SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
_____________________________________________
THIS SIXTH AMENDMENT ("Amendment"), dated as of the __ day
of April, 1997, by and among PERMA-FIX ENVIRONMENTAL SERVICES, INC.,
a Delaware corporation ("Parent"), each of those direct and indirect
subsidiaries of Parent whose names are inscribed on the signature
pages to the "Loan Agreement" referenced below (Parent and such
direct and indirect subsidiaries, collectively, the "Borrowers" or,
individually, a "Borrower") and XXXXXX FINANCIAL, INC., a Delaware
corporation ("Lender");
W I T N E S S E T H T H A T:
WHEREAS, Borrowers and Lender are parties to a certain
Loan and Security Agreement, dated as of January 27, 1995 (as
amended to date, the "Loan Agreement"; capitalized terms used herein
and not defined herein have the meanings assigned to them in the
Loan Agreement), pursuant to which, subject to the terms and
conditions set forth therein, Lenders have made and continue to make
certain financial accommodations available to Borrowers; and
WHEREAS, certain Events of Default have occurred and are
continuing under the Loan Agreement as described on Exhibit A
attached hereto (the "Existing Events of Default"); and
WHEREAS, Borrowers have requested that Lender waive the
Existing Events of Default, amend the financial covenants set forth
in Section 6 of the Loan Agreement in certain respects, and amend
certain other provisions of the Loan Agreement as set forth
hereinbelow; and
WHEREAS, pursuant to Borrowers request and subject to all
of the terms and conditions set forth herein (including, without
limitation, payment by Borrowers to Lender of the fee described in
Section 10(d) hereof), Lender is willing to waive the existing
Events of Default, and to amend the Loan Agreement in the manner
hereinafter set forth; and
WHEREAS, Borrowers and Lender desire to enter into this
Amendment in order to memorialize their mutual understandings in
regard to the foregoing matters;
NOW, THEREFORE, in consideration of the foregoing premises
and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrowers and Lender
agree as follows:
1. Amendment to Definition of Capital Expenditures.
(a) The definition of Capital Expenditures set
forth in Section 1.1 of the Loan Agreement is hereby amended by
deleting the parenthetical therein which reads "(including the
principal portion of payments made during such period under or with
respect to Capital Leases)" and substituting in lieu thereof the
following parenthetical:
(excluding the principal portion of payments
made during such period under or with respect
to Capital Leases to the extent otherwise
included as Capital Expenditures on Parent's
consolidated financial statements)
2. Amendments to Section 5.1 of the Loan Agreement.
(a) Section 5.1(M) of the Loan Agreement is hereby
deleted in its entirety and the following revised Section 5.1(M) is
substituted in lieu thereof:
(M) Projections. As soon as available and in
any event no later than July 31 of each Fiscal Year,
Parent will deliver consolidated and consolidating
Projections of Parent and its Subsidiaries for the
forthcoming Fiscal Year, month-by-month.
(b) The following sentence is hereby added at the
end of Section 5.1(O) of the Loan Agreement:
Without limitation of the foregoing, Borrowers
shall deliver to Lender on a monthly basis, on
or prior to the thirtieth (30th) business day
of each month, a report as to its financed and
unfinanced capital expenditures for the
preceding month, which report shall include a
comparison to budgeted amounts and shall
otherwise be in form satisfactory to Lender.
3. Addition of New Section 5.14 to the Loan Agreement.
5.14 Cash Infusion. Borrowers shall obtain an infusion of at
least Seven Hundred Thousand Dollars ($700,000) in unrestricted cash
on a basis satisfactory to Lender as set forth below, with an
initial infusion of at least One Hundred Fifty Thousand Dollars
($150,000) to be obtained on or prior to June 15, 1997 and the
balance to be obtained on or prior to August 15, 1997. Such cash
may consist of insurance proceeds with regard to the accident at
Borrowers' Memphis, Tennessee facility and the vandalism at
Borrowers' Fort Lauderdale, Florida facility, proceeds of capital
contributions, proceeds of stock or other securities offerings
consented to by Lender in writing pursuant to the requirements of
Section 7.6 of this Agreement, other proceeds obtained in a manner
approved by Lender in writing or some combination of the foregoing.
