as of February 1, 1999
Windswept Environmental Group, Inc.
Trade-Winds Environmental Restoration, Inc.
North Atlantic Laboratories, Inc.
New York Testing Laboratories, Inc.
000 Xxxxxxxxxxx Xxxxxx
Xxx Xxxxx, Xxx Xxxx 00000
Re: Loan and Security Agreement dated as of June 1, 1998 as modified from time
to time (the "Loan Agreement")
Gentlemen:
This is to confirm our approval of your request for a temporary overadvance
under, and certain other modifications to the terms and conditions of, the
$2,500,000.00 revolving credit facility provided for in the Loan Agreement.
Accordingly we have agreed to the following modifications to the Loan Agreement:
A. The definition of Permitted Overadvance Amount is modified to read as
follows:
Permitted Overadvance Amount means from (a) February 1, 1999 through March
4, 1999 $325,000.00, (b) from March 5, 1999 through March 11, 1999
$275,000.00; (c) from March 12, 1999 through March 18, 1999 $225,000.00,
(d) from March 19, 1999 through March 25, 1999 $175,000.00, (e) from March
26, 1999 through April 1, 1999 $125,000.00; (f) from April 2, 1999 through
April 8, 1999 $75,000.00; (g) from April 9, 1990 through April 15, 1999
$25,000.00, and (h) from April 16 on $zero.
B. The definition of Eligible Accounts is hereby modified to add the
following sentence at the end of said definition:
Notwithstanding the foregoing provisions, Accounts owing from Friends of
Long Island Heritage will, through April 15, 1999, be considered Eligible
Accounts even though such Accounts remain outstanding for more than ninety
(90) days from the invoice date, provided such Accounts otherwise
constitute an Eligible Account.
C. Paragraphs 2.1(A), 2.3, 2.5(A) and 2.9 of the Loan Agreement are hereby
modified to read as follows:
2.1 Revolving Advances; Advance Limit. (A) Upon the request of Borrower,
made at any time or from time to time during the Term and so long as no
Event of Default has occurred and is continuing, BACC may, in its sole and
absolute discretion, make Advances in an amount up to eighty percent (80%)
of the aggregate outstanding amount of Eligible Accounts (the "Borrowing
Base") plus the Permitted Overadvance Amount; provided, however, that in no
event shall the aggregate amount of the outstanding Advances be greater
than, at any time, the amount of Two Million Five Hundred Thousand and
00/100 Dollars ($2,500,000.00) (the Advance Limit);
2.3 Overadvances. All Advances shall be added to and be deemed part of the
Obligations when made. If, at any time and for any reason, the aggregate
amount of the outstanding Advances under paragraph 2.1(A) hereof exceeds
the lesser of the Borrowing Base plus the Permitted Overadvance Amount or
the Advance Limit contained in Section 2.1(A) (an Overadvance) then
Borrower shall, upon demand by BACC, immediately pay to BACC, in cash, the
amount of such Overadvance. Without affecting Borrower's obligation to
immediately repay to BACC the amount of each Overadvance, Borrower shall
pay BACC a fee (the Overadvance Fee) in an amount equal to Three percent
(3%) per annum on the amount of the Advances under paragraph 2.1(A) hereof
in excess of the lesser of the Borrowing Base plus the Permitted
Overadvance Amount or the Advance Limit for each day any such Advance in
excess of the lesser of the Borrowing Base plus the Permitted Overadvance
Amount or the Advance Limit exists. All
1
such fees shall be computed on the basis of a three hundred and sixty (360)
day year for the actual number of days elapsed.
2.5 Interest.
A. The aggregate outstanding balances of the Obligations shall accrue
interest (a) from February 1, 1999 at the per annum rate of eight
percentage points (8%) above the Prime Rate until such time as the
outstanding Advances under the revolving credit facility provided for in
paragraph 2.1(A) hereof are not in excess of the Borrowing Base and (b)
thereafter at the per annum rate of three percentage points (3%) above the
Prime Rate. The Obligations shall bear interest from and after written
notice by BACC to Borrower of the occurrence of an Event of Default, and
without constituting a waiver of any such Event of Default, at the per
annum rate of Eight percentage points (8%) above the Prime Rate. All
interest payable under the Loan Documents shall be computed on the basis of
a three hundred sixty (360) day year for the actual number of days elapsed
on the Daily Balance. Interest as provided for herein shall continue to
accrue until the Obligations are paid in full.
2.9 Servicing Fee. Borrower shall pay BACC a servicing fee in an amount
equal to one percent (1%) of the daily average outstanding balance of the
Advances during each month on or before the first (1st) day of each
calendar month in respect of BACC's services for the preceding calendar
month, during the Term, including each Renewal Term, or so long as the
Obligations are outstanding.
