EXHIBIT 10.33
FORBEARANCE AND MODIFICATION AGREEMENT
THIS FORBEARANCE AND MODIFICATION AGREEMENT (this "AGREEMENT"), is
entered into as of this 28th day of February, 2002 by and among General Electric
Capital Corporation, a Delaware corporation, whose address is 00 Xxx Xxxxxxxxx
Xxxx, Xxxxxxx, XX 00000 ("GE CAPITAL"), the other LENDERS (as hereinafter
defined), 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 are defined in the Security Agreement (as
hereinafter defined).
RECITALS:
WHEREAS, GE Capital and the Debtor previously entered into that certain
Master Security Agreement dated as of February 24, 2000 (as from time to time
modified, amended, restated or otherwise supplemented, the "SECURITY AGREEMENT")
pursuant to which Debtor granted to GE Capital and its successors and assigns a
security interest in any and all property listed on any Collateral Schedule
executed pursuant thereto, in order to secure, among other things, the payment
and performance of certain Promissory Notes executed from time to time and
identified on the Collateral Schedules;
WHEREAS, 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") have each made loans to Debtor, which loans are
evidenced by certain Promissory Notes issued by Debtor to such Lender in the
amounts and as of the dates set forth on SCHEDULE A hereto (whether initially
documented in Lender's name or assigned to Lender by GE Capital) (collectively,
the "PROMISSORY NOTES") and secured by certain Collateral Schedules executed by
Debtor pursuant to the Master Security Agreement (collectively, the "COLLATERAL
SCHEDULES") (the Promissory Notes, Collateral Schedules, Security Agreement,
Modification Agreement (as hereinafter defined) together with all other
documents relating thereto and/or evidencing the Indebtedness are collectively
referred to herein as the "DEBT DOCUMENTS") (the Indebtedness, together with any
and all other amounts due and owing from Debtor and/or Guarantor to Lenders in
respect of the Debt Documents is collectively referred to herein as the
"OBLIGATIONS");
WHEREAS, pursuant to that certain Corporate Guaranty dated as of
February 24, 2000 (the "GUARANTY"), in favor of GE Capital and its successors
and assigns, the Guarantor guaranteed all of Debtor's obligations, now and
hereafter arising, pursuant to the Debt Documents;
WHEREAS, the parties to this Agreement, exclusive of Siemens Financial
Services, Inc. ("SFS"), previously entered into a Modification Agreement dated
as of March 30, 2001 ("Modification Agreement I") which required, among other
things, that the Debtor pay each Lender party thereto under each Promissory Note
that is in the name of, or has been assigned to, such Lender, a prepayment of
principal in the amount of ten percent (10%) of the original principal amount of
each such Promissory Note upon the happening of certain events but in any case
no later than January 2, 2002 with a second prepayment of principal in the same
amount on or about April 2, 2002 and as of the date hereof, Debtor has failed in
all instances to make such required prepayments;
WHEREAS, SFS, the Debtor and the Guarantor previously entered into that
certain Amendment to Loan Documents dated as of March 30, 2001 ("Modification
Agreement II") which required, among other things, that the Debtor make certain
principal reductions and mandatory prepayments to SFS including, without
limitation, a principal reduction in the amount of Five Hundred Thousand Dollars
($500,000.00) on January 2, 2002 and as of the date hereof, Debtor has failed to
make such principal reduction (Modification Agreement I and Modification
Agreement II are sometimes collectively referred to as the "Modification
Agreements");
WHEREAS, the following Events of Default have occurred and are
continuing under the Debt Documents: (i) Debtor's breach of the Minimum Tangible
Net Worth covenant pursuant to Section 7(n) of the Master Security Agreement for
the time period September 30, 2001 through and including December 31, 2001; (ii)
Debtor's failure to make the following payments under the Debt Documents:
January 2, 2002 and April 2, 2002 mandatory principal prepayments; and (iii)
monthly principal payments in January and February 2002 (collectively, the
"Current Defaults");
WHEREAS, Lenders have not waived the Current Defaults and, as a result
of the Current Defaults, Lenders have the right, among other things, to: (i)
accelerate the Obligations and require immediate payment thereof, (ii) terminate
all further loans and credit accommodations, and (iii) foreclose upon, and take
possession of, and liquidate all Collateral;
WHEREAS, Debtor and Guarantor have requested that GE Capital and the
other Lenders: (i) waive the Current Defaults, (ii) modify the Debt Documents as
set forth herein, (iii) permit Debtor to sell its environmental division
commonly referred to as Clean Earth, Inc. ("CEI") (such sale of CEI by Debtor is
hereinafter referred to as the "CEI SALE"), and (iv) forbear in the collection
of certain principal repayments; and
WHEREAS, Lenders are willing to forbear, for the time period expressly
set forth herein, in the exercise and enforcement of such rights and remedies,
but only upon full and complete compliance and fulfillment by the Debtor and
Guarantor with the terms and conditions set forth herein in the manner
hereinafter stated.
