EXECUTION COPY
SECURITY AGREEMENT
Dated as of June 15, 2000
from
COMPOST AMERICA HOLDING COMPANY, INC.
to
X-X ASSOCIATES, LLC
TABLE OF CONTENTS
Section Page
------- ----
Section 1. Grant of Security............................................1
Section 2. Security for Obligations.....................................2
Section 3. Borrower Remains Liable......................................2
Section 4. Representations and Warranties...............................2
Section 5. Place of Perfection; Records.................................3
Section 6. Further Assurances...........................................3
Section 7. Interest; Dividends; Etc. Any and all........................4
Section 8. As to the Assigned Agreements................................4
Section 9. Payments Under the Assigned Agreements.......................5
Section 10. Transfers and Other Liens; Additional Shares.................5
Section 11. Maintaining the Cash Concentration Account...................5
Section 12. Release of Amounts...........................................5
Section 13. X-X Appointed Attorney-in-Fact...............................5
Section 14. X-X May Perform..............................................5
Section 15. X-X's Duties.................................................5
Section 16. Remedies.....................................................6
Section 17. Indemnity and Expenses.......................................6
Section 18. Amendments; Waivers; Etc. ...................................7
Section 19. Addresses for Notices........................................7
Section 20. Continuing Security Interest.................................7
Section 21. Termination..................................................7
Section 22. Governing Law................................................7
Section 23. Execution....................................................7
COMPOST AMERICA HOLDING COMPANY, INC. ......................................8
Exhibit A - Form of Cash Concentration Account Letter
Schedule I to Exhibit A
Exhibit B - Form of Consent and Agreement
SECURITY AGREEMENT
SECURITY AGREEMENT dated as of June 15, 2000 made by Compost
America Holding Company, Inc., a New Jersey corporation with an office at Xxx
Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxx, Xxx Xxxxxx 00000 ("CAHC"), to X-X
Associates, LLC, INC., a Delaware limited liability company ("X-X").
PRELIMINARY STATEMENTS.
(1) CAHC, Wasteco Ventures Limited, a corporation organized
under the laws of the British Virgin Islands ("Wasteco") and Xxxxxx X. Xxxxx, an
individual residing in the State of New Jersey ("Xxxxx") have entered into a
Sharing Agreement (the "Sharing Agreement") dated as of March 31, 2000 (terms
defined therein and not otherwise defined herein being used herein as therein
defined).
(2) CAHC is required pursuant to the Sharing Agreement to,
among other things, grant to X-X a first lien security interest including
proceeds in all of CAHC's right, title and interest in the Earnout Agreement
dated as of June 14, 2000 between Synagro Technologies, Inc., a Delaware
corporation ("Synagro") and CAHC (the "EOA") to secure the obligation of CAHC to
redeem Class C Preferred Stock held by the X-X in an amount up to $6.2 million
plus any applicable interest for late payments under the EOA.
(3) CAHC has opened a cash concentration deposit account and
securities account, Account No. _______ (the "Cash Concentration Account"), with
_______ at its office at _____ New York, New York _____ (the "Collateral Bank"),
in the name of CAHC but under the sole dominion and control of X-X and subject
to the terms of this Agreement.
(4) Unless otherwise defined in this Agreement or in the
Sharing Agreement, terms defined in Article 8 or 9 of the Uniform Commercial
Code in effect in the State of New York ("N.Y. Uniform Commercial Code") are
used in this Agreement as such terms are defined in such Article 8 or 9.
NOW, THEREFORE, in consideration of the premises and in order
to induce Wasteco and Xxxxx to waive the Exchange Option, CAHC hereby agrees as
follows:
Section 1. Grant of Security.
