EXHIBIT 10.4
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LOAN AGREEMENT dated as of May 31, 2006,
between TOUCHSTONE APPLIED SCIENCE
ASSOCIATES, INC., a Delaware corporation,
having an address at 0 Xxxxxxxxxxxx Xxxxxxx,
Xxxxxxxx, Xxx Xxxx 00000-0000 (the
"Borrower"), QUESTAR EDUCATIONAL SYSTEMS,
INC., a Minnesota corporation having an
address at 0000 Xxxxx 000xx Xxxxxx Xxxx,
Xxxxx Xxxxxx, Xxxxxxxxx 00000 ("QUESTAR")
and TD BANKNORTH, N.A., having an address at
0 Xxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxx 00000
(the "Bank").
The Borrower, Questar and the Bank hereby agree
as follows:
ARTICLE 1. THE LOANS.
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Subject to the terms and conditions hereof, the Bank
shall make the following credit facilities available to the
Borrower:
1.01. THE TERM LOAN. Subject to the terms of this
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Agreement, the Bank shall make a term loan (the "Term Loan") to
the Borrower on the date hereof in the principal amount of
$9,600,000.00. The proceeds of the Term Loan shall be used to
assist in the acquisition of Questar by the Borrower. The Term
Loan shall be evidenced by a commercial term loan promissory
note (the "Term Loan Note") in the form of Exhibit A hereto, the
terms and provisions of which are incorporated herein by
reference.
1.02. THE REVOLVING LINE OF CREDIT. Subject to the
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terms of this Agreement, and provided there exists no Event of
Default (as defined in Section 6.01 hereof) or event which, with
the passage of time or giving of notice or both would become an
Event of Default hereunder, under a revolving line of credit
(the "Line of Credit"), the Bank shall make advances (each, an
"Advance" and collectively, the "Advances") to the Borrower,
from time to time, from the date hereof until May 31, 2008 (the
"Termination Date"), in an aggregate outstanding principal
amount not to exceed $4,000,000.00 at any time. The proceeds of
the Line of Credit shall be used to fund the Borrower's accounts
receivable and other short term debt. Within the framework of
this commitment, the Borrower may borrow, repay and reborrow
under the Line of Credit. Each borrowing under the Line of
Credit shall reduce the commitment hereunder but, when repaid,
may be reborrowed.
The Borrower shall give the Bank at least one (1)
business days' notice of the Borrower's wish to borrow under the
Line of Credit. The Borrower hereby authorizes the Bank to honor
written, electronic, telecopied or telephonic requests for
Advances.
Requests for Advances under the Line of Credit are
subject to the Bank's approval, in its sole and absolute
discretion. The Bank will, upon request, deposit the amount of
each Advance in the Borrower's operating account or otherwise
make such funds available to the Borrower. Notwithstanding
anything to the contrary contained herein, the aggregate amount
outstanding under the Line of Credit shall, at no time, exceed
the sum of (i) 80% of the "Eligible Accounts Receivable" of the
Borrower, plus (ii) 50% of the "Value" of the Borrower's
"Eligible Inventory" with such Value not to exceed $500,000.00.
For these purposes, the "Value" of the "Eligible Inventory" of
the Borrower shall mean up to $500,000.00 of the value of
"Inventory" as shown in the Borrower's most recent financial
statements submitted to the Bank under Paragraphs 4.01(g) and (h)
hereof.
For these purposes, "Eligible Accounts Receivable"
shall mean at any time, all of the Borrower's accounts
receivable which contain payment terms and conditions
commercially reasonably acceptable to the Bank. Unless otherwise
specifically agreed to by the Bank in writing, Eligible Accounts
Receivable do not include:
(a) accounts receivable which have not been paid in
full within 90 days from the invoice date;
(b) accounts receivable which are subject to dispute,
counterclaim, or setoff or any asserted defense;
(c) accounts receivable of any debtor or obligor who
has filed or has had filed against it a petition in bankruptcy
or an application for relief under any provision of any state or
federal bankruptcy, insolvency, or debtor-in-relief acts; or who
has had appointed a trustee, custodian, or receiver for the
assets of such debtor or obligor; or who has made an assignment
for the benefit of creditors or has become insolvent or fails
generally to pay its debts (including its payrolls) as such
debts become due;
(d) accounts receivable with respect to which the
debtor or obligor is the United States government or any
department or agency of the United States, unless properly
assigned under the Assignment of Claims Act;
(e) accounts receivable with respect to which the
Borrower or the Guarantor is or may become liable to the account
debtor for goods sold or services rendered by such account
debtor;
(f) accounts receivable that are sold on a COD basis;
(g) accounts receivable due from any affiliate or
related entity of the Borrower or the Guarantor;
(h) accounts receivable resulting from any purchase
rebate; and/or
(i) accounts receivable that are otherwise deemed
ineligible by the Bank, in the exercise of its commercially
reasonable judgment.
Eligible Accounts Receivable may be further adjusted
by offsets determined by the Bank, in the exercise of its
commercially reasonable judgment, including, without limitation,
offsets of accounts payable, delinquencies, intercompany
transactions and/or other issues that may be defined by the
Bank, in the exercise of its commercially reasonable judgment,
or that may be defined within a collateral field exam.
The Line of Credit shall be evidenced by a commercial
line of credit promissory note (the "LOC Note") in the form of
Exhibit B hereto, the terms and provisions of which are
incorporated herein by reference.
Each of the Term Loan, the Line of Credit and the
obligations under the Letter of Credit Agreement shall be
referred to as a "Loan" and together shall be referred to as the
"Loans".
1.03 LETTER OF CREDIT. Subject to the terms of this
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Agreement, the Bank shall renew that certain Irrevocable Standby
Letter of Credit no. 20000248 in the amount of $194,750 (the
"Letter of Credit"). As security for such Letter of Credit, the
Borrower hereby agrees that the Bank shall restrict from
advances under the Line of Credit such amount as is required to
maintain the Letter of Credit under the terms agreed upon by and
between the Borrower and the Bank (the "Letter of Credit
Agreement").
1.04. INTEREST RATE.
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(a) TERM LOAN INTEREST RATE. The Borrower shall pay
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interest to the Bank on the unpaid principal amount due under
the Term Loan at the interest rate set forth in the Term Loan
Note. Interest on the Term Loan shall be calculated on the
basis of the actual number of days elapsed over a year of 360
days.
(b) LINE OF CREDIT INTEREST RATE. The Borrower shall
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pay interest to the Bank on the unpaid principal amount due
under the Line of Credit at the interest rate set forth in the
LOC Note. Interest on the Line of Credit shall be calculated on
the basis of the actual number of days elapsed over a year of
360 days.
(c) LETTER OF CREDIT INTEREST RATE. Any advances
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under the Letter of Credit shall bear interest at the rate set
forth in the Letter of Credit Agreement.
1.05. PAYMENTS.
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(a) TERM LOAN PAYMENTS. The Borrower shall pay
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monthly payments of principal and/or interest under the Term
Loan in the amounts and in the manner set forth in the Term Loan
Note. Payments shall be made, in the discretion of the Bank,
either by payment of immediately available funds or by charge to
the Borrower's operating account with the Bank.
(b) LINE OF CREDIT PAYMENTS. The Borrower shall make
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monthly payments of accrued interest only under the Line of
Credit in the amounts and in the manner set forth in the LOC
Note. Principal shall be due and payable on the Termination
Date. Payments shall be made in the discretion of the Bank,
either by payment of immediately available funds or by charge to
the Borrower's operating account with the Bank.
(c) LETTER OF CREDIT PAYMENTS. Any advances made
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under the Letter of Credit shall be payable by the Borrower in
accordance with the Letter of Credit Agreement.
1.06. DEFAULT RATE. Upon the occurrence of an Event of
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Default, whether or not the Bank has accelerated payment of the
Term Loan Note or the LOC Note (hereafter, each a "Note" and
collectively, the "Notes"), or after maturity or after judgment
has been rendered on a Note, the unpaid principal of all
advances under such Note shall, at the option of the Bank, bear
interest at a rate which is three (3) percentage points per
annum greater than that which would otherwise be applicable.
1.07. LATE CHARGE. If the entire amount of any
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required principal and/or interest is not paid in full within
fifteen (15) days after the same is due, the Borrower shall pay
to the Bank a late fee equal to five percent (5%) of the
required payment. Any such late charge accrued is immediately
due and payable.
1.08. PREPAYMENT OF LOANS. The Borrower may prepay
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all or part of the obligations under the Term Loan by paying the
prepayment fee, if any, set forth in the Term Loan Note. The
Borrower may prepay the Line of Credit or cash collateralize its
obligations under the Letter of Credit Agreement, in whole or in
part upon notice to the Bank, without penalty or fee. In
addition, the Borrower shall also pay to the Bank any accrued
and unpaid interest and all other sums due under the terms of
the Loans at the time of such payment.
1.09. FEES.
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(a) TERM LOAN. At or prior to closing, the
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Borrower agrees to pay a nonrefundable commitment fee of
$96,000.00 on account of the Term Loan.
(b) LINE OF CREDIT. The Borrower agrees to pay a
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nonrefundable line of credit fee quarterly, in an amount equal to
one quarter of one percent (.25%) per annum, of the unused
commitment, measured on an average daily basis.
(c) LETTER OF CREDIT. The Borrower agrees to pay
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a nonrefundable letter of credit fee in the amount of $1,230.00
on account of the renewal of the Letter of Credit at the time of
the issuance of the Letter of Credit and on each anniversary
date thereof.
1.10. COLLATERAL. Repayment of the Loans shall be
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secured by, among other things, a first lien security interest
in all of the assets of the Borrower and Questar as described
and granted in Security Agreements in favor of the Bank dated
the date hereof, as amended from time to time (the "Security
Agreements") in the form of Exhibit C hereto and UCC-1 Financing
Statements executed and delivered by those entities to the Bank
on the date hereof (the "Financing Statements").
1.11. CONTINUING PERFECTION. The Borrower and Questar
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will perform any and all steps requested by the Bank to create
and maintain in the Bank's favor a valid first and exclusive
lien on or security interest in the Collateral or pledges of
Collateral, including, without limitation, the execution and
delivery of financing statements and continuation statements,
supplemental security agreements, mortgages, notes and any other
documents necessary, in the opinion of the Bank, to protect its
interest in the Collateral, the Bank having the responsibility
to file any such financing statements and continuation
statements. The Bank and its designated officer are hereby
appointed the Borrower's and Questar's attorney-in-fact to do
all acts and things which the Bank may deem necessary to perfect
and preserve the security interests and liens provided for in
this Agreement, including but not limited to, executing
financing statements on behalf of the Borrower and Questar if
the Borrower or Questar fails to do so upon the request of the
Bank.
1.12 THE GUARANTY. Repayment of the Loans shall be
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supported by the execution of an unconditional guaranty (the
"Guaranty") by Questar in the form of Exhibit D hereto.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES.
The Borrower hereby represents and warrants to the
Bank that:
2.01. ORGANIZATION. The Borrower is duly organized and
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validly existing as a corporation under the laws of the State of
Delaware. Questar is duly organized and validly existing as a
corporation under the laws of the State of Minnesota. Each is
in good standing therein, and duly qualified to transact
business in all places where the failure to so qualify would
have a material adverse effect on the business condition of the
Borrower and its subsidiaries taken as a whole.
2.02. AUTHORIZATION, NO CONFLICT. The execution and
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delivery by the Borrower and Questar of this Agreement, the
Notes, the Letter of Credit Agreement, the Security Agreements
and all other documents contemplated hereunder (hereinafter
called the "Loan Documents"), and the performance of the
transactions contemplated by the Loan Documents, are within the
Borrower's and Questar's corporate powers, have been duly
authorized by all necessary action and do not and will not
violate any provision of applicable law or of their respective
Certificates of Incorporation or By-Laws, or result in the
breach of, or constitute a default or require any consent under
any indenture or other material agreement or instrument to which
the Borrower or Questar is a party or by which the Borrower or
Questar or their properties may be bound or affected, or cause
any of such property to become subject to any lien, claim or
encumbrance. Each of the Loan Documents constitutes the legal,
valid and binding obligation of the signing parties, enforceable
on its terms.
