the provisions thereof; provided, however,
that Borrower shall not be required to make any payment or to take any other
action pursuant to this subparagraph at any time while it shall be currently
contesting in good faith by appropriate proceedings its obligations to make such
a payment or to take such action, if it shall have either: (i) set aside on its
books, reserves (segregated to the extent required by sound accounting
practices) deemed adequate with respect thereto, or (ii) established a deposit
with Bank sufficient to pay any such amount if such proceedings are adversely
determined.
(j) Borrower shall take all appropriate action necessary to protect its
business and assets consistent with normal practices; conduct its business in a
sound and businesslike manner; and do or cause to be done all things necessary
to preserve and keep in full force and effect its corporate existence and all of
its rights.
(k) Borrower shall pay or reimburse Bank for any out-of-pocket expenses,
including, without limitation, attorneys' fees, incurred by Bank in preparing,
negotiating, modifying or amending the Loan Documents.
(l) Borrower shall fund all of its "plans" (if any) to which the minimum
funding standards of Section 302 of ERISA apply in accordance with such
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standards; furnish Bank, promptly upon Bank's request, copies of all reports or
other statements filed with, or received from, the United States Department of
Labor, the Internal Revenue Service, or the Pension Benefit Guaranty Corporation
with respect to all of Borrower's "plans"; and promptly advise Bank of the
occurrence of any "reportable event" or "prohibited transaction" with respect to
any such "plan" (as all quoted terms are defined in ERISA).
(m) Borrower shall comply with all applicable present and future local,
state and federal laws, including, without limitation, environmental laws and
regulations; notify Bank immediately if any "hazardous substance" (as defined in
CERCLA) is released, discharged, disposed of, stored, or discovered on any real
or personal property owned or leased by Borrower; notify Bank in writing within
three (3) days after Borrower receives notice from any governmental authority or
any individual or entity claiming violation of any environmental protection law
or regulation, or demanding compliance with any environmental protection law or
regulation, or demanding payment, indemnity, or contribution for any
environmental damage or injury to natural resources; and permit Bank from time
to time without hindrance or delay to observe Borrower's operations and to
perform tests (including soil tests and ground water tests) for "hazardous
substances" on any real or personal property owned or leased by Borrower.
(n) Borrower shall maintain its principal transaction account with Bank.
8. NEGATIVE COVENANTS. Borrower covenants and agrees that from and after the
date hereof, and so long as the Obligations remain unpaid or this Agreement
remains in effect, without the prior written consent of Bank, Borrower shall
not:
(a) Create, incur, assume, or suffer to exist any indebtedness of any
description whatsoever in excess of $250,000.00 outstanding at any one time, not
existing as of the date of this Agreement, except (i) indebtedness incurred
under this Agreement, and (ii) any trade indebtedness incurred in the ordinary
course of business payable within sixty (60) days of its incurrence.
-
(b) Enter into any merger, reorganization or consolidation; enter into a
partnership or joint venture with any other person or entity; make any
substantial change in the basic type of business now conducted by it; sell,
lease, transfer or otherwise dispose of all or any substantial portion of its
assets; take any action that would make it impossible for it to carry out its
business as now conducted; change its name; or change the location of its
principal place of business or chief executive office.
(c) Other than in the ordinary course of business, guarantee, endorse,
become surety with respect to, or otherwise become directly or contingently
liable for or in connection with any obligation or indebtedness of any other
person or entity, except that Borrower may endorse negotiable instruments for
collection in the ordinary course of business; make any loans, advances or
extensions of credit to any person or entity, except for travel advances made to
employees in the ordinary course of business; make any investments in any
subsidiary or affiliate of any Obligor or any individual or entity related to
any Obligor; make any investments in or acquisitions of any business enterprise.
(d) Allow any single judgment for the payment of money in excess of
$10,000.00 or of any number of judgments for the payment of money in excess of
the aggregate sum of $25,000.00, excluding amounts in either case with respect
to which an insurance carrier admits full coverage (except for applicable
deductibles), to remain unsatisfied against it for a period of thirty (30)
consecutive days, unless execution thereof is stayed.
(e) Pay any dividend on any of its capital stock (other than dividends
payable in capital stock of Borrower) or redeem, repurchase or otherwise acquire
or make any distribution of funds with respect to any of its capital stock, nor
will Borrower in any way amend its capital structure.
(f) Sell, transfer, lease, pledge, abandon, grant any lien on or security
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interest in, or otherwise encumber or dispose of any of its properties or
assets, including without limitation the Collateral or any interest therein,
and, except for liens for taxes not yet due and payable, Borrower shall not
permit or suffer to exist any lien, security interest or other encumbrance on
any of its properties or assets.
(g) Take or fail to take any action which would result in the imposition
of withdrawal liability under Title IV of ERISA.
(h) Release, discharge, dispose of, store, accept or receive for storage
or disposal, or allow to be stored or disposed of, any "hazardous substance" (as
defined in CERCLA) on or in any real or personal property owned or leased by
Borrower, except as otherwise expressly consented to by Bank in writing; or
release, discharge, use, transport, or dispose of any "hazardous substance" in
an unlawful manner.
9. FINANCIAL COVENANTS. Borrower covenants and agrees that from and after
the date hereof, and so long as the Obligations remain unpaid or this Agreement
remains in effect, that:
(a) The ratio of Borrower's current assets to its current liabilities
shall at all times exceed 1.0 to 1.0.
(b) Borrower's Tangible Net Worth, as shown on its financial statements,
shall exceed as of June 30, 1996, and at all times thereafter, Nine Million Six
Hundred Thousand and No/100 Dollars ($9,600,000.00), and, at September 30, 1996,
and at all times thereafter exceed Nine Million Eight Hundred Thousand and
No/100 Dollars ($9,800,000.00).
(c) The ratio of Borrower's total liabilities to its Tangible Net Worth
shall be less than 1.75: 1.0, measured quarterly and at fiscal year end.
(d) Borrower's Fixed Charge Coverage shall be greater than 1.15, measured
at Borrower's fiscal quarter and calculated for the four (4) fiscal quarters
then ended.
(e) Borrower shall have a fiscal year to date cumulative net profit,
measured at fiscal year end.
10. RIGHTS AND REMEDIES EXCLUSIVE OF DEFAULT. After the occurrence of an
Event of Default: Bank may examine, audit or inspect Borrower's books and
records constituting, evidencing or otherwise relating to the Collateral,
wherever located, at any reasonable time or times, and, without hindrance or
delay, may enter upon Borrower's premises for such purposes. Borrower shall
assist Bank in whatever way reasonably necessary to make each such examination,
audit and inspection. Bank, from time to time at its option, may perform any
agreement of Borrower hereunder which Borrower shall fail to perform and take
any other action which Bank deems necessary for the maintenance or preservation
of any of the Collateral or its interest therein, and Borrower agrees to
reimburse forthwith Bank for all reasonable costs and expenses of Bank in
connection with the foregoing, together with interest thereon from the date
incurred until reimbursed. Borrower hereby constitutes Bank or its designee as
its attorney-in-fact: to receive, open, and dispose of all mail addressed to
the Borrower; to notify the postal authorities to change the address and
delivery of mail addressed to the Borrower to such address as Bank may
designate; to endorse Borrower's name upon any notes, acceptances, checks,
drafts, money orders and other remittances that may come into Bank's possession
and to deposit or otherwise collect the same; to sign Borrower's name on any
invoice or bill of lading, on drafts against customers, and notices to
customers; to send verifications of accounts to customers; to execute in
Borrower's name any affidavits and notices with regard to any or all lien
rights; and to do all other acts and things necessary to carry out this
Agreement. Borrower hereby waives notice of presentment, protest and dishonor
of any instrument so endorsed. All acts of said attorney-in-fact or designee
are hereby authorized and ratified, and said attorney-in-fact or designee shall
not be liable for any acts of omission or commission, or for any error of
judgment or mistake of fact or law, unless resulting from Bank's gross
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<PAGE>
negligence or intentional misconduct; this power being coupled with an interest
is irrevocable while the Obligations remain outstanding.
11. RIGHTS AND REMEDIES UPON DEFAULT. Upon the occurrence of any one or more
Events of Default: Bank may terminate this Agreement and any obligations of
Bank to Borrower under any other agreement, document or instrument and may
declare the Obligations, notwithstanding any provisions thereof, without demand
or notice of any kind, immediately due and payable, whereupon the Obligations
shall become immediately due and payable and may be collected forthwith; Bank
shall have the right to take immediate possession of the Collateral without
notice or resort to legal process and without demand or notice of any kind to
set off and deduct the outstanding balance of the Obligations from sums, if any,
which now or hereafter may be owing by Bank to Borrower; and Bank may exercise
from time to time any rights and remedies available to it under the Uniform
Commercial Code and other applicable law. Borrower agrees to pay all costs of
Bank of collection of the Obligations and enforcement of rights hereunder, and,
if collected by or through an attorney, reasonable attorneys' fees and also
other legal and court expenses.
12. MISCELLANEOUS. (a) Each and every right, power or privilege granted to
Bank under the Loan Documents or available to Bank at law or in equity shall be
cumulative and may be exercised, and no delay in exercising any such right,
power or privilege shall impair any such right, power or privilege or be
construed as a waiver of any Event of Default or any acquiescence therein. All
rights, powers and privileges granted to Bank hereunder shall be cumulative, and
shall not be exclusive of any other rights, powers and privileges granted to
Bank by the Loan Documents or any other document, instrument or agreement, or
available at law or in equity. No single or partial exercise of any such right,
power or privilege shall preclude the further exercise of such right, power or
privilege or the exercise of any other right, power or privilege. No waiver by
Bank of any Event of Default hereunder shall constitute a waiver of any
subsequent Event of Default. No waiver shall be valid against Bank unless made
in writing and signed by Bank, and then only to the extent expressly specified
therein.