CAHC hereby assigns and pledges to X-X, and hereby grants to
X-X a security interest in, CAHC's right, title and interest in and to the
following (collectively, the "Collateral"):
(a) the EOA, as it may be amended, amended and restated,
supplemented or otherwise modified from time to time (the "Assigned
Agreement"), including, without limitation, (i) all rights of CAHC to
receive moneys due and to become due under or pursuant to the Assigned
Agreement (including, without limitation, any applicable interest for
late payments), (ii) all rights of CAHC to receive proceeds of any
insurance, indemnity, warranty or guaranty with respect to the Assigned
Agreement, (iii) claims of CAHC for damages arising out of or for
breach of or default under the Assigned Agreement and (iv) the right of
CAHC to terminate the Assigned Agreement, to perform thereunder and to
compel performance and otherwise exercise all remedies thereunder (all
such Collateral being the "Agreement Collateral");
(b) the following (collectively, the "Account Collateral"):
the Cash Concentration Account, all financial assets from time to time
credited to the Cash Concentration Account (including, without
limitation, all cash equivalents from time to time credited to the Cash
Concentration Account), and all dividends, interest, cash, instruments
and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such
financial assets, and all funds held therein and all certificates and
instruments, if any, from time to time representing or evidencing the
Cash Concentration Account;
(c) all proceeds of any and all of the foregoing Collateral
and, to the extent not otherwise included, all payments under any
indemnity, warranty or guaranty, payable by reason of loss or damage to
or otherwise with respect to any of the foregoing Collateral.
Section 2. Security for Obligations. This Agreement secures
(i) the obligations of CAHC now or hereafter existing under the Sharing
Agreement to redeem the Class C Preferred Stock up to an amount not to exceed
more than $6.2 million plus interest received for late payments under the EOA as
to proceeds arising as to the EOA and (ii) the payment of all obligations of
CAHC now or hereafter existing under this Agreement, whether direct or indirect,
absolute or contingent, and whether for principal, reimbursement obligations,
interest, fees, premiums, penalties, indemnifications, contract causes of
action, costs, expenses or otherwise (all such obligations being the "Secured
Obligations").
Section 3. Borrower Remains Liable. Anything herein to the
contrary notwithstanding, (a) CAHC shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (b) the exercise by X-X of any of the rights
hereunder shall not release CAHC from any of its duties or obligations under the
contracts and agreements included in the Collateral and (c) X-X shall not have
any obligation or liability under the contracts and agreements included in the
Collateral by reason of this Agreement, nor shall X-X be obligated to perform
any of the obligations or duties of CAHC thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.
Section 4. Representations and Warranties. CAHC represents and
warrants as follows:
(a) CAHC is the legal and beneficial owner of the Collateral
free and clear of any lien, except for the security interest created by
this Agreement. No effective financing statement or other instrument
similar in effect covering all or any part of the Collateral is on file
in any recording office, except such as may have been filed in favor of
X-X relating to this Agreement. None of the Agreement Collateral is
evidenced by a promissory note or other instrument that has not been
delivered to X-X. Original copies of each Assigned Agreement have been
delivered to X-X.
(b) This Agreement and the pledge of the Collateral pursuant
hereto create a valid and perfected first priority security interest in
the Collateral, securing the payment of the Secured Obligations, and
all filings and other actions necessary or desirable to perfect and
protect such security interest have been duly taken.
(c) No consent of any other Person and no authorization,
approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body or other third party is
required either (i) for the grant by CAHC of the assignment and
security interest granted hereby, for the pledge by CAHC of the
Collateral pursuant hereto or for the execution, delivery or
performance of this Agreement by CAHC, (ii) for the perfection or
maintenance of the pledge, assignment and security interest created
hereby (including the first priority nature of such pledge, assignment
or security interest), except for the filing of financing and
continuation statements under the N.Y. Uniform Commercial Code or the
Uniform Commercial Code in effect in the State of New Jersey ("N.J.
Uniform Commercial Code"), as applicable, which financing statements
have been duly filed, or (iii) for the exercise by X-X of its rights
provided for in this Agreement or the remedies in respect of the
Collateral pursuant to this Agreement, except as may be required in
connection with the disposition of any portion of the Collateral by
laws affecting the offering and sale of securities generally.