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:
1. ACKNOWLEDGEMENTS. Debtor and Guarantor jointly and severally
acknowledge that: (i) each Recital set forth hereinabove is complete, accurate
and not subject to dispute, (ii) the Current Defaults have occurred and are
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continuing, (iii) Lenders have not heretofore waived the Current Defaults, (iv)
all conduct of, and requirements made by, the Lenders as set forth herein are
authorized by and undertaken pursuant to and in accordance with the terms of the
Debt Documents, (v) they have no grounds for disputing the validity or
enforceability of any Debt Document or any of their respective obligations
thereunder, or the validity, priority, enforceability or extent of Lenders'
security interests in or liens against any item of Collateral in any judicial,
administrative or other proceeding, either during or following the termination
or expiration of the Forbearance Period (as hereinafter defined), and (vi)
absent the effectiveness of this Agreement, Lenders would have the right to
accelerate and enforce immediately payment of the Obligations and, in connection
therewith, to enforce immediately their security interests in and liens on the
Collateral and exercise all other rights and remedies provided Lenders under the
Debt Documents or at law, in equity or by statute to the fullest extent
permitted by law. The Recitals set forth herein above are intended to be part of
the terms of this Agreement. This Agreement is deemed to be a Debt Document.
2. LIMITED FORBEARANCE; WAIVER OF CURRENT DEFAULTS; UNDERTAKINGS BY
DEBTOR.
(a) FORBEARANCE OF COLLECTION OF CERTAIN PRINCIPAL PAYMENTS. During the
period commencing on the date of this Agreement and ending on the earlier to
occur of: (i) April 1, 2002, or (ii) the closing of the CEI Sale (the
"FORBEARANCE PERIOD"), and provided that no Forbearance Event of Default (as
hereinafter defined) shall have occurred and be continuing and subject to
compliance by Debtor and Guarantor with each and every term and condition of
each and every Debt Document (except as otherwise expressly provided herein),
Lenders shall forbear in the collection of principal payments due under the Debt
Documents provided, however, that Debtor shall be required to make interest
payments on the outstanding balance of the Obligations in accordance with the
terms and conditions of the Debt Documents (without giving effect to modified
payment terms set forth in the Modification Agreements). The forbearance
described in this paragraph is with respect to principal repayments only and
shall not in any way be construed to impair the ability of Lenders to enforce
any rights or remedies under the Debt Documents at any time.
(b) WAIVER OF CURRENT DEFAULTS. Each Lender hereby waives the Current
Defaults to the extent such Current Default applies to their respective
Promissory Notes and/or Collateral Schedules provided, further, that in the case
of covenant defaults, such waiver applies solely to the financial reporting
period ending September 30, 2001 and December 31, 2001 and in the case of
payment defaults, such waiver applies to the failure to make payments through
and including the scheduled February 2002 payment.
(c) EXPIRATION OF FORBEARANCE PERIOD. Unless earlier terminated in
accordance with the terms of this Agreement, Lender's forbearance, as provided
herein, shall cease immediately, without notice, upon the expiration of the
Forbearance Period, and Debtor at that time shall be required to comply with the
payment terms set forth in Section 3 hereof.
3. POST-FORBEARANCE PERIOD PAYMENT TERMS.
(a) REGULARLY SCHEDULED PRINCIPAL AND INTEREST PAYMENTS. Commencing as
of the expiration of the Forbearance Period (unless sooner terminated pursuant
to Section 2(c) hereof) and continuing through and including August 31, 2002,
Debtor shall make all regularly scheduled principal and interest payments to
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Lenders in accordance with the existing terms and conditions of the Debt
Documents (without giving effect to modified payment terms set forth in the
Modification Agreements).
(b) RESTRUCTURE OF REMAINING TERM. Commencing on September 1, 2002, the
then outstanding balance of Obligations will be restructured such that Debtor
shall be required to make monthly payments of principal and interest to Lenders
in an amount sufficient to fully amortize the then outstanding Obligations over
a forty-eight (48) month term, with the first payment to be made on the first
Business Day of September, 2002 and payments continuing on the first Business
Day of each calendar month thereafter. For purposes of this Agreement, "Business
Day" shall mean any day other than a Saturday, Sunday or other days on which
commercial banks in New York, New York are required or authorized to be closed.
