Exhibit 10.18
SECOND AMENDED AND RESTATED SECURITY AGREEMENT
THIS SECOND AMENDED AND RESTATED SECURITY AGREEMENT (this "Agreement")
dated as of December 19, 2002 is between QUAKERTOWN, LLC (the "Company") and
BANK OF AMERICA, N.A. ("Bank of America"), in its capacity as Administrative
Agent (as defined below) for the Banks (as defined below).
W I T N E S S E T H:
WHEREAS, U.S. Plastic Lumber Corp. ("USPL") entered into a Credit
Agreement dated as of September 9, 2002 (the "Credit Agreement") with various
financial institutions (the "Banks") and Bank of America, as administrative
agent (in such capacity, the "Administrative Agent");
WHEREAS, USPL, various subsidiaries thereof and the Administrative
Agent entered into an Amended and Restated Security Agreement dated as of
September 9, 2002 (the "Existing Security Agreement") to secure their
obligations under the Credit Agreement and/or certain related documents;
WHEREAS, on the date hereof, USPL has paid all of its obligations under
the Credit Agreement other than $1,000,000 of principal;
WHEREAS, the Company has agreed to assume all of the remaining
obligations of USPL under the Credit Agreement, which obligations are to be
evidenced on the date hereof by notes issued to the Banks (together with all
additional notes issued to the Banks thereunder after the date hereof, the
"Quakertown Notes");
WHEREAS, in consideration for such assumption by the Company, USPL has
agreed to transfer to the Company, subject to the existing security interest of
the Administrative Agent, all of its right, title and interest in the Quakertown
Claim (as defined below); and
WHEREAS, the parties hereto desire to amend and restate the Existing
Security Agreement as set forth herein;
NOW, THEREFORE, for and in consideration of the premises, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. When used herein, (a) capitalized terms used but not
defined herein have the respective meanings given to such terms in the
Quakertown Notes and (b) the following terms have the following meanings (such
definitions to be applicable to both the singular and plural forms of such
terms):
Administrative Agent - see the recitals.
Agreement - see the introductory paragraph.
Bank of America - see the introductory paragraph.
Banks - see the recitals.
Collateral means all property and rights of the Company in
which a security interest is granted hereunder.
Company - see the introductory paragraph.
Credit Agreement - see the recitals.
Default means the occurrence of any of the following events:
(a) any Default (as defined in the Quakertown Notes); (b) any warranty
of the Company herein is untrue or misleading in any material respect
and, as a result thereof, the Administrative Agent's security interest
in any material portion of the Collateral is not perfected or the
Administrative Agent's rights and remedies with respect to any material
portion of the Collateral are materially impaired or otherwise
materially adversely affected; or (c) the Company shall fail to comply
with any of its obligations under Section 6 and such failure shall
continue for 10 days after notice thereof to the Company from the
Administrative Agent.
Existing Security Agreement - see the recitals.
Liabilities means all obligations of the Company to the
Administrative Agent or any Bank, howsoever created, arising or
evidenced, whether direct or indirect, absolute or contingent, now or
hereafter existing, or due or to become due, which arise under the
Quakertown Notes, the Quakertown Letter Agreement or this Agreement, as
the same may be amended, modified, extended or renewed from time to
time.
Permitted Liens - see Section 3.
Quakertown Claim means the claim by the Company (as successor
to USPL (as successor to Integrated Technical Services)) for payment
pursuant to the Quakertown Foundry Site Agreement dated April 16, 1998
between Integrated Technical Services and the Pennsylvania Department
of Environmental Protection.
Quakertown Notes - see the recitals.
UCC means the Uniform Commercial Code as in effect from time
to time in the State of Illinois.
USPL - see the recitals.
2. Grant of Security Interest. As security for the payment of all
Liabilities, the Company hereby assigns, pledges and conveys to the
Administrative Agent for the benefit of the Banks, and grants to the
Administrative Agent for the benefit of the Banks a continuing security interest
in, all right, title and interest of the Company in and to the Quakertown Claim,
together with all proceeds, products, profits and returns of and from, all
rights to prosecute, settle or otherwise pursue, and all distributions on and
rights arising out of, the Quakertown Claim.
