EXHIBIT 10.60
FOURTH AMENDMENT TO CREDIT AGREEMENT AND COMPOSITE
AMENDMENT AGREEMENT
THIS FOURTH AMENDMENT TO CREDIT AGREEMENT AND COMPOSITE
AMENDMENT AGREEMENT ("Amendment") is made and entered into as of this 4th day of
December, 2000 (the "Fourth Amendment Date") by and among HI-RISE RECYCLING
SYSTEMS, INC., a Florida corporation ("Hi-Rise"), IDC ACQUISITION SUB, INC., a
New York corporation ("IDC"), ▇▇▇▇▇▇▇▇▇ COMPANY, INC., an Ohio corporation
("▇▇▇▇▇▇▇▇▇"), RECYCLTECH ENTERPRISES INC., an Ontario corporation
("Recycltech"), HESCO SALES, INC., a Florida corporation ("Hesco"), UNITED TRUCK
AND BODY CORPORATION, a Florida corporation ("United Truck"), HESCO EXPORT
CORPORATION, a Florida corporation ("Hesco Export"), BES-PAC, INC., formerly
known as BPI ACQUISITION CORP., a South Carolina corporation ("Bes-Pac
Acquisition Corp."), and DII ACQUISITION CORP., a Connecticut corporation
("▇▇▇▇▇▇ Acquisition Corp.") (Hi-Rise, IDC, ▇▇▇▇▇▇▇▇▇, Recycltech, Hesco, United
Truck, Hesco Export, Bes-Pac Acquisition Corp and ▇▇▇▇▇▇ Acquisition Corp. are
sometimes collectively referred to herein as the "Borrowers" and individually as
a "Borrower"); ACME CHUTE COMPANY, INC., a Florida corporation ("Acme Chute"),
▇▇▇▇▇▇ INDUSTRIES, INC., a Connecticut corporation ("▇▇▇▇▇▇"), ECOLOGICAL
TECHNOLOGIES, INC., a Connecticut corporation ("Eco"), KE CORPORATION, a
Delaware corporation ("▇▇▇▇▇▇▇ Acquisition Corp."), and AMERICAN GOOSENECK,
INC., an Arizona corporation ("American Gooseneck") (Acme Chute, DeVivo, Eco,
▇▇▇▇▇▇▇ Acquisition Corp. and American Gooseneck are sometimes collectively
referred to herein as the "Subsidiary Guarantors" and, together with the
Borrowers, the "Credit Parties"); GENERAL ELECTRIC CAPITAL CORPORATION, a New
York corporation (in its individual capacity, "GE Capital"), BANK OF AMERICA,
N.A., successor in interest to NATIONSBANK, N.A., a national banking association
(in its individual capacity, "NationsBank"), KEY CORPORATE CAPITAL, INC., (in
its individual capacity, "KCCI"), the other Lenders signatory hereto from time
to time, GENERAL ELECTRIC CAPITAL CORPORATION, as Administrative Agent for the
Lenders ("Administrative Agent"), and BANK OF AMERICA, N.A., successor in
interest to NATIONSBANK, N.A., as Revolver Agent for the Lenders ("Revolver
Agent" and, together with Administrative Agent, "Agents").
W I T N E S S E T H
WHEREAS, Borrowers, GE Capital, Nationsbank, KCCI and Agents
have entered into that certain Credit Agreement, dated as of October 28, 1998
(the "Credit Agreement"), as amended by that certain First Amendment to Credit
Agreement and Composite Amendment Agreement, dated as of September 17, 1999 (the
"First Amendment"), that certain Second Amendment to Credit Agreement and
Composite
Amendment Agreement dated as of June 30, 2000 (the "Second Amendment"), and that
certain Third Amendment to Credit Agreement and Composite Amendment Agreement
dated as of October 19, 2000 (the "Third Amendment"), pursuant to which Credit
Agreement the Lenders extended revolving and term credit facilities to the
Borrowers of up to Sixty-Three Million and No/100 Dollars ($63,000,000.00) in
the aggregate for the purpose of funding certain Acquisitions and refinancing
certain indebtedness of the Borrowers, to provide working capital financing for
the Borrowers and to finance capital expenditures of the Borrowers; and
WHEREAS, the Credit Parties acknowledge that they are in
default under the Credit Agreement and related Loan Documents (defined below) as
a result of, among other things, (i) an over-advance under Revolving Loan
(Revolver A) and Revolving Loan (Revolver B) as contemplated in Sections 1.1(a)
and 1.1(b) of the Credit Agreement and the Credit Parties' failure to
immediately repay such over-advances in accordance with the provisions of
Sections 1.3(b)(i) and 1.3(b)(ii) of the Credit Agreement, (ii) the failure to
meet the financial covenants set forth in Section 6.10 and Annex G of the Credit
Agreement for the Fiscal Quarter ended September 30, 2000 and (iii) certain
additional matters described in Schedule 2 hereto (collectively, the "Pending
Defaults"); and
WHEREAS, the Credit Parties have requested certain additional
fundings of up to $5,500,000.00 ("Term Loan C") notwithstanding the existence of
the Pending Defaults; and
WHEREAS, GE Capital has agreed to fund Term Loan C subject to
the terms and conditions of this Amendment; and
WHEREAS, the Lenders other than GE Capital have consented to
the Term Loan C and the other terms and conditions of this Amendment, provided
that Term Loan C is fully subordinated, both in time of payment and right of
payment, to the repayment in full of all Obligations other than Term Loan C, and
subject to the terms and conditions of this Amendment;
NOW THEREFORE, in consideration of the premises, and in
reliance thereon, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
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Article 1
RECITATIONS; DEFINITIONS
Section 1.1 Recitations. Each of the Credit Parties hereby jointly and
severally confirms the truth and accuracy of each of the preambles and recitals
set forth in the introduction to this Amendment and agrees that each of the
preambles and recitals set forth in the introduction to this Amendment are
incorporated herein by reference and are and shall be deemed to be a part of
this Amendment as if fully set forth herein.
Section 1.2 Definitions. Capitalized terms not otherwise defined in
this Amendment shall have the meaning ascribed thereto in the Credit Agreement.
As used herein, the following terms shall have the meanings set forth below:
(a) "Covenant Waiver Fee" shall mean $500,000. The
Covenant Waiver Fee has been fully earned on the Fourth Amendment Date and shall
be non-refundable when paid.
