EXECUTION COPY
FOURTH AMENDMENT dated as of May 5, 1995 (the "Amendment") to LOAN AND
SECURITY AGREEMENT dated as of September 28, 1994 (as heretofore amended
through the date hereof, the "Loan Agreement") among CANONIE ENVIRONMENTAL
SERVICES CORP., currently known as Smith Environmental Technologies
Corporation ("Smith"), BCM ENGINEERS INC., a Pennsylvania corporation, BCM
ENGINEERS INC., an Alabama corporation, RIEDEL ENVIRONMENTAL SERVICES INC.,
each of the Lenders which are or which may become parties to the Loan
Agreement and LASALLE BUSINESS CREDIT, INC., as Agent for the Lenders. Terms
which are capitalized in this Amendment and not otherwise defined shall have
the meanings ascribed to them in the Loan Agreement.
WHEREAS, each of the Borrowers has requested the Lenders to consider
establishing a subline of credit for the purpose of making Revolving Loans to
each of the Borrowers based upon certain unbilled accounts receivable of the
Account Owners and the Lenders are willing to establish such subline of
credit on the terms and subject to the fulfillment of the conditions
contained in this Amendment; and
WHEREAS, Smith has advised the Agent pursuant to a letter dated March 29,
1995, in accordance with the provisions of Paragraph 14(k) of the Loan
Agreement, that it intends to create a new wholly-owned Subsidiary, to be
known as Canonie Environmental Services Corp., a Delaware corporation (the
"New Subsidiary");
NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION ONE. AMENDMENT. Upon the fulfillment of the conditions set forth
in Section Two hereof, the Loan Agreement shall be and is hereby amended,
effective as of May 5, 1995, as follows:
(a) PARAGRAPH 1. DEFINITIONS. Paragraph 1(a) is amended by (i) deleting the
definition of the term Equity Infusion Date and by substituting the following
in lieu thereof and (ii) adding thereto in the appropriate alphabetical order
each of the following terms and the definitions thereof:
"Eligible Unbilled Account" shall mean an Unbilled Account which is
generally acceptable to the Agent in its commercially reasonable judgment.
The Agent shall, in general, consider an Unbilled Account to be an Eligible
Unbilled Account if it meets, and so long as it meets, the following
requirements:
EXHIBIT 5.1
(i) the work performed or service rendered in respect thereof has been
completed in its entirety and such Unbilled Account does not arise from
the use of the percentage of completion method of accounting;
(ii) the work performed or service rendered in respect thereof has been
completed less than forty-five (45) days prior to the submission of such
Unbilled Account to the Agent for the purpose of making a Revolving Loan
against such Unbilled Account and on or before the forty-fifth day
following the completion of such work or service, such Unbilled Account
has been actually billed as an Account; and
(iii) upon the billing of such Unbilled Account as an Account, such
Account shall meet all of the eligibility requirements set forth in the
definition of the term Eligible Account.
"Equity Infusion Date" shall mean the date upon which Smith shall have
received in its account net cash proceeds from the sale and issuance of
its equity securities in an amount not less than $10,000,000.
"Fourth Amendment Closing Date" shall mean the date upon which the last of
the events, the fulfillment of each of which is a condition precedent to the
effectiveness of the Fourth Amendment to this Agreement, dated as of May 5,
1995, shall have occurred.
"Unbilled Account" shall mean an amount which (i) is owing, but which is
not yet billable, for work actually performed or services actually rendered
by an Account Owner, as reflected on the books and records of such Account
Owner, (ii) under the terms of the relevant contract or agreement between
such Account Owner and the putative Account Debtor to become indebted
thereon, cannot yet be billed as an Account and (iii) shall become an Account
in the ordinary course of such Account Owner's business.
"Unbilled Account Cleanup Date" shall mean the date upon which the
Unbilled Account Subline shall have been reduced to zero (-0-) and all
Revolving Loans made against Eligible Unbilled Accounts, and all interest
accrued thereon, shall have been paid and satisfied in full.
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"Unbilled Account Subline" shall mean, initially, $4,000,000, as such
amount shall be reduced from time to time in accordance with the terms of
paragraph 6(d).
(b) PARAGRAPH 2. REVOLVING LOANS. Paragraph 2(a) is amended by deleting
the fourth sentence thereof in its entirety and by substituting the following
in lieu thereof:
"If at any time the outstanding principal balance of the Revolving Loans
made to a Borrower (i) against the Eligible Unbilled Accounts of such
Borrower exceeds an amount equal to the difference between (A) the amount of
the Unbilled Account Subline then in effect and (B) the then outstanding
amount of all Revolving Loans made against the Eligible Unbilled Accounts of
the other Account Owners or (ii) exceeds (A) the Subline applicable to such
Borrower or (B) the Borrowing Base of such Borrower, in each case less the
outstanding Letter of Credit Obligations of such Borrower, then such Borrower
shall immediately, and without the necessity of a demand by the Agent or the
Lenders, pay to the Agent such amounts as may be necessary to eliminate the
excess calculated pursuant to clause (i) or clause (ii) hereof, as the case
may be, and applicable to such Borrower, and the Agent shall apply such
payment against the outstanding principal balance of the Revolving Loans of
such Borrower."
(c) PARAGRAPH 2. REVOLVING LOANS. Paragraph 2 is further amended by
deleting paragraphs 2(b)(i), (ii) and (iii) in their entirety and by
substituting the following in lieu thereof:
"(i) to Smith, the lesser of
(A)(1) an amount equal to the sum of (x) up to eighty percent (80%) of
the face amount (less maximum discounts, credits and allowances which may be
taken by or granted to Account Debtors in connection therewith) of Smith's
Eligible Accounts, less such reserves as the Agent elects to establish from
time to time in the exercise of its commercially reasonable credit judgment
PLUS (y) during the period commencing on the Fourth Amendment Closing Date
and ending on the Equity Infusion Date (notice of the occurrence of which
shall be promptly given in writing by Smith to the Agent), an amount equal to
the lesser of (I) the amount of
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the Unbilled Account Subline then in effect and (ii) up to fifty percent
(50%) of the aggregate Eligible Unbilled Accounts of Smith, MINUS (2)
the outstanding amount of all Letter of Credit Obligations of Smith and
(B) the Revolving Line of Credit, MINUS the outstanding amount of all
Revolving Loans made against the Eligible Accounts of the other Account
Owners, MINUS the outstanding amount of all Revolving Loans made against the
Eligible Unbilled Accounts of the other Account Owners, and MINUS the
outstanding amount of all Letter of Credit Obligations;
(ii) to BCM, the lesser of
(A)(1) an amount equal to the sum of (x) up to eighty percent (80%) of the
face amount (less maximum discounts, credits and allowances which may be
taken by or granted to Account Debtors in connection therewith) of the
Eligible Accounts of BCM and BCM-Alabama, less such reserves as the Agent
elects to establish from time to time in the exercise of its commercially
reasonable credit judgment, PLUS (y) during the period commencing on the
Fourth Amendment Closing Date and ending on the Equity Infusion Date, an
amount equal to the lesser of (I) the amount of the Unbilled Account Subline
then in effect and (II) up to fifty percent (50%) of the aggregate Eligible
Unbilled Accounts of BCM and BCM-Alabama, MINUS (2) the outstanding amount of
all Letter of Credit Obligations of BCM and
(B) the Revolving Line of Credit, MINUS the outstanding amount of all
Revolving Loans made against the Eligible Accounts of the other Account
Owners, MINUS the outstanding amount of all Revolving Loans made against the
Eligible Unbilled Accounts of the other Account Owners, and MINUS the
outstanding amount of all Letter of Credit Obligations; and
(iii) to Riedel, the lesser of
(A)(1) an amount equal to the sum of (x) up to eighty percent (80%) of
the face amount (less maximum discounts, credits and allowances which may be
taken by or granted to Account Debtors in connection therewith) of the
Eligible Accounts of Riedel, less such reserves as the Agent elects to
establish from time to time in the exercise of its commercially reasonable
credit judgment, PLUS (y)during the period commencing on the Fourth
Amendment Closing Date and ending on the Equity Infusion Date,
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an amount equal to the lesser of (I) the amount of the Unbilled Account
Subline then in effect and (II) up to fifty percent (50%) of the aggregate
Eligible Unbilled Accounts of Riedel, MINUS (2) the outstanding amount of
all Letter of Credit Obligations of Riedel and
(B) the Revolving Line of Credit, MINUS the outstanding amount of all
Revolving Loans made against the Eligible Accounts of the other Account
Owners, MINUS the outstanding amount of all Revolving Loans made against the
Eligible Unbilled Accounts of the other Account Owners, and MINUS the
outstanding amount of all Letter of Credit Obligations."
