FOURTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT
Exhibit 10.7.4
FINAL
FOURTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT
THIS FOURTH AMENDMENT (the “Amendment”), dated as of April 30, 2008, is entered into by and
between PURE EARTH, INC., a Delaware corporation (“Pure Earth”) and all of its wholly owned
subsidiaries, including, but not limited to PURE EARTH MATERIALS, a Pennsylvania corporation, PURE
EARTH TRANSPORTATION & DISPOSAL SYSTEMS, LTD., a Delaware corporation, JUDA CONSTRUCTION, LTD., a
New York corporation, ECHO LAKE XXXXXXXXXX, LLC, PEI DISPOSAL GROUP, INC., a Delaware corporation,
and PURE EARTH MATERIALS (NJ), INC., a Delaware corporation, (collectively, the “Borrower”) and
XXXXX FARGO BANK, NATIONAL ASSOCIATION (the “Lender”), acting through its Xxxxx Fargo Business
Credit operating division.
RECITALS
The Borrower and the Lender are parties to a Credit and Security Agreement dated October 24,
2006 (as amended from time to time, the “Credit Agreement”). Capitalized terms used in this
Amendment have the meanings given to them in the Credit Agreement unless otherwise specified.
The Borrower has requested that certain amendments be made to the Credit Agreement, which the
Lender is willing to make pursuant to the terms and conditions set forth herein. As a condition of
such amendments, Lender has required that Borrower’s wholly owned subsidiaries NEW NYCON, INC., a
Delaware corporation and HFH ACQUISITION CORP., a Delaware corporation (individually, a “Guarantor”
and collectively, the “Guarantors”) execute and deliver a Guaranty of even date herewith.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements
herein contained, it is agreed as follows:
1. Exhibit B of the Credit Agreement shall be deleted and replaced with Exhibit B attached
hereto.
2. Schedule 5.1 of the Credit Agreement shall be deleted and replaced with a revised Schedule
5.1, which shall be provided to the Lender no later than June 30, 2008.
3. Schedule 5.2 of the Credit Agreement shall be deleted and replaced with a revised Schedule
5.2, which shall be provided to the Lender no later than June 30, 2008.
4. Schedule 5.5 of the Credit Agreement shall be deleted and replaced with a revised Schedule
5.5, which shall be provided to the Lender no later than June 30, 2008.
5. Schedule 6.3 of the Credit Agreement shall be deleted and replaced with a revised Schedule
6.3, which shall be provided to the Lender no later than June 30, 2008.
6. Schedule 6.4 of the Credit Agreement shall be deleted and replaced with a revised Schedule
6.4, which shall be provided to the Lender no later than June 30, 2008.
7. Section 6.6 of the Credit Agreement shall be amended to add subsection (e) as follows:
“(e) The Administrative Borrower may advance up to $300,000, in the aggregate, during each
calendar year, to its subsidiaries Pure Earth Environmental, Inc., Bio Methods, LLC and Geo
Methods, LLC. The Administrative Borrower may advance up to $300,000, during each calendar year,
to New Nycon, Inc. So long as no Default exists, any funds transferred to the Lender from Pure
Earth Environmental, Inc., Bio Methods, LLC and Geo Methods, LLC may be re-advanced to those
entities by the Administrative Borrower and will not be used in calculating the foregoing $300,000
annual intercompany advance. So long as no Default exists, any funds transferred to the Lender
from New Nycon, Inc. may be re-advanced to New Nycon, Inc. by the Administrative Borrower and will
not be used in calculating the foregoing $300,000 annual intercompany advance. Intercompany
advances funded with New Equity shall not be subject to the foregoing covenant.”