2.03. FINANCIAL CONDITION. The financial statements of
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the Borrower and Questar heretofore furnished to the Bank
(together, the "Financial Statements"), are complete and
correct, were prepared in accordance with generally accepted
accounting principles consistently applied and accurately
present the financial condition of the Borrower and Questar as
of the dates of such statements and the results of its
operations for the periods then ended October 31 and December
31, 2005, respectively. Since those dates, there has been no
material adverse change in the business, condition or prospects,
financial or otherwise of either entity.
2.04. LITIGATION. There are no judgments or orders
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outstanding against the Borrower or Questar and there are no
suits, investigations or proceedings pending, or, to the
knowledge of the Borrower, threatened, against or affecting
either entity which, if adversely determined, would by itself or
in the aggregate have a material adverse effect on the financial
condition, business or properties of the Borrower and its
subsidiaries, taken as a whole.
2.05. PURPOSE. No part of the proceeds of any Loan will
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be used to purchase or carry margin stock as such terms are
defined in Regulation U of the Board of Governors of the Federal
Reserve System or to extend credit to others for the purpose of
purchasing or carrying margin stock, and the use of such proceeds
shall not result in any violation of Regulations G, T, U or X of
said Board.
2.06. PROPERTIES. The Borrower and Questar each have
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good and marketable title to all of its assets reflected in the
Financial Statements, including the Collateral, free and clear
of all liens, claims, encumbrances, and security interests (as
defined in the Uniform Commercial Code), except as permitted
hereunder or as disclosed in such statements.
2.07. TAXES. The Borrower and Questar each have filed
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all tax returns required to be filed and paid all taxes due or
assessed, including interest and penalties, except as
specifically disclosed to the Bank, in writing, with respect to
taxes being contested in good faith and by appropriate
proceedings, provided adequate reserves have been made.
2.08. CONSENTS. No consent or approval from, or notice
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to or filing with, any federal, state or other regulatory
authority is required in connection with the execution of, or
performance under, the Loan Documents by the Borrower or Questar
other than such filings as may be required to be made with the
Securities and Exchange Commission to disclose the Loans after
closing.
2.09. ERISA. Except as otherwise disclosed to the Bank
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with respect to that certain 401(k) Plan of Questar, each
employee pension benefit plan ("Plan"), as defined in the
Employee Retirement Income Security Act of 1974, as amended from
time to time, including its rules and regulations ("ERISA"), of
the Borrower and Questar is in compliance with the applicable
provisions of ERISA, the Internal Revenue Code of 1986 (as
amended, from time to time) and any other applicable Federal or
state law, and no event or condition is occurring or exists with
respect to any such Plan concerning which the Borrower would be
under an obligation to furnish a report to the Bank in
accordance with Article 4 hereof.
2.10. TRADEMARKS, PATENTS, LICENSES, ETC. The Borrower
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and Questar possess all trademarks, patents, licenses, permits,
trade names, copyrights, proprietary rights and approvals
(collectively, "Intellectual Property Rights") required to
conduct each of their respective businesses, as now constituted
without conflict with the rights or, to the knowledge of the
Borrower, claimed rights of others.
2.11. NO MISREPRESENTATIONS OR MATERIAL NONDISCLOSURE.
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Neither the Borrower nor Questar has made nor will make to the
Bank, in this Agreement or pursuant to any of the Loan Documents,
an untrue statement of a material fact, nor has omitted to state
a material fact necessary to make any statement made not
misleading.
2.12. PERMITS. The Borrower and Questar represent that
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they have, and will continue to have, all material federal,
state, and local licenses, certificates, and permits relating to
each and its respective facilities, business, operations,
premises, and leaseholds, and each is in compliance with all
applicable federal, state, and local laws, rules, and
regulations relating to air emissions, water discharges, noise
emissions, solid or liquid storage disposal, hazardous or toxic
waste or substances and other environmental, health, and safety
matters.
ARTICLE 3. CONDITIONS OF LENDING.
3.01. PRECONDITIONS TO THE LOANS AND LETTER OF
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CREDIT. The Bank shall not be obligated to make the Loans or
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issue the Letter of Credit hereunder unless all legal matters
incident to the transactions hereby contemplated shall be
satisfactory to the Bank and its counsel, and it shall have
received properly executed, as of the closing date, and in a
form it deems satisfactory, the following:
(a) This Agreement;
(b) The Notes;
(c) The Letter of Credit Agreement;
(d) The Security Agreements and UCC-1s;
(e) The Guaranty;
All these documents, together with other documents
executed in connection with the transaction contemplated hereby
being referred to as the "Loan Documents".
(f) Certified resolutions/consents of the Borrower
and Questar authorizing the execution and delivery of the Loan
Documents, and the performance by such entity under those
documents;
(g) A certificate by the secretary of the Borrower
and Questar specifying the name and titles and including the
specimen signatures, of the officers authorized to sign the Loan
Documents and certifying as true an attached copy of the by-
laws;
(h) A copy of the Certificate of Incorporation of
each of the Borrower and Questar and any amendments thereto,
certified by the Secretary of State of the jurisdiction of its
incorporation, and a long form certificate of good standing from
said Secretary of State;
(i) An opinion of counsel to the Borrower and Questar
in form and substance reasonably satisfactory to the Bank and its
counsel;
(j) The Security Agreements and UCC-1 Financing
Statements, in form and substance satisfactory to the Bank;
(k) A certificate of a reliable insurance company,
licensed to conduct business in the relevant states, of
appropriate insurance under Section 4.02 hereunder; and
(l) Such additional documents as the Bank may
reasonably request.
ARTICLE 4. AFFIRMATIVE COVENANTS.
4.01. FINANCIAL COVENANTS. The Borrower and Questar
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agree that, while any amount is outstanding under any of the
Loans or any commitment is in effect, it shall comply with the
following covenants:
(a) DEBT SERVICE COVERAGE RATIO. The Borrower and
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Questar, on a combined basis, shall maintain a debt service
coverage ratio, defined as [adjusted EBIDTA] divided by [current
portion of long term debt plus interest expense], of at least
1.90 to 1.00. For the purposes hereof, EBIDTA shall mean
earnings before interest, depreciation, taxes and amortization.
(b) INTEREST COVERAGE RATIO. The Borrower and
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Questar, on a combined basis, shall maintain an interest
coverage ratio of not less than 5:1. For the purposes hereof,
the ratio shall be calculated as follows:
[earnings before interest and taxes]
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[annual interest expense]
(c) SENIOR DEBT TO EBIDTA RATIO. The Borrower and
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Questar, on a combined basis, shall maintain a senior debt to
EBIDTA ratio of no greater than 3:1. The ratio shall be
calculated as follows:
[the sum of total outstanding debt from all
sources (including permitted subordinated debt]
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[TTM adjusted EBIDTA]
(d) FIXED CHANGE COVERAGE RATIO. The Borrower and
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Questar, on a combined basis, shall maintain a minimum fixed
charge coverage ratio of 1.2:1. The ratio shall be calculated
as follows:
Adjusted TTM EBIDTA less the sum of unfunded capital
expenditures, less cash tax payments and less cash dividends]
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[the sum of principal and cash interest payments on all
debts for the test period
Compliance with each ratio in (a) through (d) above, shall be
tested by the Bank annually based on a rolling 4 quarter basis
and the financial statements of the Borrower and Questar. For
purposes of calculation, each ration in (a) through (d) above,
the annual financial statements of the Borrower referred to in
(g) below shall be used each year and the asset listed under
"Other" as "Test passage bank and test development" shall be
includable as an asset and not excludable as an intangible in
all calculations.
(e) Within 10 days after the end of each month, the
Borrower and Questar shall supply the Bank with an aging report
of all accounts receivable and accounts payable in form
satisfactory to the Bank in its sole discretion and certified as
accurate by the President or Treasurer of such entity;
(f) Within 10 days after the end of each month and/or
at the time of each Advance under the Line of Credit, as
requested by the Bank, the Borrower shall supply the Bank with a
Borrowing Certificate in the form attached as Exhibit C hereto;
(g) Within 120 days after the end of each fiscal year
of the Borrower, the Borrower shall supply the Bank with
financial statements of the Borrower and its consolidated
subsidiaries (including Questar) on a consolidated and
consolidating basis prepared by an independent certified public
accountant reasonably satisfactory to the Bank, on an audit
quality basis in accordance with generally accepted principles
and practices of accounting consistently applied, accompanied by
the report of such accountant acceptable to the Bank and
certified as accurate by the President or Treasurer;
(h) Within 90 days after the end of each fiscal
quarter, the Borrower shall supply the Bank with quarterly
internally prepared financial statements, accounts receivable
aging, accounts payable aging and collateral and deposit account
reconciliation of the Borrower and its consolidated subsidiaries
(including Questar), prepared internally and certified by the
President or Treasurer of the Borrower as to their accuracy and
preparation in accordance with generally accepted principles and
practices of accounting consistently applied;
(i) Within 30 days after the timely filing thereof,
the Borrower shall supply the Bank with complete, manually
signed copies of the federal tax returns of the Borrower and
Questar;
(j) Promptly, the Borrower and Questar shall supply
the Bank with such further information regarding the business
affairs and financial condition of the Borrower and Questar as
the Bank may require.
4.02. INSURANCE. The Borrower and Questar shall keep
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the following insurance in effect for itself and Questar:
(a) All insurance policies required hereby which
shall be (i) issued by companies which shall have an A.M. Best
Rating Guide Stability Rating of A- or better, and a Financial
Rating of VI or better, (ii) on forms, in amounts, and with
deductibles, all of which are acceptable to the Bank and (iii)
maintained throughout the term of the Loans, without cost to the
Bank. All policies shall be deposited with the Bank (if required
by the Bank), and shall contain such provisions as the Bank
deems necessary or desirable to protect its interest, including,
without limitation, a provision that such policy shall not be
canceled, altered or in any way limited in coverage or reduced
in amount unless the Bank is given thirty (30) days prior
written notice or ten (10) days prior written notice of non-
payment of premium.
(b) Prepaid "Special Perils" (including flood if
any property where the Collateral is located is in a special
flood hazard zone), property insurance policy covering the
property, together with the improvements, fixtures or other
personal property comprising the Collateral, including
replacement cost coverage and inflation adjustment endorsements,
and such other insurance policies as the Bank shall require,
including, without limitation, loss of rents insurance (one
year's gross rental income), boiler and machinery insurance and
business interruption coverage. All such policies to be written
for the full insurable value of the property (without deduction
for depreciation or obsolescence) or other assets securing the
Loans and shall name the Bank as Loss Payee under a Lenders'
Loss Payable Clause with respect to the Collateral securing the
Loans. If a blanket policy is issued, a certified copy of said
policy shall be furnished together with an endorsement
indicating that the Bank is the insured under said policy in the
proper designated amount. The Borrower shall also carry such
other insurance as may reasonably be required by the Bank.
(c) Commercial General Liability insurance insuring
the Borrower and/or Questar and naming the Bank as additional
insured. Such liability coverage shall be in the minimum amounts
of $1 million per occurrence and $2 million in the aggregate.
(d) Workers' Compensation/ Employer Liability
Coverage as required by applicable law.
4.03. MAINTAIN BUSINESS. The Borrower and Questar
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shall continue to engage in substantially the same type of
business in which each is presently engaged, and shall preserve
their existence and good standing and all the material rights,
privileges, franchises and other properties necessary and
desirable in the normal conduct of their respective businesses.
Neither Borrower nor Questar will change its name without
furnishing the Bank with at least thirty (30) days prior written
notice thereof. The Borrower and Questar will notify the Bank in
writing prior to utilizing any trade name not previously
submitted to the Bank.
4.04. TAXES AND OBLIGATIONS. The Borrower and Questar
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shall pay and discharge (a) all taxes, assessments and
governmental charges or levies imposed on either entity or their
respective income or profits or any of their respective
properties prior to the date on which penalties attach thereto
and (b) all lawful obligations and claims which, if unpaid,
might cause a lien or charge to be created against any of their
respective properties, except any such tax, assessment, charge
or levy, the payment of which is being contested in good faith
by proper proceedings, provided escrows, reasonably satisfactory
to the Bank, have been established.
4.05. COMPLIANCE WITH LAWS. The Borrower and Questar
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shall comply in all material respects with all applicable laws,
regulations and orders of any governmental authority with
jurisdiction.