(d) PARAGRAPH 5(b). DETERMINATION OF APPLICABLE INTEREST RATE MARGIN.
Paragraph 5(b) is amended by deleting the first sentence thereof and the
introductory portion of the second sentence thereof, through the phrase
"October 1, 1995" and by substituting the following in lieu thereof:
"At all times prior to the Fourth Amendment Closing Date, the applicable
Interest Rate Margins shall be those contained on the chart set forth below,
opposite the column marked "(I) less than $5,000,000". At all times on and
after the Fourth Amendment Closing Date through the Unbilled Account
Cleanup Date, the applicable Interest Rate Margins: (i) in the case of Prime
Rate Term Loans and LIBOR Rate Term Loans shall be those contained on the
chart set forth below opposite the column marked "(I) less than $5,000,000"
and under the headings marked "Applicable Term/Prime Interest Rate Margin for
Current Calendar Quarter" and "Applicable Term/Libor Interest Rate Margin for
Current Calendar Quarter", respectively; (ii) in the case of all Prime Rate
Revolving Loans shall be two and one-quarter percent (2 1\4 %) and (iii) in
the case of all LIBOR Rate Revolving Loans shall be four percent (4%). If the
Unbilled Account Cleanup Date occurs prior to October 1, 1995, then at all
times on and after the Unbilled Account Cleanup Date and prior to October 1,
1995, the applicable Interest Rate Margins shall be those contained on the
chart set forth below opposite the column marked "(I) less than $5,000,000".
Beginning with the later to occur of the calendar quarter commencing
October 1, 1995 and the calendar quarter commencing immediately following the
Unbilled Account Cleanup Date."
(e) PARAGRAPH 5(f). CLOSING FEES. Paragraph 5 is amended by deleting
paragraph 5(f) in its entirety and by substituting the following in lieu
thereof:
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"(f) CLOSING FEES. The Borrowers shall pay to (i) LaSalle for its own
account, on the Closing Date, a closing fee of Five Hundred Thousand Dollars
($500,000), (ii) each of Chemical Bank and The Bank of New York Commercial
Corporation, for its own account, on the First Amendment Closing Date, a
closing fee of Twenty-Five Thousand Dollars ($25,000), and (iii) the Agent,
for the ratable benefit of the Lenders, on the Fourth Amendment Closing Date,
a closing fee of One Hundred Thousand Dollars ($100,000). All of the fees
described in this paragraph 5(f) shall be payable in cash, shall be
non-refundable and shall be deemed to have been fully earned when paid."
(f) PARAGRAPH 5. INTEREST, FEES AND CHARGES. Paragraph 5 is amended by
adding a new paragraph 5(k) thereto, captioned "Service Charge", as follows:
"(k) SERVICE CHARGE. In consideration of the Lenders' agreement to make
Revolving Loans against Eligible Unbilled Accounts, the Borrowers jointly and
severally agree that, commencing on November 1, 1995 and on the First day of
each month thereafter, until such time, if any, as the Equity Infusion
Date shall occur, the Borrowers shall pay to the Agent, for the ratable
benefit of the Lenders, at the beginning of each month, a service charge of
$20,000."
(g) PARAGRAPH 6(d). REDUCTION OF REVOLVING LINE OF CREDIT. Paragraph 6(d)
is amended by (i) deleting the caption thereto and substituting in lieu
thereof the caption "Reduction of Revolving Line of Credit and Reduction of
Unbilled Account Subline" and (ii) adding the following sentence to the end
thereof:
"The amount of the Unbilled Account Subline shall automatically and
permanently reduce as of the first day of each month by $500,000 per
month, commencing with the month of August, 1995, until reduced to
zero (-0-), PROVIDED, HOWEVER, that the amount of the Unbilled Account
Subline shall automatically and permanently reduce to zero (-0-) upon
the occurrence of the Equity Infusion Date."
(h) PARAGRAPH 11(a). SCHEDULES AND REPORTS. Paragraph 11(a) is amended by
deleting the period at the end thereof and by inserting the following
thereafter:
", and a report of such Account Owner's Eligible Unbilled Accounts and
Unbilled Accounts for the previous week."
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(i) PARAGRAPH 14. COVENANTS. Paragraph 14(m) is amended by deleting
clause (ix) thereof in its entirety and by substituting the following in lieu
thereof:
"(ix) on and after the occurrence of the Unbilled Account Cleanup Date,
other investments not permitted above in an aggregate amount not exceeding
$250,000 at any time; and"
SECTION TWO. CONDITIONS PRECEDENT. This Amendment shall become effective
on the date when all of the following conditions, the fulfillment of each of
which is a condition precedent to the effectiveness of this Amendment, shall
have occurred or shall have been waived in writing by the Agent and the
Lenders.
(a) The Agent and each of the Lenders shall have received a fully executed
counterpart or original of this Amendment, together with all schedules and
exhibits hereto appropriately completed to the extent required.
(b) The Agent shall have received for the PRO RATA benefit of the Lenders
payment of a closing fee of $100,000, which fee may be paid, in the sole
discretion of the Lenders, by the charging of the Borrowers' account
maintained with the Agent.
(c) The Agent shall have received, for the ratable benefit of the Lenders,
the personal guaranty of Mr. E. Brian Smith, together with his personal
financial statement for the year ending December 31, 1994, which guaranty
shall be in the form of Exhibit A annexed hereto.
