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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 6, 1998
----------------
COMPOST AMERICA HOLDING COMPANY, INC.
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(Exact name of registrant as specified in its charter)
New Jersey 0-27832 22-2603175
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
3000 Hadley Road South Plainfield, New Jersey 07080
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (908) 668-9335
former address - 320 Grand Avenue, Englewood, New Jersey 07631
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(Former name or former address, if changed since last report.)
PLEASE ADDRESS ALL CORRESPONDENCE TO: Mark Gasarch, Esq.
40 West 57th Street
33rd Floor
New York, New York 10019
<PAGE>
Item 5. Other Events
On November 6, 1998 the Company, its 80%-owned subsidiary Miami Recycling and
Composting Company, Inc. ("MRCC") and its wholly-owned subsidiary Bedminster
Seacor Services Corp. ("Bedminster") borrowed $10,500,000 ("Loan") from Lionhart
Investments, Ltd., its affiliates, and Global Earthfund Partners, LLC
(collectively, the "Lender") pursuant to a Credit, Capitalization and Financing
Agreement (Exhibit 99.1), which borrowing was secured by a Mortgage Note
(Exhibit 99.1), the Pledge of shares of the Company (Exhibit 99.3), MRCC
(Exhibit 99.4) and Bedminster (Exhibit 99.5), a Pledge and Security Agreement
(Exhibit 99.6) and a Guaranty (Exhibit 99.7). The Lenders were given certain
registration rights on shares of the Company (Exhibit 99.8), the right to
appoint a director to the Company's Board (Exhibit 99.9) and warrants to
purchase additional shares of the Company's common stock (Exhibit 99.10).
In summary (and as disclosed in the exhibits attached hereto), the Loan bears
interest at 10.5% per annum and matures at the earlier of October 1, 2000 or the
financial closing of revenue bonds financing the Company's Miami composting
facility. The Lender also converted into common shares $800,000 of the Company's
convertible debentures held by the Lender, and received warrants to purchase
1,500,000 of the Company's common shares through December 31, 2004 at exercise
prices of $1.00 per share (500,000 shares), and $1.25, $1.50, $1.75, $2.00 and
$2.25 per share (200,000 shares each). At the maturity of the Loan, the Lender
has the right to "put" 400,000 of the Company's common shares back to the
Company at $3.10 per share. One year after the maturity of the Loan, the Lender
has the right to "put" one-half of the Company's common shares then owned by the
Lender back to the Company at $3.20 per share.
Item 7. Financial Statements and Exhibits
(a) and (b) - none
(c) Exhibits
99.1 - Credit, Capitalization and Financing Agreement
99.2 - Mortgage Note
99.3 - Stock Pledge Agreement (Company)
99.4 - Stock Pledge Agreement (MRCC)
99.5 - Stock Pledge Agreement (Bedminster)
99.6 - Pledge and Security Agreement
99.7 - Guaranty Agreement
99.8 - Registration Rights Agreement
99.9 - Director Appointment Agreement
99.10 - Form of Warrant
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: November 19, 1998
COMPOST AMERICA HOLDING COMPANY, INC.
(Registrant)
By /s/ Roger E. Tuttle
-----------------------------------
Roger E. Tuttle, President
(Principal Executive Officer)
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CREDIT, CAPITALIZATION AND FINANCING AGREEMENT
October 30, 1998
THIS CREDIT, CAPITALIZATION AND FINANCING AGREEMENT ("Agreement") is
made, consummated and executed effectively this 30th day of October, 1998
("Effective Date"), by and among Compost America Holding Company, Inc.
("Compost"), Miami Recycling and Composting Company, Inc. ("Miami"), Bedminster
Seacor Services Miami Corporation ("Bedminster"), Lionhart Global Appreciation
Fund, Ltd. ("Lionhart"), Lionhart Investments, Ltd. ("LHI") and Global EarthFund
Partners, L.L.C. ("GEP").
Recitals:
1. Compost is a New Jersey corporation. The principal office of Compost
is located at 320 Grand Avenue, Englewood, New Jersey 07631.
2. Miami is a Delaware corporation. The principal office of Miami is
located at 320 Grand Avenue, Englewood, New Jersey 07631. Bedminster is a
Florida corporation. The principal office of Bedminster is located at 320 Grand
Avenue, Englewood, New Jersey 07631. Compost is the direct parent of Miami, owns
and controls 80.1% of all issued and outstanding capital stock of Miami, and
controls Miami. Miami is the direct parent of Bedminster, Bedminster is a direct
wholly-owned subsidiary of Miami, and Compost controls Bedminster (which is an
indirect controlled subsidiary of Compost).
3. Lionhart is a British Virgin Islands international business company.
The principal office of Lionhart, in the British Virgin Islands, is located at
c/o Citco B.V.I. Limited, Post Office Box 662, Road Town, Tortola, British
Virgin Islands.
4. LHI is a United Kingdom limited liability company. The principal
office of LHI, in the United Kingdom, is located at 19 Camp Road, Heston Court,
Wimbledon, London SW19 4 RH, England. As of the Effective Date of this
Agreement, LHI is engaged by Lionhart as its investment advisor.
5. GEP is an Indiana limited liability company. The principal office of
GEP in the United States is c/o John Thomas Drics, Esq., 111 Monument Circle,
Suite 312, Indianapolis, Indiana 46204. As of the Effective Date of this
Agreement, Lionhart is the direct parent of GEP, and GEP is a direct
wholly-owned subsidiary of Lionhart.
6. Pursuant to the terms and subject to the conditions that are set
forth in a "Regulation D Convertible Debenture Purchase Agreement," by and
between Compost and Lionhart, dated and executed on or about November 27, 1996,
a copy of which is set forth in Appendix I-Item 1 to this Agreement, and a
"First Amendment to Regulation D Convertible Debenture Agreement," by and
between Compost and Lionhart, dated and executed in or about February 1997, a
copy of which is set forth in Appendix I-Item 2 to this Agreement (both such
documents of which are sometimes referred to collectively in this Agreement as
the"Debenture Purchase Agreement"), Compost sold, delivered and issued to
Lionhart, and Lionhart purchased from Compost, ten (10) debentures, Series 1-10
("Debenture(s)"), a copy of such Debentures of which are set forth in Appendix
IItem 3 to this Agreement, in the face amount per Debenture of US $100,000, and
for the total purchase price of US $1,030,000.
7. Pursuant to the terms and subject to the conditions that are set
forth in a "Subscription Agreement," by and between Compost and Lionhart, dated
on or about June 16, 1997, a copy of which is set forth in Appendix I-Item 4 to
this Agreement ("Series B Preferred Shares Subscription Agreement"), Lionhart
purchased from Compost, for the total purchase price of US $1,000,000, and
Compost issued to LHI (and not to Lionhart), 400,000 shares of Series B
Preferred Stock of Compost ("Series B Preferred Stock"), and, pursuant to which,
Compost registered (on or about July 3, 1998), in the name of "Lionhart
Investments Limited," Certificate No. B-1 ("Certificate No. B-1"). The
designations, and relative rights and privileges of, and restrictions and other
attributes attributable to the Series B Preferred Stock, are set forth in 1) the
"Designation of Rights of Series B Preferred Stock," dated and delivered in or
about June 1997, a copy of which is set forth in Appendix I-Item 5 to this
Agreement, and 2) the "Amendment to Designation of Rights of Series B Preferred
Stock," dated and delivered on or about September 17, 1997, a copy of which is
set forth in Appendix I-Item 6 (both such documents of which are sometimes
referred to collectively in this Agreement as the"Designation of Rights of
Series B Preferred Stock").
8. On or about , or effective on and as of, September 17, 1997, and at
the written request of Compost, LHI executed
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and delivered to Compost, a document entitled "Consent to Series A and Series C
Preferred Stock" ("LHI Consent"), a copy of which is set forth in Appendix
I-Item 7.
9. On or about, or effective on and as of, June 11, 1997, LHI and
Select Acquisitions, Inc. ("SAI"), consummated and executed a written letter
agreement ("LHI-Select Agreement"), a copy of which is set forth in Appendix
I-Item 8. Pursuant to the LHI-Select Agreement, Select sold to LHI, and LHI
purchased from Select, 700,000 unregistered shares of Common Stock of Compost,
of which 1) Select transferred or caused Compost to transfer, reissue and
deliver to LHI, 665,000 restricted and unregistered shares of Common Stock of
Compost ("LHI-Select Agreement Shares"), and 2) Select transferred or caused
Compost to transfer, reissue and deliver to Kaplan Gottbetter & Levenson, LLP
("KGL"), 35,000 restricted and unregistered shares of Common Stock of Compost.
10. Pursuant to the terms and subject to the conditions that are set
forth in the Debenture Purchase Agreement (including, Section 2, Section 4.1,
Section 6.3, Section 6.7 and Section 14 thereof) and the Debentures (including
Section 3(a) thereof), 1) the Debentures are secured or are required to be
secured by the "Common Stock" and "Securities" (as those terms are defined under
the Debenture Purchase Agreement), 2) Compost has the duty and obligation to
deliver any and all such "Common Stock" and "Securities" to the Escrow Agent (as
contemplated under Section 14 of the Debenture Purchase Agreement), and 3) KGL
is the Escrow Agent. As of the Effective Date of this Agreement, KGL, as Escrow
Agent under the Debenture Purchase Agreement, is holding the following "Common
Stock" and "Securities" as security for the Debentures: 1) Certificate No.
CA0860, representing 404,858 shares of Common Stock of Compost, that are
registered in the name of VRH Construction Corporation, including therewith (i)
a stock power for such Certificate No. CA0860, that is executed by VRH
Construction Corporation with a signature that is medallion guaranteed, and (ii)
a corporate resolution authorizing the execution and delivery of such stock
power (of which, copies of such Certificate No. CA0860, and the accompanying
stock power and resolution, are set forth in Appendix I-Item 9); and 2)
Certificate No. CA1370, representing 600,000 registered (freely tradable) shares
of Common Stock of Compost, and registered in the name of Lionhart (of which, a
copy of such Certificate No. CA1370 is set forth in Appendix I-Item 10).
11. On or about June 16, 1997, Adam S. Gottbetter, Esq. (for and on
behalf of KGL) and Compost, entered into a written letter agreement, dated June
16, 1997 ("KGL-Compost Agreement"), a copy of which is set forth in Appendix
I-11, that purports to amend the duties and responsibilities of KGL, as Escrow
Agent, under the Debenture Purchase Agreement and the Debentures.
12. Pursuant to the terms and subject to the conditions set forth in
the Debenture Purchase Agreement and the Debentures, 1) on or about May 20, 1997
("First Debenture Conversion"), Lionhart delivered to Compost a "Notice of
Conversion," dated May 20, 1997, a copy of which is set forth in Appendix I-Item
12, and, pursuant thereto, Lionhart properly converted US $200,000 of the
Debentures, and Compost thereafter issued and delivered to Lionhart, in exchange
for the surrender, delivery and tender by Lionhart to Compost of two (2)
Debentures (i.e., Series 9-10 of 10), Certificate No. CA1103, representing
178,253 registered (freely tradable) shares of Common Stock of Compost, and
registered in the name of Lionhart ( a copy of such Certificate No. CA1103 set
forth in Appendix I-Item 13). On or about September 8, 1997 ("Second Debenture
Conversion"), Lionhart delivered to Compost a "Notice of Conversion," dated
September 8, 1997, a copy of which is set forth in Appendix I-Item 14, and,
pursuant thereto, Lionhart properly converted or otherwise elected to convert US
$200,000 of the Debentures; and, based on the Second Debenture Conversion,
Compost, on or about March 13, 1998, issued and delivered to KGL, in exchange
for the surrender, delivery and tender by Lionhart to Compost of two (2)
Debentures (i.e., Series 7-8 of 10), Certificate No. CA1369, representing
159,670 registered (freely tradable) shares of Common Stock of Compost, and
registered in the name of Lionhart ( a copy of such Certificate No. 1369 is set
forth in Appendix I-Item 15).
13. Compost, Lionhart and LHI have been engaged or are engaged in
various disputes, disagreements, uncertainties and/or ambiguities ("Disputes")
that relate to or arise from the Debenture Purchase Agreement, the Debentures,
the Series B Preferred Shares Subscription Agreement, the Designation of Rights
of Series B Preferred Stock, the LHI Consent, the LHI-Select Agreement, the
terms of KGL's escrow arrangement and its performance as the Escrow Agent, the
KGL-Compost Agreement, the First Debenture Conversion and/or the Second
Debenture Conversion.
14. On or about March 29, 1996, Miami executed and delivered a
Promissory Note ("Miami-Rinker Note"), to Rinker Materials Corporation
("Rinker"), in the original principal amount of US $3,730,870.75, a copy of
which is set forth in Appendix I-Item 16. On or about March 29, 1996, and to
secure payment of the Miami-Rinker Note, Miami delivered to Rinker a "Mortgage
Deed" ("Rinker Mortgage"), dated March 29, 1996, which is recorded in the
Official Records Book 17182, at Page
Page 2 of 107 Pages
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0528 of the Public Records of Dade County, Florida, and re-recorded in
Official Records Book 17815, Page 2603, on October 6, 1997, of the Public
Records of Miami-Dade County, Florida, a copy of which is set forth in Appendix
I, Item 17. On or about April 24, 1998, Miami and Rinker executed a"Mortgage
Modification and Extension Agreement" ("Mortgage Modification Agreement"), a
copy of which is set forth in Appendix I, Item 18. Miami defaulted under, and is
default under, the Miami-Rinker Note and the Rinker Mortgage, and, on or about
July 20, 1998, Rinker commenced a lawsuit, including a foreclosure action, for
and with respect to the Miami-Rinker Note, the Rinker Mortgage and the Mortgage
Modification Agreement, against Miami, in the Circuit Court of the Eleventh
Judicial Circuit of Florida, in and for Miami-Dade County ("Court"), Case No.
98-16437-CA-01 (Sec. 20), that is pending as of the Effective Date of this
Agreement, and a copy of the operative Complaint of which is set forth in
Appendix I-Item 19.
15. On or about August 4, 1998, Compost and Lionhart each agreed to,
and executed, a Proposal and Term Sheet ("Term Sheet"), a copy of which is set
forth in Appendix I-Item 20. Pursuant to the Term Sheet, this Agreement and the
"Definitive Supplemental Documents" (as that term is defined under Section
1.1.42 of this Agreement), 1) Compost, Lionhart and LHI intend to resolve and
settle any and all current Disputes, and, 2) Compost, Lionhart, Miami, LHI and
GEP intend to capitalize Compost and Miami, vis-a-vis GEP, in the principal
amount of US $10,500,000, pursuant to the terms and subject to the conditions,
and for the purposes, that are set forth in this Agreement and the Definitive
Supplemental Documents.
Agreement:
ARTICLE I
DEFINITIONS, ACRONYMS AND MEANINGS
Section 1.1. Definitions. The following terms, which are not exclusive
of other terms that are defined in this Agreement, the Definitive Supplemental
Documents and/or the Credit Documents but which are not otherwise set forth in
this Section 1.1., shall have the following definitions and meanings in this
Agreement, the Definitive Supplemental Documents and Credit Documents:
1.1.01. Action. "Action" shall mean any claim, action, suit,
arbitration, inquiry, preceding or investigation by or before any
Governmental Authority.
1.1.02. Affiliate. "Affiliate" shall mean, in reference to a
Person, a person that directly or indirectly, through one or more
intermediaries, controls, is controlled by or is under, control with,
the first mentioned person.
1.1.03. Agreement. "Agreement" shall mean this "Credit,
Capitalization and Financing Agreement," dated on or about, and
effective as of, October 30, 1998, by and among Compost, Miami,
Bedminster, Lionhart, LHI and GEP.
1.1.04. Ancillary Transactions Closing. "Ancillary
Transactions Closing" shall mean the closing, execution and delivery
of, and the consummation of the transactions contemplated under, the
Definitive Supplemental Documents, as contemplated under Section
13.01.03 of this Agreement.
1.1.05.01. AW Compost Partners Stock Purchase Agreement. "AW
Compost Partners Stock Purchase Agreement" shall mean that certain
Stock Purchase Agreement, dated April 27, 1998, by and between AW
Compost Partners, L.L.C., a Delaware limited liability company, and
Compost.
1.1.05.02. Bankruptcy Proceeding. "Bankruptcy Proceeding"
shall have the definition and description as is otherwise set forth in
Section 15.01.10. of this agreement.
1.1.06. Bedminster. "Bedminster" shall mean Bedminster Seacor
Services Miami Corporation, a Florida corporation, which is a direct
wholly-owned subsidiary of Miami and is an indirect controlled
subsidiary of Compost, the principal office of which is located at 320
Grand Avenue, Englewood, New Jersey 07631.
1.1.07. Bedminster Common Stock. "Bedminster Common Stock," or
"Common Stock of Bedminster," or other similar references, shall mean
the common stock of Bedminster.
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1.1.08. Bedminster Current Permits. "Bedminster Current
Permits" shall have the definition and description as is otherwise
ascribed to such term in Section 11.26.01(b) of this Agreement.
1.1.09. Bedminster Resolutions. "Bedminster Resolutions" shall
mean the resolutions of the Bedminster Board, as is set forth in
Exhibit QQQ of this Agreement.
1.1.10. Bedminster Balance Sheet. "Bedminster Balance Sheet"
shall have the definition, meaning and description as is otherwise
ascribed to such term in Section 11.26.07 of this Agreement.
1.1.11. "Bring-Down" Certificate of Bedminster. "'Bring-Down'
Certificate of Bedminster" shall mean the certificate of the President
and Chief Executive Officer of Bedminster, in the form and substance as
is set forth in Exhibit SSS of this Agreement, as contemplated under
Section 15.01.01 of this Agreement.
1.1.12. "Bring-Down" Certificate of Compost. "'Bring-Down'
Certificate of Compost" shall mean the certificate of the President and
Chief Executive Officer of Compost, in the form and substance as is set
forth in Exhibit JJJ of this Agreement, as contemplated under Section
15.01.01 of this Agreement.
1.1.13. "Bring-Down" Certificate of Miami. "'Bring-Down'
Certificate of Miami" shall mean the certificate of the President and
Chief Executive Officer of Miami, in the form and substance as is set
forth in Exhibit KKK of this Agreement, as contemplated under Section
15.01.01 of this Agreement.
1.1.14. Business. "Business" shall mean the construction,
management and or operation of enclosed organic material recycling
compost manufacturing plant(s).
1.1.15. Business Day. "Business Day" shall mean any day other
than a Saturday, Sunday or federal holiday in the United States of
America, and consist of the time period from 12:01 a.m. through 12
o'clock midnight, Eastern Standard Time.
1.1.16. CERCLA. "CERCLA" shall mean the definition of that
term as specified in the definition as "Environmental Laws."
1.1.17 . CERCLIS. "CERCLIS" shall mean the comprehensive
environmental responsive, compensation and liability information
system, 42 USC ss. 9619(a).
1.1.18. Certificate of Bedminster Resolutions. "Certificate of
Bedminster Resolutions" shall mean the Certificate, of the Secretary of
Bedminster, as is set forth in Exhibit RRR of this Agreement.
1.1.19. Certificate of Compost Resolutions. "Certificate of
Compost Resolutions" shall mean the Certificate, of the Secretary of
Compost, as is set forth in Exhibit O of this Agreement.
1.1.20. Certificate of Miami Resolutions. "Certificate of
Miami Resolutions" shall mean the Certificate, of the Secretary of
Miami, as is set forth in Exhibit Q of this Agreement.
1.1.21. Closing Date. "Closing Date" is and shall mean October
30, 1998, commencing at or about 9:00 a.m., E.S.T., as contemplated
under Section 13.01.01 of this Agreement.
1.1.22. Closing Location. "Closing Location" is and shall mean
the offices of Greenberg Traurig, at 2005 Market Street, Suite 2050,
Philadelphia, Pennsylvania 19103, as contemplated under Section
13.01.01 of this Agreement.
1.1.23. Code. "Code" shall mean the Internal Revenue Code of
1986, as amended, including all rules and regulations promulgated
thereunder.
1.1.24. Collective Bargaining Agreements. "Collective
Bargaining Agreements" is and shall have the meaning as is specified in
the definition of that term in Section 11.24 of this Agreement.
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1.1.25. Compost. "Compost" shall mean Compost America Holding
Company, Inc., a New Jersey corporation, a principal office of which is
located at 320 Grand Avenue, Englewood, New Jersey 07631.
1.1.26. Compost Board. "Compost Board," or other similar
references in this Agreement, shall mean the Board of Directors of
Compost.
1.1.27. Compost Common Stock. "Compost Common Stock," or
"Common Stock of Compost," or other similar references, shall mean the
common stock of Compost.
1.1.28. Compost Disclosures. "Compost Disclosures" shall mean
all documents and disclosures that are enumerated under Section
11.26.01(m)(1)-(18) of this Agreement.
1.1.29. Compost-Lionhart Warrant (#1-#6). "Compost-Lionhart
Warrant # 1" shall mean the warrant, in the form and substance as is
set forth in Exhibit WW.1, which is and shall be issued by Compost to
Lionhart at the Ancillary Transactions Closing, as otherwise provided
under Article VIII of this Agreement. "Compost-Lionhart Warrant # 2"
shall mean the warrant, in the form and substance as is set forth in
Exhibit WW.2, which is and shall be issued by Compost to Lionhart at
the Ancillary Transactions Closing, as otherwise provided under Article
VIII of this Agreement. "Compost-Lionhart Warrant # 3" shall mean the
warrant, in the form and substance as is set forth in Exhibit WW.3,
which is and shall be issued by Compost to Lionhart at the Ancillary
Transactions Closing, as otherwise provided under Article VIII of this
Agreement. "Compost-Lionhart Warrant # 4" shall mean the warrant, in
the form and substance as is set forth in Exhibit WW.4, which is and
shall be issued by Compost to Lionhart at the Ancillary Transactions
Closing, as otherwise provided under Article VIII of this Agreement.