(b) All notices, demands and communications required or permitted
hereunder shall be deemed to have been sufficiently given or served for all
purposes if in a writing delivered personally to a party or to an officer of the
party to whom the same is directed, or if sent by first-class or certified mail,
postage and charges prepaid, addressed to such party at the following address,
or to such other address as shall be furnished in writing by any party to the
other pursuant to the provisions hereof:
If to Bank, to: SouthTrust Bank of Georgia, N.A.
647 Roswell Street
Marietta, Georgia 30060
Attn.: Northwest Region Commercial Banking
If to Borrower, to: Crown Andersen Inc.
Andersen 2000 Inc.
306 Dividend Drive
Peachtree City, Georgia 30269
Attn.: Milton Emmanuelli
Any such notice shall be deemed given as of the date so delivered personally, or
three (3) days after the date on which the same was deposited, first-class or
certified postage prepaid, in a regularly maintained receptacle for the deposit
of United States Mail, addressed as aforesaid.
(c) This Agreement and the other Loan Documents shall be governed by and
construed and enforced in accordance with the substantive laws of the State of
Georgia, without regard to principles governing conflicts of law. Borrower
hereby consents to the jurisdiction of any state or federal court located in
the State of Georgia and, to the extent permitted by applicable law, waives any
objection BASED ON VENUE OR FORUM NON CONVENIENS WITH RESPECT TO ANY ACTION
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<PAGE>
INSTITUTED IN ANY SUCH COURT AND AGREES THAT SERVICE OF PROCESS IN ANY SUCH
ACTION WILL BE SUFFICIENT IF SERVED ON BORROWER BY CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, OR IN ANY MANNER PROVIDED BY LAW. NOTWITHSTANDING THE
FOREGOING, BANK SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST
BORROWER OR THE COLLATERAL IN THE COURTS OF ANY OTHER JURISDICTION BANK DEEMS
NECESSARY OR APPROPRIATE IN ORDER TO ENFORCE THE OBLIGATIONS OF BORROWER UNDER
THIS AGREEMENT OR THE RIGHTS OF BANK WITH RESPECT TO THE COLLATERAL.
(d) This Agreement shall inure to the benefit of Bank, its successors and
assigns, and to any person to whom Bank may grant an interest in the
Obligations, and shall be binding upon Borrower and its or his respective heirs,
personal representatives, executors, administrators, successors and assigns;
provided, however, that Borrower shall have no right to assign its rights or
obligations hereunder to any person or entity. Time is of the essence in the
payment and performance of every provision and covenant of this Agreement and
the other Loan Documents. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
only to the extent of such prohibition or unenforceability without invalidating
the remaining provisions hereof or affecting the validity or enforceability of
such provisions in any other jurisdiction. This Agreement may not be amended or
modified, and Borrower shall not take any action herein prohibited, or omit to
perform any action required to be performed by it, unless Borrower shall obtain
the prior written consent of Bank to such amendment, modification, action or
omission to act, and no course of dealing between Borrower and Bank shall
operate as a waiver of any right, power or privilege granted under this
Agreement, under the other Loan Documents, or available at law or in equity.
This Agreement and the other Loan Documents contain the entire agreement between
Borrower and Bank regarding the Loan and the Collateral. Upon the execution and
delivery of this Agreement, the terms and conditions of any commitment letter
relating to the Loan shall be of no further force or effect. No oral
representations or statements shall be binding on Bank, and no agent of Bank has
the authority to vary the terms of this Agreement, except in writing on the face
hereof or on a separate page attached hereto. If any provision of this Agreement
conflicts or is inconsistent with any provision of the Note, the provisions of
the Note shall control.
(e) Borrower, for itself, its heirs, personal representatives, executors,
administrators, successors and assigns, hereby agrees to indemnify and hold
harmless Bank and its affiliates, successors and assigns, and its stockholders,
officers, directors, employees, agents and attorneys from and against any and
all claims, demands, liabilities, losses, costs, expenses, damages, suits and
judgments (including, without limitation, liability under CERCLA, the Federal
Resource Conservation and Recovery Act, and other environmental laws and
regulations, and costs of defense and attorneys' fees) resulting from any
representation or warranty made by Borrower or on Borrower's behalf pursuant to
Section 7(m) of this Agreement having been false when made, or resulting from
Borrower's breach of any of the covenants set forth in Section 8(h) of this
Agreement. This Agreement of indemnity shall be a continuing agreement and
shall survive payment of the Obligations and termination of the other provisions
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their duly authorized representatives on or as of the
date first above written.
BORROWER:
- ---------
CROWN ANDERSEN INC.,
a Delaware corporation
By:________________________________
Milton Emmanuelli
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<PAGE>
Treasurer/Chief Financial Officer
[CORPORATE SEAL]
ANDERSEN 2000 INC.,
a Delaware corporation
By:________________________________
Milton Emmanuelli
Secretary
[CORPORATE SEAL]
BANK:
- ----
SOUTHTRUST BANK OF GEORGIA, N.A., a national banking association
By:____________________________________
Jesse R. Erickson
Vice President
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<PAGE>
GENERAL SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement"), dated as of June 28, 1996, is made by
the undersigned CROWN ANDERSEN INC., a Delaware corporation, and ANDERSEN 2000
INC., a Delaware corporation (whether one or more, hereinafter collectively
referred to as "Debtor"), with SOUTHTRUST BANK OF GEORGIA, N.A., a national
banking association ("Secured Party").
W I T N E S S E T H:
FOR VALUE RECEIVED, and in consideration of loans, extensions of credit or
other financial accommodations previously, now or hereafter made by Secured
Party to Debtor or which are otherwise to the direct interest and benefit of
Debtor, Debtor hereby agrees with Secured Party as follows:
1. SECURITY INTEREST. As security for the full and prompt payment and
performance of the Secured Obligations (as hereinafter defined), Debtor hereby
grants, bargains, sells, conveys, assigns and sets over to Secured Party, and
grants to Secured Party a security interest in, the following property and
rights of Debtor:
A. all inventory of Debtor, whether now owned or hereafter
(Inventory and acquired by Debtor and wherever located, including,
Documents) without limitation, all goods, merchandise, raw
materials, work in process, finished goods, and other
tangible personal property held for sale or lease or
furnished under contracts of service or used or
consumed in Debtor's business and all returned,
reclaimed and repossessed goods (collectively, the
"Inventory"), together with all documents now or
hereafter representing any such Inventory
(collectively, the "Documents"), and all proceeds and
products of the foregoing.
B. all accounts, contract rights, instruments and chattel
(Accounts) paper whether arising from the sale of Inventory or the
rendering of services by Debtor or otherwise and
whether now owned or hereafter acquired by Debtor and
whether now existing or hereafter arising and all
returned, reclaimed and repossessed goods
(collectively, the "Accounts"), together with all books
and records relating to such Accounts, and all proceeds
of the foregoing.
C. all general intangibles of Debtor, whether now owned or
(Intangibles) hereafter acquired by Debtor, including, without
limitation, any goodwill, choses in action, causes of
action, literary rights, rights to performance,
confidential information, purchase orders, trade
secrets, trademarks, service marks, patents,
copyrights, inventions and other proprietary
information (collectively, the "Intangibles"), together
with all books and records relating to such
Intangibles, and all proceeds of the foregoing.
D. all equipment of Debtor, whether now owned or hereafter
(Equipment) acquired by Debtor and wherever located, including,
without limitation, all machinery, computer equipment
and peripherals, furniture, furnishings, and motor
vehicles, and all replacements thereof and substitutes
therefor, and all accessories, additions, attachments
and other goods now or hereafter installed in or
affixed thereto or used in connection therewith
(collectively, the "Equipment"), together with all
warranties and service contracts relating to such
Equipment, and all proceeds of the foregoing. The term
"Equipment," as used in this Agreement, also includes
fixtures, including leasehold improvements and
machinery and appliances which are attached to real
property in such a manner as to become fixtures
(collectively, the "Fixtures"). The Equipment described
herein includes, without limitation, the Specific
Equipment, if any, described below.
<PAGE>
E. the specific equipment of Debtor described below and
(Specific Equipment) all replacements thereof and substitutes therefor, and
all accessories, additions, attachments and other goods
now or hereafter installed in or affixed thereto or
used in connection therewith (collectively, the
"Specific Equipment"), and all proceeds of the
foregoing:
All soil remediation equipment located in Gila Bend,
Maricopa County, Arizona, including, without
limitation, all rotary kilns, dual cyclone dust
collectors, high temperature after burners, evaporative
cooler, bag house dust collector, induced draft fan,
exhaust stack, continuous stack emissions monitor,
instrumentation, and electrical switch gear, some of
which is located at 521 Butterfield Trail, Gila Bend,
Maricopa County, Arizona 85337.
(All of the property and rights described in paragraphs A, B, C, D, and E above,
as applicable, are sometimes hereinafter collectively referred to as the
"Collateral.")
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF DEBTOR. Debtor covenants,
represents and warrants to Secured Party that:
(a) Each entity comprising is a corporation, duly organized, existing and
in good standing under the laws of the state of its incorporation and is duly
qualified and in good standing in every other state in which the nature of its
business or the ownership of its properties makes qualification necessary, and
the execution, delivery and performance of this Agreement are within Debtor's
corporate powers, have been duly authorized, are not in contravention of any
law, judgment, order, writ or decree of any court or governmental authority or
the terms of Debtor's certificate of incorporation, by-laws or other
incorporation papers, or of any agreement or undertaking to which Debtor is a
party or by which Debtor or its property is bound.
(b) Debtor agrees to make all records concerning or constituting the
Collateral available to Secured Party, its agents, attorneys and accountants,
upon request at any reasonable time and without hindrance or delay, and to allow
Secured Party to inspect, audit, check or make copies or extracts of such
records.
