SIXTH AMENDMENT TO CREDIT AGREEMENT AND COMPOSITE
AMENDMENT AGREEMENT
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THIS SIXTH AMENDMENT TO CREDIT AGREEMENT AND COMPOSITE AMENDMENT
AGREEMENT ("Amendment") is made and entered into as of this 11th day of July,
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2001 (the "Sixth Amendment Date") by and among HI-RISE RECYCLING SYSTEMS, INC.,
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a Florida corporation ("Hi-Rise"), IDC ACQUISITION SUB, INC., a New York
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corporation ("IDC"), ▇▇▇▇▇▇▇▇▇ COMPANY, INC., an Ohio corporation ("▇▇▇▇▇▇▇▇▇"),
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RECYCLTECH LIMITED, an Ontario corporation ("Recycltech"), HESCO SALES, INC., a
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Florida corporation ("Hesco"), UNITED TRUCK AND BODY CORPORATION, a Florida
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corporation ("United Truck"), HESCO EXPORT CORPORATION, a Florida corporation
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("Hesco Export"), BES-PAC, INC., formerly known as BPI ACQUISITION CORP., a
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South Carolina corporation ("Bes-Pac Acquisition Corp."), and DII ACQUISITION
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CORP., a Connecticut corporation ("▇▇▇▇▇▇ Acquisition Corp.") (Hi-Rise, IDC,
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▇▇▇▇▇▇▇▇▇, 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.,
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a Florida corporation ("Acme Chute"), ▇▇▇▇▇▇ INDUSTRIES, INC., a Connecticut
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corporation ("▇▇▇▇▇▇"), ECOLOGICAL TECHNOLOGIES, INC., a Connecticut corporation
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("Eco"), KE CORPORATION, a Delaware corporation ("▇▇▇▇▇▇▇ Acquisition Corp."),
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and AMERICAN GOOSENECK, INC., an Arizona corporation ("American Gooseneck")
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(Acme Chute, DeVivo, Eco, ▇▇▇▇▇▇▇ Acquisition Corp. and American Gooseneck are
sometimes collectively referred to herein as the "Subsidiary Guarantors" and,
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together with the Borrowers, the "Credit Parties"); GENERAL ELECTRIC CAPITAL
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CORPORATION, a New York corporation (in its individual capacity, "Lender"), the
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other Lenders signatory hereto from time to time, GENERAL ELECTRIC CAPITAL
CORPORATION, as Administrative Agent for Lender ("Administrative Agent"), and
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GENERAL ELECTRIC CAPITAL CORPORATION, as Revolver Agent for Lender ("Revolver
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Agent" and, together with Administrative Agent, "Agents").
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W I T N E S S E T H
- - - - - - - - - -
WHEREAS, Borrowers, Lender, 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
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capacity, "KCCI") and Agents have entered into that certain Credit Agreement,
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dated as of October 28, 1998 (the "Credit Agreement"), as amended by that
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certain First Amendment to Credit Agreement and Composite Amendment Agreement,
dated as of September 17, 1999 (the "First Amendment"), that certain Second
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Amendment to Credit Agreement and Composite Amendment Agreement dated as of June
30, 2000 (the "Second Amendment"), that certain Third Amendment to Credit
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Agreement and Composite Amendment Agreement dated as of October 19, 2000 (the
"Third Amendment"), that certain Fourth Amendment to Credit Agreement and
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Composite Amendment Agreement dated as of December 4,
2000 (the "Fourth Amendment") and that certain Fifth Amendment to Credit
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Agreement and Composite Amendment Agreement dated as of December 9, 2000 (the
"Fifth Amendment") pursuant to which Credit Agreement Lender extended revolving
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and term credit facilities of up to Sixty-Three Million and No/100 Dollars
($63,000,000.00) in the aggregate to the Borrowers 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 all Fiscal Quarters thereafter, and (iii) certain
additional matters described in Schedule 2 hereto (collectively, the "Pending
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Defaults"); and
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WHEREAS, pursuant to the Purchase and Sale Agreements and the
Assignment Agreements dated as of June 29, 2001 (collectively the "Assignment
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Documents"), Lender has acquired all of NationsBank and KCCI's interests, rights
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and obligations under the Loan Documents; and
WHEREAS, the parties desire to further amend the Credit Agreement to,
among other things, increase the amount of the Term Loan C to $8 million and
provide for a forbearance period.