8. Formation of New Nycon, Inc. The Borrower may form New Nycon, Inc., as a wholly
owned subsidiary on the following conditions:
| a. | The Lender shall have a first perfected lien upon and security interest in all assets of New Nycon, Inc. evidenced by a security agreement acceptable to the Lender; and | ||
| b. | New Nycon, Inc. shall guarantee the Indebtedness, unconditionally, evidenced by a guarantee acceptable to the Lender. |
9. Formation of HFH Acquisition Corp. The Borrower may form HFH Acquisition Corp.,
as a wholly owned subsidiary, on the following conditions:
| a. | The Lender shall have a first perfected lien upon and security interest in all assets of HFH Acquisition Corp. evidenced by a security agreement acceptable to the Lender; and | ||
| b. | HFH Acquisition Corp. shall guarantee the Indebtedness, unconditionally, evidenced by a guarantee acceptable to the Lender. |
10. Consent to Guarantor Loans and Deposit. The Lender consents to HFH Acquisition
Corp. extending the PEI Financing as such term is defined in that certain Membership Interest
Purchase Agreement dated January 14, 2008 (the “MIPA”), executed by and between HFH Acquisition
Corp., Land Resource Solutions, LLC and HFH Hawthorne, LLC. Lender consents to the Deposit, as
such term is defined in the MIPA. Notwithstanding the foregoing, Lender’s consent to the PEI
Financing and the execution of each such transaction’s documents, shall not constitute a consent to
the Closing (as such term is defined in the MIPA) of the transactions set forth in the MIPA.
Lender’s consent to such Closing shall be made subsequent to further analysis by Lender of the MIPA
and the status of the transactions contemplated thereby. Lender also consents to HFH Acquisition
Corp.’s execution of the Hawthorne Financing Documents as such terms are defined in the MIPA.
Lender consents to the Hawthorne Financing, as such term is defined in the MIPA, to the extent the
Hawthorne Financing is funded by the Borrower from New Equity.
11. Consent to Acquisition. The Lender consents to the acquisition by New Nycon, Inc.
of the assets of Nycon, Inc. on terms and conditions set forth in the Asset Purchase Agreement
dated April
_____
, 2008.
12. Delivery of Audited Financial Statements. The Borrower shall deliver the audited
annual financial statements for the fiscal year ending December 31, 2007 required by Section 6.1(a)
of the Credit Agreement no later than April 30, 2008.
13. Advances to Pure Earth Environmental, Inc. Notwithstanding Section 6.6(e) of the
Credit Agreement (as amended hereby), the Borrower may make intercompany loans and advances to Pure
Earth Environmental, Inc. (“PEEI”) up to $300,000 in excess of the amounts set forth in Section
6.6(e) (“Supplemental Advances”) until August 1, 2008 to support two new transportation and
disposal contracts with the City of Stanford, Connecticut and City of Bridgeport, Connecticut. All
Supplemental Advances will be repaid by PEEI to the Borrower by August 1, 2008 and after August 1,
2008, the provisions of Section 6.6(e) of the Credit Agreement shall control. Intercompany
advances funded with New Equity shall not be subject to the foregoing covenant.
14. No Other Changes. Except as explicitly amended by this Amendment, all of the terms
and conditions of the Credit Agreement shall remain in full force and effect and shall apply to any
advance or letter of credit thereunder.
15. Conditions Precedent. This Amendment shall be effective when the Lender shall have
received an executed original hereof, together with each of the following, each in substance and
form acceptable to the Lender in its sole discretion:
(a) The Acknowledgment and Agreement of Guarantors set forth at the end of this Amendment,
duly executed by each Guarantor.
(b) A Certificate of the Secretary of the Borrower certifying as to (i) the resolutions of the
board of directors of the Borrower approving the execution and delivery of this Amendment, (ii) the fact that the articles of incorporation and bylaws of the Borrower, which
were certified and delivered to the Lender pursuant to the Certificate of Authority of the
Borrower’s secretary or assistant secretary dated October 24, 2006 continue in full force and
effect and have not been amended or otherwise modified except as set forth in the Certificate to be
delivered, and (iii) certifying that the officers and agents of the Borrower who have been
certified to the Lender, pursuant to the Certificate of Authority of the Borrower’s secretary or
assistant secretary dated December 29, 2006, as being authorized to sign and to act on behalf of
the Borrower continue to be so authorized or setting forth the sample signatures of each of the
officers and agents of the Borrower authorized to execute and deliver this Amendment and all other
documents, agreements and certificates on behalf of the Borrower.