(c) Except as otherwise noted in a schedule attached to this Agreement,
Debtor is the owner of the Collateral, free and clear of all security interests,
liens and encumbrances other than the security interest granted to Secured Party
herein, and has the full right and power to transfer the Collateral to Secured
Party and to grant to Secured Party a security interest therein. Except as
expressly authorized hereunder, Debtor will not sell, transfer, assign or convey
any of the Collateral or any interest therein, nor create any other security
interest therein, nor permit any financing statement other than that of Secured
Party's to be filed in any public office with respect thereto (except as
otherwise expressly agreed in writing by Secured Party), nor permit either
Debtor's or Secured Party's rights therein to be reached by attachment, levy,
garnishment or other judicial process.
(d) Debtor will pay promptly when due all taxes, charges and assessments
upon the Collateral or any part thereof, the use or operation of the Collateral,
the proceeds thereof, this Agreement and any note evidencing the Secured
Obligations. At its option, Secured Party may discharge any taxes, liens,
security interests or other encumbrances or any item levied or placed on the
Collateral or any part thereof, but Secured Party shall not be under any duty to
exercise any such authority. Debtor agrees to reimburse Secured Party, upon
demand, for any payment made by Secured Party pursuant to the foregoing
authorization.
(e) Debtor shall bear the risk of loss of, damage to, or destruction of the
Collateral, whether in possession of Debtor, Secured Party or a third party.
Secured Party shall be deemed to have exercised reasonable care in the custody
and preservation of the Collateral in its possession if Secured Party takes such
action for that purpose as Debtor shall reasonably request in writing, but no
omission on the part of Secured Party to take any action, whether or not
requested by Debtor, shall of itself be deemed a failure to exercise reasonable
care.
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<PAGE>
(f) Debtor shall do, make, execute and deliver to Secured Party all such
additional acts, things, assignments, assurances, and instruments as Secured
Party may require to vest completely in Secured Party its rights hereunder and
in or to the Collateral. At the request of Secured Party, Debtor will execute
financing statements as provided for under the Uniform Commercial Code in form
satisfactory to Secured Party and will pay the cost of filing the same in all
public offices where filing is deemed by Secured Party to be necessary or
desirable. Debtor agrees that a carbon or photostatic copy of this Agreement
may be filed as a financing statement in any public office. If certificates of
title are now or hereafter issued or outstanding with respect to any of the
Collateral, Debtor will cause the interest of Secured Party to be properly
noted thereon at Debtor's expense. Debtor will deliver all instruments,
documents and chattel paper which constitute a part of the Collateral to Secured
Party upon request, duly endorsed by Debtor to the order of Secured Party or in
blank, in each case, in form satisfactory to Secured Party. Secured Party may
elect not to perfect its security interest in all or any part of the Collateral
without impairing its rights against Debtor or any other party.
(g) Debtor hereby irrevocably makes, constitutes and appoints Secured Party
and any of its officers or designees as Debtor's true and lawful attorney-in-
fact with full power and authority to do any and all acts necessary or proper to
carry out the intent of this Agreement, including, without limitation, the
right, power and authority (i) to receive and give receipt for any amount or
amounts due or to become due to Debtor with respect to the Collateral and to
endorse and negotiate in the name of Debtor any check or other item issued in
payment or on account thereof, and in the name of Secured Party or of Debtor to
enforce by suit, compromise, settle, discharge, extend the time of payment, file
claims or otherwise participate in bankruptcy proceedings, and deal
in and with Collateral and any proceeds thereof; (ii) to open mail addressed to
Debtor, remove any Collateral or proceeds of Collateral therefrom, and deliver
the remainder of such mail to Debtor; (iii) to do all acts and things deemed by
Secured Party to be appropriate to protect, preserve and realize upon the
Collateral; and (iv) to obtain, adjust, settle, or cancel any insurance carried
with respect to the Collateral and to endorse in Debtor's name and give receipts
for checks and drafts issued in payment of losses and as return premiums with
respect to any such insurance, but Secured Party shall not be under any duty to
exercise any such authority or power or in any way be responsible for collecting
or realizing upon the Collateral. Debtor hereby ratifies and confirms all that
Secured Party, its officers or designees, shall do as such attorney-in-fact by
virtue of the foregoing powers, which powers are coupled with an interest and
are irrevocable until this Agreement has been terminated as hereinafter
provided. Secured Party shall not be liable for any act or omission which
Secured Party, its officers or designees shall take or fail to take pursuant to
the foregoing powers.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS RELATING TO INVENTORY. Debtor
has granted Secured Party a security interest in Inventory AND Debtor further
agrees with Secured Party as follows:
(a) Debtor will allow Secured Party and any of its officers, agents,
attorneys or accountants to examine or inspect the Inventory wherever located at
all reasonable times.
(b) Debtor will keep the Inventory in good condition and will not waste or
destroy any of the same. If Debtor should fail to take appropriate steps, as
determined by Secured Party, to maintain the Inventory in good condition,
Secured Party, at its option, may take such steps and expend such funds as it
deems necessary for the preservation of the Inventory. Debtor agrees to
reimburse Secured Party on demand for any sums spent by Secured Party with
respect to the maintenance of the Inventory.
(c) Until the occurrence of an event of default hereunder, Debtor may use
the Inventory in any lawful manner consistent with Debtor's customary business,
provided that such use is not inconsistent with this Agreement or with the terms
or conditions of any policy of insurance thereon, and Debtor may sell the
Inventory in the ordinary course of business. A sale in the ordinary course of
business does not include a return to a vendor for credit or other transfer in
partial or total satisfaction of a debt. Until the occurrence of event of
default, Debtor may also use and consume any raw materials or supplies, the use
and consumption of which is necessary in order to carry on Debtor's customary
business.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS RELATING TO ACCOUNTS. Debtor has
granted Secured Party a security interest in Accounts AND Debtor hereby further
agrees with Secured Party as follows:
(a) Each Account owing to Debtor, and all names of all account debtors,
amounts owing, due dates, and other facts appearing on Debtor's records relating
thereto, are true, correct and genuine and are what they purport to be, and each
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<PAGE>
such Account arises out of a bona fide sale of goods or other property sold and
delivered to, or out of services rendered by Debtor to, the account debtors so
indicated, and the amount of each such debt is unconditionally owed to Debtor by
each such account debtor, except for normal cash discounts, and is not subject
to any offset, credit, deduction, or counterclaim, and Debtor is the sole owner
thereof.
(b) The address of Debtor's chief executive office and principal place of
business is the address shown above Debtor's signature at the end of this
Agreement. Debtor agrees not to change the address of Debtor's chief executive
office without giving at least fifteen (15) days prior written notice to Secured
Party.
(c) Secured Party shall have the right at any time, whether before or after
the occurrence of a default hereunder by Debtor, to notify any or all account
debtors or obligors on the Accounts to make payment directly to Secured Party,
or to make payment to an address (a "lockbox") under the exclusive control of
Secured Party. Upon request of Secured Party, Debtor agrees immediately to
notify any or all account debtors and obligors to make payment directly to
Secured Party or to such lockbox and to place Secured Party's or such lockbox's
address on Debtor's invoices and statements as the address to which payment
should be made. To the extent Secured Party does not so elect to notify, or
does not request Debtor to notify, the account debtor or obligors, Debtor shall
continue to collect such Accounts. Debtor agrees not to commingle any proceeds
of any of the Accounts with any of Debtor's own funds, goods or property, and at
all times to hold such proceeds in trust for Secured Party until delivery
thereof is made to Secured Party. Debtor agrees to deliver all proceeds of the
Accounts in precisely the form received by Debtor, with the endorsement of
Debtor if requested by Secured Party. Secured Party may apply such proceeds to
any of the Secured Obligations, whether or not such Secured Obligations have
matured by their terms, or Secured Party may, at its option, release such
proceeds to Debtor for use in Debtor's business. Secured Party need not apply
nor give credit for any item included in such proceeds until Secured Party has
received final payment therefor at its offices in cash or cash equivalents
acceptable to Secured Party.
(d) Weekly, monthly, or at such other intervals as Secured Party shall
designate, Debtor agrees to deliver to Secured Party lists and agings of all
Accounts in such form, and in such detail, as Secured Party shall require,
together with copies of invoices, delivery receipts, bills of lading and such
other documents in support of or relating to Accounts as Secured Party shall
require.
(e) If any of the Accounts arise out of contracts with the United States or
any agency thereof, Debtor agrees to notify Secured Party thereof and to execute
such documents as shall be necessary to permit Secured Party to perfect its
right to receive payment under the Federal Assignment of Claims Act.
(f) Debtor will promptly notify Secured Party in writing in the event the
account debtor on any Account refuses to accept or returns any goods which are
the subject of the Account, and of the bankruptcy, insolvency, or cessation of
business of or by any such account debtor, and of any claim asserted against
Debtor for credit allowances, adjustments, offsets or counterclaims by any such
account debtor;
(g) Upon request of Secured Party, Debtor will purchase insurance covering
the loss of, and cost of reconstruction of, Debtor's records of its Accounts and
all books and records relating thereto, such insurance to be issued by an
insurer acceptable to Secured Party and to contain such coverage provisions as
Secured Party shall request.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS RELATING TO INVENTORY, EQUIPMENT,
AND SPECIFIC EQUIPMENT. Debtor has granted Secured Party a security interest in
Inventory, Equipment, and Specific Equipment AND Debtor agrees with Secured
Party as follows:
(a) Debtor's Inventory, Equipment, and/or Specific Equipment, as
applicable, are kept or stored only at the address shown above Debtor's
signature at the end of this Agreement and at the following addresses:
- --------------------------------------------------------------------------------
Street Address City County State Zip
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<PAGE>
- -------------------------------------------------------------------------------
Street Address City County State Zip
- -------------------------------------------------------------------------------
Street Address City County State Zip
- -------------------------------------------------------------------------------
Street Address City County State Zip
(Failure to list any address where Inventory, Equipment, or Specific Equipment
are kept shall not limit or affect Secured Party's security interest therein.)