(d) Upon the effectiveness of this Amendment, all representations and
warranties set forth in the Loan Agreement (except for such inducing
representations and warranties that were only required to be true and correct
as of a prior date) shall be true and correct in all material respects on and
as of the effective date hereof, and no Default or Event of Default shall
have occurred and be continuing.
(e) No event or development shall have occurred since the date of delivery
to the Lenders of the Borrowers' most recent financial statements which event
or development has had or is reasonably likely to have a Material Adverse
Effect.
(f) The Agent shall have received a certificate from each Borrower,
executed by its Chief Executive Officer or other authorized officer as to the
satisfaction of paragraphs (d) and (e) of this Section Two.
(g) All corporate and legal proceedings and all documents and instruments
executed or delivered in connection with this Amendment shall be satisfactory
in form and substance satisfactory to the Lenders and their counsel, and the
Lenders and their counsel shall have received all information and copies of
all documents which the Lenders and their counsel
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may have requested in connection herewith and the matters contemplated
hereunder, such documents, when requested by them, to be certified by
appropriate corporate authorities.
(h) The Lenders shall have received such further agreements, consents,
instruments and documents as may be necessary or proper in the reasonable
opinion of the Lenders, the Agent and their counsel to carry out the
provisions and purposes of this Amendment.
SECTION THREE. REPRESENTATIONS AND WARRANTIES. Each Borrower hereby
represents and warrants (which representations and warranties shall survive
the execution and delivery hereof) to the Lenders that:
(a) Such Borrower has the corporate power, authority and legal right to
execute, deliver and perform this Amendment, and the instruments, agreements,
documents and transactions contemplated hereby, and has taken all actions
necessary to authorize the execution, delivery and performance of this
Amendment, and the instruments, agreements, documents and transactions
contemplated hereby;
(b) No consent of any Person (including, without limitation, shareholders
or creditors of such Borrower other than the Lenders, and no consent, permit,
approval or authorization of, exemption by, notice or report to, or
registration, filing or declaration with, any governmental authority is
required in connection with the execution, delivery, performance, validity or
enforceability of this Amendment, and the instruments, agreements, documents
and transactions contemplated hereby;
(c) This Amendment has been duly executed and delivered on behalf of such
Borrower by its duly authorized officer, and constitutes the legal, valid and
binding obligation of such Borrower, enforceable in accordance with its terms;
(d) Such Borrower is not in default under any indenture, mortgage, deed of
trust, agreement or other instrument to which it is a party or by which it
may be bound. Neither the execution and delivery of this Amendment, nor the
consummation of the transactions herein contemplated, nor compliance with the
provisions hereof or thereof will (i) violate any law or regulation, or (ii)
result in or cause a violation by such Borrower of any order or decree of any
court or government instrumentality, or (iii) conflict with, or result in the
breach of, or constitute a default under, any indenture, mortgage, deed of
trust, agreement or other instrument to which such Borrower is a party or by
which it may be bound, or (iv) result in the creation or imposition of any
lien, charge, or encumbrance upon any of the property of such Borrower,
except in favor of the Agent for the benefit of the Lenders, to secure the
Liabilities, or (v) violate any provision of the Articles or Certificate of
Incorporation, By-Laws or any capital stock provisions of such Borrower;
(e) No Event of Default has occurred and is continuing;
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(f) Since the date of the Agent's receipt of the unaudited financial
statements of the Borrowers for the quarterly period ended February 28, 1995,
no change or event has occurred which has had or is reasonably likely to have
a Material Adverse Effect; and
(g) The recitals contained in this Amendment are true and correct in all
respects.
SECTION FOUR. GENERAL PROVISIONS.
(a) Except as herein expressly amended, the Loan Agreement and all other
agreements, documents, instruments and certificates executed in connection
therewith, are ratified and confirmed in all respects and shall remain in
full force and effect in accordance with their respective terms.
(b) All references in the Other Agreements to the Loan Agreement shall
mean the Loan Agreement as amended as of the effective date hereof, and as
amended hereby and as hereafter amended, supplemented or modified from time
to time. From and after the date hereof, all references in the Loan
Agreement to "this Agreement," "hereof,""herein," or similar terms, shall
mean and refer to the Loan Agreement as amended by this Amendment.
(c) This Amendment may be executed by the parties hereto individually or
in combination, in one or more counterparts, each of which shall be an
original and all which shall constitute one and the same agreement.
(d) This Amendment shall be governed and controlled by the laws of the
State of Illinois without reference to its choice of law principles.
(e) Smith agrees to cause the New Subsidiary, within five (5) Business
Days of the date hereof, to execute and deliver to the Agent a secured
guaranty in substantially the form of the Continuing Unconditional Guaranty
previously executed and delivered to the Lenders by Riedel and financing
statements on form UCC-1, suitable for recordation in all requisite
jurisdictions, as determined by the Agent.
[signature page follows]
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IN WITNESS WHEREOF, each of the Borrowers, BCM-Alabama, the Lenders and
the Agent have caused this Amendment to be duly executed by their respective
officers thereunto duly authorized as of the day and year first above written.
SMITH ENVIRONMENTAL TECHNOLOGIES RIEDEL ENVIRONMENTAL SERVICES
CORPORATION (f/k/a Canonie
Environmental Services Corp.)
By: /s/ Wilfrid D. Nelson By: /s/ Wilfrid D. Nelson
_______________________________________ ________________________________
(Title) Vice President, General Counsel (Title) Executive Vice President
and Secretary and Assistant Secretary
BCM ENGINEERS INC., LASALLE BUSINESS CREDIT, INC.
