CONSENT AND
FOURTH AMENDMENT
TO
REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT
THIS CONSENT AND FOURTH AMENDMENT ("Amendment") is entered
into as of March 24, 1999, by and among HEALTH-CHEM CORPORATION,
a corporation organized under the laws of the State of Delaware
("Holdings"), HERCULITE PRODUCTS, INC., a corporation organized
under the laws of the State of New York ("HPI"), TRANSDERM
LABORATORIES CORPORATION, a corporation organized under the laws
of the State of Delaware ("TLC"), HERCON ENVIRONMENTAL
CORPORATION, a corporation organized under the laws of the State
of Delaware ("HEC"), PACIFIC COMBINING CORPORATION, a corporation
organized under the laws of the State of California ("PCC") and
HERCON LABORATORIES CORPORATION, a corporation organized under
the laws of the State of Delaware ("HLC") (Holdings, HPI, TLC,
HEC, PCC and HLC, each a "Borrower" and collectively
"Borrowers"), and IBJ WHITEHALL BUSINESS CREDIT CORPORATION
(f/k/a IBJ Xxxxxxxx Business Credit Corporation) (as successor in
interest to IBJ Xxxxxxxx Bank & Trust Company), as agent (in such
capacity, the "Agent") for itself and the financial institutions
which are now or which hereafter become a party (collectively,
the "Lenders" and individually a "Lender") to the Loan Agreement
(as hereafter defined).
BACKGROUND
Borrowers, Agent and Lender are parties to a Revolving
Credit, Term Loan and Security Agreement dated as of January 9,
1997 (as amended, supplemented or otherwise modified from time to
time, the "Loan Agreement") pursuant to which Agent and Lenders
provided Borrowers with certain financial accommodations.
Borrower has requested that Agent and Lenders amend the Loan
Agreement to, among other things, increase the amount of the
overadvance facility from $1,310,000 to $1,910,000 and to extend
such facility to April 13, 1999 and to consent to the sale of all
or substantially all of the assets or stock of each of HPI and
HEC and Agent and Lenders are willing to do so on the terms and
conditions hereafter set forth.
NOW, THEREFORE, in consideration of any loan or advance or
grant of credit heretofore or hereafter made to or for the
account of Borrowers by Agent and Lenders, and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. Definitions. All capitalized terms not otherwise defined
herein shall have the meanings given to them in the Loan
Agreement.
2. Amendment to Loan Agreement. Subject to satisfaction of the
conditions precedent set forth in Section 4 below, the Loan
Agreement is hereby amended as follows:
(a) by amending the following defined term in its entirety
to provide as follows:
"Special Advance Amount" shall mean an amount equal to
(i) $1,310,000 during the period January 11, 1999 through March
23, 1999 less the outstanding undrawn amount of the Special
Letter of Credit, (ii) $1,910,000 during the period March 24,
1999 through April 13, 1999 less the outstanding undrawn amount
of the Special Letter of Credit, and (iii) at all other times,
$106,875 if the undrawn amount of the Special Letter of Credit is
still outstanding and collateralized by the Special Letter of
Credit Collateral and $0 if the Special Letter of Credit is not
outstanding or is not collateralized by the Special Letter of
Credit Collateral.
(b) by amending Section 13.1 of the Loan Agreement by
inserting the following proviso at the end of the penultimate
sentence thereof but before the period:
"; provided, however, the foregoing early termination fee shall
not be payable in the event the Obligations are repaid in full
prior to the end of the Term from the cash proceeds of the sale
of the assets or stock of HPI and HEC".
3. Consents. Subject to the satisfaction of the conditions
precedent set forth in Section 4 below, Agent hereby consents to
each of the following:
(a) the sale of all or substantially all of the assets or
stock of HPI and HEC (collectively, the "Herculite Sale");
provided, that (i) the terms and conditions of the Herculite
Sale, including the aggregate sales price, shall be satisfactory
to Lender in its discretion and (ii) the cash proceeds from the
Herculite Sale (the "Herculite Sale Proceeds") shall be remitted
to Agent to be applied to the Obligations in accordance with the
terms of the Loan Agreement pursuant to the following wire
instructions:
Bank: IBJ Whitehall Bank & Trust Company
Xxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ABA #000000000
For Credit to: IBJ Whitehall Business
Credit Corporation
Reference: Health-Chem Corporation
and (iii) Borrowers shall pay Agent on the date of this
Amendment, in consideration of Agent's foregoing consent, a
consent fee equal to $150,000, which fee shall be charged to
Borrowers' Account and become an Obligation on the date of this
Amendment, provided, that until the earlier to occur of the
receipt of the Herculite Sale Proceeds, the acceleration of the
Obligations by Agent or April 13, 1999, the amount of such
consent fee shall not be deemed a utilization of Undrawn
Availability and interest shall not accrue on the amount of such
fee.
Effective upon receipt by Agent of the Herculite Sale Proceeds,
Agent and each Lender releases all Liens which Agent and such
Lender may have in the assets or stock of HPI and HEC and Agent
and each Lender further agrees, at Borrowers' expense, to deliver
to Borrowers such documents, including, without limitation, UCC-3
partial releases, as may be reasonably requested by Borrowers in
connection with the above described release.