4. MANDATORY PRINCIPAL PREPAYMENTS.
(a) FIRST MANDATORY PRINCIPAL REPAYMENT. Debtor hereby covenants and
agrees that within two (2) Business Days of the closing of the CEI Sale, it
shall make a prepayment of principal to Lenders in reduction of the Obligations
in an amount equal to Five Hundred Thousand Dollars ($500,000.00). Debtor
further covenants and agrees to reserve from the proceeds of the CEI Sale an
amount sufficient to make the aforesaid principal repayment.
(b) SECOND MANDATORY PRINCIPAL REPAYMENT. Debtor further covenants and
agrees that it shall make a second principal prepayment to Lenders in reduction
of the Obligations in an amount equal to Two Million Dollars (2,000,000.00) upon
the earlier to occur of: (i) the closing of Guarantor's new revolving credit
loan facility which replaces its existing line of credit with Bank of America
(the "B of A Revolver") in which Guarantor's aggregate collateral value which
serves as security for such replacement revolving loan facility results in
borrowing availability to Guarantor (prior to any advance being made under the
replacement facility) of no less than Ten Million Dollars ($10,000,000.00); (ii)
the exercise by Debtor of its option to purchase of the Chicago Property (as
hereinafter defined) and subsequent receipt by Debtor of the net proceeds
derived from the refinance of the Chicago Property; or (iii) September 30, 2002.
(c) The foregoing principal repayments shall be in lieu of any
outstanding principal repayments required under Section II(2) and II(3) of
Modification Agreement I and under Section 4.1 of Modification Agreement II.
5. ADDITIONAL SECURITY INTEREST GRANT.
(a) Subject to Section 5(d), and in consideration of the agreements and
undertakings of Lenders as more fully set forth herein, and as additional and
further security for the payment of the Obligations, Debtor does hereby pledge,
assign, transfer and deliver to Lenders a continuing and unconditional lien and
security interest (subject only to the lien(s) and security interest(s) in
existence as of the date hereof) in and to all of its Equipment (as such term is
defined in the Uniform Commercial Code in effect in the State of New York from
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time to time) of any kind or nature whatsoever, together with all accessions,
attachments, replacements, substitutions, modifications and additions thereto,
whether now owned or hereafter acquired, or in which it now has or at any time
in the future may acquire any right, title, or interest, and all proceeds and
products thereof.
(b) Subject to Section 5(d), Debtor hereby authorizes and directs
Lenders to file all such financing statements and to take such other actions as
are required to perfect the security interest grant pursuant to Section 5(a)
hereof.
(c) Debtor hereby covenants and agrees that it shall take any and all
actions required to accomplish the foregoing lien and security interest grant in
favor of the Lenders, including without limitation, requiring any and all other
Subordinated Lenders (as hereinafter defined) that may currently have a prior
lien and security interest in the Equipment to subordinate such lien and
security interest to the liens and security interests of the Lenders.
(d) In the event Debtor's replacement lender upon the refinance of the
B of A Revolver does not require a first lien and security interest in the
Equipment, the Debtor shall provide such first lien and security interest to
Lenders. Notwithstanding the preceding sentence, Debtor shall use its reasonable
efforts to insure that the foregoing lien and security interest grant in favor
of the Lenders with respect to the Equipment is first and paramount through a
refinancing of the B of A Revolver such that no pledge of its Equipment is
required as collateral by such replacement lender.
6. RESTRICTION ON PLEDGE OF ASSETS. Debtor hereby covenants and agrees
that for so long as any of the Obligations remain outstanding, it shall not
either directly or indirectly, create, assume, incur or suffer or permit to
exist any mortgage, pledge, encumbrance, security interest, assignment, lien or
charge of any kind or character upon any of its assets, whether owned at the
date hereof or hereafter acquired except for the permitted encumbrances
identified on SCHEDULE B hereto. Notwithstanding the foregoing sentence, Lenders
hereby agree to waive the foregoing restriction only in the event of Debtor's
refinance of the Chicago Property and subject to the additional conditions that:
(i) no Forbearance Event of Default shall have occurred and be continuing; (ii)
GE Capital's loan, if any, made to Debtor to finance the purchase of the Chicago
Property is repaid in full; and (iii) Debtor has made the mandatory principal
prepayment to Lenders required pursuant to Section 4(b) hereof. Lenders' waiver,
if any, with respect to the foregoing pledge restriction, shall be solely with
respect to Debtor's pledge of the Chicago Property.
