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EXHIBIT 10.23
LETTER LOAN AGREEMENT
March 5, 2001
The Lenders Identified on
Schedule 1
c/o Sanders ▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned, EARTHCARE COMPANY, INC., a Delaware corporation
("PARENT"), EARTHCARE RESOURCE MANAGEMENT OF SOUTH FLORIDA, INC., a Florida
corporation and indirect wholly-owned subsidiary of Parent ("ERM OF SOUTH
FLORIDA"), AND EARTHCARE ACQUISITION SUB, INC., an Illinois corporation and
indirect wholly-owned subsidiary of Parent ("EAS") and, together with ERM of
South Florida, "BORROWER"), have requested that you ("LENDER") lend to Borrower
the sum of $2,500,000.00. Subject to the terms of this Loan Agreement (this
"AGREEMENT"), Borrower, Parent, and Lender hereby agree as follows:
1. Loan. On the terms and subject to the conditions set forth in this
Agreement, Lender agrees to lend to Borrower the sum of TWO MILLION FIVE HUNDRED
THOUSAND AND NO/100 DOLLARS ($2,500,000.00) (the "LOAN") for the purpose of
financing the acquisition (the "PCI ACQUISITION") of the assets of Palm Carting,
Inc., a Florida corporation ("PCI"), set forth on Schedule 1 hereto (the "PCI
Assets"), and the acquisition (the "LANDCOMP ACQUISITION") of LandComp
Corporation, an Illinois corporation ("LANDCOMP"), pursuant to a merger of EAS
with and into LandComp. The Loan shall be evidenced by a term promissory note,
and any renewals and extensions thereof (the "NOTE"), in a form satisfactory to
Lender, duly executed by Borrower and made payable to the order of Lender.
Principal and interest on the Note shall be due and payable in the manner and at
the times set forth in the Note.
2. Fees. Parent agrees to issue to Lender 100,000 shares of the common
stock, $0.01 par value ("COMMON STOCK"), of Parent at the closing of the Loan
transaction contemplated hereunder. In addition, Parent agrees to issue to
Lender 100,000 shares of Common Stock of Parent on the first day of each month,
commencing May 1, 2001, that any portion of the Loan and/or accrued interest on
the Loan remains unpaid.
3. Conditions Precedent.
(a) The obligation of Lender to make the Loan to Borrower is
subject to the conditions precedent that Lender shall have received
duly executed copies of each document relating to the Loan listed on
the last page of this Agreement in form and substance acceptable to
Lender and its legal counsel (all such documents, together with this
Agreement
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and any other security documents relating to the Loan and any
modifications thereof, are hereinafter collectively referred to as the
"LOAN DOCUMENTS").
(b) The obligation of Lender to make the Loan shall be subject
to the additional conditions precedent that Lender shall be furnished
with, and shall have approved, such consents from Marine Bank and the
financial institutions party to the Amended and Restated Credit
Agreement dated as of February 15, 2000 (the "BANK CREDIT AGREEMENT"),
among Parent, various financial institutions, BankBoston, N.A., as
Syndication Agent, and Bank of America, N.A., as Administrative Agent,
as may be required for Borrower to enter into this Agreement.
(c) Lender's obligation to make the Loan shall be further
subject to the conditions precedent that as of the date of this
Agreement with the same effect as if made on such date:
(i) all representations and warranties made by Borrower and
Parent to Lender under this Agreement and the other Loan
Documents are true and correct;
(ii) all documents and proceedings shall be reasonably
satisfactory to legal counsel for Lender;
(iii) no condition or event exists which constitutes an Event
of Default (as hereinafter defined) or which, with the lapse
of time and/or giving of notice, would constitute an Event of
Default;
(iv) all conditions precedent set forth in subparagraphs (a)
and (b) above shall have been satisfied; and
(v) no material adverse change in the financial condition of
Borrower or Parent since the effective date of the most recent
financial statements furnished to Lender by Borrower and
Parent shall have occurred and be continuing.
(d) Lender's obligation to advance any portion of the Loan
with respect to the LandComp acquisition shall be subject to the
condition precedent that Borrower and EAS shall have entered into an
Agreement and Plan of Merger with LandComp and the shareholders of
LandComp in form and substance satisfactory to Lender in its sole
discretion.
4. Representations and Warranties. In order to induce Lender to make
the Loan, Borrower and Parent represent and warrant to Lender as follows:
(a) Each of South Florida and EAS is a corporation duly
organized validly existing and in good standing under the laws of the
State of Florida and Illinois, respectively, and has all requisite
authority to conduct its business in each jurisdiction in which its
business is conducted.
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(b) Parent is a corporation duly organized validly existing
and in good standing under the laws of the State of Delaware and has
all requisite authority to conduct its business in each jurisdiction in
which its business is conducted.