"Compost-Lionhart Warrant # 5" shall mean the warrant, in the form and
substance as is set forth in Exhibit WW.5, which is and shall be issued
by Compost to Lionhart at the Ancillary Transactions Closing, as
otherwise provided under Article VIII of this Agreement.
"Compost-Lionhart Warrant # 6" shall mean the warrant, in the form and
substance as is set forth in Exhibit WW.6, which is and shall be issued
by Compost to Lionhart at the Ancillary Transactions Closing, as
otherwise provided under Article VIII of this Agreement.
1.1.30. Compost-Miami Guaranty. "Compost-Miami Guaranty" shall
mean the continuing and unconditional guaranty, in substantially the
form as is set forth in Exhibit UUU of this Agreement (and which is
required to be executed and delivered by Compost and Miami to Lionhart,
LHI and GEP under this Agreement, the Credit Documents and/or
Definitive Supplemental Documents, and which is and shall be secured by
and under the terms of and collateral specified in, and pursuant to the
terms and subject to the conditions set forth in, the Mortgage, the
Security Agreement, the Compost Stock Pledge Agreement (Compost Common
Stock), the Compost Stock Pledge Agreement (Miami Common Stock) and the
Compost Stock Pledge Agreement (Bedminster Common Stock)), 1) by
Compost, for the benefit of Lionhart, LHI and GEP, of the duties,
obligations and undertakings of Miami and Bedminster under this
Agreement, the Credit Documents and the Definitive Supplemental
Documents, and 2) by Miami, for the benefit of Lionhart, LHI and GEP,
of the duties, obligations and undertakings of Compost and Bedminster
under this Agreement, the Credit Documents and the Definitive
Supplemental Documents.
1.1.31. Compost Resolutions. "Compost Resolutions" shall mean
the resolutions of the Compost Board, as is set forth in Exhibit N of
this Agreement.
1.1.32. Compost Stock Pledge Agreement (Bedminster Common
Stock). "Compost Stock Pledge Agreement (Bedminster Common Stock)"
shall mean the agreement, denominated as the "Compost Stock Pledge
Agreement (Bedminster Common Stock)," a copy of which is set forth in
Exhibit MMM of this Agreement, that is required to be executed and
delivered by Miami to Lionhart, LHI and GEP, on and at the Term Loan
Closing, and pursuant to which Miami shall deliver to Lionhart, LHI and
GEP, the Pledged Bedminster Shares (including, and accompanied by, all
applicable stock certificates and appropriate stock powers duly
endorsed), in the form and substance as is set forth in Exhibit NNN of
this Agreement, and which thereupon and thereafter, Lionhart, LHI and
GEP shall have a first, senior and unsubordinated lien, pledge and
encumbrance on and against the Pledged Bedminster Shares, for purposes
of securing the timely and complete performance and discharge by
Compost, Miami and Bedminster, for the benefit of Lionhart, LHI and
GEP, of the duties, obligations and undertakings of Compost, Miami
and/or Bedminster under 1) the Mortgage Note, 2) the other Credit
Documents and 3) this Agreement and the Definitive Supplemental
Documents.
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1.1.33. Compost Stock Pledge Agreement (Compost Common Stock).
"Compost Stock Pledge Agreement (Compost Common Stock)" shall mean the
agreement, denominated as the "Compost Stock Pledge Agreement (Compost
Common Stock)," a copy of which is set forth in Exhibit G of this
Agreement, that is required to be executed and delivered by Compost to
Lionhart, LHI and GEP, on and at the Term Loan Closing, and pursuant to
which Compost shall deliver to Lionhart, LHI and GEP, the Pledged
Compost Shares (including, and accompanied by, all applicable stock
certificates and appropriate stock powers duly endorsed), in the form
and substance as is set forth in Exhibit I of this Agreement, and which
thereupon and thereafter, Lionhart, LHI and GEP shall have a first,
senior and unsubordinated lien, pledge and encumbrance on and against
the Pledged Compost Shares, for purposes of securing the timely and
complete performance and discharge by Compost, Miami and Bedminster,
for the benefit of Lionhart, LHI and GEP, of the duties, obligations
and undertakings of Compost, Miami and/or Bedminster under 1) the
Mortgage Note, 2) the other Credit Documents and 3) this Agreement and
the Definitive Supplemental Documents.
1.1.34. Compost Stock Pledge Agreement (Miami Common Stock).
"Compost Stock Pledge Agreement (Miami Common Stock)" shall mean the
agreement, denominated as the "Compost Stock Pledge Agreement (Miami
Common Stock)," a copy of which is set forth in Exhibit H of this
Agreement, that is required to be executed and delivered by Compost and
Tomas Andres Mestre ("Mestre") to Lionhart, LHI and GEP, on and at the
Term Loan Closing, and pursuant to which Compost and Mestre shall
deliver to Lionhart, LHI and GEP, the Pledged Miami Shares (including,
and accompanied by, all applicable stock certificates and appropriate
stock powers duly endorsed), in the form and substance as is set forth
in Exhibit J of this Agreement, and which thereupon and thereafter,
Lionhart, LHI and GEP shall have a first, senior and unsubordinated
lien, pledge and encumbrance on and against the Pledged Miami Shares,
for purposes of securing the timely and complete performance and
discharge by Compost, Miami and Bedminster, for the benefit of
Lionhart, LHI and GEP, of the duties, obligations and undertakings of
Compost, Miami and/or Bedminster under 1) the Mortgage Note, 2) the
other Credit Documents and 3) this Agreement and the Definitive
Supplemental Documents.
1.1.35. Control. "Control," including the terms "controlled
by" and "under, control with", shall mean the possession, directly or
indirectly, or as trustee or executor, of the power to direct or cause
the direction of the management and or policies of a Person, whether
through the ownership of stock, as trustee or executor, by contract or
credit arrangement or otherwise.
1.1.36. Conversion Common Shares. "Conversion Common Shares"
shall have the definition or description as is otherwise ascribed to
such term in Section 9.2.1 of this Agreement.
1.1.37. Conversion Shares. "Conversion Shares" shall have the
definition or description as is otherwise ascribed to such term in
Section 4.3.2 of this Agreement.
1.1.38. Credit. "Credit" shall mean US $10,500,000, as is
defined under Section 2.1 of this Agreement, and which, pursuant to the
terms and subject to the conditions set forth in this Agreement, the
Definitive Supplemental Documents and the Credit Documents, shall be
delivered to or applied for the benefit of Compost and Miami by GEP.
1.1.39. Credit Documents. "Credit Document(s)" shall mean this
Agreement and all Definitive Supplemental Documents that relate to or
arise from or which are executed and/or delivered in connection with
(and as an inducement to Lionhart, LHI and GEP to execute and deliver,
and as an inducement to GEP, in whole or in part, to extend and deliver
the Credit to Compost, Miami and Bedminster under), this Agreement, the
Credit and the Supplemental Definitive Documents, including, without
limitation, 1) the Mortgage Note, 2) the Mortgage, 3) the Security
Agreement, 4) the Compost Stock Pledge Agreement (Compost Common
Stock), 5) the Compost Stock Pledge Agreement (Miami Common Stock), 6)
the Compost-Miami Stock Pledge Agreement (Bedminster Common Stock), 7)
the Pledged Compost Certificate, 8) the Pledged Miami Certificate, 9)
the Pledged Bedminster Certificate, 10) the UCC-1 Financing Statement,
11) the Compost-Miami Guaranty, 12) the Legal Opinion of Compost's
Counsel, 13) Legal Opinion of Miami's Counsel, 14) the Legal Opinion of
Bedminster's Counsel, 15) the Compost Resolutions and the Compost
Certificate of Resolutions, 16) the Miami Resolutions and the Miami
Certificate of Resolutions, 17) the Bedminster Resolutions and the
Bedminster Certificate of Resolutions, 18) the Term Loan Closing
Statement, 19) the Mortgagee's Title Insurance Commitment, 20) the
Compost/Miami Mortgagor Affidavit, 21) the Compost/Miami Owner's
Affidavit, 22) the Mortgagor's Certificate and Indemnification
Regarding Hazardous Substances, 23) the
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Release and Satisfaction of Rinker Mortgage, 24) the Miami-Rinker Note,
25) the Stipulated Motion to Dismiss Complaint with Prejudice, 26) the
Order of Dismissal with Prejudice, 27) the Global Closing Statement,
28) the Incumbency Certificate of Compost, 29) the Incumbency
Certificate of Miami, 30) the Incumbency Certificate of Bedminster, 31)
the "Bring-Down" Certificate of Compost, 32) the "Bring-Down"
Certificate of Miami, and, 33) the "Bring-Down" Certificate of
Bedminster.
1.1.40. Debenture(s). "Debenture(s)" shall mean the
Debentures, Series 1-10, shall mean that were sold by Compost to
Lionhart, and that were purchased and were or are presently held by
Lionhart, pursuant to the terms and subject to the conditions of the
"Debenture Purchase Agreement," in or about November 27, 1996, copies
of which are set forth in Appendix I-Item 3, and that is or are
described and otherwise defined under Paragraph 6 of the Recitals of
this Agreement.
1.1.41. Debenture Purchase Agreement. "Debenture Purchase
Agreement" shall mean the "Regulation D Convertible Debenture Purchase
Agreement," by and between Compost and Lionhart, dated on or about
November 27, 1996, a copy of which is set forth in Appendix I-Item 1,
and the "First Amendment to Regulation D Convertible Debenture
Agreement," by and between Compost and Lionhart, dated in or about
February 1997, a copy of which is set forth in Appendix I-Item 2, all
of which is described in Recital Paragraph No. 6 of this Agreement.
1.1.42. Definitive Supplemental Documents. "Definitive
Supplemental Documents" shall mean the Credit Documents, and all other
agreements, certificates, resolutions, statements, considerations,
schedules, exhibits, disclosures and all other documents 1) that are
required to be executed, signed, consummated and/or delivered by
Compost and/or Miami and/or Bedminster to Lionhart and/or LHI and/or
GEP, as contemplated under this Agreement (including, without
limitation, the Registration Rights Agreement, the Director Appointment
Agreement, the Miami-Compost Guaranty, the Compost-Lionhart Warrant #
1, the Compost-Lionhart Warrant # 2, the Compost-Lionhart Warrant # 3,
the Compost-Lionhart Warrant # 4, the Compost-Lionhart Warrant # 5 and
the Compost-Lionhart Warrant # 6, and the Lock-Up Letter, and all other
considerations that are required to be executed and/or delivered under
Article XIII and/or Article XV of this Agreement), or 2) that are
required to be executed, signed, consummated and/or delivered by
Lionhart and/or LHI and/or GEP to Compost and/or Miami and/or
Bedminster (including, without limitation, all considerations that are
required to be executed and/or delivered under Article XIII and/or
Article XV of this Agreement).
1.1.43. Designation of Rights of Series B Preferred Stock.
"Designation of Rights of Series B Preferred Stock shall mean, with
respect to the Series B Preferred Stock, the "Designation of Rights of
Series B Preferred Stock," dated in or about June 1997, a copy of which
is set forth in Appendix I-Item 5, and the "Amendment to Designation of
Rights of Series B Preferred Stock," dated on or about September 17,
1997, a copy of which is set forth in Appendix I-Item 6, all of which
is described in Recital Paragraph No. 7 of this Agreement.
1.1.44. Director Appointment Agreement. "Director Appointment
Agreement" shall mean the Director Appointment Agreement, dated October
30, 1998, by and between Compost and Lionhart, which is hereby
incorporated by reference, and as is otherwise set forth in Exhibit EEE
of this Agreement.
1.1.45. Disclosure Documents. "Disclosure Documents" shall
mean 1) the documents, certificates, schedules, resolutions and all
other documents (including, without limitation, all Disclosure
Schedules), and compilations of such documents, certificates,
schedules, resolutions and all other documents (including, without
limitation, all Disclosure Schedules), that are set forth and listed or
otherwise described or referred to in Appendix III of this Agreement,
and all of which are hereby incorporated by reference in this
Agreement, and 2) the "Miami Project Disclosures," as that term is
defined under Section 11.26.01(m) of this Agreement.
1.1.46. Disclosure Schedule. "Disclosure Schedule" shall mean
each and every disclosure schedules attached hereto and forming a part
of this Agreement.
1.1.47. EBITDA. "EBITDA" shall mean earnings before interest,
income taxes, depreciation and amortization, as determined in
accordance with GAAP in the United States.
1.1.48. Effective Date. "Effective Date" shall mean the
Closing Date of this Agreement, which is October
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30, 1998.
1.1.49. Encumbrance. "Encumbrance" shall mean any security
interest, pledge, mortgage, lien (including environmental lines),
charge or (as determined, to the best of Compost's and Miami's and
Bedminster's knowledge, after due inquiry) adverse claim, including
without limitation, any restriction on the use, voting, transfer,
receipt of income or other exercise of any attributes of ownership, but
excluding such encumbrances which, individually or in the aggregate,
would not have a material adverse effect.
1.1.50. Environmental Laws. "Environmental Laws" shall mean
any law, now or hereafter in effect and as amended, and any judicial or
administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to pollution
or protection of the environment, health, safety or natural resources,
including without limitation, those relating to the use, handling,
transportation, treatment, storage, disposal, release or discharge of
Hazardous Substances.
1.1.51. Environmental Permit. "Environmental Permit" shall
mean any permit, approval, identification number, license or other
authorization required to operate the business on the real property
under any applicable Environmental Law, including, without limitation,
the Miami Project Permits.
1.1.52. ERISA. "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended, including the rules and regulations
promulgated thereunder.
1.1.53. Escrow Agent. "Escrow Agent" shall mean KGL, which is
the Escrow Agent under the Debenture Purchase Agreement, as is
described in Recital Paragraph No. 10 of this Agreement.
1.1.54. Excess Common Shares. "Excess Common Shares" shall
mean, with respect to the shares of Compost Common Stock that are owned
and held by Lionhart immediately subsequent to the Ancillary
Transactions Closing on the Closing Date, as is otherwise ascribed to
such term in Section 10.1 of this Agreement.
1.1.55. Exchange Act. "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended, including the rules and regulations
promulgated thereunder.
1.1.56. Financial Statements. "Financial Statements" shall
have the meaning as is described such term in Section 11.11 and Section
11.12 of this Agreement.
1.1.57. First Debenture Conversion. "First Debenture
Conversion" shall mean the Notice of Conversion, dated on or about May
20, 1997, that was delivered by Lionhart to Compost on or about May 20,
1997, a copy of which is set forth in Appendix I-Item 12, and, pursuant
to which Lionhart properly converted US $200,000 of the Debentures, and
Compost thereafter issued and delivered to Lionhart, in exchange for
such the surrender, delivery and tender by Lionhart to Compost of two
(2) Debentures (i.e., Series 9-10 of 10), Certificate No. CA1103,
representing 178,253 registered (freely tradable) shares of Common
Stock of Compost, and registered in the name of Lionhart ( a copy of
such Certificate No. CA1103 is set forth in Appendix I-Item 13), all as
is described in Recital Paragraph No.
12 of this Agreement.
1.1.58. GAAP. "GAAP" shall mean the generally excepted
accounting principles and practices, in the United States, in effect
from time to time applied consistently throughout the periods involved.
1.1.59. GEP. "GEP" shall mean Global EarthFund Partners, Ltd.,
an Indiana limited liability company, the principal office of which is
c/o John Thomas Drics, Esq., 111 Monument Circle, Suite 312,
Indianapolis, Indiana 46204.
1.1.60. GEP Board. "GEP Board" or other similar references in
this Agreement, shall mean the Board of Directors of GEP.
1.1.61. Governmental Authority. "Governmental Authority" means
any United States Federal, State or local or any foreign governmental,
regulatory or administrative authority, agency or commission or any
court, tribunal
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judicial or arbitral body.
1.1.62. Hazardous Substances. "Hazardous Substances" shall
mean (a petroleum and petroleum products, by products or break down
products, radioactive materials, asbestos-containing materials and
polychlorinated biphenyls, and (b) any other chemicals, materials or
substances regulated as toxic or hazardous or as a pollutant,
contaminate or waste under any applicable Environmental Law in such
levels beyond those permitted by applicable Environmental Laws.
1.1.63. Indebtedness. "Indebtedness" shall mean, with respect
to any Person, (a) all indebtedness of such Person, absolute or
contingent, for borrowed money, (b) all obligations of such Person for
the deferred purchase price of property or services, other than trade
obligations incurred in the ordinary course of business, (c) all
obligations of such Person evidence by notes, bonds, debentures or
other similar instruments, (d) all indebtedness created or arising
under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under any such agreement in the event
of default are limited to repossession or sale of such property), (e)
all obligations of such Person as lessee under leases that have been or
should be, in accordance with GAAP and, recorded as capital leases, (f)
all obligations, contingent or otherwise, of such Person under
acceptances, letters of credit or similar facilities, (g) all
obligations of such Person to purchase, redeem, retire, defease or
otherwise acquire for value any capital stock of any such Person or any
warrants, rights or options to acquire such capital stock, value, in
the case of redeemable preferred stock, at the greater of its voluntary
or involuntary liquidation preference plus accrued and unpaid
dividends, (h) all indebtedness of others referred to in clauses (a
through f above guaranteed directly or indirectly in any manner by such
Person, or in effect guaranteed to directly or indirectly by such
Person through an agreement (1) to pay or purchase such indebtedness or
to advance or supply funds for the payment or purchase of such
indebtedness, (2) to purchase, sale or lease (as lessee or lessor)
property, or to purchase or sale services, primarily for the purpose of
enabling the debtor to make payment of such indebtedness or to assure
the holder of such indebtedness against loss, (3) to supply funds to or
any other manner invest in the debtor (including any agreement to pay
for property or services irrespective of whether such property is
received or such services are rendered), or (4) otherwise to assure a
creditor against loss, and (i) all indebtedness referred to in clauses
(a) through (f) hereinabove secured by (or for which the holder of such
indebtedness has an existing right, contingent or otherwise, to be
secured by) any Encumbrance on property (including, without limitation,
accounts and contract rights) owned by any such Person, even thought
any such Person has not assumed or become liable for the payment of
such Indebtedness.
1.1.64. Intellectual Property. "Intellectual Property" shall
mean patents, patent registrations and patent applications, trade
marks, service marks, trade mark rights, trade names, trade name
rights, registered copy rights and trade secrets owned or used by
Compost, or any of its Subsidiaries, and/or Miami and/or Bedminster, in
the conduct of its or its respective businesses.
1.1.65 . Interim Financial Statements. "Interim Financial
Statements" shall have the meaning ascribed to such term as set forth
in Section 11.12 of this Agreement.
1.1.66. IRS. "IRS" shall mean the Internal Revenue Service of
the United States, or any successor Governmental Authority.
1.1.67. KGL. "KGL" shall mean Kaplan Gottbetter & Levenson,
LLP, which is current Escrow Agent under the Debenture Purchase
Agreement, as described in Recital Paragraph No. 10 of this Agreement.
1.1.68. KGL-Compost Agreement. "KGL-Compost Agreement" shall
mean the written letter agreement, by and between Compost and KGL, as
Escrow Agent under the Debenture Purchase Agreement, dated on or about
June 16, 1997, a copy of which is set forth in Appendix I-Item 11, and
as is described in Recital Paragraph No. 11 of this Agreement.
1.1.69. Leased Real Property. "Leased Real Property" shall
mean the Real Property leased by Compost or any of its Subsidiaries
(and/or Miami and/or Bedminster) together with to the extent leased by
Compost or its Subsidiaries (and/or Miami and/or Bedminster), all
buildings and other structures, facilities or improvements presently or
hereafter located thereon, all fixtures, systems, equipment and items
of personal property owned by Compost or
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any of its Subsidiaries (and/or Miami and/or Bedminster) attached or
pertinent thereto, all easements, licenses, rights and appurtenances
relating to the foregoing.
1.1.70. Legal Opinion of GEP's Counsel. "Legal Opinion of
GEP's Counsel" shall mean the opinion of GEP's counsel, as is set forth
in Exhibit PPP of this Agreement.
1.1.71. Legal Opinion of LHI's Counsel. "Legal Opinion of
LHI's Counsel" shall mean the opinion of LHI's counsel, as is set forth
in Exhibit AA of this Agreement.
1.1.72. Legal Opinion of Bedminster's Counsel. "Legal Opinion
of Bedminster's Counsel" shall mean the opinion of Bedminster's
counsel, as is set forth in Exhibit OOO of this Agreement.
1.1.73. Legal Opinion of Compost's Counsel. "Legal Opinion of
Compost's Counsel" shall mean the opinion of Compost's counsel, as is
set forth in Exhibit L of this Agreement.
1.1.74. Legal Opinion of Lionhart's Counsel. "Legal Opinion of
Lionhart's Counsel" shall mean the opinion of Lionhart's counsel, as is
set forth in Exhibit FF of this Agreement.
1.1.75. Legal Opinion of Miami's Counsel. "Legal Opinion of
Miami's Counsel" shall mean the opinion of Miami's counsel, as is set
forth in Exhibit M of this Agreement.
1.1.76.01. Lenders. "Lenders" shall mean collectively,
Lionhart, LHI and GEP, for purposes of the Term Loan under Article II
of this Agreement.
1.1.76.02. LHI. "LHI" shall mean Lionhart Investments, Ltd., a
United Kingdom limited liability company, the principal office of which
is located at 19 Camp Road, Heston Court, Wimbledon, London SW19 4 RH,
England.
1.1.77. LHI Board. "LHI Board" or other similar references in
this Agreement to the Board of Directors of LHI, shall mean the Board
of Directors of LHI.