7. LIMITATIONS ON REPAYMENT OF OTHER INDEBTEDNESS.
(a) Except as other provided in this Section 7, Debtor and Guarantor
jointly covenant and agree that they shall be prohibited from making any
payments of principal, interest or any other amounts due and owing to either:
(i) Halifax Fund, L.P. ("Halifax"); (ii) Xxxxx Partnership; or (iii) any future
subordinated lender (collectively, the "Subordinated Lenders") in respect of
indebtedness due and owing to such Subordinated Lenders by Debtor and/or
Guarantor commencing as of the date hereof and continuing through one (1) year
from the date of closing of the CEI Sale, unless and until an equal payment (in
addition to all currently scheduled principal and interest payments) is
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contemporaneously paid to Lenders. Notwithstanding the foregoing, Debtor shall
be permitted to make a payment to Halifax in full satisfaction of that certain
promissory note in the original principal amount of $4,000,000, as required to
complete the CEI Sale; provided, however, that no further proceeds of the CEI
Sale shall be paid by Debtor or Guarantor to any other Subordinated Lender
unless and until an equal payment is made to the Lenders.
(b) Debtor shall be permitted to refinance the indebtedness due and
owing to the Subordinated Lenders (as well as any other indebtedness of Debtor
or Guarantor to any other subordinated lender) provided that: (i) such
indebtedness is replaced with either: (A) additional equity contributed to
Debtor in satisfaction of such indebtedness; or (B) indebtedness which remains
subordinate and is afforded no greater priority than such refinanced
indebtedness; and (ii) the refinancing lenders agree to be bound by the terms
and conditions of any subordination agreement given by the Subordinated Lenders
in favor of the Lenders (including, without limitation, the agreement to provide
such subordination as provided in Section 5(c) above.
8. GE CAPITAL'S FINANCE OF CHICAGO PROPERTY ACQUISITION.
(a) Debtor currently leases the real property located at 0000 X.
Xxxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxx (the "CHICAGO PROPERTY") and has an option to
purchase the Chicago Property for the aggregate sum of Three Million Dollars
($3,000,000.00) (the "PURCHASE OPTION"). Debtor hereby grants in favor of GE
Capital, the first option to finance Debtor's purchase of the Chicago Property
(the "FINANCING OPTION"). Debtor covenants and agrees that it shall provide GE
Capital with thirty (30) days prior written notice of the earlier to occur of:
(i) its exercise of the Purchase Option; or (ii) Debtor's receipt of a written
commitment from any other third party lender for the financing of Debtor's
purchase of the Chicago Property (the "PURCHASE OPTION NOTICE"). GE Capital
shall exercise the Financing Option, if at all, within thirty (30) days of its
receipt of the Purchase Option Notice by providing Debtor with written notice
thereof, provided further, that the terms of GE Capital's financing of Debtor's
acquisition of the Chicago Property shall not be on less favorable terms than
those specified in such third party lender commitment, if any. Notwithstanding
the foregoing, GE Capital shall have no obligation to finance Debtor's purchase
of the Chicago Property.
(b) In the event that GE Capital exercises the Financing Option, GE
Capital shall receive a first priority mortgage and security interest in the
Chicago Property with respect to all amounts advanced to finance such
acquisition. Additionally, all Lenders shall receive a second priority mortgage
and security interest in the Chicago Property as additional security for the
Obligations. Concurrent with the exercise of its option to purchase, and
subsequent closing of, the Chicago Property, Debtor shall grant such second
priority mortgage and security interest in the Chicago Property in favor of the
Lenders irrespective of whether GE Capital exercises the Financing Option.
Lenders shall release such second priority mortgage and security interest in the
Chicago Property, if at all, upon the satisfaction of the conditions set forth
at Section 8(c) hereof.
(c) The mortgage and security interests granted in favor of GE Capital
and the Lenders, if at all, with respect to Debtor's acquisition of the Chicago
Property shall remain in full force and effect unless and until each of the
following conditions have been satisfied: (i) GE Capital's outstanding loans in
respect of Debtor's acquisition of the Chicago Property, if any, are repaid in
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full; (ii) the Lenders have received the required mandatory prepayments on the
Obligations in the aggregate amount of Two Million Five Hundred Thousand Dollars
($2,500,000.00) pursuant to Section 4 hereof; (iii) the Lenders have received
first priority liens and security interests in the Equipment, respectively, in
accordance with the terms of Section 5 hereof; (iv) no Forbearance Event of
Default shall have occurred and be continuing; and (v) Debtor shall not be in
default in any payment of principal or interest for any other indebtedness
(including indebtedness due and owing pursuant to a lease) in an aggregate
amount greater than or equal to Five Million Dollars ($5,000,000.00).