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(d) The chief place of business and chief executive officer of
CAHC and the office where CAHC keeps the original copy of the Assigned
Agreement is located at Xxx Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxx, Xxx
Xxxxxx, 00000.
(e) The Assigned Agreement to which CAHC is a party, a true
and complete copy of which has been furnished to X-X, has been duly
authorized, executed and delivered by all parties thereto, has not been
amended, amended and restated, supplemented or otherwise modified, is
in full force and effect and is binding upon and enforceable against
all parties thereto in accordance with their terms. There exists no
default under the Assigned Agreement to which CAHC is a party by any
party thereto. Each party to the Assigned Agreement other than CAHC has
executed and delivered to CAHC a consent, in substantially the form of
Exhibit B hereto or otherwise in form and substance satisfactory to
X-X, to the assignment of the Agreement Collateral to X-X pursuant to
this Agreement.
Section 5. Place of Perfection; Records. CAHC shall keep its
chief place of business and chief executive office and the office where it keeps
its records concerning the Collateral and the original copy of the Assigned
Agreement, at the location therefor specified in Section 4(d) or, upon 30 days'
prior written notice to X-X, at such other locations in a jurisdiction where all
actions required by Section 6 shall have been taken with respect to the
Collateral. CAHC will hold and preserve such records and will permit
representatives of X-X at any time during normal business hours to inspect and
make abstracts from such records.
Section 6. Further Assurances. (a) CAHC agrees that from time
to time, at the expense of CAHC, CAHC will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that X-X may request, in order to perfect and protect
any pledge, assignment or security interest granted or purported to be granted
hereby or to enable X-X to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality of the
foregoing, CAHC will: (i) xxxx conspicuously each of its records pertaining to
the Collateral with a legend, in form and substance satisfactory to X-X,
indicating that such Collateral is subject to the security interest granted
hereby; (ii) if any Collateral shall be evidenced by a promissory note or other
instrument, deliver and pledge to X-X hereunder such note or instrument duly
indorsed and accompanied by duly executed instruments of transfer or assignment,
all in form and substance satisfactory to the X-X; and (iii) execute and file
such financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or as X-X may request,
in order to perfect and preserve the pledge, assignment and security interest
granted or purported to be granted hereby.
(b) CAHC hereby authorizes X-X to file one or more financing
or continuation statements, and amendments thereto, relating to all or any part
of the Collateral without the signature of CAHC where permitted by law. A
photocopy or other reproduction of this Agreement or any financing statement
covering the Collateral or any part thereof shall be sufficient as a financing
statement where permitted by law.
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(c) CAHC will furnish to X-X from time to time statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as X-X may reasonably request, all in
reasonable detail.
Section 7. Interest; Dividends; Etc. Any and all
(A) dividends, interest and other distributions paid
or payable other than in cash in respect of, and instruments
and other property received, receivable or otherwise
distributed in respect of, or in exchange for, any Collateral,
(B) dividends and other distributions paid or payable
in cash in respect of any Collateral in connection with a
partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or
paid-in-surplus and
(C) cash paid, payable or otherwise distributed in
respect of principal of, or in redemption of, or in exchange
for, any Collateral
shall be, and shall be forthwith delivered to X-X to hold as,
Collateral and shall, if received by CAHC, be received in trust for the
benefit of X-X, be segregated from the other property or funds of CAHC
and be forthwith delivered to X-X as Collateral in the same form as so
received (with any necessary indorsement).
Section 8. As to the Assigned Agreements. (a) CAHC will at its
expense:
(i) perform and observe all terms and provisions of the
Assigned Agreement to be performed or observed by it, maintain the
Assigned Agreement to which it is a party in full force and effect,
enforce the Assigned Agreement to which it is a party in accordance
with the terms thereof and take all such action to such end as may be
requested from time to time by X-X; and
(ii) furnish to X-X promptly upon receipt thereof copies of
all notices, requests and other documents received by CAHC under or
pursuant to the Assigned Agreement to which it is a party, and from
time to time (A) furnish to X-X such information and reports regarding
the Assigned Agreement and such other Collateral of CAHC as X-X may
reasonably request and (B) upon request of X-X make to each other party
to the Assigned Agreement to which it is a party such demands and
requests for information and reports or for action as X-X is entitled
to make thereunder.