4.06. NOTICES. The Borrower and Questar shall furnish
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to the Bank, promptly after it learns thereof and in no event
more than ten (10) days after it learns thereof:
(a) Written notice of (i) any violations from any
regulatory agencies concerning it or its properties or assets,
(ii) any threatened or pending litigation or governmental or
administrative proceeding concerning it or its properties or
assets, (iii) any default under any other agreement to which it
is a party, (iv) any default or Event of Default hereunder
together with a statement by a responsible officer of the
Borrower describing the action, if any, which it proposes to
take with respect thereto, and/or (v) any material adverse
change in its business, prospects or financial condition;
(b) Written notice of any "reportable event" or
"prohibited transaction" (as such terms are defined in ERISA),
in connection with any Plan, and a statement of the action, if
any, which it proposes to take with respect thereto, and when
known, any action taken by the Internal Revenue Service or
Department of Labor with respect thereto. In addition, the
Borrower or Questar shall provide the Bank promptly after filing
or receiving thereof, with copies of all reports and notices
which it files under ERISA with the Pension Benefit Guaranty
Corporation (the "PBGC") or the United States Department of
Labor or which the Borrower receives from them;
(c) Any notice of (i) the happening of any event
involving the use, spill, discharge, or cleanup of any hazardous
or toxic substance or waste or any oil, petroleum distillate or
pesticide on any property owned or operated by the Borrower or
Questar (a "Hazardous Discharge"); or (ii) any complaint, order,
citation, or notice with regard to air emissions, water
discharges, noise emissions, or any other environmental, health,
or safety matter affecting the Borrower (an "Environmental
Complaint") from any person or entity, including, without
limitation, the New York State Department of Environmental
Conservation, any similar governmental agency of any other state
or the United States Environmental Protection Agency, then the
Borrower and Questar agree to give oral and written notice of
same to the Bank within twenty-four (24) hours of its receipt of
such notice;
(d) Any change in the name or trade name of the
Borrower or Questar;
(e) Any material adverse change with respect to the
business or financial condition of the Borrower or Questar;
(f) Any default under this Agreement or any other
Loan;
(g) Any change in the location of the Collateral;
and
(h) Promptly, such additional notices as the Bank
may request.
4.07. FIELD EXAMINATIONS. The Bank shall have full
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access during normal business hours upon reasonable advance
notice to the Borrower and Questar to, and the right, through
its officers, agents, attorneys or accountants and at the
Borrower's expense for one inspection per year (so limited if no
Event of Default has occurred and is continuing) to: (i)
examine, check, inspect and make abstracts and copies from the
Borrower's books, accounts, orders, records, audits,
correspondence, and all other papers; (ii) confirm and verify
all Accounts Receivable, and other Collateral securing repayment
of the Loans; and (iii) enter upon the premises of the Borrower or
Questar during normal business hours and from time to time upon
reasonable advance notice, for the purpose of examining the
records concerning the Collateral and for inspecting the
Collateral and any and all records.
Field examinations shall be conducted not more than
once during each twelve month period of this Agreement. The Bank
may, in its commercially reasonable discretion, request
additional field examinations in any such twelve month period.
The Borrower and/or Questar shall be responsible to reimburse
the reasonable expenses of Bank for each field examination.
4.08. OPERATING ACCOUNTS. The Borrower shall maintain
------------------
all its operating accounts with the Bank. Questar shall
establish all its operating accounts with the Bank not later
than 30 days after the date hereof.
4.09. COMPLIANCE WITH ENVIRONMENTAL LAWS. The Borrower
----------------------------------
and Questar shall, and shall cause others to, carry on the
business and operations on all property owned or operated by
them so as to comply and remain in compliance with, all
applicable federal, state, regional, county, or local laws,
statutes, rules, regulations, or ordinances concerning public
health, safety, or the environment, and all rules, regulations,
and guidance documents promulgated or published thereunder, and
any state, regional, county, or local statute, law, rule,
regulation or ordinance relating to public health, safety, or
the environment, including, without limitation, (i) relating to
releases, discharges, emissions, or disposals to air, water,
land, or groundwater; (ii) to the withdrawal or use of
groundwater; (iii) to the use, handling, or disposal of
polychlorinated byphenyls (PCBs), asbestos or urea formaldehyde;
(iv) to the treatment, storage, disposal, or management of
hazardous substances (including, without limitation, petroleum,
its derivatives, by-products, or other hydrocarbons), and any
other solid, liquid, or gaseous substance, exposure to which is
prohibited, limited, or regulated, or may or could pose a hazard
to the health and safety of the occupants of the site and
facility or the property adjacent to or surrounding the site;
(v) to the exposure of persons to toxic, hazardous, or other
controlled, prohibited, or regulated substances; and (vi) to the
transportation, storage, disposal management, or release of
gaseous or liquid substances, and any regulation, order,
injunction, judgment, declaration, notice or demand issued.
ARTICLE 5. NEGATIVE COVENANTS.
The Borrower and Questar agree that, while any amount
is outstanding under any of the Loans or any commitment is in
effect, they shall not:
5.01. LIMITATION ON MERGERS AND SALE OF ASSETS.
----------------------------------------
Without the prior written consent of the Bank, enter into any
transaction of merger, consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation
or dissolution), convey, sell, lease, transfer or otherwise
dispose of, in one transaction or a series of transactions, all
or a substantial part of its business or assets or the business
or assets of any of its subsidiaries or acquire all or
substantially all of the business or assets of another person,
except that:
(a) Any subsidiary of the Borrower or Questar may be
merged or consolidated into the Borrower or Questar;
(b) Any subsidiary of either may be merged or
consolidated into any other subsidiary; and
(c) The Borrower may acquire all or substantially all
of the business or assets of another person if the aggregate
consideration therefore does not exceed $250,000 subject to
compliance with the provisions of this Agreement.
5.02. LIMITATIONS ON LIENS. Create or suffer, or
--------------------
permit any lien, or security interest on its properties, except:
(a) Liens existing on the date hereof and reflected
in the financial statements referred to in Section 4.01 hereof;
(b) Liens for taxes not yet due or which are being
contested in good faith and by appropriate proceedings if
adequate escrows, reasonably satisfactory to the Bank, have been
established; or
(c) Carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other like liens arising as a
matter of law in the ordinary course of business securing
amounts which are not due for a period of more than thirty (30)
days;
(d) Purchase money mortgages or liens on property
acquired by the Borrower or Questar from and after the closing
of the Loans in an amount not in excess of $250,000.00 to secure
the purchase price of such property, provided that such mortgage
or lien shall apply and attach only to the property originally
subject thereto and fixed improvements constructed thereon.
5.03. DEBT. Create or suffer, without the prior
----
written consent of the Bank, any: (a) additional indebtedness
for borrowed money or loans to shareholders or officers (except
for obligations pursuant to Series A Convertible Preferred Stock
of the Borrower and obligations pursuant to or contemplated by
the Stock Purchase Agreement dated as of May 31, 2006, between
TASA, Questar and the Selling Shareholders of Questar; or (b)
obligations under leases which shall have been or should be, in
accordance with generally accepted accounting principles,
recorded as original leases; or (c) unfunded vested benefits
under plans maintained for employees covered by ERISA.
5.04. ERISA COMPLIANCE. Engage in any "prohibited
----------------
transaction" or incur any "accumulated funding deficiency"
whether or not waived (as such terms are defined in ERISA) or
terminate any Plan in a manner which could result in the
imposition of a lien on any property of the Borrower or Questar
pursuant to ERISA without the prior written consent of the Bank.
ARTICLE 6. DEFAULT.
6.01. EVENTS OF DEFAULT. Each of the following is an
-----------------
event of default ("Event of Default") under this Agreement:
(a) Failure by the Borrower to pay any principal, or
interest amount of any Loan on its due date, or the failure to
pay any fee with respect to any Loan when due pursuant to this
Agreement and such failure to pay any fee is not cured within
three (3) days after such default; or
(b) Any representation, warranty or statement
contained in this Agreement (or any document or instrument
furnished in connection with this Agreement) shall prove to have
been false or misleading in any material respect, when made or
deemed made; or
(c) Failure by the Borrower or Questar to observe any
covenant or agreement contained in Article 5 hereof which
failure is not cured within ten (10) days after written notice
to the Borrower by the Bank thereof; or
(d) Failure by the Borrower or Questar to observe any
other covenant or agreement contained in this Agreement and such
failure shall continue unremedied for a period of thirty (30)
days after written notice to the Borrower by the Bank thereof;
or
(e) The occurrence and continuance of a material
default by the Borrower or Questar under any other obligation to
the Bank, now existing or hereafter arising and the expiration
of any applicable notice and cure period; or
(f) The occurrence and continuance of a material
default by the Borrower or Questar under any other Loan Document
which default is not cured within any applicable grace or notice
period; or
(g) The Borrower or Questar shall admit its inability
to pay its debts, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted by
the Borrower or Questar, or against the Borrower or Questar
which is not vacated or terminated within sixty (60) days of the
institution thereof, seeking relief as to the Borrower or
Questar under the federal Bankruptcy Code (or its successors)
(the "Bankruptcy Code") or to adjudicate it insolvent, or
seeking reorganization, arrangement, adjustment, or composition
of it or its debts or property under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors,
or seeking appointment of a receiver, trustee, or other similar
official for it or for any substantial part of its property; or
the Borrower shall take any corporate action to authorize any of
the actions set forth above in this subsection; or
(h) All or any substantial part of the properties or
assets of the Borrower or Questar shall have been condemned,
seized or otherwise appropriated without fair consideration
therefore; or
(i) Other than as disclosed in writing to the Bank
prior to the date hereof, an event or condition occurs or exists
with respect to any Plan concerning which the Borrower or
Questar is under any obligation to furnish a report to the Bank in
accordance with Section 4.06 hereof or as a result thereof the
Borrower has incurred or in the opinion of the Bank is reasonably
likely to incur a liability to a Plan and/or the PBGC which is
material in relation to the Borrower's financial condition; or
(j) The dissolution, liquidation or cessation of
doing business by the Borrower or Questar; or
(k) Any change shall occur in the ownership or control
of Questar, without the prior written consent of the Bank; or
(l) The loss of any necessary license or permit for
the operation of the business operated or to be operated by the
Borrower and Questar; or
(m) Transfer of title to any material portion of, or
interest in, the Collateral other than in the ordinary course of
business; or
(n) If there shall occur the entry of any judgment,
issuance of any garnishment, attachment or distraint, the filing
of any lien or of any government attachment against the Borrower
or Questar in an amount of $100,000.00 or greater, which entry,
issuance, attachment or filing shall have continued unstayed and
in effect for a period of ninety (90) consecutive days, or if a
writ of execution or attachment or any similar process shall be
issued or levied against all or any material part of or interest
in the properties or assets of the Borrower or Questar or any
judgment involving monetary damages in an amount of $100,000.00
or greater shall be entered against the Borrower or Questar or
which shall become a lien on the Borrower or Questar's
properties or assets or any material portion thereof or interest
therein and an appeal is not taken and actively prosecuted on
such judgment within ninety (90) days of its entry, or such
execution, attachment or similar process is not released,
bonded, satisfied, vacated or stayed within thirty (30) days
after its entry or levy; or
(o) There occurs any event which in the Bank's
reasonably commercial judgment materially adversely affects (i)
the ability of the Borrower or Questar to perform any of its
material obligations under the Loan Documents; (ii) the business
or financial condition of the Borrower or Questar; or (iii) the
value of the Collateral or the Bank's security interest therein.
6.02. REMEDIES. If there is an Event of Default, the
--------
Bank may, without presentment, demand, protest, notice or other
formality (all of which are waived by the Borrower or Questar):
(a) Declare the full unpaid principal amount
outstanding hereunder and accrued interest thereon to be
immediately due and payable, whereupon such amounts shall be
immediately due and payable; or
(b) Foreclose or exercise any of its rights with
respect to any Collateral without waiving its rights to proceed
against any other Collateral or other entities or individuals
directly or indirectly responsible for payment of the Loans; or
(c) Exercise any other remedies under applicable law,
or under this Agreement or any other Loan Document, including
but not limited to proceeding to enforce its right by suit in
equity, action at law or other appropriate proceeding, whether
for payment or the specific performance of the covenants or
agreements contained in this Agreement or any other Loan
Document.
All remedies of the Bank provided for herein are
cumulative and shall be in addition to all other rights or
remedies of the Bank. The Borrower and Questar shall be liable
for all costs, charges and expenses, and other sums incurred or
advanced by the Bank (including reasonable attorney's fees and
disbursements) to preserve the Collateral, collect on the Loans,
protect the Bank's interests in or realize on the Collateral or
to enforce the Bank's rights against the Borrower or Questar.