(d) Notwithstanding anything in this Section 8 to the contrary, in the
event that all conditions set forth in Section 8(c)(i)-(v) have been satisfied
prior to Debtor's purchase of the Chicago Property, Debtor shall have no
obligation to finance its acquisition of the Chicago Property through GE Capital
or to grant the second mortgage and security interest in favor of the Lenders
with respect to the Chicago Property.
9. FINANCIAL COVENANTS; FINANCIAL REPORTING.
(a) Section 7(n) of the Master Security Agreement shall remain in full
force and effect until such time as the CEI Sale closes, at which point such
Section 7(n) shall be amended and restated in its entirety as follows:
"(n) If Guarantor fails to maintain at all times during the term of
this Agreement and any Schedule, a Minimum Tangible Net Worth equal to or
greater than the sum of Twenty Four Million Dollars ($24,000,000.00) plus eighty
percent (80%) of the net income recognized by Guarantor during such calendar
quarter, commencing with the quarter during which the closing of the CEI Sale
occurs. Thereafter, Guarantor shall maintain such Minimum Tangible Net Worth on
a going forward basis, increased by the amount of net income for such relevant
calendar quarter throughout each successive calendar quarter during the term of
the Security Agreement and any Schedule. Minimum Tangible Net Worth shall mean
Stockholder's Equity minus Intangible Assets. Capitalized terms used in this
Section 7(n) shall be defined in accordance with generally accepted accounting
principles. Notwithstanding the foregoing, in the event that the closing of the
CEI Sale does not occur during the calendar quarter ending March 31, 2002, there
shall be no requirement of a Minimum Tangible Net Worth for such calendar
quarter."
(b) Section 7 of the Security Agreement is hereby amended to insert the
following subsection (p):
"(p) In the event that the closing of the CEI Sales occurs, if
Guarantor fails to maintain at all times during the term of the Security
Agreement and any Schedule, EBITDA, on a cumulative basis, as follows: (i) One
Million Five Hundred Thousand Dollars ($1,500,000.00) for the calendar quarter
ending June 30, 2002; (ii) Three Million Dollars ($3,000,000.00) for the
calendar quarter ending September 30, 2002; (iii) Three Million Two Hundred
Fifty Thousand Dollars ($3,250,000.00) for the calendar quarter ending December
31, 2002; (iv) Seven Hundred Fifty Thousand Dollars ($750,000.00) for the
calendar quarter ending March 31, 2003; (v) Three Million One Hundred Thousand
Dollars ($3,100,000.00) for the calendar quarter ending June 30, 2003; (vi) Five
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Million Three Hundred Thousand Dollars ($5,300,000.00) for the calendar quarter
ending September 30, 2003; (vii) Six Million Dollars ($6,000,000.00) for the
calendar quarter ending December 31, 2003. There shall be no requirement of a
minimum EBITDA for the calendar quarter ending March 31, 2002.
In the event that the closing of the CEI Sale does not occur, if
Guarantor fails to maintain at all times during the term of this Agreement and
any Schedule, EBITDA as follows: (i) Seven Hundred Fifty Thousand Dollars
($750,000.00) for the calendar quarter ending March 31, 2002; (ii) Four Million
Seven Hundred Thousand ($4,700,000.00) for the calendar quarter ending June 30,
2002; (iii) Three Million Five Hundred Thousand ($3,500,000.00) for the calendar
quarter ending September 30, 2002; (iv) One Million Dollars ($1,000,000.00) for
the calendar quarter ending December 31, 2002; (v) Two Million Dollars
($2,000,000.00) for the calendar quarter ending March 31, 2003; (vi) Six Million
Dollars ($6,000,000.00) for the calendar quarters ending June 30, 2003 and
September 30, 2003; and (vii) Two Million Dollars ($2,000,000.00) for the
calendar quarter ending December 31, 2003.
For purposes of this Agreement, EBITDA shall mean, for any relevant
period, the sum of (i) pre-tax income from Guarantor's operations for such
period, PLUS (ii) interest expense for such period, PLUS (iii) the amount of all
non-cash charges, including but not limited to depreciation and amortization
(determined in accordance with generally accepted accounting principles) for
such period.