On June 15, 1997 and August 15, 1997, Parent shall report to Lenders
in writing as to Borrowers' compliance (or failure to comply) with
the foregoing covenant.
4. Amendment to Section 6.2 of the Loan Agreement.
Section 6.2 of the Loan Agreement is hereby deleted in its entirety
and the following revised Section 6.2 is substituted in lieu
thereof:
6.2 Minimum EBITDA.
Parent shall achieve an EBITDA of at least the amount set forth
below for each applicable period set forth below (or with respect
to each period for which a negative amount is set forth below, shall
not permit EBITDA to be more negative than such amount):
Applicable Period Amount
_________________ ______
Three Months Ended 3/31/97 $(340,000)
Six Months Ended 6/30/97 $320,000
Nine Months Ended 9/30/97 $1,360,000
Twelve Months Ended 12/31/97 $2,275,000
and for each twelve month
period ending on the last
day of each fiscal quarter
thereafter
5. Amendment to Section 6.3 of the Loan Agreement. Section
6.3 of the Loan Agreement is hereby deleted in its entirety and the
following revised Section 6.3 is hereby substituted in lieu thereof:
6.3 Capital Expenditures Limits.
The aggregate amount of all Capital
Expenditures of Parent and its Subsidiaries
(excluding trade-ins and excluding Capital
Expenditures financed pursuant to Capital
Leases permitted pursuant to Section 7.1
hereof) will not exceed the amount set forth
below for each applicable period set forth
below (on a cumulative basis for all periods
ending on or prior to December 31, 1997):
Applicable Period Amount
_________________ ______
Three Months Ended 3/31/97 $ 266,000
Six Months Ended 6/30/97 $ 416,000
Nine Months Ended 9/30/97 $ 516,000
Twelve Months Ended 12/31/97 $ 591,000
Each fiscal Quarter Ending $ 100,000
After 12/31/97
In addition, if pursuant to Section 5.14 hereof Borrowers obtain
aggregate cash infusions in excess of Seven Hundred Thousand Dollars
($700,000) on or prior to August 15, 1997, then the Capital
Expenditures limitation for the remainder of Borrowers' 1997 Fiscal
Year shall be increased by the amount by which such cash infusions
exceed Seven Hundred Thousand Dollars ($700,000); provided, however,
that Borrowers will be permitted to make Capital Expenditures in
such increased amount only if (a) for the thirty (30) days prior the
making of each such Capital Expenditure and after giving effect
thereto, the Maximum Revolving Loan Amount shall exceed the
outstanding amount of the Revolving Loan by at least Two Hundred
Thousand Dollars ($200,000) and (b) at the time any such Capital
Expenditures are to be made no Default or Event of Default has
occurred and is continuing or would result therefrom.
6. Amendment to Section 6.4 of the Loan Agreement.
Section 6.4 of the Loan Agreement is hereby deleted in its entirety
and the following revised Section 6.4 is hereby substituted in lieu
thereof.
6.4 Fixed Charge Coverage.
Parent shall not permit Fixed Charge
Coverage for each applicable period set forth
below to be less than the ratio set forth below
for such period (or if the ratio set forth
below for any applicable period is negative,
shall not permit Fixed Charge Coverage for such
applicable period to be a larger negative ratio
than that set forth below):
Applicable Period Ratio
_________________ _____
Three Months Ended 3/31/97 (1.20:1.0)
Four Months Ended 4/30/97 (.75:1.0)
Five Months Ended 5/31/97 (.45:1.0)
Six Months Ended 6/30/97 (.15:1.0)
Seven Months Ended 7/31/97 .05:1.0
Eight Months Ended 8/31/97 .25:1.0
Nine Months Ended 9/30/97 .45:1.0
Ten Months Ended 10/31/97 .60:1.0
Eleven Months Ended 11/30/97 .65:1.0
Twelve Months Ended 12/31/97 .70:1.0
Twelve Months ending on the
last day of each fiscal
month ending thereafter 1.0:1.0
In computing Fixed Charge Coverage for purposes
hereof, (a) Capital Expenditures pursuant to Capital Leases
permitted pursuant to Section 7.1 hereof and Indebtedness paid by
Perma-Fix, Inc. in connection with the sale of its Re-Tech division
shall be excluded and (b) insurance proceeds or any benefit
therefrom (if otherwise included) shall be excluded from net income.