(b) "Availability Covenant" shall mean that
commencing November 30, 2000 and on the last day of each calendar month
thereafter, the sum of (i) the positive difference, if any, of the outstanding
balance of the aggregate Revolving Loan (Revolver A) less the Borrowing Base
(Revolver A) and (ii) the positive difference, if any, of the outstanding
balance of the aggregate Revolving Loan (Revolver B) less the Borrowing Base
(Revolver B), shall be not more than $13,563,000.
(c) "Material Default" shall mean (i) an Event of
Default as defined in Credit Agreement Section 8.1(h) or (i); (ii) an Event of
Default as defined in Credit Agreement Section 8.1(l) unless arising as a result
of the issuance to or the exercise by Term Loan C Lender of the GECC Warrant
Documents (defined below); (iii) failure to satisfy the Working Capital Covenant
or the Availability Covenant; (iv) any information contained in any Borrowing
Base Certificate delivered during the Forbearance Period is untrue or incorrect
in any material respect as of the date made; or (v) any other Event of Default
(other than the Pending Defaults) hereafter designated by all of the Lenders as
a Material Default.
(d) "Term Loan C Lender" shall mean General Electric
Capital Corporation.
(e) "Term Loan C Commitment" shall mean $5,500,000.
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(f) "Term Loan C Termination Date" shall mean
February 15, 2001 or such later date as may be agreed in writing between the
Credit Parties and Lenders.
(g) "Term Loan C Note" shall mean the promissory note
dated the Fourth Amendment Date and evidencing Term Loan C.
(h) "Working Capital Covenant" shall mean that
commencing November 30, 2000 and on the last day of each calendar month
thereafter, the Credit Parties shall have Working Capital of at least
$21,371,000.
(i) "Working Capital" shall mean the sum of total
Accounts Receivable and total Inventory Balance (both as shown on the Borrowing
Base Certificate for Revolver A), the Total Lease Value/calculated outstanding
balance (as shown on the Borrowing Base Certificate for Revolver B) and cash on
hand in the Collection Account (as shown on the bank statement), less
outstanding checks (as shown on the applicable check registries) and outstanding
trade payables (as shown on the ledger of trade payables).
Article 2
FORBEARANCE
Section 2.1 Forbearance. Provided that no Material Default shall occur
and be continuing, the Agents and Lenders shall forbear from enforcing their
respective remedies for the period (the "Forbearance Period") beginning on the
date hereof and ending on the Term Loan C Termination Date. If at any time a
Material Default shall occur, Agents and Lenders may immediately commence,
proceed or otherwise continue with any or all rights and remedies available
under the Loan Documents, under applicable law or otherwise (collectively,
"Lenders' Remedies") without demand or notice to any Credit Party, but as among
Agents and Lenders, subject to the provisions of the Credit Agreement with
respect to exercising remedies. The matters disclosed on Schedule 2 hereto shall
not constitute Material Defaults during the Forbearance Period. At the end of
the Forbearance Period, if Borrower has not paid, in full, all amounts due and
owing under the Loan Documents, or otherwise cured the Pending Defaults and any
other Events of Default to the full satisfaction of Agents and Lenders in their
respective sole and absolute discretion, Agents and Lenders may proceed with
Lenders' Remedies without any notice or demand to any Credit Party or any other
party, but as among Agents and Lenders, subject to the provisions of the Credit
Agreement with respect to exercising remedies. During the Forbearance Period,
Lenders and Agents shall forbear from the exercise of any set-off rights with
respect to any funds contained in any of the Credit Parties' accounts. Lenders
and Agents are entering into this Amendment as an
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accommodation to the Credit Parties and the Credit Parties remain bound to
perform their respective obligations under the Loan Documents.
Article 3
AMENDMENTS TO CREDIT AGREEMENT
Section 3.1 Term C Loan. The following is hereby added as Credit
Agreement Section 1.1(i):
Subject to the terms and conditions hereof, each Term Loan C
Lender agrees to make a term loan from and after the Fourth
Amendment Date to Borrowers in the original principal amount
of its Term Loan C Commitment. In the event there is more than
one Term Loan C Lender, the obligations of each Term Loan C
Lender hereunder shall be several and not joint. Such Term
Loan shall be evidenced by promissory notes substantially in
the form of Exhibit 1.1(i) (each a "Term Loan C Note"), and
Borrowers shall execute and deliver a Term Loan C Note to each
Term Loan C Lender. Each Term Loan C Note shall represent the
obligations of Borrowers to pay the amount of the applicable
Term Loan C Lender's Term Loan C Commitment to Borrowers,
together with interest thereon as prescribed in Section 1.5.
Borrower shall pay the principal amount of the Term Loan C in
full on the earliest to occur of (A) the Term Loan C
Termination Date or (B) the date of refinancing the other
Loans.
Section 3.2 Application of Prepayments. Credit Agreement Section 1.3(c)
is hereby amended to change the word "last" in the first sentence thereof to
"seventeenth" and to add the following to the end of such first sentence:
eighteenth, to interest then due and payable on the Term Loan
C and nineteenth, to the principal balance of the Term Loan C.
Section 3.3 Use of Proceeds. The following is hereby added to the end
of Credit Agreement Section 1.4:
Borrowers shall utilize the proceeds of Term Loan C solely for
the following purposes: (i) on the Fourth Amendment Date, to
pay the Covenant Waiver Fee to the Term Loan C Lender, (ii) to
pay past due trade payables in the amounts and to the parties
agreed to in writing by Term Loan C Lender, in its sole and
absolute discretion, and Borrowers and (iii) to provide for
ongoing working capital purposes pursuant to and in accordance
with a budget (the "Working Capital Budget") prepared by
Borrowers and approved by the Term Loan C Lender in its sole
and
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absolute discretion. A copy of the approved Working Capital
Budget, as the same may be amended from time to time, shall be
delivered by Borrowers to the Lenders.
Section 3.4 Interest and Applicable Margins. The following is hereby
added to the end of the first paragraph of Credit Agreement Section 1.5:
Term Loan C shall bear interest at a rate per annum of 15%.
Section 3.5 Conditions Precedent to Term Loan C. The following is
hereby added as Credit Agreement Section 2.6.
