SECURITY AND EXCHANGE COMMISSION
Washingtion, D. C. 20549
FORM 8-K
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 25, 1996
ADVANCED ENVIRONMENTAL SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
New York 0-19013 84-1059226
(State or other Commission I.R.S. Employer
jurisdiction of incorporation) File Number Identification No.)
730 17th Street, Ste. 712
Denver, Colorado 80202
(Address of principal executive offices) (Zip Code)
(303) 571-5564
(Registrant's telephone number, including area code)
<PAGE>
ADVANCED ENVIRONMENTAL SYSTEMS, INC.
ITEM 5. OTHER EVENTS
The Company has filed claims for federal and state tax refunds in the
approximate amount of $458,000 and $13,700, respectively. On November 25,
1996, the Company obtained a loan from Carylyn K. Bell in the amount of
$425,000 secured by the claims for the federal tax refunds. The loan, which
bears interest at the prime rate from time to time by Key Bank Denver plus
2%, is due and payable on March 25, 1997; provided, however, that the
Company is required to apply the proceeds of the federal tax refunds to
reduce its loan obligations. The Company also agreed to pay Ms. Bell on the
maturity of the loan a fee equal to 2.5% of the original principal amount of
the loan and an additional 2% fee on any portion or all of the loan not
repaid by January 25, 1997. Ms. Bell is a significant shareholder of the
Company and the wife of J. Daniel Bell, the President and a director of the
Company and a director of the Company's wholly-owned operating subsidiary,
International Catalyst, Inc.("INCAT"). In addition, Ms. Bell is a significant
shareholder of Industrial Services Technologies, Inc. ("IST"), the majority
shareholder of the Company, of which Mr. Bell also is a director. Mark M.
King, the brother of Ms. Bell, also is a director of IST and of INCAT. IST
provided an unsecured Guaranty of the loan. The Company believes that the
terms of the loan from Ms. Bell are commercially reasonable and at least as
favorable as could have been obtained in an arm's length transaction.
The Company's Quarterly Reported on Form 10-Q for the Period ended
September 30, 1996, described, among other things, the notification which
INCAT had received from a financial institution that its line of credit
would be terminated effective November 30, 1996. On November 27, 1996,
INCAT and the financial institution entered into a Forbearance Agreement,
pursuant to which the financial institution agreed to extend the line of
credit to December 31, 1996 and to refrain from exercising any of its rights
or remedies under its loan agreement with INCAT due to its failure at
September 30, 1996 to meet certain financial loan covenants. The financial
institution also agreed to continue to fund against accounts receivable from
BASF in excess of the concentration limits in the loan agreement. The
Forbearance Agreement adjusted the interest rate payable by INCAT to the
index rate charged from time to time by the financial institution plus 2%
which, at November 27, 1996 is 10.25% per annum.
INCAT has received and is reviewing a preliminary non-binding proposal from
another financial institution for an Accounts Receivable Revolving Purchase
Facility ("Revolver") under which the financial institution would purchase
Accounts Receivables in aggregate outstanding amount of up to $2,500,000.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
(a) Loan Agreement dated November 25, 1996 by and between
Advanced Environmental Systems, Inc. and Carylyn K. Bell.
(b) Promissory Note dated November 25, 1996 in the amount
of $425,000 from Advanced Environmental Systems, Inc.
to Carylyn K. Bell.
(c) Security Agreement dated November 25, 1996 by and between
Advanced Environmental Systems, Inc. and Carylyn K. Bell.
(d) Guaranty dated November 25, 1996 by Industrial Services
Technologies, Inc. and for the benefit of Carylyn K. Bell.
<PAGE>
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.
ADVANCED ENVIRONMENTAL SYSTEMS, INC.
(Registrant)
Date: December 11, 1996 By: /s/ Alfred O. Brehmer
Alfred O. Brehmer, Secretary-Treasurer
[ARTICLE] 5
[LEGEND]
This schedule contains the Loan Agreement dated November 25, 1996 by and
between Advanced Environmental Systems, Inc. and Carylyn K. Bell.
