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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 2, 1996
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ERD Waste Corp.
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Delaware 33-76200 11-3121813
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(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
356 Veterans Memorial Hwy., Commack, N.Y. 11725
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(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code: (516) 543-0606
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On April 2, 1996, ERD Waste Corp. ("ERD") closed the transactions
contemplated by the loan agreement (the "Loan Agreement"), dated March 29, 1996,
with Chemical Bank ("Chemical"). Pursuant to the Loan Agreement, Chemical will
provide to ERD a secured revolving credit facility up to $7.5 million (the
"Revolving Facility"). Loans under the Revolving Facility (the "Revolving
Loans") may be incurred (i) to partially finance the acquisition of common stock
and preferred stock of Environmental Services of America, Inc.; (ii) for working
capital purposes; and (iii) for advances to ERD Waste Corp. (Indiana), Absorbent
Manufacturing & Technology, ENSA Acquisition Corp., ERD Waste Corp. of Illinois,
Environmental Waste Incineration, Inc., ERD Management Corp., C&J Enterprises,
Inc. and Long Beach Recycling and Recovery Corp., each of whom are guarantors of
the loans made pursuant to the Loan Agreement (each, individually, a "Guarantor"
and, collectively, the "Guarantors").
The Loan Agreement provides, among other things, for the payment by ERD
of a commitment fee, payable monthly, computed at the rate of one quarter of one
percent (1/4%) per annum (computed on the basis of the actual number of days
elapsed over 360 days) on the average daily unused amount of Chemical's $7.5
million commitment.
The Loan Agreement provides that the Revolving Loans in respect of the
Revolving Facility shall be, at ERD's request, either (i) Alternate Base Rate
Loans (as defined) which bear interest calculated at the Alternate Base Rate
plus one half of one percent (1/2%) or (ii) Eurodollar Loans (as defined) which
bear interest calculated at the Adjusted LIBOR Rate plus three and one half
percent (3 1/2%) (or a combination thereof).
"Alternate Base Rate" for any day is defined in the Loan Agreement as
the higher of (a) the prime rate of Chemical in effect at its primary office
(computed on the basis of the actual number of days elapsed over a year of 360
days) in effect on such day, (b) the Base CD Rate (as defined) in effect on such
day plus one percent (1%) (computed on the basis of the actual number of days
elapsed over a year of 360 days), or (c) the Federal Funds Effective Rate (as
defined) in effect on such day plus one half of one percent (1/2%) (computed on
the bags of the actual number of days elapsed over a year of 360 days).
"Adjusted LIBOR Rate" for any day is defined in the Loan Agreement as
an interest rate per annum equal to the product of (a) the LIBOR Rate (as
defined) and (b) Statutory Reserves (as defined).
Subject to the terms of the Loan Agreement, the Revolving Facility will
be available until April 1, 1998 (the "Conversion Date"), at which time all
outstanding principal and accrued interest under the Revolving Facility shall be
due and payable.
The Loan Agreement provides for the grant of a term loan (the "Term
Loan"), on the Conversion Date (provided no event of default exists), to ERD in
an amount equal to the lesser of Chemical's Commitment (as defined) or the
aggregate principal amount of Revolving Loans then outstanding. The bank will
make the Term Loan by crediting the
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amount thereof towards the repayment of the amounts outstanding under the
Revolving Facility. The proceeds of the Term Loan are to be used by ERD
exclusively to satisfy obligations to Chemical under Revolving Loans existing at
the Conversion Date. The principal balance of the Term Loan will be payable in
36 monthly installments. The Term Loan shall at the option of ERD, be an
Alternate Base Rate Loan or a Eurodollar Loan (or a combination thereof). If the
Term Loan is an Alternate Base Rate Loan, it will bear interest at the Alternate
Base Rate plus one percent (1%). If the Term Loan is a Eurodollar Loan, it will
bear interest at the Adjusted LIBOR Rate plus three and one half percent (3
1/2%).
The Loan Agreement provides that ERD shall have the right on or after
the Conversion Date, subject to the terms of the Loan Agreement, to (i) continue
any Eurodollar Loan or portion thereof into a subsequent Interest Period (as
defined) or (ii) convert an Alternate Base Rate Loan into a Eurodollar Loan.
The Loan Agreement provides for the granting by ERD and each of the
Guarantors listed above of a first priority security interest in all present and
future accounts, contract rights, chattel paper, general intangibles,
instruments and documents of ERD and such Guarantors then owned or thereafter
acquired, and in all machinery and equipment acquired by ERD and such Guarantors
after the date of the Loan Agreement.
The obligations of Chemical to make each Revolving Loan under the
Revolving Facility are conditioned on certain conditions, including the
following: (i) delivery of a certificate from ERD and each of the Guarantors
stating the representations and warranties contained in the Loan Agreement are
true and correct; (ii) no default or material adverse change in ERD or any
Guarantor has occurred; and (iii) the purpose for which the proceeds of such
Revolving Loan is being made.
The Loan Agreement contains traditional and customary representations,
warranties and events of default.
ERD has agreed to indemnify Chemical against any loss or expense which
Chemical may sustain or incur as a consequence of any default in payment or
prepayment of the principal amount of any Loan (as defined) or any part thereof
or interest accrued thereon, as and when due and payable on the occurrence of
any Event of Default (as defined).
Subject to the terms of the Loan Agreement, ERD has the right at any
time and from time to time to prepay any Alternate Base Rate Loan, in whole or
in part, without premium or penalty, on the same day that telephonic notice is
given to Chemical advising it of prepayment. In addition, ERD has the right to
prepay any Eurodollar Loan, in whole or in part, on three Business Days' prior
irrevocable notice, provided, however, that such prepayment may only be made on
an Interest Determination Date (as defined).
It is anticipated that the indebtedness incurred by ERD under the
Revolving Facility and Term Loan will be repaid from funds generated internally
by ERD and its subsidiaries and from other sources. No final decisions have been
made concerning the method ERD will employ to repay such indebtedness. Such
decisions will be based on ERD's review from
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time to time of the advisability of particular actions, as well as on prevailing
interest rates and financial and other economic conditions.
The foregoing summary of the Loan Agreement is qualified in its
entirety by reference to the text of the Loan Agreement, which is filed as an
exhibit hereto.
ITEM 7. EXHIBITS
EXHIBIT 1 Loan Agreement
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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 hereunto duly authorized.
April 15, 1996 ERD WASTE CORP.
By: /s/ Joseph Wisneski
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Joseph Wisneski
President
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LOAN AGREEMENT
Dated as of March 29, 1996
ERD WASTE CORP., a Delaware corporation, having its principal place of
business at 356 Veterans Memorial Highway, Commack, New York 11725 (the
"Borrower"), ERD WASTE CORP. (INDIANA), an Indiana corporation, having its
principal place of business at 102 W. Columbus Drive, East Chicago, Indiana
46312, ABSORBENT MANUFACTURING & TECHNOLOGY, INC., an Illinois corporation,
having its principal place of business at 6840 West 66th Place, Bedford Park,
Illinois 60638, ENSA ACQUISITION CORP., a Delaware corporation, having its
principal place of business at 937 East Hazelwood Avenue, Rahway, New Jersey
07065, ENVIRONMENTAL WASTE INCINERATION, INC., a Delaware corporation, having
its principal place of business at 70 Water Street, Long Beach, New York 11561,
ERD WASTE CORP. OF ILLINOIS, an Illinois corporation, having its principal place
of business at 465 East 170th Street, South Holland, Illinois 60473, ERD
MANAGEMENT CORP., a New York corporation, having its principal place of business
at 356 Veterans Memorial Highway, Commack, New York 11725, C&J ENTERPRISES,
INC., a Delaware corporation, having its principal place of business at 356
Veterans Memorial Highway, Commack, New York 11725 and LONG BEACH RECYCLING AND
RECOVERY CORP., a New York corporation having its principal place of business at
70 Water Street, Long Beach, New York 11561 (individually, a "Guarantor" and
collectively, the "Guarantors") and CHEMICAL BANK, a New York banking
corporation, having an office at 395 North Service Road, Suite 302, Melville,
New York 11747 (the "Bank") hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"ADJUSTED LIBOR RATE" means, with respect to any Eurodollar Loan for
any Interest Period, an interest rate per annum (rounded, if not already a whole
multiple of 1/100th of one (.01%) percent to the nearest 1/100th of one (.01%)
percent) equal to the product of (a) the LIBOR Rate and (b) Statutory Reserves.
"AFFILIATE" means, as to any Person (i) a Person which directly or
indirectly controls, or is controlled by, or is under common control with, such
Person; (ii) a Person which directly or indirectly beneficially owns or holds
five (5%) percent or more of any class of voting stock of, or five (5%) percent
or more of the equity interest in, such Person; or (iii) a Person five (5%)
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percent or more of the voting stock of which, or five (5%) or more of the equity
interest of which, is directly or indirectly beneficially owned or held by such
Person. The term control means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract, or
otherwise.
"AGREEMENT" means this Loan Agreement, as amended, supplemented or
modified from time to time.
"ALTERNATE BASE RATE" means, for any day, the higher of (a) the Prime
Rate (computed on the basis of the actual number of days elapsed over a year of
360 days) in effect on such day, (b) the Base CD Rate in effect on such day plus
one (1%) percent (computed on the basis of the actual number of days elapsed
over a year of 360 days), or (c) the Federal Funds Effective Rate in effect on
such day plus one-half of one (1/2%) percent (computed on the basis of the
actual number of days elapsed over a year of 360 days). For purposes of this
Agreement any change in the Alternate Base Rate due to a change in the Prime
Rate, the Three-Month Secondary CD Rate or the Federal Funds Effective Rate
shall be effective on the effective date of such change in the Prime Rate, the
Three-Month Secondary CD Rate or the Federal Funds Effective Rate, respectively.
If for any reason the Bank shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Base CD
Rate or the Federal Funds Effective Rate, or both, for any reason, including,
without limitation, the inability or failure of the Bank to obtain sufficient
bids or publications in accordance with the terms thereof, the Alternate Base
Rate shall be determined without regard to clause (b) or (c), or both, of the
first sentence of this definition, as appropriate, until the circumstances
giving rise to such inability no longer exist.
"ALTERNATE BASE RATE LOAN" means a Loan bearing interest at the
Alternate Base Rate in accordance with the provisions of Article II hereof.
"ASSESSMENT RATE" means the annual assessment rate (net of refunds and
rounded upwards, if necessary, to the next one-sixteenth (1/16) of one (1%)
percent) estimated by the Bank (in good faith, but in no event in excess of
statutory or regulatory maximums) to be payable by the Bank to the Federal
Deposit Insurance Corporation (or any successor) for insurance by such
corporation (or such successor) of time deposits made in Dollars at the Bank's
domestic offices during the current calendar year.
"BASE CD RATE" means the sum of (a) the product of (i) the Three-Month
Secondary CD Rate and (ii) Statutory Reserves and (b) the Assessment Rate.
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"BOARD OF GOVERNORS" means the Board of Governors of the
Federal Reserve System of the United States of America.
"BUSINESS DAY" means a day of the year on which banks are not required
or authorized to close in New York City, provided that, if the relevant day
relates to a Eurodollar Loan, a Eurodollar Interest Period, or notice with
respect to a Eurodollar Loan, the term "Business Day" shall mean a day on which
dealings in dollar deposits are also carried on in the London Interbank Market
and banks are open for business in London.
"CAPITAL LEASE" means a lease which has been or should be, in
accordance with GAAP, capitalized on the books of the lessee.
"CHANGE OF CONTROL" means, with respect to any Person, any event or
occurrence, the result of which is (i) 20% or more of the voting securities of
such Person are transferred in a single transaction or a series of related
transactions or (ii) 20% or more of such Person's board of directors or similar
governing body is changed in a single transaction or series of related
transactions.
"COLLATERAL" means all property which is subject or is to be subject to
the Lien granted by the Security Agreements.
"COMMITMENT" means the Bank's obligation to make Revolving Credit Loans
to the Borrower pursuant to the terms and conditions of this Agreement and to
convert the outstanding balance of such Revolving Credit Loans to the Converted
Term Loan on the Conversion Date.
"CONSOLIDATED CAPITAL EXPENDITURES" means, as to any Person, the
aggregate amount of any expenditures (including purchase money Liens) by such
Person and its Consolidated Subsidiaries for assets (including fixed assets
acquired under Capital Leases) which it is contemplated will be used or usable
in fiscal years subsequent to the year of acquisition.
"CONSOLIDATED CURRENT ASSETS" means, as to any Person, at any date, the
aggregate amount of all assets of such Person and its Consolidated Subsidiaries
which would be properly classified as current assets at such date, but excluding
deferred assets, all computed and consolidated in accordance with GAAP.
"CONSOLIDATED CURRENT LIABILITIES" means, as to any Person, the
aggregate amount of all liabilities of such Person and its Consolidated
Subsidiaries (including tax and other proper accruals) which would be properly
classified as current liabilities, including the outstanding principal amount of
the Revolving Credit Note, all computed and consolidated in accordance with
GAAP.
"CONSOLIDATED DEBT SERVICE RATIO" means, as to any Person, for
any rolling four quarter period, the ratio of (i) Consolidated
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EBITDA less Consolidated Capital Expenditures of such Person for such period to
(ii) the sum of such Person's (1) interest expense (calculated on a consolidated
basis), (2) current portion of long term debt, and (3) with respect to the
Borrower, 20% of the total outstanding Revolving Credit Loans as of the end of
the fiscal quarter for which the Consolidated Debt Service Ratio is being
measured.
"CONSOLIDATED EBITDA" means, with respect to any Person, the sum of
such Person's (calculated on a consolidated basis): (i) net income, (ii)
interest expense, (iii) taxes paid, (iv) depreciation expense and (v)
amortization.
"CONSOLIDATED SUBORDINATED DEBT" means, as to any Person, all of the
Subordinated Debt of such Person and its Consolidated Subsidiaries, computed and
consolidated in accordance with GAAP.
"CONSOLIDATED SUBSIDIARIES" means, as to any Person, those Subsidiaries
of such Person which are consolidated with such Person in the financial
statements delivered pursuant to Section 5.01(b).
"CONSOLIDATED TANGIBLE NET WORTH" means, as to any Person, the excess
of (i) such Person's Consolidated Total Assets, less all intangible assets
properly classified as such in accordance with GAAP, including, but without
limitation, patents, patent rights, trademarks, trade names, franchises,
copyrights, licenses, permits and goodwill, over (ii) such Person's Consolidated
Total Liabilities.
"CONSOLIDATED TOTAL ASSETS" means, as to any Person, the aggregate net
book value of the assets of such Person and its Consolidated Subsidiaries after
all appropriate adjustments in accordance with GAAP (including without
limitation, reserves for doubtful receivables, obsolescence, depreciation and
amortization and excluding the amount of any write-up or revaluation of any
asset), computed and consolidated in accordance with GAAP.
"CONSOLIDATED TOTAL LIABILITIES" means, as to any Person, all of the
liabilities of such Person and its Consolidated Subsidiaries, including all
items which, in accordance with GAAP would be included on the liability side of
the balance sheet (other than capital stock, treasury stock, capital surplus and
retained earnings) computed and consolidated in accordance with GAAP.
