EXHIBIT 10.1
SECOND AMENDMENT TO FORBEARANCE AND MODIFICATION AGREEMENT
THIS SECOND AMENDMENT TO FORBEARANCE AND MODIFICATION AGREEMENT
("SECOND AMENDMENT"), is entered into as of this 14th day of June, 2002 by and
among General Electric Capital Corporation, a Delaware corporation, whose
address is 00 Xxx Xxxxxxxxx Xxxx, Xxxxxxx, XX 00000 ("GE CAPITAL"), the CIT
Group/Equipment Financing, Inc., HSBC Business Credit (USA), Inc. as successor
to HSBC Business Loans, Inc., People's Capital and Leasing Corp., Safeco Credit
Company, Inc. and Siemens Financial Services, Inc., formerly known as Siemens
Credit Corporation (collectively with GE Capital, the "LENDERS"), U.S. Plastic
Lumber Ltd., a Delaware corporation with its chief executive office located at
0000 X. Xxxxxx Xxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxxxx 00000, The Eaglebrook Group,
Inc., a Delaware corporation with its chief executive office located at 0000 X.
Xxxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxx 00000 (collectively, the "DEBTOR"), and U.S.
Plastic Lumber Corp., a Nevada corporation with its chief executive office
located at 0000 X. Xxxxxx Xxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxxxx 00000
("GUARANTOR"). Terms with initial capital letters not otherwise defined herein
shall have the meanings ascribed to such terms in the Agreement (as hereinafter
defined).
RECITALS:
WHEREAS, the Lenders and the Debtor previously entered into that
certain Forbearance and Modification Agreement dated as of February 28, 2002, as
amended by First Amendment thereto dated May 30, 2002 (the "AGREEMENT") pursuant
to which the Lenders agreed to forbear in: (i) the collection of certain
regularly scheduled principal payments due and owing from Debtor under the Debt
Documents; and (ii) the exercise of their respective rights and remedies under
the Debt Documents, notwithstanding the existence of the Current Defaults,
subject to the Debtor's strict compliance with the terms and conditions of the
Agreement; and
WHEREAS, Debtor has requested that the Lenders continue their
forbearance with respect to the collection of such principal payments due and
owing under the Debt Documents due in part to the delay of the CEI Sale, and the
Lenders have agreed to such continued forbearance, subject to the terms and
conditions of this Second Amendment.
NOW, THEREFORE, in consideration of the terms and conditions contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
A. Section 2(a) of the Agreement is hereby amended to restate the
Forbearance Period as the period commencing on the date of the Agreement and
ending on the date twenty-four (24) months following the date of the closing of
the CEI Sale; provided, however, that the CEI Sale must have closed no later
than August 30, 2002. Notwithstanding the preceding sentence, the Forbearance
Period is subject to early termination upon Debtor's refinance of the B of A
Revolver, albeit pursuant to the Lenders' exercise of the Line of Credit
Financing Option (as hereinafter defined), or by any other third party lender.
B. Section 3 of the Agreement is hereby amended and restated in its
entirety as follows:
"(a) Commencing on the expiration of the Forbearance Period, the then
outstanding balance of Obligations shall be immediately due and payable in their
entirety without the requirement of notice to or demand upon Debtor.
(b) Notwithstanding Section 3(a) hereof, in the event that the Debtor
refinances the B of A Revolver (albeit pursuant to the Lenders (or any one of
them) exercise of the Line of Credit Financing Option pursuant to Section 8(A)
of the Agreement, or by any other third party lender), the Forbearance Period
shall terminate concurrent with the closing of such refinance of the B of A
Revolver, and the Debtor shall be required to repay the Obligations by making
monthly payments of principal and interest to Lenders in an amount sufficient to
fully amortize the then outstanding Obligations over the then remaining Term.
For purposes of this Second Amendment, Term shall mean the sixty (60) month
period commencing as of July 1, 2002 and continuing through and including June
30, 2007. Debtor shall commence such payments on the first Business Day of the
first month following the closing of the refinance of the B of A Revolver, and
shall make such payments continuing on the first Business Day of each calendar
month thereafter through the then remainder of the Term. By way of example, in
the event that Debtor's refinances the B of A Revolver in April 2003, Debtor
shall be required to make monthly payments of principal and interest in an
amount sufficient to fully amortize the Obligations over the then remaining
fifty (50) months of the Term."