LOAN AGREEMENT
THIS LOAN AGREEMENT (the "Agreement") is made by and between
Advanced Environmental Systems, Inc., and New York corporation ("Borrower"),
and Carylyn K. Bell, an individual Colorado resident ("Lender"). Borrower and
Lender are sometimes collectively referred to herein as the "Parties."
RECITALS
A. Borrower is a holding company which owns 100% of the issued
outstanding shares of stock of Advanced Energy Corporation, a Delaware
corporation ("AEC"). AEC is the owner of 100% of the issued outstanding
shares of stock of International Catalyst, Inc., a Nevada corporation
("INCAT"). Neither Borrower nor AEC has any operations or any assets other
than the shares of stock which it holds of AEC and INCAT, respectively.
B. Borrower files consolidated tax returns with AEC and INCAT and
has filed claims for the refunds listed on Exhibit A attached hereto and made
a part hereof (the "Tax Refunds"). Borrower anticipates that the Tax Refunds
will be received within approximately 45 to 90 days of the filing of the
claims for the Tax Refunds. Due to the urgent needs for cash by INCAT,
Borrower desires to obtain a loan secured by the Tax Refunds, the net
proceeds of which will be made available by Borrower directly or indirectly
to INCAT.
C. Lender is a principal shareholder of Borrower and the wife of
Borrower's President who also serves as one of Borrower's Directors, and,
therefore, is familiar with the condition and prospects of Borrower, AEC and
INCAT, and desires to assist them by making a loan secured by the Tax Refunds.
D. The Parties now desire to enter into this Agreement pursuant to
which Borrower shall borrow from Lender and Lender shall lend to Borrower
$425,000 secured by the Tax Refunds on the terms and conditions hereinafter
set forth:
NOW, THEREFORE, in consideration of the Recitals and the agreements hereunder
set forth, the Parties agree as follows:
AGREEMENT
1. Amount of Loan, Interest Rate. Upon the Closing as hereinafter
defined, Borrower shall borrow from Lender and Lender shall loan to Borrower
$425,000 (the "Loan"), which Loan shall be evidenced by the Promissory Note
(the "Note") of Borrower payable to Lender. The form of Note to be delivered
to Lender by Borrower shall be generally in the form attached hereto and made
a part hereof as Exhibit B. The outstanding balance of the Loan from time to
time shall bear interest at the Prime Rate charged from time to time by Key
Bank Denver plus 2% (the "Interest Rate"). The principal and interest
payable pursuant to the Loan shall be due and payable in full on March 25,
1997; provided, however, that Borrower shall prepay to Lender within three
business days of the receipt thereof, all amounts received by Borrower in
respect of the Tax Refunds. Lender shall apply any amounts so received first
to the principal of the Loan, then to the Fees as hereafter defined and
interest then due and payable.
2. Guaranty by IST. The majority shareholder of the Borrower,
Industrial Services Technologies, Inc., a Colorado corporation ("IST"), shall
guarantee payment of the Loan. The guaranty shall be generally in the form
of guaranty (the "Guaranty") attached hereto and made a part hereof as
Exhibit C.
3. Fees. Borrowers shall pay to Lender on or before the earlier of
(i) March 25, 1995, or (ii) the date on which the principal amount of the
Loan is prepaid in full, the following fees (the "Fees"): (a) a fee equal to
2.5% of the original principal amount of the Loan; and (b) in the event or
any portion of the Loan shall have not been repaid by January 25, 1997, an
additional fee equal to 2% of the then outstanding principal balance of the
Loan.
