EXHIBIT 10.2
As of May 31, 0000
X.X. Xxxxxxx Xxxxxx Corp.
0000 Xxxxxx Xxxx
Xxxxx 000 Xxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx
Re: SECOND SUPPLEMENTAL FORBEARANCE AGREEMENT
Ladies/Gentlemen:
Please refer to the Credit Agreement dated as of June 30, 2000 (as
previously amended or otherwise modified, the "CREDIT AGREEMENT") among U.S.
Plastic Lumber Corp. (the "COMPANY"), various financial institutions (the
"BANKS") and Bank of America, N.A. ("BANK OF AMERICA"), as administrative agent
for the Banks (in such capacity, the "ADMINISTRATIVE AGENT"). Capitalized terms
used but not defined herein have the respective meanings given thereto in the
Credit Agreement.
The Company has advised the Banks and the Administrative Agent that the
Company remains out of compliance with various provisions of the Credit
Agreement as more fully described in the Forbearance Agreement dated as of
November 14, 2001 (the "ORIGINAL FORBEARANCE AGREEMENT") and the Supplemental
Forbearance Agreement dated as of April 12, 2002 (the "FIRST SUPPLEMENTAL
FORBEARANCE AGREEMENT"). In addition, the Company has advised the Administrative
Agent that (except as provided in CLAUSE 4(A) below) it will be unable to make
timely payment of any principal, interest or deferred fee which is required to
be paid on or prior to August 31, 2002 (the Company's failure to pay any such
principal, which includes principal originally due on April 1, 2002, interest or
deferred fee, the "PAYMENT DEFAULTS").
By its signature below, the Company acknowledges that so long as any
Payment Default (or any other Event of Default or any Unmatured Event of
Default, including any Known Default as defined in the Original Forbearance
Agreement) exists, the Banks have no obligation to make Loans and the Issuing
Bank has no obligation to issue Letters of Credit. The Company further
acknowledges that the Administrative Agent and the Banks currently have all
rights, powers and remedies, whether arising under any of the Loan Documents
and/or applicable law, available to them during the existence of an Event of
Default, including the right to accelerate the maturity of all Loans, to obtain
cash collateral for Letters of Credit and/or to terminate the Commitments (all
of the foregoing, the "RIGHTS AND REMEDIES").
The Company has requested that the Administrative Agent and the Banks
continue to forbear from exercising the Rights and Remedies for a limited period
of time. The Administrative Agent and the Required Banks are willing to agree to
such continued forbearance subject to the terms and conditions of this letter
agreement. Accordingly, the Company, the Administrative Agent and the Required
Banks agree as follows:
1. FORBEARANCE. During the Forbearance Period (as defined in the
Original Forbearance Agreement as amended hereby), the Administrative Agent and
the Banks will not exercise the Rights and Remedies with respect to the Payment
Defaults SO LONG AS the Company complies with the terms and conditions of this
Agreement, the Original Forbearance Agreement and the First Supplemental
Forbearance Agreement.
2. EFFECTIVENESS. This letter agreement shall become effective on the
date on which the Administrative Agent shall have received (a) counterparts
hereof signed by the Company and the Required Banks and (b) confirmation that
all fees of counsel to the Administrative Agent have been paid, to the extent
billed.
3. AMENDMENTS TO ORIGINAL FORBEARANCE AGREEMENT. The Original
Forbearance Agreement is amended as follows:
(a) Section 4(a) is amended by deleting the date "May 31,
2002" therein and substituting the date "August 31, 2002" therefor.
(b) Section 5(b) is amended in its entirety to read as
follows:
"(b) Any Event of Default, other than the Known
Defaults and the Payment Defaults (as defined in the
letter agreement dated as of May 31, 2002 (the "SECOND
SUPPLEMENTAL FORBEARANCE AGREEMENT") among the Required
Banks, the Administrative Agent and the Company), shall
occur and be continuing."
(c) Section 5(g) is amended in its entirety to read as
follows:
"(g) The Company shall fail to deliver to the
Administrative Agent, promptly after any request
therefor, information as to any item of equipment used
in the plastic lumber portion of the business of the
Company and its Subsidiaries, specifying in reasonable
detail the location of such item of equipment, whether
such item is owned or leased (and, if leased, whether
such lease is an operating lease or a finance lease),
the name of each Person (other than the Administrative
Agent and Halifax Fund, L.P.) which has a lien on (or
is the lessor of) such item of equipment and the
approximate amount secured by such lien (or in the case
of a lease, details as to the payments thereon) and
matching up such item of equipment with the value
therefor in the appraisal previously delivered to the
Administrative Agent by Great American Group."