1.1.78. LHI Consent. "LHI Consent" is and shall mean the
"Consent to Series A and Series C Preferred Stock," dated on or about
September 17, 1997, a copy of which is set forth in Appendix I-Item 7,
and as is described in Recital Paragraph No. 8 of this Agreement.
1.1.79. LHI-Select Agreement. "LHI-Select Agreement" shall
mean the written letter agreement, dated on or about June 11, 1997, by
and between LHI and SAI, a copy of which is set forth in Appendix
I-Item 8, and as is described in Recital Paragraph No. 9 of this
Agreement.
1.1.80. LHI-Select Agreement Shares. "LHI-Select Agreement
Shares" shall mean the definition or description as is otherwise
ascribed to such term in Recital Paragraph No. 9 of this Agreement.
1.1.81. Liabilities. "Liabilities" shall mean any and all
debts, liabilities and obligations, whether accrued or fixed, absolute
or contingent, matured or unmatured or determined or determinable,
including, without limitation, those arising under any law, rule,
regulation or order by a Governmental Authority and those arising under
any contract, agreement, commitment, arrangement or undertaking.
1.1.82. Licensed Intellectual Property. "Licensed Intellectual
Property" shall mean all intellectual property licensed or sublicensed
to Compost and or any Subsidiary (and/or Miami and/or Bedminster) from
a third party.
1.1.83. Lionhart. "Lionhart" shall mean Lionhart Global
Appreciation Fund, Ltd., a British Virgin Islands limited liability
company, the principal office of which is located at c/o Citco B.V.I.
Limited, Post Office Box 662, Road Town, Tortola, British Virgin
Islands.
1.1.84.1. Lionhart Board. "Lionhart Board" or other similar
references in this Agreement, shall mean the Board of Directors of
Lionhart.
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1.1.84.2. Lock-up Letter. "Lock-up Letter" shall mean that
certain letter agreement, dated on and as of October 30, 1998, by and
among Compost, Lionhart, LHI and GEP, a copy of which is set forth in
Exhibit WWW of this Agreement.
1.1.85. Loss. "Loss," and other similar references with
respect to any indemnification in this Agreement, shall have the
meaning, definition and description as is otherwise ascribed to such
term in Article XVI of this Agreement.
1.1.86. Material Adverse Effect. "Material Adverse Effect"
shall mean any circumstance, change, event, transaction, loss, failure,
effect or other occurrence that is, or is reasonably likely to be,
materially adverse to the business (or Business), operations,
properties (including intangible properties), condition (financial or
otherwise), assets, liabilities (Liabilities), results of operations or
financial or business prospects of Compost and or its Subsidiaries,
and/or of Miami and/or Bedminster, taken as a whole.
1.1.87. Miami. "Miami" shall mean Miami Recycling and
Composting Co., Inc., a Delaware corporation, which is a direct
controlled subsidiary of Compost, and of which 80.1% of the issued and
outstanding capital stock of Miami is owned and controlled by Compost
and 19.9% of the issued and outstanding capital stock of Miami is owned
and controlled by Mestre. The principal office of Miami is located at
320 Grand Avenue, Englewood, New Jersey 07631.
1.1.88. Miami Balance Sheet. "Miami Balance Sheet" shall have
the definition, meaning and description as is otherwise ascribed to
such term in Section 11.26.07 of this Agreement.
1.1.89. Miami Board. "Miami Board" or other similar references
in this Agreement, shall mean the Board of Directors of Miami.
1.1.90. Miami Common Stock. "Miami Common Stock," or "Common
Stock of Miami," or other similar references, shall mean the common
stock of Miami.
1.1.91. Miami Project. "Miami Project" shall have the
definition and description as is otherwise ascribed to such term in
Section 11.26.01(a) of this Agreement.
1.1.92. Miami Project Collateral. "Miami Project Collateral"
is and shall mean collateral, that is identified, described and
otherwise specified under the Security Agreement, including 1) the
Miami Project Permits, 2) the Miami Claim, 3) the Put or Pay Contract
and 4) the Miami Project Financing (as those terms are defined under
Section 11.26.01 of this Agreement).
1.1.93. Miami Project Disclosures. "Miami Project Disclosures"
shall have the definition and description as is otherwise ascribed to
such term in Section 11.26.01(m) of this Agreement.
1.1.94. Miami Project Permits. "Miami Project Permits" shall
have the definition and description as is otherwise ascribed to such
term in Section 11.26.01(b) of this Agreement.
1.1.95. Miami Resolutions. "Miami Resolutions" shall mean the
resolutions of the Miami Board, as is set forth in Exhibit P of this
Agreement.
1.1.96. Miami-Rinker Note. "Miami-Rinker Note" shall mean the
Promissory Note, that is secured by the Rinker Mortgage, in the
principal amount of US $3,730,870.75, that was delivered by Miami to
Rinker on or about March 29, 1996, a copy of which is set forth in
Appendix I-Item 16, as is described in Recital Paragraph No. 14 of this
Agreement.
1.1.97. Miami Site. "Miami Site" shall have the definition and
description as is otherwise ascribed to such term in Section
11.26.01(d) of this Agreement.
1.1.98. Mortgage. "Mortgage" shall mean the "Mortgage," dated
on or about October 30, 1998, a copy of
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which is set forth in Exhibit E of this Agreement, that is required to
be executed and delivered by Miami to Lionhart, LHI and GEP, on and at
the Term Loan Closing, and which thereupon and thereafter shall
constitute a first, senior and unsubordinated lien, mortgage and
encumbrance on the Miami Site, for purposes of securing the timely and
complete performance and discharge by Compost, Miami and Bedminster,
for the benefit of Lionhart, LHI and GEP, of the duties, obligations
and undertakings of Compost, Miami and/or Bedminster under 1) the
Credit Documents, including (without limitation) the Mortgage Note, and
2) this Agreement and the Definitive Supplemental Documents (including,
without limitation, the Miami-Compost Guaranty).
1.1.99. Mortgage Note. "Mortgage Note" shall mean the note,
denominated as the "Mortgage Note," in the principal amount of US
$10,500,000, and dated on or about October 30, 1998, a copy of which is
set forth in Exhibit D of this Agreement, that is or is required to be
executed and delivered by Compost, Miami and Bedminster, to Lionhart,
LHI and GEP, on the Term Loan Closing Date.
1.1.100. Mortgage Modification Agreement. "Mortgage
Modification Agreement" shall mean the document, entitled "Mortgage
Modification Agreement," that was executed by and between Miami and
Rinker on or about April 24, 1998, which purports to amend the terms of
the Rinker Mortgage and/or the Miami-Rinker Note, a copy of which is
set forth in Appendix I, Item 18, as is described in Recital Paragraph
No. 14 of this Agreement.
1.1.101. Mortgagee's Title Insurance Commitment. "Mortgagee's
Title Insurance Commitment" shall mean the commitment for a mortgagee's
policy of title insurance, the effective date of which is or shall be
on or about the Closing Date, for a mortgagee's policy of title
insurance, from Lawyers Title Insurance Corporation, Case No. 9801958,
in substantially the form as is set forth in Exhibit R of this
Agreement.
1.1.102. Multiemployer Plan. "Multiemployer Plan" shall have
the meaning ascribed to such term as is set forth in Section 11.15 of
this Agreement.
1.1.103. Owned Intellectual Property. "Owned Intellectual
Property" means all intellectual property in and into which Compost or
any subsidiary holds, or has the right to hold, any right, title or
interest.
1.1.104. Owned Real Property. "Owned Real Property" shall mean
the real property owned by Compost or its Subsidiaries (and/or Miami
and/or Bedminster), together with all buildings and other structures,
facilities or improvements presently or hereafter located thereon, all
fixtures, systems, equipment and items of personal property of Compost
or its Subsidiaries (and/or Miami and/or Bedminster) attached or
appurtenant thereto, and all easements, licenses, rights and
appurtenances relating to the foregoing.
1.1.105. Person. "Person" shall mean an individual,
corporation, partnership, limited liability company, association,
trust, joint venture, unincorporated organization, other entity or
group (as defined in Section 13(d)(3) of the Exchange Act).
1.1.106. Plans. "Plans" shall have the definition and meaning
ascribed to such term as set forth in Section 11.15 of this Agreement.
1.1.107. Pledged Bedminster Shares. "Pledged Bedminster
Shares" shall mean all issued and outstanding capital stock and equity
rights of Bedminster, and all of which is pledged, or is required to be
pledged, by Miami, pursuant to the terms and subject to the conditions
set forth in the Compost Stock Pledge Agreement (Bedminster Common
Stock). The term "Pledged Bedminster Shares" includes all such capital
stock represented by and on Certificate No. 1, which indicates thereon
that Miami is the registered owner of 1000 shares of Bedminster Common
Stock ("Bedminster Certificate"). Miami, pursuant to the terms and
subject to the conditions set forth in the Compost Stock Pledge
Agreement (Bedminster Common Stock), shall deliver to Lionhart, LHI and
GEP, on and at the Term Loan Closing, the Bedminster Certificate,
including appropriate stock powers duly endorsed, in the form and
substance as is set forth in Exhibit NNN of this Agreement.
1.1.108. Pledged Compost Shares. "Pledged Compost Shares"
shall mean all shares of Compost Common Stock that are set forth on and
represented by Certificate No. CA1370, representing thereon that
Lionhart is the registered owner of 600,000 registered (freely
tradable) shares of Compost Common Stock, as is described in Recital
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Paragraph No. 10 of this Agreement ("Compost Certificate"). Compost,
pursuant to the terms and subject to the conditions set forth in the
Compost Stock Pledge Agreement (Compost Common Stock), shall deliver to
Lionhart, LHI and GEP, on and at the Term Loan Closing, the Compost
Certificate, including appropriate stock powers duly endorsed, in the
form and substance as is set forth in Exhibit I of this Agreement.
1.1.109. Pledged Miami Shares. "Pledged Miami Shares" shall
mean all issued and outstanding capital stock and equity rights of
Miami, and all of which is pledged, or is required to be pledged, by
Compost and Mestre, pursuant to the terms and subject to the conditions
set forth in the Compost Stock Pledge Agreement (Miami Common Stock).
The term "Pledged Miami Shares" includes all such capital stock
represented by and on Certificate No. 1, which indicates thereon that
Compost is the registered owner of 801 shares of Miami Common Stock,
and all such capital stock represented by and on Certificate No. 2,
which indicates thereon that Mestre is the registered owner of 199
shares of Miami Common Stock ("Miami Certificates"). Compost and
Mestre, pursuant to the terms and subject to the conditions set forth
in the Compost Stock Pledge Agreement (Miami Common Stock), shall
deliver to Lionhart, LHI and GEP, on and at the Term Loan Closing, the
Miami Certificates, including appropriate stock powers duly endorsed,
in the form and substance as is set forth in Exhibit J of this
Agreement.
1.1.110. Preferred Stock Series A. "Preferred Stock Series A"
shall mean the authorized, and/or issued and outstanding shares of
Series A Preferred Stock of Compost.
1.1.111. Preferred Stock Series B. "Preferred Stock Series B"
shall mean the authorized, and/or issued and outstanding shares of
Series B Preferred Stock of Compost (except as may be limited or
amplified by the definition of "Series B Preferred Stock" in this
Agreement).
1.1.112. Preferred Stock Series C. "Preferred Stock Series C"
shall mean the authorized, and/or issued and outstanding shares of
Series C Preferred Stock of Compost.
1.1.113. Preferred Stock Series D. "Preferred Stock Series D"
shall mean the authorized, and/or issued and outstanding shares of
Series D Preferred Stock of Compost.
1.1.114. Purchase Price. "Purchase Price" shall have the
meaning ascribed to such term as is set forth in Section 6.1 and
Section 6.2 of this Agreement.
1.1.115. Put Option # 1. "Put Option # 1" shall mean the
definition or description as is otherwise ascribed to such term in
Section 9.2.2 of this Agreement.
1.1.116. Put Option # 2. "Put Option # 2" shall mean the
definition or description as is otherwise ascribed to such term in
Section 10.2.1 of this Agreement.
1.1.117. Put Purchase Price. "Put Purchase Price," 1) for and
with respect to Put Option # 1, shall have the definition or
description as is otherwise ascribed to such term in Section 9.2.3(b)
of this Agreement, and 2) for and with respect to Put Option # 2, shall
have the meaning as is otherwise ascribed to such term in Section
10.2.2(b) of this Agreement.
1.1.118. Put or Pay Contract. "Put or Pay Contract" shall have
the definition and description as is otherwise ascribed to such term in
Section 11.26.01(e) of this Agreement.
1.1.119. Real Property. "Real Property" shall mean the leased
real property and owned real property of Compost or any of its
Subsidiaries (and/or Miami and/or Bedminster).
1.1.120. Registration Rights Agreement. "Registration Rights
Agreement" shall mean the registration rights agreement, dated October
30, 1998, by and between Compost and Lionhart, which is hereby
incorporated by reference, and as is otherwise set forth in Exhibit DDD
of this Agreement.
1.1.121. Release. "Release" shall mean disposing, discharging,
injecting, spilling, leaking, leeching, dumping, emitting, escaping,
emptying, seeping, placing and alike into or upon any land or water or
air or otherwise
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entering into the environment.
1.1.122. Remedial Action. "Remedial Action" shall mean all
action to(i) cleanup, remove, treat or handle in any other way
hazardous substances in the environment; (ii) prevent the release of
hazardous substances so that they do not migrate, endanger or threaten
to endanger public health or the environment; or (iii) perform remedial
investigations, feasibility studies, corrective actions, closures and
post remedial or post closure studies, investigations, operations,
maintenance and monitoring on, about or in any real property with
respect to any release of hazardous substances.
1.1.123. Rinker Mortgage. "Rinker Mortgage" shall mean the
"Mortgage Deed," dated on or about March 29, 1996, that was executed
and delivered by Miami to Rinker, for purposes of securing the
Miami-Rinker Note, which is and constitutes a first, senior and
unsubordinated lien, mortgage and encumbrance on the Miami Site, and
which is recorded in the Official Records Book 17182, at Page 0528 of
the Public Records of Dade County, Florida, and rerecorded in Official
Records Book 17815, Page 2603, on October 6, 1997, of the Public
Records of Miami-Dade County, Florida, a copy of which is set forth in
Appendix I, Item 17, as is described in Recital Paragraph No. 14 of
this Agreement.
1.1.124. SAI. "SAI" is and shall mean Select Acquisitions,
Inc., which is a party to the LHI-Select Agreement, as described in
Recital Paragraph No. 9 of this Agreement.
1.1.125. Schedule of Uses and Applications of Credit.
"Schedule of Uses and Applications of Credit" shall mean the document,
as so denominated, as is set forth in Exhibit B of this Agreement.
1.1.126. SEC. "SEC" shall mean the Securities and Exchange
Commission of the United States, including any political or
governmental subdivision under the jurisdiction of the SEC.
1.1.127. Second Debenture Conversion. "Second Debenture
Conversion" shall mean the Notice of Conversion, dated on or about
September 8, 1997, that was delivered by Lionhart to Compost on or
about September 8, 1997, a copy of which is set forth in Appendix
I-Item 14, and, pursuant to which Lionhart properly converted or
otherwise elected to convert US $200,000 of the Debentures; and, based
on the Second Debenture Conversion, Compost, on or about March 13,
1998, issued and delivered to KGL, in exchange for the surrender,
delivery and tender by Lionhart to Compost of two (2) Debentures (i.e.,
Series 7-8 of 10), Certificate No. CA1369, representing 159,670
registered (freely tradable) shares of Common Stock of Compost, and
registered in the name of Lionhart ( a copy of such Certificate No.
1369 is set forth in Appendix I-Item 15).
1.1.128. Section 6.1 Shares. "Section 6.1 Shares" shall mean
the definition or description as is otherwise ascribed to such term in
Section 6.1.1 of this Agreement.
1.1.129. Securities Act. "Securities Act" shall mean the
Securities Act of 1933, as amended, including the rules and regulations
promulgated thereunder.
1.1.130. Security Agreement. "Security Agreement" shall mean
the agreement, denominated as the "Pledge and Security Agreement,"
dated on or about October 30, 1998, a copy of which is set forth in
Exhibit F of this Agreement, that is required to be executed and
delivered by Compost, Miami and Bedminster to Lionhart, LHI and GEP, on
and at the Term Loan Closing, and which, pursuant to the terms and
subject to the conditions therein, imposes and establishes a first,
senior and unsubordinated lien, mortgage and encumbrance on and against
the collateral described therein (including, the Miami Project
Collateral, the Put or Pay Contract, the Miami Project Permits, the
Miami Project Financing and the Miami Claim as those terms are defined
under Section 11.26.01 of this Agreement), for purposes of securing the
timely and complete performance and discharge by Compost, Miami and
Bedminster, for the benefit of Lionhart, LHI and GEP, of the duties,
obligations and undertakings of Compost, Miami and/or Bedminster under
1) the Mortgage Note, 2) the other Credit Documents and 3) this
Agreement and the Definitive Supplemental Documents (including, without
limitation, the Miami-Compost Guaranty).
1.1.131. Series B Preferred Stock. "Series B Preferred Stock"
shall mean the 400,000 shares of Series B Preferred Stock of Compost,
that were purchased by Lionhart from Compost, pursuant to the Series B
Preferred Shares
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Subscription Agreement, dated on or about June 16, 1997, for the
purchase price of US $1,000,000, and that were issued by Compost to
LHI, as otherwise described under Recital Paragraph No. 7 of this
Agreement.
1.1.132. Series B Preferred Shares Subscription Agreement.
"Series B Preferred Shares Subscription Agreement" shall mean the
"Subscription Agreement," that is identified in Recital Paragraph No. 7
of this Agreement, and a copy of which is set forth in Appendix
I-Item 4.
1.1.133. Settlement Agreement. "Settlement Agreement" shall
mean the "Settlement Agreement," a copy of which is set forth in
Exhibit ZZ of this Agreement, and, pursuant to which, inter alia, and
on the Effective Date, 1) Compost and Lionhart mutually rescind the
Second Debenture Conversion, 2) Lionhart has the duty to return and
deliver to Compost, on the Effective Date, 159,670 registered (freely
tradable) shares of Common Stock of Compost, that are registered in the
name of Lionhart and that are represented by Certificate No. CA1369,
and 3) Compost has the duty to return and deliver to Lionhart, on the
Effective Date, and otherwise reinstates and makes effective on the
Effective Date of this Agreement, Series 7-8 of 10 Debentures.
1.1.134. Subsidiary or Subsidiaries. "Subsidiary or
Subsidiaries" means any corporation, partnership, limited liability
company, joint venture, unincorporated organization or other legal
entity of which Compost or any Person, as the case may be (either alone
or through or together with any subsidiary), owns, directly or
indirectly, fifty percent or more of the stock or other equity
interest, the holders of which is generally entitled to vote for the
election of the board of directors or other governing body of such
corporation or other legal entity.
1.1.135. Tangible Personal Property. "Tangible Personal
Property" shall mean machinery, equipment, tools, supplies, furniture,
fixtures, vehicles, rail cars and other tangible personal property.
1.1.136. Tax or Taxes. "Tax or Taxes" shall mean all income,
gross receipts, sales, use, transfer, employment, franchise, profits,
property, excise or other similar taxes, estimated import duties, fees,
stamp taxes and duties, value added taxes, assessments or charges of
any kind whatsoever, (whether payable directly or by withholding),
together with any interest any penalties, additions to tax or
additional amounts imposed by any taxing authority with respect thereto
1.1.137. Term Loan Closing. "Term Loan Closing" shall mean the
closing, execution and delivery of, and the consummation of the
transactions contemplated under, the Credit Documents, as contemplated
under Section 13.01.02 of this Agreement, and which is and shall occur
on October 30, 1998, commencing at 9:00 a.m., E.S.T., at the offices of
Greenberg Traurig, at 2005 Market Street, Suite 2050, Philadelphia,
Pennsylvania 19103.
1.1.138. Term Loan Closing Statement. "Term Loan Closing
Statement" shall mean the document, as so denominated, as is set forth
in Exhibit A of this Agreement.
1.1.139. Term Sheet. "Term Sheet" shall mean the Proposal and
Term Sheet, a copy of which is set forth in Appendix 1-Item 20, which
was approved by Lionhart, Compost and Miami on or about August 4, 1998,
and as is described in Recital Paragraph No. 15 of this Agreement.
1.1.140. Wasteco Stock Purchase Agreement. "Wasteco Stock
Purchase Agreement" shall mean that certain Stock Purchase Agreement,
dated November 3, 1997, by and among Wasteco Ventures Limited and
Compost.
Section 1.2. Other Definitions. Any other terms that are defined in
this Agreement, the Definitive Supplemental Documents and/or the Credit
Documents, but which are not otherwise set forth and enumerated specifically in
Section 1.1 of this Agreement, shall have the definitions and meanings that are
otherwise set forth in this Agreement, the Definitive Supplemental Documents and
Credit Documents.
ARTICLE II
CREDIT AGREEMENT, DOCUMENTS AND TERMS
Section 2.1. Credit-Term Loan. At the Term Loan Closing, and on the
Closing Date at the Closing Location, Lionhart, LHI and GEP (collectively and
sometimes referred to in Article II and Article XVIII of this Agreement as the
"Lenders"), shall
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loan, deliver and otherwise extend credit to or for the benefit of Compost and
Miami and Bedminster, in the principal amount of US $10,500,000 ("Credit"), on a
fixed-term loan basis, upon and pursuant to the terms and subject to the
conditions that are set forth in 1) this Agreement, 2) the Credit Documents
(including, without limitation, the Mortgage and the Mortgage Note) and 3) any
other applicable Definitive Supplemental Documents. The Credit shall be
delivered by the Lenders to Compost, Miami and Bedminster, and/or shall be
applied by the Lenders to or for the benefit of Compost, Miami and Bedminster,
at the Term Loan Closing (on the Closing Date at the Closing Location), in US
Dollars, in cash and/or cash-equivalent good and immediately available funds,
pursuant to and as otherwise prescribed under the "Term Loan Closing Statement,"
as is set forth in Exhibit A to this Agreement, and shall be used by Compost,
Miami and/or Bedminster as otherwise prescribed under, and pursuant to the terms
and subject to the conditions set forth in, 1) this Agreement, 2) the Credit
Documents, 3) any other applicable Definitive Supplemental Documents, and 4) the
"Schedule of Uses and Applications of Credit," as is set forth in Exhibit B of
this Agreement.