"CONSOLIDATED TOTAL UNSUBORDINATED LIABILITIES" means, as to any
Person, the excess of (i) such Person's Consolidated Total Liabilities over (ii)
such Person's Consolidated Subordinated Debt.
"CONVERSION DATE" means the earlier of (i) April 1, 1998, or (ii) the
Optional Conversion Date.
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"CONVERTED TERM LOAN" shall have the meaning assigned in Section 2.04
hereof.
"CONVERTED TERM LOAN MATURITY DATE" means the third (3rd) anniversary
of the Conversion Date.
"CONVERTED TERM LOAN NOTE" means a promissory note of the Borrower
payable to the order of the Bank, in substantially the form of Exhibit B annexed
hereto, evidencing the indebtedness of the Borrower to the Bank resulting from
the Converted Term Loan made by the Bank to the Borrower pursuant to this
Agreement.
"DEBT" means, as to any Person, (i) all indebtedness or liability of
such Person for borrowed money; (ii) indebtedness of such Person for the
deferred purchase price of property or services (including trade obligations);
(iii) obligations of such Person as a lessee under Capital Leases; (iv) current
liabilities of such Person in respect of unfunded vested benefits under any
Plan; (v) obligations of such Person under letters of credit issued for the
account of such Person; (vi) obligations of such Person arising under acceptance
facilities; (vii) all guaranties, endorsements (other than for collection or
deposit in the ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in any other
Person, or otherwise to assure a creditor against loss; (viii) obligations
secured by any Lien on property owned by such Person whether or not the
obligations have been assumed; and (ix) all other liabilities recorded as such,
or which should be recorded as such, on such Person's financial statements in
accordance with GAAP.
"DEFAULT" means any of the events specified in Section 6.01 of this
Agreement, whether or not any requirement for notice or lapse of time or any
other condition has been satisfied.
"DOLLARS" AND THE SIGN "$" mean lawful money of the United
States of America.
"ENSA" means Environmental Services of America, Inc.
"ENSA ACQUISITION" means the acquisition of ENSA by the Borrower
through a tender offer for the common and preferred stock of ENSA and/or a
merger of ENSA Acquisition Corp. ("EAC") into ENSA, pursuant to the draft
Agreement and Plan of Merger among the Borrower, EAC and ENSA dated March, 1996.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, the regulations promulgated thereunder and the
published interpretations thereof as in effect from time to time.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) which together with any other Person would be
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treated, with such Person, as a single employer under Section 4001 of ERISA.
"EURODOLLAR LOAN" means a Loan bearing interest at a rate based on the
Adjusted LIBOR Rate in accordance with the provisions of Article II hereof.
"EVENT OF DEFAULT" means any of the events specified in Section 6.01 of
this Agreement, provided that any requirement for notice or lapse of time or any
other condition has been satisfied.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published for such
day (or, if such day is not a Business Day for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Bank from three (3) federal funds brokers
of recognized standing selected by it.
"GAAP" means Generally Accepted Accounting Principles.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" means those generally
accepted accounting principles and practices which are recognized as such by the
American Institute of Certified Public Accountants acting through the Financial
Accounting Standards Board ("FASB") or through other appropriate boards or
committees thereof and which are consistently applied for all periods so as to
properly reflect the financial condition, operations and cash flows of a Person,
except that any accounting principle or practice required to be changed by the
FASB (or other appropriate board or committee of the FASB) in order to continue
as a generally accepted accounting principle or practice may be so changed. Any
dispute or disagreement between the Borrower and the Bank relating to the
determination of Generally Accepted Accounting Principles shall, in the absence
of manifest error, be conclusively resolved for all purposes hereof by the
written opinion with respect thereto, delivered to the Bank, of the independent
accountants selected by the Borrower and approved by the Bank for the purpose of
auditing the periodic financial statements of the Borrower.
"GUARANTOR" OR "GUARANTORS" means one or more of the Guarantors named
as such in the preamble to this Agreement, and any other Person required to
guarantee the obligations of the Borrower in accordance with Section 5.01(l) of
this Agreement.
"GUARANTY" OR "GUARANTIES" means the guaranty or guaranties executed
and delivered by the Guarantors pursuant to Section 3.01(h) or Section 5.01 (l)
of this Agreement.
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"HAZARDOUS MATERIALS" includes, without limit, any flammable
explosives, radioactive materials, hazardous materials, hazardous wastes,
hazardous or toxic substances, or related materials defined in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended (42
U.S.C. Sections 9601, et seq.), the Hazardous Materials Transportation Act, as
amended (49 U.S.C. Section 1801 et seq.), the Resource Conservation and Recovery
Act, as amended (42 U.S.C. Sections 9601 et. seq.), and in the regulations
adopted and publications promulgated pursuant thereto, or any other federal,
state or local environmental law, ordinance, rule or regulation.
"INTEREST DETERMINATION DATE" means the date on which an Alternate Base
Rate Loan is converted to a Eurodollar Loan and, in the case of a Eurodollar
Loan, the last day of the applicable Interest Period.
"INTEREST PAYMENT DATE" means (i) as to each Eurodollar Loan, the last
Business Day of each month during the applicable Interest Period and the last
day of each Interest Period and (ii) as to each Alternate Base Rate Loan, the
last Business Day of each month.
"INTEREST PERIOD" means as to any Eurodollar Loan, the period
commencing on the date of such Eurodollar Loan and ending on the numerically
corresponding day in the calendar month that is one, three, six, nine or twelve
months thereafter, as the Borrower may elect (or, if there is no numerically
corresponding day, on the last Business Day of such month); provided, however,
(i) with respect to a Revolving Credit Loan, no Interest Period shall end later
than the Conversion Date, (ii) with respect to the Converted Term Loan, no
Interest Period shall end later than the Converted Term Loan Maturity Date,
(iii) if any Interest Period would end on a day which shall not be a Business
Day, such Interest Period shall be, in the case of Eurodollar Loans, extended to
the next succeeding Business Day unless such next succeeding Business Day would
fall in the next calendar month, in which case such Interest Period shall end on
the next preceding Business Day, (iv) no Interest Period in respect of a
Eurodollar Loan representing a portion of the principal required to be paid in
accordance with Section 2.07 may be selected unless the outstanding Alternate
Base Rate Loans and Eurodollar Loans for which the relevant Interest Periods end
on or prior to the date of such payment are in an aggregate amount which will be
sufficient to make such payment, (v) interest shall accrue from and including
the first day of such Interest Period to but excluding the date of payment of
such interest pursuant to Section 2.08, and (vi) no Interest Period of
particular duration with respect to a Eurodollar Loan may be selected by the
Borrower if the Bank determines, in its sole discretion, that Eurodollar Loans
with such maturities are not generally available.
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"INVESTMENT" means any stock, evidence of Debt or other security of any
Person, any loan, advance, contribution of capital, extension of credit or
commitment therefor, including without limitation the guaranty of loans made to
others (except for current trade and customer accounts receivable for services
rendered in the ordinary course of business and payable in accordance with
customary trade terms in the ordinary course of business) and any purchase of
(i) any security of another Person or (ii) any business or undertaking of any
Person or any commitment or option to make any such purchase, or any other
investment.
"LIBOR RATE" means the rate (rounded upwards, if not already a whole
multiple of 1/16th of one (1%) percent, to the next higher of 1/16th of one (1%)
percent) at which dollar deposits approximately equal in principal amount to the
requested Eurodollar Loan and for a maturity equal to the requested Interest
Period are offered in immediately available funds to the London office of the
Bank by leading banks in the London Interbank Market for Eurodollars at
approximately 11:00 a.m., London time, two (2) Business Days prior to the
commencement of such Interest Period.
"LIEN" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), or preference, priority, or other security agreement or preferential
arrangement, charge, or encumbrance of any kind or nature whatsoever, including,
without limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction to evidence any of the
foregoing.
"LOAN" OR LOANS" means the Revolving Credit Loans or the Converted Term
Loan or any or all of the same as the context may require and includes Alternate
Base Rate Loans and Eurodollar Loans, as the context may require.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Guaranties, the
Security Agreements and any other document executed or delivered pursuant to
this Agreement.
"LONG BEACH PROPERTY" means the waste treatment plant and the land on
which it is situated in Long Beach, New York.
"MATERIAL ADVERSE CHANGE" means, as to any Person, (i) a material
adverse change in the financial condition, business, operations, properties or
results of operations of such Person or (ii) any event or occurrence which could
have a material adverse effect on the ability of such Person to perform its
obligations under the Loan Documents.
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"MULTIEMPLOYER PLAN" means a Plan described in Section 4001(a)(3) of
ERISA which covers employees of the Borrower or any ERISA Affiliate.
"NOTE" OR "NOTES" means the Revolving Credit Note or the Converted Term
Loan Note or either or both of the same as the context may require.
"OPTIONAL CONVERSION DATE" shall have the meaning assigned in Section
2.04 hereof.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PERMITTED INVESTMENTS" means, (i) direct obligations of the United
States of America or any governmental agency thereof, or obligations guaranteed
by the United States of America, provided that such obligations mature within
one year from the date of acquisition thereof; (ii) time certificates of deposit
having a maturity of one year or less issued by any commercial bank organized
and existing under the laws of the United States or any state thereof and having
aggregate capital and surplus in excess of $1,000,000,000.00; (iii) money market
mutual funds having assets in excess of $2,500,000,000; (iv) commercial paper
rated not less than P-1 or A-1 or their equivalent by Moody's Investor Services,
Inc. or Standard & Poor's Corporation, respectively; (v) tax exempt securities
rated Prime 2 or better by Moody's Investor Services, Inc. or A-1 or better by
Standard & Poor's Corporation; or (vi) loans, advances or investments between
the Borrower and one or more Guarantors, or a Guarantor and the Borrower or one
or more Guarantors.
"PERSON" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity or a federal, state or local government, or a political
subdivision thereof or any agency of such government or subdivision.
"PLAN" means any employee benefit plan established, maintained, or to
which contributions have been made by the Borrower or any ERISA Affiliate.
"PRIME RATE" means the rate per annum announced by the Bank from time
to time as its prime rate in effect at its principal office on a 360-day basis;
each change in the Prime Rate shall be effective on the date such change is
announced to become effective.
"PROHIBITED TRANSACTION" means any transaction set forth in Section 406
of ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended from
time to time.
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"REGULATION D" means Regulation D of the Board of Governors, as the
same may be amended and in effect from time to time.
"REGULATION G" means Regulation G of the Board of Governors, as the
same may be amended and in effect from time to time.
"REGULATION T" means Regulation T of the Board of Governors, as the
same may be amended and in effect from time to time.
"REGULATION U" means Regulation U of the Board of Governors, as the
same may be amended and in effect from time to time.
"REGULATION X" means Regulation X of the Board of Governors, as the
same may be amended and in effect from time to time.
"REPORTABLE EVENT" means any of the events set forth in
Section 4043 of ERISA.
"REVOLVING CREDIT LOANS" shall have the meaning assigned to such term
in Section 2.01 of this Agreement.
"REVOLVING CREDIT NOTE" means a promissory note of the Borrower payable
to the order of the Bank, in substantially the form of Exhibit A annexed hereto,
evidencing the aggregate indebtedness of the Borrower to the Bank resulting from
Revolving Credit Loans made by the Bank to the Borrower pursuant to this
Agreement.
"SECURITY AGREEMENT" or "SECURITY AGREEMENTS" means the security
agreement or security agreements to be executed and delivered pursuant to
Section 3.01(i) of this Agreement.
"STATUTORY RESERVES" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including, without
limitation, any marginal, special, emergency, or supplemental reserves)
expressed as a decimal established by the Board of Governors or any other
banking authority to which the Bank is subject (i) with respect to the Adjusted
LIBOR Rate for Eurocurrency Liabilities (as defined in Regulation D) or (ii)
with respect to the Base CD Rate, for new negotiable non-personal time deposits
in Dollars of over $100,000.00 with maturities approximating equal to three (3)
months. Such reserve percentages shall include, without limitation, those
imposed under such Regulation D. Eurodollar Loans shall be deemed to constitute
Eurocurrency Liabilities and as such shall be deemed to be subject to such
reserve requirements without benefit of or credit for proration, exceptions or
offsets which may be available from time to time to the Bank under such
Regulation D. Statutory Reserves shall be adjusted automatically on and as of
the effective date of any change in any reserve percentage.
<PAGE>
"SUBORDINATED DEBT" means Debt of any Person, the repayment of which
the obligee and obligor have agreed in writing, on terms which have been
approved by the Bank in advance in writing, shall be subordinate and junior to
the rights of the Bank with respect to Debt owing from such Person to the Bank.
"SUBSIDIARY" means, as to any Person, any corporation, partnership or
joint venture whether now existing or hereafter organized or acquired (i) in the
case of a corporation, of which a majority of the securities having ordinary
voting power for the election of directors (other than securities having such
power only by reason of the happening of a contingency) are at the time owned by
such Person and/or one or more Subsidiaries of such Person or (ii) in the case
of a partnership or joint venture, of which a majority of the partnership or
other ownership interests are at the time owned by such Person and/or one or
more Subsidiaries of such Person.
"THREE-MONTH SECONDARY CD RATE" means, for any day, the secondary
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day shall not be a Business Day, the next preceding
Business Day) through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of the
Board of Governors, be published in Federal Reserve Statistical Release #15(519)
during the week following such day), or, if such rate shall not be so reported
on such day or such next preceding Business Day, the average of the secondary
market quotations for three-month certificates of deposit of major money center
banks in New York City received at approximately 10:00 a.m., New York City time,
on such day (or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Bank from three (3) New York City negotiable certificate of
deposit dealers of recognized standing selected by it.
SECTION 1.02. COMPUTATION OF TIME PERIODS. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to and including".
SECTION 1.03. ACCOUNTING TERMS. Except as otherwise herein specifically
provided, each accounting term used herein shall have the meaning given to it
under GAAP.
<PAGE>
ARTICLE II
AMOUNT AND TERMS OF THE LOANS
SECTION 2.01. THE REVOLVING CREDIT LOANS. The Bank agrees, on the date
of this Agreement, on the terms and conditions of this Agreement and in reliance
upon the representations and warranties set forth in this Agreement, to lend to
the Borrower prior to the Conversion Date such amounts as the Borrower may
request from time to time (individually, a "Revolving Credit Loan" or
collectively, the "Revolving Credit Loans"), which amounts may be borrowed,
repaid and reborrowed, provided, however, that the aggregate amount of such
Revolving Credit Loans outstanding at any one time shall not exceed Seven
Million Five Hundred Thousand ($7,500,000.00) Dollars (the "Commitment"), or
such lesser amount of the Commitment as may be reduced pursuant to Section 2.12
hereof.
Each Revolving Credit Loan shall be an Alternate Base Rate Loan or a
Eurodollar Loan (or a combination thereof) as the Borrower may request subject
to and in accordance with Section 2.02. The Bank may at its option make any
Eurodollar Loan by causing a foreign branch or affiliate to make such Loan,
provided that any exercise of such option shall not affect the obligation of the
Borrower to repay such Loan in accordance with the terms of the Revolving Credit
Note. Subject to the other provisions of this Agreement, Revolving Credit Loans
of more than one type may be outstanding at the same time, provided that not
more than six (6) Eurodollar Loans may be outstanding at one time.