(d) Section 5(i) is amended in its entirety to read as
follows:
"(i) The Company shall fail to comply with any
provision of (x) Section 4 of the letter agreement
dated as of April 12, 2002 among the Required Banks,
the Administrative Agent and the Company; or (y)
Section 4 of the Second Supplemental Forbearance
Agreement."
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(e) The following clauses (j), (k) and (l) are added to
Section 5 in proper sequence:
"(j) The Company shall fail to deliver to the
Administrative Agent, on or prior to June 14, 2002, (i)
a definitive purchase agreement (the "CEI PURCHASE
AGREEMENT") for the sale of Clean Earth, Inc. to an
affiliate of EOS (the "CLEAN EARTH SALE") on terms and
subject to conditions reasonably satisfactory to the
Required Banks (it being understood that the form of
CEI Purchase Agreement delivered to the Lenders on June
13, 2002 is satisfactory to the Lenders); (ii) an
agreement (which may be in the form of a signed term
sheet or commitment letter) from the holders (the "GECC
FACILITY LENDERS") of the indebtedness secured pursuant
to the Master Security Agreement dated as of February
24, 2000 among U.S. Plastic Lumber Ltd., The Eaglebrook
Group, Inc. and General Electric Capital Corporation
(the "GECC FACILITY") pursuant to which the GECC
Facility Lenders agree to a restructuring of the GECC
Facility on terms (including required amortization)
satisfactory to the Required Banks, in their sole
discretion, in exchange for a payment of not more than
$500,000 upon the closing of the Clean Earth Sale; and
(iii) an agreement (which may be in the form of a
signed term sheet or commitment letter) from Halifax
Fund, L.P. ("HALIFAX") pursuant to which Halifax agrees
to a restructuring of its existing subordinated debt in
the Company on terms satisfactory to the Required
Banks, in their sole discretion, in exchange for a
payment of not more than $2,500,000 upon the closing of
the Clean Earth Sale.
(k) At any time after the execution and delivery
thereof, the CEI Purchase Agreement shall fail to be in
full force and effect; any party to the CEI Purchase
Agreement shall determine that it will not proceed with
the Clean Earth Sale or shall fail to work diligently
toward the completion of the Clean Earth Sale; or the
Company shall fail to distribute to its shareholders,
on or before August 12, 2002, a proxy statement for
approval of the Clean Earth Sale (which statement shall
be reasonably satisfactory to the Required Banks).
(l) The Company shall fail to pay any invoice for
services rendered issued by counsel to the
Administrative Agent or the Consultant (as defined in
the First Supplemental Forbearance Agreement) within
five Business Days after submission of such invoice to
the Company."
4. ADDITIONAL AGREEMENTS. As additional consideration for the foregoing
forbearance, the Company agrees with the Administrative Agent and the Required
Banks as follows:
(a) The Company shall pay $303,258.22 of the interest which
was due on May 31, 2002 on the earlier of (i) the closing date of the
Clean Earth Sale or (ii) to the extent that any funds are received in
connection with the contract for the project known as Remedial Action
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for Pennsylvania Avenue Landfill located in Brooklyn, New York, on the
date of receipt of such funds.
(b) The Company will permit the Consultant (as defined in the
First Supplemental Forbearance Agreement) to participate in the
Company's discussions and negotiations with the GECC Facility Lenders
and Halifax.
5. NO OTHER CHANGE TO THE LOAN DOCUMENTS; PRESERVATION OF RIGHTS.
Except to the extent expressly set forth herein, (a) all of the terms and
conditions of the Credit Agreement, the Original Forbearance Agreement, the
First Supplemental Forbearance Agreement and the other Loan Documents shall
remain unchanged and in full force and effect, (b) this letter agreement shall
not be deemed a waiver or modification by the Administrative Agent or any Bank
of any term or provision of, or of any default under, the Credit Agreement or
any other Loan Document, and (c) the Administrative Agent and the Banks hereby
fully preserve all their rights, powers and remedies against the Company and
each Guarantor. In addition, subject to the forbearance set forth in SECTION 1,
nothing contained herein shall be deemed to be a waiver or abandonment of any
Event of Default (whether presently or subsequently existing, including, without
limitation, the Payment Defaults) or of any right, power or remedy available to
the Administrative Agent or the Banks under the Loan Documents or applicable
law, each of which rights, powers and remedies is hereby specifically and
expressly reserved, including, without limitation, the right to seek judgment
against the Company or any Guarantor, to foreclose any interest in any
collateral in which the Administrative Agent has a security interest or other
lien, or to take any other action permitted under the Loan Documents and/or
applicable law. Without limiting the foregoing, nothing contained herein shall
constitute a waiver of any condition to the making of a Loan or the issuance of
a Letter of Credit, and the Company acknowledges that it has no right to obtain
any additional Loans or the issuance of any additional Letters of Credit so long
as any Event of Default (including (i) the Payment Defaults or (ii) any Known
Default as defined in the Original Forbearance Agreement) exists or would result
therefrom.