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
1.1 Recitations. Each of the Credit Parties hereby jointly and severally
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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.
1.2 Definitions. Capitalized terms not otherwise defined in this Amendment
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shall have the meaning ascribed thereto in the Credit Agreement. As used herein,
the following terms shall have the meanings set forth below:
(a) "Forbearance Termination Date" shall mean August 31, 2001 or
such later date as is agreed in writing by Lender.
(b) "Term Loan C Commitment" shall mean $8,000,000.
(c) "Term Loan C Termination Date" shall mean August 31, 2001 or
such later date as may be agreed to in writing between the Credit Parties and
Lender.
(d) "Term Loan C Note" shall mean the amended and restated
promissory note dated the date hereof and evidencing Term Loan C.
ARTICLE 2
FORBEARANCE
2.1 Forbearance. Provided that no Event of Default (other than a Pending
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Default) shall occur and be continuing, the Agents and Lender shall forbear from
enforcing their respective remedies for the period (the "Forbearance Period")
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beginning on the date hereof and ending on the Forbearance Termination Date. The
foregoing notwithstanding, Lender may, during the Forbearance Period or
thereafter, institute and pursue a claim against the Credit Parties regarding
acts which fall within the scope of the Credit Parties' Directors and Officer's
Policy (#280-96-75) with National Union Fire Insurance Company of Pittsburgh,
PA. Lender acknowledges that the Credit Parties reserve the right to defend
against any such claim, subject to the waivers and agreements expressly set
forth in this Amendment. Any recovery as a result of any such claim shall be
applied in accordance with Section 1.12 of the Credit Agreement. If at any time
an Event of Default shall occur, Agents and Lender 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,
"Lender's Remedies") without demand or notice to any Credit Party. The matters
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disclosed on Schedule 2 hereto shall not constitute Event of Defaults during the
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Forbearance Period. At the end of
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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 Lender in their
respective sole and absolute discretion, Agents and Lender may proceed with
Lender's Remedies without any notice or demand to any Credit Party or any other
party, but as among Agents and Lender, subject to the provisions of the Credit
Agreement with respect to exercising remedies. During the Forbearance Period,
Lender 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. Lender
and Agents are entering into this Amendment as an 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
3.1 Availability Covenant and Working Capital Covenant. The first sentence
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of Section 3.7 of the Fourth Amendment is hereby deleted. The Credit Parties
shall have no further obligations with respect to the Availability Covenant or
Working Capital Covenant. The Credit Parties shall continue to deliver the
Borrowing Base Certificate, except that no computation of or certification with
respect to the Availability Covenant or Working Capital Covenant is required.
3.2 Term C Loan. Borrower shall pay the principal amount of the Term Loan
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C in full on the earliest to occur of (A) the Forbearance Termination Date or
(B) the date of refinancing the other Loans.
3.3 Term Loan C Note. The Credit Agreement is hereby amended to add as
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Exhibit 1.1(i) the form of promissory note attached to this Sixth Amendment as
Exhibit A.
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3.4 Additional Covenants.
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(a) The Credit Parties shall engage senior management reasonably
acceptable to Lender. Lender agrees that the following persons are acceptable
for the positions indicated: ▇▇▇ ▇▇▇▇▇▇ (Acting CEO), ▇▇▇ ▇▇▇▇▇▇▇ (Acting COO -
Solid Waste Division), ▇▇▇ ▇▇▇▇▇▇ (Acting CFO) and ▇▇▇▇▇▇▇▇ ▇▇▇▇ (Treasurer and
Corporate Secretary).
(b) The Credit Parties shall, on or before July 15, 2001, engage
on a contingent basis an investment bank satisfactory to Lender to assist the
Credit Parties in exploring strategic alternatives, including without limitation
the sale of the architectural division, waste equipment divisions and certain
lease receivables. The Credit Parties and Lender acknowledge that ▇▇▇▇▇▇▇ ▇▇▇▇▇
is a satisfactory investment bank to assist the Credit Parties in the matters
stated above.
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(c) Pursuant to Section 4.1(a) of the Credit Agreement, the
Credit Parties shall provide to Lender promptly upon delivery to the Board of
Directors or any committee thereof, including without limitation the Audit
Committee, copies of any reports, audits or other information made available by
or to the Board of Directors or any committee thereof; provided, however, that
no reports, audits or other information qualifying as attorney work product or
as privileged material between Credit Parties and its counsel shall be required
to be provided to Lender.