10. CONDITIONS TO EFFECTIVENESS. The effectiveness of this Agreement is
subject to Debtor and Guarantor's delivery to Lenders of a counterpart of this
Agreement, signed by each of them, together with all other documents,
certificates and agreements as Lenders may reasonably request to accomplish the
purposes of this Agreement.
11. INSPECTION. At the option of Lenders, and upon reasonable notice to
Debtor (provided that no Forbearance Event of Default shall have occurred and be
continuing in which case no such notice is required) a representative or
representatives of Lenders including, without limitation, a consultant or other
professional, may enter and remain at the places of business of the Debtor
and/or Guarantor at any time during ordinary business hours and may observe
Debtor's and/or Guarantor's conduct and operations, and inspect and examine the
Debtor's and/or Guarantor's properties, books and records, including without
limitation daily cash receipts and other correspondence, but shall not in any
respect direct or participate in the management of the day-to-day business
operations of the Debtor or Guarantor. The Debtor and Guarantor and each of
their professionals shall cooperate fully with any such representative. All
direct and indirect expenses incurred by Lenders with respect to such
observation and with respect to any analysis or report prepared by the Debtor,
Guarantor, Lender, or their respective agents in connection therewith, shall
accrue and be payable by the Debtor, consistent with the terms of the Debt
Documents.
12. FORBEARANCE FEE. Debtor shall pay Lenders a non-refundable
forbearance fee in an amount equal to one percent (1%) of the Obligations
outstanding as of the date of the CEI Sale (the "FORBEARANCE FEE"). Debtor
acknowledges that the Forbearance Fee shall be earned by the Lenders upon
execution of this Agreement and shall be part of the Obligations. The
Forbearance Fee shall be paid by Debtor to Lenders in three (3) equal monthly
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installments with the first Business Day of the month following the month in
which the closing of the CEI Sale occurs, with payments continuing on the first
Business Day of each of the next two calendar months thereafter. Any payment in
respect of the Forbearance Fee not paid within five (5) days of the due date
therefore, shall bear interest at the default rate of interest specified in the
Debt Documents. Notwithstanding the foregoing, in the event that the closing of
the CEI Sale does not occur by June 1, 2002, the Forbearance Fee shall be
immediately due and payable in full.
13. REFERENCE TO AND EFFECT ON DEBT DOCUMENTS.
(a) RATIFICATION. Except as specifically amended herein, the Debt
Documents shall remain in full force and effect and are each hereby ratified and
confirmed. To the extent that this Agreement conflicts with the provisions of
the Debt Documents, the provisions of this Agreement shall govern.
(b) NO WAIVER. The execution, delivery and effectiveness of this
Agreement shall not operate as a waiver of any right or remedy of Lenders under
the Debt Documents, nor shall it constitute a waiver of any provision of the
Debt Documents or impose upon Lenders any obligation, express or implied, to
consent to any amendment or further modification of the Debt Documents and
Lenders hereby expressly reserve all rights, powers and remedies specifically
given to them under the Debt Documents or now or hereafter existing at law or in
equity or by statute.
14. REPRESENTATIONS AND WARRANTIES. All of Debtor and Guarantor's
representations and warranties contained in this Agreement shall survive the
execution, delivery and acceptance of this Agreement by the parties hereto.
Debtor and Guarantor jointly and severally represent and warrant to Lenders as
follows:
(a) The execution and delivery of this Agreement and the performance by
each of them of their respective obligations hereunder are within the corporate
powers and authority of each of them, have been duly authorized by all necessary
corporate action and do not and will not contravene or conflict with the
articles of incorporation or by-laws of either of them. This Agreement has been
duly executed and delivered by Debtor and Guarantor, and constitutes the legal,
valid and binding obligation of each of them, enforceable against each of them
in accordance with its terms.
(b) No consent, order, qualification, validation, license, approval or
authorization of, or filing, recording, registration or declaration with, or
other action in respect of, any governmental body, authority, bureau or agency
or other person is required in connection with the execution, delivery or
performance of, or the legality, validity, binding effect or enforceability of,
this Agreement.
(c) The execution, delivery and performance of this Agreement by Debtor
and Guarantor does not and will not violate any law, governmental regulation,
judgment, order or decree applicable to and do not and will not violate the
provisions of, or constitute a default or any event of default under, or result
in the creation of any security interest or lien upon any property of either of
them pursuant to any indenture, mortgage, instrument, contract, agreement or
other undertaking to which Debtor and/or Guarantor is a party or is subject or
by which Debtor and/or Guarantor or any of their respective real or personal
property may be bound.
