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Exhibit 10.3
[exhibit10-12.jpg]

TERM NOTE
(VARIABLE RATE)

$3,000,000.00 April 22, 2011
FOR VALUE RECEIVED, and intending to be legally bound OP-TECH ENVIRONMENTAL
SERVICES, INC. (“Borrower”), a corporation organized under the laws of the State
Delaware, with its principal place of business at One Adler Drive, East
Syracuse, New York 13057, promises to pay to FIRST NIAGARA BANK, N.A., a
national banking association with a banking office at 6950 South Transit Road,
P.O. Box 514, Lockport, New York  14095-0514 (“Lender”) or order, on or before
May 1, 2016 (“Maturity”), the principal sum of THREE MILLION AND 00/100 DOLLARS
($3,000,000.00) together with interest thereon until paid in full.

1.           INTEREST RATE.  Until converted as provided herein, the outstanding
principal amount hereunder shall bear interest per annum rate equal to the LIBOR
Rate, as defined below, plus 3.50% until paid in full. Borrower shall have a
one-time option to convert the interest rate from the LIBOR Rate plus 3.50% to a
fixed rate equal to the FHLB Rate plus 3.5% per annum.
 
(a)           Borrower shall pay interest, calculated on the basis of a 360-day
year for the actual number of days of each year (365 or 366, as applicable) on
the outstanding principal amount from and including the date of this Note to,
but not including, the date the outstanding principal amount is paid in full.

(b)           If pursuant to the terms of this Note, Borrower is at any time
obligated to pay interest on the principal balance of this Note at a rate in
excess of the maximum interest rate permitted by applicable law, the applicable
interest rate shall be immediately reduced to such maximum rate and all previous
payments in excess of the maximum rate shall be deemed to have been payments in
reduction of principal and not on account of the interest due hereunder.

(c)           After the occurrence of an Event of Default, at Lender’s option,
interest shall accrue at a rate per annum equal to the aggregate of six percent
(6%) plus the rate otherwise applicable (the “Default Rate”), and such rate
shall continue to apply whether or not judgment shall be entered on this Note.

(d)           If any interest rate index is not available, a similar rate based
upon a comparable index selected by Lender, in its sole discretion, will be
utilized.

 
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2.           REPAYMENT On the date hereof, if requested by Lender, Borrower
shall pay to Lender interest only in advance for the month in which this Note is
dated.  Borrower shall repay the outstanding balance of this Note in sixty (60)
equal consecutive monthly payments of principal in the amount of $50,000.00 plus
accrued interest at the applicable interest rate, commencing June 1, 2011 and
continuing on the first day of each consecutive month until Maturity, when the
remaining unpaid principal and unpaid accrued interest shall be due and payable
in full.

3.           APPLICATION; BUSINESS DAY.  Borrower shall make all payments on
this Note to Lender at its address stated above or at such other place as the
holder of this Note may designate.  All payments shall be made absolutely net
of, without deduction or offset and free and clear of taxes, deductions, charges
or withholding of any kind.  Lender shall apply all payments received on this
Note to any accrued and unpaid interest then due and owing, then to the
reduction of principal of this Note, then to other sums due hereunder in such
order and in such amounts as Lender may determine from time to time.  The sum or
sums shown on Lender’s records shall be evidence of the correct unpaid balances
of principal and interest on this Note, absent manifest error.  If any payment
comes due on a day that is not a Business Day, as defined below, Borrower may
make the payment on the first Business Day following the payment date and pay
the additional interest accrued to the date of payment.  “Business Day” means a
day of the year which is neither a Saturday or Sunday nor a legal holiday which
banks are required or authorized by law to close in New York State.  While this
Note bears interest based upon the LIBOR Rate, “Business Day” on which
commercial banks are open for international business (including dealings in
United States Dollar deposits in the London Interbank Eurodollar) in New York
City.

4.           PREPAYMENT.  While this Note bears interest at the LIBOR Rate, this
Note may be prepaid in whole or in part at any time without premium.

If this Note is converted to a fixed rate, this Note may be prepaid, in whole or
in part, at any time subject to and together with payment of a Prepayment
Premium, as calculated below.  The Prepayment Premium shall be calculated by
multiplying the following percentage by the principal amount prepaid.  For
purposes of this Section, Loan Year One shall be deemed to mean the first twelve
(12) full calendar months following the date hereof.  Each twelve (12) month
period thereafter shall be deemed a “Loan Year.”