SECTION 2.02. NOTICE OF REVOLVING CREDIT LOANS.
(a) The Borrower shall give the Bank irrevocable written, telex,
telephonic (immediately confirmed in writing) or facsimile notice (i) at least
three (3) Business Days prior to each Revolving Credit Loan comprised in whole
or in part of one or more Eurodollar Loans (subject to availability) and (ii)
prior to 11:00 a.m. on the day of each Revolving Credit Loan consisting solely
of an Alternate Base Rate Loan. Such notice shall specify the date of such
borrowing, the amount thereof and whether such Loan is to be (or what portion or
portions thereof are to be) an Alternate Base Rate Loan or a Eurodollar Loan
and, if such Loan or any portion thereof is to consist of one or more Eurodollar
Loans, the principal amounts thereof and Interest Period or Interest Periods
with respect thereto. If no election as to a type of Loan is specified in such
notice, such Loan (or portion thereof as to which no election is specified)
shall be an Alternate Base Rate Loan. If no election as to the Interest Period
is specified in such notice with respect to any Eurodollar Loan, the Borrower
shall be deemed to have selected an Interest Period of one month's duration and
if a Eurodollar Loan is requested when such Loans are not available, the
Borrower shall be deemed to have requested an Alternate Base Rate Loan.
<PAGE>
(b) The Borrower shall have the right, on such notice to the Bank as is
required pursuant to (a) above, (i) to continue any Eurodollar Loan or a portion
thereof into a subsequent Interest Period (subject to availability) or (ii) to
convert an Alternate Base Rate Loan into a Eurodollar Loan (subject to
availability) subject to the following:
(a) if an Event of Default shall have occurred and be
continuing at the time of any proposed conversion or continuation only Alternate
Base Rate Loans shall be available;
(b) in the case of a continuation or conversion of fewer than
all Loans, the aggregate principal amount of each Eurodollar Loan continued or
into which a Loan is converted shall be in the minimum principal amount of
$500,000.00 and in minimum increased multiples of $100,000.00;
(c) each continuation or conversion shall be effected by the
Bank applying the proceeds of the new Loan to the Loan (or portion thereof)
being continued or converted;
(d) if the new Loan made as a result of a continuation or
conversion shall be a Eurodollar Loan, the first Interest Period with respect
thereto shall commence on the date of continuation or conversion;
(e) each request for a Eurodollar Loan which shall fail to
state an applicable Interest Period shall be deemed to be a request for an
Interest Period of one month and each request for a Eurodollar Loan made when
such Loans are not available shall be deemed to be a request for an Alternate
Base Rate Loan;
(f) no Interest Period in respect of a Eurodollar Loan
representing a portion of the principal required to be paid in accordance with
Section 2.07 may be selected unless the outstanding Alternate Base Rate Loans
and Eurodollar Loans for which the relevant Interest Periods end on or prior to
the date of such payment are in an aggregate amount which will be sufficient to
make such payment; and
(g) in the event that the Borrower shall not give notice to
continue a Eurodollar Loan as provided above, such Loan shall automatically be
converted into an Alternate Base Rate Loan at the expiration of the then current
Interest Period.
SECTION 2.03. REVOLVING CREDIT NOTE. Each Revolving Credit Loan shall
be (i) in the case of each Alternate Base Rate Loan in the minimum principal
amount of $250,000.00 and (ii) in the case of each Eurodollar Loan in the
minimum principal amount of $500,000.00 and in minimum increased multiples of
$100,000.00 (except that, if any such Alternate Base Rate Loan so requested
shall exhaust the remaining available Commitment, such Alternate Base Rate Loan
may
<PAGE>
be in an amount equal to the amount of the remaining available Commitment). Each
Revolving Credit Loan shall be evidenced by the Revolving Credit Note of the
Borrower. The Revolving Credit Note shall be dated the date hereof and be in the
principal amount of Seven Million Five Hundred Thousand ($7,500,000.00) Dollars,
and shall mature on the Conversion Date, at which time the entire outstanding
principal balance and all interest thereon shall be due and payable. The
Revolving Credit Note shall be entitled to the benefits and subject to the
provisions of this Agreement.
At the time of the making of each Revolving Credit Loan and at the time
of each payment of principal thereon, the holder of the Revolving Credit Note is
hereby authorized by the Borrower to make a notation on the schedule annexed to
the Revolving Credit Note of the date and amount, and the type and Interest
Period of the Revolving Credit Loan or payment, as the case may be. Failure to
make a notation with respect to any Revolving Credit Loan shall not limit or
otherwise affect the obligation of the Borrower hereunder or under the Revolving
Credit Note with respect to such Revolving Credit Loan, and any payment of
principal on the Revolving Credit Note by the Borrower shall not be affected by
the failure to make a notation thereof on said schedule.
SECTION 2.04. CONVERSION DATE; MAKING OF CONVERTED TERM LOAN.
(a) The Borrower shall be obligated to pay to the Bank on the
Conversion Date the then outstanding principal amount of the Revolving Credit
Loans and all accrued but unpaid interest thereon. The Bank agrees, upon the
terms and subject to the conditions hereof, including, but without limitation,
the conditions of Section 3.03 hereof, and provided that no Default or Event of
Default shall have occurred and be continuing, to make a converted term loan
(the "Converted Term Loan") to the Borrower, on the Conversion Date in an amount
equal to the lesser of the Commitment or the aggregate principal amount of
Revolving Credit Loans then outstanding under the Revolving Credit Note.
(b) Upon three (3) Business Days' prior written notice to the Bank, the
Borrower may request the Bank to make the Converted Term Loan prior to the
Conversion Date and the Bank agrees, upon the terms and subject to the
conditions hereof, including, but without limitation, the conditions of Section
3.03 hereof, and provided that no Default or Event of Default shall have
occurred and be continuing, to make the Converted Term Loan on the date so
requested (the "Optional Conversion Date").
(c) The Bank shall make the Converted Term Loan by crediting the amount
thereof towards the repayment of the principal amount of Revolving Credit Loans
outstanding under the Revolving Credit Note.
(d) The Converted Term Loan, or portions thereof, shall be an Alternate
Base Rate Loan or a Eurodollar Loan (or a combination
<PAGE>
thereof) as the Borrower may request subject to and in accordance with Section
2.05 hereof. The Bank may at its option make any Eurodollar Loan by causing a
foreign branch or affiliate to make such Loan provided that any exercise of such
option shall not affect the obligations of the Borrower to repay such Loan in
accordance with the terms of the Converted Term Loan Note.
SECTION 2.05. NOTICE OF CONVERTED TERM LOAN DESIGNATIONS.
(a) The Borrower may elect to designate the Converted Term Loan (or a
portion thereof) as an Alternate Base Rate Loan or a Eurodollar Loan by so
specifying in the irrevocable notice given pursuant to this Section 2.05;
provided, however, that each Eurodollar Loan for any specific Interest Period
shall be in the minimum principal amount of $500,000.00 and in minimum multiples
of $100,000.00.
(b) The Borrower shall give the Bank irrevocable written, telex,
telephonic (immediately confirmed in writing) or facsimile notice (i) at least
three (3) Business Days prior to each election to designate the Converted Term
Loan (or a portion thereof) as a Eurodollar Loan (subject to availability) and
(ii) prior to 11:00 a.m. on the day of such Loan of each election to designate
the Converted Term Loan (or a portion thereof) as an Alternate Base Rate Loan,
in each case specifying the date (which shall be a Business Day) and the
aggregate principal amount of such Loan and, if any portion thereof is to
consist of one or more Eurodollar Loans, the respective principal amounts and
Interest Periods for each such Eurodollar Loan; provided that:
(i) if the Borrower shall fail to specify the duration of an
Interest Period with regard to any Eurodollar Loan in its notice, the Interest
Period shall be for a period of one month; and
(ii) if the Borrower shall request a Eurodollar Loan when such
Loans are not available, the request shall be deemed to be a request for an
Alternate Base Rate Loan.
SECTION 2.06. CONVERTED TERM LOAN NOTE. The Converted Term Loan shall
be evidenced by the Converted Term Loan Note of the Borrower. The Converted Term
Loan Note shall be dated the Conversion Date and shall mature on the Converted
Term Loan Maturity Date at which time the entire outstanding principal balance
and all interest thereon shall be due and payable. The Converted Term Loan Note
shall be entitled to the benefits and subject to the provisions of this
Agreement.
SECTION 2.07. REPAYMENT OF CONVERTED TERM LOAN NOTE. The principal
balance of the Converted Term Loan Note shall be payable in thirty six (36)
monthly installments, due on the last Business Day of each month beginning on
the first such day after the Conversion Date, and continuing on the last
Business Day of each
<PAGE>
calendar month thereafter. Each of the first thirty five (35) such monthly
installments shall be in an amount equal to 1/36th of the principal amount of
the Converted Term Loan and the thirty sixth (36th) such monthly principal
installment shall be in an amount equal to the then outstanding principal
balance of the Converted Term Loan Note.
SECTION 2.08. PAYMENT OF INTEREST ON THE REVOLVING CREDIT
NOTE AND THE CONVERTED TERM LOAN NOTE.
(a) In the case of an Alternate Base Rate Loan, interest shall be
payable at a rate per annum (computed on the basis of the actual number of days
elapsed over a year of 360 days) equal at all times to (i) in the case of
Revolving Credit Loans, the Alternate Base Rate plus one-half of one (1/2%)
percent and (ii) in the case of the Converted Term Loan, the Alternate Base Rate
plus one (1%) percent. Such interest shall be payable on each Interest Payment
Date, commencing with the first Interest Payment Date after the date of such
Alternate Base Rate Loan, on each Interest Determination Date, on the Conversion
Date and on the Converted Term Loan Maturity Date. Any change in the rate of
interest on the Revolving Credit Note or the Converted Term Loan Note due to a
change in the Alternate Base Rate shall take effect as of the date of such
change in the Alternate Base Rate.
(b) In the case of a Eurodollar Loan, interest shall be payable at a
rate per annum (computed on the basis of the actual number of days elapsed over
a year of 360 days) equal to the Adjusted LIBOR Rate plus three and one half (3
1/2%) percent. Such interest shall be payable on each Interest Payment Date,
commencing with the first Interest Payment Date after the date of such
Eurodollar Loan, on each Interest Determination Date, on the Conversion Date and
on the Converted Term Loan Maturity Date. In the event Eurodollar Loans are
available, the Bank shall determine the rate of interest applicable to each
requested Eurodollar Loan for each Interest Period at 11:00 a.m., New York City
time, or as soon as practicable thereafter, two (2) Business Days prior to the
commencement of such Interest Period and shall notify the Borrower of the rate
of interest so determined. Such determination shall be conclusive absent
manifest error.
SECTION 2.09. CONVERSION AND CONTINUATION OF LOANS. On or after the
Conversion Date, the Borrower shall have the right, at any time, on such notice
to the Bank as is required pursuant to Section 2.05, (i) to continue any
Eurodollar Loan or portion thereof into a subsequent Interest Period (subject to
availability) or (ii) to convert an Alternate Base Rate Loan into a Eurodollar
Loan (subject to availability), subject to the following:
(a) if an Event of Default shall have occurred and be continuing at the
time of any proposed conversion or continuation only Alternate Base Rate Loans
shall be available;
<PAGE>
(b) in the case of a continuation or conversion of fewer than all
Loans, the aggregate principal amount of each Eurodollar Loan continued or into
which a Loan is converted shall be in the minimum principal amount of
$500,000.00 and in minimum increased multiples of $100,000.00;
(c) each continuation or conversion shall be effected by the Bank
applying the proceeds of the new Loan to the Loan (or portion thereof) being
continued or converted;
(d) if the new Loan made as a result of a continuation or conversion
shall be a Eurodollar Loan, the first Interest Period with respect thereto shall
commence on the date of continuation or conversion;
(e) each request for a Eurodollar Loan which shall fail to state an
applicable Interest Period shall be deemed to be a request for an Interest
Period of one month and each request for a Eurodollar Loan made when such Loans
are not available shall be deemed to be a request for an Alternate Base Rate
Loan;
(f) unless sufficient Alternate Base Rate Loans are outstanding or
other Eurodollar Loans are outstanding with Interest Periods expiring prior to
the next scheduled installment payment of the Converted Term Loan Note, and are
sufficient to enable the Borrower to make such installment payment, any
Eurodollar Loan a portion of which is required to be repaid on any such
installment payment date shall be automatically converted at the end of such
Interest Period into an Alternate Base Rate Loan; and
(g) in the event that the Borrower shall not give notice to continue a
Eurodollar Loan as provided above, such Loan shall automatically be converted
into an Alternate Base Rate Loan at the expiration of the then current Interest
Period.
SECTION 2.10. USE OF PROCEEDS. The proceeds of the Revolving Credit
Loans shall be used by the Borrower for general corporate purposes, including
(i) working capital, (ii) for advances to the Guarantors and (iii) to partially
finance the ENSA Acquisition but no other acquisition, and the proceeds of the
Converted Term Loan shall be used by the Borrower exclusively to satisfy
existing obligations to the Bank under the Revolving Credit Note. No part of the
proceeds of any Loan may be used (i) in order to pay dividends or repurchase any
of the Borrower's capital stock or (ii) for any purpose that directly or
indirectly violates or is inconsistent with, the provisions of Regulations G, T,
U or X.
SECTION 2.11. COMMITMENT FEE. The Borrower agrees to pay to the Bank
from the date of this Agreement and for so long as the Commitment remains
outstanding, on the last Business Day of each calendar quarter, a commitment fee
computed at the rate of one quarter of one (1/4%) percent per annum (computed on
the basis of the
<PAGE>
actual number of days elapsed over 360 days) on the average daily unused amount
of the Commitment, such commitment fee being payable for the calendar quarter,
or part thereof, preceding the payment date.
SECTION 2.12. REDUCTION OF COMMITMENT. Upon at least three (3) Business
Days' written notice, the Borrower may irrevocably elect to have the unused
Commitment terminated in whole or reduced in part provided, however, that any
such partial reduction shall be in a minimum amount of Two Hundred Fifty
Thousand ($250,000.00) Dollars, or whole multiples thereof. The Commitment, once
terminated or reduced, shall not be reinstated without the express written
approval of the Bank.
SECTION 2.13. PREPAYMENT. (a) The Borrower shall have the right at any
time and from time to time to prepay any Alternate Base Rate Loan, in whole or
in part, without premium or penalty on the same day on which telephonic notice
is given to the Bank (immediately confirmed in writing) of such prepayment
provided, however, that each such prepayment shall be on a Business Day and
shall be in an aggregate principal amount which is an integral multiple of
$250,000.00.
(b) The Borrower shall have the right at any time and from time to
time, subject to the provisions of this Agreement, to prepay any Eurodollar
Loan, in whole or in part, on three (3) Business Days' prior irrevocable written
notice to the Bank, provided, however, that such prepayment may only be made on
an Interest Determination Date.