(a) In addition to the other conditions precedent to
the making of any Loan pursuant to this Agreement, the Term Loan C Lender shall
have no obligation to advance any portion of Term Loan C until the following
additional conditions have been satisfied or provided for in a manner
satisfactory to Term Loan C Lender or waived in writing by Term Loan C Lender:
(i) receipt by Term Loan C Lender of fully
executed counterparts of the Fourth Amendment, Term Loan C Note, opinions,
certificates, and other instruments and agreements, all in form and substance
satisfactory to Term Loan C Lender;
(ii) with respect to any advance of Term
Loan C on or after January 10, 2001, the Credit Parties shall have delivered to
the Lenders a turnaround plan prepared by ▇▇▇▇▇▇▇▇, Galef and Goldress and shall
be implementing the same to the satisfaction of Term Loan C Lender;
(iii) the Credit Parties shall, to the
satisfaction of Term Loan C Lender, continue to actively pursue the sale of the
architectural business and explore the sale of certain lease receivables,
including, without limitation, promptly engaging an investment bank satisfactory
to Lenders to assist the Credit Parties in such sale process;
(iv) receipt by Term Loan C Lender of a
fully executed Securities Purchase Agreement (the "GECC SPA") and a Registration
Rights Agreement (the "GECC Registration Agreement") both in form substantially
similar to that executed in connection with the closing of the Credit Agreement
and pursuant to which GE Capital shall be issued warrants representing 45% of
the common stock of Borrower on a fully diluted basis at an exercise price of
one cent per share; and
(v) issuance of the warrants required
pursuant to the GECC SPA (the "GECC Warrants"), together with such opinions,
certificates and related
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documents as GE Capital shall require (the warrants, GECC SPA and GECC
Registration Agreement being collectively the "GECC Warrant Documents").
(b) Notwithstanding any provision or reference to the
contrary in Credit Agreement Section 2.2 or elsewhere, the satisfaction or
waiver of any condition precedent to an advance of Term Loan C shall be at the
sole discretion of Term Loan C Lender.
Section 3.6 Term Loan C Note. The Credit Agreement is hereby amended to
add as Exhibit 1.1(i) the form of promissory note attached to this Fourth
Amendment as Exhibit A.
Section 3.7 Additional Covenants. The Credit Parties covenant to comply
with the Working Capital Covenant and the Availability Covenant. Commencing
December 14, 2000 and on the 14th day of each month thereafter, the Credit
Parties shall deliver to the Lenders a Borrowing Base Certificate substantially
in the form of Exhibit A hereto with respect to the previous month.
Section 3.8 No Other Advances. Except for advances of Term Loan C, no
further advances under any of the Loans or issuance of Letters of Credit shall
be available to the Credit Parties unless and until Lenders and Agents agree in
writing, in their sole and absolute discretion, to make such further advances.
The Credit Parties have been advised that additional fundings may not be
forthcoming and that alternative sources of fundings should be explored.
Section 3.9 Interest and Principal Payments. The Lenders hereby agree
that during the Forbearance Period, all interest payments due with respect to
the Loans shall accrue and any principal payments due with respect to the Loans
shall be deferred. All such accrued and deferred payments shall be payable at
the expiration of the Forbearance Period.
Section 3.10 Subordinated Payments. The Term Loan C Lender acknowledges
and agrees that Term Loan C is fully subordinated, both in time of payment and
right of payment, to the repayment in full of all Obligations other than Term
Loan C.
Section 3.11 GECC Warrant Documents. The Lenders consent to the GECC
Warrant Documents and the exercise by GE Capital of its rights contained therein
and agree that neither the issuance of the GECC Warrants or the issuance of
shares of Hi-Rise's Common Stock upon exercise thereof shall constitute an Event
of Default under the Credit Agreement. Notwithstanding the provisions of the
Credit Agreement, the Securities Purchase Agreement dated as of October 28, 1998
among Hi-Rise, GE Capital, NationsBank (predecessor in interest to BOA) and KCCI
or the Warrants (as defined
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therein and as used herein, the "Lender Warrants"), the Lenders hereby waive any
default under the Credit Agreement or any optional redemption rights with
respect to the Lender Warrants or the securities issuable upon exercise thereof
that may arise as a result of the issuance of the GECC Warrants or the exercise
thereof. The rights of GE Capital, on the one hand, and BOA and KCCI on the
other, with respect to the registration rights in the respective Registration
Rights Agreements entered into with respect to the Lender Warrants and the
Warrant (as defined in the GECC SPA) shall be pro rata based on the numbers of
shares attributable to each Warrant.
Section 3.12 Securities Issues. Hi-Rise has been advised that it is
subject to de-listing by Nasdaq as a result of the failure to maintain a minimum
bid price of $1.00. In addition, the issuance of the GECC Warrants could result
in de-listing by Nasdaq. The Lenders agree that any de-listing of Hi-Rise from
Nasdaq shall not constitute an Event of Default.
Section 3.13 Certain Definitions.
3.13.1 All references in the Credit Agreement to "this
Agreement," "herein," hereof" or sections thereof shall be deemed to mean
references to the Credit Agreement as amended by this Amendment.
3.13.2 The definition of "Loan Documents" is hereby amended to
include the Credit Agreement, as amended by this Amendment, the Term Loan C
Note, the GECC Warrant Documents together with all other documents and
instruments heretofore, contemporaneous herewith or from time to time hereafter
executed and delivered to or in favor of the Administrative Agent, the Revolver
Agent and/or the Lenders, or any one or more of them, in connection with the
Credit Agreement, as amended by this Amendment, and/or evidencing and/or
securing all or any portion of the obligations and indebtedness of the
Borrowers, and each of them, to the Lenders and the Agents under the Credit
Agreement, as amended by this Amendment, together with any and all
modifications, renewals and replacements therefor made from time to time. The
definition of "Lenders" shall include the Term Loan C Lender. The definition of
"Loan" shall include the Term Loan C. The definition of "Notes" shall include
the Term Loan C Note.
Article 4
COMPOSITE AMENDMENT
Section 4.1 Additional Definitions. All references in each of the Loan
Documents to the "Agreement" and the "Credit Agreement" shall mean the Credit
Agreement, as amended by this Amendment, and all modifications, amendments and
extensions thereto from time to time.
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Section 4.2 Ratification. The parties hereto agree that the Collateral
Documents, and each of them, secure, in addition to all obligations presently
secured thereby, the full and timely payment performance by the Borrowers, and
each of them, of their respective obligations and indebtedness under and in
respect of the Credit Agreement, as amended by this Amendment, including,
without limitation, the repayment of the Term Loan C and each of the Notes, as
the same may be consolidated, amended and restated, in each case whether
presently existing or hereafter created or incurred, all of which obligations
are and shall be equally secured with and have the same priority as the
obligations originally secured by the Collateral Documents, and each of them,
provided that nothing herein shall be deemed or construed to mean that the
Collateral Documents by their own terms do not presently secure such obligations
and indebtedness.