Section 2.2. Credit Conditions. Notwithstanding Section 2.1 of this
Agreement, the Lenders each shall not have any duty or obligation to loan, make
or otherwise extend the Credit to Compost, Miami and/or Bedminster, and Compost,
Miami and Bedminster shall not have any right (under this Agreement, the Credit
Documents or any applicable Definitive Supplemental Documents, or otherwise) to
compel the Lenders to loan, make or otherwise extend the Credit to Compost
and/or Miami and/or Bedminster, unless and until all conditions, that are
otherwise set forth in 1) this Agreement, 2) the Credit Documents and 3) any
other applicable Definitive Supplemental Documents, are satisfied by Compost and
Miami and Bedminster, to the reasonable satisfaction of the Lenders, and their
respective counsel, on or before the Term Loan Closing on the Closing Date at
the Closing Location.
Section 2.3. Term Loan Closing. At the Term Loan Closing, and on the
Closing Date at the Closing Location, and upon such terms and subject to such
conditions as set forth in 1) this Agreement (including, without limitation,
Article XIII), 2) the Credit Documents and 3) any applicable Definitive
Supplemental Documents:
2.3.1. Lender Undertakings to Compost, Miami and Bedminster.
The Lenders shall execute and/or deliver or cause to be executed and/or
delivered to Compost, Miami and Bedminster:
(A) Credit. The Credit, as otherwise provided under
Section 2.1 of this Agreement, and as otherwise provided under
the Term Loan Closing Statement; and,
(B) Term Loan Closing Statement. The Term Loan
Closing Statement, as is set forth in Exhibit A of this
Agreement; and,
(C) Lender Receipt #1. A receipt for the execution
and/or delivery by Compost and/or Miami and/or Bedminster to
the Lenders, in substantially the form as is set forth in
Exhibit C.1 of this Agreement, of 1) the Mortgage Note, in
substantially the form as is set forth in Exhibit D of this
Agreement; 2) the Mortgage, in substantially the form as is
set forth in Exhibit E of this Agreement; 3) the Security
Agreement, in substantially the form as is set forth in
Exhibit F of this Agreement; 4) the Compost Stock Pledge
Agreement (Compost Common Stock), in substantially the form as
is set forth in Exhibit G of this Agreement; 5) the Compost
Stock Pledge Agreement (Miami Common Stock), in substantially
the form as is set forth in Exhibit H of this Agreement; 6)
the Compost Stock Pledge Agreement (Bedminster Common Stock),
in substantially the form as is set forth in Exhibit MMM of
this Agreement; 7) the Pledged Compost Shares, including the
Compost Certificate in substantially the form as is set forth
in Exhibit I of this Agreement; 8) the Pledged Miami Shares,
including the Miami Certificates in substantially the form as
is set forth in Exhibit J of this Agreement; 9) the Pledged
Bedminster Shares, including the Bedminster Certificate in
substantially the form as is set forth in Exhibit NNN of this
Agreement; 10) the UCC-1 Financing Statement, in substantially
the form as is set forth in Exhibit K of this Agreement; 11)
the Compost-Miami Guaranty, in substantially the form as is
set forth in Exhibit UUU of this Agreement; 12) the Legal
Opinion of Compost's Counsel, in substantially the form as is
set forth in Exhibit L of this Agreement; 13) the Legal
Opinion of Miami's Counsel, in substantially the form as is
set forth in Exhibit M of this Agreement; 14) the Legal
Opinion of Bedminster's Counsel, in substantially the form as
is set forth in Exhibit OOO of this Agreement; 15) the Compost
Resolutions, in substantially the form as is set forth in
Exhibit N of this Agreement; 16) the Compost Certificate of
Resolutions, in substantially the form as is set forth in
Exhibit O of this Agreement; 17) the Miami Resolutions, in
substantially the form as is set forth in Exhibit P of this
Agreement; 18) the
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Miami Certificate of Resolutions, in substantially the form as
is set forth in Exhibit Q of this Agreement; 19) the
Bedminster Resolutions, in substantially the form as is set
forth in Exhibit QQQ of this Agreement; 20) the Bedminster
Certificate of Resolutions, in substantially the form as is
set forth in Exhibit RRR of this Agreement; 21) the
Mortgagee's Title Insurance Commitment, the effective date of
which is or shall be on or about the Closing Date, issued to
the Lenders by Lawyers Title Insurance Corporation, Case No.
9801958, in substantially the form as is set forth in Exhibit
R of this Agreement; 22) the Compost/Miami Mortgagor
Affidavit, in substantially the form as is set forth in
Exhibit S of this Agreement; 23) the Compost/Miami Owner's
Affidavit, in substantially the form as is set forth in
Exhibit T of this Agreement; 24) the Mortgagor's Certificate
and Indemnification Regarding Hazardous Substances, in
substantially the form as is set forth in Exhibit VVV of this
Agreement; 25) the Global Closing Statement, in substantially
the form as is set forth in Exhibit YY of this Agreement; 26)
the Incumbency Certificate of Compost, in substantially the
form as is set forth in Exhibit GGG of this Agreement; 27) the
Incumbency Certificate of Miami, in substantially the form as
is set forth in Exhibit HHH of this Agreement; 28) the
Incumbency Certificate of Bedminster, in substantially the
form as is set forth in Exhibit TTT of this Agreement; 29) the
"Bring-Down" Certificate of Compost, in substantially the form
as is set forth in Exhibit JJJ of this Agreement; 30) the
"Bring-Down" Certificate of Miami, in substantially the form
as is set forth in Exhibit KKK of this Agreement; and, 31) the
"Bring-Down" Certificate of Bedminster, in substantially the
form as is set forth in Exhibit SSS of this Agreement; and,
(D) Lender Receipt # 2. A receipt for the execution
and/or delivery by Compost and/or Miami to the Lenders, in
substantially the form as is set forth in Exhibit C.2 of this
Agreement, of 1) the "Release and Satisfaction of Rinker
Mortgage," in substantially the form as is set forth in
Exhibit U of this Agreement, duly executed by Rinker; 2) the
Miami-Rinker Note, in substantially the form as is set forth
in Exhibit V of this Agreement, duly canceled and returned by
Rinker to Miami; 3) a "Stipulated Motion to Dismiss Complaint
with Prejudice," in substantially the form as is set forth in
Exhibit W of this Agreement, duly executed by Rinker and
Miami; and, 4) an "Order of Dismissal with Prejudice," in
substantially the form as is set forth in Exhibit X of this
Agreement, duly executed and ordered by the Court; and,
(E) Credit Documents. Any Credit Documents that
require the signature of and execution by the Lenders,
including, if applicable, 1) the Security Agreement, 2) the
Compost Stock Pledge Agreement (Compost Common Stock), 3) the
Compost Stock Pledge Agreement (Miami Common Stock) and 4) the
Compost Stock Pledge Agreement (Bedminster Common Stock); and,
(F) Legal Opinion of Counsel. The Opinion of the
Lender's Counsel, in substantially the form as is set forth in
Exhibit PPP of this Agreement; and,
(G) Miscellaneous. All other agreements, instruments,
certificates or other documents that are described, identified
or otherwise prescribed under Section 13.02.01 of this
Agreement, including, all applicable Definitive Supplemental
Documents.
2.3.2. Miami/Compost/Bedminster Undertakings to Lenders.
Compost, Miami and/or Bedminster, as appropriate, shall execute and/or
deliver, or cause to be executed and/or delivered, to the Lenders:
(A) Credit Receipt. A receipt, in substantially the
form as is set forth in Exhibit Y of this Agreement, for the
execution and/or delivery by the Lenders to Compost, Miami and
Bedminster of 1) the Credit, as otherwise provided under
Section 2.1 of this Agreement and as otherwise provided under
the Term Loan Closing Statement, 2) the Term Loan Closing
Statement, 3) the Credit Documents that require the signature
of or execution by any Lender (including, if applicable, the
Security Agreement, the Guaranty, the Mortgage, the Compost
Stock Pledge Agreement (Compost Common Stock), the Compost
Stock Pledge Agreement (Miami Common Stock) and the Compost
Stock Pledge Agreement (Bedminster Common Stock)), and 4) the
Opinion of the Lender's Counsel; and,
(B) Term Loan Closing Statement. The Term Loan
Closing Statement, as is set forth in Exhibit A to this
Agreement; and,
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(C) Credit Documents. 1) The Mortgage Note, in
substantially the form as is set forth in Exhibit D of this
Agreement; 2) the Mortgage, in substantially the form as is
set forth in Exhibit E of this Agreement; 3) the Security
Agreement, in substantially the form as is set forth in
Exhibit F of this Agreement; 4) the Compost Stock Pledge
Agreement (Compost Common Stock), in substantially the form as
is set forth in Exhibit G of this Agreement; 5) the Compost
Stock Pledge Agreement (Miami Common Stock), in substantially
the form as is set forth in Exhibit H of this Agreement; 6)
the Compost Stock Pledge Agreement (Bedminster Common Stock),
in substantially the form as is set forth in Exhibit MMM of
this Agreement; 7) the Pledged Compost Shares, including the
Compost Certificate in substantially the form as is set forth
in Exhibit I of this Agreement; 8) the Pledged Miami Shares,
including the Miami Certificates in substantially the form as
is set forth in Exhibit J of this Agreement; 9) the Pledged
Bedminster Shares, including the Bedminster Certificate in
substantially the form as is set forth in Exhibit NNN of this
Agreement; 10) the UCC-1 Financing Statement, in substantially
the form as is set forth in Exhibit K of this Agreement; 11)
the Compost-Miami Guaranty, in substantially the form as is
set forth in Exhibit UUU of this Agreement; 12) the Legal
Opinion of Compost's Counsel, in substantially the form as is
set forth in Exhibit L of this Agreement; 13) the Legal
Opinion of Miami's Counsel, in substantially the form as is
set forth in Exhibit M of this Agreement; 14) the Legal
Opinion of Bedminster's Counsel, in substantially the form as
is set forth in Exhibit OOO of this Agreement; 15) the Compost
Resolutions, in substantially the form as is set forth in
Exhibit N of this Agreement; 16) the Compost Certificate of
Resolutions, in substantially the form as is set forth in
Exhibit O of this Agreement; 17) the Miami Resolutions, in
substantially the form as is set forth in Exhibit P of this
Agreement; 18) the Miami Certificate of Resolutions, in
substantially the form as is set forth in Exhibit Q of this
Agreement; 19) the Bedminster Resolutions, in substantially
the form as is set forth in Exhibit QQQ of this Agreement; 20)
the Bedminster Certificate of Resolutions, in substantially
the form as is set forth in Exhibit RRR of this Agreement; 21)
the Mortgagee's Title Insurance Commitment, the effective date
of which is or shall be on or about the Closing Date, issued
to the Lenders by Lawyers Title Insurance Corporation, Case
No. 9801958, in substantially the form as is set forth in
Exhibit R of this Agreement; 22) the Compost/Miami Mortgagor
Affidavit, in substantially the form as is set forth in
Exhibit S of this Agreement; 23) the Compost/Miami Owner's
Affidavit, in substantially the form as is set forth in
Exhibit T of this Agreement; 24) the Mortgagor's Certificate
and Indemnification Regarding Hazardous Substances, in
substantially the form as is set forth in Exhibit VVV of this
Agreement; 25) the Global Closing Statement, in substantially
the form as is set forth in Exhibit YY of this Agreement; 26)
the Incumbency Certificate of Compost, in substantially the
form as is set forth in Exhibit GGG of this Agreement; 27) the
Incumbency Certificate of Miami, in substantially the form as
is set forth in Exhibit HHH of this Agreement; 28) the
Incumbency Certificate of Bedminster, in substantially the
form as is set forth in Exhibit TTT of this Agreement; 29) the
"Bring-Down" Certificate of Compost, in substantially the form
as is set forth in Exhibit JJJ of this Agreement; 30) the
"Bring-Down" Certificate of Miami, in substantially the form
as is set forth in Exhibit KKK of this Agreement; and, 31) the
"Bring-Down" Certificate of Bedminster, in substantially the
form as is set forth in Exhibit SSS of this Agreement; and,
32) the documents, that otherwise constitute "Credit
Documents," and that are set forth under Section 2.3.2(D) of
this Agreement; and,
(D) Rinker Mortgage/Release Documents. 1) The
"Release and Satisfaction of Rinker Mortgage," in
substantially the form as is set forth in Exhibit U of this
Agreement, duly executed by Rinker, 2) the Miami-Rinker Note,
in substantially the form as is set forth in Exhibit V of this
Agreement, duly canceled and returned by Rinker to Miami, 3) a
"Stipulated Motion to Dismiss Complaint with Prejudice," in
substantially the form as is set forth in Exhibit W of this
Agreement, duly executed by Rinker and Miami, and, 4) an
"Order of Dismissal with Prejudice," in substantially the form
as is set forth in Exhibit X of this Agreement, duly executed
and ordered by the Court; and,
(E) Miscellaneous. All other agreements, instruments,
certificates or other documents 1) that are described,
identified or otherwise prescribed under Section 13.03.01 of
this Agreement, including, all applicable Definitive
Supplemental Documents, and/or 2) that may be requested
reasonably by the Lenders and/or their respective counsel.
ARTICLE III
SERIES B PREFERRED STOCK
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Section 3.1. Recapitulation-Series B Preferred Stock. Compost, Lionhart
and LHI each hereby agree that, pursuant to the Series B Preferred Shares
Subscription Agreement, 1) on or about June 16, 1997, Lionhart purchased from
Compost, and Compost issued incorrectly and inadvertently to LHI, for the total
purchase price of US $1,000,000, 400,000 fully paid and non-assessable shares of
the Series B Preferred Stock, 2) the relative rights, privileges, restrictions
and other attributes of those 400,000 fully paid and non-assessable shares of
the Series B Preferred Stock, are set forth in the Designation of Rights of
Series B Preferred Stock, and, 3) Compost issued incorrectly and inadvertently
to LHI, and LHI received from Compost, Certificate No. B-1, registered in the
name of "Lionhart Investments Limited," and dated July 3, 1997, that evidences
incorrectly thereon that LHI (and not Lionhart) is the owner of 400,000 fully
paid and non-assessable shares of the Series B Preferred Stock.
Section 3.2. Tender/Reissue-Series B Preferred Stock. At the Ancillary
Transactions Closing, and on the Closing Date at the Closing Location, and upon
such terms and subject to such conditions as set forth in 1) this Agreement and
2) any applicable Definitive Supplemental Documents:
3.2.1. LHI Undertakings to Compost. LHI shall execute and/or
deliver or cause to be executed and/or delivered to Compost:
(A) Certificate, Power and Resolutions. 1)
Certificate No. B-1; 2) a stock power for such Certificate No.
B-1, that is duly executed by LHI; 3) the joint resolutions of
the Lionhart Board and the LHI Board, in substantially the
form as is set forth in Exhibit Z of this Agreement, thereby
affirming and declaring that, inter alia, Lionhart (and not
LHI) was intended as, is and should be the actual purchaser,
owner and holder of the 400,000 fully paid and non-assessable
shares of Series B Preferred Stock, as otherwise evidenced by
Certificate B-1, and authorizing LHI to surrender, tender and
deliver Certificate No. B-1 to Compost, and instructing
Compost to transfer and register such Series B Preferred Stock
in the name of Lionhart, and to reissue and redeliver a
corrected Certificate No. B-1, registered in the name of
Lionhart (and not LHI), to Lionhart; and,
(B) Legal Opinion of Counsel. The Legal Opinion of
LHI's Counsel, in substantially the form as is set forth in
Exhibit AA of this Agreement; and,
(C) Receipt. A receipt, in substantially the form as
is set forth in Exhibit BB of this Agreement, for the
execution and/or delivery by Compost to LHI of 1) the Compost
Resolutions and the Compost Certificate of Resolutions, as
provided under Section 3.2.2(B) of this Agreement, and 2) the
Legal Opinion of Compost's Counsel, as provided under Section
3.2.2(C) of this Agreement; and,
(D) Estoppel Certificate. An estoppel certificate,
duly executed by LHI and Lionhart, in substantially the form
as is set forth in Exhibit CC of this Agreement, and, pursuant
to which, and subject to the performance and discharge by
Compost to Lionhart of its duties and obligations under
Section 3.3 of this Agreement, 1) LHI waives and releases any
right or claim to the 1998 Dividend Shares, that are or will
be issued on the Ancillary Transactions Closing (on the
Closing Date at the Closing Location) by Compost to Lionhart,
as provided under Section 3.3.1(A) of this Agreement, and, 2)
LHI releases Compost from any duty or obligation to issue, or
for any claim relating to or arising from the failure to
issue, the 1998 Dividend Shares to LHI; and,
(E) Miscellaneous. All other agreements, instruments,
certificates or other documents that are described, identified
or otherwise prescribed under Section 13.02.03 of this
Agreement, including, all applicable Definitive Supplemental
Documents.
3.2.2. Compost Undertakings to LHI. Compost shall execute
and/or deliver, or cause to be executed and/or delivered, to LHI:
(A) Receipt. A receipt, in substantially the form as
is set forth in Exhibit DD, for the execution and/or delivery
by LHI to Compost of 1) Certificate No. B-1, as provided under
Section 3.2.1(A)(1) of this Agreement; 2) a stock power for
such Certificate No. B-1, that is duly executed by LHI, as
provided under Section 3.2.1(A)(2) of this Agreement; 3) the
joint resolutions of the Lionhart Board and the LHI Board, as
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provided under Section 3.2.1(A)(3) of this Agreement; 4) the
Legal Opinion of LHI's Counsel, as provided under Section
3.2.1(B) of this Agreement; and 5) the Estoppel Certificate,
as provided under Section 3.2.1(D) of this Agreement; and,
(B) Resolutions. The Compost Resolutions, in
substantially the form as is set forth in Exhibit N of this
Agreement, and the Compost Certificate of Resolutions, in
substantially the form as is set forth in Exhibit O of this
Agreement; and,
(C) Legal Opinion of Counsel. The Legal Opinion of
Compost's Counsel, in substantially the form as is set forth
in Exhibit L of this Agreement; and,
(D) Miscellaneous. All other agreements, instruments,
certificates or other documents 1) that are described,
identified or otherwise prescribed under Section 13.03.02 of
this Agreement, including, all applicable Definitive
Supplemental Documents, and/or 2) that may be requested
reasonably by LHI and/or its counsel.
3.2.3. Compost Undertakings to Lionhart. Compost shall execute
and/or deliver, or cause to be executed and/or delivered, to Lionhart:
(A) Receipt. A receipt, in substantially the form as
is set forth in Exhibit EE, for the execution and/or delivery
by LHI and/or Lionhart to Compost of 1) Certificate No. B-1,
as provided under Section 3.2.1(A)(1) of this Agreement; 2) a
stock power for such Certificate No. B-1, that is duly
executed by LHI, as provided under Section 3.2.1(A)(2) of this
Agreement; 3) the joint resolutions of the Lionhart Board and
the LHI Board, as provided under Section 3.2.1(A)(3) of this
Agreement; 4) the Estoppel Certificate, as provided under
Section 3.2.4(D) of this Agreement; and, 5) the Legal Opinion
of Lionhart's Counsel, as provided under Section 3.2.4(B) of
this Agreement; and,
(B) Replacement Certificate No. B-1. A new or
replacement Certificate No. B-1, duly executed and issued by
Compost, and in a form that is reasonably acceptable to and
approved by Lionhart's counsel, evidencing thereon that
Lionhart, and not LHI, is the registered owner and holder of
the 400,000 fully paid and non-assessable shares of the Series
B Preferred Stock; and,
(C) Resolutions. The Compost Resolutions, in
substantially the form as is set forth in Exhibit N of this
Agreement, and the Compost Certificate of Resolutions, in
substantially the form as is set forth in Exhibit O of this
Agreement; and,
(D) Miscellaneous. All other agreements, instruments,
certificates or other documents that are described, identified
or otherwise prescribed under Section 13.03.03 of this
Agreement, including, all applicable Definitive Supplemental
Documents, and/or 2) that may be requested reasonably by
Lionhart and/or its counsel.