(b) CAHC agrees that it will not without the prior written
consent of X-X:
(i) cancel or terminate the Assigned Agreement to which it is
a party or consent to or accept any cancellation or termination
thereof;
(ii) amend, amend and restate, supplement or otherwise modify
the Assigned Agreement or give any consent, waiver or approval
thereunder;
(iii) waive any default under or breach of the Assigned
Agreement; or
(iv) take any other action in connection with the Assigned
Agreement that would impair the value of the interests or rights of
CAHC thereunder or that would impair the interests or rights of X-X
hereunder.
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(c) CAHC hereby consents on its behalf and on behalf of its
Subsidiaries to the assignment and pledge to X-X of the Assigned Agreement to
which it is a party.
Section 9. Payments Under the Assigned Agreements. CAHC
agrees, and has effectively so instructed each other party to the Assigned
Agreement to which it is a party, that all payments due or to become due under
or in connection with the Assigned Agreement will be made directly to the Cash
Concentration Account.
Section 10. Transfers and Other Liens; Additional Shares. CAHC
shall not (i) sell, assign (by operation of law or otherwise) or otherwise
dispose of, or grant any option with respect to, any of the Collateral, or (ii)
create or suffer to exist any lien upon or with respect to any of the Collateral
except for the pledge, assignment and security interest created by this
Agreement.
Section 11. Maintaining the Cash Concentration Account. So
long as there is any Secured Obligation outstanding, CAHC will (a) maintain the
Cash Concentration Account only with a bank that has entered into a letter
agreement substantially in the form of Exhibit A hereto or otherwise in form and
substance satisfactory to X-X, (b) immediately instruct Synagro Technologies,
Inc. or any successor thereto obligated at any time to make any payment to CAHC
pursuant to the Assigned Agreement to make such payment to the Cash
Concentration Account and (c) immediately deposit any proceeds of any of the
Collateral in the Cash Concentration Account.
Section 12. Release of Amounts. At any time when cash or cash
equivalents in the Cash Concentration Account exceed $1,000,000, X-X will direct
the Collateral Bank to pay and release to X-X such amounts then on deposit in
the Cash Concentration Account to be applied to the obligations of CAHC under
the Sharing Agreement to redeem Class C Preferred Stock; provided, however that
the maximum amount of funds permitted to be released for such purpose shall be
$6,200,000 plus interest received for late payments under the EOA as to proceeds
arising as to the EOA.
Section 13. X-X Appointed Attorney-in-Fact. CAHC hereby
irrevocably appoints X-X CAHC's attorney-in-fact, with full authority in the
place and stead of CAHC and in the name of CAHC or otherwise, from time to time
in X-X's discretion, to take any action and to execute any instrument that X-X
may deem necessary or advisable to accomplish the purposes of this Agreement,
including, without limitation:
(a) to ask for, demand, collect, xxx for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral,
(b) to receive, indorse and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a)
above, and
(c) to file any claims or take any action or institute any
proceedings that X-X may deem necessary or desirable for the collection
of any of the Collateral.
Section 14. X-X May Perform. If CAHC fails to perform any
agreement contained herein,X-X may itself perform, or cause performance of, such
agreement, and the expenses of X-X incurred in connection therewith shall be
payable by CAHC under Section 15(b).
Section 15. X-X's Duties. The powers conferred on X-X
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the safe custody
of any Collateral in its possession and the accounting for moneys actually
received by it hereunder, X-X shall have no duty as to any Collateral, or as to
the taking of any necessary steps to preserve rights against any parties or any
other rights pertaining to any Collateral. X-X shall be deemed to have exercised
reasonable care in the custody and preservation of any Collateral in its
possession if such Collateral is accorded treatment substantially equal to that
which X-X accords its own property.