Article 5
CREDIT PARTY ACKNOWLEDGMEnts
Section 5.1 Indebtedness. The principal amount outstanding under the
Notes as of the date hereof, is as set forth on the schedule attached hereto as
Schedule "1".
Section 5.2 No Offsets or Defenses. As a material inducement to Lenders
and Agents to enter into this Agreement, each of the Borrowers and Subsidiary
Guarantors hereby acknowledges and agrees that the Indebtedness and all Loan
Documents are valid and binding liabilities and obligations of each Borrower and
Subsidiary Guarantors. Each of the Credit Parties hereby jointly and severally
ratifies and confirms each of their respective obligations and indebtedness
under the Credit Agreement and represents and warrants to the Lenders and the
Agents that none of them has or claims any defenses, offsets or counterclaims to
any of their respective obligations and indebtedness under the Credit Agreement
or any of the other Loan Documents, in each case as amended by this Amendment.
Section 5.3 No Waiver or Estoppel. None of this Amendment, advances of
the Term Loan C or any negotiations or other action undertaken with respect to
the Loans shall constitute a waiver of any party's rights under the Loan
Documents, except to the extent specifically stated herein or in another written
agreement executed by all of the parties to this Amendment. In addition, except
as expressly provided in this Amendment, none of this Amendment, advances of
Term Loan C or any negotiations or other action undertaken with respect to the
Loans shall restrict, inhibit or estop Lenders or Agents from exercising any
right, remedy or power available to such party at any time (whether or not
negotiations are continuing) including all rights, remedies and powers granted
under the Loan Documents or otherwise available at law or in equity, or require
any delay in the exercise of any such right, remedy or power, but subject to the
terms and conditions of the Loan Documents. The Credit Parties agree that no
failure to exercise and no delay in exercising any rights, remedies, and powers
under the Loan Documents
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or otherwise available at law or in equity shall operate as a waiver of any such
rights, remedies or powers, including the right to charge interest at the
Default Rate on all outstanding amounts (including advances of Term Loan C) from
the time of the Pending Defaults or the date of any advance of Term Loan C, as
applicable.
Section 5.4 Partial Payments. The Credit Parties acknowledge that any
partial payments made, either before or after the execution of this Amendment,
may be applied to the Notes in partial satisfaction of the Obligations and that
neither the acceptance nor application by Agents or Lenders of any partial
payment shall constitute a cure or waiver of any default under any of the Loan
Documents, constitute any extension or other modification of the Loans or any
Loan Document, or prejudice any of Lenders' rights under any Loan or any Loan
Documents.
Section 5.5 Representations and Warranties. Each of the Credit Parties
hereby jointly and severally represents and warrants that, except as set forth
on Schedule 2 hereto, each of the representations and warranties of the Credit
Parties, and each of them, set forth in the Credit Agreement and in each of the
other Loan Documents, in each case as amended by this Amendment, is true and
correct as of the date hereof and other than the Pending Defaults, no Default or
Event of Default has occurred and is continuing under the Credit Agreement or
any of the other Loan Documents, in each case as amended by this Amendment.
Section 5.6 No Litigation. The Credit Parties hereby represent and
warrant to Administrative Agent and the Lenders that, except as set forth on
Schedule 2 hereto, no litigation, investigation or proceeding before or by an
arbitrator or Governmental Authority is continuing or, to the knowledge of any
Credit Party, threatened against the Credit Parties, or any of them, or any of
their officers, directors or Affiliates (i) with respect to the Credit
Agreement, as amended by this Amendment, the Notes, or any of the other Loan
Documents, in each case as amended by this Amendment, or any of the transactions
contemplated hereby or thereby, or (ii) which could have a Material Adverse
Effect on the Business, prospects or financial condition of the Credit Parties,
or any of them.
Article 6
Additional Covenants
Section 6.1 Waiver of the Automatic Stay.
6.1.1 The Credit Parties hereby agree that, in consideration
for the Term Loan C in the event that any Borrower or Subsidiary Guarantor shall
(i) file with any bankruptcy court of competent jurisdiction or be the subject
of any petition under Title 11 of the U.S. Code, as amended ("Bankruptcy Code"),
(ii) be the subject of any order for
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relief issued under the Bankruptcy Code, (iii) file or be the subject of any
petition seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under any present or future federal
or state act or law relating to bankruptcy, insolvency, or other relief for
debtors, (iv) have sought or consented to or acquiesced in the appointment of
any trustee, receiver, conservator, or liquidator, or (v) be the subject of an
order, judgment or decree entered by any court of competent jurisdiction
approving a petition filed against Credit Parties for any reorganization,
arrangement, composition, readjustment, liquidation, dissolution, or similar
relief under any present or future federal or state act or law relating to
bankruptcy, insolvency or relief for debtors (any of the foregoing clauses (i) -
(v) being a "Filing"), then, subject to court approval, Agents and Lenders shall
thereupon be entitled and the Credit Parties hereby irrevocably consent to and
agree to stipulate to relief from any automatic stay imposed by Section 362 of
the Bankruptcy Code, or otherwise, on or against the exercise of the rights and
remedies otherwise available to Lenders as provided in the Loan Documents, and
as otherwise provided by law, and Credit Parties hereby irrevocably waive any
rights to object to such relief. This covenant is a material inducement for
Lenders to accept this Amendment.
6.1.2 Lenders, Agents and Credit Parties shall cooperate in
defending the validity of the transactions contemplated by the Credit Agreement,
this Amendment or any of the other Loan Documents in any court, administrative
or judicial proceeding.