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(d) Except as set forth on SCHEDULE 14(d), a copy of which is attached
hereto, there are no suits or proceedings pending or threatened in court or
before any regulatory commission, board or other administrative governmental
agency against or affecting Debtor or Guarantor, which will have a material
adverse effect on the ability of Debtor or Guarantor to fulfill their respective
obligations under this Agreement or the other Debt Documents.
(e) The consolidated financial statements of Guarantor and its
subsidiaries, heretofore delivered to Lenders fairly present, in all material
respects, the financial position and results of operations of Guarantor and its
subsidiaries, as of the date of delivery, and there has been no material adverse
change in the financial condition of Guarantor and its subsidiaries since the
date of such financial statements.
(f) Except for the Current Defaults or matters previously disclosed by
the Company in public documents, no Event of Default has occurred and is
continuing.
15. RELEASE. Debtor and Guarantor, for themselves and any other person
or entity who may claim an interest through them, hereby release and discharge,
with prejudice, Lenders, their respective directors, officers, agents, attorneys
and employees from any and every claim, right, cause, action, cause of action,
damage, liability and other matter or proceeding arising from, relating to or in
connection with any acts or omissions of Lenders, their respective directors,
officers, agents, attorneys and employees prior to the date of execution of this
Agreement. This provision shall survive and continue in full force and effect
whether or not Debtor and/or Guarantor shall satisfy all other provisions of the
Debt Documents, including payment in full of the Obligations.
16. PRE-ARRANGED PAYMENT PLAN AGREEMENT. Debtor shall make payments in
respect of the Obligations automatically via an electronic payment system that
allows GE Capital to initiate debit entries for payment from Debtor's accounts
in accordance with GE Capital's standard Pre-Arranged Payment Plan Agreement in
the form of SCHEDULE C hereto. Failure by Debtor to permit debit entries
pursuant to such electronic payment system shall be a Forbearance Event of
Default (as hereinafter defined) hereunder.
17. FORBEARANCE EVENTS OF DEFAULT. A Forbearance Event of Default shall
mean the occurrence of any one or more of the following events:
(a) Debtor shall fail to pay any of the Obligations when due under the
Debt Documents (as modified pursuant to this Agreement and taking into account
any future extension of time, forbearance or waiver, if any, as evidenced by a
writing expressly so stating and signed by Debtor and such Lender with respect
thereto);
(b) the occurrence of an Event of Default under any of the Debt
Documents;
(c) Debtor or Guarantor shall fail to perform its obligations under or
otherwise fail to comply with any term or condition of this Agreement;
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(d) Debtor shall fail to permit debit entries for purposes of payment
of the Obligations pursuant to the electronic payment system set forth at
Section 16 hereof;
(e) In the event Debtor shall, at any time during the term of the Debt
Documents, sell, lease, assign, transfer or otherwise dispose of assets (other
than sales of inventory or collection of accounts receivable in the ordinary
course of business of Debtor) which, individually or in the aggregate, equals or
exceeds Two Million ($2,000,000.00) Dollars (based upon Debtor's cost of or
gross selling price of such assets); provided, however, that the foregoing
restriction shall not apply with respect to the CEI Sale;
(f) Debtor's failure to obtain the Subordinated Lenders' (that may
currently have a prior lien and security interest in the Equipment to that of
the Lenders) subordination of their liens and security interests in the
Equipment to the first priority liens and security interests of the Lenders with
respect to the Equipment, prior to or simultaneously with the closing of
Guarantor's replacement revolving loan facility no later than September 30,
2002;
(g) Debtor's failure to effectuate the first priority lien and security
interest grant in favor of the Lenders with respect to the Equipment prior to
the closing of a new replacement revolving loan credit facility no later than
September 30, 2002; or
(h) Any instrument, document, report, schedule, agreement,
representation or warranty, oral or written, made or delivered to Lender by
Debtor or Guarantor in connection with this Agreement is untrue or incorrect in
any material respect when made or delivered.
18. REMEDIES. Upon the occurrence of a Forbearance Event of Default,
the Forbearance Period shall automatically terminate and all Obligations shall
automatically become immediately due and payable, without notice or demand of
any kind and Lender shall be entitled and empowered to exercise all of its
rights and remedies under this Agreement, the Debt Documents and at law, in
equity or by statute including, without limitation, the right to enforce its
liens on, and security interests in, the Collateral and reimbursement of its
costs, charges and expenses all as provided in the Debt Documents, subject in
each case to applicable law. Debtor and Guarantor have not, by this Agreement,
waived any rights or privileges under insolvency statutes or the U.S. Bankruptcy
Code.