4. Collateral. At the Closing, to secure all obligations (the
"Obligations") of Borrower to Lender pursuant to this Agreement and all
documents executed in connection therewith (collectively, the "Loan
Documents"), Borrower shall grant Lender a first priority security interest
in and to the claims for the Tax Refunds, the proceeds thereof and all books
and records of Borrower relating thereto (the "Collateral"), which grant
shall be evidenced by the execution and delivery of a security agreement in
the form of the security agreement (the "Security Agreement") attached hereto
and part hereof as Exhibit D. Borrower shall, at its sole cost and expense,
file Uniform Commercial Code financing statements (the "Financing
Statements") in favor of Lender with the Offices of the Secretaries of States
of New York and Colorado.
5. Representations of Borrower. Borrower represents to Lender as
follows:
a. Borrower is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of New York.
b. The execution, delivery and performance by Borrower of
this Agreement and all documents and instruments to be delivered pursuant
hereto have been duly authorized by all necessary corporate action and do not
contravene the Borrower's Certificate of Incorporation or Bylaws.
c. The Tax Refunds are owned by Borrower free and clear of
liens in favor of any other persons or entities and Borrower has full
corporate power and authority to grant a first priority security interest in
the Tax Refunds to Lender.
d. This Agreement constitutes the legal, valid and binding
obligation of Borrower enforceable against it in accordance with its terms,
subject to the effect of applicable bankruptcy, insolvency, reorganization
or similar laws affecting creditors' rights generally and principles of
equity.
6. Representations of Lender. Lender represents and warrants to
Borrower as follows:
a. Lender, as a principal shareholder of Borrower, has a
direct financial interest in Borrower and, therefore, desires to make the
Loan.
b. Lender acknowledges that she has had a full opportunity to
inspect, review and otherwise familiarize herself completely with respect to
the financial condition and prospects of Borrower and IST andto familiarize
herself completely with respect to the Tax Refunds.
c. All representations and warranties in the form of
Subscription Agreement attached hereto and made part hereof as Exhibit E are
true and correct as the date hereof and shall be true and correct as of the
date of the Closing and are hereby incorporated in this Loan Agreement by
reference.
7. Closing. The Closing shall take place at the offices of IST,
Suite 2300, 370 Seventeenth Street, Denver, Colorado 80202 on November 25,
1996 at 10 A.M. or at such other time and place as is mutually agreeable to
the Parties. At the Closing, the following documents shall be delivered by
Borrower to Lender:
a. Secretary-Treasurer's Certificate of Borrower regarding
Directors' resolutions of Borrower approving the Loan.
b. The Note.
c. The Security Agreement.
d. Officer's Certificate of Guarantor regarding Directors'
resolutions of Guarantor approving the Guaranty.
e. The Guaranty.
f. The Financing Statements with evidence of the filing of
the Financing Statements or the delivery of the Financing Statements to a
third party service such as CT Corporation System with instructions for
filing.
At the Closing, Lender shall deliver to Borrower the following:
a. The Subscription Agreement.
b. The $425,000 principal amount of the Loan to be delivered by wire
transfer to the account of AES or such third party as AES directs in
accordance with the following wire transfer instructions, which delivery of
funds, Borrower acknowledges as being made on its behalf and for which
Borrower hereby acknowledges receipt notwithstanding the delivery of the
funds at its direction to a third party:
8. Notices. Any notice required or permitted to be given under this
Agreement will be given in writing to the Parties at their respective address
as set forth below:
a. Advanced Environmental Systems, Inc.
730 17th Street, Ste. 712
Denver, Colorado 80202
Attention: Alfred O. Brehmer, Secretary-Treasurer
b. Carylyn K. Bell
2750 East Cedar Avenue
Denver, Colorado 80209
Notices may be sent by personal delivery or by certified mail, return receipt
requested, postage prepaid. Notices delivered by personal delivery shall be
effective when delivered if delivered on a business day, otherwise on the
first business day following delivery and if sent by certified mail, on the
earlier of actual receipt or the third business day following the day sent.
Either Party may change its or her address by notice given to the other in
accordance with this section.