Section 6.2 Release. Credit Parties hereto desire to fully comprise,
release and settle any and all claims, counterclaims, liabilities, damages,
defenses, demands and causes of action that Credit Parties have or may have
against the Agents or Lenders related to or that may have arisen, may arise or
are or become assertable as a result of events occurring in connection with the
Lending Relationship (as defined below), including any claims, causes of action
or defenses based on the negligence of Agents or Lenders or on any "lender
liability" theories of, among others, bad faith, unfair dealings, duress,
coercion, control, misrepresentation, omission, misconduct, overreaching,
unconscionability, disparate bargaining position, reliance, equity
subordination, fraud, failure of consideration in whole or in part, or
otherwise, and do hereby intend to release, compromise and settle all such
claims and matters, whether known or unknown, whether reduced to judgment,
liquidated or unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured and whether they arose
collaterally, directly, derivately, or otherwise between the Credit Parties on
the one hand, and Agents or Lenders, on the other hand (collectively, the
"Released Claims"). The Credit Parties hereby stipulate, agree, covenant,
warrant and represent unto the Lenders and Agents that no Borrower or Subsidiary
Guarantor has any outstanding claims, counterclaims, liabilities, damages,
defenses, demands or causes of action against any Lender or Agent and their
respective successors, assigns, directors, officers, employees, agents and/or
attorneys. The Credit Parties do hereby unconditionally forever release, acquit,
settle and discharge each Agent and Lender, and their respective successors,
assigns, directors, officers, employees, agents and attorneys of and from the
Released
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Claims and Credit Parties hereby declare the Released Claims forever released,
acquitted, settled and discharged. As used herein, the term "Lending
Relationship" shall mean a collective reference to the Notes, any Loan,
Collateral Documents, Guaranties, or any other Loan Documents, together with any
and all negotiations, discussions, acts, omissions, renewals, extensions,
collateral documents, loan agreements, term sheets and other agreements and
actions related thereto.
Article 7
MISCELLANEOUS
Section 7.1 Free and Voluntary Act. All Borrowers and Subsidiary
Guarantors are freely and voluntarily entering into this Amendment and will
enter into any document necessary to fulfill the agreements contemplated herein
after full consultation with legal, financial and other counsel of their
choosing. Each Borrower and Subsidiary Guarantor has individually read this
Amendment and has discussed this Amendment with its respective legal, financial
and other counsel. All Borrowers and the Subsidiary Guarantors understand this
Amendment and the risk inherent in, and significance of, same.
Section 7.2 No Implied Terms. Any and all duties or obligations that
Agents and Lenders may have to any Borrower or Subsidiary Guarantor, are limited
to those expressly stated in the Loan Documents as amended hereby, and neither
the duties and obligations of Lenders and Agents nor the rights of the Credit
Parties shall be expanded beyond the express terms of the Loan Documents as so
amended.
Section 7.3 Fair Consideration. Agents' and Lenders' agreements
contained herein constitute valuable, adequate and fair consideration for the
obligations of the Credit Parties hereunder.
Section 7.4 No Lender Control. No Lender will, nor has ever been, a
partner, joint venturer, alter ego, manager, or controlling person of any of the
Credit Parties.
Section 7.5 No Other Representation. The Credit Parties acknowledge and
agree that no Agent, Lender or any person or entity acting on their behalf has
made any representation or promise to any Borrower or Subsidiary Guarantor which
is not expressly set forth herein or in the other Loan Documents.
Section 7.6 Captions. The captions and headings used in this Amendment
are for convenience of reference only and do not in any way affect, limit,
amplify or modify the terms and provisions of this Amendment.
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Section 7.7 Counterpart Execution. This Amendment may be executed in
several counterparts, each of which shall constitute an original, but together
such counterparts shall constitute one and the same instrument.
Section 7.8 Successors and Assigns. This Amendment shall inure to the
benefit of and be binding upon the parties hereto and their permitted legal
representatives, heirs, successors and assigns.
Section 7.9 Time; Construction; Exhibits. Time is of the essence of
each provision of this Amendment. All references to the singular or plural
number or masculine, feminine or neuter gender shall, as the context requires,
include all others. All exhibits attached hereto are by this reference made a
part of this Amendment for all purposes. All references to sections, paragraphs,
and exhibits are to this Amendment unless otherwise specifically noted. The use
of the words "hereof", "hereunder", "herein" and words of similar import shall
refer to this entire Agreement and not to any particular section, paragraph or
portion of this Amendment unless otherwise specifically noted. All references to
"including" shall mean "including without limited to."
Section 7.10 Severability. If for any reason any provision of this
Amendment shall be held to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
Section 7.11 Authority. Each individual executing this Amendment on
behalf of any party to this Amendment represents and warrants that he or she is
authorized to enter into this Amendment on behalf of that party and that this
Amendment binds that party.
Section 7.12 Parties in Interest. Nothing in this Amendment is intended
to confer any rights or remedies under or by reason of this Amendment on any
person other than the parties hereto and their respective permitted successors
and assigns, nor is anything in this Amendment intended to relieve or discharge
any obligation of any third person or any party hereto or to give any third
person any right to subrogation or action over or against any party to this
Amendment.
Section 7.13 Further Assurances. The Credit Parties shall, at their own
expense, execute, acknowledge and deliver any further assignments, conveyances,
transfers or other assurances, documents or instruments reasonably requested by
any Agent and will take any other action consistent with the terms of this
Amendment or which may reasonably be requested by any Agent in order to
accomplish and effectuate the intent hereof.
13
Section 7.14 Expenses; Documentary Stamp Taxes. The Credit Parties
shall pay all costs and expenses incurred by Lenders or Agents in connection
with the execution and delivery of this Amendment. This Amendment and the Term
Loan C Note have been executed and delivered outside the State of Florida and
are not intended to be brought into the State of Florida except for collection
purposes. It is the parties understanding that no Florida documentary stamp tax
levied pursuant to Chapter 201 of the Florida statutes is due with respect to
this Amendment. However, the Credit Parties agree to indemnify the Lenders and
Agents and hold them harmless from and against any losses, costs or expense, and
hereby agree to pay any and all stamps, duties and taxes, together with any
penalty that any Lender or Agent may be called upon to pay in the event the
Florida Department of Revenue or any other governmental agency should in the
future determine that any such amounts have been, are or will at any time in the
future become due and payable.