Debtor agrees not to keep or store any Inventory, Equipment, and/or Specific
Equipment, as applicable, at any address other than those set forth above
without giving at least fifteen (15) days prior written notice to Secured Party.
(b) Debtor agrees not to sell or otherwise dispose of any Equipment or
Specific Equipment, as applicable, except worn out or obsolete Equipment or
Specific Equipment which is immediately replaced with other Equipment of
equivalent function and of equal or greater value (and if a motor vehicle, upon
which the security interest of Secured Party has been properly noted on the
certificate of title therefor).
(c) All Inventory, if applicable, is and will be produced in compliance
with the Federal Fair Labor Standards Act.
(d) Debtor will maintain insurance at all times with respect to all
Inventory, Equipment, and/or Specific Equipment, as applicable, against risk of
fire (including so-called extended coverage), theft, water damage and such other
risks as Secured Party may require from time to time and, in the case of motor
vehicles, against risk of collision and vandalism, in such amounts, in such
form, for such perils, and written by companies as may be satisfactory to
Secured Party. Secured Party shall be named as loss payee under such policies
of insurance. Debtor may furnish such insurance through an existing policy or a
policy independently obtained and paid for by Debtor. All policies of insurance
shall provide for a minimum of ten (10) days prior written notice to Secured
Party before cancellation. At request of Secured Party, Debtor will deliver
such policies, or at Secured Party's option, certificates thereof, to Secured
Party to be held by it. Debtor hereby assigns all insurance policies at any
time covering any Inventory, Equipment, or Specific Equipment, as applicable,
and all return or unearned premiums thereunder to Secured Party as additional
collateral for the Secured Obligations. Secured Party in its discretion may
apply any proceeds of such insurance to the payment of the Secured Obligations,
whether or not due, in such order of application as Secured Party may elect, or
may release such proceeds to Debtor for use in purchasing other Inventory,
Equipment, and/or Specific Equipment, as applicable, as a replacement for any
loss thereof. In the event Debtor fails to provide any insurance as required
herein, Secured Party may, at its option, purchase such insurance or, at Secured
Party's option and after ten (10) days' prior written notice to Debtor, Secured
Party may purchase insurance covering only Secured Party's interest in the
Inventory, Equipment, and/or Specific Equipment, as applicable. Debtor agrees to
reimburse Secured Party on demand for the cost of such insurance.
(e) Upon request of Secured Party at any time, Debtor will deliver to
Secured Party lists or copies of all Accounts which are proceeds of Inventory,
Equipment, or Specific Equipment, as applicable, promptly after they arise.
Unless Secured Party shall have otherwise agreed with Debtor in writing, Debtor
will deliver to Secured Party, promptly upon receipt, all proceeds (except
goods) of the Inventory, Equipment, or Specific Equipment, as applicable,
received by Debtor, including proceeds of such Accounts, in precisely the form
received by Debtor, with the endorsement of Debtor if requested by Secured
Party. Debtor agrees not to commingle any proceeds of such Collateral with any
of Debtor's own funds, goods or property, and at all times to hold such proceeds
upon express trust for Secured Party until delivery thereof is made to Secured
Party. To evidence Secured Party's rights hereunder, Debtor will assign or
endorse proceeds to Secured Party in such form as Secured Party may request and
Secured Party shall have the full power and authority to collect, compromise,
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<PAGE>
endorse, sell or otherwise deal with proceeds in its own name or that of Debtor.
Secured Party in its discretion may apply cash proceeds to the payment of any of
the Secured Obligations, whether or not due, in the order of application as
Secured Party may elect, or may release such cash proceeds to Debtor for use in
the operation of Debtor's business.
6. WAIVERS OF DEBTOR. Debtor hereby expressly waives:
(a) notice of acceptance of this Agreement;
(b) notice of the existence or creation of any or all of the Secured
Obligations;
(c) notice of any default, nonpayment, partial payment, presentment, demand
and all other notices which Debtor may be entitled to whatsoever;
(d) any invalidity or disability in whole or in part with respect to any
Collateral, at the time of its acceptance or at any other time, as well as with
respect to the liability of any Obligor;
(e) the fact that the Collateral or any part thereof may at any time or
from time to time be incorrectly estimated or deteriorate in value for any cause
whatsoever;
(f) all diligence in collection or protection of or realization upon the
Collateral, the Secured Obligations, or any part thereof, or any security for
any of the foregoing;
(g) any duty or obligation on the part of Secured Party to ascertain the
extent or nature of the Collateral, or any part thereof, or the liability of
Obligor, as well as any duty or obligation on the part of Secured Party to take
any steps or actions to safeguard, protect, deal with, handle, obtain or convey
information with respect to the Collateral or any part thereof; and
(h) any right to require Secured Party to proceed against any Obligor, if
Debtor is not the same as Obligor, as set forth in Section 10-7-24 of the
Official Code of Georgia.
================================================================================
DEBTOR HEREBY EXPRESSLY WAIVES ANY AND ALL RIGHTS DEBTOR MAY HAVE TO NOTICE
PRIOR TO THE SEIZURE OF THE COLLATERAL. THIS WAIVER IS GIVEN BY DEBTOR TO
SECURED PARTY IN ACCORDANCE WITH SECTION 44-14-263 OF THE OFFICIAL CODE OF
GEORGIA IN ORDER TO ELIMINATE THE REQUIREMENT THAT SECURED PARTY FURNISH A
BOND SHOULD SECURED PARTY SEEK AN IMMEDIATE WRIT OF POSSESSION.
-----------------------------------------
SIGNATURE ON BEHALF OF DEBTOR
===============================================================================
7. EXPENDITURES. All sums expended by Secured Party for which Debtor is
obligated to reimburse Secured Party under this Agreement shall bear interest
from the date the expenditure is made until the date paid at the rate provided
in any promissory note evidencing the Secured Obligation with respect to which
the sum was expended by Secured Party, or if no single such promissory note
exists or is identifiable, then at the rate which is two (2) percentage points
in excess of the rate of interest per annum announced by Secured Party from time
to time as its base rate of interest as of the date such expenditure was made.
8. DEFAULT. Any or all of the Secured Obligations shall, at the option of
Secured Party and notwithstanding the stated maturity date of any instrument
evidencing any such Secured Obligations, become immediately due and payable,
without notice or demand, except as specifically provided in any such
investment, upon the occurrence of any of the following events, each of which
shall constitute an event of default hereunder:
-6-
<PAGE>
(a) The failure of any Obligor to pay or perform as and when due any of the
Secured Obligations;
(b) The failure of Debtor to pay or perform as and when due any covenant or
agreement contained in this Agreement or if any warranty or representation made
or any writing furnished to Secured Party by or on behalf of Debtor in or in
connection with this Agreement is breached or is false or inaccurate in any
material respect when made or furnished;
(c) Loss, theft, damage, or destruction of any material part of the
Collateral, or any levy, seizure, garnishment or attachment thereof or thereon;
(d) The death of (if an individual), or dissolution of (if a partnership or
corporation), insolvency of, general assignment for the benefit of creditors by,
filing of a petition under any chapter of the federal bankruptcy code by or
against, filing of an application in any court for a receiver for, entry of any
judgment against, or issuance of a levy or writ of execution, attachment or
garnishment against any of the property of, any Obligor;
(e) The transfer by any Obligor of all or substantially all of his, her or
its assets outside the ordinary course of business, or the waste, loss or
dissipation of a substantial part of such person's assets;
(f) If any Obligor is a partnership, the withdrawal or removal of any
general partner of such partnership;
(g) If any Obligor is a corporation, the transfer, directly or indirectly
(including through any voting trust, irrevocable proxy, or the like), of the
ownership or power to vote more than fifty percent (50%) of the voting stock of
such corporation;
(h) The occurrence of any default or event authorizing acceleration as
provided under any promissory note or other evidence of debt, loan agreement,
security agreement, pledge agreement, assignment, mortgage, deed to secure debt,
deed of trust, lease agreement or other agreement or contract between any
Obligor and Secured Party;
(i) The financial responsibility of any Obligor becomes impaired at any
time in the sole opinion of Secured Party; or
(j) The determination by Secured Party that it otherwise deems itself to
be insecure.
9. REMEDIES. Upon the occurrence of any event of default set forth in the
preceding paragraph 8 and at any time thereafter, Secured Party shall have and
be entitled to exercise, from time to time, all the rights and remedies of a
secured party under the Uniform Commercial Code, and other applicable law,
including, without limitation, the right to take possession of all or any part
of the Collateral and, with or without taking possession thereof, to sell the
Collateral at one or more public or private sales, at Secured Party's option.
At Secured Party's request, Debtor agrees to assemble the Collateral and to make
it available to Secured Party at a place to be designated by Secured Party.
Debtor waives any notice of sale or other disposition of the Collateral. To the
extent that such notice may not be waived under applicable law, Debtor agrees
that notice of sale or other disposition of the Collateral hereunder, or any
part thereof, shall be sufficient if such notice is provided to Debtor in
accordance with the notice provisions set forth in this Agreement at least five
(5) calendar days before the time of the sale or disposition. Debtor agrees to
pay Secured Party on demand all expenses incurred or paid by Secured Party in
protecting or enforcing the Secured Obligations and the rights of Secured Party
hereunder, including Secured Party's right to take possession of and sell or
dispose of the Collateral, and in repossessing, collecting and storing the
Collateral, preparing the Collateral for sale, advertising and conducting such
sale, and collecting the proceeds of such sale. The proceeds of any sale or
other disposition or collection of the Collateral shall be applied, first, to
the payment of all costs and expenses incurred by Secured Party in connection
with such sale or other realization including, without limitation, attorneys'
fees as specified above and all costs of litigation, and to the repayment of all
advances made by Secured Party hereunder for the account of Debtor and the
payment of all costs and expenses paid or incurred by Secured Party in
-7-
<PAGE>
connection with this Agreement or in the exercise of any right or remedy
hereunder or under applicable law; second, to the payment of the Secured
Obligations in such order as Secured Party may elect; and third, to Debtor, or
any other person entitled thereto, or as a court of competent jurisdiction may
direct. Debtor will remain obligated to pay any deficiency.