C. Section 4(b) of the Agreement is hereby amended to substitute June
30, 2003 in lieu of September 30, 2002 in subsection (iii) at the close of said
subsection.
D. Section 5 of the Agreement is hereby amended in part to add the
following subsections (e) and (f):
"(e) Debtor hereby assigns, transfers and conveys to Lenders a first
priority lien and security interest in the Purchase Option as additional
security for the repayment and performance of the Obligations.
(f) Lenders covenant and agree to release their first priority lien and
security interest in the Purchase Option contemporaneous with the Debtor's
exercise thereof; provided, however, that in the event that Debtor does not
exercise such Purchase Option by May 1, 2003, then such Purchase Option shall be
deemed to have transferred in its entirety, free and clear of any liens and
security interests, to the Lenders without the requirement of further action
thereof on the part of the Lenders."
E. Section 8(a) is hereby amended in part to add the following sentence
at the close of said subsection:
"Debtor covenants and agrees that the first priority mortgage financing
shall not exceed the aggregate amount of Five Million Dollars ($5,000,000.00),
notwithstanding whether such financing is provided by GE Capital or another
third party lender."
F. Section 8(b) of the Agreement is hereby amended to eliminate the
last sentence of such subsection in its entirety.
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G. Section 8(c) of the Agreement is hereby eliminated in its entirety.
H. Section 8(d) of the Agreement is hereby eliminated in its entirety.
I. The Agreement is hereby amended to insert the following Section
8(A):
"8A. LENDERS' REFINANCE OF THE B OF A REVOLVER. Debtor hereby grants in
favor of the Lenders, the first option to refinance the B of A Revolver at any
time following the date hereof (the "LINE OF CREDIT FINANCING OPTION"). Debtor
further covenants and agrees that it shall provide Lenders with thirty (30) days
prior written notice of Debtor's receipt of a written commitment from Bank of
America or any other third party lender for the refinancing of the B of A
Revolver, in the event that Lenders have not already exercised the Line of
Credit Financing Option (the "REFINANCING NOTICE"). Lenders, or any one of them,
shall exercise the Line of Credit Financing Option, if at all, within sixty (60)
days of their receipt of the Refinancing Notice by providing Debtor with written
notice thereof; provided further, that the terms of the Lender(s) refinancing of
the B of A Revolver shall not be on less favorable terms than those specified in
such third party lender commitment, if any. Notwithstanding the foregoing,
Lenders shall have no obligation to refinance the B of A Revolver."
J. Section 12 of the Agreement is amended in part such that the
Forbearance Fee shall be an amount equal to two percent (2%) of the Obligations
outstanding as of the date of the CEI Sale and shall be paid in full upon the
earlier to occur of: (i) the closing of Debtor's refinancing of the B of A
Revolver; or (ii) the closing of Debtor's financing of the Chicago Property
acquisition.
K. REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES. Except for the
consent required by the senior lenders of the Debtor, the Debtor and Guarantor
hereby reaffirm each and every representation contained in the Agreement and
acknowledge that all such representations are true and correct as of the date
hereof in the same manner and to the same extent as of the date of the
Agreement. Debtor further represents and warrants that as of the date hereof, it
has not assigned, transferred or conveyed any lien, security interest or other
encumbrance with respect to the Purchase Option, other than as set forth herein.
Lenders acknowledge that (i) Bank of America presently holds a first lien an
security interest on the Purchase Option, which lien and security interest shall
be released in its entirety concurrent with the execution of this Second
Amendment; and (ii) Halifax Fund, L.P. currently holds a second priority lien
and security interest on all assets of the Debtor.
L. REAFFIRMATION AND EXTENSION OF RELEASE. Debtor and Guarantor, for
themselves and any other person or entity who may claim an interest through
them, hereby reaffirm the provisions of Section 15 of the Agreement in favor of
the Lenders, their respective directors, officers, agents, attorneys and
employees and agree that such release provisions shall extend through the date
of this Second Amendment.