7. Amendment to Section 7.5 of the Loan Agreement.
Section 7.5 of the Loan Agreement is hereby amended by deleting the
words "either cash or" from clause (d) thereof such that hereafter
Parent will not be permitted to pay cash dividends on the Third
Offering Shares.
8. Amendment to Section 8.1 of the Loan Agreement.
Section 8.1(C) of the Loan Agreement is hereby amended by adding
immediately after the reference to subsection 5.6 therein the words
"or Section 5.14".
9. Waiver of Existing Events of Default. Lender hereby
waives the Existing Events of Default; provided, however, that (i)
such waivers and the amendments set forth in Sections 4, 5 and 6
hereof shall become void and of no further force or effect if (a)
Parent's audited financial statements for its 1996 Fiscal Year
evidence that Borrowers' Fixed Charge Coverage for such Fiscal Year
was less than .26:1.0 or that Borrowers made Capital Expenditures
in excess of $2,166,000 (calculated by including the principal
portion of payments made during such period under or with respect
to Capital Leases) for such Fiscal Year, (b) such financial
statements differ in any material adverse respect from the draft
thereof provided to Lender pursuant to Section 10(f) hereof, or (c)
Borrowers fail to deliver such audited financial statements to
Lender on or prior to April 16, 1997, accompanied by the unqualified
opinion of Parent's accountants and (ii) such waivers shall not be,
or be deemed to be, waivers of any other Defaults or Events of
Default which may presently or hereafter exist.
10. Conditions Precedent. The amendments and waivers
set forth herein shall not become effective unless and until each
of the following conditions shall have been satisfied, as determined
by Lender in its sole discretion:
(a) The Loan Parties party thereto and Ally
Capital shall have entered into an amendment to the Ally Capital
Lease, in form and substance satisfactory to Lender, pursuant to
which all violations of the financial covenants set forth therein
shall be waived on a basis satisfactory to Lender and all such
covenants applicable to future periods which correspond to the
financial covenants amended hereby shall be amended so that such
covenants are no more restrictive than the covenants set forth
herein, as determined by Lender in its sole discretion .
(b) Each of the Loan Parties shall have executed
and delivered in favor of Lender such additional Loan Documents and
amendments to existing Loan Documents as Lender shall deem to be
necessary or appropriate in connection herewith.
(c) After giving effect to the waivers set forth in
Section 9 hereof, no Default or Event of Default shall have
occurred and be continuing.
(d) In consideration of the accommodations by
Lender to the Loan Parties contemplated hereby the Loan Parties
shall have paid to Lender a fee of $25,000, which fee shall be
fully-earned on the date hereof and non-refundable, and shall be in
addition to, and not in lieu of, all fees, interest and expenses
payable by the Loan Parties under the Loan Agreement.
(e) Since December 31, 1996, there shall have
occurred no material adverse change in the business, operations,
financial conditions, profits or prospect of any Loan Party or in
the Collateral, except for the explosion at Borrowers' Memphis,
Tennessee facility.
(f) Borrowers shall have delivered to Lender a
draft of Parent's consolidated audited financial statements for its
1996 Fiscal Year and the same shall be satisfactory to Lender in all
respects.
11. Condition Subsequent. To induce Lender to enter
into this Amendment with Borrowers, Borrowers hereby agree that on
or prior to May 9, 1997. Borrowers shall deliver to Lender a report
in form and substance satisfactory to Lender which shall adjust the
orderly liquidation value of Borrowers' Equipment shown in the
report of Collateral Evaluation Associates, Inc. dated December 26,
1996 to exclude therefrom the value of all leased equipment and all
equipment which is partially owned and partially leased.