(c) The execution, delivery, and performance of this Agreement
and the other Loan Documents have been duly authorized by all necessary
action by Borrower and Parent and are the legal, valid, and binding
obligations of Borrower, enforceable in accordance with their
respective terms, except as limited by bankruptcy, insolvency or other
laws of general application relating to the enforcement of creditors'
rights.
(d) Each financial statement delivered by Borrower and Parent
to Lender prior to the date of this Agreement is true and correct,
fairly presents the financial condition of Borrower and Parent, and has
been prepared in accordance with generally accepted accounting
principles, consistently applied; as of the date of this Agreement,
there are no obligations, liabilities or indebtedness (including
contingent and indirect liabilities) which are material to Borrower or
Parent and not reflected in such financial statements; and no material
adverse changes have occurred in the financial condition or business of
Borrower or Parent since the date of the most recent financial
statements which Borrower and Parent have delivered to Lender.
(e) Each of the documents (the "SEC FILINGS") filed by Parent
with the Securities and Exchange Commission (the "SEC") complied when
filed in all material respects with all of the requirements of the
Securities Act of 1933, as amended, and the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), as applicable, and did not
contain any untrue statement of a material fact or omit to state any
material fact required to be contained therein or necessary or
necessary in order to make the statements therein not misleading.
(f) Neither the execution and delivery of this Agreement and
the other Loan Documents, nor the consummation of any of the
transactions herein or therein contemplated, nor compliance with the
terms and provisions hereof or thereof, will (i) contravene or conflict
with any provision of law, statute, or regulation to which Borrower or
Parent is subject or any judgment, license, order, or permit applicable
to Borrower or Parent or any indenture, mortgage, deed of trust, or
other instrument to which Borrower or Parent may be subject or (ii)
require the consent, approval, authorization, or order of any court,
governmental authority, or third party in connection with the execution
and delivery by Borrower or Parent of this Agreement or the
transactions contemplated herein or therein, which have not previously
been obtained and are in full force and effect.
(g) No litigation, investigation, or governmental proceeding
is pending or, to the knowledge of any of Borrower's or Parent's
officers, threatened against or affecting Borrower or Parent that may
result in any material adverse change in Borrower's or Parent's
business, properties or operations.
(h) There is no specific fact known to Borrower or Parent that
Borrower or Parent has not disclosed to Lender in writing which is
likely to result in any material adverse change in Borrower's or
Parent's business, properties or operations.
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(i) Borrower owns all of the assets reflected on its balance
sheet (most recently submitted to Lender), free and clear of all liens,
security interests, or other encumbrances, except as previously
disclosed in writing to Lender.
(j) The principal office, chief executive office, and
principal place of business of Parent are in Dallas, Texas and of each
Borrower is in Boca Raton, Florida.
(k) All tax reports and returns required by any law or
regulation to be filed have been filed and all taxes required to be
paid by Borrower or Parent have in fact been paid, except for taxes
being contested in good faith by appropriate proceedings for which
adequate reserves have been established.
(l) No written certificate or written statement herewith or
heretofore delivered by Borrower or Parent to Lender in connection
herewith, or in connection with any transaction contemplated hereby,
contains any untrue statement of a material fact or fails to state any
material fact necessary to keep the statements contained therein from
being misleading.
(m) Each of Borrower and Parent is in compliance with all
laws, ordinances, governmental rules or regulations with respect to the
Collateral, the conduct of Borrower's or Parent's business, the
ownership of its assets, and otherwise, and no default exists under any
material agreement, contract, or understanding to which Borrower or
Parent is a party, which violation or default would result in any
material adverse change in Borrower's or Parent's business, properties
or operations.
(n) Borrower has taken all steps necessary to determine and
has determined that no hazardous substances, or other substances known
or suspected to pose a threat to health or the environment which are in
violation of Applicable Environmental Laws ("HAZARDS") exist with
respect to the Collateral. No prior use by Borrower, or to Borrower's
knowledge, the prior owners of the Collateral, has occurred which
violates any laws pertaining to health or the environment ("APPLICABLE
ENVIRONMENTAL LAWS"), including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended ("CERCLA"), the Resource Conservation and Recovery Act of 1976,
as amended ("RCRA"), the Texas Water Code and the Texas Solid Waste
Disposal Act. The Borrower's handling and maintenance of the Collateral
does not and will not result in the disposal or release of any
hazardous substance or Hazard on, in or to the Collateral. The terms
"hazardous substance" and "release" shall each have the meanings
specified in CERCLA, and the terms "solid waste" and "disposal" (or
"disposed") shall each have the meanings specified in RCRA; provided,
however, that in the event either CERCLA or RCRA is amended so as to
broaden the meaning of any term defined thereby, such broader meaning
shall apply subsequent to the effective date of such amendment; and
provided further that, to the extent that the laws of the State of
Texas establish a meaning for "hazardous substance," "release," "solid
waste," or "disposal" which is broader than that specified in either
CERCLA or RCRA, such broader definition shall apply.