Loan Year One                           -   5.0% of the amount prepaid
Loan Year Two                           -   4.0% of the amount prepaid
Loan Year Three                              -      3.0% of the amount prepaid
Loan Year Four                           -   2.0% of the amount prepaid
Loan Year Five                           -   1.0% of the amount prepaid

Notwithstanding the above, Borrower may prepay this Note in its entirety, or in
part, at any time without premium, provided that the source of funds used for
such prepayment are the result of internally generated funds of Borrower.

5.           LATE FEE.  If any payment due under this Note is unpaid for ten
(10) days or more, Borrower shall pay, in addition to any other sums due under
this Note (and without limiting Lender’s other remedies on account thereof), a
late charge in an amount equal to 6% of such unpaid amount.

 
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6.           USE OF PROCEEDS.  Any loan made by Lender to Borrower and evidenced
by this Note shall be used by Borrower for the refinancing of Borrower’s debt
with Citizen’s Bank.

7.           MAINTAIN OPERATING ACCOUNTS.  Borrower agrees to maintain with
Lender, as its primary financial institution, corporate deposit and operating
accounts.  At the option of Lender, all interest payments, principal payments
and fees will automatically be deducted from Borrower’s primary operating
account.

8.           SUBJECT TO LOAN AGREEMENT.  This Note is executed and delivered
subject to the terms of a Loan Agreement dated April ___, 2011 between Borrower
and Lender (as the same may be amended or supplemented from time to time, the
“Loan Agreement”) and reference is hereby made to the Loan Agreement for the
provisions relating to Lender’s rights of acceleration of the principal hereof
upon the occurrence of an Event of Default, as defined in the Loan Agreement and
Lender’s remedies.

9.           SETOFF.  Without limiting its rights of setoff under New York law
generally, if the unpaid principal amount of this Note, interest accrued on the
unpaid principal amount thereof or other amount owing by Borrower under this
Note or the other loan documents shall have become due and payable (at maturity,
by acceleration or otherwise), Lender will have the right, in addition to all
other rights and remedies available to it, without notice to Borrower, to setoff
against and to appropriate and apply to such due and payable amounts any
obligations owing to, and any other funds held in any manner for the account of,
Borrower by Lender or any other direct or indirect subsidiary of First Niagara
Financial Group, Inc., including, without limitation, all funds in all deposit
accounts (whether time or demand, general or special, provisionally credited or
finally credited, or otherwise) now or in the future maintained by
Borrower.  Borrower consents to and confirms the foregoing arrangements and
confirms the rights of banker’s lien and setoff.  Nothing in this Note will be
deemed a waiver or prohibition of or restriction on such rights of banker’s lien
or setoff.

10.           PAYMENT OF FEES AND EXPENSES.  Borrower agrees to pay, upon
demand, costs of collection of all amounts due under this Note, including,
without limitation, principal, interest and fees, or in connection with the
enforcement of, or realization on, any security for this Note, including,
without limitation, to the extent permitted by applicable law, reasonable
attorneys’ fees and expenses.

11.           GOVERNING LAW.  This Note shall be governed by the internal laws
of the State of New York, without regard to principles of the conflict of laws.

12.           GENERAL PROVISIONS.

(a)           Borrower waives presentment, demand, notice, protest and all other
demands and notices in connection with delivery, acceptance, performance or
enforcement of this Note.

(b)           This Note, together with any related loan and security agreements,
guaranties, and documents ancillary thereto contains the entire agreement
between Lender and Borrower with respect to the subject matter hereof, and
supersedes every course of dealing, other conduct, oral agreement, commitment
letter or other correspondence related thereto and representation previously
made by Lender.

 
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(c)           Borrower agrees that in any legal proceeding, a copy of this Note
kept in Lender’s course of business may be admitted into evidence as an
original.

(d)           This Note is a binding obligation enforceable against Borrower and
its permitted successors and assigns and shall inure to the benefit of Lender
and its successors and assigns.

(e)           If a court deems any provision of this Note invalid, the remainder
of this Note shall remain in effect.

(f)           If there is more than one Borrower, each of them shall be jointly
and severally liable for all amounts and obligations which become due under this
Note and the term “Borrower” shall include each as well as all of them.

(g)           If payment of this Note is secured by collateral, the collateral
is specified in the collateral records of Lender.

(h)           No failure by the holder hereof to exercise, and no delay in
exercising, any right or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise by such holder of any right or remedy
hereunder preclude any other or further exercise thereof or the exercise of any
other right or remedy.  The rights and remedies of the holder hereof as herein
specified are cumulative and not exclusive of any other rights or remedies which
such holder may otherwise have.

(i)           All notices, demands, or other communications hereunder must be in
writing and will be effective when delivered or mailed to the address set forth
herein or such other address as provided by such party via overnight delivery
service or personal service or, if mailed, three (3) days after deposit, postage
prepaid, in an official depository maintained by the United States Post Office.