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3. Warranties. The Company warrants that: (i) no financing statement
(other than any which may have been filed on behalf of the Administrative Agent)
covering any of the Collateral is on file in any public office; (ii) the Company
is and will be the lawful owner of all Collateral, free of all security
interests, liens and claims whatsoever, other than the security interest
hereunder and inchoate tax and ERISA liens (collectively, "Permitted Liens"),
with full power and authority to execute this Agreement and perform the
Company's obligations hereunder, and to subject the Collateral to the security
interest hereunder; (iii) all information with respect to Collateral set forth
in any schedule, certificate or other writing at any time heretofore or
hereafter furnished by the Company to the Administrative Agent or any Bank and
all other written information heretofore or hereafter furnished by the Company
to the Administrative Agent or any Bank in connection with the Quakertown Notes
will be true and correct in all material respects as of the date furnished; (iv)
the Company's true legal name as registered in the jurisdiction in which the
Company is organized, jurisdiction of organization, federal employer
identification number and organizational identification number, if any, as
designated by the state of its organization are as set forth on Schedule I
hereto; (v) the Company was formed on December 16, 2002 and, prior to the date
hereof, has not engaged in any business activities.
4. Agreements of the Company. The Company will (a) upon request of the
Administrative Agent, execute such financing statements and other documents (and
pay the cost of filing or recording the same in all public offices reasonably
deemed appropriate by the Administrative Agent) and do such other acts and
things, all as the Administrative Agent may from time to time reasonably
request, to establish and maintain a valid security interest in the Collateral
(free of all other security interests, liens, claims and rights of third parties
whatsoever, other than Permitted Liens) to secure the payment of the Liabilities
(and the Company hereby authorizes the Administrative Agent to file any
financing statement without its signature, to the extent permitted by applicable
law, and/or to file a copy of this Agreement as a financing statement in any
jurisdiction); (b) not change its state of organization or its name, identity or
structure such that any financing statement filed to perfect the Administrative
Agent's interests under this Agreement would become seriously misleading, unless
the Company shall have given the Administrative Agent not less than 30 days'
prior notice of such change; (c) furnish the Administrative Agent such
information concerning the Company and the Collateral as the Administrative
Agent may from time to time reasonably request; (d) not sell, lease, assign or
create or permit to exist any lien on or security interest in any Collateral
other than Permitted Liens; (e) execute and deliver all documents, and take such
other actions, as are necessary so that the proceeds of the Quakertown Claim are
delivered directly to the Administrative Agent (and the Company agrees that if
the Company fails to execute and deliver any such document, or to take any such
action, within 10 business days after request therefor by the Administrative
Agent, the Administrative Agent may execute and deliver such document or take
such action on the Company's behalf); and (f) reimburse the Administrative Agent
for all expenses, including reasonable attorneys' fees and legal expenses,
incurred by the Administrative Agent in seeking to collect or enforce any rights
in respect of the Collateral.
5. Default. (a) Whenever a Default exists, the Administrative
Agent may exercise from time to time any rights and remedies available to it
under the UCC, under any other applicable law and as set forth below in this
Section 5.
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(b) Notice of the intended disposition of any Collateral may be given
by first-class mail, hand-delivery (through a delivery service or otherwise),
facsimile or E-mail, and shall be deemed to have been "sent" upon deposit in the
United States mail with adequate postage properly affixed, upon delivery to an
express delivery service or upon the electronic submission through telephonic
services, as applicable.
Any cash proceeds of any realization by the Administrative Agent on any
of the Collateral shall be applied by the Administrative Agent to payment of
expenses in connection with the Collateral, including reasonable attorneys' fees
and legal expenses, and thereafter to the payment of the Liabilities in
accordance with the Quakertown Letter Agreement.
6. Control and Management of Quakertown Claim.
(a) Subject to the provisions of this Section 6, the Company shall
retain control of and responsibility for enforcing and resolving the Quakertown
Claim. In connection with the foregoing, the Company shall (at its own expense)
take all reasonable and appropriate steps to resolve, or litigate to judgment,
the Quakertown Claim in a diligent and commercially reasonable manner. The
Company may retain such legal counsel and experts as the Company elects to
handle the Quakertown Claim; provided that any legal counsel other than Cohen,
Seglias, Pallas & Greenhall, P.C. shall be approved by the Administrative Agent
(which approval shall not be unreasonably withheld).