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(o) No event of default under this Agreement or default under
the other Loan Documents to which Borrower or Parent is a party has
occurred and neither Borrower nor Parent is in default with respect to
any writ, injunction, decree, or demand of any court or any government
authority which would have a material adverse effect on Borrower,
Parent or the Collateral.
(p) To the best of Parent's knowledge, there are no existing
facts or circumstances that materially and adversely affect, or
(insofar as the Parent can now reasonably foresee) in the future may
materially and adversely affect, the business, prospects, results of
operations or condition, financial or otherwise, of the Parent and/or
Borrower, on an individual or consolidated basis, which are not
disclosed in the Annual Report on Form 10-K for the year ended December
31, 1999, the Form 10-Q for the quarter ended September 30, 2000, other
documents filed with the SEC pursuant to the Exchange Act, or in this
Agreement or any exhibit hereto, or which are required to be disclosed
by Parent in an Exchange Act filing.
5. Affirmative Covenants. Until payment in full of the Note and all
other obligations and liabilities of Borrower under this Agreement, Parent and
Borrower agree and covenant that (unless Lender shall otherwise consent in
writing):
(a) Borrower shall pay or cause to be paid all amounts due
under the Note, this Agreement, and the other Loan Documents on the due
dates thereof and will perform all of its obligations therein in full
on the dates same are to be performed.
(b) Borrower will use the proceeds of the Loan as follows:
(i) $350,000 shall be paid to PCI at the closing of the PCI
Acquisition as cash compensation for the PCI Assets;
(ii) $438,000 shall be paid to the shareholders of LandComp
upon execution of the LandComp merger agreement;
(iii) $1,062,000 shall be paid to LandComp upon execution of
the LandComp merger agreement to be used to retire certain
shareholder loans; and
(iv) $650,000 shall be used for working capital of the
Borrower including payment of costs and expenses incurred in
connection with this Agreement and the issuance of the Note.
Pending use of the proceeds of the Loan as described above,
Borrower shall retain the proceeds in its possession.
(c) As soon as available, and in any event (i) within 107 days
after the end of each fiscal year of Parent, Parent shall deliver to
Lender a copy of the annual financial statements of Parent and Borrower
prepared in conformity with generally accepted accounting principles,
certified (with no material qualifications or exceptions) by
independent public accountants selected by Parent and acceptable to
Lender, which show the financial condition of Parent and Borrower at
the close of such fiscal year and the results of operations during such
fiscal year, and shall include, but not be limited to, a profit and
loss statement, balance sheet and such other matters as Lender may
reasonably request, and (ii) within 47 days after the end of the
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first three calendar quarters of each year, Parent shall deliver to
Lender a copy of the quarterly and fiscal year to date financial
statements of Parent and Borrower, which show the financial condition
of Parent and Borrower at the close of such quarter and the results of
operations during such quarter and shall include, but not be limited
to, a statement of operations, balance sheet and such other matters as
Lender may reasonably request.
(d) Each of Parent and Borrower shall conduct its business in
an orderly and efficient manner consistent with good business practices
and in accordance with all valid regulations, laws and orders of any
governmental authority and will act in accordance with customary
industry standards in maintaining and operating its assets, properties
and investments, and shall not change the nature or type of their basic
business.
(e) Each of Parent and Borrower shall maintain complete and
accurate books and records of its transactions in accordance with
generally accepted accounting principles, and will give Lender access
during business hours to all books, records and documents of Parent and
Borrower and permit Lender to make and take away copies thereof.
(f) Borrower shall furnish to Lender, immediately upon
becoming aware of the existence of any condition or event constituting
an Event of Default or event which, with the lapse of time and/or
giving of notice, would constitute an Event of Default, written notice
specifying the nature and period of existence thereof and any action
which Borrower or Parent is taking or proposes to take with respect
thereto.
(g) Borrower shall maintain or cause to be maintained
insurance from responsible and reputable companies in such amounts and
covering such risks as is acceptable to Lender, is prudent and is
usually carried by companies engaged in business similar to that of
Borrower including, without limitation, insurance, comprehensive
liability insurance, fire and extended insurance, with Borrower named
as a co-loss payee; Borrower shall furnish Lender, on request, with
certified copies of insurance policies or other appropriate evidence of
compliance with the foregoing covenant.