(c) The notice of prepayment under this Section 2.13 shall set forth
the prepayment date and the principal amount of the Loan being prepaid and shall
be irrevocable and shall commit the Borrower to prepay such Loan by the amount
and on the date stated therein. All prepayments shall be accompanied by accrued
interest on the principal amount being prepaid to the date of prepayment. Each
prepayment under this Section 2.13 shall be applied first towards unpaid
interest on the amount being prepaid and then towards the principal in whole or
partial prepayment of Loans by the Borrower. In the absence of such
specification, amounts being prepaid shall be applied first to any Alternate
Base Rate Loan then outstanding and then to Eurodollar Loans in the order of the
expiration of their respective Interest Periods. In the case of the Converted
Term Loan, all partial prepayments of Loans shall be applied to installments of
principal of the Converted Term Loan, as the case may be, in the inverse order
of maturity.
SECTION 2.14. REIMBURSEMENT BY BORROWER. The Borrower shall reimburse
the Bank upon the Bank's demand for any loss, cost or expense incurred or to be
incurred by it (in the Bank's sole determination) as a result of any prepayment
or conversion (whether voluntarily or by acceleration) of any Eurodollar Loan
other than
<PAGE>
on the last day of the Interest Period for such Loan, or if the Borrower fails
to borrow the Eurodollar Loan (or is not able to borrow because of an Event of
Default or for any other reason hereunder) after having given the irrevocable
notice of borrowing required by this Agreement. Such reimbursement shall
include, but not be limited to, any loss, cost or expense incurred by the Bank
in obtaining, liquidating or redeploying any funds used or to be used in making
or maintaining the Eurodollar Loan.
SECTION 2.15. STATUTORY RESERVES. It is understood that the cost to the
Bank of making or maintaining Eurodollar Loans may fluctuate as a result of the
applicability of, or change in, Statutory Reserves. The Borrower agrees to pay
to the Bank from time to time, as provided in Section 2.16 below, such amounts
as shall be necessary to compensate the Bank for the portion of the cost of
making or maintaining any Eurodollar Loans made by it resulting from any such
Statutory Reserves, or change therein, it being understood that the rates of
interest applicable to Eurodollar Loans hereunder have been determined on the
basis of Statutory Reserves in effect at the time of determination of the
Adjusted LIBOR Rate and that such rates do not reflect costs imposed on the Bank
in connection with any change to such Statutory Reserves. It is agreed that for
purposes of this paragraph the Eurodollar Loans made hereunder shall be deemed
to constitute Eurocurrency Liabilities as defined in Regulation D and to be
subject to the reserve requirements of Regulation D without benefit or credit of
proration, exemptions or offsets which might otherwise be available to the Bank
from time to time under Regulation D.
SECTION 2.16. INCREASED COSTS. If, after the date of this Agreement,
the adoption of, or any change in, any applicable law, regulation, rule or
directive, or any interpretation thereof by any authority charged with the
administration or interpretation thereof:
(i) subjects the Bank to any tax with respect to its
Commitment, the Loans, the Notes or on any amount paid or to be paid under or
pursuant to this Agreement, the Loans or the Notes (other than any tax measured
by or based upon the overall net income of the Bank);
(ii) changes the basis of taxation of payments to the Bank of
any amounts payable hereunder (other than any tax measured by or based upon the
overall net income of the Bank);
(iii) imposes, modifies or deems applicable any reserve,
capital adequacy or deposit requirements against any assets held by, deposits
with or for the account of, or loans made by, the Bank; or
(iv) imposes on the Bank any other condition affecting its
Commitment, the Loans, the Notes or this Agreement; and the
<PAGE>
result of any of the foregoing is to increase the cost to the Bank of
maintaining this Agreement or the Commitment or making the Loans, or to reduce
the amount of any payment (whether of principal, interest or otherwise)
receivable by the Bank or to require the Bank to make any payment on or
calculated by reference to the gross amount of any sum received by it, in each
case by an amount which the Bank in its sole judgment deems material, then and
in any such case:
(a) the Bank shall promptly advise the Borrower of such event,
together with the date thereof, the amount of such increased cost or
reduction or payment and the way in which such amount has been
calculated; and
(b) the Borrower shall pay to the Bank, within ten (10) days
after the advice referred to in subsection (a) hereinabove, such an
amount or amounts as will compensate the Bank for such additional cost,
reduction or payment for so long as the same shall remain in effect.
The determination of the Bank as to additional amounts payable pursuant
to this Section 2.16 shall be conclusive evidence of such amounts absent
manifest error.
SECTION 2.17. CAPITAL ADEQUACY. If the Bank shall have determined that
the applicability of any law, rule, regulation or guideline, or the adoption
after the date hereof of any other law, rule, regulation or guideline regarding
capital adequacy, or any change in any of the foregoing or in the interpretation
or administration of any of the foregoing by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by the Bank (or any lending office of the Bank) or the
Bank's holding company with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on the Bank's capital or on the capital of the Bank's holding company, if any,
as a consequence of its obligations hereunder to a level below that which the
Bank or the Bank's holding company could have achieved but for such adoption,
change or compliance (taking into consideration the Bank's policies and the
policies of the Bank's holding company with respect to capital adequacy) by an
amount deemed by the Bank to be material, then from time to time the Borrower
shall pay to the Bank such additional amount or amounts as will compensate the
Bank or the Bank's holding company for any such reduction suffered.
SECTION 2.18. CHANGE IN LEGALITY. (a) Notwithstanding anything to the
contrary contained elsewhere in this Agreement, if any change after the date
hereof in law, rule, regulation, guideline or order, or in the interpretation
thereof by any governmental authority charged with the administration thereof,
<PAGE>
shall make it unlawful for the Bank to make or maintain any Eurodollar Loan or
to give effect to its obligations as contemplated hereby with respect to a
Eurodollar Loan, then, by written notice to the Borrower, the Bank may:
(i) declare that Eurodollar Loans will not thereafter
be made hereunder, whereupon the Borrower shall be prohibited from
requesting such Eurodollar Loans hereunder unless such declaration is
subsequently withdrawn; and
(ii) require that, subject to the provisions of
Section 2.14, all outstanding Eurodollar Loans made by it be converted
to an Alternate Base Rate Loan, whereupon all of such Eurodollar Loans
shall be automatically converted to an Alternate Base Rate Loan as of
the effective date of such notice as provided in paragraph (b) below.
(b) For purposes of this Section 2.18, a notice to the
Borrower by the Bank pursuant to paragraph (a) above shall be effective, for the
purposes of paragraph (a) above, if lawful, and if any Eurodollar Loans shall
then be outstanding, on the last day of the then current Interest Period;
otherwise, such notice shall be effective on the date of receipt by the
Borrower.
SECTION 2.19. INDEMNITY. The Borrower will indemnify the Bank against
any loss or expense which the Bank may sustain or incur as a consequence of any
default in payment or prepayment of the principal amount of any Loan or any part
thereof or interest accrued thereon, as and when due and payable (at the due
date thereof, by notice of prepayment or otherwise), or the occurrence of any
Event of Default, including but not limited to any loss or expense sustained or
incurred in liquidating or employing deposits from third parties acquired to
affect or maintain such Loan or any part thereof. When claiming under this
Section 2.19, the Bank shall provide to the Borrower a statement, signed by an
officer of the Bank, explaining the amount of any such loss or expense
(including the calculation of such amount), which statement shall, in the
absence of manifest error, be conclusive with respect to the parties hereto.
SECTION 2.20. CHANGE IN LIBOR; AVAILABILITY OF RATES. In the event, and
on each occasion, that, on the day the interest rate for any Eurodollar Loan is
to be determined, the Bank shall have determined (which determination, absent
manifest error, shall be conclusive and binding upon the Borrower) that dollar
deposits in the amount of the principal amount of the requested Eurodollar Loan
are not generally available in the London Interbank Market, or that the rate at
which such dollar deposits are being offered will not adequately and fairly
reflect the cost to the Bank of making or maintaining the principal amount of
such Eurodollar Loan during such Interest Period, such Eurodollar Loan shall be
unavailable. The Bank shall, as soon as practicable thereafter, give written,
<PAGE>
telex or telephonic notice of such determination of unavailability to the
Borrower. Any request by the Borrower for an unavailable Eurodollar Loan shall
be deemed to have been a request for an Alternate Base Rate Loan. After such
notice shall have been given and until the Bank shall have notified the Borrower
that the circumstances giving rise to such notice no longer exist, each
subsequent request for an unavailable Eurodollar Loan shall be deemed to be a
request for an Alternate Base Rate Loan.
SECTION 2.21. AUTHORIZATION TO DEBIT BORROWER'S ACCOUNT. The Bank is
hereby authorized to debit the Borrower's account maintained with the Bank for
(i) all scheduled payments of principal and/or interest under the Notes, and
(ii) the commitment fee and all other amounts due hereunder; all such debits to
be made on the days such payments are due in accordance with the terms hereof.
SECTION 2.22. LATE CHARGES, DEFAULT INTEREST. (a) If the Borrower shall
default in the payment of any principal installment of or interest on any Loan
or any other amount becoming due hereunder, the Borrower shall pay interest, to
the extent permitted by law, on such defaulted amount up to the date of actual
payment (after as well as before judgment) at a rate per annum (computed on the
basis of the actual number of days elapsed over a year of 360 days) equal to two
(2%) percent in excess of the interest rate otherwise in effect with respect to
the type of Loan in connection with which the required payments have not been
made.
(b) Upon the occurrence and during the continuation of an Event of
Default, the Borrower shall pay interest on all amounts owing under the Notes
and this Agreement (after as well as before judgment) at a rate per annum
(computed on the basis of the actual number of days elapsed over a year of 360
days) equal to two (2%) percent in excess of the interest rate otherwise in
effect hereunder.
SECTION 2.23. PAYMENTS. All payments by the Borrower hereunder or under
the Notes shall be made in Dollars in immediately available funds at the office
of the Bank by 12:00 noon, New York City time on the date on which such payment
shall be due. Interest on the Notes shall accrue from and including the date of
each Loan to but excluding the date on which such Loan is paid in full or
refinanced with a Loan of a different type.
SECTION 2.24. INTEREST ADJUSTMENTS. (a) If the provisions of this
Agreement or the Notes would at any time otherwise require payment by the
Borrower to the Bank of any amount of interest in excess of the maximum amount
then permitted by applicable law the interest payments shall be reduced to the
extent necessary so that the Bank shall not receive interest in excess of such
maximum amount. To the extent that, pursuant to the foregoing sentence, the Bank
shall receive interest payments hereunder or under the
<PAGE>
Notes in an amount less than the amount otherwise provided, such deficit
(hereinafter called the "Interest Deficit") will cumulate and will be carried
forward (without interest) until the termination of this Agreement. Interest
otherwise payable to the Bank hereunder and under the Notes for any subsequent
period shall be increased by such maximum amount of the Interest Deficit that
may be so added without causing the Bank to receive interest in excess of the
maximum amount then permitted by applicable law.
(b) The amount of the Interest Deficit shall be treated as a prepayment
penalty and paid in full at the time of any optional prepayment by the Borrower
to the Bank of all or any part of the Converted Term Loan. The amount of the
Interest Deficit relating to the Notes at the time of any complete payment of
the Notes at that time outstanding (other than an optional prepayment thereof)
shall be cancelled and not paid.
SECTION 2.25. PARTICIPATIONS, ETC. The Bank shall have the right at any
time, with or without notice to the Borrower, to sell, assign, transfer or
negotiate all or any part of the Revolving Credit Note or the Converted Term
Loan Note or the Commitment or grant participations therein to one or more banks
(foreign or domestic, including an affiliate of the Bank), insurance companies
or other financial institutions, pension funds or mutual funds. The Borrower and
the Guarantors agree and consent to the Bank providing financial and other
information regarding their business and operations to prospective purchasers or
participants and further agree that to the extent that the Bank should sell,
assign, transfer or negotiate all or any part of the Notes or the Commitment,
the Bank shall be forever released and discharged from its obligations under the
Notes, the Commitment and this Agreement to the extent same is sold, assigned,
transferred or negotiated. Nothing herein shall be read or construed as
prohibiting or otherwise limiting the ability or right of the Bank to pledge any
Note to a Federal Reserve Bank.
<PAGE>
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. CONDITIONS PRECEDENT TO THE MAKING OF THE INITIAL
REVOLVING CREDIT LOAN. The obligation of the Bank to make the initial Revolving
Credit Loan contemplated by this Agreement is subject to the condition precedent
that the Bank shall have received from the Borrower and the Guarantors the
following, in form and substance satisfactory to the Bank and its counsel:
(a) The Revolving Credit Note duly executed and payable to the
order of the Bank.
(b) Certified (as of the date of this Agreement) copies of the
resolutions of the Board of Directors of the Borrower authorizing the Loans and
authorizing and approving this Agreement and the other Loan Documents and the
execution, delivery and performance thereof and certified copies of all
documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to this Agreement and the other Loan Documents.
(c) Certified (as of the date of this Agreement) copies of the
resolutions of the Boards of Directors and the shareholders of each of the
Guarantors, authorizing and approving this Agreement, their Guaranties and any
other Loan Document applicable to the Guarantors, and the execution, delivery
and performance thereof and certified copies of all documents evidencing other
necessary corporate action and governmental approvals, if any, with respect to
this Agreement, their Guaranties and the other Loan Documents.
(d) A certificate of the Secretary or an Assistant Secretary (attested
to by another officer) of the Borrower certifying: (i) the names and true
signatures of the officer or officers of the Borrower authorized to sign this
Agreement, the Revolving Credit Note, the Converted Term Loan Note and the other
Loan Documents to be delivered hereunder on behalf of the Borrower; and (ii) a
copy of the Borrower's by-laws as complete and correct on the date of this
Agreement.
(e) A Certificate of the Secretary or an Assistant Secretary (attested
to by another officer) of each of the Guarantors certifying (i) the names and
true signatures of the officer or officers of the Guarantors authorized to sign
this Agreement, their Guaranties and any other Loan Documents to be delivered
hereunder on behalf of the Guarantors; (ii) a copy of each of the Guarantors'
by-laws as complete and correct on the date of this Agreement; and (iii) the
stock ownership of each Guarantor.
(f) Copies of the certificate of incorporation and all amendments
thereto of each of the Borrower and the Guarantors certified in each case by the
Secretary of State (or equivalent
<PAGE>
officer) of the state of incorporation of each of the Borrower and the
Guarantors and a certificate of existence and good standing with respect to each
of the Borrower and the Guarantors from the Secretary of State (or equivalent
officer) of the state of incorporation of each of the Borrower and the
Guarantors and from the Secretary of State (or equivalent officer) of any state
in which the Borrower or the Guarantors are authorized to do business.
(g) An opinion of Karp and Sommers, counsel for the Borrower and the
Guarantors as to certain matters referred to in Article IV hereof and as to such
other matters as the Bank or its counsel may reasonably request.
(h) From each of the Guarantors, an executed Guaranty.