Section 7.15 Law Governing; Consent to Jurisdiction. EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THE LOAN
DOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
MADE AND PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA. EACH CREDIT PARTY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL
COURTS LOCATED IN ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ SHALL HAVE
EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE
CREDIT PARTIES, AGENTS AND LENDERS PERTAINING TO THIS AMENDMENT OR ANY OF THE
OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS
AMENDMENT OR ANY OF THE OTHER LOAN DOCUMENTS, PROVIDED, THAT AGENTS, LENDERS AND
THE CREDIT PARTIES ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE
HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK COUNTY, CITY OF NEW YORK, NEW YORK
AND, PROVIDED, FURTHER, NOTHING IN THIS AMENDMENT SHALL BE DEEMED OR OPERATE TO
PRECLUDE ADMINISTRATIVE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN
ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR
THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF
ADMINISTRATIVE AGENT. EACH CREDIT PARTY EXPRESSLY SUBMITS AND CONSENTS IN
ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT,
AND EACH CREDIT PARTY HEREBY WAIVES ANY OBJECTION WHICH SUCH CREDIT PARTY MAY
HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS AND
14
HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. EACH CREDIT PARTY HEREBY WAIVES PERSONAL SERVICE OF
THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS SET
FORTH IN THE CREDIT AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED
UPON THE EARLIER OF SUCH CREDIT PARTY'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS
AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
Section 7.16 WAIVER OF JURY TRIAL. AGENTS, LENDERS, BORROWERS AND
SUBSIDIARY GUARANTORS DO HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
THE RIGHT WHICH THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AMENDMENT, THE
EXHIBITS, ANY TRANSACTION CONTEMPLATED HEREIN, OR ANY COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY ARISING OUT OF OR
RELATED IN ANY MANNER WITH THIS AMENDMENT, ANY NOTE, ANY LOAN OR THE COLLATERAL
(INCLUDING, WITHOUT LIMITATION, ANY ACTION TO RESCIND OR CANCEL THIS AMENDMENT
AND ANY CLAIMS OR DEFENSES ASSERTING THAT THIS AMENDMENT WAS FRAUDULENTLY
INDUCED OR IS OTHERWISE VOID OR VOIDABLE). THIS WAIVER BY LENDERS, BORROWERS AND
SUBSIDIARY GUARANTORS IS A MATERIAL INDUCEMENT FOR AGENTS AND LENDERS TO ENTER
INTO THIS AMENDMENT.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
15
IN WITNESS WHEREOF, this Amendment was made and executed as of the date
first above written.
BORROWERS: HI-RISE RECYCLING SYSTEMS, INC., a Florida
corporation
IDC ACQUISITION SUB, INC., a New York corporation
▇▇▇▇▇▇▇▇▇ COMPANY, INC., an Ohio corporation
RECYCLTECH ENTERPRISES INC., an Ontario corporation
HESCO SALES, INC., a Florida corporation
BES-PAC, INC., formerly known as BPI ACQUISITION
CORP., a South Carolina corporation
DII ACQUISITION CORP., a Connecticut corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: CEO
ACME CHUTE COMPANY, INC., a Florida corporation
▇▇▇▇▇▇ INDUSTRIES, INC., a Connecticut corporation
ECOLOGICAL TECHNOLOGIES, INC., a Connecticut
corporation
KE CORPORATION, a Delaware corporation
AMERICAN GOOSENECK, INC., an Arizona corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: CEO
16
LENDERS: GENERAL ELECTRIC CAPITAL CORPORATION, as
Administrative Agent and as Lender
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Risk Manager
BANK OF AMERICA, N.A., successor in interest to
NATIONSBANK, N.A., as Revolver Agent and as Lender
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
KEY CORPORATE CAPITAL, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Designated Signer
17
Exhibit 1.1(i)
Term Loan Note
PROMISSORY NOTE (TERM LOAN C)
New York, New York
Dated as of December 4, 2000 $5,500,000.00
FOR VALUE RECEIVED, the undersigned, HI-RISE RECYCLING
SYSTEMS, INC., a Florida corporation ("Hi-Rise"), IDC ACQUISITION SUB, INC., a
New York corporation ("IDC"), ▇▇▇▇▇▇▇▇▇ COMPANY, INC., an Ohio corporation
("▇▇▇▇▇▇▇▇▇"), RECYCLTECH ENTERPRISES INC., an Ontario corporation
("Recycltech"), HESCO SALES, INC., a Florida corporation ("Hesco"), UNITED TRUCK
AND BODY CORPORATION, a Florida corporation ("United Truck"), HESCO EXPORT
CORPORATION, a Florida corporation ("Hesco Export"), BES-PAC, INC., formerly
known as BPI ACQUISITION CORP., a South Carolina corporation ("Bes-Pac
Acquisition Corp."), and DII ACQUISITION CORP., a Connecticut corporation
("▇▇▇▇▇▇ Acquisition Corp."), (Hi-Rise, IDC, ▇▇▇▇▇▇▇▇▇, Recycltech, Hesco,
United Truck, Hesco Export, Bes-Pac Acquisition Corp. and ▇▇▇▇▇▇ Acquisition
Corp. are sometimes collectively referred to herein as the "Borrowers" and
individually as a "Borrower"), HEREBY JOINTLY AND SEVERALLY PROMISE TO PAY to
the order of GENERAL ELECTRIC CAPITAL CORPORATION ("Lender"), at the offices of
GE Capital Corporation Capital Funding Inc, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇, or at such other place as Lender may designate from time to
time in writing, in lawful money of the United States of America and in
immediately available funds, the amount of FIVE MILLION FIVE HUNDRED THOUSAND
AND NO/100 AND NO CENTS ($5,500,000.00) or, if less, the aggregate unpaid amount
of all advances of the Term Loan C made to the undersigned under the "Credit
Agreement" (as hereinafter defined). All capitalized terms used but not
otherwise defined herein have the meanings given to them in the Credit Agreement
or in Annex A thereto.
This Promissory Note (Term Loan C) is issued pursuant to that certain
Credit Agreement dated as of October 28, 1998, by and among Borrowers, General
Electric Capital Corporation, Bank of America, N.A., successor in interest to
NationsBank, N.A., Key Corporate Capital, Inc. and the other Persons signatory
thereto from time to time as Lenders, General Electric Capital Corporation, as
Administrative Agent and Revolver Agent (including all annexes, exhibits and
schedules thereto, and as from time to time amended, restated, supplemented or
otherwise modified, the "Credit Agreement"), and is entitled to the benefit and
security of the Credit Agreement, the Security Agreement and all of the other
Loan Documents referred to therein. Reference is hereby made to the Credit
Agreement for a Statement of all of the terms and conditions under which the
Loans evidenced hereby are made and are to be repaid. The date and amount of
each
18
advance made by Lender to Borrowers, the rates of interest applicable thereto
and each payment made on account of the principal thereof, shall be recorded by
Lender on its books; provided that the failure of Lender to make any such
recordation shall not affect the obligations of Borrowers to make a payment when
due of any amount owing under the Credit Agreement or this Note in respect of
Term Loan C made by Lender to Borrowers.