3.2.4. Lionhart's Undertakings to Compost. Lionhart shall
execute and/or deliver, or cause to be executed and/or delivered, to
Compost:
(A) Resolutions. The joint resolutions of the
Lionhart Board and the LHI Board, as provided under Section
3.2.1(A)(3) of this Agreement; and,
(B) Legal Opinion of Counsel. The Legal Opinion of
Lionhart's Counsel, in substantially the form as is set forth
in Exhibit FF of this Agreement; and,
(C) Estoppel Certificate. An estoppel certificate,
duly executed by LHI and Lionhart, in substantially the form
as is set forth in Exhibit CC of this Agreement, and, pursuant
to which, Lionhart releases Compost, and any of its officers,
directors, employees, professionals and other agents or
representatives, from any claim (by Lionhart) relating to or
arising from the failure (by and on the part of, or for or on
behalf of, Compost) to issue to Lionhart, prior to the
Ancillary Transactions Closing on the
Page 20 of 107 Pages
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Closing Date, 1) the above-referenced 400,000 fully paid and
non-assessable shares of Series B Preferred Stock, and/or 2)
the above-referenced 1998 Dividend Shares; and,
(D) Receipt. A receipt, in substantially the form as
is set forth in Exhibit GG of this Agreement, for the
execution and/or delivery by Compost to Lionhart of 1) the
Compost Resolutions and the Compost Certificate of
Resolutions, as provided under Section 3.2.2(B) of this
Agreement, 2) the Legal Opinion of Compost's Counsel, as
provided under Section 3.2.2(C) of this Agreement; and, 3) the
new or replacement Certificate No. B-1, duly executed and
issued by Compost, evidencing thereon that Lionhart, and not
LHI, is the registered owner and holder of the 400,000 fully
paid and non-assessable shares of the Series B Preferred
Stock, as provided under Section 3.2.3(B) of this Agreement;
and,
(E) Estoppel Certificate. An estoppel certificate,
duly executed by Lionhart, in substantially the form as is set
forth in Exhibit HH of this Agreement, and duly authorized
under the joint resolutions of the Lionhart Board and the LHI
Board, as provided under Section 3.2.1(A)(3) of this
Agreement, and, pursuant to which, Lionhart agrees, promises
and covenants to be bound by, and to waive any claims against
or defenses to, and to not assert any challenge to or
contentions against, the LHI Consent and the LHI-Select
Agreement, except for and excluding any claims or actions that
are expressly reserved and permitted under Section 7.1.2 of
this Agreement, and to accept all 400,000 shares of Series B
Preferred Stock, as otherwise evidenced under the replacement
Certificate No. B-1 (as provided under Section 3.2.3(B) of
this Agreement, subject to 1) the Series B Preferred Shares
Subscription Agreement, 2) the Designation of Rights of Series
B Preferred Stock, 3) the LHI Consent and 4) the LHI-Select
Agreement; and,
(F) Miscellaneous. All other agreements, instruments,
certificates or other documents that are described, identified
or otherwise prescribed under Section 13.02.02 of this
Agreement, including, all applicable Definitive Supplemental
Documents.
Section 3.3. 1998 Dividend Shares. At the Ancillary Transactions
Closing, and on the Closing Date at the Closing Location, and upon such terms
and subject to such conditions as are set forth in 1) this Agreement and 2) the
Definitive Supplemental Documents:
3.3.1. Compost Undertakings to Lionhart. Pursuant to the terms
and subject to the conditions set forth in Section 6 of the
"Designation of Rights of Series B Preferred Stock," Compost shall
issue, execute and/or deliver to Lionhart deliver to Lionhart, and
shall register in the name of Lionhart, 35,178 shares of Common Stock
of Compost, as a common stock dividend ("1998 Dividend Shares"), and
shall concurrently deliver to Lionhart:
(A) Certificate. A stock certificate, duly
authorized, executed and issued by Compost to Lionhart, and in
a form that is reasonably acceptable to and approved by
Lionhart's counsel, indicating thereon that Lionhart is the
registered owner and holder of the 1998 Dividend Shares; and,
(B) Resolutions. The Compost Resolutions, in
substantially the form as is set forth in Exhibit N of this
Agreement, and the Compost Certificate of Resolutions, in
substantially the form as is set forth in Exhibit O of this
Agreement; and,
(C) Legal Opinion of Counsel. The Legal Opinion of
Compost's Counsel, in substantially the form as is set forth
in Exhibit L of this Agreement; and,
(D) Miscellaneous. All other agreements, instruments,
certificates or other documents 1) that are described,
identified or otherwise prescribed under Section 13.03.03 of
this Agreement, including, all applicable Definitive
Supplemental Documents, and/or 2) that may be requested
reasonably by Lionhart and/or its counsel.
3.3.2. Lionhart Undertakings to Compost. Lionhart shall
execute and/or deliver or cause to be executed and/or delivered, to
Compost :
(A) Receipt. A receipt, in substantially the form as
is set forth in Exhibit II, for the execution and/or
Page 21 of 107 Pages
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delivery by Compost to Lionhart of 1) the stock certificate,
for and with respect to the 1998 Dividend Shares, as provided
under Section 3.3.1(A) of this Agreement; 2) the Compost
Resolutions and Compost Certificate of Resolutions, as
provided under Section 3.3.1(B) of this Agreement; and, 3) the
Legal Opinion of Compost's Counsel, as provided under Section
3.3.1(C) of this Agreement; and,
(B) Legal Opinion of Counsel. The Legal Opinion of
Lionhart's Counsel, in substantially the form as is set forth
in Exhibit FF of this Agreement; and,
(C) Estoppel Certificate. An estoppel certificate,
duly executed by Lionhart, in substantially the form as is set
forth in Exhibit HH of this Agreement, and duly authorized
under the joint resolutions of the Lionhart Board and the LHI
Board, as provided under Section 3.2.1(A)(3) of this
Agreement, and, pursuant to which, Lionhart agrees, promises
and covenants to be bound by, and to waive any claims against
or defenses to, and to not assert any challenge to or
contentions against, the LHI Consent and the LHI-Select
Agreement, except for and excluding any claims or actions that
are expressly reserved and permitted under Section 7.1.2 of
this Agreement, and to accept all 400,000 shares of Series B
Preferred Stock, as otherwise evidenced under the replacement
Certificate No. B-1 (as provided under Section 3.2.3(B) of
this Agreement, subject to 1) the Series B Preferred Shares
Subscription Agreement, 2) the Designation of Rights of Series
B Preferred Stock, 3) the LHI Consent and 4) the LHI-Select
Agreement; and,
(D) Estoppel Certificate. An estoppel certificate,
duly executed by LHI and Lionhart, in substantially the form
as is set forth in Exhibit CC of this Agreement, and, pursuant
to which, Lionhart releases Compost (and its officers,
directors, employees and agents) from any claim (by Lionhart)
relating to or arising from the failure (by and on the part of
the Compost) to issue to Lionhart, prior to the Ancillary
Transactions Closing on the Closing Date, 1) the
above-referenced 400,000 fully paid and non-assessable shares
of Series B Preferred Stock, and/or 2) the above-referenced
1998 Dividend Shares; and
(E) Miscellaneous. All other agreements, instruments,
certificates or other documents that are described, identified
or otherwise prescribed under Section 13.02.02 of this
Agreement, including, all applicable Definitive Supplemental
Documents.
ARTICLE IV
DEBENTURE CONVERSION UNDER DEBENTURE PURCHASE AGREEMENT
Section 4.1. Recapitulation-Debentures. Compost and Lionhart hereby
agree that, pursuant to the Debenture Purchase Agreement and the Debentures:
1) On or about November 27, 1996, Compost sold, issued and
delivered to Lionhart, and Lionhart purchased from Compost, ten (10)
Debentures, Series 1-10, in the face amount per Debenture of US
$100,000, and for the total purchase price of US $1,300,000;
2) Pursuant to the First Debenture Conversion, on or about May
20, 1997, Lionhart surrendered, delivered and tendered to Compost, a
"Notice of Conversion" (a copy of which is set forth under Appendix
I-Item 12) and two (2) Debentures, each in the face amount of US
$100,000 (i.e., Series 9-10 of 10 Debentures), and, in exchange
therefor, Compost issued and delivered to Compost, and registered in
the name of Lionhart, Certificate No. CA1103, representing 178,253
registered (freely tradable) shares of Common Stock of Compost;
3) Pursuant to the Second Debenture Conversion, on or about
September 8, 1997, Lionhart surrendered, delivered and tendered to
Compost, a "Notice of Conversion" (a copy of which is set forth under
Appendix I-Item 14) and two (2) Debentures, each in the face amount of
US $100,000 (i.e., Series 7-8 of 10 Debentures), and, pursuant thereto,
Lionhart properly converted or otherwise elected to convert US $200,000
of the Debentures; and, based on the Second Debenture Conversion,
Compost, on or about March 13, 1998, issued and delivered to KGL, in
exchange for the surrender, delivery and tender by Lionhart to Compost
of two (2) Debentures (i.e., Series 7-8 of 10), Certificate No. CA1369,
representing 159,670 registered (freely tradable) shares of Common
Stock of Compost, and registered in the name of Lionhart ( a copy of
such Certificate No. 1369 is set forth in Appendix I-Item 15);
Page 22 of 107 Pages
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4) Pursuant to the terms and subject to the conditions of the
Settlement Agreement, 1) Compost and Lionhart have mutually rescinded
the Second Debenture Conversion, 2) Lionhart has returned and delivered
to Compost, on the Effective Date, 159,670 registered (freely tradable)
shares of Common Stock of Compost, that are registered in the name of
Lionhart and that are represented by Certificate No. CA1369, and 3)
Compost has returned and delivered to Lionhart, on the Effective Date,
and otherwise reinstates and makes effective on the Effective Date of
this Agreement, Series 7-8 of 10 Debentures; and,
5) As of and on the Effective Date, and immediately prior to the
Ancillary Transactions Closing under this Agreement, and by giving
effect to the Settlement Agreement, Lionhart owns and holds, and there
are presently outstanding, eight (8) Debentures (Series 1-8)
("Outstanding Debentures"), each in the face amount of US $100,000, with
accrued and unpaid cumulative interest attributable to the Outstanding
Debentures, as of the Effective Date of this Agreement, of US $12,611.33
("Accrued Cumulative Interest").
Section 4.2. Outstanding Debenture Conversion. At the Ancillary
Transactions Closing, on the Closing Date at the Closing Location, and upon such
terms and subject to such conditions as are set forth in 1) this Agreement and
2) the Definitive Supplemental Documents:
4.2.1. Conversion. Pursuant to Section 5 of the Debenture
Purchase Agreement and Section 3 of the Outstanding Debentures, Lionhart
then and thereby converts all Outstanding Debentures, and shall be
deemed conclusively to have then and thereby converted all such
Outstanding Debentures.
4.2.2. Notice of Conversion. This Agreement shall constitute a
"Notice of Conversion," as otherwise required under Section 3(b) of the
Outstanding Debentures, for and with respect to all Outstanding
Debentures, and 1) Lionhart shall not have any duty or obligation, under
the Debenture Purchase Agreement and/or the Outstanding Debentures, or
otherwise, notwithstanding Section 3(b) of the Debenture Purchase
Agreement, to fax or otherwise deliver any additional "Notice of
Conversion" to Compost, and 2) Compost hereby accepts and approves the
"Notice of Conversion," as provided under this Section 4.2.2, and hereby
waives any objection to the "Notice of Conversion," as provided under
this Section 4.2.2.
4.2.3. Surrender. Notwithstanding Section 3(b) of the
Outstanding Debentures, Lionhart shall have the duty to surrender and
deliver the original Outstanding Debentures to Compost, and Compost
shall only have the right to receive or otherwise demand delivery of the
original Outstanding Debentures from Lionhart, at the Ancillary
Transactions Closing, on the Closing Date and at the Closing Location,
as otherwise provided under Section 4.3 of this Agreement.
4.2.4. Date of Conversion. The Date of Conversion, for purposes
of Section 3(f) of the Outstanding Debentures, is and shall be the
Closing Date.
4.2.5. Confirmation. This Agreement shall constitute a
confirmation of receipt by Compost of the "Notice of Conversion," as
otherwise provided under Section 4.2.2 of this Agreement, and 1) Compost
shall not have any duty or obligation, under the Debenture Purchase
Agreement and/or the Outstanding Debentures, or otherwise,
notwithstanding Section 3(b) of the Debenture Purchase Agreement, to fax
or otherwise deliver any additional confirmation of receipt of the
"Notice of Conversion" to Lionhart, and 2) Lionhart hereby accepts and
approves the confirmation of receipt of the "Notice of Conversion," as
provided under this Section 4.2.5, and hereby waives any objection to
the receipt of confirmation of the "Notice of Conversion," as provided
under this Section 4.2.5.
4.2.6. Conversion Shares. Notwithstanding Section 3(a) of the
Outstanding Debentures, the number of shares of "Common Stock" of
Compost, as that term is defined under the Outstanding Debentures, that
are and shall be deemed to be converted from the conversion of the
Outstanding Debentures as contemplated under Article IV of this
Agreement, is 1,406,593 shares of Common Stock of Compost.
Section 4.3. Debenture Conversion-Share Issuance. At the Ancillary
Transactions Closing, on the Closing Date at the Closing Location, and upon such
terms and subject to such conditions as are set forth in 1) this Agreement and
2) the Definitive Supplemental Documents:
Page 23 of 107 Pages
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4.3.1. Lionhart Undertakings to Compost. Lionhart shall execute
and/or deliver (or surrender) or cause to be executed and/or delivered
(or surrendered) to Compost:
(A) Outstanding Debentures. The original Outstanding
Debentures, as that term is defined under Section 4.1 of this
Agreement; and,
(B) Legal Opinion of Counsel. The Legal Opinion of
Lionhart's Counsel, in substantially the form as is set forth in
Exhibit FF of this Agreement; and,
(C) Resolutions. The resolutions of the Lionhart Board,
in substantially the form as is set forth in Exhibit JJ of this
Agreement, thereby approving the conversion by Lionhart of all
Outstanding Debentures, as provided under Section 4.2 of this
Agreement; and,
(D) Receipt. A receipt, in substantially the form as is
set forth in Exhibit KK of this Agreement, for the execution
and/or delivery by Compost to Lionhart of 1) the stock
certificate for the Conversion Shares, as provided under Section
4.3.2(A) of this Agreement; 2) the payment of the Accrued
Cumulative Interest, as provided under Section 4.3.2(B) of this
Agreement; 3) the Compost Resolutions and Compost Certificate of
Resolutions, as provided under Section 4.3.2(C) of this
Agreement; and, 4) the Legal Opinion of Compost's Counsel, as
provided under Section 4.3.2(D) of this Agreement; and,
(E) Miscellaneous. All other agreements, instruments,
certificates or other documents that are described, identified
or otherwise prescribed under Section 13.02.02 of this
Agreement, including, all applicable Definitive Supplemental
Documents.
4.3.2. Compost Undertakings to Lionhart. Compost shall execute
and/or deliver (or issue) or cause to be executed and/or delivered (or
issued) to Lionhart:
(A) Conversion Shares. Based on the conversion by
Lionhart of all Outstanding Debentures, as provided under
Section 4.2 of this Agreement, 1) 1,406,593 shares of
fully-paid, non-assessable shares of Compost Common Stock, par
value $.001 per share, all of which shall then be issued
pursuant to a registration statement filed with and declared
effective by the Securities and Exchange Commission ("Conversion
Shares"), and 2) a stock certificate, duly executed and
delivered by Compost, and in a form that is reasonably
acceptable to and approved by Lionhart's counsel, which
evidences thereon the ownership by Lionhart of all such
Conversion Shares; and,
(B) Accrued Cumulative Interest. A check, in the amount
of the Accrued Cumulative Interest, if any, attributable to the
Outstanding Debentures, as of and on the Closing Date, issued by
Compost to Lionhart, and drawn on good and certified US funds;
and,
(C) Legal Opinion of Counsel. The Legal Opinion of
Compost's Counsel, in substantially the form as is set forth in
Exhibit L of this Agreement; and,
(D) Resolutions. The Compost Resolutions, in
substantially the form as is set forth in Exhibit N of this
Agreement, and the Compost Certificate of Resolutions, in
substantially the form as is set forth in Exhibit O of this
Agreement; and,
(E) Receipt. A receipt, in substantially the form as is
set forth in Exhibit LL of this Agreement, for the execution
and/or delivery by Lionhart to Compost of 1) the Outstanding
Debentures, as provided under Section 4.3.1(A) of this
Agreement; 2) the Legal Opinion of Lionhart's Counsel, as
provided under Section 4.3.1(B) of this Agreement; and, 3) the
resolutions of Lionhart's Board, as provided under Section
4.3.1(C) of this Agreement; and,
(F) Miscellaneous. All other agreements, instruments,
certificates or other documents 1) that are described,
identified or otherwise prescribed under Section 13.03.03 of
this Agreement, including, all applicable Definitive
Supplemental Documents, and/or 2) that may be requested
reasonably by
Page 24 of 107 Pages
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Lionhart and/or its counsel.
ARTICLE V
LHI-SELECT AGREEMENT SHARES
Section 5.1. Recapitulation-LHI-Select Shares. Pursuant to the terms
and subject to the conditions of the LHI-Select Agreement, Select transferred to
LHI, and Compost registered in the name of LHI, and LHI is presently the
registered owner and holder of, the LHI-Select Agreement Shares.
Section 5.2. LHI-Lionhart Transfer. At the Ancillary Transactions
Closing, and on the Closing Date at the Closing Location:
5.2.1. LHI Undertakings to Compost. LHI shall execute and/or
deliver or cause to be executed and/or delivered to Compost:
(A) Certificate, Power and Resolutions. 1) The stock
certificate, if any, that was issued by Compost to LHI, and that
represents or evidences the ownership thereof by LHI of the
LHI-Select Agreement Shares; 2) a stock power for any such stock
certificate, as provided under Section 5.2.1(A)(1), that is duly
executed by LHI; and, 3) the joint resolutions of the Lionhart
Board and the LHI Board, in substantially the form as is set
forth in Exhibit Z of this Agreement, thereby approving the
transfer by LHI to Lionhart of the LHI-Select Agreement Shares;
and,
(B) Legal Opinion of Counsel. The Legal Opinion of LHI's
Counsel, in substantially the form as is set forth in Exhibit AA
of this Agreement, and the Legal Opinion of Lionhart's Counsel,
in substantially the form as is set forth in Exhibit FF of this
Agreement; and,
(C) Receipt. A receipt, in substantially the form as is
set forth in Exhibit MM of this Agreement, for the execution
and/or delivery by Compost to LHI of 1) the Compost Resolutions
and the Compost Certificate of Resolutions, as provided under
Section 5.2.2(B) of this Agreement, and 2) the Legal Opinion of
Compost's Counsel, as provided under Section 5.2.2(C) of this
Agreement; and,
(D) Miscellaneous. All other agreements, instruments,
certificates or other documents that are described, identified
or otherwise prescribed under Section 13.02.03 of this
Agreement, including, all applicable Definitive Supplemental
Documents.
5.2.2. Compost Undertakings to LHI. Compost shall execute and/or
deliver, or cause to be executed and/or delivered, to LHI:
(A) Receipt. A receipt, in substantially the form as is
set forth in Exhibit NN, for the execution and/or delivery by
LHI to Compost of 1) any stock certificate, if any, as provided
under Section 5.2.1(A)(1) of this Agreement; 2) a stock power
for any such certificate, that is duly executed by LHI, as
provided under Section 5.2.1(A)(2) of this Agreement; 3) the
joint resolutions of the Lionhart Board and the LHI Board, as
provided under Section 5.2.1(A)(3) of this Agreement; 4) the
Legal Opinion of LHI's Counsel, as provided under Section
5.2.1(B) of this Agreement; and, 5) the Legal Opinion of
Lionhart's Counsel, as provided under Section 5.2.1(B) of this
Agreement; and,
(B) Resolutions. The Compost Resolutions, in
substantially the form as is set forth in Exhibit N of this
Agreement, and the Compost Certificate of Resolutions, in
substantially the form as is set forth in Exhibit O of this
Agreement; and,
(C) Legal Opinion of Counsel. The Legal Opinion of
Compost's Counsel, in substantially the form as is set forth in
Exhibit L of this Agreement; and,
(D) Miscellaneous. All other agreements, instruments,
certificates or other documents 1) that are
Page 25 of 107 Pages
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described, identified or otherwise prescribed under Section
13.03.02 of this Agreement, including, all applicable Definitive
Supplemental Documents, and/or 2) that may be requested
reasonably by LHI and/or its counsel.
5.2.3. Compost Undertakings to Lionhart. Compost shall execute
and/or deliver, or cause to be executed and/or delivered, to Lionhart:
(A) Receipt. A receipt, in substantially the form as is
set forth in Exhibit OO, for the execution and/or delivery by
LHI and/or Lionhart to Compost of 1) any stock certificate, if
any, as provided under Section 5.2.1(A)(1) of this Agreement; 2)
a stock power for any such certificate, that is duly executed by
LHI, as provided under Section 5.2.1(A)(2) of this Agreement; 3)
the joint resolutions of the Lionhart Board and the LHI Board,
as provided under Section 5.2.1(A)(3) of this Agreement; 4) the
Legal Opinion of LHI's Counsel, as provided under Section
5.2.1(B) of this Agreement; and, 5) the Legal Opinion of
Lionhart's Counsel, as provided under Section 5.2.1(B) of this
Agreement; and,
(B) Stock Certificate/LHI-Select Agreement Shares. A new
stock certificate, duly executed and issued by Compost, and in a
form that is reasonably acceptable to and approved by Lionhart's
counsel, evidencing thereon that Lionhart, and not LHI, is the
registered owner and holder of the LHI-Select Agreement Shares;
and,
(C) Resolutions. The Compost Resolutions, in
substantially the form as is set forth in Exhibit N of this
Agreement, and the Compost Certificate of Resolutions, in
substantially the form as is set forth in Exhibit O of this
Agreement; and,
(D) Miscellaneous. All other agreements, instruments,
certificates or other documents that are described, identified
or otherwise prescribed under Section 13.03.03 of this
Agreement, including, all applicable Definitive Supplemental
Documents, and/or 2) that may be requested reasonably by
Lionhart and/or its counsel.