6.03. RIQHT OF SET-OFF; SECURITY INTEREST. The Borrower
-----------------------------------
and Questar hereby grant to the Bank, a continuing lien,
security interest and right of setoff as security for all
liabilities and obligations to Bank, whether now existing or
hereafter arising, upon and against all deposits, credits,
collateral and property, now or hereafter in the possession,
custody, safekeeping or control of Bank or any entity under the
control of the Bank and the successors and assigns or in transit
to any of them, other than deposits or funds held by the
Borrower in trust for another. At any time, after an Event of
Default, without demand or notice (any such notice being
expressly waived by the Bank) the Bank may setoff the same or
any part thereof and apply the same to any liability or
obligation of the Borrower or Questar even though unmatured and
regardless of the adequacy of any other collateral securing the
Loans. Any and all rights to require the Bank to exercise its
rights or remedies with respect to any other collateral which
secures the Loans, prior to exercising its right of setoff with
respect to such deposits, credits or other property are hereby
knowingly, voluntarily and irrevocably waived.
ARTICLE 7. MISCELLANEOUS.
7.01. CROSS DEFAULT/CROSS COLLATERAL. All other
------------------------------
agreements between or among the Bank and the Borrower and/or
Questar are hereby amended so that an Event of Default under
this Agreement is a default under all such other agreements and
a default after the expiration of applicable notice and cure
periods under any one of those agreements is an Event of Default
under this Agreement. All such agreements between or among the
Bank and the Borrower and/or Questar are further amended so that
the Collateral under this Agreement secures the obligations now
or hereafter outstanding under all other agreements with the
Bank and the collateral which serves as security under any other
agreement of the Borrower and/or Questar with the Bank secures
the obligations under this Agreement.
7.02. INDEMNIFICATION. At all times the Borrower and
---------------
Questar shall jointly and severally defend and indemnify and
hold the Bank (which for the purposes of this paragraph shall
include the present or future shareholder, officers, directors,
employees, representatives, agents, licensees and assigns of the
Bank) harmless from and against any and all liabilities, claims,
demands, suits, proceedings, actions, causes of action, losses,
damages, settlements, judgments, recoveries, costs and expenses
(including reasonable fees and actual disbursements of counsel)
resulting from any material breach of the representations,
warranties, agreements or covenants made by the Borrower in this
Agreement or any other Loan Document, arising from or connected
with the transactions contemplated by this Agreement or any
other Loan Document, or any of the rights and properties
assigned or pledged to the Bank, except to the extent arising
from the gross negligence or wilful misconduct of the Bank.
7.03. AMENDMENTS, WAIVERS, ETC. No amendment or waiver
------------------------
of any provision in the Loan Documents or consent to any
departure by the Borrower or Questar therefrom, shall 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 it
was given. No failure by the Bank to exercise in whole or part,
and no delay in so exercising, any right hereunder shall operate
as a waiver thereof or preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies
provided by law.
7.04. SURVIVAL. All representations and warranties
--------
made herein or pursuant hereto shall survive the making of the
Loans hereunder.
7.05. USURY. If, at any time, the rate of interest,
-----
together with all amounts which constitute interest and which
are reserved, charged or taken by Bank as compensation for fees,
services or expenses incidental to the making, negotiating or
collection of any Loan evidenced hereby, shall be deemed by any
competent court of law, governmental agency or tribunal to
exceed the maximum rate of interest permitted to be charged by
Bank under applicable law, then, during such time as such rate
of interest would be deemed excessive, that portion of each sum
paid attributable to that portion of such interest rate that
exceeds the maximum rate of interest so permitted shall be
deemed a voluntary prepayment of principal. As used herein, the
term "applicable law" shall mean the law in effect as of the
date hereof; provided, however, that in the event there is a
change in the law which results in a higher permissible rate of
interest, then this Agreement shall be governed by such new law
as of its effective date.
7.06. PAYMENT OF FEES AND EXPENSES. The Borrower and
----------------------------
Questar shall pay on demand all expenses of Bank in connection
with the preparation, administration, default, collection,
waiver or amendment of loan terms, or in connection with Bank's
exercise, preservation or enforcement of any of its rights,
remedies or options hereunder, including, without limitation,
reasonable fees of outside legal counsel or the reasonable
allocated costs of in-house legal counsel, accounting,
consulting, brokerage or other similar professional fees or
expenses, and any fees or expenses associated with travel or
other costs relating to any appraisals or examinations conducted
in connection with the Loans or the Collateral, and the amount
of all such expenses shall, until paid, bear interest at the
rate applicable to principal hereunder (including any default
rate) and be an obligation secured by the Collateral.
7.07. GOVERNING LAW. This Agreement shall be deemed
-------------
to have been made under, governed by and construed in accordance
with, the laws of the State of New York (excluding the laws
applicable to conflicts or choice of law); provided that the
foregoing is not intended to limit the maximum rate of interest
which may be charged or collected by the Bank hereunder if,
under the laws applicable to it, the Bank may charge or collect
such interest at a higher rate than is permissible under the
laws of said State.
7.08. BINDING EFFECT. This Agreement shall be binding
--------------
upon, and shall inure to the benefit of, the Borrower, Questar,
the Bank and their respective successors and assigns except that
the Borrower and Questar may not assign or transfer its rights
or obligations hereunder.
7.09. NOTICES. Notices under this Agreement shall be
-------
delivered personally or by registered mail to the address shown
on the signature page hereof. Notice personally delivered shall
be effective as of delivery or, if sent by registered mail, on
the third business day after the date of mailing.
7.10. SUBSIDIARIES. If the Borrower or Questar has
------------
any subsidiaries (defined as corporations in which the Borrower
or Questar owns or controls the majority of the capital stock
with ordinary voting power) all representations, covenants and
conditions referring to the Borrower or Questar shall also apply
to its subsidiaries, and, all financial statements and tests
shall apply to the Borrower or Questar and their subsidiaries on
a consolidated and consolidating basis.
7.11. CAPTIONS. The captions and headings hereunder
--------
are for convenience only and shall not affect the interpretation or
construction of this Agreement.
7.12. SEVERABILITY. The provisions of this Agreement
------------
shall be severable; if any provision shall be held invalid or
unenforceable in whole or in part the determination shall not
affect the remaining provisions of the Agreement in any manner.
7.13. DISCLOSURE. The Bank is hereby authorized to
----------
disclose any financial or other information it may have about
the Borrower or Questar to any present or future participant or
prospective participant, any regulatory body or agency having
jurisdiction over the Bank, or to any successor to all or any
part of the Bank's interest herein.
7.14. REPLACEMENT OF NOTE/SECURITY DOCUMENT. Upon
-------------------------------------
receipt of an affidavit of an officer of Bank as to the loss,
theft, destruction or mutilation of any Note or any other
security document which is not of public record, and, in the
case of any such loss, theft, destruction or mutilation, upon
cancellation of such Note or other security document, the
Borrower and/or Questar will issue, in lieu thereof, a
replacement note or other security document in the same
principal amount thereof and otherwise of like tenor.
7.15. WAIVER OF TRIAL BY JURY. THE BORROWER AND THE
-----------------------
BANK (BY ACCEPTANCE OF THIS AGREEMENT) MUTUALLY HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A
TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR
ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING, WITHOUT
LIMITATION, ANY COURSE OF CONDUCT, COURSE OF DEALINGS,
STATEMENTS OR ACTIONS OF THE BANK RELATING TO THE ADMINISTRATION
OF THE LOANS OR ENFORCEMENT OF THE LOAN DOCUMENTS, AND AGREE
THAT NEITHER PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH
ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN
WAIVED. EXCEPT AS PROHIBITED BY LAW, THE BORROWER HEREBY WAIVES
ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION ANY
SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY
DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. THE
BORROWER CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
THE BANK HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BANK
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT
FOR THE BANK TO ACCEPT THIS AGREEMENT AND MAKE THE LOANS.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed as of the day and year first
above written.
Attest: TOUCHSTONE APPLIED SCIENCE
ASSOCIATES, INC., a Delaware
corporation
/s/ XXXXX X. XXXXXXX By: /s/ XXXXXX X. XXXXX
-------------------- -------------------
Xxxxx X. Xxxxxxx Xxxxxx X. Xxxxx
Attest: QUESTAR EDUCATIONAL SYSTEMS, INC.
/s/ XXXXX X. XXXXXXX By: /s/ XXXXXXXX XXXXXXX
-------------------- --------------------
Xxxxx X. Xxxxxxx Xxxxxxxx Xxxxxxx
Attest: TD BANKNORTH, N.A.
/s/ XXXXXXX X. XXXXXX By: /s/ XXXXXXX XXXXXXX
--------------------- -------------------
Xxxxxxx X. Xxxxxx Xxxxxxx Xxxxxxx
Exhibits
--------
Exhibit A Form of Term Loan Note
Exhibit B Form of Line of Credit Note
Exhibit C Form of Security Agreements
Exhibit D Form of Guaranty
EXHIBIT A
TD BANKNORTH, N.A.
COMMERCIAL TERM LOAN NOTE
Amount: $9,600,000.00
Dated: May 31, 2006
FOR VALUE RECEIVED, the undersigned (the "Borrower")
promises to pay TD BANKNORTH, N.A. (the "Bank"), at its office
located at 000 Xxxx Xxxxxx, Xxxxxxxxxxxx, Xxx Xxxx 00000, or at
such other place as the Bank may direct, NINE MILLION SIX
HUNDRED THOUSAND AND 00/100 DOLLARS ($9,600,000.00), together
with interest, as follows:
1. COMMERCIAL TERM LOAN. This Note evidences the
--------------------
Borrower's obligations under a commercial term loan in the
amount of $9,600,000.00 (the "Loan") which is being made
available by the Bank to the Borrower in accordance with, and
subject to the terms and provisions of, the Loan Agreement dated
the date hereof by and between the Borrower and the Bank (the
"Loan Agreement"). This Note is subject to and governed by the
terms and provisions of the Loan Agreement, all of which terms
and provisions are incorporated herein by reference. All
capitalized terms used herein and not defined shall have the
meaning set forth in the Loan Agreement.
2. INTEREST RATE. The Borrower shall pay the Bank
-------------
interest on the unpaid principal balance of the Loan from the
date of this Note at a variable annual rate equal to two and
one-half percent (2.50%) above the LIBOR for the Designated
Maturity. Such adjustments shall become effective on the first
(1st) day of each month (the "Reset Date") with the first Reset
Date being July 1, 2006. The Bank shall not be required to
notify Borrower of adjustments in said interest rate. As used
herein, LIBOR (London Interbank Offered Rate) means the rate for
deposits in U.S. Dollars for a period of the Designated
Maturity, which appears on the Telerate Page 3750 as of 11:00
AM, London time, on the day that is two (2) London banking days
prior to the Reset Date. If such rate does not appear on
Telerate Page 3750, the rate for that adjustment date will be
the arithmetic mean of the rates quoted by major banks in
London, selected by the Bank for the Designated Maturity, as of
11:00 AM, London time, on the day that is two (2) London banking
days prior to the Reset Date. "Telerate" means, when used in
connection with any designated page and any floating rate
option, the display page so designated on Bridge's Telerate
Service (or such other page as may replace that page on that
service, or such other service as may be nominated as the
information vendor, for the purpose of displaying rates or
prices comparable to that floating rate option. "Designated
Maturity" means a period of one (1) month.
All computations of interest shall be made on the
basis of a three hundred sixty (360) day year and the actual
number of days elapsed for any payment period.
3. TERM. This Note matures and is payable in full
----
on May 30, 2011 (the "Due Date").
4. PAYMENTS. For the first six (6) months of the
--------
term of the Loan, the Borrower shall pay accrued interest only
on the principal unpaid amount of the Loan. Such payments of
accrued interest shall be paid by the Borrower on the first
(1st) day of each and every succeeding month commencing on July
1, 2006 and continuing until December 1, 2006, subject to
adjustment in accordance with the Following Business Day
Convention. Commencing on January 1, 2007 and for the remainder
of the term of the Loan, the Borrower shall pay consecutive
monthly installments of principal plus accrued interest
according to the principal schedule as set forth in the attached
Schedule I and continuing until the Due Date, when the entire
unpaid amount of fees, interest and principal shall be due and
payable, subject to adjustment in accordance with the Following
Business Day Convention.