3.5 No Other Advances. No further advances under any of the Loans or
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issuance of Letters of Credit shall be available to the Credit Parties unless
and until Lender and Agents agree in writing, in their respective 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.
3.6 Interest and Principal Payments. During the Forbearance Period, all
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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.
3.7 Certain Definitions.
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3.7.1 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.
3.7.2 The definition of "Loan Documents" is hereby amended to include
the Credit Agreement, as amended by this Amendment, 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 Lender, 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 Lender 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.
ARTICLE 4
COMPOSITE AMENDMENT
4.1 Additional Definitions. All references in each of the Loan Documents
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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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4.2 Ratification. The parties hereto agree that the Collateral Documents,
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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 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
5.1 Indebtedness. The principal amount outstanding under the Notes as of
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the date hereof, is as set forth on the schedule attached hereto as Schedule
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"1".
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5.2 No Offsets or Defenses. As a material inducement to Lender and Agents
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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 Lender 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.
5.3 No Waiver or Estoppel. Neither this Amendment or any negotiations or
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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,
neither this Amendment or any negotiations or other action undertaken with
respect to the Loans shall restrict, inhibit or estop Lender 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 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 from the date of the Pending Defaults.
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5.4 Partial Payments. The Credit Parties acknowledge that any partial
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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 Lender 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 Lender's rights under any Loan or any Loan
Documents.
5.5 Representations and Warranties. Each of the Credit Parties hereby
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jointly and severally represents and warrants that, except as set forth on
Schedule 2 hereto, each of the representations and warranties of the Credit
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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.
5.6 No Litigation. The Credit Parties hereby represent and warrant to
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Administrative Agent and Lender that, except as set forth on Schedule 2 hereto,
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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
6.1 Waiver of the Automatic Stay.
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6.1.1 The Credit Parties hereby agree that, in consideration for the
continued forbearance and other provisions of this Amendment, 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,
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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,
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subject to court approval, Agents and Lender 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 Lender 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 Lender to accept this
Amendment.
6.1.2 Lender, 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.
6.2 Release. Credit Parties hereto desire to fully comprise, release and
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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 Lender 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 Lender 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 Lender, on the other hand (collectively, the
"Released Claims"). The Credit Parties hereby stipulate, agree, covenant,
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warrant and represent unto Lender and Agents that no Borrower or Subsidiary
Guarantor has any outstanding claims, counterclaims, liabilities, damages,
defenses, demands or causes of action against 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 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.
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ARTICLE 7
MISCELLANEOUS
7.1 Free and Voluntary Act. All Borrowers and Subsidiary Guarantors are
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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.
7.2 No Implied Terms. Any and all duties or obligations that Agents and
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Lender 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 Lender and Agents nor the rights of the Credit Parties shall
be expanded beyond the express terms of the Loan Documents as so amended.
7.3 Fair Consideration. Agents' and Lender's agreements contained herein
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constitute valuable, adequate and fair consideration for the obligations of the
Credit Parties hereunder.
7.4 No Lender Control. Lender will not, nor has ever been, a partner,
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joint venturer, alter ego, manager, or controlling person of any of the Credit
Parties.
7.5 No Other Representation. The Credit Parties acknowledge and agree that
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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.
7.6 Captions. The captions and headings used in this Amendment are for
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convenience of reference only and do not in any way affect, limit, amplify or
modify the terms and provisions of this Amendment.
7.7 Counterpart Execution. This Amendment may be executed in several
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counterparts, each of which shall constitute an original, but together such
counterparts shall constitute one and the same instrument.
7.8 Successors and Assigns. This Amendment shall inure to the benefit of
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and be binding upon the parties hereto and their permitted legal
representatives, heirs, successors and assigns.
7.9 Time; Construction; Exhibits. Time is of the essence of each provision
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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
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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."
7.10 Severability. If for any reason any provision of this Amendment shall
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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.
7.11 Authority. Each individual executing this Amendment on behalf of any
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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.
7.12 Parties in Interest. Nothing in this Amendment is intended to confer
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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.
7.13 Further Assurances. The Credit Parties shall, at their own expense,
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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.