(b) Without limiting any other provision of this Agreement, the Company
shall deliver to the Administrative Agent and each Bank (i) not later than the
15th day after the end of each calendar quarter, a written report summarizing
the status of the Quakertown Claim; (ii) promptly upon the occurrence thereof,
notice of any material development relating to the Quakertown Claim; and (iii)
immediately upon receipt by the Company (or its counsel) thereof, notice of any
settlement offer made with respect to the Quakertown Claim (and, if such
settlement offer is in writing, a copy thereof). In addition, the Company shall,
and shall cause its counsel to, deliver to Mayer, Brown, Xxxx & Maw (or another
law firm or attorney designated in writing by the Administrative Agent) all
information regarding the Quakertown Claim as such counsel may from time to time
reasonably request, including, without limitation, information regarding
theories of recovery and trial preparation. The parties hereto acknowledge that
they have a common legal interest in the Quakertown Claim and that the
Administrative Agent has a legitimate need for such information to allow it to,
among other things, fully evaluate and exercise its rights pursuant to clauses
(c) and (d) below. The parties hereto agree that all information shared pursuant
to this clause (b) will be communicated in confidence for the purpose of
securing or communicating legal advice and representation on matters as to which
the parties have a common interest, and therefore will be asserted to be subject
to the work product doctrine, attorney client privilege and contractual
obligations of confidentiality. Notwithstanding the foregoing (but only so long
as the Administrative Agent has not undertaken responsibility for the control
and management of the Quakertown Claim as provided in clause (d) below), the
Administrative Agent agrees that neither the Company nor its counsel shall be
required to disclose information to the Administrative Agent's counsel to the
extent that the Company's counsel has reasonably determined, as evidenced by a
written opinion of the Company's counsel delivered to the Administrative Agent,
that such disclosure is reasonably likely to result in loss of the
attorney-client privilege or work product protection applicable to such
information.
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(c) Notwithstanding clause (a) above, the Company shall not, without
the prior written consent of the Required Holders, settle the Quakertown Claim
for an amount that would result in a Quakertown Shortfall. If the Company
notifies the Administrative Agent that the Company has elected, subject only to
the approval of the Required Holders, to accept a written settlement offer that
will result in a Quakertown Shortfall, then (i) if the Required Holders consent
to such settlement, the Company shall, immediately after its receipt of notice
of such consent, accept such settlement offer; and (ii) if the Required Holders
do not consent to such settlement, the Company may (but shall not be obligated
to), during the 10-day period after its receipt of notice that the Required
Holders have not consented to such settlement, elect (by written notice to the
Administrative Agent) to assign control and management of the Quakertown Claim
to the Administrative Agent (for the benefit of the Banks). Thereafter, the
provisions of clause (e) shall apply.
(d) At any time a Default exists, the Administrative Agent (on behalf
of the Banks) shall have the right (but no obligation), upon written notice to
the Company, to assume control and management of the Quakertown Claim.
(e) If the Administrative Agent undertakes responsibility for the
control and management of the Quakertown Claim pursuant to clause (c) or (d)
above, the Administrative Agent may (i) retain such counsel and experts as the
Administrative Agent elects (which may or may not be counsel and/or experts
previously retained by the Company) to handle the Quakertown Claim; (ii) enter
into such discussions and negotiations with the defendants on the Quakertown
Claim as the Administrative Agent or its counsel deems appropriate; (iii)
commence, continue or settle any litigation related to the Quakertown Claim; and
(iv) otherwise treat the Quakertown Claim as if the Administrative Agent were
the absolute owner thereof and the Company had no interest therein (it being
understood that, notwithstanding the foregoing, the Company shall retain its
rights under the Quakertown Letter Agreement).
(f) If the Administrative Agent undertakes responsibility for the
control and management of the Quakertown Claim, the Company shall cooperate
fully with the Administrative Agent in the prosecution of the Quakertown Claim,
such cooperation to include (but not be limited to) providing, and causing its
counsel to provide, the Administrative Agent and its counsel access to all
books, records, pleadings and other information regarding the Quakertown Claim
in the possession of the Company or its counsel.
(g) The Company agrees that if the Administrative Agent undertakes
control and management of the Quakertown Claim and subsequently settles, or
obtains a final judgment in respect of, the Quakertown Claim, neither the
Administrative Agent nor any Bank shall have any liability to the Company in
connection with such settlement unless, and then only to the extent that, it is
determined in a final, non-appealable judgment that the aggregate amount that
should have been recovered in respect of the Quakertown Claim exceeded the total
of (i) all amounts paid by the Administrative Agent in connection with the
administration and enforcement of this Agreement and the prosecution and
collection of the Quakertown Claim; plus (ii) all obligations under the
Quakertown Notes; plus (iii) the greater of (x) all amounts received by the
Company in respect of the Quakertown Claim pursuant to the Quakertown Letter
Agreement and (y) the aggregate principal amount of the Deferred Payment Notes
(as defined in the Credit Agreement).