10. SET-OFF RIGHTS. Secured Party shall have the right to set off the
Secured Obligations against any indebtedness or liability of Secured Party to
Debtor at any time existing. As additional security for the Secured
Obligations, Debtor hereby transfers and assigns to Secured Party, and grants to
Secured Party a security interest in, all account balances, credits, deposits,
and rights of withdrawal of Debtor with Secured Party, whether now owned or
hereafter acquired, and whether jointly or severally held, and Debtor agrees
that Secured Party shall have a lien upon and security interest in all property
of Debtor of every kind now or hereafter in the possession or control of Secured
Party for any reason.
11. NOTICES. Any and all notices, elections, demands, requests and responses
thereto permitted or required to be given under this Agreement shall be in
writing, signed by or on behalf of the party giving the same, and shall be
deemed to have been properly given and shall be effective upon being personally
delivered, or three (3) days after being deposited in the United States mail,
postage prepaid, certified with return receipt requested, to Debtor if mailed to
the address set forth above Debtor's name at the end of this Agreement and to
Secured Party at the address set forth in the beginning of this Agreement or at
such other address within the continental United States for either party as such
party may designate by notice to the other given in accord ance with the
provisions of this paragraph; provided, however, that the time period in which a
response to any such notice, election, demand or request must be given shall
commence on the date of receipt thereof; and provided further that no notice of
change of address shall be effective until the date of receipt thereof.
Personal delivery to a party or to any officer, partner, agent or employee of
such party at said address shall constitute receipt. Rejection or other refusal
to accept or inability to deliver because of a changed address of which no
notice has been received shall also constitute receipt.
12. MISCELLANEOUS. (a) At such time as the Secured Obligations are paid and
satisfied in full and Secured Party has no other or further obligation,
contingent or otherwise, to make any present or future advance of funds or to
incur any present or future expense contemplated by the agreements relating to
the Secured Obligations, Secured Party will deliver to Debtor a written
termination of this Agreement upon written request therefor from Debtor. Prior
to such termination this shall be a continuing Agreement in every respect.
(b) No delay by Secured Party in enforcing its rights hereunder shall
prejudice its rights to enforce this Agreement. All rights and remedies under
this Agreement, under any other agreement and under applicable law shall be
cumulative, and any failure of Secured Party to exercise any such right or
remedy shall not be construed as a waiver of the right to exercise the same or
any other right or remedy at any time and from time to time thereafter. No
waiver by Secured Party shall be effective unless made in writing by a duly
authorized officer or agent of Secured Party, and no waiver by Secured Party of
any right or remedy shall constitute a waiver of any other or future right or
remedy. This Agreement shall inure to the benefit of Secured Party, its
successors and assigns, and to any person to whom Secured Party may grant an
interest in any of the Secured Obligations, and shall be binding upon Debtor and
his, her, its or their respective heirs, executors, administrators, successors
and assigns. This agreement shall be governed, construed and enforced in
accordance with the substantive laws of the State of Georgia, without regard to
principles of conflict of laws.
(c) Debtor hereby consents to the jurisdiction of any state or federal
court located in the State of Georgia and, to the extent permitted by applicable
law, waives any objection based on venue or forum non conveniens with respect to
any action instituted in any such court and agrees that service of process in
any such action will be sufficient if served on Debtor by certified mail, return
receipt requested or in any manner provided by law. Notwithstanding the
foregoing, secured party shall have the right to bring any action or proceeding
against debtor or the collateral in the courts of any other jurisdiction Secured
Party deems necessary or appropriate in order to enforce the obligations of
Debtor under this agreement or the rights of Secured Party with respect to the
Collateral.
-8-
<PAGE>
13. Definitions. As used in this Agreement, the following terms have the
following meanings:
"Obligor" means and includes Debtor and each other person primarily or
secondarily liable to Secured Party for any of the Secured Obligations, together
with his, her, its or their heirs, administrators, executors, successors and
assigns, including any resulting or surviving corporation following any merger
or any other reorganization, and also includes any debtor in possession or
similar entity following the filing of a petition for relief by or against
Obligor under any chapter of the federal bankruptcy code or in any similar
proceeding under state or federal law, and also includes any proprietorship,
partnership, corporation, trust, or other entity resulting from or arising out
of the dissolution, liquidation or change in form of business organization by
Obligor or following any change of name or domicile by Obligor.
"Secured Obligations" means all debts and other obligations now owed by
Debtor to Secured Party, all debts and other obligations owed by Debtor to
Secured Party in the future, all extensions and renewals of any such debts or
obligations, and all interest and other lawful fees and charges on any or all
such debts and obligations, including, without limitation, late charges, penalty
interest, premiums and costs of collection (including attorneys' fees) for which
Debtor has agreed to pay or reimburse Secured Party, or for which Debtor is
obligated to pay Secured Party under applicable law, together with each and
every promissory note, guaranty, or other instrument or writing now or hereafter
evidencing the obligation of Debtor to pay any such debt, the interest thereon
or such other charges; whether such debts or other obligations are now foreseen
or unforeseen; whether now due or to become due in the future; whether arising
from contract, tort or otherwise; whether arising from an original obligation of
Debtor to Secured Party or from an obligation of Debtor which was purchased by
Secured Party, whether from time to time increased, reduced or entirely
extinguished and then reincurred; whether direct or indirect, absolute or
contingent, liquidated or unliquidated, secured or unsecured; whether otherwise
guaranteed or not; and whether arising out of one or more loans or other
extension of credit from, or line of credit with, or the issuance of one or more
letters of credit by, or the acceptance of one or more bankers' acceptances by,
or the lease of personal property from, or the furnishing of other financial
accommodation by Secured Party, or otherwise. The Secured Obligations include,
without limitation, interest, fees and other charges on any debt or obligation
of Debtor to Secured Party accruing after the filing of a petition under any
chapter of the federal bankruptcy code by or against Debtor and any loans or
other credit or financial accommodations extended to Debtor after the filing of
any such petition. The Secured Obligations shall also include, without
limitation, any amounts which Debtor may be obligated to pay Secured Party under
this Agreement and all costs and expenses incurred by Secured Party in
connection with the collection and realization upon the Collateral and
enforcement of its rights hereunder, including without limitation, court costs,
litigation expenses and reasonable attorneys' fees if referred to an attorney
for collection.
All terms used in this Agreement which are not expressly defined herein shall
have the meaning, if any, ascribed to them in Article 9 of the Uniform
Commercial Code.
14. TIME OF ESSENCE. Time is of the essence of every provision of this
Agreement.
-9-
<PAGE>
IN WITNESS WHEREOF, each Debtor has executed this Agreement under seal, or has
caused this Agreement to be executed by its duly authorized agent and its seal
to be affixed hereto, as of the date set forth above.
ADDRESS OF 306 DIVIDEND DRIVE
DEBTOR: PEACHTREE CITY, GEORGIA 30269
DEBTOR:
CROWN ANDERSEN INC.,
a Delaware corporation
By: /s/Milton Emmanuelli
----------------------------------
Milton Emmanuelli
Treasurer/Chief Financial Officer
[CORPORATE SEAL]
ANDERSEN 2000 INC.,
a Delaware corporation
By: /s/ Milton Emmanuelli
----------------------------------
Milton Emmanuelli
Secretary
[CORPORATE SEAL]
-10-
<PAGE>
COMMERCIAL REVOLVING NOTE
$5,000,000.00 Atlanta, Georgia June 28, 1996
FOR VALUE RECEIVED, the undersigned CROWN ANDERSEN INC., a Delaware
corporation, and ANDERSEN 2000 INC., a Delaware corporation (hereinafter
collectively referred to as "Maker"), jointly and severally promise to pay to
the order of SOUTHTRUST BANK OF GEORGIA, N.A., a national banking association
(hereinafter referred to as "Payee"; Payee and any subsequent holder of this
Note being referred to collectively as "Holder"), at any office of Payee in
Atlanta, Georgia, or at such other place as Holder may designate, the principal
amount of Five Million and No/100 Dollars ($5,000,000.00), or such lesser amount
as may be outstanding and unpaid hereunder, together with interest on so much
thereof as is outstanding hereunder from time to time at the rate stated below
from the date of this Note (or other interest accrual date shown below) until
maturity, and at the rate of interest which is two percent (2%) per annum in
excess of the rate stated below after maturity, said principal and interest to
be due and payable as stated below.
INTEREST RATE. Interest will accrue on each advance made under this Note
at a rate per annum which is the Base Rate (hereinafter referred to as the
"Floating Rate"). "Base Rate," as used herein, means the rate of interest
designated by Payee from time to time as its Base Rate. Maker understands that
the Base Rate merely serves as a basis for calculating rates of interest and is
not necessarily the lowest rate charged by Payee. The Base Rate on the date of
this Note is eight and one-quarter percent (8.25%) per annum and, consequently,
the rate of interest charged under this Note on any advance made on the date of
this Note is eight and one-quarter percent (8.25%) per annum. Any change in the
rate of interest accruing under this Note resulting from a change in the Base
Rate shall be effective on any day the Base Rate changes.
PAYMENT SCHEDULE. Principal and interest shall be due and payable as
follows: Interest only on the outstanding principal amount shall be due and
payable monthly, in arrears, beginning on August 1, 1996, and continuing on the
first day of each month thereafter until maturity. On February 28, 1997, all
unpaid principal, plus accrued and unpaid interest, shall be due and payable in
full.
INTEREST ACCRUAL. Interest shall accrue daily on the unpaid principal
amount of this Note and will be calculated at the rate stated above on the basis
of a 360-day year and the actual days elapsed by multiplying the unpaid
principal amount by the per annum rate stated above, multiplying the product
thereof by the actual number of days elapsed, and dividing the product so
obtained by 360.