19. EFFECT OF ACKNOWLEDGMENTS. Any and all acknowledgments contained in
this Agreement, including but not limited to those contained in Section 1 above,
are intended to be and may construed to be affirmative covenants,
representations and warranties of Debtor and Guarantor.
20. LIMITATION OF LIABILITY. In making any decision as to whether to
restructure the Obligations with Debtor or to take any other actions related to
the Debt Documents, Lenders shall have no liability to any third party
(including creditors of the Debtor and/or Guarantor and any party to any
agreement purporting to prohibit, restrict or otherwise limit Debtor or
Guarantor from encumbering any of its assets) and shall not be deemed to be in
control of the operations of Debtor or Guarantor or to be acting as a
"responsible person" or "owner or operator" with respect to the operation or
management of Debtor or Xxxxxxxxx.
00
00. DEBTOR TO PAY ATTORNEYS FEES. Debtor hereby agrees to promptly pay
any and all costs and expenses of Lenders incurred in connection with this
Agreement including without limitation, all attorneys and paralegal fees
incurred in connection with the preparation negotiation and review of this
Agreement, in aggregate not to exceed Fifteen Thousand Dollars ($15,000.00).
22. JOINT AND SEVERAL LIABILITY; SUCCESSORS AND ASSIGNS. Debtor and
Guarantor shall be jointly and severally liable under this Agreement. This
Agreement shall be binding on and shall inure to the benefit of Debtor,
Guarantor and Lenders and their respective successors and assigns. The terms and
provisions of this Agreement are for the purpose of defining the relative rights
and obligations of Debtor, Guarantor and Lenders with respect to the
transactions contemplated hereby.
23. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
of the parties hereto with respect to the subject matter hereof and supersedes
all other understandings, oral, written or imputed.
24. HEADINGS. Section headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose and should not be considered in interpreting any
provision hereof.
25. NOTICES. Except as otherwise provided herein, Debtor and Guarantor
waive all notices and demands in connection with the enforcement of Lenders'
rights hereunder. All notices, requests, demands and other communications
provided for hereunder shall be in writing and delivered in accordance with the
terms of the Debt Documents.
26. NO THIRD-PARTY BENEFICIARIES. Notwithstanding anything contained in
this Agreement that could be interpreted to the contrary, this Agreement is
intended neither to inure to the benefit, nor create any obligations to, any
person who has not executed this Agreement.
27. CONSENT TO JURISDICTION. Debtor and Guarantor consent to
jurisdiction of the state and federal courts located in New York, New York,
and/or such other appropriate court and venue as Lenders may choose for purposes
of enforcing the terms of this Agreement. Notwithstanding any other provision in
the Debt Documents to the contrary, the Debt Documents shall be deemed to be
amended hereby to provide for Debtor and Guarantor's consent to the aforesaid
jurisdiction for purposes of enforcing the Debt Documents.
28. COUNTERPARTS AND FACSIMILE SIGNATURES. This Agreement 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 Agreement 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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, this 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: Xxxxxxx X. Xxxxxxx, Treasurer
THE EAGLEBROOK GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------------
Title: Xxxxxxx X. Xxxxxxx, Treasurer
GUARANTOR:
U.S. PLASTIC LUMBER CORP.
By: /s/ Xxxx X. Xxxxxx
-------------------------------------------
Title: Xxxx X. Xxxxxx, CFO
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ Xxxxxx Xxxxxxx
-------------------------------------------
Title: Xxxxxx Xxxxxxx, Senior Risk Manager
THE CIT GROUP/EQUIPMENT FINANCING,
INC.
By: /s/ Xxxxx Xxxxxxxxx
-------------------------------------------
Title: Xxxxx Xxxxxxxxx, Vice President
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SAFECO CREDIT COMPANY, INC.
By: /s/
-------------------------------------------
Title: Division Credit Manager
HSBC BUSINESS CREDIT (USA) as successor
to HSBC BUSINESS LOANS, INC.
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------------------
Title: Xxxxxxxx X. Xxxxxx, Vice President
PEOPLE'S CAPITAL AND LEASING CORP.
By: /s/
-------------------------------------------
Title: Vice President
SIEMENS FINANCIAL SERVICES, INC.
By: /s/ Xxxxx Xxxxxxx
-------------------------------------------
Title: Xxxxx Xxxxxxx
Vice President Credit and Operations
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