The "Following Business Day Convention" means the
convention for adjusting any relevant date that would otherwise
fall on a day that is not a Business Day so that the date will
be the first following day that is a Business Day. As used
herein, "Business Day" means a day (other than Saturday, Sunday
or holiday) on which the Bank is open and conducting its
customary banking transactions in the State of New York.
All payments shall be automatically charged to the
Borrower's operating account with the Bank, which shall be
maintained in good standing at the Bank during the duration of
the Loan or any other loan made by the Bank to the Borrower.
All payments shall be applied first to the payment of
all fees, expenses and other amounts due to the Bank (excluding
principal and interest), then to accrued interest, and the
balance on account of outstanding principal; provided, however,
that after an Event of Default (as defined hereafter), payments
will be applied to the obligations of Borrower to Bank as Bank
determines in its sole discretion.
5. PREPAYMENT. Prepayment will be permitted, in
----------
whole or in part, at any time, without fee or penalty. In
addition to any prepaid amount, the Borrower shall also pay to
the Bank any accrued and unpaid interest and all other sums due
under the terms of this Note at the time of such prepayment. All
prepayments shall be applied first to unpaid fees, unpaid
interest and then to installments of principal in their inverse
order of maturity.
Prepayments of borrowings covered by an interest rate
swap may require termination or adjustment of the swap and will
be subject to the terms and conditions of the swap agreement
with respect to such prepayment.
6. LATE FEE. If the entire amount of any required
--------
principal and/or interest is not paid in full within ten (10)
days after the same is due, Borrower shall pay to Bank a late
fee equal to five percent (5%) of the required payment.
7. COLLATERAL. Repayment of this Note is secured
----------
by, among other things, a first lien security interest in all of
the assets of the Borrower (the "Collateral") pursuant to the
terms of a Security Agreement dated the date hereof between the
Bank and the Borrower (the "Security Agreement"). Any security
interests in any other collateral given to the Bank by the
Borrower in connection with any other obligation to the Bank
shall also secure repayment of this Note.
8. DEFAULT. The Borrower shall be in default under
-------
this Note upon the occurrence of any of the following events
(each, an "Event of Default"):
(a) Failure by the Borrower to pay any payment
of principal, interest or fee due under this Note or any Loan
(as defined in the Loan Documents) on its due date, and such
failure to pay is not cured within three (3) days after such
default; or
(b) Any representation, warranty or statement
contained in this Note (or any document or instrument furnished
in connection with this Note) shall prove to have been false or
misleading in any material respect, when made or deemed made; or
(c) An Event of Default occurs under any Loan
Document.
(d) The occurrence and continuance of a material
default by the Borrower or Questar under any other Loan Document
which default is not cured within any applicable grace or notice
period; or
(e) The Borrower or Questar shall admit its
inability to pay its debts, or shall make a general assignment
for the benefit of creditors; or any proceeding shall be
instituted by the Borrower or Questar, or against the Borrower
or Questar which is not vacated or terminated within sixty (60)
days of the institution thereof, seeking relief as to the
Borrower or Questar under the federal Bankruptcy Code (or its
successors) (the "Bankruptcy Code") or to adjudicate it
insolvent, or seeking reorganization, arrangement, adjustment,
or composition of it or its debts or property under any law
relating to bankruptcy, insolvency or reorganization or relief
of debtors, or seeking appointment of a receiver, trustee, or
other similar official for it or for any substantial part of its
property; or the Borrower shall take any corporate action to
authorize any of the actions set forth above in this subsection;
or
(f) All or any substantial part of the
properties or assets of the Borrower or Questar shall have been
condemned, seized or otherwise appropriated without fair
consideration therefore; or
(g) Other than as disclosed in writing to the
Bank prior to the date hereof, an event or condition occurs or
exists with respect to any Plan concerning which the Borrower or
Questar is under any obligation to furnish a report to the Bank
or as a result thereof the Borrower has incurred or in the
opinion of the Bank is reasonably likely to incur a liability to
a Plan and/or the PBGC which is material in relation to the
Borrower's financial condition; or
(h) The dissolution, liquidation or cessation of
doing business by the Borrower or Questar; or
(i) Any change shall occur in the ownership or
control of Questar, without the prior written consent of the
Bank; or
(j) The loss of any necessary license or permit
for the operation of the business operated or to be operated by
the Borrower and Questar; or
(k) Transfer of title to any material portion
of, or interest in, the Collateral (as defined in the Loan
Documents) other than in the ordinary course of business.
(l) If there shall occur the entry of any
judgment, issuance of any garnishment, attachment or distraint,
the filing of any lien or of any government attachment against
the Borrower or Questar in an amount of $100,000.00 or greater,
which entry, issuance, attachment or filing shall have continued
unstayed and in effect for a period of ninety (90) consecutive
days, or if a writ of execution or attachment or any similar
process shall be issued or levied against all or any material
part of or interest in the properties or assets of the Borrower
or Questar or any judgment involving monetary damages in an
amount of $100,000.00 or greater shall be entered against the
Borrower or Questar or which shall become a lien on the Borrower
or Questar's properties or assets or any material portion
thereof or interest therein and an appeal is not taken and
actively prosecuted on such judgment within ninety (90) days of
its entry, or such execution, attachment or similar process is
not released, bonded, satisfied, vacated or stayed within thirty
(30) days after its entry or levy; or
(m) There occurs any event which in the Bank's
reasonably commercial judgment materially adversely affects (i)
the ability of the Borrower or Questar to perform any of its
material obligations under the Loan Documents; (ii) the business
or financial condition of the Borrower or Questar; or (iii) the
value of the Collateral or the Bank's security interest therein.
Upon the occurrence of an Event of Default: (a) the
Bank shall be under no further obligation to make advances
hereunder; (b) the outstanding principal balance and accrued
interest hereunder together with any additional amounts payable
hereunder, at the Bank's option and without demand or notice of
any kind, may be accelerated and become immediately due and
payable; (c) at the Bank's option, this Note will bear interest
at the default rate of interest set forth below from the date of
the occurrence of the Event of Default; and (d) the Bank may
exercise from time to time any of the rights and remedies
available under the Loan Documents or under applicable law.
Upon default (whether or not Bank has accelerated
payment of this Note), or after maturity or after judgment has
been rendered on this Note, the unpaid principal of all advances
shall, at the option of Bank, bear interest at a rate which is
three (3) percentage points (3.00%) per annum greater than that
which would otherwise be applicable. The Borrower acknowledges
that: (i) such additional rate is a material inducement to the
Bank to make the Loan; (ii) the Bank would not have made the Loan
in the absence of the agreement of the Borrower to pay such
additional rate; (iii) such additional rate represents
compensation for increased risk to the Bank that the Loan will
not be repaid; and (iv) such rate is not a penalty and represents
a reasonable estimate of (a) the cost to the Bank in allocating
its resources (both personnel and financial) to the ongoing
review, monitoring, administration and collection of the Loan and
(b) compensation to the Bank for losses that are difficult to
ascertain.
The Bank does not give up its rights upon a default as
a result of any delay in declaring or failing to declare a
default.
9. SET-OFF. Borrower hereby grants to Bank, a
-------
continuing lien, security interest and right of setoff as
security for all liabilities and obligations to Bank, whether now
existing or hereafter arising, upon and against all deposits,
credits, collateral and property, now or hereafter in the
possession, custody, safekeeping or control of Bank or any
entity under the control of the Bank and its successors and
assigns or in transit to any of them. At any time, after an Event
of Default, without demand or notice (any such notice being
expressly waived by Borrower), Bank may setoff the same or any
part thereof and apply the same to any liability or obligation of
Borrower even though unmatured and regardless of the adequacy of
any other collateral securing the Loan. ANY AND ALL RIGHTS TO
REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO
ANY OTHER COLLATERAL WHICH SECURES THE LOAN, PRIOR TO EXERCISING
ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR
OTHER PROPERTY OF BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY
AND IRREVOCABLY WAIVED.
10. WAIVERS. The Bank is not required to do any of
-------
the following before enforcing its rights under this Note:
(a) Demand payment of amounts due;
(b) Give notice that amounts due have not been
paid; or
(c) Obtain an official certificate of non-
payment.
11. CHANGES. This Note can only be changed by an
-------
agreement in writing signed by the Borrower and the Bank.
12. NOTE BINDING ON EACH BORROWER AND SUCCESSOR. All
-------------------------------------------
obligations under this Note are the joint and several
unconditional obligations of each Borrower and all who succeed to
their rights and interests. Release of any Borrower, Collateral
or guarantor shall not release any other Borrower, Collateral or
guarantor.
13. GOVERNING LAW. This Note shall be construed
-------------
according to the laws of the State of New York (excluding the
laws applicable to conflicts or choice of law) and the Borrower
consents to the jurisdiction of the courts of the State of New
York to determine any questions of fact or law arising under this
Note.
14. PAYMENT OF FEES AND EXPENSES. Borrower shall pay
----------------------------
on demand all expenses of Bank in connection with the
preparation, administration, default, collection, waiver or
amendment of Loan terms, or in connection with Bank's exercise,
preservation or enforcement of any of its rights, remedies or
options hereunder, including, without limitation, fees of outside
legal counsel or the allocated costs of in-house legal counsel,
accounting, consulting, brokerage or other similar professional
fees or expenses, and any fees or expenses associated with travel
or other costs relating to any appraisals or examinations
conducted in connection with the Loan or any collateral
therefor, and the amount of all such expenses shall, until paid,
bear interest at the rate applicable to principal hereunder
(including any default rate) and be an obligation secured by any
collateral.
15. WAIVER OF TRIAL BY JURY. BORROWER AND BANK (BY
-----------------------
ACCEPTANCE OF THIS NOTE) MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT
OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS NOTE OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE
EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE
OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
ANY PARTY, INCLUDING, WITHOUT LIMITATION, ANY COURSE OF CONDUCT,
COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF BANK RELATING TO THE
ADMINISTRATION OF THE LOAN OR ENFORCEMENT OF THE LOAN DOCUMENTS,
AND AGREE THAT NEITHER PARTY WILL SEEK TO CONSOLIDATE ANY SUCH
ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR
HAS NOT BEEN WAIVED. EXCEPT AS PROHIBITED BY LAW, BORROWER HEREBY
WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY
LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. BORROWER CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF BANK HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
BANK WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT
FOR BANK TO ACCEPT THIS NOTE AND MAKE THE LOAN.
16. NO USURY. If, at any time, the rate of interest,
--------
together with all amounts which constitute interest and which are
reserved, charged or taken by Bank as compensation for fees,
services or expenses incidental to the making, negotiating or
collection of the Loan evidenced hereby, shall be deemed by any
competent court of law, governmental agency or tribunal to exceed
the maximum rate of interest permitted to be charged by Bank to
Borrower under applicable law, then, during such time as such
rate of interest would be deemed excessive, that portion of each
sum paid attributable to that portion of such interest rate that
exceeds the maximum rate of interest so permitted shall be deemed
a voluntary prepayment of principal. As used herein, the term
"applicable law" shall mean the law in effect as of the date
hereof; provided, however, that in the event there is a change in
the law which results in a higher permissible rate of interest,
then this Note shall be governed by such new law as of its
effective date.
17. RIGHTS CUMULATIVE. The rights and remedies of the
-----------------
Bank under this Note and the Loan Documents shall be cumulative
and concurrent and at the sole discretion of the Bank may be
pursued singly, successively, or together and exercised as often
as the Bank shall desire. Time is of the essence under this
Note. The failure of the Bank to exercise any such right or
remedy shall in no event be construed an a waiver of release
thereof. Nothing herein contained shall be construed as limiting
the Bank to the remedies mentioned above.
18. PLEDGE TO THE FEDERAL RESERVE. Bank may at any
-----------------------------
time pledge or assign all or any portion of its rights under the
Loan Documents, including any portion of this Note, to any of
the twelve (12) Federal Reserve Banks organized under Section 4
of the Federal Reserve Act, 12 U.S.C. Section 341. No such
pledge or assignment or enforcement thereof shall release Bank
from its obligations under any of the Loan Documents.