REBORROWINGS. Until the earlier of maturity of this Note, or the
occurrence of any event giving Holder the right to accelerate the maturity of
this Note as provided below, or written or oral notice to Maker of Holder's
election to terminate the line of credit (which notice Holder may give at its
discretion), Maker may borrow hereunder, repay the principal amount in whole or
in part upon the terms and conditions set forth herein, and reborrow hereunder,
so long as the aggregate unpaid principal amount of such advances does not
exceed the principal amount of this Note at any time. To the extent permitted
by law, any accrued interest not paid when due as set forth above may at
Holder's discretion be paid by Holder providing an advance hereunder in the
amount of such unpaid interest, or if the outstanding principal balance under
this Note would not permit such advance, the unpaid interest shall be added to
the principal balance due hereunder. Any such advance or principal amount shall
accrue interest at the rate provided for herein.
LOAN FEE. A loan fee in the amount of $12,500.00 has been paid by Maker
to Payee on the date of this Note. The loan fee is earned when paid and is not
subject to refund except to the extent required by law.
SECURITY. As security for the full payment and performance of this Note,
Maker hereby assigns, conveys, and grants a security interest to Holder in all
property in which Maker has an interest which is in or comes into the
possession, control or custody of Holder, all property in which Maker has
heretofore granted or hereafter grants to Holder a security interest to secure
any obligation, and all property of Maker in which Holder has acquired or
hereafter otherwise acquires a lien, encumbrance or other right (including, but
not limited to, balances, credits, deposits, accounts and monies). Maker hereby
agrees that Holder may, at any time and without notice, apply any balances,
credits, deposits, accounts, monies or other indebtedness now or hereafter owing
by Holder to Maker in satisfaction of any indebtedness evidenced by this Note
whether or not due.
FINANCIAL STATEMENTS. Maker agrees, for so long as there is any amount
outstanding under this Note or Maker is entitled to request advances hereunder,
to provide Holder financial statements and other information of or concerning
Maker and any other Obligor (as hereinafter defined), in such detail, of such
quality (i.e., audited, reviewed, unaudited or otherwise), and with such
frequency and timeliness as Holder may reasonably request from time to time.
All financial statements required by Holder as set forth above shall be prepared
in accordance with generally accepted accounting principles (except for the
absence of footnotes with respect to monthly and quarterly financial statements)
and shall fairly present the financial condition and results of operations of
the Obligor specified as of the end of and for the period covered thereby.
USE OF PROCEEDS. Maker represents and agrees that the proceeds of the loan
evidenced by this Note shall be used solely for business purposes and shall not
be used for any personal, family, household, consumer or other purpose.
<PAGE>
LATE CHARGE. If any payment of the principal amount outstanding under this
Note is late ten (10) days or more, in addition to interest after maturity as
provided above, Maker agrees to pay a late charge equal to one-half of one
percent (1/2%) of the amount of the payment which is late, subject to a minimum
late charge of $5.00 and a maximum late charge of $250.00 for any one payment as
compensation for administrative and other costs associated with the late payment
as set forth below.
MAXIMUM RATE OF INTEREST. If, at any time, the rate or amount of interest,
late charges, attorneys' fees or any other charge payable under this Note should
exceed the maximum rate or amount permitted by applicable law, then for such
time as such rate or amount would be excessive, its application shall be
suspended and there shall be charged instead the maximum rate or amount
permitted under such law, and any excess interest or other charge paid by Maker
or collected by Holder shall be refunded to Maker or credited against the
principal amount of this Note, at the election of Holder or as required by
applicable law. Maker agrees that the late charge provided in this Note is a
reasonable estimate of probable additional unanticipated internal costs to
Holder of reporting and accounting for the late payment, that such costs are
difficult or impossible to estimate accurately, and that the agreement to pay a
late charge is a reasonable liquidated damages provision.
DEFAULT. The following shall constitute events of default under this Note:
a failure of Maker (Maker and each other person primarily or secondarily liable
to Holder for the indebtedness evidenced by this Note hereinafter collectively
referred to as "Obligors") to make any payment of principal or interest or any
other amount under this Note when due or failure of Maker to perform or observe
any promise or agreement contained in this Note; the death of (if an
individual), death of a general partner (if a partnership), or dissolution of
(if a partnership or corporation), insolvency of, general assignment for the
benefit of creditors by, any Obligor; the commencement of a voluntary proceeding
under any law relating to bankruptcy, insolvency, reorganization, arrangement,
composition or readjustment of debt, dissolution, liquidation or debtor relief
law or statute of any jurisdiction, whether now or hereafter in effect,
including without limitation the filing of a petition under any chapter of the
Federal Bankruptcy Code, as amended, by or against, or acquiescence in writing
to same by, or failure to timely and diligently controvert any such involuntary
proceeding by, any Obligor; the filing of a proceeding for the appointment of a
receiver, custodian, trustee, liquidator or similar official for Obligor or
Obligor's property or consenting to the appointment of same; the failure of an
involuntary petition for relief under the federal bankruptcy code to be
dismissed within thirty (30) days after the commencement thereof or in which an
order for relief is entered; the making by any Obligor of a conveyance
fraudulent as to creditors under any state or federal law; entry of any judgment
against, or issuance of a levy or writ of execution, attachment or garnishment
against any of the property of, any Obligor; the inability of any Obligor to pay
debts as they become due or admit in writing to such effect; the transfer by any
Obligor of all or substantially all of his, her or its assets outside the
ordinary course of business, or the waste, loss or dissipation of a substantial
part of such person's assets; if any Obligor is a partnership, the withdrawal or
removal of any general partner of such partnership; if any Obligor is a
corporation, the transfer, directly or indirectly (including through any voting
trust, irrevocable proxy, or the like), of the ownership or power to vote more
than thirty percent (30%) of the voting stock of such corporation; the
suspension of the operation of any Obligor's present business; the occurrence of
any default or event authorizing acceleration as provided under any promissory
note or other evidence of debt, loan agreement, security agreement, pledge
agreement, assignment, mortgage, deed to secure debt, deed of trust, lease
agreement or other agreement or contract between any Obligor and Holder or any
third party; any statement, representation or warranty of any Obligor made
orally or in writing in any document evidencing, securing or otherwise relating
to the indebtedness evidenced by this Note or in any other writing or statement
at any time furnished or made by any Obligor to Holder is false or misleading in
a material respect as of the date furnished or made; revocation or termination
of any guaranty executed in favor of Holder guaranteeing the indebtedness
evidenced by this Note; the financial responsibility of any Obligor becomes
impaired at any time in the sole opinion of Holder; or, the determination by
Holder that it otherwise deems itself to be insecure.
REMEDIES. If this Note is payable on demand, all of the principal amount
outstanding hereunder and all accrued but unpaid interest thereon shall be due
and payable in full upon demand by Holder, whether or not any event of default
described below has occurred and whether or not Holder reasonably deems itself
to be insecure. If any event of default under this Note should occur, all
unpaid amounts of any or all of the principal amount outstanding hereunder and
all accrued but unpaid interest thereon shall, at the option of Holder and
without notice or demand, become immediately due and payable and Holder shall
have and be entitled to exercise, from time to time, all the rights and remedies
available to it as provided elsewhere in this Note, in any other agreement or
contract between Maker and Holder and under applicable law. All of Holder's
rights and remedies shall be cumulative, and any failure of Holder to exercise
any such right or remedy shall not be construed as a waiver of the right to
exercise the same or any other right or remedy at any time and from time to time
thereafter.
WAIVER. With respect to the obligations of Maker under this Note, to the
extent permitted by applicable law, Maker waives the following: (1) demand,
presentment, protest, notice of dishonor, suit against any party and all other
requirements necessary to charge or hold Maker liable on this Note; (2) all
statutory provisions and requirements for the benefit of Maker (including notice
requirements), now or hereafter in force (except to the extent provided for in
any other contract or agreement between Maker and Holder); and (3) the right to
interpose any set-off or counterclaim of any nature or description in any
litigation in which Holder and any Maker shall be adverse parties.
NOTICES. Any and all notices, elections, demands, requests and responses
thereto permitted or required to be given under this Note shall be in writing,
signed by or on behalf of the party giving the same, and shall be deemed to have
been properly given and shall be effective upon being personally delivered, or
three (3) days after being deposited in the United States mail, postage prepaid,
certified with return receipt requested, to Maker if mailed to the address set
forth above Maker's name at the end of this Note and to Holder at the address
set forth in the beginning of this Note or at such other address within the
<PAGE>
continental United States for either party as such party may designate by notice
to the other given in accordance with the provisions of this paragraph;
provided, however, that the time period in which a response to any such notice,
election, demand or request must be given shall commence on the date of receipt
thereof; and provided further that no notice of change of address shall be
effective until the date of receipt thereof. Personal delivery to a party or to
any officer, partner, agent or employee of such party at said address shall
constitute receipt. Rejection or other refusal to accept or inability to deliver
because of a changed address of which no notice has been received shall also
constitute receipt.
EXPENSES AND COLLECTION COSTS. Maker agrees to pay all filing fees and
taxes in connection with this Note and all costs of collecting or securing or
attempting to collect or secure any of the indebtedness evidenced by this Note,
including, without limitation, court costs, litigation expenses and reasonable
attorneys' fees, and all accrued but unpaid interest thereon, if this Note is
referred to an attorney for collection. If attorneys' fees in such amount would
be prohibited by applicable law, then Maker agrees to pay reasonable attorneys'
fees not to exceed the maximum amount allowed by law.
PARTICIPATION OF NOTE. Maker understands that Holder may enter into
participation agreements with participating institutions whereby Holder will
sell undivided interest in this Note to such other institutions. Maker agrees
that Holder may furnish information regarding Maker, including financial
information, to such institutions from time to time and also to prospective
participating institutions in order that such institutions may make an informed
decision whether to purchase a participation in this Note. Maker hereby grants
to each such participating institution, to the extent of its participation in
this Note, the right to set off deposit accounts maintained by Maker, or any of
them, with such institution, against unpaid amounts owed under this Note. Upon
written request from Holder, Maker agrees to make each payment under this Note
directly to each such participating institution in proportion to the
participant's interest in this Note as set forth in such request from Holder.