5.2.4. Lionhart's Undertakings to Compost. Lionhart shall
execute and/or deliver, or cause to be executed and/or delivered, to
Compost:
(A) Resolutions. The joint resolutions of the Lionhart
Board and the LHI Board, as provided under Section 5.2.1(A)(3)
of this Agreement; and,
(B) Legal Opinion of Counsel. The Legal Opinion of
Lionhart's Counsel, in substantially the form as is set forth in
Exhibit FF of this Agreement; and,
(C) Receipt. A receipt, in substantially the form as is
set forth in Exhibit PP of this Agreement, for the execution
and/or delivery by Compost to Lionhart of 1) the Compost
Resolutions and the Compost Certificate of Resolutions, as
provided under Section 5.2.2(B) of this Agreement, 2) the Legal
Opinion of Compost's Counsel, as provided under Section 5.2.2(C)
of this Agreement; and, 3) the stock certificate, duly executed
and issued by Compost, and in a form that is reasonably
acceptable to and approved by Lionhart's counsel, evidencing
thereon that Lionhart, and not LHI, is the registered owner and
holder of the LHI-Select Agreement Shares, as provided under
Section 3.2.3(B) of this Agreement; and,
(D) Miscellaneous. All other agreements, instruments,
certificates or other documents that are described, identified
or otherwise prescribed under Section 13.02.02 of this
Agreement, including, all applicable Definitive Supplemental
Documents.
ARTICLE VI
PURCHASE AND REDEMPTION BY COMPOST OF COMPOST SHARES OWNED BY LIONHART
Section 6.1. Compost-Lionhart Share Purchase Transaction. At the
Ancillary Transactions Closing, and on the Closing Date at the Closing Location,
and upon such terms and subject to such conditions as set forth in 1) this
Agreement and
Page 26 of 107 Pages
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2) any applicable Definitive Supplemental Documents:
6.1.1. Section 6.1 Shares. Compost shall be authorized, and
shall purchase and redeem from Lionhart, 1,000,000 shares of Compost
Common Stock that are owned or held by Lionhart (or will, pursuant to
this Agreement and the Definitive Supplemental Documents, be owned and
held by Lionhart on and as of the Closing Date ("Section 6.1 Shares"),
for and in consideration of the payment and delivery by Compost to
Lionhart of the Purchase Price, as set forth and prescribed under
Section 6.1.2 of this Agreement. The Section 6.1 Shares shall consist
and be comprised of the following: (i) the LHI-Select Agreement Shares
(i.e., 665,000 shares); (ii) the 1998 Dividend Shares (i.e., 35,178
shares); and, (iii) 299,822 shares of Compost Common Stock (which shall
be derived from, and transferred by Lionhart to Compost from, the
Conversion Shares).
6.1.2. Purchase Price. The Purchase Price, for the Section 6.1
Shares, is and shall be US $3,000,000, in cash, or equivalent good US
funds, which shall be payable by Compost to Lionhart from the proceeds
of the Credit.
Section 6.2. Closing Undertakings. At the Ancillary Transactions
Closing, and on the Closing Date at the Closing Location, and upon such terms
and subject to such conditions as set forth in 1) this Agreement and 2) any
applicable Definitive Supplemental Documents:
6.2.1. Lionhart Undertakings to Compost. Lionhart shall execute
and/or deliver or cause to be executed and/or delivered, to Compost:
(A) Certificate, Power and Resolutions. 1) The stock
certificate or certificates, which represent and evidence
thereon that Lionhart is the registered owner and holder of the
Section 6.1 Shares; 2) a stock power for any such stock
certificates, as provided under Section 6.2.1(A)(1), that is
duly executed by Lionhart; and, 3) the joint resolutions of the
Lionhart Board and the LHI Board, in substantially the form as
is set forth in Exhibit Z of this Agreement, thereby approving
the sale and transfer by Lionhart to Compost of, and the
redemption and purchase by Compost from Lionhart of, the
LHI-Select Agreement Shares, for the Purchase Price, as provided
under Section 6.1.1 and Section 6.1.2 of this Agreement; and,
(B) Legal Opinion of Counsel. The Legal Opinion of
Lionhart's Counsel, in substantially the form as is set forth in
Exhibit FF of this Agreement; and,
(C) Receipt. A receipt, in substantially the form as is
set forth in Exhibit QQ of this Agreement, for the execution
and/or delivery by Compost to Lionhart of 1) the Purchase Price,
as provided under Section 6.1.2 and Section 6.2.2(A) of this
Agreement; 2) the Compost Resolutions and the Compost
Certificate of Resolutions, as provided under Section 6.2.2(B)
of this Agreement, and 3) the Legal Opinion of Compost's
Counsel, as provided under Section 6.2.2(C) of this Agreement;
and,
(D) Miscellaneous. All other agreements, instruments,
certificates or other documents that are described, identified
or otherwise prescribed under Section 13.02.02 of this
Agreement, including, all applicable Definitive Supplemental
Documents.
6.2.2. Compost Undertakings to Lionhart. Compost shall execute
and/or deliver, or cause to be executed and/or delivered, to Lionhart:
(A) Receipt. A receipt, in substantially the form as is
set forth in Exhibit RR, for the execution and/or delivery by
Lionhart to Compost of 1) the stock certificate or certificates,
as provided under Section 6.2.1(A)(1) of this Agreement; 2) a
stock power for any such certificate(s), that is duly executed
by Lionhart, as provided under Section 6.2.1(A)(2) of this
Agreement; 3) the joint resolutions of the Lionhart Board and
the LHI Board, as provided under Section 6.2.1(A)(3) of this
Agreement; and, 4) the Legal Opinion of Lionhart's Counsel, as
provided under Section 6.2.1(B) of this Agreement; and,
(B) Purchase Price. The Purchase Price, consisting of US
$3,000,000, in US cash and currency, or equivalent good US
funds, by certified funds or by wire transfer, to an account or
accounts designated by Lionhart's counsel, or pursuant to other
commercially reasonable written instructions provided by
Lionhart
Page 27 of 107 Pages
<PAGE>
to Compost at (or prior to) the Ancillary Transactions Closing;
and,
(C) Resolutions. The Compost Resolutions, in
substantially the form as is set forth in Exhibit N of this
Agreement, and the Compost Certificate of Resolutions, in
substantially the form as is set forth in Exhibit O of this
Agreement; and,
(D) Legal Opinion of Counsel. The Legal Opinion of
Compost's Counsel, in substantially the form as is set forth in
Exhibit L of this Agreement; and,
(E) New Stock Certificate. If necessary, a new stock
certificate, duly authorized and executed by Compost, and in a
form that is reasonably acceptable to and approved by Lionhart's
counsel, which indicates and evidences thereon, that after the
sale and transfer by Lionhart to Compost of 299,822 shares of
the Conversion Shares, as part of the Section 6.1 Shares, as
well as all other shares of Compost Common Stock that otherwise
comprise and constitute the Section 6.1 Shares, and pursuant to
the terms and subject to the provisions of this Agreement,
Lionhart is and remains (as of and immediately after the Closing
Date) the registered owner and holder of 1,106,771 shares of the
Conversion Shares (i.e., Compost Common Stock); and,
(F) Miscellaneous. All other agreements, instruments,
certificates or other documents 1) that are described,
identified or otherwise prescribed under Section 13.03.03 of
this Agreement, including, all applicable Definitive
Supplemental Documents, and/or 2) that may be requested
reasonably by Lionhart and/or its counsel.
ARTICLE VII
DEBENTURE PURCHASE AGREEMENT-ESCROW AGREEMENT AND COLLATERAL UNDERTAKINGS
Section 7.1. Escrow Agreement. At the Ancillary Transactions Closing,
and on the Closing Date at the Closing Location, and upon such terms and subject
to such conditions as set forth in 1) this Agreement and 2) any applicable
Definitive Supplemental Documents:
7.1.1. Escrow-Disposition of Certificates. Subject to Section
7.1.2 of this Agreement, the "Escrow" as prescribed under the Debenture
Purchase Agreement and the Debenture Purchase Agreement, is and shall be
terminated, whereupon: 1) KGL, or any successor Escrow Agent under the
Debenture Purchase Agreement and the Debentures, is and shall be
authorized to release from that "Escrow," and to return and deliver to
VRH Construction Corporation, Certificate No. CA0860, representing
thereof 404,858 shares of Common Stock of Compost, that are registered
in the name of VRH Construction Corporation (including therewith the
stock power for such Certificate No. CA0860, that is duly executed by
VRH Construction Corporation with a signature that is medallion
guaranteed), free of and without claim by KGL (or any successor Escrow
Agent under the Debenture Purchase Agreement and the Debenture), Compost
or Lionhart, under the Debenture Purchase Agreement, the Debentures or
otherwise; and, 2) KGL, or any successor Escrow Agent under the
Debenture Purchase Agreement and the Debentures, is and shall be
authorized to release from that "Escrow," and to deliver to Lionhart,
Certificate No. CA1370, representing 600,000 registered (freely
tradable) shares of Common Stock of Compost, and registered in the name
of Lionhart, which shall be held thereafter by Lionhart, as the Pledged
Compost Shares, pursuant to the terms and subject to the conditions set
forth in 1) this Agreement, 2) the Credit Documents (including the
Security Agreement and the Compost Stock Pledge Agreement (Compost
Common Stock)), and 3) the applicable Definitive Supplemental Documents,
as part of "Collateral" as that term is defined under the Security
Agreement and the Compost Stock Pledge Agreement (Compost Common Stock).
7.1.2. Reservation. Notwithstanding Section 7.1.1 of this
Agreement, and any other term or provision of this Agreement, the
Definitive Supplemental Documents and/or the Credit Documents, Lionhart
hereby reserves the right to assert any claims and/or to commence any
lawsuits or other actions, against KGL (including, without limitation,
Adam S. Gottbetter), and does not (by this Agreement, the Definitive
Supplemental Documents and/or the Credit Documents, or otherwise)
release or waive any right to assert any claims and/or to commence any
lawsuits or other actions against, KGL (including Adam S. Gottbetter),
that relate to or arise from the Debenture Purchase Agreement and/or the
Debentures, the Series B Preferred Shares Subscription Agreement, the
Series B Preferred
Page 28 of 107 Pages
<PAGE>
Stock, the Designation of Rights of Series B Preferred Stock, the LHI
Consent, the LHI-Select Agreement, the LHI-Select Agreement Shares, the
First Debenture Conversion, the Second Debenture Conversion, the KGL
Compost Agreement, the Escrow Agent, or otherwise.
Section 7.2. Closing Undertakings. At the Ancillary Transactions
Closing, and on the Closing Date at the Closing Location, and upon such terms
and subject to such conditions as set forth in 1) this Agreement and 2) any
applicable Definitive Supplemental Documents:
7.2.1. Lionhart Undertakings to Compost. Lionhart shall execute
and/or deliver or cause to be executed and/or delivered, to Compost:
(A) Mutual Escrow Agent Instruction # 1. The "Mutual
Escrow Agent Instruction # 1," in substantially the form as is
set forth under Exhibit SS of this Agreement, by and between
Compost and Lionhart, and, pursuant to which, Compost and
Lionhart shall thereby consent, approve and instruct KGL, as the
Escrow Agent under the Debenture Purchase Agreement and the
Debentures, to release from that "Escrow," and to return and
deliver to VRH Construction Corporation, Certificate No. CA0860,
representing thereof 404,858 shares of Common Stock of Compost,
that are registered in the name of VRH Construction Corporation
(including therewith the stock power for such Certificate No.
CA0860, that is duly executed by VRH Construction Corporation
with a signature that is medallion guaranteed), free of and
without claim by KGL (or any successor Escrow Agent under the
Debenture Purchase Agreement and the Debenture), Compost or
Lionhart, under the Debenture Purchase Agreement, the Debentures
or otherwise; and,
(B) Mutual Escrow Agent Instruction # 2. The "Mutual
Escrow Agent Instruction # 2," in substantially the form as is
set forth under Exhibit TT of this Agreement, by and between
Compost and Lionhart, and, pursuant to which, Compost and
Lionhart shall thereby consent, approve and instruct KGL, as the
Escrow Agent under the Debenture Purchase Agreement and the
Debentures, to release from that "Escrow," and to deliver to
Lionhart, Certificate No. CA1370, representing 600,000
registered (freely tradable) shares of Common Stock of Compost,
and registered in the name of Lionhart, which shall be held
thereafter by Lionhart, as the Pledged Compost Certificate,
pursuant to the terms and subject to the conditions set forth in
1) this Agreement, 2) the Credit Documents (including the
Security Agreement and the Compost Stock Pledge Agreement
(Compost Common Stock)), and 3) the applicable Definitive
Supplemental Documents, as part of "Collateral" as that term is
defined under the Security Agreement and the Compost Stock
Pledge Agreement (Compost Common Stock); and,
(C) Joint Resolutions. The joint resolutions of the
Lionhart Board and the LHI Board, in substantially the form as
is set forth in Exhibit Z of this Agreement; and,
(D) Legal Opinion of Counsel. The Legal Opinion of
Lionhart's Counsel, in substantially the form as is set forth in
Exhibit FF of this Agreement; and,
(E) Receipt. A receipt, in substantially the form as is
set forth in Exhibit UU of this Agreement, for the execution
and/or delivery by Compost to Lionhart of 1) the Mutual Escrow
Agent Instruction # 1, as provided under Section 7.2.1(A) and
Section 7.2.2(B) of this Agreement; 2) the Mutual Escrow Agent
Instruction # 2, as provided under Section 7.2.1(B) and Section
7.2.2(C) of this Agreement; 3) Certificate No. CA1370,
representing 600,000 registered (freely tradable) shares of
Common Stock of Compost, and registered in the name of Lionhart,
as provided and contemplated under Section 7.1.1 and Section
7.2.1(B) of this Agreement; 4) the Compost Resolutions and the
Compost Certificate of Resolutions, as provided under Section
7.2.2(D) of this Agreement, and 5) the Legal Opinion of
Compost's Counsel, as provided under Section 7.2.2(E) of this
Agreement; and,
(F) Miscellaneous. All other agreements, instruments,
certificates or other documents that are described, identified
or otherwise prescribed under Section 13.02.02 of this
Agreement, including, all applicable Definitive Supplemental
Documents.
7.2.2. Compost Undertakings to Lionhart. Compost shall execute
and/or deliver, or cause to be executed
Page 29 of 107 Pages
<PAGE>
and/or delivered, to Lionhart:
(A) Receipt. A receipt, in substantially the form as is
set forth in Exhibit VV, for the execution and/or delivery by
Lionhart to Compost of 1) the Mutual Escrow Agent Instruction #
1, as provided under Section 7.2.1(A) of this Agreement; 2) the
Mutual Escrow Agent Instruction # 2, as provided under Section
7.2.1(B) of this Agreement; 3) the joint resolutions of the
Lionhart Board and the LHI Board, as provided under Section
7.2.1(C) of this Agreement; and, 4) the Legal Opinion of
Lionhart's Counsel, as provided under Section 7.2.1(D) of this
Agreement; and,
(B) Mutual Escrow Agent Instruction # 1. The "Mutual
Escrow Agent Instruction # 1," in substantially the form as is
set forth under Exhibit SS of this Agreement, by and between
Compost and Lionhart, and, pursuant to which, Compost and
Lionhart shall thereby consent, approve and instruct KGL, as the
Escrow Agent under the Debenture Purchase Agreement and the
Debentures, to release from that "Escrow," and to return and
deliver to VRH Construction Corporation, Certificate No. CA0860,
representing thereof 404,858 shares of Common Stock of Compost,
that are registered in the name of VRH Construction Corporation
(including therewith the stock power for such Certificate No.
CA0860, that is duly executed by VRH Construction Corporation
with a signature that is medallion guaranteed), free of and
without claim by KGL (or any successor Escrow Agent under the
Debenture Purchase Agreement and the Debenture), Compost or
Lionhart, under the Debenture Purchase Agreement, the Debentures
or otherwise; and,
(C) Mutual Escrow Agent Instruction # 2. The "Mutual
Escrow Agent Instruction # 2," in substantially the form as is
set forth under Exhibit TT of this Agreement, by and between
Compost and Lionhart, and, pursuant to which, Compost and
Lionhart shall thereby consent, approve and instruct KGL, as the
Escrow Agent under the Debenture Purchase Agreement and the
Debentures, to release from that "Escrow," and to deliver to
Lionhart, Certificate No. CA1370, representing 600,000
registered (freely tradable) shares of Common Stock of Compost,
and registered in the name of Lionhart, which shall be held
thereafter by Lionhart, as the Pledged Compost Certificate,
pursuant to the terms and subject to the conditions set forth in
1) this Agreement, 2) the Credit Documents (including the
Security Agreement and the Compost Stock Pledge Agreement
(Compost Common Stock)), and 3) the applicable Definitive
Supplemental Documents, as part of "Collateral" as that term is
defined under the Security Agreement and the Compost Stock
Pledge Agreement (Compost Common Stock); and,
(D) Resolutions. The Compost Resolutions, in
substantially the form as is set forth in Exhibit N of this
Agreement, and the Compost Certificate of Resolutions, in
substantially the form as is set forth in Exhibit O of this
Agreement; and,
(E) Legal Opinion of Counsel. The Legal Opinion of
Compost's Counsel, in substantially the form as is set forth in
Exhibit L of this Agreement; and,
(F) Miscellaneous. All other agreements, instruments,
certificates or other documents 1) that are described,
identified or otherwise prescribed under Section 13.03.03 of
this Agreement, including, all applicable Definitive
Supplemental Documents, and/or 2) that may be requested
reasonably by Lionhart and/or its counsel.
Section 7.3. General Closing Undertakings. At the Ancillary
Transactions Closing, on the Closing Date at the Closing Location, and
thereafter, 1) Compost and Lionhart shall use commercially reasonable
efforts, in good faith, to mutually cooperate, with respect to the
implementation of Section 7.1 of this Agreement.
ARTICLE VIII
COMPOST WARRANTS
Section 8.1. Warrants. At the Ancillary Transactions Closing, on the
Closing Date at the Closing Location, Compost shall issue warrants to Lionhart
(or the registered holder thereof) to purchase from Compost: 1) 500,000 shares
of registered (freely tradable) shares of Common Stock of Compost, for the
purchase price per share of US $1.00, pursuant to the terms and subject to the
conditions that are set forth in the Compost-Lionhart Warrant #1 (a copy of
which is set forth in Exhibit WW.1
Page 30 of 107 Pages
<PAGE>
of this Agreement), and which shall be exercisable at any time thereafter, by
the registered holder thereof, before January 1, 2005; 2) 200,000 shares of
registered (freely tradable) shares of Common Stock of Compost, for the purchase
price per share of US $1.25, pursuant to the terms and subject to the conditions
that are set forth in the Compost-Lionhart Warrant #2 (a copy of which is set
forth in Exhibit WW.2 of this Agreement), and which shall be exercisable at any
time thereafter, by the registered holder thereof, before January 1, 2005; 3)
200,000 shares of registered (freely tradable) shares of Common Stock of
Compost, for the purchase price per share of US $1.50, pursuant to the terms and
subject to the conditions that are set forth in the Compost-Lionhart Warrant #3
(a copy of which is set forth in Exhibit WW.3 of this Agreement), and which
shall be exercisable at any time thereafter, by the registered holder thereof,
before January 1, 2005; 4) 200,000 shares of registered (freely tradable) shares
of Common Stock of Compost, for the purchase price per share of US $1.75,
pursuant to the terms and subject to the conditions that are set forth in the
Compost-Lionhart Warrant #4 (a copy of which is set forth in Exhibit WW.4 of
this Agreement), and which shall be exercisable at any time thereafter, by the
registered holder thereof, before January 1, 2005; 5) 200,000 shares of
registered (freely tradable) shares of Common Stock of Compost, for the purchase
price per share of US $2.00, pursuant to the terms and subject to the conditions
that are set forth in the Compost-Lionhart Warrant #5 (a copy of which is set
forth in Exhibit WW.5 of this Agreement), and which shall be exercisable at any
time thereafter, by the registered holder thereof, before January 1, 2005; and,
6) 200,000 shares of registered (freely tradable) shares of Common Stock of
Compost, for the purchase price per share of US $2.25, pursuant to the terms and
subject to the conditions that are set forth in the Compost-Lionhart Warrant #6
(a copy of which is set forth in Exhibit WW.6 of this Agreement), and which
shall be exercisable at any time thereafter, by the registered holder thereof,
before January 1, 2005.
Section 8.2. Closing Undertakings. At the Ancillary Transactions
Closing, and on the Closing Date at the Closing Location, and upon such terms
and subject to such conditions as set forth in 1) this Agreement and 2) any
applicable Definitive Supplemental Documents:
8.2.1. Lionhart Undertakings to Compost. Lionhart shall execute
and/or deliver or cause to be executed and/or delivered, to Compost:
(A) Warrant Receipt. A receipt, in substantially the
form that is set forth in Exhibit XX of this Agreement, for the
execution and/or delivery by Compost to Lionhart of 1) the duly
authorized, executed and issued Compost-Lionhart Warrant # 1,
Compost-Lionhart Warrant # 2, Compost-Lionhart Warrant # 3,
Compost-Lionhart Warrant # 4, Compost-Lionhart Warrant # 5 and
Compost-Lionhart Warrant # 6; 2) the Compost Resolutions and the
Compost Certificate of Resolutions, as provided under Section
8.2.2(D) of this Agreement, and 3) the Legal Opinion of
Compost's Counsel, as provided under Section 8.2.2(E) of this
Agreement; and,
(B) Miscellaneous. All other agreements, instruments,
certificates or other documents that are described, identified
or otherwise prescribed under Section 13.02.02 of this
Agreement, including, all applicable Definitive Supplemental
Documents.