(c) The Security Agreement and Guaranty of New Nycon, Inc., in form and substance acceptable
to the Lender.
(d) The Security Agreement and Guaranty of HFH Acquisition Corp., in form and substance
acceptable to the Lender.
(e) Current searches of appropriate filing offices showing that no Liens have been filed and
remain in effect against New Nycon, Inc. and HFH Acquisition Corp., except Permitted Liens or Liens
held by Persons who have agreed in writing they will satisfy, release or terminate such Liens in a
manner satisfactory to the Lender.
(f) Certificates of the insurance required under the Credit Agreement, with all hazard
insurance containing a lender’s loss payable endorsement in the Lender’s favor subject to the
rights of any Person having security interests in assets of New Nycon, Inc. and HFH Acquisition
Corp. senior in priority to the right therein in favor of Lender and with all liability insurance
naming the Lender as an additional insured.
(g) Such other matters as the Lender may require.
16. Representations and Warranties. The Borrower hereby represents and warrants to the
Lender as follows:
(a) The Borrower has all requisite power and authority to execute this Amendment and any other
agreements or instruments required hereunder and to perform all of its obligations hereunder, and
this Amendment and all such other agreements and instruments has been duly executed and delivered
by the Borrower and constitute the legal, valid and binding obligation of the Borrower, enforceable
in accordance with its terms.
(b) The execution, delivery and performance by the Borrower of this Amendment and any other
agreements or instruments required hereunder have been duly authorized by all necessary corporate
action and do not (i) require any authorization, consent or approval by any governmental
department, commission, board, bureau, agency or
instrumentality, domestic or foreign, (ii) violate any provision of any law, rule or
regulation or of any order, writ, injunction or decree presently in effect, having applicability to
the Borrower, or the articles of incorporation or by-laws of the Borrower, or (iii) result in a
breach of or constitute a default under any indenture or loan or credit agreement or any other
agreement, lease or instrument to which the Borrower is a party or by which it or its properties
may be bound or affected.
(c) All of the representations and warranties contained in Article V of the Credit Agreement
are correct on and as of the date hereof as though made on and as of such date, except to the
extent that such representations and warranties relate solely to an earlier date.
17. References. All references in the Credit Agreement to “this Agreement” shall be
deemed to refer to the Credit Agreement as amended hereby; and any and all references in the
Security Documents to the Credit Agreement shall be deemed to refer to the Credit Agreement as
amended hereby.
18. No Waiver. The execution of this Amendment and the acceptance of all other
agreements and instruments related hereto shall not be deemed to be a waiver of any Default or
Event of Default under the Credit Agreement or a waiver of any breach, default or event of default
under any Security Document or other document held by the Lender, whether or not known to the
Lender and whether or not existing on the date of this Amendment.
19. Release. The Borrower, and each Guarantor signing the Acknowledgment and Agreement
of Guarantors set forth below, hereby absolutely and unconditionally releases and forever
discharges the Lender, and any and all participants, parent corporations, subsidiary corporations,
affiliated corporations, insurers, indemnitors, successors and assigns thereof, together with all
of the present and former directors, officers, agents and employees of any of the foregoing, from
any and all claims, demands or causes of action of any kind, nature or description, whether arising
in law or equity or upon contract or tort or under any state or federal law or otherwise, which the
Borrower or each Guarantor has had, now has or has made claim to have against any such person for
or by reason of any act, omission, matter, cause or thing whatsoever arising from the beginning of
time to and including the date of this Amendment, whether such claims, demands and causes of action
are matured or unmatured or known or unknown.