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Section 16. Remedies. If any default under the Sharing
Agreement with respect to CAHC's obligation to redeem the Class C Preferred
Stock or this Agreement shall have occurred and be continuing:
(a) X-X may exercise in respect of the Collateral, in addition
to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party upon default
under the N.Y. Uniform Commercial Code (whether or not the N.Y. Uniform
Commercial Code applies to the affected Collateral) and also may (i)
require CAHC to, and CAHC hereby agrees that it will at its expense and
upon request of X-X forthwith, assemble all or part of the Collateral
as directed by X-X and make it available to X-X at a place to be
designated by X-X that is reasonably convenient to both parties and
(ii) without notice except as specified below, sell the Collateral or
any part thereof in one or more parcels at public or private sale, at
any of X-X's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as X-X may deem commercially
reasonable. CAHC agrees that, to the extent notice of sale shall be
required by law, at least ten days' notice to CAHC of the time and
place of any public sale or the time after which any private sale is to
be made shall constitute reasonable notification. X-X shall not be
obligated to make any sale of Collateral regardless of notice of sale
having been given. X-X may adjourn any public or private sale from time
to time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to
which it was so adjourned.
(b) All cash proceeds received by X-X in respect of any sale
of, collection from, or other realization upon all or any part of the
Collateral may, in the discretion of X-X, be held by the X-X as
collateral for, and/or then or at any time thereafter applied (after
payment of any amounts payable to X-X pursuant to Section 17) in whole
or in part by X-X against, all or any part of the Secured Obligations
in such order as X-X shall elect. Any surplus of such cash or cash
proceeds held by X-X and remaining after payment in full of all the
Secured Obligations shall be paid over to CAHC or to whomsoever may be
lawfully entitled to receive such surplus.
(c) X-X may exercise any and all rights and remedies of CAHC
under or in connection in respect of the Collateral.
(d) All payments received by CAHC under or in connection in
respect of the Collateral shall be received in trust for the benefit of
X-X, shall be segregated from other funds of CAHC and shall be
forthwith paid over to X-X in the same form as so received (with any
necessary indorsement).
Section 17. Indemnity and Expenses. (a) CAHC agrees to
indemnify X-X from and against any and all claims, losses and liabilities
arising out of or resulting from this Agreement (including, without limitation,
enforcement of this Agreement), except claims, losses or liabilities resulting
from X-X's gross negligence or willful misconduct as determined by a final
judgment of a court of competent jurisdiction.
(b) CAHC will upon demand pay to X-X the amount of any and all
reasonable expenses, including the reasonable fees and expenses of its counsel
and of any experts and agents, that X-X may incur in connection with (i) the
administration of this Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from or other realization upon, any of
the Collateral, (iii) the exercise or enforcement of any of the rights of X-X
hereunder or (iv) the failure by CAHC to perform or observe any of the
provisions hereof.
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Section 18. Amendments; Waivers; Etc. No amendment or waiver
of any provision of this Agreement, and no consent to any departure by CAHC
herefrom, shall in any event be effective unless the same shall be in writing
and signed by X-X, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given. No failure
on the part of X-X to exercise, and no delay in exercising any right hereunder,
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right preclude any other or further exercise thereof or the exercise of
any other right.
Section 19. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing (including telecopier
communication and any other method of communication authorized by X-X) and,
mailed, telecopied or otherwise sent or delivered to CAHC or to the X-X, as the
case may be, in each case addressed to it at its address specified in the
Sharing Agreement or, as to either party, at such other address as shall be
designated by such party in a written notice to each other party complying as to
delivery with the terms of this Section. All such notices and other
communications shall, when mailed, telecopied, or otherwise sent or delivered,
be effective when deposited in the mails, telecopied or otherwise sent or
delivered, respectively, addressed as aforesaid.