The principal amount of the indebtedness evidenced hereby shall be
payable in the amounts and on the dates specified in the Credit Agreement, the
terms of which are hereby incorporated herein by reference. Interest thereon
shall be paid until such principal amount is paid in full at such interest rates
and at such times, pursuant to such calculations, as are specified in the Credit
Agreement.
If any payment on this Promissory Note (Term Loan C) becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day and, with respect to payments of
principal, interest thereon shall be payable at the then applicable rate during
such extension.
Upon and after the occurrence of any Event of Default, this Promissory
Note (Term Loan C) may, as provided in the Credit Agreement, and without demand,
notice or legal process of any kind, be declared, and immediately shall become,
due and payable.
Time is of the essence of this Promissory Note (Term Loan C). Demand,
presentment, protest and notice of nonpayment and protest are hereby waived by
each Borrower.
Except as provided in the Credit Agreement, this Promissory Note (Term
Loan C) may not be assigned by Lender to any Person.
THIS PROMISSORY NOTE (TERM LOAN C) SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
MADE AND PERFORMED IN THAT STATE.
19
IN WITNESS WHEREOF, the undersigned Borrowers have caused this
Promissory Note (Term Loan C) to be duly executed and delivered this 4th day of
December, 2000.
HI-RISE RECYCLING SYSTEMS, INC., a
Florida corporation
IDC ACQUISITION SUB, INC., a New
York corporation
▇▇▇▇▇▇▇▇▇ COMPANY INC., an Ohio
corporation
RECYCLTECH ENTERPRISES INC., an
Ontario corporation
HESCO SALES, INC., a Florida corporation
UNITED TRUCK AND BODY
CORPORATION, a Florida corporation
HESCO EXPORT CORPORATION, a
Florida corporation
BES-PAC, INC., formerly known as BPI
ACQUISITION CORP., a South Carolina
corporation
DII ACQUISITION CORP., a Connecticut
corporation
By: ____________________________________________
Name:
Title
20
STATE OF )
) ss.
COUNTY OF )
The foregoing instrument was acknowledged before me this _____ day of
___________, 2000 by ________________________________, who personally appeared
before me, being an officer of each of HI-RISE RECYCLING SYSTEMS, INC., a
Florida corporation IDC ACQUISITION SUB, INC., a New York corporation, ▇▇▇▇▇▇▇▇▇
COMPANY INC., an Ohio corporation, RECYCLTECH ENTERPRISES INC., an Ontario
corporation, HESCO SALES, INC., a Florida corporation, UNITED TRUCK AND BODY
CORPORATION, a Florida corporation, HESCO EXPORT CORPORATION, a Florida
corporation, BES-PAC, INC., formerly known as BPI ACQUISITION CORP., a South
Carolina corporation, and DII ACQUISITION CORP., a Connecticut corporation, on
behalf of each such corporation, and he acknowledged that he signed and
delivered the foregoing instrument as his own free will and voluntary act for
the purposes therein set forth. He is personally known to me or presented
_____________________________ as identification.
_____________________________________________________
Print Name:__________________________________________
NOTARY PUBLIC
Commission Number:___________________________________
My Commission Expires:
(Notarial Seal)
21
EXHIBIT A
BORROWING BASE CERTIFICATE
Dated:____________
With respect to the month ending _______________
Pursuant to the Credit Agreement, dated as of October 28, 1998, (as amended, the
"Credit Agreement"), among Hi-Rise Recycling Systems, Inc., IDC Acquisition Sub,
Inc., ▇▇▇▇▇▇▇▇▇ Company, Inc., Recycltech Enterprises Inc., Hesco Sales, Inc.,
United Truck and Body Corporation, Hesco Export Corporation, Bes-Pac, Inc., DII
Acquisition Corp., Acme Chute Company, Inc., ▇▇▇▇▇▇ Industries, Inc., Ecological
Technologies, Inc., KE Corporation, and American Gooseneck, Inc., General
Electric Capital Corporation, Bank of America, N.A., successor in interest to
NationsBank, N.A. and Key Corporate Capital, Inc., the other Lenders signatory
thereto from time to time, General Electric Capital Corporation, as
Administrative Agent for the Lenders ("Administrative Agent"), and Bank of
America, N.A., as Revolver Agent for the Lenders ("Revolver Agent" and, together
with Administrative Agent, "Agents"), the undersigned Borrower Representative
certifies for itself and each of the other Credit Parties that as of the close
of business on the date set forth below, the Borrowing Base (Revolver A),
Borrowing Base (Revolver B), Working Capital Covenant and Availability Covenant
are computed as set forth on the attached Schedules to this Certificate.
Capitalized terms defined in the Credit Agreement are used in this Certificate
as so defined.
The undersigned represents and warrants for itself and each of the other Credit
Parties that this Borrowing Base Certificate is a true and correct statement of,
and that the information contained herein is true and correct in all material
respects regarding, the status of all amounts reflected herein. The undersigned
further represents and warrants for itself and each of the other Credit Parties
that there is no Material Default or other Event of Default (other than Pending
Defaults) and all representations and warranties contained in the Credit
Agreement and other Loan Documents are true and correct as of the date of this
Borrowing Certificate, except to the extent that such representations or
warranties expressly relate to an earlier date, except for changes therein
expressly permitted or contemplated by the Credit Agreement or any other Loan
Document and except as previously disclosed in Schedule 2 to the Fourth
Amendment. The undersigned understands that the Lenders will continue
forbearance based on the information contained herein and additional funds lent
by Term Loan C Lender is based on the information contained herein.
22
IN WITNESS WHEREOF, the undersigned Borrower Representative has duly executed
and delivered this Borrowing Base Certificate on behalf of itself and each of
the other Credit Parties as of the date first above written.
HI-RISE RECYCLING SYSTEMS, INC.
a Florida corporation
By: ________________________________________________
Name:
Title:
23
SCHEDULE 1
CURRENT OUTSTANDING BALANCES
(as of November 30, 2000)
Revolving Notes (Revolver A) including $18,469,423.28
Swing Line Notes (Revolver A)
Revolving Notes (Revolver B) including $7,248,298.95
Swing Line Notes (Revolver B)
Term Notes A $4,333,333.35
Term Notes B $9,000,000.00
Term Note C $0.00
Acquisition Loan Notes $14,372,005.70
24
SCHEDULE 2
POTENTIAL DEFAULTS
CREDIT PARTIES DISCLOSURE SCHEDULE
Dated as of December 4, 2000
In connection with the Fourth Amendment to Credit Agreement and
Composite Amendment Agreement, dated as of the Fourth Amendment Date (the
"Fourth Amendment"), by and among the Credit Parties, the Lenders and the
Agents, attached hereto are certain sections of the disclosure schedule (the
"Disclosure Schedule") to the Fourth Amendment prepared by the Credit Parties.