9. Entire Agreement. This Agreement and the other Loan Documents
constitute the entire agreement and understanding between the Parties with
respect to the subject matter and supersedes all prior understandings,
proposals and communications on the subject matter.
10. Governing Law. This Agreement will be governed and construed in
accordance with the laws of the State of Colorado. Each Party irrevocably
consents to the personal jurisdiction and placement of venue in the state and
federal courts located within the City and County of Denver for the purposes
of enforcing this Agreement, and agrees that such courts will exclusively
constitute the permitted forums for resolving disputes under or in connection
with this Agreement.
11. Severability. If any provision of this Agreement or portion of any
such provision is held invalid or unenforceable as written by a court of
competent jurisdiction, such provisions or portion thereof affected by such
holding will be modified, to the extent possible, by reducing its scope or
duration so that it is enforceable to the maximum extent permissible. If
said modification is not possible, the affected provision or portion thereof
will be stricken, and all remaining provision of this Agreement will continue
in full force and effect.
12. Miscellaneous.
a. No Party will assign this Agreement or any portion thereof
to any third party without the prior written consent of the other, which
either Party may withhold in its sole discretion.
b. The warranties, representations and covenants of the
Parties contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the Closing.
c. Except as otherwise provided herein, the terms and
conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the Parties. Nothing in this
Agreement, express or implied, is intended to confer upon any party other
than the Parties hereto or their respective successors and assigns any
rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
d. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
e. Irrespective of whether the Closing is effected, each Party
shall be responsible for its respective costs and expenses incurred with
respect to the negotiation, execution, delivery and performance of this
Agreement. Each Party represents to the other that it or she has relied its
or her own advisors and legal counsel in connection with the negotiation,
execution, delivery and performance of this Agreement.
DATED THIS to be effective as of the 25th day of November, 1996.
ADVANCED ENVIRONMENTAL SYSTEMS, INC.,
a New York corporation
By: /s/ Carylyn K. Bell
CARYLYN K. BELL, individually Authorized Officer
EXHIBIT A
Advanced Environmental Systems, Inc.
Federal Form 1139 Corporation Application for Tentative
Refund $272,822.00
Advanced Environmental Systems, Inc.
Federal Income tax returns for the year ended
March 31, 1996 185,993.00
Total $458,815.00
[ARTICLE] 5
[LEGEND]
This schedule contains the Promissory Note dated November 25, 1996 in the
amount of $425,000 from Advanced Environmental Systems, Inc. to Carylyn
K. Bell.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT"), OR UNDER THE PROVISIONS OF ANY APPLICABLE STATE
SECURITIES LAWS, BUT HAS BEEN ACQUIRED BY THE REGISTERED HOLDER HEREOF FOR
PURPOSES OF INVESTMENT IN RELIANCE ON EXEMPTIONS UNDER THE 1933 ACT, AND
UNDER APPLICABLE STATE SECURITIES LAWS. NEITHER THIS NOTE NOR ANY INTEREST
THEREIN MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR ASSIGNED EXCEPT IN A
TRANSACTION WHICH IS EXEMPT UNDER PROVISIONS OF THE 1933 ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT; AND IN THE CASE OF AN EXEMPTION, ONLY IF THE COMPANY HAS RECEIVED
AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH TRANSACTION
DOES NOT REQUIRE REGISTRATION OF THIS NOTE.
PROMISSORY NOTE
U.S.$425,000 NOVEMBER 25, 1996
FOR VALUE RECEIVED, Advanced Environmental Systems, Inc.,
a New York corporation ("Maker"), having an address at 730 17th Street,
Suite 712, Denver, Colorado 80202, promises to pay to Carylyn K. Bell (the
"Payee") the principal sum of $425,000, together with (a) simple interest on
the principal balance of this Promissory Note (the "Note") outstanding from
time to time at the rate per annum equal to the Prime Rate charged from time
to time by Key Bank Denver plus 2% and (b) a fee equal to 2.5% of the
original principal amount and an additional fee of 2% of the principal
amount, if any, outstanding at January 25, 1997 (collectively, the "Fees").