7.14 Expenses; Documentary Stamp Taxes. The Credit Parties shall pay all
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costs and expenses incurred by Lender or Agents in connection with the execution
and delivery of this Amendment or the Term Loan C Note issued hereunder. This
Amendment and the Term Loan C Note issued hereunder 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 or the Term
Loan C Note issued hereunder. However, the Credit Parties agree to indemnify
Lender 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 Lender or any 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.
7.15 Law Governing; Consent to Jurisdiction. EXCEPT AS OTHERWISE EXPRESSLY
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PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND
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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 LENDER 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
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AGENTS, LENDER 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
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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
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NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE
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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.
7.16 WAIVER OF JURY TRIAL. AGENTS, LENDER, BORROWERS AND SUBSIDIARY
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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
11
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 LENDER, BORROWERS AND SUBSIDIARY GUARANTORS IS
A MATERIAL INDUCEMENT FOR AGENTS AND LENDER TO ENTER INTO THIS AMENDMENT.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
12
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
By:/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------
Title: VP, Controller, Treasurer
and Corporate Secretary
IDC ACQUISITION SUB, INC., a New York
corporation
▇▇▇▇▇▇▇▇▇ COMPANY, INC., an Ohio
corporation
RECYCLTECH LIMITED, 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
HESCO EXPORT CORPORATION, a Florida
corporation
UNITED TRUCK AND BODY CORPORATION, a
Florida corporation
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------
Title: Vice President and
Secretary
[Additional signatures appear on the following page.]
13
BORROWERS:
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: Vice President and
Secretary
14
LENDER: GENERAL ELECTRIC CAPITAL CORPORATION,
as Administrative Agent, Revolving
Agent and Lender
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------
Title: Risk Manager
15
EXHIBIT A
FORM OF AMENDED AND RESTATED TERM C NOTE
AMENDED AND RESTATED PROMISSORY NOTE (TERM LOAN C)
Dated as of July 10, 2001 $8,000,000.00
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 LIMITED, 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, 401
------
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇, 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 EIGHT MILLION AND
NO/100 AND NO CENTS ($8,000,000.00) 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 advance made by Lender to Borrowers, the rates of interest applicable
thereto and each
16
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 Promissory Note (Term Loan C) in
respect of Term Loan C made by Lender to Borrowers.
This Promissory Note (Term Loan C) increases, amends and restates that
certain Promissory Note (Term Loan C), dated as of December 4, 2000 (the
"Original Note"), made by the Borrowers payable to the order of the Lender in
the original principal amount of $5,500,000.00. The outstanding principal
balance of the Original Note, together with all accrued and unpaid interest
thereon, shall, without any further action on the part of any party, be deemed
to be outstanding under this Promissory Note (Term Loan C) with the same
allocation between principal and interest as under said Original Note.
Acceptance by Borrower of this Promissory Note (Term Loan C) shall not be deemed
or construed as any payment, satisfaction, novation or refinancing of all or any
portion of the indebtedness evidenced by the Original Note.
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.
17
IN WITNESS WHEREOF, the undersigned Borrowers have caused this
Promissory Note (Term Loan C) to be duly executed and delivered this 10th day of
July, 2001.
HI-RISE RECYCLING SYSTEMS, INC., a
Florida corporation
By: ________________________________
Name:___________________________
Title:__________________________
IDC ACQUISITION SUB, INC., a New York
corporation
▇▇▇▇▇▇▇▇▇ COMPANY INC., an Ohio
corporation
RECYCLTECH LIMITED, 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:__________________________
18
STATE OF )
) ss.
COUNTY OF )
The foregoing instrument was acknowledged before me this _____ day of
___________, 2001 by ________________________________, who personally appeared
before me, being an officer of each of HI-RISE RECYCLING SYSTEMS, INC., a
Florida 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)
STATE OF )
) ss.