Capitalized terms not otherwise defined herein but defined in the Fourth
Amendment shall have the meaning set forth in the Fourth Amendment.
Any fact or item stated in any section of the Disclosure Schedule shall
be deemed to be disclosed on any other section or sections of the Disclosure
Schedule, notwithstanding the omission of a reference or cross-reference
thereto.
The inclusion of any information in the Disclosure Schedule shall not
be deemed an admission or acknowledgment, in and of itself, that such
information is required to be listed in the Disclosure Schedule or that any such
items are material to the Credit Parties.
The headings of the sections of the Disclosure Schedule are inserted
for convenience only and shall not be deemed to constitute a part thereof or a
part of the Fourth Amendment.
25
Schedule 2
Representations and Warranties and Litigation
The representations and warranties contained in Sections 3.13, 3.17 and 3.21 of
the Credit Agreement are qualified by the following exceptions:
▇▇▇▇▇▇ Environmental Matters
In February 1999, Hi-Rise acquired all of the outstanding capital stock of
▇▇▇▇▇▇. ▇▇▇▇▇▇ had been operating four paint spray booths to paint its products
since 1985. Two Notices of Violation were issued by the Connecticut Department
of Environmental Protection (the "DEP"), one for construction of the booths and
one for their operation. In addition, a third Notice of Violation was issued by
the DEP for ▇▇▇▇▇▇'▇ failure to have submitted an application permit under Title
V of the Clean Air Act.
On or about July 31, 2000, the Commissioner of Environmental Protection for the
State of Connecticut (the "Plaintiff") brought an action in Superior Court,
Judicial District of Hartford, State of Connecticut, against ▇▇▇▇▇▇ alleging
that ▇▇▇▇▇▇ violated several provisions of Connecticut law by its failure to
obtain the permits relating to its construction, installation and operation in
1986 and 1994 of those paint spray booths used in its manufacturing processes.
The Plaintiff is seeking civil penalties not to exceed $25,000 per day for each
day of violation on or after October 1, 1990 and civil penalties not to exceed
$1,000 per day for each day of violation prior to October 1, 1990. The Credit
Parties believe that they are entitled to be indemnified for substantially all
liability for this action by the former shareholders of ▇▇▇▇▇▇ pursuant to the
terms and conditions of the Stock Purchase Agreement dated as of February 23,
1999, by and among Hi-Rise Recycling Systems, Inc., DII Acquisition Corp.,
▇▇▇▇▇▇, Ecological Technologies and the shareholders of ▇▇▇▇▇▇.
▇▇▇▇▇▇ has submitted applications for the necessary permits.
▇▇▇▇▇ Diesel International, Inc. v. Mirage on the Gulf, Ltd., et. al, Case No.
00-36-3061CA, ▇▇▇▇▇▇▇ County, Florida Circuit Court
Hi-Rise is named as a defendant in this case. ▇▇▇▇▇ Diesel, the general
contractor, is suing the owner, Mirage, for non-payment of the sums due under
the general contract. Hi-Rise has filed a claim of lien against the subject
property. ▇▇▇▇▇ Diesel alleges that ▇▇▇▇▇ Diesel's interests are superior to the
lien held by Hi-Rise and seeks to foreclose the Hi-Rise lien. An amended
complaint was served on Hi-Rise on November 14, 2000.
26
▇▇▇▇▇▇ Steel, Inc. v. Hi-Rise Recycling Systems, Inc. and ▇▇▇▇▇▇ Industries,
Case No. 00-29876 CA24, Miami-Dade County, Florida Circuit Court
▇▇▇▇▇▇ Steel filed suit on November 14, 2000 alleging non-payment of $58,396.87.
[Note: The previous suit filed by ▇▇▇▇▇▇ Steel in federal court was voluntarily
dismissed without prejudice. ▇▇▇▇▇▇ Steel then re-filed in state court.]
Reliance MetalCenter v. Hi-Rise Recycling Systems, Inc., United States District
Court, Southern District of Florida, Case No. 00-14293-CIV-▇▇▇▇▇/▇▇▇▇▇
Reliance filed suit on October 2, 2000 alleging non-payment of $364,536.05 for
metal products previously delivered to Hi-Rise and AG Products, Inc.
The representations and warranties set forth in Section 3.5 are qualified by the
following exceptions:
The Pending Defaults, the litigation and environmental matters described above
could have a Material Adverse Effect.
27
Covenants
The Credit Parties may be in breach of certain covenants set forth in Sections
5.8 and 6.11 of the Credit Agreement due to the ▇▇▇▇▇▇ Environmental Matters
referenced above.
In addition, the Credit Parties may be in breach of the following covenants:
Section 5.2 - Payment of Obligations
Hi-Rise files its income tax returns on a consolidated basis that
includes the other Credit Parties. Hi-Rise has not made any payments
with respect to its outstanding consolidated income tax liability
incurred for the fiscal year ended December 31, 1999 because it
anticipates that it will receive a refund for fiscal year ending
December 31, 2000 due to losses incurred during that fiscal year.
Hi-Rise intends to accrue penalties and interest up until the date on
which the refund is paid to it and allow a portion of that refund to be
used to pay the outstanding income tax liability and the accompanying
penalties and interest.
The Credit Parties owe payment for lawful claims for labor, materials,
supplies and services which have been provided by certain vendors of
the Credit Parties and are past due.
Section 5.6 - Supplemental Disclosure
The Credit Parties have not timely supplemented each Disclosure
Schedule to the Credit Agreement to disclose matters which, if existing
or occurring at the date of the Credit Agreement, would have been
required to be set forth or described in such Disclosure Schedule to
the Credit Agreement or which was necessary to correct any information
in such Disclosure Schedule or representation to the Credit Agreement.
The Credit Parties have now supplied to Lenders the information that
would have been required to have been so disclosed.
Section 5.9 - Landlords' Agreements, Mortgage Agreements and Bailee
Letters
The Credit Parties have not yet obtained landlord agreements with
respect to certain parcels of land which are leased by the Credit
Parties which would contain a waiver or subordination of all Liens or
claims that the landlord may assert against the Inventory or Collateral
at that location.
Section 6.10 - Financial Covenants
The Credit Parties are not in compliance with any of the financial
covenants.
28