M. Section 17 of the Agreement is hereby amended to add the following
additional Forbearance Events of Default:
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"(i) Debtor's failure to exercise the Purchase Option no later than May
1, 2003;
(j) Debtor's failure to grant a first priority mortgage and security
interest in the Chicago Property in favor of GE Capital no later than July 1,
2003;
(k) Debtor's failure to grant a second priority mortgage and security
interest in the Chicago Property in favor of the Lenders no later than July 1,
2003;
(l) if the CEI Sale shall not have closed by August 30, 2002; and
(m) the breach of any representation, warranty, covenant or condition
contained in the Agreement, as amended by this Second Amendment.
N. DEBTOR TO PAY ATTORNEYS FEES. Debtor hereby covenants and agrees to
promptly pay any and all costs and expenses of Lenders incurred in connection
with this Second Amendment including without limitation, all attorneys and
paralegal fees incurred in connection with the preparation negotiation and
review of this Second Amendment.
O. CONDITIONS TO EFFECTIVENESS OF SECOND AMENDMENT. The effectiveness
of this Second Amendment is subject to satisfaction of the following conditions:
(a) Debtor having delivered to Lenders a duly executed copy of this
Second Amendment;
(b) Debtor having paid all attorneys' fees incurred by the Lenders in
connection with the Agreement and the Second Amendment;
(c) Lenders having obtained a satisfactory appraisal and environmental
report with respect to the Chicago Property, which appraisal supports a fair
market value of the Chicago Property of not less than Ten Million Dollars
($10,000,000.00); and
(d) Debtor having delivered to Lenders the written acknowledgment of
the current owner of the Chicago Property, with respect to the assignment of the
Purchase Option in favor of the Lenders pursuant to Section 5(e) of the
Agreement.
P. COUNTERPARTS AND FACSIMILE SIGNATURES. This Second Amendment may be
executed in any number of separate original counterparts and by the different
parties on separate counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one agreement. A
party to this Second Amendment may execute and deliver its signature page hereto
by facsimile. Each party hereto agrees to be bound by its own facsimile
signature page and to accept, as if it were a fully executed manual signature
page, the facsimile signature page of any other party hereto.
Q. Debtor and Guarantor covenant and agree to execute all such
documents, certificates and deliver all instruments required to accomplish the
purposes of the Agreement, including without limitation, any new promissory
notes which may be necessary to reflect the revised payment terms for the
Obligations.
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R. In all other respects, the Agreement shall remain in full force and
effect, unaltered by the terms of this Second Amendment.
IN WITNESS WHEREOF, this Second Amendment to Forbearance and
Modification Agreement has been duly executed as of the date first written
above.
DEBTOR:
U.S PLASTIC LUMBER, LTD.
By: /s/ XXXXXXX X. XXXXXXX
---------------------------------
Title: TREASURER
---------------------------------
THE EAGLEBROOK GROUP, INC.
By: /s/ XXXXXXX X. XXXXXXX
---------------------------------
Title: TREASURER
---------------------------------
GUARANTOR:
U.S. PLASTIC LUMBER CORP.
By: /s/ XXXXXXX X. XXXXXXX
---------------------------------
Title: VICE PRESIDENT OF FINANCE
---------------------------------
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ XXXXXX XXXXXXXX
---------------------------------
Title: RISK ANALYST
---------------------------------
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THE CIT GROUP/EQUIPMENT FINANCING,
INC.
By: /s/ XXX XXXXXX
---------------------------------
Title: VICE PRESIDENT
---------------------------------
SAFECO CREDIT COMPANY, INC.
By: /s/ XXXXXX XXXXXXXX
---------------------------------
Title: RISK ANALYST
---------------------------------
HSBC BUSINESS CREDIT (USA) as successor
to HSBC BUSINESS LOANS, INC.
By: /s/ XXXXXXXX X. XXXXXX
---------------------------------
Title: VICE PRESIDENT
---------------------------------
` PEOPLE'S CAPITAL AND LEASING CORP.
By: /s/ XXXXXXXXX XXXXXXX
---------------------------------
Title: VICE PRESIDENT OF CREDIT
---------------------------------
SIEMENS FINANCIAL SERVICES, INC.
By: /s/ XXXXX X. XXXXXXX
---------------------------------
Title: VICE PRESIDENT OF CREDIT &
OPERATIONS-RISK MANAGEMENT
---------------------------------
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