MISCELLANEOUS. No delay by Holder in enforcing its rights hereunder shall
prejudice Holder's rights to enforce this Note. No waiver by Holder shall be
effective unless made in writing by a duly authorized officer or agent of
Holder, and no waiver by Holder of any right or remedy shall constitute a waiver
of any other or future right or remedy. This Note shall inure to the benefit of
Holder, its successors and assigns, and to any person to whom Holder may grant
an interest in any of the indebtedness evidenced hereby, and shall be binding
upon Maker, and his, her, its, or their respective heirs, executors,
administrators, successors and assigns. Maker, if more than one, includes each
person executing this Note, who are jointly and severally liable for all
obligations of Maker under this Note, and each Maker has subscribed its name
hereto without condition that anyone else should sign or become bound hereon and
without any other condition whatever being made. Holder may release any Obligor
or renew or extend the maturity hereof without affecting any obligations of any
other Obligor to repay the principal amount outstanding hereunder and all
accrued but unpaid interest. THIS NOTE SHALL BE GOVERNED, CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF GEORGIA,
WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
CONSENT TO JURISDICTION. MAKER HEREBY CONSENTS TO THE JURISDICTION OF ANY
STATE OR FEDERAL COURT LOCATED IN THE STATE OF GEORGIA, AND, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, WAIVES ANY OBJECTION BASED ON VENUE OR FORUM NON
CONVENIENS WITH RESPECT TO ANY ACTION INSTITUTED IN ANY SUCH COURT AND AGREES
THAT PROCESS IN ANY SUCH ACTION WILL BE SUFFICIENT IF SERVED ON MAKER BY
CERTIFIED MAIL, RETURN RECEIPT REQUESTED OR IN ANY MANNER PROVIDED BY LAW.
NOTWITHSTANDING THE FOREGOING, HOLDER SHALL HAVE THE RIGHT TO BRING ANY ACTION
OR PROCEEDING AGAINST MAKER OR MAKER'S PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION HOLDER DEEMS NECESSARY OR APPROPRIATE IN ORDER TO ENFORCE THE
OBLIGATIONS OF MAKER UNDER THIS NOTE.
HEADINGS. The headings of the paragraphs set forth in this Note are for
convenience of reference only, and are not to be considered a part hereof and
shall not limit or otherwise affect any of the terms hereof.
TIME OF ESSENCE. Time is of the essence of the payment and performance of
this Note.
IN WITNESS WHEREOF, Maker has executed this Note under seal, or has caused
this Note to be executed by its duly authorized agent and its seal to be affixed
hereto, as of the date first above written.
ADDRESS OF 306 DIVIDEND DRIVE
MAKER: PEACHTREE CITY, GEORGIA 30269
MAKER:
CROWN ANDERSEN INC.,
a Delaware corporation
By: /s/Milton Emmanuelli
_______________________________
Milton Emmanuelli
Treasurer/Chief Financial Officer
[CORPORATE SEAL]
<PAGE>
ANDERSEN 2000 INC.,
a Delaware corporation
By: /s/Milton Emmanuelli
____________________________
Milton Emmanuelli
Secretary
[CORPORATE SEAL]
<PAGE>
COMMERCIAL PROMISSORY NOTE
$1,000,000.00
Atlanta, Georgia
June 28, 1996
FOR VALUE RECEIVED, the undersigned CROWN ANDERSEN INC., a Delaware
corporation, and ANDERSEN 2000 INC., a Delaware corporation (hereinafter
collectively referred to as "Maker"), jointly and severally promise to pay to
the order of SOUTHTRUST BANK OF GEORGIA, N.A., a national banking association
(hereinafter referred to as "Payee"; Payee and any subsequent holder of this
Note being referred to collectively as "Holder"), at any office of Payee in
Atlanta, Georgia, or at such other place as Holder may designate, the principal
amount of One Million and No/100 Dollars ($1,000,000.00), or such lesser amount
as may be outstanding and unpaid hereunder, together with interest on so much
thereof as is outstanding hereunder from time to time at the rate stated below
from the date of this Note (or other interest accrual date shown below) until
maturity, and at the rate of interest which is two percent (2%) per annum in
excess of the rate stated below after maturity, said principal and interest to
be due and payable as stated below.
INTEREST RATE. Interest will accrue on each advance made under this Note at
a rate per annum which is the Base Rate (hereinafter referred to as the
"Floating Rate"). "Base Rate," as used herein, means the rate of interest
designated by Payee from time to time as its Base Rate. Maker understands that
the Base Rate merely serves as a basis for calculating rates of interest and is
not necessarily the lowest rate charged by Payee. The Base Rate on the date of
this Note is eight and one-quarter percent (8.25%) per annum and, consequently,
the rate of interest charged under this Note on any advance made on the date of
this Note is eight and one-quarter percent (8.25%) per annum. Any change in the
rate of interest accruing under this Note resulting from a change in the Base
Rate shall be effective on any day the Base Rate changes.
PAYMENT SCHEDULE. Principal and interest thereon shall be due and payable
as follows:
From and after the date hereof (until maturity or default as hereinafter
provided), interest shall accrue at the Floating Rate and shall be computed on
the daily outstanding principal balance hereunder based on a three hundred sixty
(360) day year. Interest so computed shall accrue for each and every day (365
days per year, 366 days per leap year) on which any indebtedness remains
outstanding hereunder, including the day on which funds are initially advanced
regardless of the time of day such advance is made, and including the day on
which funds are repaid unless repayment is credited prior to 2:00 p.m., the
close of Payee's business day. Commencing on August 1, 1996 and continuing on
the first (1st) day of each month thereafter through and including February 1,
1999, accrued and unpaid interest at the Floating Rate, together with principal
in thirty-one (31) equal consecutive monthly installments of Eight Thousand
Three Hundred Thirty-Three and 33/100 Dollars ($8,333.33) each, shall be due and
payable. On February 28, 1999, the entire outstanding principal balance hereof,
together with all accrued by unpaid interest thereon, shall be due and payable
in full.
PREPAYMENT. Maker may prepay the outstanding principal amount of this Note
in whole or in part at any time without the prior written consent of Holder and
without penalty, premium or unearned interest.
LOAN FEE. A loan fee in the amount of $2,500.00 has been paid by Maker to
Payee on the date of this Note. The loan fee is earned when paid and is not
subject to refund except to the extent required by law.
SECURITY. As security for the full payment and performance of this Note,
Maker hereby assigns, conveys, and grants a security interest to Holder in all
property in which Maker has an interest which is in or comes into the
possession, control or custody of Holder, all property in which Maker has
heretofore granted or hereafter grants to Holder a security interest to secure
any obligation, and all property of Maker in which Holder has acquired or
hereafter otherwise acquires a lien, encumbrance or other right (including, but
not limited to, balances, credits, deposits, accounts and monies). Maker hereby
agrees that Holder may, at any time and without notice, apply any balances,
credits, deposits, accounts, monies or other indebtedness now or hereafter owing
by Holder to Maker in satisfaction of any indebtedness evidenced by this Note,
whether or not due.
FINANCIAL STATEMENTS. Maker agrees, for so long as there is any amount
outstanding under this Note, to provide Holder financial statements and other
information of or concerning Maker and any other Obligor (as hereinafter
defined), in such detail, of such quality (i.e., audited, reviewed, unaudited or
otherwise), and with such frequency and timeliness as Holder may reasonably
request from time to time. All financial statements required by Holder as set
forth above shall be prepared in accordance with generally accepted accounting
principles (except for the absence of footnotes with respect to monthly and
quarterly financial statements) and shall fairly present the financial position
and results of operation of the Obligor specified as of and for the period
specified.
USE OF PROCEEDS. Maker represents and agrees that the proceeds of the loan
evidenced by this Note shall be used solely for business purposes and shall not
be used for any personal, family, household, consumer or other purpose.
<PAGE>
LATE CHARGE. If any payment of principal or interest is late ten (10) days
or more, in addition to interest after maturity as provided above, Obligor
agrees to pay a late charge equal to one-half of one percent (1/2%) of the
amount of the payment which is late, subject to a minimum late charge of $5.00
and a maximum late charge of $250.00 for any one payment, as compensation for
administrative and other costs associated with the late payment as set forth
below.
MAXIMUM RATE OF INTEREST. If, at any time, the rate or amount of interest,
late charges, attorneys' fees or any other charge payable under this Note should
exceed the maximum rate or amount permitted by applicable law, then for such
time as such rate or amount would be excessive, its application shall be
suspended and there shall be charged instead the maximum rate or amount
permitted under such law, and any excess interest or other charge paid by
Obligor or collected by Holder shall be refunded to Obligor or credited against
the principal amount of this Note, at the election of Holder or as required by
applicable law. Obligor agrees that the late charge provided in this Note is a
reasonable estimate of probable additional unanticipated internal costs to
Holder of reporting and accounting for the late payment, that such costs are
difficult or impossible to estimate accurately, and that the agreement to pay a
late charge is a reasonable liquidated damages provision.