(h) Each of Borrower and Parent shall promptly notify Lender
of (i) any material adverse change in its financial condition or
business, (ii) any default under any material agreement, contract, or
other instrument to which Borrower or Parent is a party or by which any
of its properties are bound, or any acceleration of any maturity of any
indebtedness owing by Borrower, (iii) any material adverse claim
against or affecting Borrower or Parent or any of its properties, and
(iv) any litigation or any claim or controversy which might become the
subject of litigation, against Borrower or Parent or affecting any of
Borrower's or Parent's property, if such litigation or potential
litigation might, in the event of an unfavorable outcome, have, in
Lender's reasonable judgment, a material adverse effect on Borrower's
or Parent's financial condition or business or might cause an Event of
Default.
(i) Borrower shall maintain and preserve its existence under
the laws of the State of Florida and Borrower shall preserve and
maintain all licenses, privileges, franchises, certificates and the
like necessary for the operation of its business.
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(j) Borrower and Parent agree to furnish to Lender within such
time period as Lender may reasonably request such additional
information and statements, lists of assets and liabilities, tax
returns, financial statements, reporting statements or any other
reports with respect to Borrower's or Parent's financial condition,
business operations, and properties as Lender may request from time to
time.
(k) Borrower shall give notice to Lender immediately upon
acquiring knowledge of the presence of any Hazards relating to the
Collateral, which is in a condition that is resulting, or could
reasonably be expected to result, in any adverse environmental impact,
with a full description thereof; promptly comply with all Applicable
Environmental Laws requiring the notice, removal, treatment, or
disposal of any hazardous substances; and provide Lender, within 30
days after demand by Lender, with financial assurance evidencing to
Lender's satisfaction that sufficient funds are available to pay the
cost of removing, treating, and disposing of any such known Hazards and
discharging any liens or assessments that may be established relating
to the Collateral.
(l) Borrower shall pay and discharge when due all indebtedness
and obligations including, without limitation, all assessments, taxes,
government charges, levies, and liens of every kind and nature imposed
upon Borrower or its properties, incomes or profit, prior to the date
on which penalties would attach, and all lawful claims that, if unpaid,
might become a lien or charge upon any of Borrower's properties,
income, or profits; provided, however, Borrower will not be required to
pay and discharge any such assessment, tax, charge, levy, lien, or
claim so long as (i) the legality of the same shall be contested in
good faith by appropriate judicial, administrative, or other legal
proceedings, and (ii) Borrower shall have established on its books
adequate reserves with respect to such contested assessment, tax,
charge, ▇▇▇▇, ▇▇▇▇ or claim in accordance with generally accepted
accounting principles, consistently applied.
(m) Each of Borrower and Parent shall immediately notify
Lender if any Collateral suffers damage or destruction and shall
promptly make arrangements satisfactory to Lender for the restoration
or replacement of same.
(n) Each of Borrower and Parent shall, at the request of
Lender, (i) promptly correct any defect, error, or omission in any Loan
Document, (ii) execute, acknowledge, deliver, or record such further
instruments and do such further acts deemed necessary, desirable, or
proper by Lender to carry out the purposes of the Loan Documents or to
protect the liens or security interests under the Loan Documents
against the rights or interests of third persons, and (iii) do such
further acts deemed necessary, desirable, or proper by Lender to comply
with the requirements of any agency having jurisdiction over Lender.
(o) Parent agrees to reimburse Lender for all reasonable costs
and expenses of Lender, including reasonable attorney's fees, incurred
in connection with the making of the Loan, the preparation, execution,
delivery, and performance of this Agreement and the other agreements
referred to herein and any subsequent amendments thereto or waivers
thereof, and the charges for recording fees and legal fees in
connection with the Loan transaction, whether or not the Loan
transaction contemplated hereunder or under any other Loan Documents is
closed; and further Parent's obligations hereunder shall survive the
delivery of the Loan
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Documents, the closing of the Loan transaction contemplated hereunder,
and the release or termination of the Loan Documents, or any other
event whatsoever.
(p) As soon as possible following the filing of Parent's
Annual Report on Form 10-K and, in any event, within 90 days following
closing of the Loan transaction contemplated hereunder, Parent shall
use its best efforts to cause to be filed with the SEC a Registration
Statement on Form S-3 relating to the shares of Common Stock to be
issued to Lender pursuant to Section 2 and in the event that such
Registration Statement is not effective on such date, Parent shall
continue to use its best efforts to cause it to become effective until
it becomes effective. Parent shall use its best efforts to obtain any
related qualifications, registrations, or other compliances that may be
necessary under any applicable state securities laws in each
jurisdiction requested by Lender. Parent shall pay all expenses
incurred in connection with such registration.
(q) Parent shall cause EAS and ERM of South Florida to become
and at all times be maintained as wholly-owned subsidiaries of
EarthCare Resource Management of Florida, Inc., a wholly-owned
subsidiary of Parent.