a Pennsylvania corporation
By: /s/ Wilfrid D. Nelson By: /s/
_______________________________________ ________________________________
(Title) Executive Vice President (Title)
and Assistant Secretary
BCM ENGINEERS INC., CHEMICAL BANK
an Alabama corporation
By: /s/ Wilfrid D. Nelson By: /s/
_______________________________________ ________________________________
(Title) Executive Vice President (Title)
and Assistant Secretary
THE BANK OF NEW YORK LASALLE BUSINESS CREDIT, INC.,
COMMERCIAL CORPORATION as Agent
By: /s/ By: /s/
_______________________________________ ________________________________
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EXHIBIT A
CONTINUING UNCONDITIONAL GUARANTY
BY E. BRIAN SMITH
WHEREAS, Smith Environmental Technologies Corporation, formerly known as
Canonie Environmental Services Corp. ("Smith Environmental"), BCM Engineers,
Inc., a Pennsylvania corporation, BCM Engineers, Inc., an Alabama corporation
and Riedel Environmental Services, Inc. (together with Smith Environmental,
the "Borrowers") have entered into a Loan and Security Agreement dated as of
September 28, 1994 (as heretofore amended through the date hereof, the "Loan
Agreement"; terms which are capitalized herein and are not otherwise defined
shall have the meanings ascribed to them in the Loan Agreement) with each of
the lenders which are or which may become parties to the Loan Agreement (the
"Lenders") and LaSalle Business Credit, Inc., in its capacity as agent for
the Lenders (in such capacity, the "Agent"); and
WHEREAS, concurrently with the execution and delivery of this instrument of
guaranty (the "Guaranty"), Borrowers, the Lenders and the Agent are entering
into the Fourth Amendment to the Loan Agreement, one of the conditions
precedent to the effectiveness of which is the execution and delivery of this
Guaranty by Mr. E. Brian Smith, an individual (the "Guarantor"), in favor of
the Agent for the ratable benefit of the Lenders; and
WHEREAS, after giving effect to certain transactions and to the
satisfaction of certain indebtedness, the Guarantor will own beneficially and
of record, or control, together with certain Persons affiliated with the
Guarantor (such Persons, together with the Guarantor, the "Smith Group"), not
less than thirteen percent (13%) of the issued and outstanding shares of
capital stock of Smith Environmental entitled to vote for the election of
directors (the "Smith Securities"); and
WHEREAS, the extension and/or continued extension of credit, as aforesaid,
by the Lenders is necessary and desirable to the conduct and operation of the
business of Borrowers and will inure to the personal and Financial benefit of
Guarantor;
NOW, THEREFORE, for value received and in consideration of any loan,
advance, or Financial accommodation of any kind whatsoever heretofore, now or
hereafter made, given or granted to Borrowers by the Lenders (including,
without limitation, the Loans as defined in, and made or to be made by the
Lenders to Borrowers pursuant to, the Loan Agreement), Guarantor
unconditionally guaranties (i) the full and prompt payment and performance
when due, whether at maturity or earlier, by reason of acceleration or
otherwise, and at all times thereafter, of all Liabilities of Borrowers to
the Agent and the Lenders and (ii) the prompt, full and faithful discharge by
Borrowers of each and every term, condition, agreement, representation and
warranty now or hereafter made by Borrowers to the Lenders (which, together
with the Liabilities described in clause (i) hereof, are collectively
referred to herein as the "Borrowers' Liabilities"), PROVIDED, HOWEVER, that
in no event shall the Guarantor's maximum liability for the Borrowers'
Liabilities exceed the sum of Four Million Dollars
($4,000,000). Guarantor further agrees to pay all reasonable out-of-pocket
costs and expenses, including, without limitation, all court costs and
reasonable attorneys' and paralegals' fees paid or actually incurred by the
Agent or the Lenders, in endeavoring to collect all or any part of Borrowers'
Liabilities from, or in prosecuting any action against, Guarantor or any
other guarantor of all or any part of Borrowers' Liabilities. All amounts
payable by Guarantor under this Guaranty shall be payable upon demand by the
Agent.
Guarantor hereby agrees that, except as hereinafter provided, his
obligations under this Guaranty shall be unconditional, irrespective of (i)
the validity or enforceability of Borrowers' Liabilities or any part thereof,
or of any promissory note or other document evidencing all or any part of
Borrowers' Liabilities, (ii) the absence of any attempt to collect Borrowers'
Liabilities from Borrowers or any other guarantor or other action to enforce
the same, (iii) the waiver or consent by the Agent or the Lenders with
respect to any provision of any instrument evidencing Borrowers' Liabilities,
or any part thereof, or any other agreement heretofore, now or hereafter
executed by any Borrower and delivered to the Agent or the Lenders, (iv)
failure by the Agent to take any steps to perfect and maintain its security
interest in, or to preserve its rights to, any security or collateral for
Borrowers' Liabilities, (v) the institution of any proceeding under Chapter
11 of Title 11 of the United States Code (11 U.S.C. Section 101 et seq.), as
amended (the "Bankruptcy Code"), or any similar proceeding, by or against any
Borrower, or the Lenders' election in any such proceeding of the application
of Section 1111(b)(2) of the Bankruptcy Code, (vi) any borrowing or grant of
a security interest by any Borrower as debtor-in-possession, under Section
364 of the Bankruptcy Code, (vii) the disallowance, under Section 502 of the
Bankruptcy Code, of all or any portion of the Agent's or the Lenders'
claim(s) for repayment of Borrowers' Liabilities, or (viii) any other
circumstance which might otherwise constitute a legal or equitable discharge
or defense of a guarantor.
Guarantor is delivering to the Agent herewith Guarantor's personal
financial statement for the year ending December 31, 1994 (the "Financial
Statement"). Guarantor acknowledges and agrees that the Agent and the
Lenders have relied on, and have been justified in their reliance on, the
truth and completeness of each of the items contained in the Financial
Statement in determining to enter into the Fourth Amendment, to consummate
the transactions contemplated thereby and to accept this Guaranty on an
unsecured basis from the Guarantor. In connection, therewith, the Guarantor
hereby represents and warrants in favor of the Agent and the Lenders, and
hereby covenants to each of them, that: (i) the Financial Statement is true
and complete in all material respects and does not omit the statement of any
facts material to the financial condition of the Guarantor; (ii) no event or
development has occurred since the effective date of the Financial Statement
which has had or is reasonably likely to have a material adverse effect on
Guarantor's condition, financial or otherwise, business, assets, liabilities
or prospects (a "Material Adverse Effect"); and (iii) so long as this
Guaranty remains in effect, Guarantor shall promptly advise the Agent in
writing of the occurrence of any event or condition which has had or is
reasonably likely to have a Material Adverse Effect.
Guarantor hereby waives diligence, presentment, demand of payment, filing
of claims with a court in the event of receivership or bankruptcy of any
Borrower, protest or notice with respect to Borrowers' Liabilities and all
demands whatsoever, and covenants that this
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Guaranty will not be discharged, except by complete performance of the
obligations and liabilities contained herein or upon the payment and
satisfaction in full of the Borrowers' Liabilities and the termination of the
Loan Agreement. Upon the occurrence and during the continuance of an Event of
Default under the Loan Agreement, the Agent may, at its sole election,
proceed directly and at once, upon five (5) days prior written notice to
Guarantor, against Guarantor to collect and recover the full amount or any
portion of Borrowers' Liabilities, without first proceeding against any
Borrower, or any other person, firm, or corporation, or against any security
or collateral for Borrowers' Liabilities.
The Lenders are hereby authorized, without notice or demand and without
affecting the liability of Guarantor hereunder, to at any time and from time
to time (i) renew, extend, accelerate or otherwise change the time for
payment of, or other terms relating to, Borrowers' Liabilities or otherwise
modify, amend or change the terms of any promissory note or other agreement,
document or instrument now or hereafter executed by Borrowers and delivered
to the Agent or the Lenders; (ii) accept partial payments on Borrowers'
Liabilities; (iii) take and hold security or collateral for the payment of
Borrowers' Liabilities guaranteed hereby, or for the payment of this
Guaranty, or for the payment of any Other guaranties of Borrowers'
Liabilities or other liabilities of Borrowers, and exchange, enforce, waive
and release any such security or collateral; (iv) apply such security or
collateral and direct the order or manner of sale thereof as in its or their
sole discretion it or they may determine; and (v) settle, release,
compromise, collect or otherwise liquidate Borrowers' Liabilities and any
security or collateral therefor in any manner, without affecting or impairing
the obligations of Guarantor hereunder. The Agent shall have The exclusive
right to determine The time and manner of application of any payments or
credits, whether received from Borrowers or any other source, and such
determination shall be binding on Guarantor. All such payments and credits
may be applied, reversed and reapplied, in whole or in part, to any of
Borrowers' Liabilities as the Agent shall determine in its sole discretion
without affecting the validity or enforceability of this Guaranty (unless
otherwise required pursuant to the Loan Agreement).