The principal of this Note, the Fees and interest on the unpaid principal
balance of this Note outstanding from time to time shall be due and payable
on March 25, 1997; provided, however, that Maker shall pay to Payee within
three business days of its receipt thereof, any portion or all of the Tax
Refunds received by it to be applied first to the principal and then to the
Fees and interest then due and payable hereunder.
This Note is made pursuant to the provisions of a Loan Agreement dated of
even date herewith by and between Maker and Payee, as it may be amended from
time to time (the "Loan Agreement"), and is secured by the Collateral and a
Guaranty. Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Loan Agreement. This Note is not negotiable.
Except as expressly provided to the contrary in the Loan Agreement, Maker
waives presentment, demand, dishonor, protest, notice of protest, diligence
and any other notice or action otherwise required to be given or taken under
the law in connection with the delivery, acceptance, performance,default,
enforcement or collection of this Note, and expressly agrees that this Note,
or any payment hereunder, may be extended, modified or subordinated (by
forbearance or otherwise) from time to time, without in any way affecting
the liability of Maker.
The occurrence of any of the following events shall constitute an "Event of
Default" under this Note:
(a) The failure by Maker to pay, within five days of the due date
therefor, any of the principal, the Fees or accrued interest due under this
Note; or
(b) If Maker (i) makes a general assignment for the benefit of creditors,
(ii) is adjudicated a bankrupt,(iii) files a voluntary petition in
bankruptcy, (iv)takes advantage, as against its creditors, of any bankruptcy
law, (v) has a petition or proceeding filed against it under any provision of
any bankruptcy or insolvency law, which petition or proceeding is not
dismissed within sixty days after the date of the commencement thereof, (vi)
has a receiver, liquidator, trustee, custodian, conservator, sequestrator or
other such person appointed by any court to take charge of its affairs or
assets or business and such appointment is not vacated or discharged within
sixty days thereof, (vii) any liquidation, dissolution or winding up of the
business of Maker, (viii) any sale (whether voluntary or involuntary, or
whether in one transaction or a series of transactions) of all or
substantially all of the assets of Maker, or (ix) takes any action in
furtherance of any of the foregoing (collectively, an "Insolvency Proceeding").
(c) If an event of default which is not cured within any applicable cure
period occurs pursuant to the Security Agreement.
If any Event of Default shall occur:
(a) The entire unpaid principal balance of the Note, together with any
Fees and accrued interest thereon, shall be immediately due and payable (the
"Acceleration");
(b) Payee shall have the right to commence collection proceedings against
Maker and/or proceed under the Collateral; and
(c) From and after Acceleration, interest shall accrue at a default rate
of interest equal to 18% per annum.
If any payment under this Note falls due on a Saturday, Sunday or public
holiday, the payment shall be payable on the next business day.
Maker may prepay all or part of the outstanding principal of this Note at
any time or times after the date hereof without penalty or premium of any
kind.
Any notice or other communication given hereunder shall be given as provided
in the Loan Agreement.
This Note and its validity, construction and performance shall be governed in
all respects by the laws of the State of Colorado.
This Note may not be amended or changed orally, but only by an agreement in
writing executed by the parties hereto.
Maker shall pay all reasonable costs and fees, including attorneys' fees, of
Payee in enforcing this Note.
IN WITNESS WHEREOF, Maker has caused this Note to be duly executed by an
authorized officer as of the date written above.
ADVANCED ENVIRONMENTAL SYSTEMS, INC.
By: /s/ Gary L. Schmitt
Authorized Officer
ACCEPTED AND AGREED TO:
/s/Carylyn K. Bell
Carylyn K. Bell
[ARTICLE] 5
[LEGEND]
This schedule contains the Security Agreement dated November 25, 1996 by and
between Advanced Environmental Systems, Inc. and Carylyn K. Bell.