(j)           Borrower agrees to indemnify Lender and its affiliates and their
respective officers, directors and employees (collectively, “Indemnitees”) and
hereby holds Indemnitees harmless against all liabilities, claims, actions,
suits, proceedings, penalties, costs, expenses, brokerage or other fees
(including, without limitation, reasonable legal fees and expenses), losses,
damages and liabilities of any kind or nature including in tort, penalties and
interest, which Lender may incur in any manner other than Lender’s own active
gross negligence or willful misconduct, by reason of any matter relating,
directly or indirectly, to this Note and the related loan documents.  This
indemnity shall survive the termination of this Note.

13.           JURISDICTION AND VENUE.   Borrower knowingly, voluntarily,
intentionally and irrevocably (a) consents in each action and other legal
proceeding commenced by Lender and arising out of or otherwise relating to this
Note or any Collateral related hereto to the nonexclusive personal jurisdiction
of any court that is either a court of record of the State of New York, County
of Onondaga or Erie or a court of the United States located in the State of New
York, County of Onondaga or Erie, (b) waives each objection to the laying of
venue of any such action or other legal proceeding, (c) waives personal service
of process in each such action and other legal proceeding, and (d) consents to
the making of service of process in each such action and other legal proceeding
by registered mail directed to Borrower at the last address of Borrower shown in
the records relating to this Note maintained by Lender, with such service of
process to be deemed completed five (5) days after the mailing thereof.

 
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14.           WAIVER OF JURY TRIAL.  Borrower knowingly, voluntarily,
intentionally and irrevocably waives each right Borrower may have to a trial by
jury with respect to, and each right to assert any claim for damages (including,
but not limited to, punitive damages) in any action or other legal proceeding of
any nature, relating to (a) this Note, any related loan document or any
Collateral related hereto, (b) any transaction contemplated by any such
documents or (c) any negotiation, performance or enforcement of this note, or
any collateral related hereto.  Borrower certifies that neither Lender nor any
representative of Lender has represented to Borrower that Lender will not seek
to enforce the waiver made by borrower in this paragraph.  Borrower acknowledges
that it has been represented by independent legal counsel as necessary and
appropriate.

15.           DEFINITIONS.  As used in this Note, unless otherwise specified,
the following terms shall have the following respective meanings:

(a)           “FHLB Rate” shall mean a fixed rate of interest determined by
Lender based upon the Amortizing Advance Rate offered by the Federal Home Loan
Bank of New York for instruments having a term of five-year/five-year
amortization (or for remaining amortization) most recently available on the day
which is two (2) Business Days immediately preceding the date for such
determination.

(b)           “LIBOR Advance” shall mean the outstanding principal balance of
this Note bearing interest based upon the LIBOR Rate.

(c)           “LIBOR Rate” shall mean the rate of interest determined by Lender
by dividing (i) the average rate per annum as determined by Lender to be the
rate offered for deposits in United States Dollars in the London Interbank
Eurodollar Market for an amount comparable to the LIBOR Advance and for a period
of one month (the “Interest Period”) by (ii) a number equal to 1.0 less the
Reserve Requirement.  The LIBOR Rate will be adjusted on the first day of each
calendar month to the then current LIBOR Rate.

(d)           “Reserve Requirement” shall mean the percentage which Lender
determines to be the maximum reserve requirement (including, without limitation,
any emergency, marginal, special or supplemental reserve requirement) prescribed
for so-called “Eurocurrency liabilities” (or any other category of eurocurrency
funding) prescribed by the Board of Governors of the Federal Reserve System (or
under any successor regulation which Lender determines to be applicable) with
each change in such maximum reserve requirement automatically, immediately and
without notice changing the LIBOR Rate thereafter applicable to the LIBOR
Advance.

Borrower:
OP-TECH ENVIRONMENTAL SERVICES, INC.
 
 
 
By:      CHARLES B. MORGAN                               
Name: CHARLES B. MORGAN
Title: Chief Executive Officer
 

 
Rev. 01/14/2011

 
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STATE OF NEW YORK                                           )
COUNTY OF ONONDAGA                                                           )
SS.:

On the 22nd day of April in the year 2011, before me, the undersigned,
personally appeared CHARLES B. MORGAN, known to me or proved to me on the basis
of satisfactory evidence to be the individual whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his
capacity, and that by his signature on the instrument, the individual, or the
person upon behalf of which the individual acted, executed the instrument.
 

____________________________________
Notary Public
 
Mark Arbon
Notary Public in the State of New York
Qualified in Onondaga Co. No. 02AR4939224
My Commission Expires July 5, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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