(r) Promptly upon request of Lender Parent or Borrower shall
provide Lender with the following:
(i) such financial statements, tax returns and financial
projections as Lender may require on Parent, each Borrower,
PCI, and LandComp;
(ii) a copy of all certificates, licenses, and permits from
the applicable governmental authority required to evidence
full compliance by each Borrower, PCI, and LandComp with all
laws, including all Applicable Environmental Laws (as
hereinafter defined), applicable to the operation of the
business of Borrower, PCI, and LandComp; and
(iii) policies or certificates (if acceptable to Lender) of
insurance maintained by Borrower in such amounts and covering
such risks as Lender may require, including without
limitation, comprehensive liability insurance, fire and
extended coverage casualty insurance and worker's compensation
insurance.
6. Negative Covenants. Until payment in full of the Note and all other
obligations and liabilities of Borrower hereunder, and the performance of all
covenants and agreements of Borrower hereunder, Borrower and Parent covenant
that (unless Lender shall otherwise consent in writing):
(a) Borrower shall not
(i) endorse, guarantee, or otherwise become liable for the
obligations of any person, firm or corporation except for endorsements
of negotiable instruments by Borrower in the ordinary course of
business;
(ii) mortgage, assign, encumber, incur, assume or grant a
security interest in or lien upon any of the assets of Borrower, except
(i) to Lender, and (ii) on newly
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acquired assets financed by nonaffiliated third party lenders that
provide purchase money financing for such assets;
(iii) liquidate, dissolve or reorganize; or merge or
consolidate with, or acquire all or substantially all of the assets of,
any other company, firm or association; or make or permit any other
substantial change in Borrower's capitalization; or make any other
substantial change in its business;
(iv) sell any of its assets, except in the ordinary course of
business; or sell any of its assets to any other person, firm or
corporation with the agreement that such assets shall be leased back to
Borrower, unless replaced with assets of equal value;
(v) own, purchase, or acquire, directly or indirectly, any
promissory notes, stock or securities of any other person, firm or
corporation, other than securities guaranteed as to the principal and
interest by the United States government; or make any loans or
advances;
(vi) permit any change in the management of Borrower or
executive officer level;
(vii) make any material change in the nature of Borrower's
business as carried on as of the date of this Agreement;
(viii) transfer, assign or encumber Borrower's rights or
obligations under any Loan Documents or the proceeds of the Loan
without the prior written consent of Lender; or
(viv) advance or loan any funds to Parent.
(b) Parent shall not mortgage, assign, encumber, incur, assume or grant
a security interest in or lien upon the proceeds of the sale of the stock or
assets of (i) the Parent's subsidiaries comprising its EarthAmerica division
(the "EARTHAMERICA DIVISION"), including Magnum Environmental, Inc., a Florida
corporation, International Petroleum Corporation of Louisiana, a Louisiana
corporation, International Petroleum Corporation of Maryland, a Maryland
corporation, International Petroleum Corporation of Georgia, a Georgia
corporation, International Petroleum Corporation of Delaware, a Delaware
corporation, International Petroleum Corporation of Pennsylvania, a Pennsylvania
corporation, International Petroleum Corporation of Lafayette, a Louisiana
corporation, and International Environmental Services, Inc., a Florida
corporation, or (ii) the Parent's subsidiaries comprising its EarthLiquid
division (the "EARTHLIQUID DIVISION"), including EarthCare Company of Texas, a
Texas corporation, Sub-Surface Liquid Injection, a Texas corporation, EarthCare
Company of Pennsylvania, a Texas corporation, All County Resource Management, a
New Jersey corporation, All County Resource of New York, a New York corporation,
Reifsneider Environmental Services, inc., a Pennsylvania corporation, Brehms
Cesspool Services, Inc., a Pennsylvania corporation, EarthCare Company of New
York, a Texas corporation, Bone Dry Enterprises, Inc., a Georgia corporation, EC
Acquisitions, Inc., a Georgia corporation, ▇▇▇▇▇▇ Environmental Services, Inc.,
a Georgia corporation, ▇▇▇▇
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▇▇▇▇▇▇ Plumbing, Heating & Cooling, Inc., a Georgia corporation, and EarthCare
Environmental Services, inc., a Texas corporation, except (i) to Lender, and
(ii) the financial institutions party (the "BANKS") to Bank Credit Agreement. In
addition, Parent shall apply to repayment of the Note that portion of the
proceeds received by Parent upon the sale of all or a portion of its
EarthAmerica division or its EarthLiquid division in excess of amounts paid to
the Banks under the Bank Credit Agreement.