8.2.2. Compost Undertakings to Lionhart. Compost shall execute
and/or deliver, or cause to be executed and/or delivered, to Lionhart:
(A) Warrants. Compost-Lionhart Warrant # 1,
Compost-Lionhart Warrant # 2, Compost-Lionhart Warrant # 3,
Compost-Lionhart Warrant # 4, Compost-Lionhart Warrant # 5 and
Compost-Lionhart Warrant # 6, each of which shall be duly
authorized, executed and delivered by Compost to Lionhart, and
in a form that is reasonably acceptable to and approved by
Lionhart's counsel; and,
(B) Resolutions. The Compost Resolutions, in
substantially the form as is set forth in Exhibit N of this
Agreement, and the Compost Certificate of Resolutions, in
substantially the form as is set forth in Exhibit O of this
Agreement; and,
(C) Legal Opinion of Counsel. The Legal Opinion of
Compost's Counsel, in substantially the form as is set forth in
Exhibit L of this Agreement; and,
(D) Miscellaneous. All other agreements, instruments,
certificates or other documents 1) that are described,
identified or otherwise prescribed under Section 13.03.03 of
this Agreement, including,
Page 31 of 107 Pages
<PAGE>
all applicable Definitive Supplemental Documents, and/or 2) that
may be requested reasonably by Lionhart and/or its counsel.
ARTICLE IX
PUT AGREEMENT (SERIES B PREFERRED STOCK)
Section 9.1. Recapitulation-Series B Preferred Stock. Compost and
Lionhart hereby confirm, and hereby agree, 1) that, as of and immediately
subsequent to the Ancillary Transactions Closing, on the Closing Date at the
Closing Location, and pursuant to the Series B Preferred Shares Subscription
Agreement and Section 3.1 and Section 3.2 of this Agreement, Lionhart is the
registered owner and holder of 400,000 shares of the Series B Preferred Stock
("Series B Preferred Stock"), and 2) that, pursuant to the terms and subject to
the conditions of the Series B Preferred Shares Subscription Agreement and the
Designation of Rights of Series B Preferred Stock, each such share of Series B
Preferred Stock is convertible into one (1) share of Common Stock of Compost, at
any time after September 15, 1997, upon notice and demand by the registered
holder thereof, subject to the adjustments set forth under Section 2(b) of the
Designation of Rights of Series B Preferred Stock.
Section 9.2. Put-Series B Preferred Stock. With respect to all such
400,000 shares of Series B Preferred Stock, that are or shall be owned and held
by Lionhart as of the Ancillary Transactions Closing, on the Closing Date at the
Closing Location, Compost and Lionhart each hereby agree, promise and covenant,
as follows:
9.2.1. Conversion. This Section 9.2 shall apply to each share of
Common Stock of Compost, that is converted from one (1) or more shares
of the 400,000 shares of Series B Preferred Stock, as identified and
described under Section 9.1 of this Agreement, by Lionhart (or any
successor registered owner thereof), pursuant to the terms and subject
to the conditions set forth in the Designation of Rights of Series B
Preferred Stock ("Conversion Common Share(s")").
9.2.2. Put. Commencing on and as of the Ancillary Transactions
Closing, on the Closing Date at the Closing Location, and thereafter
(subject to Section 9.2.3 of this Agreement), Compost hereby grants,
conveys, transfers and delivers to Lionhart, a put option for and with
respect to each and every Conversion Common Share ("Put Option #1"),
that is and shall be exercisable at any time(s) in the sole discretion
and election of Lionhart as provided under (and pursuant to the terms
and subject to the conditions set forth in) this Section 9.2, and
pursuant to which, upon any exercise(s) thereof by Lionhart, Lionhart
shall have the right to demand and compel Compost to purchase from
Lionhart, and Compost shall then and thereupon have the unconditional
duty and obligation to purchase from Lionhart, any and all such
Conversion Common Share(s) that are otherwise the subject of any such
exercise(s) of a Put Option # 1.
9.2.3. Put Conditions. Any exercise(s) of any Put Option # 1, as
provided under Section 9.2.1 and Section 9.2.2 of this Agreement, is and
shall be subject to the following procedures and conditions:
(a) Put Option Election. Lionhart, when and if Lionhart
elects at any time(s) to exercise a Put Option # 1 with respect
to any such Conversion Common Shares, shall deliver to Compost,
via fax or e-mail (followed promptly by a hard copy) or hard
copy, a written notice of an election at any such time(s) to
exercise the Put Option # 1 ("Put Election"), not more than
twenty (20) business days before and not less than ten (10)
business days prior to the "Maturity Date of the Mortgage Note"
(as that term is defined under Section 9.4 of this Agreement).
(b) Put Purchase Price. Upon the receipt by Compost of
any such Put Election at any time(s), Lionhart shall have the
duty to sell to Compost, and Compost shall have the duty to
purchase from Lionhart, on the Maturity Date of such Mortgage
Note, all such Conversion Common Shares for which, pursuant to
such Put Election, Lionhart has exercised a Put Option # 1, for
the purchase price ("Put Purchase Price") of US $3.10 per share
of each such Conversion Common Share, which shall be paid by
Compost to Lionhart in US cash or currency, or equivalent good
US funds, on the "Maturity Date of such Mortgage Note" (as that
term is defined under Section 9.4 of this Agreement).
(c) Lapse. Any Put Option # 1, that is not exercised as
provided under Section 9.2.3 of this Agreement, shall then and
thereafter terminate and lapse, and shall not thereafter have
any legal force or
Page 32 of 107 Pages
<PAGE>
effect.
(d) Successors and Assigns. The term "Lionhart," for
purposes of Article IX of this Agreement, shall mean Lionhart,
and each and every successor registered owner of any Conversion
Common Share(s) thereafter, and the rights and duties, as
provided and set forth in Section 9.1 and Section 9.2 of this
Agreement, shall inure to the benefit of, and shall be binding
upon, Compost and Lionhart, and their respective successors and
assigns.
9.2.4. Stock Certificate-Put Option # 1 Legends. Compost and
Lionhart hereby agree, promise and covenant as follows:
(a) Certificates-Series B Preferred Stock. On and as of
the Ancillary Transactions Closing on the Closing Date, Compost
shall place or cause to be placed on each stock certificate,
that represents any one (1) or more of the above-referenced
400,000 shares of Series B Preferred Stock to which the Put
Option # 1 is applicable, and each such stock certificate shall
bear, the following legend:
"The securities represented hereby are subject to a Put,
that is or may by exercised by the registered holder
hereof, at any time after October 30, 1998, and on or
before the earlier of (i) October 1, 2000, or (ii) the
date corresponding to the "Financial Closing of the
Miami Project Financing" (as that term is defined under
Section 8 of a Mortgage Note, in the principal amount of
US $10,500,000.00, dated and delivered on October 30,
1998, a maker of which is Compost America Holding
Company, Inc., Miami Recycling and Composting Company,
Inc., and Bedminster Seacor Services Miami Corporation,
and the original holder of which is Lionhart Global
Appreciation Fund, Ltd., Lionhart Investments, Ltd., and
Global EarthFund Partners, L.L.C.), pursuant to the
terms and subject to the conditions set forth in Article
IX of an agreement, entitled "Credit, Capitalization and
Financing Agreement," dated on and as of October 30,
1998, a signatory party of which is Compost America
Holding Company, Inc."
(b) Certificates-Conversion Common Shares. On and as of,
and subsequent to, the Ancillary Transactions Closing on the
Closing Date, Compost shall place or cause to be placed on each
stock certificate, that represents any one (1) or more of the
above-referenced Conversion Common Shares to which the Put
Option # 1 is applicable, and each such stock certificate shall
bear, the following legend:
"The securities represented hereby are subject to a Put,
that is or may by exercised by the registered holder
hereof, at any time after October 30, 1998, and on or
before the earlier of (i) October 1, 2000, or (ii) the
date corresponding to the "Financial Closing of the
Miami Project Financing" (as that term is defined under
Section 8 of a Mortgage Note, in the principal amount of
US $10,500,000.00, dated and delivered on October 30,
1998, a maker of which is Compost America Holding
Company, Inc., Miami Recycling and Composting Company,
Inc., and Bedminster Seacor Services Miami Corporation,
and the original holder of which is Lionhart Global
Appreciation Fund, Ltd., Lionhart Investments, Ltd., and
Global EarthFund Partners, L.L.C.), pursuant to the
terms and subject to the conditions set forth in Article
IX of an agreement, entitled "Credit, Capitalization and
Financing Agreement," dated on and as of October 30,
1998, a signatory party of which is Compost America
Holding Company, Inc."
Section 9.3. Ancillary Transactions Closing. At the Ancillary
Transactions Closing (on the Closing Date and at the Closing Location), 1)
Lionhart shall present to Compost all stock certificates, that are presently
held by Lionhart, and that represent any one (1) or more of the above-referenced
400,000 shares of Series B Preferred Stock to which the Put Option # 1 is
applicable, and, 2) Compost shall place the legend, as otherwise provided under
Section 9.2.4(a) of this Agreement, on the stock certificates as presented under
this Section 9.3(1), and shall then return to Lionhart all such stock
certificates (as otherwise presented to Compost and which then bear the legend,
as otherwise provided under this Section 9.3).
Section 9.4. Definition-Maturity Date of the Mortgage Note. The term
"Maturity Date of the Mortgage Note," for
Page 33 of 107 Pages
<PAGE>
purposes of Article IX of this Agreement, shall be defined as, and shall mean,
the same date as the "Maturity Date" of the Mortgage Note, as the term "Maturity
Date" is otherwise defined and determined under Section 8 of the Mortgage Note.
ARTICLE X
PUT AGREEMENT (EXCESS COMMON SHARES)
Section 10.1. Recapitulation-Excess Common Shares. Compost and Lionhart
hereby confirm, and hereby agree, that, as of and immediately subsequent to the
consummation of the Ancillary Transactions Closing, on the Closing Date at the
Closing Location, and exclusive of the 178,253 shares of Common Stock of Compost
that were issued by Compost to Lionhart pursuant to the First Debenture
Conversion, Lionhart is the registered holder of 1,106,771 shares of Common
Stock of Compost ("Post-Closing Common Shares"), exclusive of any shares of
Compost Common Stock to which Lionhart (or any successor registered owner
thereof) is entitled to purchase under and pursuant to the Compost-Lionhart
Warrant # 1, and/or the Compost-Lionhart Warrant # 2, and/or the
Compost-Lionhart Warrant # 3, and/or the Compost-Lionhart Warrant # 4, and/or
the Compost-Lionhart Warrant # 5 and/or the Compost-Lionhart Warrant # 6, which
is calculated as follows:
<TABLE>
<CAPTION>
Shares of
Derivative Transaction Compost Common Stock
<S> <C>
LHI-Select Agreement Shares (10/23/98) 665,000
1998 Dividend Shares (10/23/98) 35,178
Conversion Shares-Debenture Conversion (10/30/98) 1,406,593
Sub-Total (10/30/98) 2,106,771
Less: Section 6.1 Shares (10/30/98) (1,000,000)
Post-Closing Compost Common Stock (10/30/98) 1,106,771
</TABLE>
The term "Excess Common Shares," for purposes of this Article X, shall mean 50%
of the "Post-Closing Compost Common Stock (10/30/98)," as and of the Ancillary
Transactions Closing on the Closing Date, as set forth in the last row of the
table set forth in this Section 10.1, or 553,386 shares of Common Stock of
Compost ("Excess Common Shares").
Section 10.2. Put-Excess Common Shares. With respect to each and every
of those Excess Common Shares, Compost and Lionhart each hereby agree, promise
and covenant as follows:
10.2.1. Put. Commencing on and as of the Ancillary Transactions
Closing, on the Closing Date at the Closing Location, and thereafter
(subject to Section 10.2.2 of this Agreement), Compost hereby grants,
conveys, transfers and delivers to Lionhart, a put option for and with
respect to each and every Excess Common Share ("Put Option #2"), that is
and shall be exercisable at any time(s) in the sole discretion and
election of Lionhart as provided under (and pursuant to the terms and
subject to the conditions set forth in) this Section 10.2, and pursuant
to which, upon any exercise(s) thereof by Lionhart, Lionhart shall have
the right to demand and compel Compost to purchase from Lionhart, and
Compost shall then and thereupon have the unconditional duty to purchase
from Lionhart, any and all such Excess Common Share(s) that are
otherwise the subject of any such exercise(s) of a Put Option #2.
10.2.2. Put Conditions. Any exercise(s) of any Put Option #2, as
provided under Section 10.2.1 of this Agreement, is and shall be subject
to the following procedures and conditions:
(a) Put Option Election. Lionhart, when and if Lionhart
elects at any time(s) to exercise a Put Option # 2 with respect
to any such Excess Common Shares, shall deliver to Compost, via
fax, e-mail or hard copy, a written notice of an election at any
such time(s) to exercise the Put Option # 2 ("Put Election"),
not more than twenty (20) business days before and not less than
ten (10) business days prior to the "First Anniversary Date of
the Maturity Date of the Mortgage Note" (as that term is defined
under Section 10.4 of this Agreement).
(b) Put Purchase Price. Upon the receipt by Compost of
any such Put Election at any time(s), Lionhart shall have the
duty to sell to Compost, and Compost shall have the duty to
purchase from Lionhart,
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on the First Anniversary Date of the Maturity Date of such
Mortgage Note, all such Excess Common Shares for which, pursuant
to such Put Election, Lionhart has exercised a Put Option #2,
for the purchase price ("Put Purchase Price") of US $3.20 per
share of each such Excess Common Share, which shall be paid by
Compost to Lionhart in US cash or currency, or equivalent good
US funds, on the "First Anniversary Date of the Maturity Date of
such Mortgage Note" (as that term is defined under Section 10.4
of this Agreement).
(c) Lapse. Any Put Option #2, that is not exercised as
provided under Section 10.2.2(b) of this Agreement, shall then
and thereafter terminate and lapse, and shall not thereafter
have any legal force or effect.
(d) Successors and Assigns. The term "Lionhart," for
purposes of Article X of this Agreement, shall mean Lionhart,
and each and every successor registered owner of any Conversion
Common Share(s) thereafter, and the rights and duties, as
provided and set forth in Section 10.1 and Section 10.2 of this
Agreement, shall inure to the benefit of, and shall be binding
upon, Compost and Lionhart, and their respective successors and
assigns.
10.2.3. Stock Certificate-Put Option # 2 Legends. Compost and
Lionhart hereby agree, promise and covenant that, on and as of the
Ancillary Transactions Closing on the Closing Date, Compost shall place
or cause to be placed on each stock certificate, that represents any one
(1) or more of the above-referenced Conversion Common Shares to which
the Put Option # 2 is applicable, and each such stock certificate shall
bear, the following legend:
"The securities represented hereby are subject to a Put, that is
or may by exercised by the registered holder hereof, at any time
after October 30, 1998, and on or before the earlier of (i)
October 1, 2001, or (ii) the date corresponding to the "First
Anniversary Date of the Maturity Date of the Mortgage Note" (as
that term is defined under Section 10.4 of an agreement,
entitled "Credit, Capitalization and Financing Agreement," dated
on and as of October 30, 1998, a signatory party of which is
Compost America Holding Company, Inc.), pursuant to the terms
and subject to the conditions set forth in Article X of that
"Credit, Capitalization and Financing Agreement."
Section 10.3. Ancillary Transactions Closing. At the Ancillary
Transactions Closing (on the Closing Date and at the Closing Location), 1)
Lionhart shall present to Compost all stock certificates, that are presently
held by Lionhart, and that represent any one (1) or more of the above-referenced
Conversion Common Shares to which the Put Option # 2 is applicable, and, 2)
Compost shall place the legend, as otherwise provided under Section 10.2. 3 of
this Agreement, on the stock certificates as presented under this Section
10.3(1), and shall then return to Lionhart all such stock certificates (as
otherwise presented to Compost and which then bear the legend, as otherwise
provided under this Section 10.3).
Section 10.4. Definition-First Anniversary Date of the Maturity Date of
the Mortgage Note. The term "First Anniversary Date of the Maturity Date of the
Mortgage Note," for purposes of Article X of this Agreement, shall be defined
as, and shall mean, the date and time corresponding to twelve (12) months after
the first day of the first calendar month that is inclusive of the "Maturity
Date" of the Mortgage Note, as the term "Maturity Date" is otherwise defined and
determined under Section 8 of the Mortgage Note.
ARTICLE XI
REPRESENTATIONS AND WARRANTIES RELATING TO COMPOST AND SUBSIDIARIES
Compost, Miami and Bedminster, on a joint and several basis, each
hereby represent and warrant to Lionhart, LHI and GEP, as is set forth in
Section 11.01-Section 11.27, that:
Section 11.01. Organization and Qualification: Compost/Subsidiaries.
Compost is a New Jersey corporation, that is duly organized, validly existing
and in good standing under the laws of the State of New Jersey. Miami is a
Delaware corporation, that is duly organized, validly existing and in good
standing under the laws of the State of Delaware. Bedminster is a Florida
corporation, that is duly organized, validly existing and in good standing under
the laws of the State of Florida. Miami is a direct controlled subsidiary of
Compost, and Compost owns and controls 80.1% of all issued and outstanding
capital stock of Miami and Mestre owns and controls 19.9% of all issued and
outstanding capital stock of Miami. Bedminster is 1) a direct wholly-owned
subsidiary of Miami and 2) an indirect controlled subsidiary of Compost.
Compost, and each of its Subsidiaries (including, without limitation, Miami and
Bedminster), is a corporation duly organized, validly existing and in good
standing under the laws of their respective jurisdictions of incorporation or
formation, and has the requisite power and authority to own, lease and operate
their respective properties and carry on their respective business in all
material respects as presently owned or conducted. Compost and each of its
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Subsidiaries (including, without limitation, Miami and Bedminster) is each duly
qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of its properties owned,
leased or operated by it or the nature of its activities make such qualification
or licensing necessary, except those jurisdictions, if any, in which the failure
to be do duly qualified or licensed and in good standing would not, taken as a
whole, have a Material Adverse Effect. The Disclosure Documents set forth a
complete and correct list of each of the Subsidiaries of Compost and each
Affiliate of Compost. Miami is a direct controlled subsidiary of Compost, and
every other Subsidiary (including, Bedminster) is directly or indirectly
wholly-owned or controlled by Compost, unless otherwise indicated in the
Disclosure Documents, which Disclosure Documents set forth all other owners of
each such Subsidiary not directly or indirectly-wholly owned by Compost,
including their percentage of ownership in such entity and further explaining
any differences between the percentage of such ownership and any rights of such
owner with respect to the cash flow of such entities and further including all
Persons who have any rights to become such owner in the future. Other than the
Subsidiaries, there are no other corporations, partnerships, limited liability
companies, joint ventures, associations or other entities in which Compost owns,
of record or beneficially any direct or indirect equity or other interest or any
right (contingent or otherwise) to acquire the same. Other than the
Subsidiaries, Compost is not a member of (nor is any part of its business
conducted through) any partnership, nor is Compost a participant in any joint
venture or other similar arrangement.
Section 11.02. Organization and Qualification:
Miami/Bedminster/Subsidiaries. (a) Miami is a Delaware corporation, that is duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has the requisite power and authority to own, lease and operate
its properties and carry on its business in all material respects as presently
owned or conducted. Miami is a direct controlled subsidiary of Compost. Compost
controls Miami. Bedminster is a direct wholly-owned subsidiary of Miami. Except
for Bedminster, Miami does not own or control any other Subsidiary, directly or
indirectly. Miami is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
its properties owned, leased or operated by it or the nature of its activities
make such qualification or licensing necessary, including the State of Florida,
except those jurisdictions, if any, in which the failure to be do duly qualified
or licensed and in good standing would not, taken as a whole, have a Material
Adverse Effect. The Disclosure Documents set forth a complete and correct list
of each Affiliate of Miami. Compost owns and controls 80.1% of all issued and
outstanding capital stock of Miami, and Mestre owns and controls 19.9% of all
issued and outstanding capital stock of Miami. Other than Compost and Mestre,
there are no other corporations, partnerships, limited liability companies,
joint ventures, associations or other entities or Persons that own(s), of record
or beneficially any direct or indirect equity or other interest or any right
(contingent or otherwise) to acquire the same in and to Miami. Miami is not a
member of (nor is any part of its business conducted through) any partnership,
nor is Miami a participant in any joint venture or other similar arrangement.
(b) Bedminster is a Florida corporation, that is duly organized,
validly existing and in good standing under the laws of the State of Florida,
and has the requisite power and authority to own, lease and operate its
properties and carry on its business in all material respects as presently owned
or conducted. Bedminster is a direct wholly-owned subsidiary of Miami, and is an
indirect controlled subsidiary of Compost. Compost controls Bedminster.
Bedminster does not own or control any Subsidiary, directly or indirectly.
Bedminster is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
its properties owned, leased or operated by it or the nature of its activities
make such qualification or licensing necessary, including the State of Florida,
except those jurisdictions, if any, in which the failure to be do duly qualified
or licensed and in good standing would not, taken as a whole, have a Material
Adverse Effect. The Disclosure Documents set forth a complete and correct list
of each Affiliate of Bedminster. Other than Compost and Miami, there are no
other corporations, partnerships, limited liability companies, joint ventures,
associations or other entities or Persons that own(s), of record or beneficially
any direct or indirect equity or other interest or any right (contingent or
otherwise) to acquire the same in and to Bedminster. Bedminster is not a member
of (nor is any part of its business conducted through) any partnership, nor is
Bedminster a participant in any joint venture or other similar arrangement.
Section 11.03. Certificate of Incorporation and By-Laws. Compost, Miami
and Bedminster have heretofore furnished to Lionhart, LHI and GEP, as to Compost
and each Subsidiary of Compost (including, without limitation, Miami and
Bedminster), a complete and correct copy of the Certificate of Incorporation and
the By-Laws, each as amended through the date hereof, each of which is in full
force and effect as of the date hereof. Neither Compost nor any Subsidiary
(including, without limitation, Miami and Bedminster) is in violation of any of
the provisions of their respective Certificates of Incorporation or By-Laws, and
to Compost's and Miami's and Bedminster's knowledge, none of the Subsidiaries of
Compost
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(including, without limitation, Miami and Bedminster) are in violation of any of
the provisions of their respective charters of incorporation, by-laws or
equivalent organizational documents, with respect to any matter, transaction,
event or occurrence whatsoever, including, without limitation, the execution,
consummation and performance by Compost and/or Miami and/or Bedminster of this
Agreement and/or the Definitive Supplemental Documents.