Section 20. Continuing Security Interest. This Agreement shall
create a continuing security interest in the Collateral and shall (a) remain in
full force and effect until the payment in full in cash of the Secured
Obligations, (b) be binding upon CAHC, its successors and assigns and (c) inure,
together with the rights and remedies of X-X hereunder, to the benefit of X-X,
and its respective successors, transferees and assigns.
Section 21. Termination. Upon the payment in full in cash of
the Secured Obligations, the pledge, assignment and security interest granted
hereby shall terminate and all rights to the Collateral shall revert to CAHC.
Upon any such termination, X-X will, at CAHC's expense, execute and deliver to
CAHC such documents as CAHC shall reasonably request to evidence such
termination.
Section 22. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, except to
the extent that the perfection of the security interest hereunder, or remedies
hereunder, in respect of any particular Collateral are governed by the laws of a
jurisdiction other than the State of New York.
Section 23. Execution. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement. Delivery of a
signature page to this Agreement (whether by fax or manually executed) shall be
effective as if it were delivery of a manually executed counterpart of this
Agreement.
[Signature Page Immediately Follows]
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IN WITNESS WHEREOF, CAHC has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
COMPOST AMERICA HOLDING COMPANY, INC.
By
----------------------------------------
Title:
8
Exhibit A to the
Security Agreement
FORM OF CASH CONCENTRATION ACCOUNT LETTER
---------------, ----
[Name and address
of Collateral Bank]
Compost America Holding Company, Inc.
Gentlemen/women:
Reference is made to deposit account no. __________ (the "Cash
Concentration Account") into which certain monies, instruments and other
properties are deposited from time to time maintained with you by Compost
America Holding Company, Inc., a New Jersey corporation (the "Grantor").
Pursuant to the Security Agreement dated June __, 2000 (as amended, amended and
restated, supplemented or otherwise modified from time to time, the "Security
Agreement"), the Grantor has granted to X-X Associates, LLC, a Delaware limited
liability corporation ("X-X"), a security interest in, and sole dominion and
control of, certain property of the Grantor, including, among other things, the
following (the "Account Collateral"): the Cash Concentration Account, all funds
held therein and all certificates and instruments, if any, from time to time
representing or evidencing the Cash Concentration Account, all interest,
dividends, distributions, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the then existing Account Collateral and all proceeds of any and
all of the foregoing Account Collateral. It is a condition to the continued
maintenance of the Cash Concentration Account with you that you agree to this
letter agreement.
By executing this letter agreement, you acknowledge notice of,
and consent to the grant of the security interest in, and the pledge and
assignment of, the Account Collateral to X-X and you confirm to X-X that the
description of the Cash Concentration Account set forth on Schedule I hereto is
correct and that you have not received any notice of any other security interest
in, pledge or assignment of, or other claim (other than that of the Grantor) on,
the Cash Concentration Account. Further, you hereby agree with X-X that:
(a) Notwithstanding anything to the contrary in any other
agreement relating to the Cash Concentration Account, the Cash
Concentration Account is and will be subject to the security interest,
pledge and assignment created under the Security Agreement, will be
maintained solely for the benefit of X-X, will have the title set forth
opposite the account number therefor on Schedule I hereto and will be
subject to written instructions only from an officer of X-X. Only X-X
is authorized to withdraw amounts from, to draw upon, or, except as
otherwise set forth herein, to otherwise exercise any powers with
respect to the Cash Concentration and the funds deposited therein. X-X
authorizes and directs that the sole signatories authorized to act on
behalf of X-X with respect to the Cash Concentration Account are and
shall be such officers of X-X as X-X may from time to time designate in
a writing acceptable to you. You may rely without liability on any such
written designation, absent manifest error, unless and until you
receive a written designation to the contrary. Any such written
designation shall include the specimen signature of each authorized
officer of X-X.