Thereafter, if it is determined that the outstanding principal
balance of the Term Loan exceeds seventy-five percent (75%) of such
adjusted orderly liquidation value, Borrowers and Lender shall
discuss the appropriate required prepayment of the Term Loan. If
Borrowers and Lender are unable to agree on an amount on or prior
to May 23, 1997, then on such date Lender shall make such
determination and advise Borrowers of the required prepayment
amount. Borrowers shall pay such amount on or prior to May 26,
1997, or, in lieu thereof, Lender may cause such amount to be paid
by making a Revolving Loan in the amount thereof.
12. Miscellaneous.
(a) Effect of Amendment. Except as set forth
expressly herein, all terms of the Loan Agreement and the other Loan
Documents shall be and remain in full force and effect and shall
constitute the legal, valid, binding and enforceable obligations of
Parent and Borrowers. Without limitation of the foregoing, Parent
and each other Borrower hereby ratify and reaffirm the Parent
Guaranty or Cross-Guaranty, as applicable, to which it is party,
after giving effect to this Amendment. To the extent that any terms
and conditions in any of the Loan Documents shall contradict or be
in conflict with any terms or conditions of the Loan Agreement,
after giving effect to this Amendment, such terms and conditions are
hereby deemed modified and amended accordingly to reflect the terms
and conditions of the Loan Agreement as modified and amended hereby.
Nothing contained herein shall be construed as a consent to any
matter prohibited by the Loan Agreement
(b) Reaffirmation of Representations and
Warranties. Borrowers hereby ratify and reaffirm each and every
representation and warranty set forth in the Loan Agreement and the
other Loan Documents effective as of the date hereof.
(c) Ratification. Borrowers hereby restate, ratify
and reaffirm each and every term and condition set forth in the Loan
Agreement, as amended hereby, and the other Loan Documents effective
as of the date hereof.
(d) Estoppel. To induce Lender to enter into this
Amendment and to continue to make Revolving Loans to Borrowers under
the Loan Agreement, Borrowers hereby acknowledge and agree that, as
of the date hereof, there exists no Event of Default or Default and
no right of offset, defense, counterclaim or objection in favor of
any Borrower as against Lender with respect to the Obligations.
(e) Waiver and Release. Borrowers waive and
affirmatively agree not to allege or otherwise pursue any or all
defenses, affirmative defenses, counterclaims, claims, causes of
action, set-offs, or other rights that any of them may have to
contest (I) any provision of the Loan Agreement, this Amendment, or
the other Loan Documents; (ii) the right of Lender to all proceeds
from the Collateral; (iii) the ownership and security interest of
Lender in any property (whether real or personal, tangible or
intangible), right or other interest, now or hereafter arising in
connection with the Collateral; (iv) the conduct of Lender in
administering this Amendment, the Loan Agreement, the other Loan
Documents or otherwise. In consideration of the terms and
conditions of this Amendment, the receipt and sufficiency of which
consideration are hereby acknowledged by each Borrower, each
Borrower hereby releases Lender, its parent and affiliates, its
agents, servants, employees, directors, attorneys, successors, and
assigns from any and all liabilities, claims, actions, or causes of
action accruing to any Borrower or its affiliates, arising out of
or in any manner connected with this Amendment, the Loan Agreement,
the other Loan Documents or Lender's activities, including, without
limitation, all actions taken or not taken by Lender in connection
with the administration of this Amendment, the Loan Agreement, the
other Loan Documents or otherwise.
(f) Governing Law. This Amendment shall be
governed by, and construed in accordance with, the laws of the State
of Illinois without regard to its conflicts of law rules.
(g) Costs and Expenses. Parent and Borrowers agree
to pay promptly on demand all reasonable costs and expenses of
Lender in connection with the preparation, execution, delivery and
enforcement of this Amendment, including, without limitation, the
reasonable fees and out-of-pocket expenses of Lender's counsel.
(h) Counterparts. This Amendment may be executed
by one or more of the parties to this Amendment on any number of
separate counterparts and all of said counterparts taken together
shall be deemed to constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their proper and duly authorized
officers as of the day and year first above written.