19. RIGHTS TO SELL PORTION OF LOAN TO A PROSPECTIVE
-----------------------------------------------
PARTICIPANT. Bank shall have the unrestricted right at any time
-----------
and from time to time, and without the consent of or notice to
Borrower, to grant to one or more banks or other financial
institutions (each, a "Participant") participating interests in
Bank's obligation to lend hereunder and/or any or all of the
Loans held by Bank hereunder. In the event of any such grant by
Bank of a participating interest to a Participant, whether or not
upon notice to Borrower, Bank shall remain responsible for the
performance of its obligations hereunder and Borrower shall
continue to deal solely and directly with Bank in connection with
Bank's rights and obligations hereunder. Bank may furnish any
information concerning Borrower in its possession from time to
time to prospective Participants, provided that Bank shall
require any such prospective Participant to agree in writing to
maintain the confidentiality of such information.
20. INTEGRATION. This Note is intended by the parties
-----------
as the final, complete and exclusive statement of the
transaction evidenced by this Note. All prior or contemporaneous
promises, agreements and understandings, whether oral or
written, are deemed to be superceded by this Note and no party
is relying on any. promise, agreement or understanding not set
forth in this Note. This Note may not be amended or modified
except by a written instrument describing such amendment or
modification executed by Borrower and Bank.
21. USE OF PROCEEDS (REGULATION U). No portion of the
------------------------------
proceeds of the Loan shall be used, in whole or in part, for the
purpose of purchasing or carrying any "margin stock" as such term
is defined in Regulation U of the Board of Governors of the
Federal Reserve System.
22. REPLACEMENT OF NOTE. Upon receipt of an affidavit
-------------------
of an officer of Bank as to the loss, theft, destruction or
mutilation of this Note or any other security document which is
not of public record, and, in the case of any such loss, theft,
destruction or mutilation, upon cancellation of such Note or
other security document, Borrower will issue, in lieu thereof, a
replacement note or other security document in the same principal
amount thereof and otherwise of like tenor.
IN WITNESS WHEREOF, the Borrower has executed this
Commercial Term Loan Note as of the day and year first set forth
above.
Seal
Attest: TOUCHSTONE APPLIED SCIENCE,
ASSOCIATES, INC., a Delaware
corporation
BY:______________________________ By:________________________________
Xxxxx X. Xxxxxxx, Secretary Xxxxxx X. Xxxxx, President
EXHIBIT B
TD BANKNORTH, N.A.
COMMERCIAL LINE OF CREDIT NOTE
Amount: $4,000,000.00
Dated: May 31, 2006
FOR VALUE RECEIVED, the undersigned (the "Borrower")
promises to pay TD BANKNORTH, N.A. (the "Bank"), at its office
located at 000 Xxxx Xxxxxx, Xxxxxxxxxxxx, Xxx Xxxx 00000, or at
such other place as the Bank may direct, FOUR MILLION AND 00/100
DOLLARS ($4,000,000.00), together with interest, as follows:
1. LINE OF CREDIT. This Note evidences the
--------------
Borrower's obligations under an asset-based revolving line of
credit (the "Loan") which is being made available by the Bank to
the Borrower in accordance with, and subject to the terms and
provisions of, the Loan Agreement dated the date hereof by and
between the Borrower and the Bank (the "Loan Agreement"). This
Note is subject to and governed by the terms and provisions of
the Loan Agreement, all of which terms and provisions are
incorporated herein by reference. All capitalized terms used
herein and not defined shall have the meaning set forth in the
Loan Agreement.
2. INTEREST RATE. The Borrower shall pay the Bank
-------------
interest on the unpaid principal balance of the Loan from the
date of this Note at a variable annual rate equal to two and
one-half percent (2.50%) above the LIBOR for the Designated
Maturity. Such rate shall be set at closing and adjusted every
three (3) months (each such date being a "Reset Date"). The
Bank shall not be required to notify Borrower of adjustments in
said interest rate. As used herein, LIBOR (London Interbank
Offered Rate) means the rate for deposits in U.S. Dollars for a
period of the Designated Maturity, which appears on the Telerate
Page 3750 as of 11:00 AM, London time, on the day that is two
(2) London banking days prior to the Reset Date. If such rate
does not appear on Telerate Page 3750, the rate for that
adjustment date will be the arithmetic mean of the rates quoted
by major banks in London, selected by the Bank for the
Designated Maturity, as of 11:00 AM, London time, on the day
that is two (2) London banking days prior to the Reset Date.
"Telerate" means, when used in connection with any designated
page and any floating rate option, the display page so
designated on Bridge's Telerate Service (or such other page as
may replace that page on that service, or such other service as
may be nominated as the information vendor, for the purpose of
displaying rates or prices comparable to that floating rate
option. "Designated Maturity" means a period of three (3)
months.
All computations of interest shall be made on the
basis of a three hundred sixty (360) day year and the actual
number of days elapsed for any payment period.
3. TERM. This Note matures and is payable in full on
----
April 30, 2008 (the "Due Date").
4. PAYMENTS. The Borrower shall pay accrued
--------
interest only on the unpaid principal amount of the Loan, on the
first (1st) day of July 2006 and the first (1st) day of each and
every succeeding month following the initial advance hereunder
and continuing until the Due Date, or earlier demand for
payment, if applicable, when the entire unpaid amount of fees,
interest and principal shall become due, subject to adjustment
in accordance with the Following Business Day Convention.
The "Following Business Day Convention" means the
convention for adjusting any relevant date that would otherwise
fall on a day that is not a Business Day so that the date will
be the first following day that is a Business Day. As used
herein, "Business Day" means a day (other than Saturday, Sunday
or holiday) on which the Bank is open and conducting its
customary banking transactions in the State of New York.
All payments shall be automatically charged to the
Borrower's operating account with the Bank, which shall be
maintained in good standing at the Bank during the duration of
the Loan or any other loan made by the Bank to the Borrower.
All payments shall be applied first to the payment of
all fees, expenses and other amounts due to the Bank (excluding
principal and interest), then to accrued interest, and the
balance on account of outstanding principal; provided, however,
that after an Event of Default hereunder, payments will be
applied to the obligations of Borrower to Bank as Bank
determines in its sole discretion.
5. PREPAYMENT,. Prepayment will be permitted, in
-----------
whole or in part, at any time, without fee or penalty. In
addition to any prepaid amount, the Borrower shall also pay to
the Bank any accrued and unpaid interest and all other sums due
under the terms of this Note at the time of such prepayment. All
prepayments shall be applied first to unpaid fees, unpaid
interest and then to installments of principal in their inverse
order of maturity.
6. LATE FEE. If the entire amount of any required
--------
principal and/or interest is not paid in full within ten (10)
days after the same is due, Borrower shall pay to Bank a late
fee equal to five percent (5%) of the required payment.
7. COLLATERAL. Repayment of this Note is secured
----------
by, among other things, a first lien security interest in all of
the assets of the Borrower (the "Collateral") pursuant to the
terms of a Security Agreement dated the date hereof between the
Bank and the Borrower (the "Security Agreement"). Any security
interests in any other collateral given to the Bank by the
Borrower in connection with any other obligation to the Bank
shall also secure repayment of this Note.
8. DEFAULT. The Borrower shall be in default under
-------
this Note upon the occurrence of any of the following events
(each, an "Event of Default"):
(a) Failure by the Borrower to pay any payment
of principal, interest or fee due under this Note or any Loan
(as defined in the Loan Documents) on its due date, and such
failure to pay is not cured within three (3) days after such
default; or
(b) Any representation, warranty or statement
contained in this Note (or any document or instrument furnished
in connection with this Note) shall prove to have been false or
misleading in any material respect, when made or deemed made; or
(c) An Event of Default occurs under any Loan
Document.
(d) The occurrence and continuance of a material
default by the Borrower or Questar under any other Loan Document
which default is not cured within any applicable grace or notice
period; or
(e) The Borrower or Questar shall admit its
inability to pay its debts, or shall make a general assignment
for the benefit of creditors; or any proceeding shall be
instituted by the Borrower or Questar, or against the Borrower
or Questar which is not vacated or terminated within sixty (60)
days of the institution thereof, seeking relief as to the
Borrower or Questar under the federal Bankruptcy Code (or its
successors) (the "Bankruptcy Code") or to adjudicate it
insolvent, or seeking reorganization, arrangement, adjustment,
or composition of it or its debts or property under any law
relating to bankruptcy, insolvency or reorganization or relief
of debtors, or seeking appointment of a receiver, trustee, or
other similar official for it or for any substantial part of its
property; or the Borrower shall take any corporate action to
authorize any of the actions set forth above in this subsection;
or
(f) All or any substantial part of the
properties or assets of the Borrower or Questar shall have been
condemned, seized or otherwise appropriated without fair
consideration therefore; or
(g) Other than as disclosed in writing to the
Bank prior to the date hereof, an event or condition occurs or
exists with respect to any Plan concerning which the Borrower or
Questar is under any obligation to furnish a report to the Bank or
as a result thereof the Borrower has incurred or in the opinion
of the Bank is reasonably likely to incur a liability to a Plan
and/or the PBGC which is material in relation to the Borrower's
financial condition; or
(h) The dissolution, liquidation or cessation of
doing business by the Borrower or Questar; or
(i) Any change shall occur in the ownership or
control of Questar, without the prior written consent of the
Bank; or
(j) The loss of any necessary license or permit
for the operation of the business operated or to be operated by
the Borrower and Questar; or
(k) Transfer of title to any material portion
of, or interest in, the Collateral (as defined in the Loan
Documents) other than in the ordinary course of business.
(l) If there shall occur the entry of any
judgment, issuance of any garnishment, attachment or distraint,
the filing of any lien or of any government attachment against
the Borrower or Questar in an amount of $100,000.00 or greater,
which entry, issuance, attachment or filing shall have continued
unstayed and in effect for a period of ninety (90) consecutive
days, or if a writ of execution or attachment or any similar
process shall be issued or levied against all or any material
part of or interest in the properties or assets of the Borrower
or Questar or any judgment involving monetary damages in an
amount of $100,000.00 or greater shall be entered against the
Borrower or Questar or which shall become a lien on the Borrower
or Questar's properties or assets or any material portion
thereof or interest therein and an appeal is not taken and
actively prosecuted on such judgment within ninety (90) days of
its entry, or such execution, attachment or similar process is
not released, bonded, satisfied, vacated or stayed within thirty
(30) days after its entry or levy; or
(m) There occurs any event which in the Bank's
reasonably commercial judgment materially adversely affects (i)
the ability of the Borrower or Questar to perform any of its
material obligations under the Loan Documents; (ii) the business
or financial condition of the Borrower or Questar; or (iii) the
value of the Collateral or the Bank's security interest therein.
Upon the occurrence of an Event of Default: (a) the
Bank shall be under no further obligation to make advances
hereunder; (b) the outstanding principal balance and accrued
interest hereunder together with any additional amounts payable
hereunder, at the Bank's option and without demand or notice of
any kind, may be accelerated and become immediately due and
payable; (c) at the Bank's option, this Note will bear interest
at the default rate of interest set forth below from the date of
the occurrence of the Event of Default; and (d) the Bank may
exercise from time to time any of the rights and remedies
available under the Loan Documents or under applicable law.
Upon default (whether or not Bank has accelerated
payment of this Note), or after maturity or after judgment has
been rendered on this Note, the unpaid principal of all advances
shall, at the option of Bank, bear interest at a rate which is
three (3) percentage points (3.00%) per annum greater than that
which would otherwise be applicable. The Borrower acknowledges
that: (i) such additional rate is a material inducement to the
Bank to make the Loan; (ii) the Bank would not have made the Loan
in the absence of the agreement of the Borrower to pay such
additional rate; (iii) such additional rate represents
compensation for increased risk to the Bank that the Loan will
not be repaid; and (iv) such rate is not a penalty and
represents a reasonable estimate of (a) the cost to the Bank in
allocating its resources (both personnel and financial) to the
ongoing review, monitoring, administration and collection of the
Loan and (b) compensation to the Bank for losses that are
difficult to ascertain.
The Bank does not give up its rights upon a default as
a result of any delay in declaring or failing to declare a
default.
9. SET-OFF. Borrower hereby grants to Bank, a
-------
continuing lien, security interest and right of setoff as
security for all liabilities and obligations to Bank, whether now
existing or hereafter arising, upon and against all deposits,
credits, collateral and property, now or hereafter in the
possession, custody, safekeeping or control of Bank or any
entity under the control of the Bank and its successors and
assigns or in transit to any of them. At any time, after an Event
of Default, without demand or notice (any such notice being
expressly waived by Borrower), Bank may setoff the same or any
part thereof and apply the same to any liability or obligation
of Borrower even though unmatured and regardless of the adequacy
of any other collateral securing the Loan. ANY AND ALL RIGHTS TO
REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO
ANY OTHER COLLATERAL WHICH SECURES THE LOAN, PRIOR TO EXERCISING
ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR
OTHER PROPERTY OF BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY
AND IRREVOCABLY WAIVED.