(i) From the Borrower and each of the Guarantors, an executed Security
Agreement giving to the Bank a first priority security interest in all present
and future accounts, contract rights, chattel paper, general intangibles,
instruments and documents of the Borrower and the Guarantors, all whether now
owned or hereafter acquired, and in all machinery and equipment acquired by the
Borrower and the Guarantors after the date of this Agreement (collectively the
"Collateral").
(j) From the Borrower and each of the Guarantors, UCC-1 filings
perfecting the Bank's security interests in the Collateral.
(k) A property damage insurance policy for the Collateral in the amount
of the greater of (1) the replacement value of the Collateral or (2) the
principal amount outstanding under the Loans, naming the Bank as loss payee with
an insurance company acceptable to the Bank. The policy shall provide for thirty
(30) days notice to the Bank of cancellation or change.
(l) The last audit performed on the Borrower and/or the Guarantors by
the New York State Department of Environmental Conservation or any and all other
federal, state or local regulatory authorities, the review of which shall be
satisfactory to the Bank and its counsel in all respects, with such additional
accreditation and regulatory documents as may be required by the Bank.
(m) An accounts receivable aging schedule (by account) of the Borrower
and the Guarantors, dated not more than thirty (30) days prior to the date of
this Agreement, such schedule to be satisfactory to the Bank in all respects.
(n) Copies of all shareholder agreements, management contracts,
employment agreements and similar agreements between or among the Borrower, any
of the Guarantors and Robert Rubin and/or Joseph Wisneski the review of which
shall be satisfactory to the Bank in all respects.
<PAGE>
(o) The management prepared consolidated and consolidating financial
statements of the Borrower and the Guarantors for the nine (9) month period
ended October 31, 1995, prepared in accordance with GAAP, the review of which
shall be satisfactory to the Bank in all respects.
(p) All material loan or credit agreements to which the Borrower or any
Guarantor is a party, the review of which shall be satisfactory to the Bank in
all respects.
(q) Insurance policies or binders related thereto for the Borrower and
Guarantors evidencing professional liability, general liability and umbrella
liability coverage, such policies and coverages to be satisfactory to the Bank
in all respects.
(r) All employee benefit plans of the Borrower and the Guarantors, the
review of which shall be satisfactory to the Bank in all respects.
(s) A schedule of all lease agreements in which the Borrower or any of
the Guarantors are the lessees, which schedule shall include the name of the
lessor, the name of the lessee, the term of the lease, the annual lease
expenditure, the expiration of the lease and whether such lease is an operating
or capital lease, the review of such schedule to be satisfactory to the Bank in
all respects.
(t) A schedule of all contracts entered into by the Borrower or any of
the Guarantors with the City of Long Beach, New York, the review of which shall
be satisfactory to the Bank in all respects.
(u) A copy of the Agreement and Plan of Merger among the Borrower, ENSA
Acquisition Corp. and Environmental Services of America, Inc., and all other
documents and agreements relating to the ENSA Acquisition, the review of which
shall be satisfactory to
the Bank in all respects.
(v) Evidence of full repayment and cancellation of any other credit
facilities and/or indebtedness to other lenders and evidence of receipt of UCC-3
financing statements to terminate any such lender's security interest in the
assets of the Borrower or the Guarantors, or an assignment of such security
interests to the Bank, as the Bank may request in its sole and absolute
discretion.
(w) From the Borrower, copies of the Phase I and Phase II Environmental
Audits on the Long Beach Property.
(x) The Bank and its counsel shall have completed its diligence on
certain litigation involving principals of the Borrower, which shall be
satisfactory to the Bank in all respects.
<PAGE>
(y) The following statements shall be true and the Bank shall have
received a certificate signed by the President or Chief Financial Officer of the
Borrower and each Guarantor dated the date hereof, stating:
(i) That the representations and warranties contained in
Article IV of this Agreement and in the Loan Documents are true and correct on
and as of such date;
(ii) That no Default, Event of Default or Material Adverse
Change in the Borrower or any Guarantor has occurred and is continuing, or would
result from the making of the initial Revolving Credit Loan; and
(iii) The purpose for which the proceeds of the requested Loan
will be made, with supporting documentation satisfactory to the Bank in all
respects.
(z) All schedules, documents, certificates and other information
provided to the Bank pursuant to or in connection with this Agreement shall be
satisfactory to the Bank and its counsel in all respects.
(aa) All legal matters incident to this Agreement and the Loan
transactions contemplated hereby shall be satisfactory to Cullen and Dykman,
counsel to the Bank.
(bb) Such other approvals, opinions, documents or due diligence
checkings as the Bank or its counsel may reasonably request, the review of which
shall be satisfactory to the Bank in all respects.
(cc) All fees, expenses and other costs required to be paid by the
Borrower in connection with this Agreement shall have been paid.
SECTION 3.02. CONDITIONS PRECEDENT TO ALL REVOLVING CREDIT LOANS. The
obligations of the Bank to make each Revolving Credit Loan (including the
initial Revolving Credit Loan) shall be subject to the further condition
precedent that on the date of such Revolving Credit Loan:
(a) The following statements shall be true and the Bank shall have
received a certificate signed by the President or the Chief Financial Officer of
the Borrower and each Corporate Guarantor dated the date of such Revolving
Credit Loan, stating:
(i) That the representations and warranties contained in
Article IV of this Agreement and in the Loan Documents are true and correct on
and as of such date as though made on and as of such date; and
<PAGE>
(ii) That no Default, Event of Default or Material Adverse
Change in the Borrower or any Guarantor has occurred and is continuing, or would
result from such Revolving Credit Loan; and
(iii) The purpose for which the proceeds of the requested Loan
will be made, with supporting documentation satisfactory to the Bank in all
respects.
(b) The Bank shall have received such other approvals, opinions or
documents as the Bank may reasonably request.
SECTION 3.03. CONDITIONS PRECEDENT TO THE CONVERTED TERM LOAN. The
obligation of the Bank to make the Converted Term Loan shall be subject to the
condition precedent that the Bank shall have received on or before the
Conversion Date all of the documents required by Sections 3.01 and 3.02 and each
of the following, in form and substance satisfactory to the Bank and its
counsel:
(a) The Converted Term Loan Note duly executed by the Borrower.
(b) The following statements shall be true and the Bank shall have
received a certificate signed by the President or the Chief Financial Officer of
the Borrower and each Guarantor dated the Conversion Date stating that:
(i) The representations and warranties contained in Article IV of
this Agreement and in the Loan Documents are true and correct on and as of the
Conversion Date as though made on and as of such date; and
(ii) No Default, Event of Default or Material Adverse Change in
the Borrower or any Guarantor has occurred and is continuing, or would result
from the making of the Converted Term Loan.
(c) Additional Documentation. The Bank shall have received such other
approvals, opinions, or documents as the Bank or its counsel may reasonably
request.
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. REPRESENTATIONS AND WARRANTIES. On the date hereof, on
each date that the Borrower requests a Revolving Credit Loan and on the
Conversion Date, the Borrower and each of the Guarantors represent and warrant
as follows:
(a) On the date hereof, the only Subsidiaries of the Borrower or a
Guarantor are those set forth on Schedule 4.01(a) annexed hereto, which Schedule
accurately sets forth with respect to each such Subsidiary, its name and
address, any other addresses at which it conducts business, its state of
incorporation and each other jurisdiction in which it is qualified to do
business and the identity and share holdings of its stockholders. Except as set
forth on Schedule 4.01(a), all of the issued and outstanding shares of each
Subsidiary which are owned by the Borrower or a Guarantor are owned by the
Borrower or such Guarantor free and clear of any mortgage, pledge, lien or
encumbrance. Except as set forth on Schedule 4.01(a), there are not outstanding
any warrants, options, contracts or commitments of any kind entitling any Person
to purchase or otherwise acquire any shares of common or capital stock or other
equity interest of the Borrower, any Guarantor or any Subsidiary of the Borrower
or a Guarantor, nor are there outstanding any securities which are convertible
into or exchangeable for any shares of the common or capital stock of the
Borrower, any Guarantor or any Subsidiary of the Borrower or a Guarantor.
(b) The Borrower and each Guarantor are each a corporation duly
incorporated, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation and each has the corporate power to
own its assets and to transact the business in which it is presently engaged and
is duly qualified and is in good standing in all other jurisdictions where the
character or nature of its business requires such qualification.
(c) The execution, delivery and performance by the Borrower and each
Guarantor of the Loan Documents to which they are a party are within the
Borrower's and the Guarantors' corporate power and have been duly authorized by
all necessary corporate action and do not and will not (i) require any consent
or approval of the stockholders of the Borrower or Guarantors; (ii) do not
contravene the Borrower's or any of the Guarantors' certificates of
incorporation, charters or by-laws; (iii) violate any provision of or any law,
rule, regulation, contractual restriction, order, writ, judgment, injunction, or
decree, determination or award binding on or affecting the Borrower or any
Guarantor; (iv) result in a breach of or constitute a default under any
indenture or loan or credit agreement, or any other agreement, lease or
instrument to which the Borrower or any Guarantor is a party or by which it or
its
<PAGE>
properties may be bound or affected; and (v) result in, or require, the creation
or imposition of any Lien (other than the Lien of the Loan Documents) upon or
with respect to any of the properties now owned or hereafter acquired by the
Borrower or any Guarantor.
(d) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by the Borrower or any Guarantor of
any Loan Document to which it is a party, except authorizations, approvals,
actions, notices or filings which have been obtained, taken or made, as the case
may be.
(e) The Loan Documents when delivered hereunder will have been duly
executed and delivered on behalf of the Borrower and each Guarantor, as the case
may be, and will be legal, valid and binding obligations of the Borrower and
each Guarantor, as the case may be, enforceable against the Borrower or such
Guarantor in accordance with their respective terms.
(f) The consolidated financial statements of the Borrower and its
Consolidated Subsidiaries for the fiscal year ended January 31, 1995, and for
the three (3) quarters ended October 31, 1995, copies of which have been
furnished to the Bank, fairly present the financial condition of the Borrower
(including, without limitation, all contingent liabilities) and its Consolidated
Subsidiaries as at such dates and the results of operations of the Borrower and
its Consolidated Subsidiaries for the periods ended on such dates, all in
accordance with GAAP, and since January 31, 1995 there has been (i) no material
increase in the liabilities (including contingent liabilities) of the Borrower
and its Consolidated Subsidiaries and (ii) no Material Adverse Change in the
Borrower and its Consolidated Subsidiaries. The Borrower and its Consolidated
Affiliates did not incur Consolidated Capital Expenditures in excess of
$1,606,000.00 during the fiscal year ended January 31, 1996.
(g) Except as disclosed in Schedule 4.01(g), there is no pending or
threatened action, proceeding or investigation affecting the Borrower, any
Guarantor or any Subsidiary of the Borrower or a Guarantor, before any court,
governmental agency or arbitrator, which may either in one case or in the
aggregate, result in a Material Adverse Change in the Borrower, any Guarantor or
any such Subsidiary.
(h) The Borrower, each Guarantor and each Subsidiary of the Borrower or
a Guarantor have filed all federal, state and local tax returns required to be
filed and have paid all taxes, assessments and governmental charges and levies
thereon to be due, including interest and penalties.
<PAGE>
(i) The Borrower, each Guarantor and each Subsidiary of the Borrower or
any Guarantor possess all licenses, permits, franchises, patents, copyrights,
trademarks and trade names, or rights thereto, to conduct their respective
businesses substantially as now conducted and as presently proposed to be
conducted, and neither the Borrower, any Guarantor nor any such Subsidiary are
in violation of any similar rights of others.
(j) Neither the Borrower nor any Guarantor is a party to any indenture,
loan or credit agreement or any other agreement, lease or instrument or subject
to any charter or corporate restriction which could result in a Material Adverse
Change in the Borrower or any Guarantor.
(k) The Borrower is not engaged in the business of extending credit for
the purpose of purchasing or carrying margin stock (within the meaning of
Regulation G, T, U or X), and no proceeds of any Loan will be used to purchase
or carry any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock or in any other way which will cause the
Borrower to violate the provisions of Regulations G, T, U or X.
(l) No proceeds of any Loan will be used to acquire any security in any
transaction which is subject to Sections 13 or 14 of the Securities Exchange Act
of 1934.
(m) The Borrower, each Guarantor and each Subsidiary of the Borrower or
a Guarantor are in all material respects in compliance with all federal and
state laws and regulations in all jurisdictions where the failure to comply with
such laws or regulations could result in a Material Adverse Change in the
Borrower, any of the Guarantors or any such Subsidiary.
(n) The Borrower, each Guarantor, each Subsidiary of the Borrower or a
Guarantor and each ERISA Affiliate are in compliance in all material respects
with all applicable provisions of ERISA. Neither a Reportable Event nor a
Prohibited Transaction has occurred and is continuing with respect to any Plan;
no notice of intent to terminate a Plan has been filed nor has any Plan been
terminated; no circumstances exist which constitute grounds under Section 4042
of ERISA entitling the PBGC to institute proceedings to terminate, or appoint a
trustee to administrate, a Plan, nor has the PBGC instituted any such
proceedings; neither the Borrower, any Guarantor, any Subsidiary of the Borrower
or a Guarantor, nor any ERISA Affiliate has completely or partially withdrawn
under Sections 4201 or 4204 of ERISA from a Multiemployer Plan; the Borrower,
each Guarantor, each Subsidiary of the Borrower or a Guarantor and each ERISA
Affiliate have met their minimum funding requirements under ERISA with respect
to all of their Plans and the present fair market value of all Plan assets
exceeds the present value of all vested benefits under each Plan, as determined
on the most recent valuation date of the Plan in accordance with the
<PAGE>
provisions of ERISA for calculating the potential liability of the Borrower, any
Guarantor, any such Subsidiary or any ERISA Affiliate to PBGC or the Plan under
Title IV of ERISA; and neither the Borrower, any Guarantor, any such Subsidiary
nor any ERISA Affiliate has incurred any liability to the PBGC under ERISA.
(o) The Borrower, each Guarantor and each Subsidiary of the Borrower or
a Guarantor are in compliance with all federal, state or local laws, ordinances,
rules, regulations or policies governing Hazardous Materials and neither the
Borrower, any Guarantor nor any such Subsidiary has used Hazardous Materials on,
from, or affecting any property now owned or occupied or hereafter owned or
occupied by the Borrower, any Guarantor or any such Subsidiary in any manner
which violates federal, state or local laws, ordinances, rules, regulations or
policies governing the use, storage, treatment, transportation, manufacture,
refinement, handling, production or disposal of Hazardous Materials, and that to
the best of the Borrower's, Guarantors' and such Subsidiaries' knowledge, no
prior owner of any such property or any tenant, subtenant, prior tenant or prior
subtenant have used Hazardous Materials on, from or affecting such property in
any manner which violates federal, state or local laws, ordinances, rules,
regulations, or policies governing the use, storage, treatment, transportation,
manufacture, refinement, handling, production or disposal of Hazardous
Materials.
(p) The proceeds of the Revolving Credit Loans and the Converted Term
Loan shall be used exclusively for the purposes set forth in Section 2.10
hereof.