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7. General.
All notices and requests hereunder shall be in writing (including
facsimile transmission) and shall be sent (i) if to the Administrative Agent, to
its address set forth below its signature hereto, (ii) if to the Company, to its
address shown on Schedule I hereto or (iii) in the case of either party, to such
other address as such party may, by written notice to the other party, have
designated as its address for such purpose. Notices sent by facsimile
transmission shall be deemed to have been given when sent; notices sent by mail
shall be deemed to have been given five business days after the date when sent
by registered or certified mail, postage prepaid; and notices sent by hand
delivery or overnight courier shall be deemed to have been given when received
(or when delivery is refused).
No delay on the part of the Administrative Agent in the exercise of any
right or remedy shall operate as a waiver thereof, and no single or partial
exercise by the Administrative Agent of any right or remedy shall preclude other
or further exercise thereof or the exercise of any other right or remedy.
This Security Agreement shall remain in full force and effect until all
Liabilities have been paid in full. If at any time all or any part of any
payment theretofore applied by the Administrative Agent or any Bank to any of
the Liabilities is or must be rescinded or returned by the Administrative Agent
or such Bank for any reason whatsoever (including, without limitation, the
insolvency, bankruptcy or reorganization of the Company), such Liabilities
shall, for purposes of this Agreement, to the extent that such payment is or
must be rescinded or returned, be deemed to have continued in existence,
notwithstanding such application by the Administrative Agent or such Bank, and
this Agreement shall continue to be effective or be reinstated, as the case may
be, as to such Liabilities, all as though such application by the Administrative
Agent or such Bank had not been made.
This Agreement shall be construed in accordance with and governed by
the laws of the State of Illinois applicable to agreements made and to be
performed entirely within the State of Illinois (except to the extent that,
pursuant to Illinois law, the perfection, the effect of perfection or
nonperfection or the priority of any security interest granted hereunder may be
determined in accordance with the laws of a different jurisdiction). Whenever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
The rights and privileges of the Administrative Agent hereunder shall
inure to the benefit of its successors and assigns.
This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, and each such counterpart
shall be deemed to be an original, but all such counterparts shall together
constitute one and the same Agreement.
This Agreement amends and restates the Existing Security Agreement.
Nothing contained in this Agreement shall be construed to release, cancel,
terminate or otherwise
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adversely affect any lien, claim, right or security interest heretofore granted
to or retained by the Administrative Agent on the Quakertown Claim or the
proceeds thereof under the Existing Security Agreement.
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED IN CONNECTION HEREWITH, SHALL BE
BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN
THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED
THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY
BE BROUGHT, AT THE ADMINISTRATIVE AGENT'S OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE COMPANY
HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF
THE STATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE.
THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED
MAIL, POSTAGE PREPAID, TO THE ADDRESS OF ITS CHIEF EXECUTIVE OFFICE SET FORTH ON
SCHEDULE I HERETO (OR SUCH OTHER ADDRESS AS IT SHALL HAVE SPECIFIED IN WRITING
TO THE ADMINISTRATIVE AGENT AS ITS ADDRESS FOR NOTICES HEREUNDER) OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. THE COMPANY HEREBY EXPRESSLY
AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
EACH OF THE COMPANY, THE ADMINISTRATIVE AGENT AND (BY ACCEPTING THE
BENEFITS HEREOF) EACH BANK HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR ANY
DOCUMENT EXECUTED IN CONNECTION HEREWITH AND ANY AMENDMENT, INSTRUMENT, DOCUMENT
OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
HEREWITH OR THEREWITH OR ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN
CONNECTION WITH ANY OF THE FOREGOING, AND AGREES THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first above written.
QUAKERTOWN, LLC
By: U.S. Plastic Lumber Corp., its sole Member
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxx
---------------------------------
Title: General Counsel and Secretary
---------------------------------
BANK OF AMERICA, N.A., as Administrative Agent
By: /s/ Xxxxxxxx Xxxxxxx
---------------------------------
Name: Xxxxxxxx Xxxxxxx
---------------------------------
Title: Vice President
---------------------------------
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxxx Xxxxxxx
Facsimile: 000-000-0000
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