D. Paragraph 2.5 of the Loan Agreement is hereby modified to add a
subparagraph 2.5(d) as follows:
(d) Notwithstanding the foregoing, for purposes of this Agreement, it is
the intention of Borrower and BACC that "interest" shall mean, and be
limited to, any payment to BACC which compensates it for extending credit
to Borrower, for making available to Borrower a line of credit during the
term of this Agreement and for any default or breach by Borrower of a
condition upon which credit was extended. Borrower and BACC agree that, for
the sole purpose of calculating the "interest" paid by Borrower to BACC, it
is the intention of Borrower and BACC that interest shall mean and include,
and be expressly limited to, any interest accrued on the aggregate
outstanding balance of the Obligations during the term hereof pursuant to
Sections 2.5(A) and 2.5(B); and any Overadvance Fee, Origination or
facility Fee, and late fees charged to Borrower during the term hereof.
Borrower and BACC further agree that it is their intention that the
following fees shall not constitute "interest": any Servicing Fee, any
attorney fees incurred by BACC, any premiums or commissions attributable to
insurance guaranteeing repayment, finders' fees, credit report fees,
appraisal fees or fees for document preparation or notarization. To the
extent, however, that New Jersey law excludes from the calculation of
"interest" any fees defined herein as interest, or includes as interest any
fees or other sums which are intended not to constitute interest New Jersey
law shall supersede and prevail and all such interest shall be subject to
paragraph 2.5(C) above.
E. Article 6 of the Loan Agreement is hereby modified to add paragraph 6.16
as follows:
6.16 Year 2000 Compatibility. Borrower agrees to take such actions as are
necessary to assure that it's computer based hardware and software will
operate prior to, on and after January 1, 2000 and will accurately process
data including dates on and after January 1, 2000 and are otherwise year
2000 compatible. Borrower will, from time to time, at the request of BACC,
furnish to BACC evidence of Borrowers compliance with the foregoing.
In consideration of our entering into this letter modification agreement,
you shall (a) pay to us, contemporaneous with you acceptance hereof, a facility
fee of $25,000.00 and (b) furnish to us, at your expense, an updated appraisal
of you machinery and equipment by an appraiser satisfactory to BACC.
2
Our approval shall not constitute a waiver of any Events of Default, if any
so exist, or any future violation of any provisions of the Loan Agreement or any
other Loan Documents. By your execution hereof Borrower agrees to pay all costs
and expenses, including reasonable attorneys fees and disbursements, incurred by
BACC in connection with the preparation of this letter agreement and the other
documents created in connection herewith. Capitalized terms not defined herein
but defined in the Loan Agreement shall have the same meaning ascribed to such
terms in the Loan Agreement. Your execution shall also act as your
representation that the execution of this letter agreement has been authorized
by all required corporate action, that this letter agreement constitutes the
valid and binding obligation of the Borrower, is enforceable in accordance with
its terms and that no material adverse change in the financial condition of the
Borrower has occurred and the Borrower's reaffirmation of its grant to BACC of a
lien on the Collateral.
Except as herein set forth, the Loan Agreement and all other Loan Documents
shall remain in full force and effect. Our agreement as aforesaid is subject to
your written agreement with the terms hereof by signing and returning a copy
hereof where so indicated below and by the written consent of guarantor where so
indicated below.
BUSINESS ALLIANCE CAPITAL CORP.
By: /s/ Xxxxxxx Xxxxxxx
------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Senior Vice President
Agreed to:
Windswept Environmental Group, Inc.
By: /s/ Xxxxxxx X'Xxxxxx
-------------------------------------
Name: Xxxxxxx X' Xxxxxx
Title: President
Trade-Winds Environmental Restoration, Inc.
By: /s/ Xxxxxxx X'Xxxxxx
-------------------------------------
Name: Xxxxxxx X' Xxxxxx
Title: President
North Atlantic Laboratories, Inc.
By: /s/ Xxxxxxx X'Xxxxxx
-------------------------------------
Name: Xxxxxxx X' Xxxxxx
Title: Vice President
New York Testing Laboratories, Inc.
By: /s/ Xxxxxxx X'Xxxxxx
-------------------------------------
Name: Xxxxxxx X'Xxxxxx
Title: Vice President
3
The undersigned, guarantor of the Liabilities of the Borrower to BACC,
hereby consents to the above letter and agrees that same shall not affect his
Individual Guaranty dated as of June 1, 1998, which guaranty remains in full
force and effect.
/s/ Xxxxxxx X'Xxxxxx
---------------------------
Xxxxxxx X'Xxxxxx