(b) You will collect mail from the Cash Concentration Account
on each of your business days at times that coincide with the delivery
of mail thereto.
(c) You will follow your usual operating procedures for the
handling of any remittance that contains restrictive endorsements,
irregularities (such as a variance between the written and numerical
amounts), undated or postdated items, missing signatures, incorrect
payees, etc. received in any the Cash Concentration Account.
(d) You will endorse and process all eligible checks and other
remittance items not covered by paragraph (c) above and deposit such
checks and remittance items in the Cash Concentration Accounts.
(e) You will maintain a record of all checks and other
remittance items received in the Cash Concentration Account and, in
addition to providing the Grantor with photostats, vouchers,
enclosures, etc. of such checks and remittance items on a daily basis,
furnish to X-X a monthly statement of the Cash Concentration Account,
to be mailed or telecopied to X-X at: _______________, __________,
__________, Telecopier No. __________, Attention: __________.
(f) Unless X-X shall have made the request referred to in
paragraph (g) below, you will from time to time (x) invest amounts on
deposit in the Cash Concentration Account in such cash equivalents in
the name of X-X as the Grantor may select and X-X may approve, and (y)
invest interest paid on the cash equivalents referred to in clause (x)
above, and reinvest other proceeds of any such cash equivalents that
may mature or be sold, in each case in such cash equivalents in the
name of X-X as the Grantor may select and X-X may approve. Interest and
proceeds that are not invested or reinvested in cash equivalents as
provided above shall be deposited and held in the Cash Concentration
Account. In addition, X-X has the right at any time to direct you to
exchange such cash equivalents for similar cash equivalents of smaller
or larger denominations, or for other cash equivalents, and you agree
to comply with any such direction.
(g) Upon the written request of X-X to you, you will transfer,
in same day funds, on each of your business days thereafter until X-X
withdraws such request in writing (in which case the provisions of
paragraph (g) shall again become operative), all amounts collected from
or on deposit in the Cash Concentration Account (or such lesser amounts
as X-X shall direct) on such day to the following account (the "X-X
Account"):
X-X Associates, LLC
Account No. ________
________________
________________
________________
________________
Attention: ______________
Each such transfer of funds shall neither comprise only part of a
remittance nor reflect the rounding off of any funds so transferred.
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(h) All transfers referred to in paragraph (g) above shall be
made by you irrespective of, and without deduction for, any
counterclaim, defense, recoupment or set-off and shall be final, and
you will not seek to recover from X-X for any reason any such payment
once made.
(i) All service charges and fees with respect to the Cash
Concentration Account shall be payable by the Grantor, and deposited
checks returned for any reason shall not be charged to the Cash
Concentration Account.
(j) X-X shall be entitled to exercise any and all rights of
the Grantor in respect of the Cash Concentration Account and the other
Account Collateral in accordance with the terms of the Security
Agreement, and you shall comply in all respects with such exercise.
You hereby represent and warrant that the person executing
this letter agreement on your behalf is duly authorized to do so.
No amendment or waiver of any provision of this letter
agreement, nor consent to any departures by you or the Grantor herefrom, shall
be effective unless the same shall be in writing as signed by you, the Grantor
and X-X.
This letter agreement shall be binding upon you and your
successors and assigns and shall inure to the benefit of X-X and their
successors, transferees and assigns. You may terminate this letter agreement
upon thirty days' prior written notice to the Grantor and X-X. Upon such
termination you shall close the Cash Concentration Account and transfer all
funds in the Cash Concentration Account to another account as instructed by X-X
at such time. After any such termination, you shall nonetheless remain obligated
promptly to transfer to such other account as instructed by X-X at such time all
funds and other property received in respect of the Cash Concentration Account.
This letter agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which when
taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this letter agreement by telecopier
shall be effective as delivery of an original executed counterpart of this
letter agreement.