6. COUNTERPARTS. This letter agreement may be executed in any number of
counterparts and by the different parties 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.
7. EXPENSES. The Company agrees to pay the reasonable costs and
expenses of the Administrative Agent (including the reasonable fees and charge
of counsel to the Administrative Agent) in connection with the preparation,
execution and delivery of this letter agreement.
8. GOVERNING LAW. This letter agreement shall be a contract made under
and governed by the laws of the State of Illinois applicable to contracts made
and to be performed entirely within such State.
9. REPRESENTATIONS. The Company hereby represents and warrants to the
Administrative Agent and the Banks that the execution, delivery and performance
of this letter agreement is within the Company's powers, has been duly
authorized by the Company does not conflict with any of the Company's
organizational documents, and does not conflict with any law, agreement or
obligation by which the Company is bound.
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10. SUCCESSORS AND ASSIGNS. This letter agreement is binding upon the
Company and its successors and assigns and shall inure to the benefit of the
Administrative Agent and the Banks and their respective successors and assigns.
11. HEADINGS. Headings used in this letter agreement are for
convenience of reference only and shall not affect the construction of this
letter agreement.
12. WAIVER OF JURY TRIAL. THE PARTIES HEREBY CONFIRM THAT THE WAIVER OF
JURY TRIAL SET FORTH IN SECTION 14.16 OF THE CREDIT AGREEMENT IS APPLICABLE TO
THIS LETTER AGREEMENT PURSUANT TO SUCH SECTION 14.16.
13. RELEASE. In consideration of the agreements and understandings in
this letter agreement, the Company, for itself and each of its Subsidiaries,
hereby releases each of the Administrative Agent and each Bank, and their
respective employees, officers, participants, agents, affiliates, subsidiaries,
successors and assigns, from any claim, right or cause of action which now
exists, in any way related to facts in existence as of the date hereof, whether
known or unknown. By way of example and not limitation, the foregoing includes
any claims in any way related to the Loan Documents and the business
relationship between the Company and its Subsidiaries, on the one hand, and the
Administrative Agent or any Bank, on the other hand.
14. COVENANT NOT TO XXX. The Company hereby covenants that it will, and
will cause each of its Subsidiaries to, refrain from commencing any action or
suit or prosecuting any action or suit, in law or in equity, against the
Administrative Agent or any Bank, or any of their respective employees,
officers, agents, participants, affiliates, subsidiaries, successors or assigns,
on account of any claim, action or cause of action which now exists in the
Company's or such Subsidiary's favor based upon facts existing as of the date of
this letter agreement. In addition to any other liability which shall accrue
upon the breach of this covenant, the Company agrees to pay, and acknowledges
that it shall be liable for, all reasonable attorneys' fees and costs incurred
by the Administrative Agent or any Bank in the defense of any such action or
suit.
15. CONSENT TO CLEAN EARTH SALE. The Required Lenders hereby consent to
Clean Earth Sale so long as such sale is consummated substantially in accordance
with the form of CEI Purchase Agreement delivered to the Lenders on June 13,
2002.
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Please acknowledge the foregoing by signing a counterpart of this
letter agreement and returning it to the Administrative Agent.
BANK OF AMERICA, N.A., as
Administrative Agent
By: /s/ XXXXX X. XXXXXXXX
-------------------------------
Title: VICE PRESIDENT
BANK OF AMERICA, N.A., as
Issuing Bank, Swing Line Bank
and a Bank
By: /s/ XXXXXX XXXXXX
-------------------------------
Title: SENIOR VICE PRESIDENT
LASALLE BANK NATIONAL
ASSOCIATION
By: /s/ XXXXXX XxXXXXX
-------------------------------
Title: Vice President
UNION PLANTERS BANK NATIONAL
ASSOCIATION
By: /s/ XXXXX X. XXXXXXX
-------------------------------
Title: EXECUTIVE VICE PRESIDENT
ACKNOWLEDGED AND AGREED
as of May 31, 2002:
U.S. PLASTIC LUMBER CORP.
By: /s/ XXXXX X. XXXXXXX
------------------------------
Title: Secretary
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