(c) Parent shall not borrow any amounts under the Bank Credit Agreement
in excess of the outstanding Loans and Letters of Credit (as such terms are
defined in the Bank Credit Agreement as in effect on the date hereof) on the
date hereof and upon repayment of any such Loans or termination of such Letters
of Credit with any proceeds from the sale of the EarthAmerica division or the
EarthLiquid division, Parent shall not request the Banks to extend any new Loans
or Letters of Credit as to the amount so repaid. It being understood that so
long as the Note is outstanding, Parent shall be entitled to borrow, repay, and
reborrow amounts under the Bank Credit Agreement only as to funds generated from
the operations of Parent's business and not from the sale of any assets of
Parent.
7. Default. An "Event of Default" shall exist if any one or more of the
following events (herein collectively called "EVENTS OF DEFAULT") shall occur:
(a) Borrower shall fail to pay when due any principal of, or
interest on, the Note or any other fee or payment due hereunder or
under any of the Loan Documents;
(b) any representation or warranty made in any of the Loan
Documents shall prove to be untrue or inaccurate in any material
respect as of the date on which such representation or warranty is
made;
(c) default shall occur in the performance of any of the
covenants or agreements of Borrower or Parent contained herein in any
of the other Loan Documents and such default (other than a monetary
default) shall continue for a period of 30 days after Lender sends
Borrower notice thereof;
(d) Borrower or any Parent shall (i) apply for or consent to
the appointment of a receiver, custodian, trustee, intervenor or
liquidator of it or of all or a substantial part of its assets, (ii)
voluntarily become the subject of a bankruptcy, reorganization or
insolvency proceeding or be insolvent or admit in writing that it is
unable to pay its debts as they become due, (iii) make a general
assignment for the benefit of creditors, (iv) file a petition or answer
seeking reorganization or an arrangement with creditors or to take
advantage of any bankruptcy or insolvency laws, (v) file an answer
admitting the material allegations of, or consent to, or default in
answering, a petition filed against it in any bankruptcy,
reorganization or insolvency proceeding, (vi) become the subject of an
order for relief under any bankruptcy, reorganization or insolvency
proceeding, or (vii) fail to pay any money judgment against it before
the expiration of 30 days after such judgment becomes final and no
longer subject to appeal;
(e) an order, judgment or decree shall be entered by any court
of competent jurisdiction or other competent authority approving a
petition appointing a receiver,
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custodian, trustee, intervenor or liquidator of Borrower or Parent or
of all or substantially all of its assets, and such order, judgment or
decree shall continue unstayed and in effect for a period of 30 days;
or a complaint or petition shall be filed against Borrower or Parent
seeking or instituting a bankruptcy, insolvency, reorganization,
rehabilitation or receivership proceeding of Borrower or Parent, and
such petition or complaint shall not have been dismissed within 30
days; or
(f) Borrower or Parent shall default in the payment of any
indebtedness or in the performance of any of its obligations and such
default shall continue for more than any applicable period of grace.
8. Remedies Upon Event of Default. If an Event of Default shall have
occurred and be continuing, then Lender, at its option, may (a) declare the
principal of, and all interest then accrued on, the Note and any other
liabilities of Borrower to Lender to be forthwith due and payable, whereupon the
same shall forthwith become due and payable without notice, presentment, demand,
protest, notice of intention to accelerate, or other notice of any kind, all of
which Borrower hereby expressly waives, anything contained herein or in the Note
to the contrary notwithstanding, (b) reduce any claim to judgment, and/or (c)
without notice of default or demand, pursue and enforce any of Lender's rights
and remedies under the Loan Documents or otherwise provided under or pursuant to
any applicable law or agreement.
9. Collateral. As collateral and security for the indebtedness
evidenced by the Note and all other indebtedness or obligations from time to
time owing by Borrower to Lender and for the performance of the obligations
described herein Borrower shall grant, and hereby grants, to Lender, its
successors and assigns, a first and prior lien on and perfected security
interest in and to the following described property, together with any and all
products and proceeds thereof (the "COLLATERAL"): (i) the PCI Assets, (ii) the
outstanding capital stock of ERM of South Florida and EAS, (iii) the promissory
note issued by LandComp payable to the order of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ in the
original principal amount of $500,000 (the "LANDCOMP NOTE"), (iv) all rights of
Parent and Borrower under any agreements, documents, or instruments entered into
in connection with the acquisition of either PCI or LandComp (the "ACQUISITION
DOCUMENTS"), and (v) all business assets of ERM of South Florida and EAS and/or
LandComp, together with all proceeds thereof. Repayment of the Note shall be
guaranteed by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇.