COUNTY OF )
The foregoing instrument was acknowledged before me this _____ day of
___________, 2001 by ________________________________, who personally appeared
before me, being an officer of each of IDC ACQUISITION SUB, INC., a New York
corporation, ▇▇▇▇▇▇▇▇▇ COMPANY INC., an Ohio corporation, RECYCLTECH LIMITED, 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)
19
SCHEDULE 1
----------
CURRENT OUTSTANDING BALANCES
(as of July 9, 2001)
Revolving Notes (Revolver A) including $18,519,422.83
Swing Line Notes (Revolver A)
Revolving Notes (Revolver B) including $ 7,517,369.95
Swing Line Notes (Revolver B)
Term Notes A $ 4,333,333.35
Term Notes B $ 9,000,000.00
Term Note C $ 7,291,000.00
Acquisition Loan Notes $14,372,005.70
20
SCHEDULE 2
----------
POTENTIAL DEFAULTS
CREDIT PARTIES DISCLOSURE SCHEDULE
Dated as of July 9, 2001
In connection with the Sixth Amendment to Credit Agreement and Composite
Amendment Agreement, dated as of the Sixth Amendment Date (the "Sixth
Amendment"), by and among the Credit Parties, Lender and the Agents, attached
hereto are certain sections of the disclosure schedule (the "Disclosure
Schedule") to the Credit Agreement prepared by the Credit Parties. Capitalized
terms not otherwise defined herein but defined in the Sixth Amendment shall have
the meaning set forth in the Sixth 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 Sixth Amendment.
21
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.
▇▇▇▇▇▇ has entered into a Stipulation for Judgment with the Plaintiff pursuant
to the terms of which ▇▇▇▇▇▇ has agreed to pay a civil penalty in the amount of
$200,000 in exchange for the settlement of all allegations contained in the
complaint. The Credit Parties have been indemnified for the entire $200,000
amount 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.
On March 28, 2001, ▇▇▇▇▇▇ Family Limited Partnership, lessor of Hesco
Sales, Inc.'s ("Hesco") office and manufacturing facilities and Hi-Rise's
principal executive office, filed a lawsuit in the Circuit Court of the Eleventh
Judicial Circuit in and for Miami-Dade County, Florida against Hesco. The
complaint filed in this action seeks unspecified damages alleging breach of the
▇▇▇▇▇▇ Lease through the alleged failure on the part of Hesco to maintain the
property, alleged noncompliance with environmental laws and alleged failure of
Hesco to provide insurance to lessor insuring against loss of rent. Hesco has
filed a response and intends to vigorously defend against all allegations made
in the complaint. Hesco believes the suit is without merit; however, Hesco is
unable to predict the outcome of the litigation.
On March 30, 2001, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, a former employee of Hesco, filed a
lawsuit in the Circuit Court of the Eleventh Judicial Circuit in and for Miami-
Dade County, Florida against Hesco. The complaint filed in this action seeks
unspecified
22
damages alleging breach of the Employment Agreement, dated February 20, 1998,
between ▇▇▇▇▇▇▇ and Hesco, resulting from Hesco's decision to terminate
▇▇▇▇▇▇▇'▇ employment for cause. Hesco has filed a response and intends to
vigorously defend against all allegations made in the complaint. Hesco believes
the suit is without merit; however, Hesco is unable to predict the outcome of
the litigation.
On May 3, 2001, the Equal Employment Opportunity Commission ("EEOC")
notified Hesco that a charge of employment discrimination had been filed against
Hesco under Title VII of the Civil Rights Act of 1964 for charges of age and
national origin discrimination alleged by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, a former employee of
Hesco, whose employment had been terminated by Hesco. Hesco has replied to the
EEOC notice and intends to vigorously defend against all allegations made in the
complaint. Hesco believes the suit is without merit; however, Hesco is unable to
predict the outcome of the litigation.
On May 8, 2001, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇▇"), a former employee of Hi-
Rise, filed a lawsuit in the Superior Court, Judicial District of Litchfield,
Connecticut against Hi-Rise. The complaint filed in this action seeks
unspecified damages alleging breach of the Employment Agreement, dated February
23, 1999, between ▇▇▇▇▇▇▇▇▇▇ and Hi-Rise, and violation of the Connecticut
Unfair Trade Practices Act resulting from Hi-Rise's decision to terminate
▇▇▇▇▇▇▇▇▇▇'▇ employment for cause. Hi-Rise has filed a response and intends to
vigorously defend against all allegations made in the complaint. Hi-Rise
believes the suit is without merit; however, Hi-Rise is unable to predict the
outcome of the litigation.
The representations and warranties set forth in Section 3.5 are qualified by the
following exceptions:
The Pending Defaults and the litigation described above could have a Material
Adverse Effect.
23
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
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 Lender 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.
24