SECURITY AGREEMENT
THIS SECURITY AGREEMENT made as of this 25th day of November, 1996
by and between Advanced Environmental Systems, Inc. ("Borrower") and
Carylyn K. Bell ("Lender").
RECITALS
A. Pursuant to that certain Loan Agreement of even date herewith (the
"Loan Agreement") executed by and between Borrower and Lender, Lender agreed
to make a Loan (this and all other capitalized terms not otherwise defined in
this Security Agreement and defined in the Loan Agreement shall have the
meanings ascribed to them in the Loan Agreement) to Borrower of $425,000,
subject to the terms and conditions set forth in the Loan Agreement.
B. One of the conditions precedent to the consummation of the
transactions contemplated by the Loan Agreement is the execution by Borrower
of this Security Agreement.
NOW, THEREFORE, in consideration of the Recitals and for other good and
valuable consideration, the receipt and sufficiency of which hereby is
acknowledged, Borrower and Lender agree as follows:
1. Collateral. As used herein, "Collateral" shall mean the claims for
the Tax Refunds and all proceeds thereof and all books and records of
Borrower relating thereto, whether now owned or hereafter acquired by
Borrower.
2. Grant of Security Interest. To secure payment and performance of
the Obligations, Borrower hereby pledges and grants to Lender a security
interest in the Collateral, which pledge and security interest Borrower
acknowledges are coupled with an interest.
3. Representations and Warranties. Borrower hereby represents and
warrants to Lender that:
a. Borrower is the legal and beneficial owner of such Collateral;
b. This Security Agreement creates a valid first priority
security interest in the Collateral in favor of Lender;
c. None of the Collateral is subject to any security interest of
any kind whatsoever, except for the security interest in such Collateral
granted to Lender hereby; and
d. Until the termination of this Agreement,Borrower:
(1) will not create or permit to exist any security
interest uponor with respect to such Collateral, except for the security
interest thereon granted to Lender by this Security Agreement; and
(2) will not sell, transfer, convey, assign, or otherwise
divest its interests in such Collateral, or any part thereof, to any other
person.
4. Default and Remedies.
4.1 The breach by Borrower of any of its representations and
warranties set forth in Section 3 of this Agreement or the occurrence and
continuation of an Event of Default together with an Acceleration under the
Note shall constitute an Event of Default hereunder.
4.2 If an Event of Default shall occur and be continuing
hereunder, Lender shall have all rights of a secured party under the Uniform
Commercial Code as in effect in Colorado from time to time.
Following an Event of Default, subject to applicable law, Borrower hereby
irrevocably constitutes and appoints Lender its attorney-in-fact with full
power of substitution and acknowledges that the constitution and appointment
of such attorney-in-fact is coupled with an interest and is irrevocable.
5. Termination of Security Agreement. This Security Agreement shall
terminate upon the payment and performance in full of the Obligations.
6. Miscellaneous.
6.1 Subject to the terms of the Loan Agreement, Borrower further
agrees that if an Event of Default hereunder has occurred and is continuing,
Lender may exercise its rights and remedies hereunder. The obligations of
Borrower under this Security Agreement shall be absolute and unconditional
and shall remain in full force and effect without regard to, and shall not be
released or discharged or in any way affected, by:
6.1.1 Any amendment or modification of or supplement to any
of the Loan Documents;
6.1.2 The granting of any postponements or extensions for
time of payment or other indulgences to Borrower or any other person, or the
settlement or adjustment of any claim or the release or discharge or
substitution of any person primarily or secondarily liable with respect to
any of the Obligations;
6.1.3 The institution of any bankruptcy, insolvency, debt
agreement, readjustment, composition, receivership or liquidation proceedings
by or against Borrower or Guarantor; or
6.1.4 Any other circumstance which otherwise might
constitute a defense to, or a discharge of Borrower with respect to the
Obligations.