(q) The properties and assets of the Borrower and the Guarantors are
not subject to any Lien other than those described in Section 5.02(a) hereof.
(r) Neither the business nor the properties of the Borrower, any
Guarantor or any Subsidiary of the Borrower or a Guarantor are affected by any
fire, explosion, accident, strike, hail, earthquake, embargo, act of God or of
the public enemy, or other casualty (whether or not covered by insurance), which
could result in a Material Adverse Change in the Borrower, any Guarantor or any
such Subsidiary.
(s) Except for Liens described in Section 5.02(a)(ix), the Lien on the
Collateral created by the Security Agreements constitute valid first priority
perfected security interests in favor of the Bank.
(t) The liability of the Guarantors (other than C&J Enterprises, Inc.
and Long Beach Recycling and Recovery Corp.) as a result of the execution of
their respective Guaranties and the execution of this Agreement shall not cause
the liabilities (including contingent liabilities) of each of the Guarantors
(other
<PAGE>
than C&J Enterprises, Inc. and Long Beach Recycling and Recovery Corp.) to
exceed the fair saleable value of their respective assets.
(u) The Guarantors acknowledge they have derived or expect to derive a
financial or other advantage from the Loans obtained by the Borrower from the
Bank.
(v) Schedule 4.01(v) is a complete and correct list of all credit
agreements,indentures, purchase agreements, guaranties, Capital Leases,and other
investments, agreements and arrangements presently in effect providing for or
relating to extensions of credit (including agreements and arrangements for the
issuance of letters of credit or for acceptance financing) in respect of which
the Borrower or any Guarantor are in any manner directly or contingently
obligated, and the maximum principal or face amounts of the credit in question,
outstanding or to be outstanding, are correctly stated, and all Liens of any
nature given or agreed to be given as security therefor are correctly described
or indicated in such Schedule.
<PAGE>
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. AFFIRMATIVE COVENANTS. So long as any amount shall remain
outstanding under the Revolving Credit Note or the Converted Term Loan Note, or
so long as the Commitment shall remain in effect, the Borrower and the
Guarantors will, unless the Bank shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply, and cause each Subsidiary of the
Borrower or a Guarantor to comply, in all material respects with all applicable
laws, rules, regulations and orders, where the failure to so comply could result
in a Material Adverse Change in the Borrower, a Guarantor or any such
Subsidiary.
(b) Reporting Requirements. Furnish to the Bank: (i) Annual Financial
Statements. (1) As soon as available and in any event within ninety (90) days
after the end of each fiscal year of the Borrower, a copy of the audited
consolidated and consolidating financial statements of the Borrower and its
Consolidated Subsidiaries for such year, including balance sheets with related
statements of income and retained earnings and statements of cash flows, all in
reasonable detail and setting forth in comparative form the figures for the
previous fiscal year, together with an unqualified opinion, prepared by
independent certified public accountants selected by the Borrower and
satisfactory to the Bank, all such financial statements to be prepared in
accordance with GAAP, and (2) As soon as available and in any event within
ninety (90) days after the end of each fiscal year of each Guarantor, a copy of
the financial statements of each Guarantor for such year, including balance
sheets with related statements of income and retained earnings and statements of
cash flows, all in reasonable detail and setting forth in comparative form the
figures for the previous fiscal year, prepared on a review basis by independent
certified public accountants selected by the Guarantors and satisfactory to the
Bank, all such financial statements to be prepared in accordance with GAAP.
(ii) Quarterly Financial Statements. (1) As soon as available and in
any event within forty five (45) days after the end of each of the first three
fiscal quarters of each fiscal year of the Borrower, a copy of the consolidated
and consolidating financial statements of the Borrower and its Consolidated
Subsidiaries for such quarter, including a balance sheet with related statements
of income and retained earnings and a statement of cash flows, all in reasonable
detail and setting forth in comparative form the figures for the comparable
quarter for the previous fiscal year, prepared by the management of the
Borrower, and certified by its Chief Financial Officer, all such financial
statements to be prepared in accordance with GAAP; and (2) As soon as available
and in any event within forty five (45) days after the end of each of the first
<PAGE>
three fiscal quarters of each fiscal year of each Guarantor, a copy of the
financial statements of each Guarantor for such quarter, including a balance
sheet with related statements of income and retained earnings and a statement of
cash flows, all in reasonable detail and setting forth in comparative form the
figures for the comparable quarter for the previous fiscal year, prepared by
management of the Borrower, and certified by its Chief Financial Officer, all
such financial statements to be prepared in accordance with GAAP.
(iii) Management Letters. Promptly upon receipt thereof, copies of any
reports submitted to the Borrower or any Guarantor by independent certified
public accountants in connection with the examination of the financial
statements of the Borrower and each Guarantor made by such accountants;
(iv) Certificate of No Default. Simultaneously with the delivery of the
financial statements referred to in Section 5.01(b)(i) and (ii), a certificate
of the President or the Chief Financial Officer of the Borrower or Guarantor, as
the case may be, (1) certifying that no Default or Event of Default has occurred
and is continuing, or if a Default or Event of Default has occurred and is
continuing, a statement as to the nature thereof and the action which is
proposed to be taken with respect thereto; and (2) with computations
demonstrating compliance with the covenants contained in Section 5.03.
(v) Accountants' Report. Simultaneously with the delivery of the annual
financial statements referred to in Section 5.01(b)(i), a certificate of the
independent certified public accountants who audited such statements to the
effect that, in making the examination necessary for the audit or review of such
statements, they have obtained no knowledge of any condition or event which
constitutes a Default or Event of Default, or if such accountants shall have
obtained knowledge of any such condition or event, specify in such certificate
each such condition or event of which they have knowledge and the nature and
status thereof.
(vi) Accounts Receivable Aging Schedule. As soon as available and in
any event within fifteen (15) days after the end of each month, an accounts
receivable aging schedule.
(vii) Notice of Litigation. Promptly after the commencement thereof,
notice of all actions, suits and proceedings before any court or governmental
department, commission, board, bureau, agency, or instrumentality, domestic or
foreign, affecting the Borrower, any Guarantor or any Subsidiary of the Borrower
or a Guarantor.
(viii) Notice of Defaults and Events of Default. As soon as possible
and in any event within five (5) days after the occurrence of each Default or
Event of Default, a written notice setting forth
<PAGE>
the details of such Default or Event of Default and the action which is proposed
to be taken by the Borrower with respect thereto.
(ix) ERISA Reports. Promptly after the filing or receiving thereof,
copies of all reports, including annual reports, and notices which the Borrower,
any Guarantor or any Subsidiary of the Borrower or a Guarantor, files with or
receives from the PBGC, the Internal Revenue Service or the U.S. Department of
Labor under ERISA; and as soon as possible after the Borrower, any Guarantor or
any such Subsidiary knows or has reason to know that any Reportable Event or
Prohibited Transaction has occurred with respect to any Plan or that the PBGC or
the Borrower, any Guarantor or any such Subsidiary has instituted or will
institute proceedings under Title IV of ERISA to terminate any Plan, the
Borrower or such Guarantor will deliver to the Bank a certificate of the
President or the Chief Financial Officer of the Borrower or such Guarantor
setting forth details as to such Reportable Event or Prohibited Transaction or
Plan termination and the action the Borrower or such Guarantor proposes to take
with respect thereto;
(x) Reports to Other Creditors. Promptly after the furnishing thereof,
copies of any statement or report furnished to any other party pursuant to the
terms of any indenture, loan, or credit or similar agreement and not otherwise
required to be furnished to the Bank pursuant to any other clause of this
Section 5.01(b).
(xi) Proxy Statements, Etc. Promptly after the sending or filing
thereof, copies of all proxy statements, financial statements and reports which
the Borrower or any Guarantor sends to its stockholders, and copies of all
regular, periodic, and special reports, and all registration statements which
the Borrower or any Guarantor files with the Securities and Exchange Commission
or any governmental authority which may be substituted therefor, or with any
national securities exchange.
(xii) Notice of Affiliates. Promptly after any Person becomes an
Affiliate of the Borrower or a Guarantor, notice to the Bank of such Affiliate.
(xiii) General Information. Such other information respecting the
condition or operations, financial or otherwise, of the Borrower, any Guarantor
or any Subsidiary of the Borrower or a Guarantor as the Bank may from time to
time reasonably request.
(c) Taxes. Pay and discharge, and cause its Subsidiaries to pay and
discharge, all taxes, assessments and governmental charges upon it or them, its
or their income and its or their properties prior to the dates on which
penalties are attached thereto, unless and only to the extent that (i) such
taxes shall be contested in good faith and by appropriate proceedings by the
Borrower, any Guarantor or any such Subsidiary, as the case may be; (ii) there
be adequate reserves therefor in accordance with GAAP entered on the
<PAGE>
books of the Borrower, any Guarantor or any such Subsidiary; and (iii) no
enforcement proceedings against the Borrower, any Guarantor or any such
Subsidiary have been commenced.
(d) Corporate Existence. Preserve and maintain, and cause its
Subsidiaries to preserve and maintain, their corporate existence and good
standing in the jurisdiction of their incorporation and the rights, privileges
and franchises of the Borrower, each Guarantor and each such Subsidiary in each
case where failure to so preserve or maintain could result in a Material Adverse
Change in the Borrower, such Guarantor or such Subsidiary.
(e) Maintenance of Properties and Insurance. (i) Keep, and cause any
Subsidiaries to keep, the respective properties and assets (tangible or
intangible) that are useful and necessary in its business, in good working order
and condition, reasonable wear and tear excepted; (ii) maintain, and cause any
Subsidiaries to maintain, insurance with financially sound and reputable
insurance companies or associations in such amounts and covering such risks as
are usually carried by companies engaged in similar businesses and owning
properties doing business in the same general areas in which the Borrower, any
Guarantors and any such Subsidiaries operate; and (iii) cause the Bank to be
named as loss payee on any such insurance policies.
(f) Books of Record and Account. Keep, and cause any Subsidiaries to
keep, adequate records and proper books of record and account in which complete
entries will be made in a manner to enable the preparation of financial
statements in accordance with GAAP, reflecting all financial transactions of the
Borrower, the Guarantors, and any such Subsidiaries.
(g) Visitation. At any reasonable time, and from time to time, permit
the Bank or any agents or representatives thereof, to examine and make copies of
and abstracts from the books and records of, and visit the properties of, the
Borrower or any Guarantor and to discuss the affairs, finances and accounts of
the Borrower or any Guarantor with any of the respective officers or directors
of the Borrower or such Guarantor or the Borrower's or such Guarantor's
independent accountants.
(h) Performance and Compliance with Other Agreements. Perform and
comply, and cause any Subsidiaries to perform and comply, with each of the
provisions of each and every agreement the failure to perform or comply with
which could result in a Material Adverse Change in the Borrower, any Guarantor
or any Subsidiary.
(i) Continued Perfection of Liens and Security Interest. Record or file
or rerecord or refile the Loan Documents or a financing statement or any other
filing or recording or refiling or rerecording in each and every office where
and when necessary to preserve and perfect the security interests of the Loan
Documents.
<PAGE>
(j) Pension Funding. Comply with the following and cause each ERISA
Affiliate of the Borrower, any Guarantor or any Subsidiary of the Borrower or a
Guarantor to comply with the following:
(i) engage solely in transactions which would not subject any
of such entities to either a civil penalty assessed pursuant to Section
502(i) of ERISA or a tax imposed by Section 4975 of the Internal
Revenue Code in either case in an amount in excess of $25,000.00;
(ii) make full payment when due of all amounts which, under
the provisions of any Plan or ERISA, the Borrower, any Guarantor, any
such Subsidiary or any ERISA Affiliate of any of same is required to
pay as contributions thereto;
(iii) all applicable provisions of the Internal Revenue Code
and the regulations promulgated thereunder, including but not limited
to Section 412 thereof, and all applicable rules, regulations and
interpretations of the Accounting Principles Board and the Financial
Accounting Standards Board;
(iv) not fail to make any payments in an aggregate amount
greater than $25,000.00 to any Multiemployer Plan that the Borrower,
any Guarantor, any such Subsidiary or any ERISA Affiliate may be
required to make under any agreement relating to such Multiemployer
Plan, or any law pertaining thereto; or
(v) not take any action regarding any Plan which could result
in the occurrence of a Prohibited Transaction.
(k) Licenses. Maintain at all times, and cause each Subsidiary to
maintain at all times, all licenses or permits necessary to the conduct of its
business or as may be required by any governmental agency or instrumentality
thereof.
(l) New Affiliates. Cause any Affiliate of the Borrower or a Guarantor
formed after the date of this Agreement to become a Guarantor of all obligations
of the Borrower to the Bank, whether incurred under this Agreement or otherwise
and to secure its obligations as a Guarantor by granting to the Bank a first
priority security interest in all personal property of such Affiliate.
(m) City of Long Beach Consents. Promptly, but in no event later than
six (6) months from the date of this Agreement, deliver to the Bank copies of
the executed consent(s) of the City of Long Beach (the "City") to the assignment
by Long Beach Recycling and Recovery Corp. ("LBRR") to Environmental Waste
Incineration, Inc. of (i) the Lease Agreement dated as of November 16, 1984
between the City and LBRR, (ii) the Lease Agreement dated as of May 13, 1992
between the City and LBRR, and (iii) the Solid Waste Disposal Agreement between
the City and LBRR.
<PAGE>
SECTION 5.02. NEGATIVE COVENANTS. So long as any amount shall remain
outstanding under the Revolving Credit Note or the Converted Term Loan Note, or
so long as the Commitment shall remain in effect, neither the Borrower nor the
Guarantors will, without the written consent of the Bank:
(a) Liens, Etc. Create, incur, assume or suffer to exist, any Lien,
upon or with respect to any of its properties, now owned or hereafter acquired,
except:
(i) Liens in favor of the Bank;
(ii) Liens for taxes or assessments or other government
charges or levies if not yet due and payable or if due and payable if they are
being contested in good faith by appropriate proceedings and for which
appropriate reserves are maintained;
(iii) Liens imposed by law, such as mechanics',
materialmen's, landlords', warehousemen's, and carriers' Liens, and other
similar Liens, securing obligations incurred in the ordinary course of business
which are not past due or which are being contested in good faith by appropriate
proceedings and for which appropriate reserves have been established;
(iv) Liens under workers' compensation, unemployment
insurance, Social Security, or similar legislation;
(v) Liens, deposits, or pledges to secure the performance of
bids, tenders, contracts (other than contracts for the payment of money), leases
(permitted under the terms of this Agreement), public or statutory obligations,
surety, stay, appeal, indemnity, performance or other similar bonds, or other
similar obligations arising in the ordinary course of business;
(vi) Liens described in Schedule 5.02(a), provided that no
such Liens shall be renewed, extended or refinanced;
(vii) Judgment and other similar Liens arising in connection
with court proceedings (other than those described in Section 6.01(f)), provided
that, except for C&J Enterprises, Inc. and Long Beach Recycling and Recovery
Corp., the execution or other enforcement of such Liens is effectively stayed
and the claims secured thereby are being actively contested in good faith and by
appropriate proceedings;
(viii) Easements, rights-of-way, restrictions, and other
similar encumbrances which, in the aggregate, do not materially interfere with
the Borrower's or a Guarantor's occupation, use and enjoyment of the property or
assets encumbered thereby in the normal course of its business or materially
impair the value of the property subject thereto;
<PAGE>
(ix) Purchase money Liens on any property hereafter acquired
or the assumption of any Lien on property existing at the time of such
acquisition, or a Lien incurred in connection with any conditional sale or other
title retention agreement or a Capital Lease, provided that:
(1) Any property subject to any of the foregoing
is acquired by the Borrower or any Guarantor in the ordinary course of its
respective business and the Lien on any such property is created
contemporaneously with such acquisition;
(2) The obligation secured by any Lien so created,
assumed, or existing shall not exceed seventy five (75%) percent of lesser of
cost or fair market value of the property acquired as of the time of the
Borrower or any Guarantor acquiring the same;
(3) Each such Lien shall attach only to the
property so acquired and fixed improvements thereon;
(4) The Debt secured by all such Liens shall not
exceed $1,000,000.00 at any time outstanding in the aggregate; and
(5) The obligation secured by such Lien is
permitted by the provisions of Section 5.02(b) and the related expenditure is
permitted by the provisions of Section 5.03(c).