Guarantor hereby assumes responsibility for keeping himself informed of the
Financial condition of Borrowers, and any and all endorsers and/or other
guarantors of any instrument or document evidencing all or any part of
Borrowers' Liabilities and of all other circumstances bearing upon the risk
of nonpayment of Borrowers' Liabilities or any part thereof that diligent
inquiry would reveal and Guarantor hereby agrees that neither the Agent nor
the Lenders shall have any duty to advise Guarantor of information known to
any of them regarding such condition or any such circumstances or to
undertake any investigation not a part of their respective regular business
routines. If the Agent or any Lender, in its sole discretion, undertakes at
any time or from time to time to provide any such information to the
Guarantor, neither the Agent or such Lender, as the case may be, shall be
under any obligation to update any such information or to provide any such
information to Guarantor on any subsequent occasion.
Guarantor consents and agrees that neither the Agent nor the Lenders shall
be under any obligation to marshall any assets in favor of Guarantor or
against or in payment of any or all of Borrowers' Liabilities. Guarantor
further agrees that, to the extent that any
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Borrower makes a payment or payments to the Agent or the Lenders, or the
Agent or the Lenders receive any proceeds of collateral, which payment or
payments or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to such
Borrower, its estate, trustee, receiver or any other party, including,
without limitation, Guarantor, under any bankruptcy law, state or federal
law, common law or equitable theory, then to the extent of such payment or
repayment, Borrowers' Liabilities or the part thereof which has been paid,
reduced or satisfied by such amount, and Guarantor's obligations hereunder
with respect to such portion of Borrowers' Liabilities, shall be reinstated
and continued in full force and effect as of the date such initial payment,
reduction or satisfaction occurred.
Guarantor hereby waives any and all claims (including without limitation
any claim for reimbursement, contribution or subrogation) of Guarantor
against Borrowers, any endorser or any other guarantor of all or any part of
Borrowers' Liabilities, or against any of Borrowers' properties, arising by
reason of any payment by Guarantor to the Agent or the Lenders pursuant to
the provisions hereof.
Each Lender may, without notice to anyone, sell or assign Borrowers'
Liabilities or any part thereof, or grant participations therein, and in any
such event each and every immediate or remote assignee or holder of, or
participant in, all or any of Borrowers' Liabilities shall have the right to
enforce this Guaranty, by suit or otherwise for the benefit of such assignee,
holder, or participant, as fully as if herein by name specifically given such
right.
This Guaranty shall be binding upon Guarantor and upon the heirs,
successors (including without limitation, any receiver, trustee or debtor in
possession of or for Guarantor) and assigns, of Guarantor and shall inure to
the benefit of the Agent, the Lenders and their respective successors and
assigns.
This Guaranty shall continue in full force and effect, and the Lenders
shall be entitled to make loans and advances and extend financial
accommodations to Borrowers on the faith hereof until such time as the Agent
has, in writing, notified Guarantor that all of Borrowers' Liabilities have
been paid in full and discharged and the Loan Agreement has been terminated
or until the Agent has actually received written notice from Guarantor of the
discontinuance of this Guaranty. In case of any such discontinuance, this
Guaranty and the obligations of Guarantor and his heirs, successors or
assigns shall remain in full force and effect with respect to all of
Borrowers' Liabilities incurred prior to the receipt by the Agent of written
notice of such discontinuance. Upon the soonest to occur of (a) the Equity
Infusion Date, (b) the Unbilled Account Cleanup Date and (c) the consummation
of the Stock Pledge and the passage of a period of 91 days following such
consummation, provided no action or proceeding shall have been filed by or
against the Guarantor under any state or federal bankruptcy or insolvency law
or proceeding during such period, this Guaranty shall terminate automatically
and shall be of no further force or effect.
As used herein, the term "Stock Pledge" shall mean: (i) the execution and
delivery to the Agent, for the ratable benefit of the Lenders, by each member
of the Smith
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Group (each such member, for purposes of the Stock Pledge, a "Pledgor"), of a
stock pledge agreement in substantially the form of Annex 1 attached hereto;
(ii) the delivery to the Agent of a stock certificate or certificates, duly
authorized and appropriately completed, evidencing such Pledgor's
unrestricted ownership, beneficially and of record, of such Smith Securities,
together with financing statements on form UCC-1, executed by such Pledgor
as debtor and listing the Agent, for the ratable benefit of the Lenders, as
Secured Party, describing the collateral as such shares of Smith Securities,
together with the proceeds thereof, which financing statements shall be
suitable for recordation in all appropriate jurisdictions; (iii) the
execution and delivery by such Pledgor to the Agent of appropriate stock
powers in blank; (iv) the execution or delivery by such Pledgor to the Agent
of all other agreements, documents and instruments which the Agent shall
determine, in its commercially reasonable judgment, to be necessary or
desirable in connection with such Pledgor's pledge and assignment of the
Smith Securities, as hereinabove described and (iv) the pledge and assignment
to the Agent, as hereinabove described, of not less than 800,000 shares, in
the aggregate, of Smith Securities, which shares shall constitute not less
than thirteen percent (13%) of the Smith Securities.
Wherever possible each provision of this Guaranty shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Guaranty shall be prohibited by or invalid under such law,
such provision shall be ineffective to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or the
remaining provisions of this Guaranty.
THIS GUARANTY SHALL BE GOVERNED AND CONTROLLED BY THE INTERNAL LAWS OF THE
STATE OF ILLINOIS.
Guarantor irrevocably agrees that, subject to the Agent's sole and absolute
election, ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT, ARISING
OUT OF OR FROM OR RELATED TO THIS GUARANTY SHALL BE LITIGATED IN COURTS
HAVING SITUS WITHIN THE CITY OF CHICAGO, STATE OF ILLINOIS. GUARANTOR HEREBY
CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL
COURTS LOCATED WITHIN SAID CITY AND STATE. Guarantor hereby irrevocably
appoints and designates the Secretary of State of Illinois, whose address is
Springfield, Illinois (or any other person having and maintaining a place of
business in such state whom Guarantor may from time to time hereafter
designate upon ten (10) days written notice to the Agent and who the Agent
has agreed in its sole discretion in writing is satisfactory and who has
executed an agreement in form and substance satisfactory to the Agent
agreeing to act as such attorney and agent), as Guarantor's true and lawful
attorney and duly authorized agent for acceptance of service of legal
process. Guarantor agrees that service of such process upon such person shall
constitute personal service of such process upon Guarantor. GUARANTOR HEREBY
WAIVES ANY RIGHT HE MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY
LITIGATION BROUGHT AGAINST GUARANTOR BY THE AGENT IN ACCORDANCE WITH THIS
PARAGRAPH.
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GUARANTOR HEREBY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THIS GUARANTY.