6.2 Each and every right, remedy and power granted to Lender
hereunder shall be cumulative and in addition to any other right, remedy or
power specifically granted herein or now or hereafter existing in equity, at
law, by virtue of statute or otherwise and may be exercised by Lender, from
time to time, concurrently or independently and as often and in such order as
Lender may deem expedient. Any failure or delay on the part of Lender in
exercising any such right, remedy or power, or abandonment or discontinuance
of steps to enforce the same, shall not operate as a waiver thereof or affect
Lender's right thereafter to exercise the same, and any single or partial
exercise of any such right, remedy or power shall not preclude any other
right, remedy or power, and no such failure, delay, abandonment or single or
partial exercise of Lender's rights hereunder shall be deemed to establish a
custom or course of dealing or performance between the parties hereto.
6.3 Any modification or waiver of any provision of this Security
Agreement, or any consent to any departure by Borrower therefrom, shall not
be effective in any event unless the same is in writing and signed by Lender,
and then such modification, waiver or consent shall be effective only in the
specific instance and for the specific purpose given. Any notice to or
demand on Borrower in any event not specifically required of Lender hereunder
shall not entitle Borrower to any other or further notice or demand in the
same, similar or other circumstances unless specifically required hereunder.
6.4 Borrower agrees that at any time, and from time to time, after
the execution and delivery of this Security Agreement, upon the request of
Lender and at its own expense, it promptly will execute and deliver such
further documents and do such further acts and things as Lender may
reasonably request in order to effect fully the purposes of this Security
Agreement and to subject to the security interest created hereby any property
intended by the provisions hereof to be covered hereby.
6.5 Borrower agrees that it will warrant, preserve, maintain and
defend, at the expense of Borrower, the right, title and interest of Lender
in and to the Collateral and all right, title and interest represented
thereby against all claims, charges and demands of all persons, other than
such claims, charges and demands which arise out of acts of Lender or are
permitted pursuant to the Loan Agreement.
6.6 All notices and communications under this Loan Agreement shall
be in writing and shall be delivered in accordance with the Loan Agreement.
6.7 In the event that any provision of this Security Agreement is
deemed to be invalid by reason of the operation of any law, or by reason of
the interpretation placed thereon by an court or other governmental body,
this Security Agreement shall be construed as not containing such provision
and the invalidity of such provision shall not affect the validity of any
other provision hereof, and any and all other provisions hereof which
otherwise are lawful and valid shall remain in full force and effect.
6.8 This Security Agreement shall inure to the benefit of and shall
be binding upon the successors and assigns of the Parties.
6.9 The validity, construction and performance of this Security
Agreement shall be governed in all respects by the laws of the State of
Colorado.
6.10 Time for the performance of Borrower's obligations under this
Security Agreement is of the essence of this Security Agreement.
6.11 This Security Agreement may be signed, including by facsimile
signatures, in counterparts which, together, shall constitute one and the
same original.
IN WITNESS WHEREOF, Borrower and Lender have caused this Security
Agreement to be executed as of the date first written above.
BORROWER:
ADVANCED ENVIRONMENTAL SYSTEMS, INC.
By: /s/ Gary L. Schmitt
Authorized Officer
LENDER:
/s/ Carylyn K. Bell
Carylyn K. Bell, individually
[ARTICLE] 5
[LEGEND]
This schedule contains the Guaranty dated November 25, 1996 by Industrial
Services Technologies, Inc. and for the benefit of Carylyn K. Bell.
GUARANTY
THIS GUARANTY is made effective as of the 25th day of November, 1996
by Industrial Services Technologies, Inc., a Colorado corporation (the
"Guarantor"), having its principal place of business and mailing address at
370 17th Street, Suite 2300, Denver, Colorado 80202 to and for the benefit
of Carylyn K. Bell, a Colorado resident ("Lender") having an address at 2750
East Cedar Avenue, Denver, Colorado 80209.