(b) Debt. Create, incur, assume, or suffer to exist, any Debt, except:
(i) Debt of the Borrower under this Agreement or the Notes or
any other Debt of the Borrower or the Guarantors owing to the Bank;
(ii) Debt described in Schedule 5.02(b), provided that no such
Debt shall be renewed, extended or refinanced;
(iii) Subordinated Debt;
(iv) Accounts payable to trade creditors for goods or services
which are not aged more than sixty (60) days from billing date and current
operating liabilities (other than for borrowed money) which are not more than
thirty (30) days past due, in each case incurred in the ordinary course of
business and paid within the specified time, unless contested in good faith and
by appropriate proceedings; and
(v) Debt of the Borrower or any Guarantor secured by purchase
money Liens permitted by Section 5.02(a)(ix).
<PAGE>
(c) Lease Obligations. Create, incur, assume, or suffer to exist any
obligation as lessee for the rental or hire of any real or personal property,
except (i) Capital Leases permitted by Section 5.02(a), or (ii) leases existing
on the date of this Agreement and any extensions or renewals thereof and other
leases entered into after the date of this Agreement (other than Capital Leases)
which do not in the aggregate require the Borrower or any Guarantor to make
payments (including taxes, insurance, maintenance, and similar expenses which
the Borrower or any Guarantor is required to pay under the terms of any lease)
in any fiscal year of the Borrower or any Guarantor in excess of $300,000.00.
(d) Merger. Merge into, or consolidate with or into, or have merged
into it, any Person, except for the ENSA Acquisition; and, for the purpose of
this subsection (d), the acquisition or sale by the Borrower or any Guarantor by
lease, purchase or otherwise, of all, or substantially all, of the common stock
or the assets of any Person or of it shall be deemed a merger of such Person
with the Borrower or any Guarantor.
(e) Sale of Assets, Etc. Sell, assign, transfer, lease or otherwise
dispose of any of its assets, (including a saleleaseback transaction) with or
without recourse, except for (i) inventory disposed of in the ordinary course of
business; and (ii) the sale or other disposition of assets no longer used or
useful in the conduct of its business.
(f) Investments, Etc. Make any Investment other than Permitted
Investments.
(g) Transactions With Affiliates. Except in the ordinary course of
business and pursuant to the reasonable requirements of the Borrower's, a
Guarantor's or a Subsidiary's business and upon fair and reasonable terms no
less favorable to the Borrower, or the Guarantor or the Subsidiary than would be
obtained in a comparable arm's length transaction with a Person not an
Affiliate, enter into any transaction, including, without limitation, the
purchase, sale, or exchange of property or the rendering of any service, with
any Affiliate.
(h) Prepayment of Outstanding Debt. Pay, in whole or in part, any
outstanding Debt (other than Debt owing to the Bank) of the Borrower or any
Guarantor, which by its terms is not then due and payable.
(i) Guarantees. Guaranty, or in any other way become directly or
contingently obligated for any Debt of any other Person (including any
agreements relating to working capital maintenance, take or pay contracts or
similar arrangements) other than (i) the endorsement of negotiable instruments
for deposit in the ordinary course of business; (ii) guarantees existing on the
date hereof and
<PAGE>
set forth in Schedule 5.02(i) annexed hereto; or (iii) guaranties by the
Borrower or the Guarantors of Debt of the Borrower or the Guarantors if such
Debt is permitted by the provisions of Section 5.02(b) of this Agreement.
(j) Change of Business. Materially alter the nature of its business.
(k) Fiscal Year. Change the ending date of its fiscal year from January
31.
(l) Losses. Incur a net loss for any fiscal quarter.
(m) Accounting Policies. Change any accounting policies, except as
permitted by GAAP.
(n) Change of Tax Status. Change its tax reporting status as a
sub-chapter C corporation.
(o) Dividends, Etc. Declare or pay any dividends, purchase, redeem,
retire or otherwise acquire for value any of its capital stock now or hereafter
outstanding, or make any distribution of assets to its stockholders as such,
whether in cash, assets, or in obligations of the Borrower or any Guarantor; or
allocate or otherwise set apart any sum for the payment of any dividend or
distribution on, or for the purchase, redemption or retirement of any shares of
its capital stock; or make any other distribution by reduction of capital or
otherwise in respect of any share of its capital stock.
(p) Change of Control. Allow, or have occur, a Change of Control.
(q) Management. Fail to retain Joseph Wisneski in a reasonably active
full time capacity in the management of the Borrower.
(r) Hazardous Material. The Borrower, each Guarantor and each
Subsidiary of the Borrower or a Guarantor shall not cause or permit any property
owned or occupied by the Borrower, any Guarantor or any such Subsidiary to be
used to generate, manufacture, refine, transport, treat, store, handle, dispose,
transfer, produce or process Hazardous Materials, except in compliance with all
applicable federal, state and local laws or regulations nor shall the Borrower,
any Guarantor or any such Subsidiary cause or permit, as a result of any
intentional or unintentional act or omission on the part of the Borrower, any
Guarantor or any such Subsidiary or any tenant or subtenant, a release of
Hazardous Materials onto any property owned or occupied by the Borrower, any
Guarantor or any such Subsidiary or onto any other property. The Borrower, each
Guarantor and each such Subsidiary shall not fail to comply with all applicable
federal, state and local laws, ordinances, rules and
<PAGE>
regulations, whenever and by whomever triggered, and shall not fail to obtain
and comply with, any and all approvals, registrations or permits required
thereunder. The Borrower and the Guarantors shall execute any documentation
required by the Bank in connection with the representations, warranties and
covenants contained in this paragraph and Section 4.01 of this Agreement.
SECTION 5.03. FINANCIAL REQUIREMENTS. So long as any amount shall
remain outstanding under the Revolving Credit Note or the Converted Term Loan
Note or so long as the Commitment shall remain in effect:
(a) Minimum Consolidated Tangible Net Worth. The Borrower will maintain
at all times a Consolidated Tangible Net Worth of not less than $12,500,000.00
from the date of this Agreement until January 30, 1997, and on January 31, 1997
until January 30, 1998, and on each succeeding January 31 until the next
succeeding January 30, not less than $1,500,000.00 in excess of the Borrower's
Consolidated Tangible Net Worth as of the preceding January 31.
(b) Consolidated Capital Expenditures. The Borrower will not make
Consolidated Capital Expenditures (i) in excess of $1,500,000.00 in the
aggregate during the fiscal year ending January 31, 1997 and (ii) in excess of
$500,000.00 in the aggregate during any fiscal year thereafter.
(c) Current Ratio. The Borrower will maintain at all times a ratio of
Consolidated Current Assets to Consolidated Current Liabilities of not less than
2.50 to 1.00.
(d) Leverage Ratio. The Borrower will maintain at all times a ratio of
Consolidated Total Liabilities to Consolidated Tangible Net Worth of not greater
than 1.25 to 1.00.
(e) Consolidated Debt Service Ratio. The Borrower will maintain a
Consolidated Debt Service Ratio of (i) not less than 1.50 to 1.00 from the date
of this Agreement until January 30, 1997; (ii) not less than 1.75 to 1.00 from
January 31, 1997 until January 30, 1998; and (iii) not less than 2.00 to 1.00
from January 31, 1998 and thereafter.
<PAGE>
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. EVENTS OF DEFAULT. If any of the following events
("Events of Default") shall occur and be continuing:
(a) The Borrower shall fail to pay any installment of
principal of, or interest on, the Revolving Credit Note or the Converted Term
Loan Note when due or any fees or other amounts owed in connection with this
Agreement; or
(b) Any representation or warranty made by the Borrower or any
Guarantor herein or in the Loan Documents or which is contained in any
certificate, document, opinion, or financial or other statement furnished at any
time under or in connection with any Loan Document shall prove to have been
incorrect in any material respect when made; or
(c) The Borrower or any Guarantor shall fail to perform or
observe any term, covenant, or agreement contained in this Agreement in any
other Loan Document (other than the Notes) on its part to be performed or
observed; or
(d) The Borrower, any Guarantor, or any Subsidiary of the
Borrower or a Guarantor shall fail to pay any Debt (excluding Debt evidenced by
the Revolving Credit Note and the Converted Term Loan Note) of the Borrower, any
Guarantor or any such Subsidiary (as the case may be), or any interest or
premium thereon, when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) and such failure shall continue after the
applicable grace period, if any, specified in the agreement or instrument
relating to such Debt; or any other default under any agreement or instrument
relating to any such Debt, or any other event shall occur and shall continue
after the applicable grace period, if any, specified in such agreement or
instrument, if the effect of such default or event is to accelerate, or to
permit the acceleration of, the maturity of such Debt; or any such Debt shall be
declared to be due and payable, or required to be prepaid (other than by a
regularly scheduled required prepayment), prior to the stated maturity thereof;
or
(e) The Borrower, any Guarantor or any Subsidiary of the
Borrower or a Guarantor shall generally not pay its Debts as such Debts become
due, or shall admit in writing its inability to pay its Debts generally, or
shall make a general assignment for the benefit of creditors; or any proceeding
shall be instituted by or against the Borrower, any Guarantor or any such
Subsidiary seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of it or its Debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or
<PAGE>
seeking the entry of an order for relief or the appointment of a receiver,
trustee, or other similar official for it or for any substantial part of its
property and if instituted against the Borrower, any Guarantor or any such
Subsidiary shall remain undismissed for a period of 30 days; or the Borrower,
any Guarantor or any such Subsidiary shall take any action to authorize any of
the actions set forth above in this subsection (e); or
(f) Any judgment or order or combination of judgments or
orders for the payment of money, in excess of $50,000.00 in the aggregate, which
sum shall not be subject to full, complete and effective insurance coverage,
shall be rendered against the Borrower, any Guarantor or any Subsidiary of the
Borrower or a Guarantor and either (i) enforcement proceedings shall have been
commenced by any creditor upon such judgment or order or (ii) there shall be any
period of 30 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; or
(g) Any Guarantor shall fail to perform or observe any term or
provision of its Guaranty or any representation or warranty made by any
Guarantor (or any of its officers or partners) in connection with such
Guarantor's Guaranty shall prove to have been incorrect in any material respect
when made; or
(h) Any of the following events occur or exist with respect to
the Borrower, any Guarantor, any Subsidiary of the Borrower or a Guarantor, or
any ERISA Affiliate: (i) any Prohibited Transaction involving any Plan; (ii) any
Reportable Event with respect to any Plan; (iii) the filing under Section 4041
of ERISA of a notice of intent to terminate any Plan or the termination of any
Plan; (iv) any event or circumstance that might constitute grounds entitling the
PBGC to institute proceedings under Section 4042 of ERISA for the termination
of, or for the appointment of a trustee to administer, any Plan, or the
institution of the PBGC of any such proceedings; (v) complete or partial
withdrawal under Section 4201 or 4204 of ERISA from a Multiemployer Plan or the
reorganization insolvency, or termination of any Multiemployer Plan; and in each
case above, such event or condition, together with all other events or
conditions, if any, could in the opinion of the Bank subject the Borrower, any
Guarantor, any such Subsidiary or any ERISA Affiliate to any tax, penalty, or
other liability to a Plan, a Multiemployer Plan, the PBGC, or otherwise (or any
combination thereof) which in the aggregate exceeds or may exceed $50,000.00; or
(i) This Agreement or any other Loan Document, at any time
after its execution and delivery and for any reason, ceases to be in full force
and effect or shall be declared to be null and void, or the validity or
enforceability of any document or instrument delivered pursuant to this
Agreement shall be contested by the Borrower, any Guarantor or any party to such
document or
<PAGE>
instrument or the Borrower, any Guarantor or any party to such document or
instrument shall deny that it has any or further liability or obligation under
any such document or instrument; or
(j) An event of default specified in any Loan Document other
than this Agreement shall have occurred and be continuing.
SECTION 6.02. REMEDIES ON DEFAULT. Upon the occurrence and continuance
of an Event of Default the Bank may by notice to the Borrower, (i) terminate the
Commitment, (ii) declare the Revolving Credit Note, the Converted Term Loan
Note, all interest thereon and all other amounts payable under this Agreement to
be forthwith due and payable, whereupon the Commitment shall be terminated, the
Revolving Credit Note, the Converted Term Loan Note, all such interest and all
such amounts shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Borrower and (ii) proceed to enforce its rights whether by suit in
equity or by action at law, whether for specific performance of any covenant or
agreement contained in this Agreement or any Loan Document, or in aid of the
exercise of any power granted in either this Agreement or any Loan Document or
proceed to obtain judgment or any other relief whatsoever appropriate to the
enforcement of its rights, or proceed to enforce any other legal or equitable
right which the Bank may have by reason of the occurrence of any Event of
Default hereunder or under any Loan Document, provided, however, upon the
occurrence of an Event of Default referred to in Section 6.01(e), the Commitment
shall be immediately terminated, the Revolving Credit Note and the Converted
Term Loan Note, all interest thereon and all other amounts payable under this
Agreement shall be immediately due and payable without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived
by the Borrower. Any amounts collected pursuant to action taken under this
Section 6.02 shall be applied to the payment of, first, any costs incurred by
the Bank in taking such action, including but without limitation attorneys fees
and expenses, second, to payment of the accrued interest on the Revolving Credit
Note and the Converted Term Loan Note, and third, to payment of the unpaid
principal of the Revolving Credit Note and the Converted Term Loan Note.
SECTION 6.03. REMEDIES CUMULATIVE. No remedy conferred upon or reserved
to the Bank hereunder or in any Loan Document is intended to be exclusive of any
other available remedy, but each and every such remedy shall be cumulative and
in addition to every other remedy given under this Agreement or any Loan
Document or now or hereafter existing at law or in equity. No delay or omission
to exercise any right or power accruing upon any Event of Default shall impair
any such right or power or shall be construed to be a waiver thereof, but any
such right and power may be exercised from time to time and as often as may be
deemed expedient. In order to
<PAGE>
entitle the Bank to exercise any remedy reserved to it in this Article VI, it
shall not be necessary to give any notice, other than such notice as may be
herein expressly required in this Agreement or in any Loan Document.