IN WITNESS WHEREOF, this Guaranty has been duly executed by the undersigned
as of this ____ day of __________________, 1995.
_____________________________
E. BRIAN SMITH, an individual
State of ________________________ )
) ss.:
County of________________________ )
On the ______________ day of ______________ , 1995, E. BRIAN SMITH, an
individual residing at ______________________________________________________
and known to me, a notary public in and for the above county and state, did
execute before me the instrument of guaranty hereinabove contained, and did
acknowledge before me that such instrument was executed by him of his own free
act and will.
_____________________________
Notary Public
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ANNEX I
FORM OF STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Agreement") is dated as of ____________
199____ and is executed by [name of pledgor] an individual (the "Pledgor"),
in favor of LaSalle Business Credit, Inc., in its capacity as agent for the
Lenders, as hereinafter defined (the "Pledgee").
WHEREAS, E. Brian Smith has executed a certain Continuing Unconditional
Guaranty, dated as of May 5, 1995 (the "Guaranty") in favor of the Pledgee,
for the ratable benefit of each of the financial institutions which are or
which may become lenders (the "Lenders") under a certain Loan and Security
Agreement dated as of September 28, 1994 (as amended through the date hereof,
the "Loan Agreement") among the Lenders, the Pledgee, in its capacity as
agent for the Lenders, and the borrowers which are parties thereto; and
WHEREAS, unless the Equity Infusion Date or the Unbilled Account Cleanup
Date shall have sooner occurred, it is a condition precedent to the
termination of the Guaranty that the Pledgor shall have executed this
Agreement and made the pledge in favor of the Pledgee, for the ratable
benefit of the Lenders, as contemplated hereby;
NOW, THEREFORE, in consideration of the premises and to induce the Pledgee
to enter into the Loan Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Pledgor hereby agrees with the Pledgee as follows:
1. DEFINITIONS. Unless the context otherwise requires, all terms used but
not expressly defined herein shall have the meanings given to them in the
Loan Agreement or, if they are not defined in the Loan Agreement but are
defined in the Illinois Uniform Commercial Code (the "Code"), they shall have
the same meaning herein as in the Code.
2. PLEDGE OF THE PLEDGED STOCK; POWER OF ATTORNEY.
(a) As security for the prompt payment and performance when due of the
Liabilities, the Pledgor hereby pledges to the Pledgee, for the ratable
benefit of the Lenders, and grants to the Pledgee, for the ratable benefit of
the Lenders, a lien on and security interest in the following (the "Pledged
Collateral"): (i) [number of shares] shares of common stock of Smith
Environmental Technologies, Inc., a Delaware corporation ("Smith
Environmental") (the "Pledged Stock"), (ii) the certificates evidencing the
Pledged Stock, (iii) subject to Section 6 hereof, all dividends, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the
Pledged Stock and (iv) all proceeds of any of the foregoing (including,
without limitation, proceeds constituting any property of the types described
above). The Pledgor has delivered to the
Pledgee original stock certificates for all of the Pledged Stock, each
accompanied by an undated stock power executed in blank by the Pledgor.
(b) The Pledgee shall have no obligation with respect to the Pledged
Collateral or any other property held or received by it hereunder except to
use reasonable care in the custody thereof to the extent required by law. The
Pledgee may hold the Pledged Collateral in the form in which it is received
by it.
(c) The Pledgor, to the full extent permitted by law, hereby constitutes
and irrevocably appoints the Pledgee (and any officer or agent of the
Pledgee, with full power of substitution and revocation) as the Pledgor's
true and lawful attorney-in-fact, in the Pledgor's stead and in the name of
the Pledgor or in the name of the Pledgee, to transfer, upon the occurrence
of an Event of Default, the Pledged Collateral on the books of Smith
Environmental, as applicable, in whole or in part, to the name of the Pledgee
or such other Person or Persons as the Pledgee may designate and, upon the
occurrence of an "Event of Default", as defined in Section 9 hereof, to take
all such other and further actions as the Pledgor could have taken with
respect to the Pledged Collateral which the Pledgee in its absolute
discretion determines to be necessary or appropriate to accomplish the
purposes of this Agreement.
(d) The powers of attorney granted pursuant to this Agreement and all
authority hereby conferred are granted and conferred solely to protect the
Pledgee's interests in the Pledged Collateral and shall not impose any duty
upon the attorney-in-fact to exercise such powers. Such powers of attorney
shall be irrevocable prior to the payment in full of the Liabilities and the
termination of the Revolving Loan Commitment, and shall not be terminated
prior thereto or affected by any act of the Pledgor or other Persons or by
operation of law.
(e) Each Person who shall be a transferee of the beneficial ownership of
any of the Pledged Collateral (any such transfer being prohibited under
Section 5 unless the Pledgee consents thereto) shall be deemed to have
irrevocably appointed the Pledgee, with full power of substitution and
revocation, as such Person's true and lawful attorney-in-fact in such
Person's name and otherwise to do any and all acts herein permitted and to
exercise any and all powers herein conferred.
3. RIGHTS OF THE PLEDGER; VOTING.
(a) During the term of this Agreement, and so long as no Voting Notice
(as deemed below) is received from the Pledgee following the occurrence of an
Event of Default as hereinafter provided in this Section 3, the Pledgor shall
have the right to vote any of the Pledged Collateral in all corporate matters
except those which would contravene this Agreement or any Other Agreement or
which might materially reduce the value of the Pledged Collateral, unless
the Pledgee consents thereto. The Pledgor shall not suffer or permit any such
action to be taken by Smith Environmental without the prior written approval
(which approval the Pledgee may withhold in its sole discretion) of the
Pledgee.
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(b) Upon the occurrence of an Event of Default the Pledgor shall give the
Pledgee at least five days' prior notice of (i) any meeting of stockholders
of Smith Environmental or any meeting of directors convened for any purpose
and (ii) any written consent which the Pledgor proposes to execute as the
stockholder of Smith Environmental or which any of the representatives of the
Pledgor proposes to execute as a director of Smith Environmental. The Pledgor
hereby authorizes the Pledgee to send its agents and representatives to any
such meeting of shareholders or directors of Smith Environmental that the
Pledgee wishes to attend, and agrees to take such steps as may be necessary
to confirm and effectuate such authority, including, without limitation,
causing Smith Environmental to give reasonable prior written notice to the
Pledgee of the time and place of any such meeting and the principal actions
to be taken thereat.
(c) Notwithstanding the occurrence of an Event of Default, the Pledgor may
continue to exercise the voting rights of the Pledgor as herein described
(and subject to the limitations herein) except to the extent that the Pledgee
may elect to exercise voting power (as determined by it in its sole
discretion) by a written notice given to the Pledgor at any time during the
continuance of an Event of Default (a "Voting Notice"), whereupon the Pledgee
shall have the exclusive right to exercise such rights to the extent
specified in such Voting Notice, and the Pledgor shall take all such steps as
may be necessary to effectuate such rights until the Pledgee notifies the
Pledgor of the release of such rights.