10. WAIVERS. The Bank is not required to do any of
-------
the following before enforcing its rights under this Note:
(a) Demand payment of amounts due;
(b) Give notice that amounts due have not been
paid; or
(c) Obtain an official certificate of non-
payment.
11. CHANGES. This Note can only be changed by an
-------
agreement in writing signed by the Borrower and the Bank.
12. NOTE BINDING ON EACH BORROWER AND SUCCESSOR. All
-------------------------------------------
obligations under this Note are the joint and several
unconditional obligations of each Borrower and all who succeed to
their rights and interests. Release of any Borrower, Collateral
or guarantor shall not release any other Borrower, Collateral or
guarantor.
13. GOVERNING LAW. This Note shall be construed
-------------
according to the laws of the State of New York (excluding the
laws applicable to conflicts or choice of law) and the Borrower
consents to the jurisdiction of the courts of the State of New
York to determine any questions of fact or law arising under this
Note.
14. PAYMENT OF FEES AND EXPENSES. Borrower shall pay
----------------------------
on demand all expenses of Bank in connection with the
preparation, administration, default, collection, waiver or,
amendment of Loan terms, or in connection with Bank's exercise,
preservation or enforcement of any of its rights, remedies or
options hereunder, including, without limitation, fees of outside
legal counsel or the allocated costs of in-house legal counsel,
accounting, consulting, brokerage or other similar professional
fees or expenses, and any fees or expenses associated with travel
or other costs relating to any appraisals or examinations
conducted in connection with the Loan or any collateral
therefor, and the amount of all such expenses shall, until paid,
bear interest at the rate applicable to principal hereunder
(including any default rate) and be an obligation secured by any
collateral.
15. WAIVER OF TRIAL BY JURY. BORROWER AND BANK (BY
-----------------------
ACCEPTANCE OF THIS NOTE) MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT
OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS NOTE OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE
EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE
OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
ANY PARTY, INCLUDING, WITHOUT LIMITATION, ANY COURSE OF CONDUCT,
COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF BANK RELATING TO THE
ADMINISTRATION OF THE LOAN OR ENFORCEMENT OF THE LOAN DOCUMENTS,
AND AGREE THAT NEITHER PARTY WILL SEEK TO CONSOLIDATE ANY SUCH
ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR
HAS NOT BEEN WAIVED. EXCEPT AS PROHIBITED BY LAW, BORROWER HEREBY
WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY
LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. BORROWER CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF BANK HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
BANK WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT
FOR BANK TO ACCEPT THIS NOTE AND MAKE THE LOAN.
16. NO USURY. If, at any time, the rate of interest,
--------
together with all amounts which constitute interest and which
are reserved, charged or taken by Bank as compensation for fees,
services or expenses incidental to the making, negotiating or
collection of the Loan evidenced hereby, shall be deemed by any
competent court of law, governmental agency or tribunal to
exceed the maximum rate of interest permitted to be charged by
Bank to Borrower under applicable law, then, during such time as
such rate of interest would be deemed excessive, that portion of
each sum paid attributable to that portion of such interest rate
that exceeds the maximum rate of interest so permitted shall be
deemed a voluntary prepayment of principal. As used herein, the
term "applicable law" shall mean the law in effect as of the
date hereof; provided, however, that in the event there is a
change in the law which results in a higher permissible rate of
interest, then this Note shall be governed by such new law as of
its effective date.
17. RIGHTS CUMULATIVE. The rights and remedies of the
-----------------
Bank under this Note and the Loan Documents shall be cumulative
and concurrent and at the sole discretion of the Bank may be
pursued singly, successively, or together and exercised as often
as the Bank shall desire. Time is of the essence under this
Note. The failure of the Bank to exercise any such right or
remedy shall in no event be construed an a waiver of release
thereof. Nothing herein contained shall be construed as limiting
the Bank to the remedies mentioned above.
18. PLEDGE TO THE FEDERAL RESERVE. Bank may at any
-----------------------------
time pledge or assign all or any portion of its rights under the
Loan Documents, including any portion of this Note, to any of the
twelve (12) Federal Reserve Banks organized under Section 4 of the
Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or
assignment or enforcement thereof shall release Bank from its
obligations under any of the Loan Documents.
19. RIGHTS TO SELL PORTION OF LOAN TO A PROSPECTIVE
-----------------------------------------------
PARTICIPANT. Bank shall have the unrestricted right at any time
-----------
and from time to time, and without the consent of or notice to
Borrower, to grant to one or more banks or other financial
institutions (each, a "Participant") participating interests in
Bank's obligation to lend hereunder and/or any or all of the
Loans held by Bank hereunder. In the event of any such grant by
Bank of a participating interest to a Participant, whether or not
upon notice to Borrower, Bank shall remain responsible for the
performance of its obligations hereunder and Borrower shall
continue to deal solely and directly with Bank in connection with
Bank's rights and obligations hereunder. Bank may furnish any
information concerning Borrower in its possession from time to
time to prospective Participants, provided that Bank shall
require any such prospective Participant to agree in writing to
maintain the confidentiality of such information.
20. INTEGRATION. This Note is intended by the parties
-----------
as the final, complete and exclusive statement of the transaction
evidenced by this Note. All prior or contemporaneous promises,
agreements and understandings, whether oral or written, are
deemed to be superceded by this Note and no party is relying on
any promise, agreement or understanding not set forth in this
Note. This Note may not be amended or modified except by a
written instrument describing such amendment or modification
executed by Borrower and Bank.
21. USE OF PROCEEDS (REGULATION U),. No portion of the
-------------------------------
proceeds of the Loan shall be used, in whole or in part, for the
purpose of purchasing or carrying any "margin stock" as such term
is defined in Regulation U of the Board of Governors of the
Federal Reserve System.
22. REPLACEMENT OF NOTE. Upon receipt of an affidavit
-------------------
of an officer of Bank as to the loss, theft, destruction or
mutilation of this Note or any other security document which is
not of public record, and, in the case of any such loss, theft,
destruction or mutilation, upon cancellation of such Note or
other security document, Borrower will issue, in lieu thereof, a
replacement note or other security document in the same principal
amount thereof and otherwise of like tenor.
IN WITNESS WHEREOF, the Borrower has executed this
Commercial Line of Credit Note as of the day and year first set
forth above.
Seal TOUCHSTONE APPLIED SCIENCE
Attest: ASSOCIATES, INC., a
Delaware corporation
By:____________________________ By:__________________________________
Xxxxx X. Xxxxxxx, Secretary Xxxxxx X. Xxxxx, President
EXHIBIT C
SECURITY AGREEMENT
SECURITY AGREEMENT made this 31st day of May, 2006, between
TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC. (the "Debtor"), with
its principal office at 0 Xxxxxxxxxxxx Xxxxxxx, Xxxxxxxx, Xxx
Xxxx 00000-0000 and TD BANKNORTH, N.A. (the "Bank"), with an
office at 0 Xxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxx 00000.
1. GRANT OF SECURITY INTEREST. To induce the making and
continuation of all the Debtor's present and future liabilities
to the Bank under any promissory note, guaranty or other
obligation to the Bank including the payment and performance of
all obligations under the ISDA Agreement dated May 31, 2006, and
to secure all of those obligations, whether direct or indirect,
absolute or contingent, joint or several, presently existing or
hereafter incurred (the "Obligations") the Debtor hereby grants
to the Bank a continuing first lien security interest in all of
the Debtor's right, title and interest in and to the following
described property (together with all accessions and additions
thereto, substitutions therefor, and proceeds and products
thereof, being called the "Collateral"):
(a) all machinery, furniture, fixtures, equipment and
other personal property of the Debtor, now existing
and hereafter acquired;
(b) all work in process, materials and inventory of the
Debtor, now existing and hereafter acquired;
(c) all accounts, claims for monies due and other accounts
receivable of the Debtor, now existing and hereafter
arising;
(d) all general intangibles of the Debtor, now existing
and hereafter arising;
(e) all documents, instruments, investment property and
chattel paper of the Debtor, now existing and
hereafter acquired; and
(f) all other property and assets of the Debtor, now
existing and hereafter acquired.
All terms in this paragraph 1 shall include, but not be limited
to, any definitions thereof contained in the New York Uniform
Commercial Code, as the same may be amended, from time to time.
2. NATURE OF USE. The Debtor represents and warrants that:
(a) it is the owner of the Collateral and has good and
marketable title thereto, free and clear of all
security interests, liens and encumbrances;
(b) the Collateral is used or bought for use primarily in
business;
(c) if the Collateral consists of goods which are or are
to become fixtures, the description of the real
property to which the goods are attached or are to be
attached, and the name of the owner of such real
property (if different from the Debtor), are as
follows: 0 Xxxxxxxxxxxx Xxxxxxx, Xxxxxxxx, Xxx Xxxx,
which is owned by 26 Xxxxxx, LLC, 2258, LLC, 79-01 and
SJM Brewster, LLC.
3. LOCATION OF COLLATERAL. The Debtor represents that the
place where the Collateral will be kept is the same place as
stated at the head of this agreement. The Debtor will notify
the Bank promptly, of any change in such location(s).
4. COVENANTS. So long as any of the Obligations remain
unpaid, the Debtor agrees to:
(a) keep the Collateral free from all security interests,
liens, and encumbrances other than those granted to
the Bank;
(b) keep the Collateral insured, at its own cost and
expense, naming the Bank as an insured, under a
lender's loss payable endorsement (or in any other
manner designated by the Bank), in such amounts, with
such insurers, under such endorsements, and against
such risks as may be commercially reasonable and
acceptable to the Bank, and, on request, to deliver
the policies evidencing such insurance to the Bank;
(c) execute all documents requested by the Bank to perfect
or preserve the Bank's security interest in the
Collateral (and authorizes the Bank to execute any
such documents as its attorney-in-fact) and pay the
cost of filing such documents;
(d) maintain such records and information with respect to
the Collateral and its financial condition and
operations, as the Bank may, from time to time,
reasonably require, and allow the Bank upon reasonable
notice and during normal working hours, to inspect
such records and information and supply copies of such
records and information to the Bank; and
(e) immediately inform the Bank of any change in its name,
ownership, or business structure.
If the Debtor fails to keep the Collateral insured as provided
herein or fails to pay any tax upon or other charge or claim
against the Collateral, the Bank may, in addition to any other
remedy it may have (under this agreement or otherwise) pay the
cost of such insurance or the amount of such tax, other charge
or claim, and the amount so paid, together with interest at the
highest rate of interest then allowable on the Obligations
secured hereby, shall be paid to the Bank by the Debtor upon
demand, and, until so paid, shall be a liability of the Debtor
secured by this Agreement.
5. EVENT OF DEFAULT. Upon the occurrence of an Event of
Default hereunder or under any Note, Loan Agreement or Guaranty
executed on the date hereof in connection with the transactions,
contemplated thereby, then, in any such event (each, an "Event
of Default"), the Bank may, at its option, declare all
Obligations secured hereby immediately due and payable, and the
Bank may require the Debtor to assemble the Collateral and make
it available to the Bank at a place which is reasonably
convenient to the Bank and the Debtor. In addition, the Bank
shall have, and may exercise, all the rights and remedies
conferred upon secured parties by the Uniform Commercial Code
and other applicable laws. The Debtor hereby irrevocable
appoints the Bank as Debtor's attorney-in-fact, with full
authority in the place and stead of Debtor and in the name of
Debtor or otherwise, upon the occurrence of an Event of Default,
to take any commercially reasonable action and to execute any
instrument that the Bank may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without
limitation: (a) to assign, pledge, convey or otherwise transfer
title in or dispose of the Collateral to any third person, and
(b) to file any claims, to take any commercially reasonable
action or institute any proceedings which the Bank may deem
necessary or desirable to enforce the rights of the Bank with
respect to any of the Collateral.
6. NOTIFICATION OF OBLIGORS. At any time, after occurrence
and the continuance of an Event of Default by the Debtor, the
Bank may notify the obligors on any of the Collateral of the
existence of its security interest and direct them to make
payments directly to the Bank. The Debtor, at the request of
the Bank, shall also take such actions and hold any sums
received from such obligors in trust for the Bank. Until such
time as the Bank elects to exercise such rights, the Debtor is
authorized, as agent of the Bank, to collect and enforce those
obligations.