10. Miscellaneous.
(a) No Waiver. No failure to exercise, and no delay on the
part of Lender in exercising any right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the
exercise of any other right. The rights of Lender hereunder and under
the other Loan Documents shall be in addition to all other rights
provided by law. No notice or demand given in any case shall constitute
a waiver of the right to take other action in the same, similar or
other instances without such notice or demand.
(b) Notices. All notices or other communications required or
permitted under any of the Loan Documents must be given in writing and
must be personally delivered, sent by facsimile transmission or mailed
by prepaid certified or registered mail, return receipt
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12
requested, to the party to whom such notice or communication is
directed at the address of such party as follows:
(i) Borrower: EarthCare Resource Management of South Florida, Inc.
or I.W.S. Portables, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
(ii) Parent: EarthCare Company, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
(iii) Lender: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
Any such notice or other communication shall be deemed to have been
given (whether actually received or not) on the day it is personally
delivered or telecopied as aforesaid, or, if mailed, on the third day
after it is mailed as aforesaid. Any party may change its address for
purposes of this Agreement by giving notice of such change to all other
parties pursuant to this Paragraph.
(c) Governing Law. This Agreement and the other Loan Documents
are being executed and delivered, and are intended to be performed, in
the State of Texas, and the substantive laws of Texas shall govern the
validity, construction, enforcement and interpretation of this
Agreement and all other Loan Documents, except to the extent: (i)
otherwise specified therein; (ii) the federal or state laws governing
banks expressly supersede and have contrary application; or (iii)
federal laws governing maximum interest rates shall provide for rates
of interest higher than those permitted under the laws of the State of
Texas.
(d) Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under present or future
laws effective during the term of this Agreement, such provision shall
be fully severable and this Agreement shall be construed and enforced
as if such illegal, invalid or unenforceable provision had never
comprised a part of this Agreement, and the remaining provisions of
this Agreement shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its
severance from this Agreement.
(e) Entirety and Amendments. The Loan Documents embody the
entire agreement between the parties and supersede all prior agreements
and understandings, if any, relating to the subject matter hereof and
thereof, and this Agreement and the other Loan
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13
Documents may be amended only by an instrument in writing executed by
the party, or an authorized officer of the party, against whom such
amendment is sought to be enforced.
(f) Headings. Paragraph and section headings are for
convenience of reference only and shall in no way affect the
interpretation of this Agreement.
(g) Construction and Conflicts. The provisions of this
Agreement shall be in addition to those of the Note, the Loan Documents
and any guaranty, pledge or security agreement, note or other evidence
of liability held by Lender, all of which shall be construed as
complementary to each other. Nothing herein contained shall prevent
Lender from enforcing the Note, the Loan Documents and any and all
other notes, guaranty, pledge or security agreements in accordance with
their respective terms. To the extent of any conflict or contradiction
between the terms of this Agreement and the terms of the Note, the Loan
Documents or any other document executed in connection herewith, the
terms of this Agreement shall control.
(h) Indemnification; Hazardous Substances. Borrower and Parent
shall protect, indemnify and hold Lender, its agents, and any immediate
successors to Lender's interest in the Collateral and any other person
who acquires any portion of the Collateral at a foreclosure sale or
otherwise through the exercise of Lender's rights and remedies under
the Loan Documents, and all employees and agents of all of the
aforementioned indemnified parties, harmless from and against any and
all actual or potential claims, proceedings, lawsuits, liabilities,
damages, losses, fines, penalties, judgments, awards, costs and
expenses (including, without limitation, attorneys' fees and costs and
expenses of investigation) which arise out of or relate in any way to
any use, handling, production, transportation, disposal or storage of
any hazardous substance or solid waste whether by Borrower or any other
person during the ownership of the Collateral by Borrower including,
without limitation, (i) all foreseeable and all unforeseeable
consequential damages directly or indirectly arising out of (A) the
use, generation, storage, discharge or disposal of the Collateral by
Borrower or (B) any residual contamination affecting the environment,
and (ii) the cost of any required or necessary repair, cleanup, or
detoxification of the Collateral and the preparation of any closure or
other required remedial plans. In addition, Borrower agrees that in the
event the Collateral is assigned an identification number by the
Environmental Protection Agency, the Collateral shall be solely in the
name of Borrower or other responsible person and, as between Borrower
and Lender, Borrower shall assume any and all liability for such
removed Collateral. All such costs, damages, and expenses referred to
herein shall hereinafter be referred to as "EXPENSES." Borrower
understands and agrees that its liability to the aforementioned
indemnified parties shall arise upon the earlier to occur of (i)
discovery of any violation of the Applicable Environmental Laws or (ii)