"LENDER"
XXXXXX FINANCIAL, INC., a
Delaware corporation
By: /s/ Xxxx Xxxxxx
__________________________
Xxxx Xxxxxx
Vice President
"PARENT" AND "BORROWER"
PERMA-FIX ENVIRONMENTAL
SERVICES, INC., a Delaware
corporation
By: /s/ Xxxxx Xxxxxxxxxx
___________________________
Name: /s/ Xxxxx X. Xxxxxxxxxx
______________________
Title: CEO
_____________________
"BORROWERS"
INDUSTRIAL WASTE MANAGEMENT,
INC., a Missouri corporation
By: /s/ Xxxxx Xxxxxxxxxx
___________________________
Name: Xxxxx X. Xxxxxxxxxx
______________________
Title: CEO
_____________________
PERMA-FIX, INC., an Oklahoma
corporation
By: /s/ Xxxxx Xxxxxxxxxx
___________________________
Name: Xxxxx X. Xxxxxxxxxx
______________________
Title: CEO
_____________________
PERMA-FIX OF DAYTON, INC.,
an Ohio corporation
By: /s/ Xxxxx Xxxxxxxxxx
___________________________
Name: Xxxxx X. Xxxxxxxxxx
______________________
Title: CEO
_____________________
PERMA-FIX OF FLORIDA, INC.,
a Florida corporation
By: /s/ Xxxxx Xxxxxxxxxx
___________________________
Name: Xxxxx X. Xxxxxxxxxx
______________________
Title: CEO
_____________________
PERMA-FIX OF FORT LAUDERDALE,
INC., a Florida corporation
By: /s/ Xxxxx X. Xxxxxxxxxx
___________________________
Name: Xxxxx X. Xxxxxxxxxx
______________________
Title: CEO
_____________________
PERMA-FIX OF MEMPHIS, INC.,
a Tennessee corporation
By: /s/ Xxxxx Xxxxxxxxxx
___________________________
Name: Xxxxx X. Xxxxxxxxxx
______________________
Title: CEO
_____________________
PERMA-FIX OF NEW MEXICO, INC.,
a New Mexico corporation
By: /s/ Xxxxx Xxxxxxxxxx
___________________________
Name: Xxxxx X. Xxxxxxxxxx
______________________
Title: CEO
_____________________
PERMA-FIX TREATMENT SERVICES,
INC., an Oklahoma corporation
By: /s/ Xxxxx X. Xxxxxxxxxx
___________________________
Name: Xxxxx X. Xxxxxxxxxx
______________________
Title: CEO
_____________________
XXXXXXXXX, GRANA & YONLEY,
INC., a Missouri corporation
By: /s/ Xxxxx Xxxxxxxxxx
___________________________
Name: Xxxxx X. Xxxxxxxxxx
______________________
Title: CEO
_____________________
MINTECH, INC., an Oklahoma
corporation
By: /s/ Xxxxx X. Xxxxxxxxxx
___________________________
Name: Xxxxx X. Xxxxxxxxxx
______________________
Title: CEO
_____________________
RECLAMATION SYSTEMS, INC., an
Oklahoma corporation
By: /s/ Xxxxx Xxxxxxxxxx
___________________________
Name: Xxxxx X. Xxxxxxxxxx
______________________
Title: CEO
_____________________
EXHIBIT A
EXISTING EVENTS OF DEFAULT
1. Event of Default under Section 8.1(C) of the Loan Agreement as
a result of Parent s failure to deliver an accountant s report
as to its and its Subsidiaries financial statements for the
fiscal year ending December 31, 1996 on or prior to March 31,
1997 without a going-concern qualification as required
pursuant to Section 5.1(B) of the Loan Agreement.
2. Events of Default under Section 8.1(C) of the Loan Agreement
as a result of Parent s failure to comply with the financial
covenants set forth in Sections 6.3 (Capital Expenditures) and
6.4 (Fixed Charge Coverage) of the Loan Agreement for its
Fiscal Year ending December 31, 1996 and its failure to comply
with the financial covenant set forth in Section 6.4 of the
Loan Agreement for the months of January, 1997 and February,
1997.