DEFAULT. The following shall constitute events of default under this Note:
a failure of Maker (Maker and each other person primarily or secondarily liable
to Holder for the indebtedness evidenced by this Note hereinafter collectively
referred to as "Obligors") to make any payment of principal or interest or any
other amount under this Note when due or failure of Maker to perform or observe
any promise or agreement contained in this Note; the death of (if an
individual), death of a general partner (if a partnership), or dissolution of
(if a partnership or corporation), insolvency of, general assignment for the
benefit of creditors by, any Obligor; the commencement of a voluntary proceeding
under any law relating to bankruptcy, insolvency, reorganization, arrangement,
composition or readjustment of debt, dissolution, liquidation or debtor relief
law or statute of any jurisdiction, whether now or hereafter in effect,
including without limitation the filing of a petition under any chapter of the
federal bankruptcy code by or against, or acquiescence in writing to same by, or
failure to timely and diligently controvert any such involuntary proceeding by,
any Obligor; the filing of a proceeding for the appointment of a receiver,
custodian, trustee, liquidator or similar official for Obligor or Obligor's
property or consenting to the appointment of same; the failure of an involuntary
petition for relief under the Federal Bankruptcy Code, as amended, to be
dismissed within thirty (30) days after the commencement thereof or in which an
order for relief is entered; the making by any Obligor of a conveyance
fraudulent as to creditors under any state or federal law; entry of any judgment
against, or issuance of a levy or writ of execution, attachment or garnishment
against any of the property of, any Obligor; the inability of any Obligor to pay
debts as they become due or admit in writing to such effect; the transfer by any
Obligor of all or substantially all of his, her or its assets outside the
ordinary course of business, or the waste, loss or dissipation of a substantial
part of such person's assets; if any Obligor is a partnership, the withdrawal or
removal of any general partner of such partnership; if any Obligor is a
corporation, the transfer, directly or indirectly (including through any voting
trust, irrevocable proxy, or the like), of the ownership or power to vote more
than thirty percent (30%) of the voting stock of such corporation; the
suspension of the operation of any Obligor's present business; the occurrence of
any default or event authorizing acceleration as provided under any promissory
note or other evidence of debt, loan agreement, security agreement, pledge
agreement, assignment, mortgage, deed to secure debt, deed of trust, lease
agreement or other agreement or contract between any Obligor and Holder or any
third party; any statement, representation or warranty of any Obligor made
orally or in writing in any document evidencing, securing or otherwise relating
to the indebtedness evidenced by this Note or in any other writing or statement
at any time furnished or made by any Obligor to Holder is false or misleading in
a material respect as of the date furnished or made; revocation or termination
of any guaranty executed in favor of Holder guaranteeing the indebtedness
evidenced by this Note; the financial responsibility of any Obligor becomes
impaired at any time in the sole opinion of Holder; or, the determination by
Holder that it otherwise deems itself to be insecure.
REMEDIES. If this Note is payable on demand, all of the principal amount
outstanding hereunder and all accrued but unpaid interest thereon shall be due
and payable in full upon demand by Holder, whether or not any event of default
has occurred and whether or not Holder reasonably deems itself to be insecure.
If any event of default under this Note should occur, all unpaid amounts of any
or all of the principal amount outstanding hereunder and all accrued but unpaid
interest thereon shall, at the option of Holder and without notice or demand,
become immediately due and payable and Holder shall have and be entitled to
exercise, from time to time, all the rights and remedies available to it as
provided elsewhere in this Note, in any other agreement or contract between
Maker and Holder and under applicable law. All of Holder's rights and remedies
shall be cumulative, and any failure of Holder to exercise any such right or
remedy shall not be construed as a waiver of the right to exercise the same or
any other right or remedy at any time and from time to time thereafter.
WAIVER. With respect to the obligations of Maker under this Note, to the
extent permitted by applicable law, Maker waives the following: (1) demand,
presentment, protest, notice of dishonor, suit against any party and all other
requirements necessary to charge or hold Maker liable on this Note; (2) all
statutory provisions and requirements for the benefit of Maker (including notice
requirements), now or hereafter in force (except to the extent provided for in
any other contract or agreement between Maker and Holder); and (3) the right to
interpose any set-off or counterclaim of any nature or description in any
litigation in which Holder and Maker shall be adverse parties.
NOTICES. Any and all notices, elections, demands, requests and responses
thereto permitted or required to be given under this Note shall be in writing,
signed by or on behalf of the party giving the same, and shall be deemed to have
been properly given and shall be effective upon being personally delivered, or
three (3) days after being deposited in the United States mail, postage prepaid,
certified with return receipt requested, to Maker if mailed to the address set
forth above Maker's name at the end of this Note and to Holder at the address
set forth in the beginning of this Note or at such other address within the
continental United States for either party as such party may designate by notice
to the other given in accordance with the provisions of this paragraph;
<PAGE>
provided, however, that the time period in which a response to any such notice,
election, demand or request must be given shall commence on the date of receipt
thereof; and provided further that no notice of change of address shall be
effective until the date of receipt thereof. Personal delivery to a party or to
any officer, partner, agent or employee of such party at said address shall
constitute receipt. Rejection or other refusal to accept or inability to deliver
because of a changed address of which no notice has been received shall also
constitute receipt.
EXPENSES AND COLLECTION COSTS. Maker agrees to pay all filing fees and
taxes in connection with this Note and all costs of collecting or securing or
attempting to collect or secure any of the indebtedness evidenced by this Note,
Obligations, including, without limitation, court costs, litigation expenses and
reasonable attorneys' fees, and all accrued but unpaid interest thereon, if this
Note is referred to an attorney for collection. If attorneys' fees in such
amount would be prohibited by applicable law, then Maker agrees to pay
reasonable attorneys' fees not to exceed the maximum amount allowed by law.
PARTICIPATION OF NOTE. Maker understands that Holder may enter into
participation agreements with participating institutions whereby Holder will
sell undivided interest in this Note to such other institutions. Maker agrees
that Holder may furnish information regarding Maker, including financial
information, to such institutions from time to time and also to prospective
participating institutions in order that such institutions may make an informed
decision whether to purchase a participation in this Note. Maker hereby grants
to each such participating institution, to the extent of its participation in
this Note, the right to set off deposit accounts maintained by Maker, or any of
them, with such institution, against unpaid amounts owed under this Note. Upon
written request from Holder, Maker agrees to make each payment under this Note
directly to each such participating institution in proportion to the
participant's interest in this Note as set forth in such request from Holder.
MISCELLANEOUS. No delay by Holder in enforcing its rights hereunder shall
prejudice Holder's rights to enforce this Note. No waiver by Holder shall be
effective unless made in writing by a duly authorized officer or agent of
Holder, and no waiver by Holder of any right or remedy shall constitute a waiver
of any other or future right or remedy. This Note shall inure to the benefit of
Holder, its successors and assigns, and to any person to whom Holder may grant
an interest in any of the indebtedness evidenced hereby, and shall be binding
upon Maker, and his, her, its, or their respective heirs, executors,
administrators, successors and assigns. Maker, if more than one, includes each
person executing this Note, who are jointly and severally liable for all
obligations of Maker under this Note and each Maker has subscribed its name
hereto without condition that anyone else should sign or become bound hereon and
without any other condition whatever being made. Holder may release any Obligor
or renew or extend the maturity hereof without affecting any obligations of any
other Obligor to repay the principal amount outstanding hereunder and all
accrued but unpaid interest. THIS NOTE SHALL BE GOVERNED, CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF GEORGIA,
WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
CONSENT TO JURISDICTION. OBLIGOR HEREBY CONSENTS TO THE JURISDICTION OF
ANY STATE OR FEDERAL COURT LOCATED IN THE STATE OF GEORGIA, AND, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, WAIVES ANY OBJECTION BASED ON VENUE OR FORUM NON
CONVENIENS WITH RESPECT TO ANY ACTION INSTITUTED IN ANY SUCH COURT AND AGREES
THAT PROCESS IN ANY SUCH ACTION WILL BE SUFFICIENT IF SERVED ON OBLIGOR BY
CERTIFIED MAIL, RETURN RECEIPT REQUESTED OR IN ANY MANNER PROVIDED BY LAW.
NOTWITHSTANDING THE FOREGOING, HOLDER SHALL HAVE THE RIGHT TO BRING ANY ACTION
OR PROCEEDING AGAINST OBLIGOR OR OBLIGOR'S PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION HOLDER DEEMS NECESSARY OR APPROPRIATE IN ORDER TO ENFORCE THE
OBLIGATIONS OF OBLIGOR UNDER THIS NOTE.
HEADINGS. The headings of the paragraphs set forth in this Note are for
convenience of reference only, and are not to be considered a part hereof and
shall not limit or otherwise affect any of the terms hereof.
TIME OF ESSENCE. Time is of the essence of the payment and performance of
this Note.
IN WITNESS WHEREOF, Maker has executed this Note under seal, or has caused
this Note to be executed by its duly authorized agent and its seal to be affixed
hereto, as of the date first above written.
ADDRESS OF 306 DIVIDEND DRIVE
MAKER: PEACHTREE CITY, GEORGIA 30269
MAKER:
CROWN ANDERSEN INC.,
a Delaware corporation
By: /s/Milton Emmanuelli
________________________________
Milton Emmanuelli
Treasurer/Chief Financial Officer
[CORPORATE SEAL]
<PAGE>
ANDERSEN 2000 INC.,
a Delaware corporation
By: /s/Milton Emmanuelli
________________________________
Milton Emmanuelli
Secretary
[CORPORATE SEAL]
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 4,578,223
<SECURITIES> 0
<RECEIVABLES> 2,225,402
<ALLOWANCES> 136,029
<INVENTORY> 2,712,154
<CURRENT-ASSETS> 15,249,938
<PP&E> 1,778,867
<DEPRECIATION> 0
<TOTAL-ASSETS> 22,359,458
<CURRENT-LIABILITIES> 6,992,130
<BONDS> 1,690,779
0
0
<COMMON> 156,164
<OTHER-SE> 13,329,415
<TOTAL-LIABILITY-AND-EQUITY> 22,359,458
<SALES> 17,122,566
<TOTAL-REVENUES> 17,154,613
<CGS> 13,312,565
<TOTAL-COSTS> 16,055,120
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (86,082)
<INCOME-PRETAX> 1,099,493
<INCOME-TAX> 405,900
<INCOME-CONTINUING> 1,099,493
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 693,593
<EPS-PRIMARY> 0.44
<EPS-DILUTED> 0.44
</TABLE>