20. Costs and Expenses. The Borrower hereby reaffirms its agreement under the Credit
Agreement to pay or reimburse the Lender on demand for all costs and expenses incurred by the
Lender in connection with the Loan Documents, including without limitation all reasonable fees and
disbursements of legal counsel. Without limiting the generality of the foregoing, the Borrower
specifically agrees to pay all fees and disbursements of counsel to the Lender for the services
performed by such counsel in connection with the preparation of this Amendment and the documents
and instruments incidental hereto. The Borrower hereby agrees that the Lender may, at any time or
from time to time in its sole discretion and without further authorization by the Borrower, make a loan to the Borrower under the Credit Agreement, or
apply the proceeds of any loan, for the purpose of paying any such fees, disbursements, costs and
expenses and the fee required under Paragraph 14 of this Amendment.
21. Miscellaneous. This Amendment and the Acknowledgment and Agreement of Guarantors
may be executed in any number of counterparts, each of which when so executed and delivered shall
be deemed an original and all of which counterparts, taken together, shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the
date first above written.
| XXXXX FARGO BANK, | ||||||
| NATIONAL ASSOCIATION | PURE EARTH, INC. | |||||
By:
|
/s/ Xxxx X. Xxxxx | By: | /s/ Xxxxx Xxxxxxxxxx | |||
| Xxxx X. Xxxxx | Xxxxx Xxxxxxxxxx | |||||
| Its Vice President | Its Executive Vice President | |||||
| NEW NYCON, INC. | ||||||
| By: | /s/ Xxxxx Xxxxxxxxxx | |||||
| Xxxxx Xxxxxxxxxx | ||||||
| Its Treasurer | ||||||
| HFH ACQUISITION CORP. | ||||||
| By: | /s/ Xxxxx Xxxxxxxxxx | |||||
| Xxxxx Xxxxxxxxxx | ||||||
| Its Treasurer | ||||||
ACKNOWLEDGMENT AND AGREEMENT OF GUARANTORS
The undersigned, each a guarantor of the indebtedness of Pure Earth, Inc. and its wholly owned
subsidiaries (the “Borrower”) to Xxxxx Fargo Bank, National Association (the “Lender”), acting
through its Xxxxx Fargo Business Credit operating division, pursuant to a Guaranty dated December
29, 2006 (the “Guaranty”), hereby (i) acknowledges receipt of the foregoing Amendment; (ii)
consents to the terms (including without limitation the release set forth in Paragraph 19 of the
Amendment) and execution thereof; (iii) reaffirms all obligations to the Lender pursuant to the
terms of the Guaranty; and (iv) acknowledges that the Lender may amend, restate, extend, renew or
otherwise modify the Agreement and any indebtedness or agreement of the Borrower, or enter into any
agreement or extend additional or other credit accommodations, without notifying or obtaining the
consent of the undersigned and without impairing the liability of the undersigned under the
Guaranty for all of the Borrower’s present and future indebtedness to the Lender.
| Geo Methods, LLC | Pure Earth Environmental, Inc. | |||||
By:
|
/s/ Xxxxx Xxxxxxxxxx | By: | /s/ Xxxxx Xxxxxxxxxx | |||
| Xxxxx Xxxxxxxxxx | Xxxxx Xxxxxxxxxx | |||||
| Its Treasurer | Its Treasurer | |||||
| Address: | Address: | |||||
| One Neshaminy Interplex, Ste. 000 | Xxx Xxxxxxxxx Xxxxxxxxx, Xxx. 000 | |||||
| Xxxxxxx, XX 00000 | Xxxxxxx, XX 00000 | |||||
| Attention: Xxxxx Xxxxxxxxxx | Attention: Xxxxx Xxxxxxxxxx | |||||
| Bio Methods, LLC | ||||||
| By: | /s/ Xxxxx Xxxxxxxxxx | |||||
| Xxxxx Xxxxxxxxxx Its Treasurer |
||||||
| Address: | ||||||
| Xxx Xxxxxxxxx Xxxxxxxxx, Xxx. 000 | ||||||
| Xxxxxxx, XX 00000 | ||||||
| Attention: Xxxxx Xxxxxxxxxx | ||||||