<PAGE>
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. AMENDMENTS, ETC. No amendment, modification, termination
or waiver of any provision of any Loan Document to which the Borrower or any
Guarantor is a party, nor consent to any departure by the Borrower or any
Guarantor from any provision of any Loan Document to which it is a party, shall
in any event be effective unless the same shall be in writing and signed by the
Bank, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 7.02. NOTICES, ETC. All notices and other communications
provided for hereunder shall be in writing (including telegraphic communication)
and mailed, telegraphed, sent by facsimile or delivered, if to the Borrower or
any Guarantor, at the address of the Borrower or Guarantor, as the case may be,
set forth at the beginning of this Agreement and if to the Bank, at the address
of the Bank set forth at the beginning of this Agreement to the attention of ERD
Waste Corp. Account Officer, or, as to each party, at such other address as
shall be designated by such party in a written notice complying as to delivery
with the terms of this Section 7.02 to the other parties. All such notices and
communications shall be effective when mailed, telegraphed or delivered, except
that notices to the Bank shall not be effective until received by the Bank.
SECTION 7.03. NO WAIVER, REMEDIES. No failure on the part of the Bank
to exercise, and no delay in exercising, any right, power or remedy under any
Loan Document, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right under any Loan Document preclude any other or
further exercise thereof or the exercise of any other right. The remedies
provided in the Loan Documents are cumulative and not exclusive of any remedies
provided by law.
SECTION 7.04. COSTS, EXPENSES AND TAXES. The Borrower agrees to pay on
demand all costs and expenses of the Bank in connection with the preparation,
execution, delivery and administration of this Agreement, the Revolving Credit
Note, the Converted Term Loan Note and any other Loan Documents, including,
without limitation, the fees and expenses of counsel for the Bank with respect
thereto and with respect to advising the Bank as to its rights and
responsibilities under this Agreement, and all costs and expenses, if any
(including counsel fees and expenses), in connection with the enforcement of
this Agreement, the Revolving Credit Note, the Converted Term Loan Note and any
other Loan Documents. The Borrower shall at all times protect, indemnify, defend
and save harmless the Bank from and against any and all claims, actions, suits
and other legal proceedings, and liabilities, obligations, losses, damages,
penalties, judgments, costs, expenses or
<PAGE>
disbursements which the Bank may, at any time, sustain or incur by reason of or
in consequence of or arising out of the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby. The Borrower
acknowledges that it is the intention of the parties hereto that this Agreement
shall be construed and applied to protect and indemnify the Bank against any and
all risks involved in the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, all of which risks are
hereby assumed by the Borrower, including, without limitation, any and all risks
of the acts or omissions, whether rightful or wrongful, of any present or future
de jure or de facto government or governmental authority, provided that the
Borrower shall not be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Bank's gross negligence or willful misconduct.
The provisions of this Section 7.04 shall survive the payment of the Notes and
the termination of this Agreement.
SECTION 7.05. RIGHT OF SET-OFF. Upon the occurrence and during the
continuance of any Event of Default, the Bank is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by the Bank,
Chemical Securities, Inc. or any other affiliate of the Bank to or for the
credit or the account of the Borrower or any Guarantor against any and all of
the obligations of the Borrower or any Guarantor now or hereafter existing under
this Agreement, the Revolving Credit Note and the Converted Term Loan Note,
irrespective of whether or not the Bank shall have made any demand under this
Agreement or the Revolving Credit Note or the Converted Term Loan Note and
although such obligations may be unmatured. The rights of the Bank under this
Section are in addition to all other rights and remedies (including, without
limitation, other rights of set-off) which the Bank may have.
SECTION 7.06. BINDING EFFECT. This Agreement shall become effective
when it shall have been executed by the Borrower, the Guarantors and the Bank
and thereafter it shall be binding upon and inure to the benefit of the
Borrower, the Guarantors and the Bank and their respective successors and
assigns, except that neither the Borrower nor any Guarantor shall have any right
to assign its rights hereunder or any interest herein without the prior written
consent of the Bank.
SECTION 7.07. FURTHER ASSURANCES. The Borrower and each Guarantor agree
at any time and from time to time at its expense, upon request of the Bank or
its counsel, to promptly execute, deliver, or obtain or cause to be executed,
delivered or obtained any and all further instruments and documents and to take
or cause to be taken all such other action the Bank may deem desirable in
<PAGE>
obtaining the full benefits of, this Agreement or any other Loan Document.
SECTION 7.08. SECTION HEADINGS, SEVERABILITY, ENTIRE AGREEMENT. Section
and subsection headings have been inserted herein for convenience only and shall
not be construed as part of this Agreement. Every provision of this Agreement
and each Loan Document is intended to be severable; if any term or provision of
this Agreement, any Loan Document, or any other document delivered in connection
herewith shall be invalid, illegal or unenforceable for any reason whatsoever,
the validity, legality and enforceability of the remaining provisions hereof or
thereof shall not in any way be affected or impaired thereby. All exhibits and
schedules to this Agreement shall be annexed hereto and shall be deemed to be
part of this Agreement. This Agreement and the exhibits and schedules attached
hereto embody the entire Agreement and understanding between the Borrower, the
Guarantors and the Bank and supersede all prior agreements and understandings
relating to the subject matter hereof.
SECTION 7.09. GOVERNING LAW. This Agreement, the Revolving Credit Note
and the Converted Term Loan Note and all other Loan Documents shall be governed
by, and construed in accordance with, the laws of the State of New York.
SECTION 7.10. WAIVER OF JURY TRIAL. The Borrower, each Guarantor and
the Bank waive all rights to trial by jury on any cause of action directly or
indirectly involving the terms, covenants or conditions of this Agreement or any
Loan Document.
SECTION 7.11. EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed
<PAGE>
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
ERD WASTE CORP. C&J ENTERPRISES, INC.
By____________________________ By_____________________________
Name: Joseph Wisneski Name: Joseph Wisneski
Title: President Title: President
ERD WASTE CORP. (INDIANA) LONG BEACH RECYCLING & RECOVERY
CORP.
By____________________________
Name: Robert M. Rubin By_____________________________
Title: Chairman of the Board Name: Joseph Wisneski
Title: President
ABSORBENT MANUFACTURING &
TECHNOLOGY, INC. CHEMICAL BANK
By____________________________ By_____________________________
Name: Robert M. Rubin Name: Robert F. Eisen, Jr.
Title: Chairman of the Board Title: Vice President
ENSA ACQUISITION CORP.
By____________________________
Name: Joseph Wisneski
Title: President
ENVIRONMENTAL WASTE INCINERATION,
INC.
By____________________________
Name: Robert M. Rubin
Title: Chairman of the Board
ERD WASTE CORP. OF ILLINOIS
By____________________________
Name: Robert M. Rubin
Title: Chairman of the Board
ERD MANAGEMENT CORP.
By:____________________________
Name: Joseph Wisneski
Title: President
<PAGE>
SCHEDULE 4.01(a)
STATE OF INCORPORATION IDENTITY AND
AND EACH STATE IN WHICH PERCENTAGE OF
SUBSIDIARY'S NAME IT IS QUALIFIED TO DO OWNERSHIP OF
AND ADDRESS BUSINESS EACH SHAREHOLDER
- ----------------- ----------------------- ----------------
<PAGE>
SCHEDULE 4.01(v)
Nature of Amount of Liens Securing
Creditor Agreement Credit Credit
- -------- --------- ------ ------
<PAGE>
SCHEDULE 5.02(a)
Creditor Amount Property Subject to Lien
- -------- ------ ------------------------
<PAGE>
SCHEDULE 5.02(b)
Creditor Amount
-------- ------
<PAGE>
SCHEDULE 5.02(i)
Description of All Guaranties:
<PAGE>
EXHIBIT A
---------
REVOLVING CREDIT NOTE
$_________________ Garden City, New York
______________, 199_
FOR VALUE RECEIVED, on April 1, 1998, ERD WASTE CORP, a _____________
corporation, having its principal place of business at 356 Veterans Memorial
Highway, Commack, New York 11725 (the "Borrower"), promises to pay to the order
of CHEMICAL BANK ("Bank") at its office located at 395 North Service Road, Suite
302, Melville, New York 11747, the principal sum of the lesser of: (a) Seven
Million Five Hundred Thousand ($7,500,000.00) Dollars; or (b) the aggregate
unpaid principal amount of all Revolving Credit Loans made by Bank to Borrower
pursuant to the Agreement (as defined below).
Borrower shall pay interest on the unpaid principal balance of this
Note from time to time outstanding, at said office, at the rates of interest, at
the times and for the periods set forth in the Agreement.
All payments including prepayments on this Note shall be made in lawful
money of the United States of America in immediately available funds. Except as
otherwise provided in the Agreement, if a payment becomes due and payable on a
day other than a Business Day, the maturity thereof shall be extended to the
next succeeding Business Day, and interest shall be payable thereon at the rate
herein specified during such extension.
Borrower hereby authorizes Bank to enter from time to time the amount
of each Loan to Borrower and the amount of each payment on a Loan on the
schedule annexed hereto and made a part hereof. Failure of Bank to record such
information on such schedule shall not in any way effect the obligation of
Borrower to pay any amount due under this Note.
This Note is the Revolving Credit Note referred to in that certain Loan
Agreement among Borrower, certain Guarantors, and Bank of even date herewith
(the "Agreement"), as such Agreement may be further amended from time to time,
and is subject to prepayment and its maturity is subject to acceleration upon
the terms contained in said Agreement. All capitalized terms used in this Note
and not defined herein shall have the meanings given them in the Agreement.
If any action or proceeding shall be commenced to collect this Note or
enforce any of its provisions, Borrower further agrees to pay all costs and
expenses of such action or proceeding and attorneys' fees and expenses and
further expressly waives any and every right to interpose any counterclaim in
any such action or
<PAGE>
proceeding. Borrower hereby submits to the jurisdiction of the Supreme Court of
the State of New York and agrees with Bank that personal jurisdiction over
Borrower shall rest with the Supreme Court of the State of New York for purposes
of any action on or related to this Note, the liabilities, or the enforcement of
either or all of the same. Borrower hereby waives personal service by manual
delivery and agrees that service of process may be made by post-paid certified
mail directed to the Borrower at the Borrower's address set forth above or at
such other address as may be designated in writing by the Borrower to Bank in
accordance with Section 7.02 of the Agreement, and that upon mailing of such
process such service be effective with the same effect as though personally
served. Borrower hereby expressly waives any and every right to a trial by jury
in any action on or related to this Note, the liabilities or the enforcement of
either or all of the same.
Bank may transfer this Note and may deliver the security or any part
thereof to the transferee or transferees, who shall thereupon become vested with
all the powers and rights above given to Bank in respect thereto, and Bank shall
thereafter be forever relieved and fully discharged from any liability or
responsibility in the matter. The failure of any holder of this Note to insist
upon strict performance of each and/or all of the terms and conditions hereof
shall not be construed or deemed to be a waiver of any such term or condition.
Borrower and all endorsers and guarantors hereof waive presentment and
demand for payment, notice of non-payment, protest, and notice of protest.
This Note shall be construed in accordance with and governed by the
laws of the State of New York.
ERD WASTE CORP.
By___________________________________________
Name: Joseph Wisneski
Title: President
<PAGE>
Schedule of Revolving Credit Loans
----------------------------------
Amount of
Principal Unpaid Name of
Making Amount of Paid or Principal Person Making
Date Loan Prepaid Balance Notation
- ------ --------- --------- --------- -------------
<PAGE>
EXHIBIT B
---------
CONVERTED TERM LOAN NOTE
Garden City, New York
$__________________ ______________, 199_
FOR VALUE RECEIVED, ERD WASTE CORP., a ______________
corporation, having its principal place of business at 356 Veterans Memorial
Highway, Commack, New York 11725 (the "Borrower") promises to pay to the order
of CHEMICAL BANK ("Bank") at its office located at 395 North Service Road, Suite
302, Melville, New York 11747, the principal amount of ____________
($____________) DOLLARS, or, if less, the unpaid principal amount of the
Converted Term Loan (as defined in the Agreement, as defined below) made by the
Bank to the Borrower pursuant to the Agreement.
The principal balance of this Note shall be payable in thirty
six (36) equal monthly principal installments, due on the last Business Day of
each month, commencing on the first such day after the Conversion Date, each
such installment being in an amount equal to one-thirty sixth (1/36th) of the
original principal amount of this Note.
Borrower shall pay interest on the unpaid principal balance of
this Note from time to time outstanding, at said office at the rates of
interest, at the times and for the periods set forth in the Agreement.
All payments including prepayments on this Note shall be made
in lawful money of the United States of America in immediately available funds.
Except as otherwise provided in the Agreement, if a payment becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day, and interest shall be payable
thereon at the rate herein specified during such extension.
This Note is the Converted Term Loan Note referred to in that
certain Loan Agreement among Borrower, certain Guarantors and Bank dated as of
March 29, 1996 (the "Agreement"), as such Agreement may be further amended from
time to time, and is subject to prepayment and its maturity is subject to
acceleration upon the terms contained in said Agreement. All capitalized terms
used in this Note and not defined herein shall have the meanings given them in
the Agreement.
If any action or proceeding shall be commenced to collect this
Note or enforce any of its provisions, Borrower further agrees to pay all costs
and expenses of such action or proceeding and attorneys' fees and expenses and
further expressly waives any and
<PAGE>
every right to interpose any counterclaim in any such action or proceeding.
Borrower hereby submits to the jurisdiction of the Supreme Court of the State of
New York and agrees with Bank that personal jurisdiction over Borrower shall
rest with the Supreme Court of the State of New York for purposes of any action
on or related to this Note, the liabilities, or the enforcement of either or all
of the same. Borrower hereby waives personal service by manual delivery and
agrees that service of process may be made by postpaid certified mail directed
to Borrower at Borrower's address designated in the Agreement or at such other
address as may be designated in writing by Borrower to Bank in accordance with
Section 7.02 of the Agreement, and that upon mailing of such process such
service be effective with the same effect as though personally served. Borrower
hereby expressly waives any and every right to a trial by jury in any action on
or related to this Note, the liabilities or the enforcement of either or all of
the same.
Bank may transfer this Note and may deliver the security or
any part thereof to the transferee or transferees, who shall thereupon become
vested with all the powers and rights above given to Bank in respect thereto,
and Bank shall thereafter be forever relieved and fully discharged from any
liability or responsibility in the matter. The failure of any holder of this
Note to insist upon strict performance of each and/or all of the terms and
conditions hereof shall not be construed or deemed to be a waiver of any such
term or condition.
Borrower authorizes Bank to complete this Note as to any terms
not set forth herein at the time of delivery hereof.
Borrower and all endorsers and guarantors hereof waive
presentment and demand for payment, notice of non-payment, protest, and notice
of protest.
This Note shall be construed in accordance with and governed
by the laws of the State of New York.
ERD WASTE CORP.
By:__________________________
Name: Joseph Wisneski
Title: President