4. NO RESTRICTIONS ON TRANSFER. The Pledgor warrants and represents that
there are no restrictions on the transfer of the Pledged Stock except for
such restrictions imposed by operation of law, that there are no options,
warrants or rights pertaining thereto, and that the Pledgor has the right to
transfer the Pledged Stock free of any encumbrances and without the consent
of the creditors of the Pledgor or the consent of Smith Environmental or any
other Person or any governmental agency whatsoever.
5. NO TRANSFER OR LIENS: ADDITIONAL SECURITIES. The Pledgor agrees that
the Pledgor will not sell, transfer or convey any interest in, or suffer or
permit any lien or encumbrance to be created upon or with respect to, any of
the Pledged Collateral during the term of this Agreement, except to or in
favor of the Pledgee.
6. ADJUSTMENTS OF CAPITAL STOCK; PAYMENT AND APPLICATION OF DIVIDENDS. In
the event that during the term of this Agreement any stock dividend,
reclassification, readjustment or other change is declared or made in the
capital structure of Smith Environmental, or if any other or additional
shares of stock of Smith Environmental are issued to the Pledgor, all new,
substituted and additional shares or other securities issued by reason of any
such change or acquisition shall immediately be delivered by the Pledgor to
the Pledgee and shall be deemed to be part of the "Pledged Collateral" under
the terms of this Agreement in the same manner as the shares of stock
originally pledged hereunder. All cash dividends received by or payable to
the Pledgor in respect of the Pledged Collateral, including any additional
shares of stock received by the Pledgor as a result of the Pledgor's record
ownership of the Pledged Stock shall immediately be delivered by the Pledgor
to the Pledgee, to be held by the Pledgee
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as Pledged Collateral hereunder or to be applied by the Pledgee against the
Liabilities. Upon the occurrence of an Event of Default, the Pledgor will not
demand and will not be entitled to receive, any cash dividends or other
income, interest or property in or with respect to the Pledged Collateral,
and if the Pledgor receives any of the same, the Pledgor shall immediately
deliver it to the Pledgee to be held by it and applied as provided in the
preceding sentence.
7. WARRANTS AND OPTIONS. in the event that during the term of this
Agreement subscription warrants or other rights or options shall be issued in
connection with the Pledged Collateral, all such stock warrants, rights and
options shall forthwith be assigned to the Pledgee by the Pledgor, and said
stock warrants, rights and options shall be, and, if exercised by the
Pledgor, all new stock issued pursuant thereto shall be, pledged by the
Pledgor to the Pledgee to be held as, and shall be deemed to be part of, the
Pledged Collateral under the terms of this Agreement in the same manner as
the shares of capital stock originally pledged hereunder.
8. RETURN OF PLEDGED COLLATERAL UPON OCCURRENCE OF CERTAIN EVENTS. Upon
the soonest to occur of (a) the Equity Infusion Date, (b) the Unbilled
Account Cleanup Date and (c) the release, satisfaction, discharge or
termination of all of the Liabilities and the termination of the Loan
Agreement, the Pledgee shall cause to be transferred or returned to the
Pledgor, within seven (7) business days following such soonest occurring
event, all of the Pledged Stock and any money, property and rights received
by the Pledgee pursuant hereto, to the extent the Pledgee has not taken, sold
or otherwise realized upon the same as permitted hereunder, together with all
other documents reasonably required by the Pledgor to evidence termination of
the pledge contemplated hereby.
9. EVENTS OF DEFAULT; REMEDIES. (a) Upon the occurrence and during the
continuance of any Event of Default, the Pledgee shall have and at any time
may exercise with respect to the Pledged Collateral, the proceeds thereof,
and any other property or money held by the Pledgee hereunder, all rights and
remedies available to it under law, including, without limitation, those
given, allowed or permitted to a secured party by or under the Code, and all
rights and remedies provided for herein. "Event of Default" shall mean any
default by the Pledgor in any of the Pledgor's obligations hereunder or any
Event of Default as defined in the Loan Agreement. The Pledgee shall have
the sole right to determine the order in which Liabilities shall be deemed
discharged by the application of the proceeds of Pledged Collateral or any
other property or money held hereunder or any amount realized thereon.
10. CERTAIN REPRESENTATIONS AND WARRANTIES. The Pledgor represents and
warrants to the Pledgee that: (a) All shares of Pledged Stock are fully paid,
duly and properly issued, nonassessable and owned by the Pledgor free and
clear of any lien or encumbrance of any kind whatsoever, excepting those
herein granted to the Pledgee.
(b) No effective financing statement or other instrument similar in effect
covering all or any part of the Pledged Collateral is on File in any
recording office.
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(c) The pledge of the Pledged Collateral pursuant to this Agreement creates
a valid and perfected first priority security interest in the Pledged
Collateral, securing the payment of the Liabilities.
(d) No authorization, approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for
(i) the pledge by the Pledgor of the Pledged Collateral pursuant to this
Agreement, the grant by the Pledgor of the assignment or security interest
granted hereby or the execution, delivery or performance of this Agreement by
the Pledgor, (ii) the perfection of or exercise by the Pledgee of its rights
and remedies provided for in this Agreement, or (iii) the exercise by the
Pledgee of the voting or other rights provided for in this Agreement or the
remedies in respect of the Pledged Collateral pursuant to this Agreement
(except as may be required in connection with the disposition of the Pledged
Stock by laws affecting the offering and sale of securities generally).
(e) The Pledgor has full right, power and authority to enter into this
Agreement and to grant the security interest in the Pledged Collateral made
hereby, and this Agreement constitutes the legal, valid and binding
obligation of the Pledgor enforceable against the Pledgor in accordance with
its terms, except as the enforceability thereof may be (i) limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforceability of creditors' rights generally, and (ii) subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
11. INDEMNITY AND EXPENSES. (a) The Pledgor agrees to and hereby
indemnifies the Pledgee from and against any and all claims, damages, losses,
liabilities and expenses arising out of, or in connection with, or resulting
from, this Agreement (including, without limitation, enforcement of this
Agreement).
(b) The Pledgor agrees promptly upon the Pledgee's demand to pay or
reimburse the Pledgee for all reasonable expenses (including, without
limitation, reasonable fees and disbursements of counsel) incurred by the
Pledgee in connection with (i) the administration of this Agreement and any
modification or amendment to or waiver of any provision of this Agreement,
(ii) the custody or preservation of the Pledged Collateral, (iii) any actual
or attempted sale or exchange of, or any enforcement, collection, compromise
or settlement respecting, the Pledged Collateral or any other property or
money held hereunder, any other action taken by the Pledgee hereunder whether
directly or as attorney-in-fact pursuant to the power of attorney herein
conferred, (iv) the failure by the Pledgor to perform or observe any of the
provisions hereof or (v) any action taken by the Pledgee pursuant to this
Agreement. All such expenses shall be deemed a part of the Liabilities for
all purposes of this Agreement and the Pledgee may apply the Pledged
Collateral or any other property or money held hereunder to payment of or
reimbursement for such expenses after notice and demand to the Pledgor.