the institution of any Hazardous Materials Claim (as hereinafter
defined), and not upon the realization of loss or damage, and Borrower
agrees to pay to Lender from time to time, immediately upon Lender's
request, an amount equal to such Expenses, as reasonably determined by
Lender. In addition, Borrower agrees that any Expenses incurred by
Lender and not paid by Borrower shall be additional indebtedness of
Borrower and shall be secured by the Loan Documents and shall accrue
interest at the rate provided in the Note. The agreements contained
herein shall survive the repayment of the Note and the termination of
the Loan Documents. As used herein, "HAZARDOUS MATERIALS
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14
CLAIMS" shall mean any and all enforcement, clean-up, removal or other
governmental or regulatory actions or orders threatened, instituted or
completed pursuant to any Applicable Environmental Laws, together with
all claims made or threatened by any third party against Borrower or
the Collateral relating to damage, contribution, cost recovery
compensation, loss or injury resulting from any hazardous substance or
solid waste. Notwithstanding anything to the contrary contained in this
subparagraph or in the Loan Documents, it is hereby expressly agreed
and understood that Borrower's obligation to protect, indemnify and
hold Lender and the other aforementioned indemnified parties harmless
from and against any and all Hazardous Materials Claims and Expenses
pursuant to this subparagraph shall not apply to Hazardous Materials
Claims or Expenses arising out of or relating in any way to any use,
handling, production, transportation, disposal or storage of the
Collateral directly caused by Lender or any such other indemnified
party during the management, operation, possession or ownership of the
Collateral by Lender or any such other indemnified party, and not
resulting from a condition existing prior to the commencement of such
management, operation, possession or ownership of the Collateral by
Lender or any such other indemnified party.
(i) Financial Terms. As used in this Agreement, all financial
and accounting terms not otherwise defined herein shall be defined and
calculated in accordance with generally accepted accounting principles
consistently applied.
(j) Expenses of Lender. Borrower and Parent will, on demand,
reimburse Lender for all expenses except as otherwise provided herein,
including the reasonable fees and expenses of legal counsel for Lender,
incurred by Lender in connection with the preparation, administration,
amendment, modification or enforcement of this Agreement, the Note and
the Loan Documents and the collection or the attempted collection of
the Note.
10. Right to Assign. Lender may assign, negotiate, pledge, or otherwise
hypothecate this Agreement and the other Loan Documents or any of its rights and
security hereunder or thereunder, and may assign and delegate any or all of its
functions under same. In case of such assignment, Borrower shall accord full
recognition thereto and hereby agrees that all rights and remedies of Lender in
connection with the interest so assigned shall be enforceable against Borrower
by the assignee thereof. Borrower shall have no right to assign all or any
portion of its rights, interests, or obligations under this Agreement.
11. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto on separate counterparts and each
such counterpart shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same Agreement.
11. NO ORAL AGREEMENTS. THIS WRITTEN LOAN AGREEMENT AND THE LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
If Lender agrees to the foregoing, Lender should execute this Agreement
in the space indicated below.
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15
"BORROWER"
EARTHCARE RESOURCE MANAGEMENT OF
SOUTH FLORIDA, INC.
By:
-----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.,
Chief Financial Officer
EARTHCARE ACQUISITION SUB, INC.
By
-----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.,
Chief Financial Officer
"PARENT"
EARTHCARE COMPANY, INC.
By:
-----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.,
Chief Financial Officer
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ACCEPTED:
"LENDER"
-------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇, Individually and as Independent
Executor of the Estate of ▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ OPPORTUNITY FUND, L.P. and
▇▇▇▇▇▇▇ OPPORTUNITY FUND (INSTITUTIONAL), L.P.
By: SOF Management, LLC, General Partner
By
----------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇, Manager
-------------------------------------
▇▇▇ ▇▇▇▇
List of Loan Documents
1. Letter Loan Agreement
2. Promissory Note(s)
3. Security Agreement from ERM of South Florida
4. Security Agreement from EAS
5. UCC-1 Financing Statements from ERM of South Florida
6. UCC-1 Financing Statements from EAS
7. Security Agreement--Pledge from EarthCare Resource Management of Florida,
Inc.
8. Security Agreement from EarthCare Resource Management of Florida, Inc.
9. UCC-1 Financing Statements from EarthCare Resource Management of Florida,
Inc.
10. Collateral Assignment of LandComp Note from ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
11. Guaranty of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Schedule 1
Lenders
Name and Address Loan Commitment
---------------- ---------------
▇▇▇ ▇. ▇▇▇▇▇▇▇ $1,000,000
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ Opportunity Fund, L.P. 109,150
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ Opportunity Fund (Institutional), L.P. 390,850
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 450,000
c/o ▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇, Independent Executor 450,000
of the Estate of ▇▇▇▇ ▇. ▇▇▇▇▇
600 ▇▇▇▇▇▇, Suite 3100
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ 100,000
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
----------
Total $2,500,000
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