7. Duties with respect to Collateral. The Bank shall have no
duty to:
(a) collect, preserve, protect, insure or care for the
Collateral or any proceeds thereof;
(b) preserve rights of the Debtor or others;
(c) realize on the Collateral or any proceeds; or
(d) marshal the assets of the Debtor.
8. COSTS OF ENFORCEMENT. The Bank's reasonable expenses of
realizing upon the Collateral, including reasonable attorneys'
fees, shall be paid by the Debtor. Any notification of a sale
or other disposition of the Collateral (or of other action by
the Bank) required to be given by the Bank, will be sufficient
if given personally or mailed by certified mail, not less than
five (5) days prior to the day on which such sale or other
disposition will be made, and such notification shall be deemed
reasonable notice.
9. MISCELLANEOUS. The waiver by the Bank of any default
hereunder or of any provision hereof shall not discharge the
Debtor from liability hereunder and such waiver shall be limited
to the particular event of default or to the particular
provision and shall not operate as a waiver of any subsequent
default or of any other provision.
If there is more than one person or entity executing this
agreement as Debtor, their obligations hereunder shall be joint
and several.
This agreement and the rights of the parties hereto shall be
governed by the laws of the State of New York and shall be
binding upon and inure to the benefit of the Bank, the Debtor,
and their respective heirs, executors, administrators,
successors and assigns.
IN WITNESS WHEREOF, the undersigned have caused this agreement
to be executed the day and year first above written.
Witness/Attest: THE DEBTOR:
TOUCHSTONE APPLIED SCIENCE
ASSOCIATES, INC.
___________________________ By:________________________________________
Xxxxx X. Xxxxxxx, Secretary Xxxxxx X. Xxxxx, President
Attest: THE BANK:
TD BANKNORTH, N.A.
____________________________ By:________________________________________
EXHIBIT D
GUARANTY OF PAYMENT
GUARANTY dated as of May 31, 2006, made by
QUESTAR EDUCATIONAL SYSTEMS, INC., having an
address of 0000 Xxxxx 000xx Xxxxxx Xxxx,
Xxxxx Xxxxxx, Xxxxxxxxx 00000 (the
"Guarantor"), in favor of TD BANKNORTH,
N.A., having an office at 0 Xxxxx Xxxxxx,
Xxxxxxxxxx, Xxx Xxxx 00000 (the "Bank").
Touchstone Applied Science Associates, Inc. (the
"Borrower"), desires to obtain loans from the Bank. The Bank is
unwilling to extend the accommodations unless it receives this
Guaranty. The Guarantor wishes the loans to be made and will
derive advantage from such loans.
Accordingly, to induce the Bank to make such loans:
Section 1. GUARANTY. The Guarantor hereby unconditionally
guarantees to the Bank the prompt payment, when due, whether by
acceleration or otherwise, of all present or future obligations
or liabilities of the Borrower to the Bank, whether now existing
or arising after the date of this Guaranty, secured or
unsecured, absolute or contingent, together with all
modifications, extensions or renewals of the obligations or
liabilities. This Guaranty covers obligations and liabilities
incurred by the Borrower in any capacity (including as maker,
endorser, guarantor, accommodation party or otherwise) and also
includes the amount of any payment made by the Borrower to the
Bank which payment is rescinded or must otherwise be returned by
the Bank upon the insolvency or bankruptcy of the Borrower.
This Guaranty covers obligations and liabilities incurred by the
Borrower under any indemnification provisions set forth in the
documents evidencing and securing such obligations and
liabilities. Such obligations and liabilities, together with
interest and all fees, costs, expenses, reasonable attorneys'
fees and other costs of collection incurred or paid by the Bank,
are together referred to as the "Indebtedness".
Section 2. GUARANTY ABSOLUTE. The Guarantor will pay all
the Indebtedness in accordance with its terms. The liability of
the Guarantor under this Guaranty is absolute and unconditional
irrespective of:
(i) any lack of validity or enforceability of any
documents evidencing (or relating) to the
Indebtedness;
(ii) any change in the time, manner, place or amount of
payment or in any other term of all or any of the
Indebtedness, or any other amendment or waiver of or
any consent to departure from the terms of the
Indebtedness;
(iii) any exchange, release or non-perfection of any
collateral or lien securing all or any part of the
Indebtedness, which exchange, release or non-
perfection the Guarantor expressly agrees will not be
deemed an unjustifiable impairment of the collateral;
(iv) any release or amendment or waiver of or consent to
departure from any other guaranty, for all or any part
of the Indebtedness;
(v) any settlement or compromise with the Borrower or any
other person relating to the Indebtedness; or
(vi) any other circumstances, other than payment, which
might otherwise constitute a defense available to, or
a discharge of, the Borrower in respect of the
Indebtedness or the Guarantor in respect of this
Guaranty.
This Guaranty will continue to be effective, or be reinstated,
as the case may be, if at any time any of the Indebtedness is
rescinded or must otherwise be returned by the Bank upon the
insolvency or bankruptcy of the Borrower or otherwise, all as
though such payment had not been made.
Section 3. WAIVER. The Guarantor waives presentment,
demand, diligence, notice of acceptance and any other notice
with respect to any of the Indebtedness and/or this Guaranty
(other than notice as set forth in Section 8 hereof) and any
requirement that the Bank exhaust any right or take any action
against the Borrower or any other person or entity or any
collateral.
Section 4. SUBROGATION, REIMBURSEMENT AND INDEMNITY. The
Guarantor waives (a) all right to seek reimbursement or
indemnity from the Borrower, and (b) any right to subrogation it
may have or acquire as result of performance under this
Guaranty.
Section 5. REPRESENTATION AND WARRANTIES. The Guarantor
represents and warrants:
(a) The execution and delivery of this Guaranty and the
performance of its obligations under this Guaranty
have been authorized by all necessary action.
(b) No authorization, or registration with, any court or
governmental department, commission, agency or
instrumentality, is or will be necessary to the valid
execution, delivery or performance of the Guaranty.
(c) This Guaranty constitutes the legal, valid and binding
obligation of the Guarantor, enforceable against the
Guarantor in accordance with its terms.
(d) The Guarantor has made whatever inquiry into the
financial or other affairs of the Borrower, and the
terms of any Indebtedness, as it deems necessary or
desirable prior to executing this Guaranty and has not
relied on the Bank for any such information.
(e) The Guarantor shall provide the Bank with any and all
financial information and/or financial statements as
requested by the Bank, including annual financial
statements and manually signed copies of federal and
state tax returns, which shall be satisfactory to the
Bank.
(f) The Guarantor agrees not to transfer any of its assets
other than for full and adequate consideration without
the written consent of the Bank other than transfers
made in the ordinary course of business which are not
material to the Guarantor.
Section 6. ACCELERATION. The Guarantor agrees that, if
the maturity of any of the Indebtedness is accelerated, by
bankruptcy or otherwise, as against the Borrower, the maturity
shall also be deemed accelerated for the purposes of this
Guaranty, and without demand on or notice to the Guarantor.
Section 7. AMENDMENTS, ETC. This Guaranty represents the
entire agreement of the parties. No amendment or waiver of any
provision nor consent to departure by the Guarantor from any
provision is effective unless in writing and signed by the Bank,
and then the waiver or consent will be effective only in the
special instance and for the specific purpose given.
Section 8. NOTICES. All notices required or permitted
under this Guaranty shall be given to the parties at the address
stated in this Guaranty (or at any other address a party may
designate) in writing, sent by first class mail, postage
prepaid, and is deemed complete upon mailing.
Section 9. NO WAIVER; REMEDIES. No failure on the part of
the Bank to exercise, and no delay in exercising, any right
under this Guaranty shall operate as a waiver of such right, nor
shall any single or partial exercise of any right preclude any
further exercise of such right or of any other right. All
remedies provided in this Guaranty and in any document
evidencing or relating to any Indebtedness are cumulative.
Section 10. RIGHT OF SET-OFF; SECURITY INTEREST. The
Guarantor hereby grants to Bank, a continuing lien, security
interest and right of setoff as security for all liabilities and
obligations to Bank, whether now existing or hereafter arising,
upon and against all deposits, credits, collateral and property,
now or hereafter in the possession, custody, safekeeping or
control of Bank or any entity under the control of the Bank and
its successors and assigns or in transit to any of them. At any
time, after an event of default, without demand or notice (any
such notice being expressly waived by the Guarantor), the Bank
may setoff the same or any part thereof and apply the same to
any liability or obligation of the Guarantor or the Borrower
even though unmatured and regardless of the adequacy of any
other collateral securing the Loan. ANY AND ALL RIGHTS TO
REQUIRE THE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT
TO ANY OTHER COLLATERAL WHICH SECURES THE LOAN, PRIOR TO
EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS,
CREDITS OR OTHER PROPERTY OF SUCH GUARANTOR OR BORROWER, ARE
HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
Section 11. CONTINUING GUARANTY; ASSIGNMENT. This
Guaranty is a continuing guaranty and will: (a) remain in full
force and effect until payment in full of the Indebtedness and
all other amounts payable under this Guaranty, (b) extend to and
cover every modification, waiver, extension or renewal of and
every obligation accepted in substitution for, the Indebtedness,
(c) be binding upon the Guarantor, its successors and assigns
and; (d) inure to the benefit of and be enforceable by the Bank
and its successors, transferees and assigns.
Section 12. NO IMPAIRMENT OF GUARANTY. This Guaranty
shall not be impaired or affected in any way as to any Guarantor
by any termination, revocation, release, modification, discharge
or substitution of collateral or changes as to any or all of the
liabilities or undertakings of any other obligor.
Section 13. GUARANTY NOT MODIFIED BY BANKRUPTCY. Neither
the Guarantor's obligation in accordance with the terms of this
Guaranty, nor any remedy for the enforcement, nor the amount of
the Indebtedness of the Borrower will be impaired, modified, or
limited in any manner whatsoever by any impairment,
modification, discharge, limitation of the Indebtedness of the
Borrower or its estate in bankruptcy or any remedy for the
enforcement, resulting from the operation of any present or
future provision of the Bankruptcy Code of the United States or
other statute, or from the decision of any court interpreting
any of the same, and the Guarantor is obligated under this
Guaranty. The amount of the Indebtedness will, for the purposes
of this Guaranty, be determined as if no such impairment, stay,
modification, discharge, or limitation had occurred.
Section 14. GOVERNING LAW. This Guaranty will be governed
by, and construed in accordance with, the laws of the State of
New York (excluding the laws applicable to conflicts or choice
of law). In the event the Bank brings any action hereunder in
any court of record of New York or the Federal Government, the
Guarantor consents to and confers personal jurisdiction over the
Guarantor by such court or courts and agrees that service of
process may be made upon the Guarantor by mailing a copy of such
process to it.
Section 15. WAIVER OF JURY TRIAL. THE GUARANTOR AND THE
BANK (BY ACCEPTANCE OF THIS GUARANTY) MUTUALLY HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY
IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR
IN CONNECTION WITH THIS GUARANTY OR ANY OTHER LOAN DOCUMENTS
CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE
OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING, WITHOUT LIMITATION,
ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR ACTIONS
OF BANK RELATING TO THE ADMINISTRATION OF THE LOAN OR
ENFORCEMENT OF THE LOAN DOCUMENTS, AND AGREE THAT NEITHER PARTY
WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION
IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. EXCEPT
AS PROHIBITED BY LAW, THE GUARANTOR HEREBY WAIVES ANY RIGHT IT
MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES
OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. THE GUARANTOR
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE BANK
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BANK WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR THE
BANK TO ACCEPT THIS GUARANTY AND MAKE LOANS OR OTHER FINANCIAL
ACCOMMODATIONS TO BORROWER.
Witness or Attest: QUESTAR EDUCATIONAL SYSTEMS, INC.
_____________________________ By:_______________________________
Xxxxx X. Xxxxxxx, Secretary Xxxxxx X. Xxxxx, Vice President
SHAREHOLDERS' CONSENT
The undersigned shareholder of the Guarantor named in this
Guaranty, consents to the making and delivery of this Guaranty
by the corporate Guarantor and confirms the ownership
percentages below.
PERCENT
NAME OWNERSHIP SIGNATURE
Touchstone Applied 100% By:___________________________
Science Associates, Inc. ______ Xxxxxx X. Xxxxx, President
100%