Please indicate your acknowledgment of and agreement to the
provisions of this letter agreement by signing in the appropriate space provided
below and returning this letter agreement to ________________, _______________,
__________, ________ ______, Telecopier No.: (212) ___-____, Attention:
________________. If you elect to deliver this letter agreement by telecopier,
please arrange for the executed original to follow by next-day courier.
This letter agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
Very truly yours,
COMPOST AMERICA HOLDING COMPANY, INC.
By
---------------------------------
Title:
X-X ASSOCIATES, LLC
By
---------------------------------
Title:
Acknowledged and agreed to as of
the date first above written:
[NAME OF COLLATERAL BANK]
By
-------------------------------
Title:
3
Schedule I to the
Cash Concentration Account Letter
Account Number Account Name
-------------- ------------
Exhibit B to the
Security Agreement
FORM OF CONSENT AND AGREEMENT
The undersigned hereby (a) acknowledges notice of, and
consents to the terms and provisions of, the Security Agreement dated June __,
2000 (as amended, amended and restated, supplemented or otherwise modified from
time to time, the "Security Agreement", the terms defined therein being used
herein as therein defined) from Compost America Holding Company, Inc., a New
Jersey corporation (the "Grantor") to X-X Associates, LLC, a Delaware limited
liability company, (b) consents in all respects to the pledge and assignment to
X-X of all of the Grantor's right, title and interest in, to and under the
Assigned Agreement (as defined below) pursuant to the Security Agreement, (c)
acknowledges that the Grantor has provided it with notice of the right of X-X in
the exercise of its rights and remedies under the Security Agreement to make all
demands, give all notices, take all actions and exercise all rights of the
Grantor under the Assigned Agreement, and (d) agrees with X-X that:
(i) The undersigned will make all payments to be made by it
under or in connection with the __________ Agreement dated
_______________, ____ (the "Assigned Agreement") between the
undersigned and the Grantor directly to the Cash Concentration Account
or otherwise in accordance with the instructions of X-X.
(ii) All payments referred to in paragraph (i) above shall be
made by the undersigned irrespective of, and without deduction for, any
counterclaim, defense, recoupment or set-off and shall be final, and
the undersigned will not seek to recover from any Secured Party for any
reason any such payment once made.
(iii) X-X or its designee shall be entitled to exercise any
and all rights and remedies of the Grantor under the Assigned Agreement
in accordance with the terms of the Security Agreement, and the
undersigned shall comply in all respects with such exercise.
(iv) The undersigned will not, without the prior written
consent of X-X, (A) cancel or terminate the Assigned Agreement or
consent to or accept any cancellation or termination thereof or (B)
amend, amend and restate, supplement or otherwise modify the Assigned
Agreement.
(v) In the event of a default by the Grantor in the
performance of any of its obligations under the Assigned Agreement, or
upon the occurrence or non-occurrence of any event or condition under
the Assigned Agreement which would immediately or with the passage of
any applicable grace period or the giving of notice, or both, enable
the undersigned to terminate or suspend its obligations under the
Assigned Agreement, the undersigned shall not terminate the Assigned
Agreement until it first gives written notice thereof to X-X and
permits the Grantor and X-X the period of time afforded to the Grantor
under the Assigned Agreement to cure such default.
(vi) The undersigned shall deliver to X-X, concurrently with
the delivery thereof to the Grantor, a copy of each notice, request or
demand given by the undersigned pursuant to the Assigned Agreement.
(vii) Except as specifically provided in this Consent and
Agreement, X-X shall not have any liability or obligation under the
Assigned Agreement as a result of this Consent and Agreement, the
Security Agreement or otherwise.
This Consent and Agreement shall be binding upon the
undersigned and its successors and assigns, and shall inure, together with the
rights and remedies of X-X hereunder, to the benefit of X-X's successors,
transferees and assigns. This Consent and Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the undersigned has duly executed this
Consent and Agreement as of the date set opposite its name below.
Dated: _______________, ____ [NAME OF OBLIGOR]
By
--------------------------
Title:
2