RECITALS
A. Lender has contemporaneously herewith entered into a Loan Agreement
(the "Loan Agreement") with Advanced Environmental Systems, Inc., a New York
corporation ("Borrower"), pursuant to which Lender has agreed, among other
things, to make a secured loan to Borrower in the original principal amount
of $425,000 (the "Loan") on the terms and conditions set forth in the Loan
Agreement.
B. It is a condition to the consummation of the transactions
contemplated in the Loan Agreement that Guarantor execute and deliver this
Guaranty to Lender.
C. Guarantor, as a principal stockholder of Borrower, will be directly
benefitted by the Loan and desires to execute and deliver this Guaranty to
Lender.
NOW, THEREFORE, in consideration of the Recitals and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Guarantor hereby covenants and agrees as follows:
1. Guarantor hereby unconditionally and irrevocably guarantees the
payment in full of any and all obligations of Borrower to Lender now or
hereafter arising pursuant to the Loan Agreement (collectively, the
"Obligations"). Guarantor hereby acknowledges that the Guaranty is a
guarantee of payment and not of collection and that Lender shall not be
required, as a condition precedent to making a demand upon the Guarantor or
to bringing an action against the Guarantor under this Guaranty, to make a
demand upon, or institute any action or proceeding, at law or in equity
against Borrower or anyone else, or to exhaust its remedies against Borrower
or anyone else, or against any collateral security. All remedies afforded to
Lender by reason of this Guaranty are separate and cumulative remedies and
Guarantor agrees and acknowledges that none of such remedies, whether
exercised by Lender or not, shall be deemed to be exclusive of any other
remedies available to Lender and shall not limit or prejudice any other
remedy which Lender may have against any party, including the Guarantor.
2. Guarantor shall remain liable on this Guaranty notwithstanding any
change or changes in the terms, covenants or agreements of the Loan
Agreement, or any amendment thereto, hereafter made or granted, or any delay
on the part of Lender in exercising her rights hereunder or thereunder, it
being the intention hereof that the Guarantor shall remain liable until the
full amount of the Obligations secured hereunder and any sums which may due
thereon, shall have been fully paid, notwithstanding any act or omission
which might otherwise operate as a legal or equitable discharge of the
Guarantor.
3. Guarantor hereby waives:
a. Notice of acceptance of this Guaranty;
b. Presentment and demand for payment of the obligations or any
portion thereof;
c. Protest and notice of dishonor or default to the Guarantor or
to any other person or party with respect to the Obligations or any portion
thereof;
d. All other notices to which the Guarantor might otherwise be
entitled;
e. Any demand for payment or performance of this Guaranty; and
f. All guaranty and suretyship defenses or other defenses in the
nature thereof.
4. This Guaranty shall inure to the benefit of, and be enforceable by
Lender and her successors or assigns, and shall be binding upon and
enforceable against the Guarantor and its successors or assigns.
5. Guarantor agrees that in the event this Guaranty is placed in the
hands of an attorney for enforcement, Guarantor will reimburse Lender for all
reasonable expenses incurred, including reasonable attorneys' fees, in the
enforcement hereof.
6. This Guaranty cannot be modified or amended except in writing duly
executed by Guarantor and Lender and shall be construed according to Colorado
law.
7. If any provision of this Guaranty is deemed to be invalid by reason
of the operation of any law or by reason by the interpretation placed thereon
by any court, this Guaranty shall be construed as not containing such
provision and the invalidity of such provision shall not affect the validity
of any other provision hereof and any and all provisions hereof which
otherwise are lawful and valid shall remain in full force and effect.
IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be executed
as of the date and year first above written.
INDUSTRIAL SERVICES TECHNOLOGIES, INC., a Colorado corporation
By: /s/ Gary L. Schmitt
Gary L. Schmitt, President