(b) the return by PCC to each of Highland Industries, NRB
Industries, Inc. and Xxxxxxxx & Co. (collectively, the "PCC
Vendors"), in connection with the consummation of settlement
agreements with each such PCC Vendor, of Inventory sold by the
PCC Vendors to PCC so long as (i) the aggregate value of such
Inventory as determined from the original purchase price paid by
PCC for such Inventory is not more than $152,000, (ii) PCC and
each PCC Vendor shall have executed a settlement agreement and
(iii) Borrowers shall deliver to Agent a borrowing base
certificate in form and substance satisfactory to Agent setting
forth the value of the Collateral giving pro forma effect to the
return of such Inventory. Effective upon the consummation of
such settlement agreements, the PCC Vendors shall own such
returned Inventory free and clear of the Lien of Agent.
4. Conditions of Effectiveness. This Amendment shall become
effective when Agent shall have received (i) three (3) copies of
this Amendment executed by Borrowers and consented and agreed to
by each Guarantor and (ii) an amendment fee equal to $50,000,
which fee shall be charged to Borrowers' Account on the date of
this Amendment.
5. (a) Representations and Warranties. Each Borrower hereby
represents and warrants as follows:
(i) This Amendment and the Loan Agreement, as amended
hereby, constitute legal, valid and binding obligations of such
Borrower and are enforceable against such Borrower in accordance
with their respective terms.
(ii) Upon the effectiveness of this Amendment, each
Borrower hereby reaffirms all covenants, representations and
warranties made in the Loan Agreement to the extent the same are
not amended hereby including, without limitation, Section 13.1
thereof, and agrees that all such covenants, representations and
warranties shall be deemed to have been remade as of the
effective date of this Amendment.
(iii) No Event of Default or Default has occurred
and is continuing or would exist after giving effect to this
Amendment.
(iv) No Borrower has any defense, counterclaim or
offset with respect to the Loan Agreement.
(b) Covenants. Each Borrower hereby covenants and agrees
as follows:
(i) To deliver to Agent not later than April 13, 1999
motor vehicle title certificates for each of the motor vehicles
listed on Schedule A attached hereto, each noting Agent as
lienholder.
(ii) The proceeds of Advances from the increase of the
Special Advance Amount from $1,310,000 to $1,910,000 effected by
this Amendment shall be used by Borrowers (i) to settle certain
outstanding claims and disputes with, and to satisfy in full
certain of PCC's trade creditors and (ii) for general working
capital and corporate purposes.
6. Effect on the Loan Agreement.
(a) Upon the effectiveness of Section 2 hereof, each
reference in the Loan Agreement to "this Agreement," "hereunder,"
"hereof," "herein" or words of like import shall mean and be a
reference to the Loan Agreement as amended hereby.
(b) Except as specifically amended herein, the Loan
Agreement, and all other documents, instruments and agreements
executed and/or delivered in connection therewith, shall remain
in full force and effect, and are hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not, except as set forth in Section 3 hereof,
operate as a waiver of any right, power or remedy of Agent or any
Lender, nor constitute a waiver of any provision of the Loan
Agreement, or any other documents, instruments or agreements
executed and/or delivered under or in connection therewith.
7. Governing Law. This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and assigns and shall be governed by and construed in
accordance with the laws of the State of New York.
8. Headings. Section headings in this Amendment are included
herein for convenience of reference only and shall not constitute
a part of this Amendment for any other purpose.
9. Counterparts; Telecopies Signature. This Amendment may be
executed in any number of and by different parties hereto, on
separate counterparts, all of which when so executed shall be
deemed an original, but all such counterparts shall constitute
one and the same agreement. Any signature delivered by a party
by facsimile transmission shall be deemed to be an original
signature hereto.
IN WITNESS WHEREOF, this Amendment has been duly executed as
of the day and year first written above.
HEALTH-CHEM CORPORATION
HERCULITE PRODUCTS, INC.
PACIFIC COMBINING CORPORATION
HERCON LABORATORIES CORPORATION
By: /s/Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Chairman of the Board of each of the
foregoing corporations
TRANSDERM LABORATORIES
CORPORATION
By: /s/Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: President
HERCON ENVIRONMENTAL CORPORATION
By: /s/Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Chairman of the Board
IBJ WHITEHALL BUSINESS CREDIT
CORPORATION, as Agent and Lender
By: _______________________________
Name: _____________________________
Title: ______________________________
CONSENT AND REAFFIRMATION BY GUARANTORS
Each of the undersigned consents to the execution of the
Consent and Fourth Amendment and acknowledges and agrees that
each Guaranty by each of the undersigned with respect to the
Obligations is, and will remain, in full force and effect in
accordance with its terms and that the undersigned has no
defense, counterclaim or offset with respect to the Guaranty.
March 24, 1999
MEDALLION GROUP, INC.
HEALTH-CHEM INDUSTRIES, INC.
H.S. PROTECTIVE FABRICS CORPORATION
H.S. DEVELOPMENT, INC.
YORK AEROSOL DELIVERY SYSTEM
CORPORATION
SPRINGS DEVELOPMENT CORPORATION
RESEARCH DEVELOPMENT CORPORATION
HEALTH-MED CORPORATION
CAPCO DELAWARE, INC.
ABERDEEN RESEARCH CORPORATION
By: /s/Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: President or Chairman of the Board
of each of the foregoing corporations
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