12. PLEDGEE MAY PERFORM. If the Pledgor fails to perform any agreement
contained herein, the Pledgee may, but shall not be obligated to, perform, or
cause performance
-5-
of, such agreement, and the expenses of the Pledgee incurred in connection
therewith shall be payable by the Pledgor.
13. WAIVERS AND AMENDMENT. The rights and remedies given hereby are in
addition to all others however arising, but it is not intended that any right
or remedy be exercised in any jurisdiction in which such exercise would be
prohibited by law. No action, failure to act or knowledge of the Pledgee
shall be deemed to constitute a waiver of any power, right or remedy
hereunder, nor shall any single or partial exercise thereof preclude any
further exercise thereof or the exercise of any other power, right or remedy.
Any right or power of the Pledgee hereunder respecting the Pledged Collateral
and any other property or money held hereunder may at the option of the
Pledgee be exercised as to all or any part of the same and the term the
"Pledged Collateral" wherever used herein, unless the context clearly
requires otherwise, shall be deemed to mean (and shall be read as) "the
Pledged Collateral and any other property or money held hereunder or any part
thereof." This Agreement shall not be amended nor shall any right hereunder
be deemed waived except by a written agreement expressly setting forth the
amendment or waiver and signed by the Pledgor.
14. CONTINUING SECURITY INTEREST; ASSIGNMENTS OF SECURED DEBT. This
Agreement shall create a continuing security interest in the Pledged
Collateral and shall (i) remain in full force and effect until released in
accordance herewith, (ii) be binding upon the Pledgor, and the Pledgor's
heirs, successors and assigns, and upon Smith Environmental, and its
successors and assigns, and (iii) inure, together with the rights and
remedies of the Pledgee hereunder, to the benefit of the Pledgee, its
successors and assigns. Without limiting the generality of the foregoing
clause (iii), the Pledgee may assign or otherwise transfer all or any portion
of its rights and obligations under this Agreement to any other person or
entity, and such other person or entity shall thereupon become vested with
all the benefits in respect hereof granted to the Pledgee herein; the Pledgee
shall, however, retain all of its rights and powers with respect to any part
of the Pledged Collateral not transferred. Any agent or nominee of the
Pledgee shall have the benefit of this Agreement as if named herein and may
exercise all the rights and powers given to the Pledgee hereunder.
15. GOVERNING LAW; SUITS; THIS AGREEMENT AND THE RIGHTS AND LIABILITIES OF
THE PLEDGOR AND THE PLEDGEE HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS, NOTWITHSTANDING ITS
CONFLICTS OF LAW PRINCIPLES. THE PLEDGOR HEREBY IRREVOCABLY (I)CONSENTS THAT
ANY SUIT, ACTION OR LEGAL PROCEEDING ARISING OUT OF OR RELATED IN ANY WAY TO
THIS AGREEMENT SHALL, IF THE PLEDGEE SO ELECTS, BE BROUGHT AND ENFORCED IN
ANY STATE OR FEDERAL COURT SITUATED IN COOK COUNTY, ILLINOIS AND (II) WAIVES
ANY OBJECTION TO JURISDICTION OR VENUE IN ANY SUCH SUIT, ACTION OR PROCEEDING
COMMENCED IN ANY SUCH COURT AND ANY CLAIM THAT SUCH SUIT, ACTION OR PROCEEDING
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE PLEDGOR AGREES THAT SERVICE OF
PROCESS IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE
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EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY
SUBSTANTIALLY SIMILAR FORM OF MAIL) POSTAGE PREPAID, TO THE PLEDGOR AT THE
ADDRESS SET FORTH IN SECTION 16 HEREOF.
16. NOTICES. All notices hereunder shall be in writing (except only as
otherwise provided in Section 13) and shall be conclusively deemed to have
been received and shall be effective (a) on the day on which delivered if
delivered personally (including delivery by courier providing evidence of
delivery), or transmitted by telex or telegram or telecopier with
transmission confirmed, or (b) five days after the date on which the same is
deposited in the United States mail (certified or registered if required
under Section 15), with postage prepaid and properly addressed, and any
notice mailed shall be addressed:
(a) in the case of the Pledgor, to:
[name and address of Pledgor]
(b) in the case of the Pledgee, to:
LaSalle Business Credit, Inc.
477 Madison Avenue
20th Floor
New York, New York 10022
Attention: District Credit Manager
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with a copy to:
Lowenthal, Landau, Fischer & Bring, P.C.
250 Park Avenue
New York, New York 10177
Telecopier No. (212) 986-0604
Attn.: Robert Stein, Esq.
or at such other address as the party giving such notice shall have been
advised of in writing for such purpose by the party to whom or to which the
same is directed.
17. WAIVERS OF JURY TRIAL AND CONSEQUENTIAL DAMAGES. THE PLEDGOR AND, BY ITS
ACCEPTANCE HEREOF, THE PLEDGEE HEREBY WAIVE TRIAL BY JURY IN ANY LITIGATION
IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS
AGREEMENT, THE PLEDGED COLLATERAL, OR ANY INSTRUMENT OR DOCUMENT DELIVERED
PURSUANT HERETO.
NEITHER THE PLEDGOR OR THE PLEDGEE, NOR ANY EMPLOYEE, AGENT OR ATTORNEY OF
EITHER OF THEM, SHALL BE LIABLE TO THE OTHER FOR CONSEQUENTIAL DAMAGES
ARISING FROM ANY BREACH OF CONTRACT, TORT OR OTHER WRONG RELATING TO THIS
AGREEMENT OR THE ESTABLISHMENT, ADMINISTRATION OR COLLECTION OF THE
LIABILITIES, EXCEPT FOR BAD FAITH.
18. SEVERABILITY: ENTIRE AGREEMENT. (a) If any provision of this Agreement
shall be invalid, illegal, or unenforceable in any jurisdiction, the
validity, legality or enforceability of any such provision in any other
jurisdictions shall not be affected or impaired, and to the extent any
provision is held invalid, illegal or unenforceable, then such provision
shall be deemed severable from, and shall in no way affect the validity or
enforceability of the remaining provisions of, this Agreement.
(b) This Agreement constitutes the entire agreement of the Pledgor, and
replaces any other or prior agreements or undertakings, with respect to the
subject matter hereof, and there are no other agreements or undertakings,
oral or written, respecting such subject matter which are intended to have
any force or effect after the execution hereof.
19. MISCELLANEOUS. This Agreement shall be binding upon and shall inure to
the benefit of the Pledgor and the Pledgee and their respective heirs,
successors, trustees, and assigns. Section headings used herein are for
convenience only and shall not affect the meaning or construction of any of
the provisions hereof.
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IN WITNESS WHEREOF, the Pledgor has caused this Agreement to be executed by
its duly authorized officer as of the day and year first above written.
___________________________________
[name of Pledgor]
The undersigned hereby agree to recognize all of the rights granted to the
Pledgee under the foregoing Agreement and to take all actions necessary to
effectuate said rights and the purposes of the Agreement including, without
limitation, performance of any acts requested by the Pledgee pursuant to the
terms thereof.
Date: ________________, 199____
SMITH ENVIRONMENTAL TECHNOLOGIES CORP.
By:
___________________________________
Title:
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