Section 11.04. Compost Capitalization. (a) As of the close of business
on the Effective Date of this Agreement, the authorized capital stock of Compost
consisted of (1) 25,000,000 shares of preferred stock, of which (i) 169,000
shares of Preferred Stock Series A are issued and outstanding, (ii) 401,000
shares of Preferred Stock Series B are issued and outstanding, (iii) 91,000
shares of Preferred Stock Series C are issued and outstanding, and (iv) 17,500
shares of Preferred Stock Series D are issued and outstanding, and (2)
100,000,000 shares of Common Stock, of which (i) 43,736,581 shares of Common
Stock are issued and outstanding, (ii) no shares of Common Stock are held in the
treasury of Compost, (iii) an aggregate of 401,000 shares of Common Stock are
reserved for issuance upon conversion of the Preferred Stock Series B, (iv) no
shares of Common Stock are reserved for issuance upon conversion of the
Preferred Stock Series C, (v) no shares of Common Stock are reserved for
issuance upon conversion of the Preferred Stock Series D, and (v) 9,060,528
shares of Common Stock are reserved for options, warrants or other similar
rights pursuant to those agreements listed on Schedule 11.04(b)(1) (for a total
of 53,198,109 shares of Common Stock issued and reserved for issuance).
(b) Except as set forth in this Section 11.04 or in Schedule
11.04(b)(1) of the Disclosure Schedule as to Compost, and/or Schedule
11.04(b)(2) of the Disclosure Schedule as to the other Subsidiaries (including,
without limitation, Miami and Bedminster) or Affiliates of Compost, there are no
options, warrants or other rights, agreements, arrangements or commitments of
any character to which Compost or any of its Subsidiaries (including, without
limitation, Miami and Bedminster) or Affiliates is a party or obligating Compost
or any of its Subsidiaries (including, without limitation, Miami and Bedminster)
or Affiliates to issue or sell any shares of capital stock of, or other equity
interests in Compost or any of its Subsidiaries (including, without limitation,
Miami and Bedminster) or Affiliates. Except as set forth in Schedule 11.04(b)(1)
or Schedule 11.04(b)(2) of the Disclosure Documents, there are no outstanding
contractual obligations of Compost or any of its Subsidiaries (including,
without limitation, Miami and Bedminster) or Affiliates to repurchase, redeem or
otherwise acquire any of the capital stock of Compost or any Subsidiary
(including, without limitation, Miami and Bedminster) or Affiliate or to provide
funds to or make any investment (in the form of a loan, capital contribution or
otherwise) in any Subsidiary (including, without limitation, Miami and
Bedminster) or Affiliate or any other entity. Each of the outstanding shares of
capital stock of each of Compost's Subsidiaries is duly authorized, validly
issued, fully paid and nonassessable and is owned by Compost, directly or
indirectly, free and clear of all Encumbrances, except as provided or otherwise
specified under Schedule 11.04(b)(3) of the Disclosure Schedule.
(c) Except as set forth herein and on Schedule 11.04(c) of the
Disclosure Schedule, neither Compost nor any of its Subsidiaries (including,
without limitation, Miami and Bedminster) and Affiliates is a party to any
agreement granting registration rights to any Person with respect to any equity
or debt securities of Compost.
(d) Schedule 11.04(d)-Part II of the Disclosure Schedule
contains a complete and accurate list, as of the Effective Date of this
Agreement, of the names and the addresses of each Person owning shares of
capital stock of Compost and each Subsidiary (including, without limitation,
Miami and Bedminster) representing 5% or more of the outstanding shares of
Common or Preferred Stock of such company, as the case may be, and the
corresponding number of shares and the certificate number evidencing such shares
owned by such Person as of the Effective Date of this Agreement. Schedule
11.04(d)-Part II of the Disclosure Schedule further contains a complete and
accurate list, as of the Effective Date of this Agreement, of each shareholder
of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock
and Series D Preferred Stock of Compost, and the corresponding quantity of such
all shares of stock (common and preferred) that are be owned by such
shareholders of the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock of Compost.
(e) Except as otherwise disclosed in the Disclosure Documents,
none of the Persons listed on Schedule 11.04(d)-Part I and/or Part II of the
Disclosure Schedule, and no officer or director of Compost, or any Subsidiary
and no relative or spouse who resided with, or is a dependent of any such
Person, has any interest in any business enterprise (other than Compost or any
Subsidiary) which engages in any of the businesses in which Compost or any of
its Subsidiaries engage or which are suppliers to, or purchasers from, Compost
or its Subsidiaries.
(f) Schedule 11.04(f) of the Disclosure Schedule contains a
complete and accurate copy, as of the Effective
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Date of this Agreement, of 1) the current Designation of Rights of Series A
Preferred Stock, as amended, 2) the current Designation of Rights of Series B
Preferred Stock, as amended, 3) the current Designation of Rights of Series C
Preferred Stock, as amended, and 4) the current Designation of Rights of Series
D Preferred Stock, as amended, each such "Designation of Rights" of which sets
forth the complete and accurate terms and conditions (including, without
limitation, any and all rights, preferences and privileges) of the Series A
Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock and
the Series D Preferred Stock.
Section 11.05. Miami/Bedminster Capitalization. (a) As of the close of
business on the Effective Date of this Agreement, the authorized capital stock
of Miami consisted exclusively of 1,000 shares of Common Stock ("Miami Common
Stock"), of which ) (i) 801 shares of Miami Common Stock are issued by Miami to
Compost, are presently outstanding and are held and owned exclusively by
Compost, (ii) 199 shares of Miami Common Stock are issued by Miami to Mestre,
are presently outstanding and are held and owned exclusively by Mestre, and (ii)
all such issued and outstanding shares of Miami Common Stock are owned and held
respectively by Compost and Mestre, free and clear of all Encumbrances. As of
the close of business on the Effective Date of this Agreement, the authorized
capital stock of Bedminster consisted exclusively of 1,000 shares of Common
Stock ("Bedminster Common Stock"), of which ) (i) 1,000 shares of Bedminster
Common Stock are issued by Bedminster and are presently outstanding, and (ii)
all such issued and outstanding shares of Bedminster Common Stock are owned and
held exclusively by Miami, free and clear of all Encumbrances.
(b) There are no options, warrants or other rights, agreements,
arrangements or commitments of any character to which Compost, Miami, Bedminster
or any of Compost's Subsidiaries or Compost's Affiliates is a party or
obligating Miami, Bedminster or any of Compost's Subsidiaries or Compost's
Affiliates to issue or sell any shares of capital stock of, or other equity
interests in Miami or Bedminster.
(c) Each of the outstanding shares of capital stock of Miami is duly
authorized, validly issued, fully paid and nonassessable and is owned directly
by Compost, free and clear of all Encumbrances. Miami is not a party to any
agreement granting registration rights to any Person with respect to any equity
or debt securities of Miami. Schedule 11.05(c)-1 of the Disclosure Schedule
contains a complete and accurate list of the names and the addresses of each
Person owning shares of capital stock of Miami representing 5% or more of the
outstanding shares of Miami Common Stock, and the corresponding number of shares
and the certificate number evidencing such shares owned by such Person as of the
Effective Date of this Agreement. Each of the outstanding shares of capital
stock of Bedminster is duly authorized, validly issued, fully paid and
nonassessable and is owned directly by Miami, free and clear of all
Encumbrances. Bedminster is not a party to any agreement granting registration
rights to any Person with respect to any equity or debt securities of
Bedminster. Schedule 11.05(c)-2 of the Disclosure Schedule contains a complete
and accurate list of the names and the addresses of each Person owning shares of
capital stock of Bedminster representing 5% or more of the outstanding shares of
Bedminster Common Stock, and the corresponding number of shares and the
certificate number evidencing such shares owned by such Person as of the
Effective Date of this Agreement.
(d) Except as otherwise disclosed in the Disclosure Documents, none of
the Persons listed on Schedule 11.04(d)-Part I and/or Part II and/or Schedule
11.05(c)-1 or Schedule 11.05(c)-2 of the Disclosure Schedule, and no officer or
director of Compost, Miami or Bedminster or any other Subsidiary or Affiliate,
and no relative or spouse who resided with, or is a dependent of any such
Person, has any interest in any business enterprise (other than Compost, Miami
or Bedminster or any other Subsidiary) which engages in any of the businesses in
which Compost, Miami or Bedminster or any of the Subsidiaries engage or which
are suppliers to, or purchasers from, Compost or its Subsidiaries (including,
without limitation, Miami and Bedminster).
Section 11.06. Compost/Miami/Bedminster Authority. Compost, Miami and
Bedminster each has all necessary corporate power and authority to execute and
deliver this Agreement, the Credit Documents and all other Supplemental
Definitive Document, and to perform its obligations and to consummate the
transactions contemplated under this Agreement and all Definitive Supplemental
Documents (including, without limitation, the Credit Documents), including
(without limitation): 1) the borrowing of the Credit, the execution and delivery
of the Credit Documents and the performance and discharge of their respective
obligations and duties under the Credit Documents, pursuant to the terms and
subject to the conditions as are set forth in Article II of this Agreement, the
Credit Documents, and any other applicable Definitive Supplemental Documents; 2)
the issuance of the Series B Preferred Stock to Lionhart, pursuant to the terms
and subject to the conditions as are set forth in Article III of this Agreement,
and any applicable Definitive Supplemental Documents; 3) the acceptance by
Compost of the conversion of the Outstanding Debentures, and the issuance by
Compost to Lionhart of the
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Conversion Shares, pursuant to the terms and subject to the conditions as are
set forth in Article IV of this Agreement, and any applicable Definitive
Supplemental Documents; 4) the acceptance of the transfer by LHI to Lionhart of
the LHI-Select Shares, pursuant to the terms and subject to the conditions as
are set forth in Article V of this Agreement, and any applicable Definitive
Supplemental Documents; 5) the purchase and redemption by Compost, from
Lionhart, of 1,000,000 shares of common stock of Compost that are or will be
held and owned by Lionhart, for the purchase price of US $3,000,000, pursuant to
the terms and subject to the conditions as are set forth in Article VI of this
Agreement, and any applicable Definitive Supplemental Documents; 6) the
transactions that relate to or arise from the Escrow, pursuant to the terms and
subject to the conditions as are set forth in Article VII of this Agreement, and
any applicable Definitive Supplemental Documents; 7) the issuance by Compost to
Lionhart of the Compost-Lionhart Warrant # 1, the Compost-Lionhart Warrant # 2,
the Compost-Lionhart Warrant # 3, the Compost-Lionhart Warrant # 4, the
Compost-Lionhart Warrant # 5 and the Compost-Lionhart Warrant # 6, pursuant to
the terms and subject to the conditions as are set forth in Article VIII of this
Agreement, and any applicable Definitive Supplemental Documents; 8) the granting
by Compost to Lionhart of the Put Option # 1, for and with respect to the Series
B Preferred Stock and the Conversion Common Shares, pursuant to the terms and
subject to the conditions as are set forth in Article IX of this Agreement, and
any applicable Definitive Supplemental Documents; 9) the granting by Compost to
Lionhart of the Put Option # 2, for and with respect to the Excess Common
Shares, pursuant to the terms and subject to the conditions as are set forth in
Article X of this Agreement, and any applicable Definitive Supplemental
Documents; and, 10) the execution and delivery of all documents and
considerations that are contemplated and/or prescribed under Section 13.03
and/or Section 15.02 of this Agreement. The execution and delivery of this
Agreement, the Credit Documents and the Definitive Supplemental Documents, by
Compost and/or Miami and/or Bedminster, and the consummation by Compost and/or
Miami and/or Bedminster of the transactions contemplated under this Agreement,
the Credit Documents and the Definitive Supplemental Documents, have been duly
and validly authorized by all necessary corporate action by Compost, Miami and
Bedminster, and no other corporate proceedings on the part of Compost and/or
Miami and/or Bedminster are necessary to authorize, execute or deliver this
Agreement, the Credit Documents or the Definitive Supplemental Documents, or to
consummate the transactions contemplated by this Agreement, the Credit Documents
and/or the Definitive Supplemental Documents. This Agreement, and each of the
Credit Documents and the Definitive Supplemental Documents, has been duly and
validly authorized, executed and delivered by Compost, Miami and Bedminster, and
constitutes 1) the legal, valid and binding obligations of Compost enforceable
against Compost in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles, and 2) the legal, valid and binding obligations of Miami enforceable
against Miami in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles, and 3) the legal, valid and binding obligations of Bedminster
enforceable against Bedminster in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
Section 11.07. No Conflict: Required Filings and Consents-Compost.
Assuming the satisfaction of the conditions set forth in Article XIII and
Article XV of this Agreement, the execution and delivery of this Agreement, the
Credit Documents and the Definitive Supplemental Documents by Compost do not,
and the performance of this Agreement, the Credit Documents and the Definitive
Supplemental Documents (including, without limitation, the consummation of the
transactions and performance and discharge of the duties and undertakings
provided or contemplated under this Agreement, the Credit Documents and the
Definitive Supplemental Documents) will not (i) conflict with or violate the
Certificate of Incorporation or By-Laws of Compost, (ii) conflict with or
violate the certificates of incorporation or by-laws or equivalent
organizational documents of any of the Subsidiaries of Compost, (iii) conflict
with or violate any law, rule, regulation, order, judgment or decree applicable
to Compost or any of its Subsidiaries or by which its or any of their respective
properties are bound or affected, or (iv) result in any breach of or constitute
a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance on any of the properties or assets of Compost or any of its
Subsidiaries pursuant to any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, insurance policy or other instrument or
obligation to which Compost or any of its Subsidiaries is a party, or by which
Compost or any of its Subsidiaries or its or any of their respective properties
are bound or affected, except in the case of clauses (ii), (iii) and (iv) above
for such conflicts which would not, taken as a whole, have a Material Adverse
Effect. This execution and delivery of this Agreement, the Credit Documents and
the Definitive Supplemental Documents by Compost do not, and the performance of
this Agreement, the Credit Documents and the Definitive Supplemental Documents
by Compost (including, without limitation, the consummation of the transactions
contemplated hereunder) will not, require any consent, approval, authorization
or permit which has not been obtained as of or prior to the Closing Date.
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Section 11.08. No Conflict: Required Filings and
Consents-Miami/Bedminster. (a) Assuming the satisfaction of the conditions set
forth in Article XIII and Article XV of this Agreement, the execution and
delivery of this Agreement, the Credit Documents and the Definitive Supplemental
Documents by Miami do not, and the performance of this Agreement, the Credit
Documents and the Definitive Supplemental Documents (including, without
limitation, the consummation of the transactions and performance and discharge
of the duties and undertakings provided or contemplated under this Agreement,
the Credit Documents and the Definitive Supplemental Documents) will not (i)
conflict with or violate the Certificate of Incorporation or By-Laws of Miami,
(ii) conflict with or violate the certificates of incorporation or by-laws or
equivalent organizational documents of any of the Subsidiaries of Miami, (iii)
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to Miami or any of its Subsidiaries or by which its or any of their
respective properties are bound or affected, or (iv) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or encumbrance on any of the properties or assets of Miami or any of its
Subsidiaries pursuant to any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, insurance policy or other instrument or
obligation to which Miami or any of its Subsidiaries is a party, or by which
Miami or any of its Subsidiaries or its or any of their respective properties
are bound or affected, except in the case of clauses (ii), (iii) and (iv) above
for such conflicts which would not, taken as a whole, have a Material Adverse
Effect. This execution and delivery of this Agreement, the Credit Documents and
the Definitive Supplemental Documents by Miami do not, and the performance of
this Agreement, the Credit Documents and the Definitive Supplemental Documents
by Miami (including, without limitation, the consummation of the transactions
contemplated hereunder) will not, require any consent, approval, authorization
or permit which has not been obtained as of or prior to the Closing Date.
(b) Assuming the satisfaction of the conditions set forth in Article
XIII and Article XV of this Agreement, the execution and delivery of this
Agreement, the Credit Documents and the Definitive Supplemental Documents by
Bedminster do not, and the performance of this Agreement, the Credit Documents
and the Definitive Supplemental Documents (including, without limitation, the
consummation of the transactions and performance and discharge of the duties and
undertakings provided or contemplated under this Agreement, the Credit Documents
and the Definitive Supplemental Documents) will not (i) conflict with or violate
the Certificate of Incorporation or By-Laws of Bedminster, (ii) conflict with or
violate the certificates of incorporation or by-laws or equivalent
organizational documents of any of the Subsidiaries of Bedminster, (iii)
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to Bedminster or any of its Subsidiaries or by which its or any of
their respective properties are bound or affected, or (iv) result in any breach
of or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or encumbrance on any of the properties or assets of Bedminster or any of its
Subsidiaries pursuant to any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, insurance policy or other instrument or
obligation to which Bedminster or any of its Subsidiaries is a party, or by
which Bedminster or any of its Subsidiaries or its or any of their respective
properties are bound or affected, except in the case of clauses (ii), (iii) and
(iv) above for such conflicts which would not, taken as a whole, have a Material
Adverse Effect. This execution and delivery of this Agreement, the Credit
Documents and the Definitive Supplemental Documents by Bedminster do not, and
the performance of this Agreement, the Credit Documents and the Definitive
Supplemental Documents by Bedminster (including, without limitation, the
consummation of the transactions contemplated hereunder) will not, require any
consent, approval, authorization or permit which has not been obtained as of or
prior to the Closing Date.
Section 11.09. Deal Attributes. Assuming that all conditions that are
set forth in Article XIII and Article XV of this Agreement are satisfied, and
that, on the Closing Date at the Closing Location, this Agreement and all
Definitive Supplemental Documents (including, without limitation, the Credit
Documents) are executed, consummated and delivered, as provided and contemplated
under this Agreement and/or the Definitive Supplemental Documents (including,
without limitation, the Credit Documents), then:
(a) (i) This Agreement, (ii) the Credit Documents (including, without
limitation, 1) the Mortgage Note, 2) the Mortgage, 3) the Security Agreement, 4)
the Compost Stock Pledge Agreement (Compost Common Stock), 5) the Compost Stock
Pledge Agreement (Miami Common Stock), 6) the Compost Stock Pledge Agreement
(Bedminster Common Stock), 7) the Pledged Compost Shares, 8) the Pledged Miami
Shares, 9) the Pledged Bedminster Shares, 10) the UCC-1 Financing Statement, 11)
the Compost-Miami Guaranty, 11) the Compost Resolutions and the Compost
Certificate of Resolutions, 12) the Miami Resolutions and the Miami Certificate
of Resolutions, 13) the Bedminster Resolutions and the Bedminster Certificate of
Resolutions, 14) the Term Loan Closing Statement, 15) the Mortgagee's Title
Insurance Commitment, 16) the Compost/Miami Mortgagor Affidavit, 17) the
Compost/Miami Owner's Affidavit, 18) the Certificate and Indemnification
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Regarding Hazardous Substances, 19) the Release and Satisfaction of Rinker
Mortgage, 20) the Miami-Rinker Note, 21) the Stipulated Motion to Dismiss
Complaint with Prejudice, 22) the Order of Dismissal with Prejudice, 23) the
Global Closing Statement, 24) the Incumbency Certificate of Compost, 25) the
Incumbency Certificate of Miami, 26) the Incumbency Certificate of Bedminster,
27) the "Bring-Down" Certificate of Compost, 28) the "Bring-Down" Certificate of
Miami, and, 29) the "Bring-Down" Certificate of Bedminster) and (iii) the
Definitive Supplemental Documents, are and shall be binding and enforceable
against Compost, Miami and Bedminster, pursuant to their respective terms
thereof.
(b) Lionhart, LHI and GEP, pursuant to the terms of this Agreement and
the Definitive Supplemental Documents (including, without limitation, the Credit
Documents (including the Mortgage)), shall hold and possess, jointly and
severally, a first, senior, unsubordinated and exclusive lien, mortgage and
encumbrance against the Miami Site, to ensure the prompt, timely and complete
performance and discharge by Compost and/or Miami and/or Bedminster of all of
their respective duties and obligations under this Agreement and the Definitive
Supplemental Documents (including, without limitation, the Credit Documents).
(c) Lionhart, LHI and GEP, pursuant to the terms of this Agreement and
the Definitive Supplemental Documents (including, without limitation, the Credit
Documents (including the Security Agreement, the Compost Stock Pledge Agreement
(Compost Common Stock), the Compost Stock Pledge Agreement (Miami Common Stock)
and the Compost Stock Pledge Agreement (Bedminster Common Stock)), shall hold
and possess, jointly and severally, a first, senior, unsubordinated and
exclusive security interest, lien, pledge and encumbrance against the Miami
Project Collateral (as that term is defined under Section 11.26.01 of this
Agreement), the Pledged Compost Shares, the Pledged Miami Shares and the Pledged
Bedminster Shares, to ensure the prompt, timely and complete performance and
discharge by Compost, Miami and Bedminster of all of their respective duties and
obligations under this Agreement and the Definitive Supplemental Documents
(including, without limitation, the Credit Documents).
(d) The mortgage lien of Lionhart, LHI and GEP, in and to the Miami
Site, as granted and conveyed by Miami to Lionhart, LHI and GEP under and
pursuant to this Agreement and the Definitive Supplemental Documents (including,
without limitation, the Credit Documents (including, the Mortgage)), is duly
granted, conveyed and delivered by Miami to Lionhart, LHI and GEP.
(e) The security interests, liens, pledges and encumbrances, against
the Miami Project Collateral, the Pledged Compost Shares, the Pledged Miami
Shares and the Pledged Bedminster Shares, as granted, conveyed and delivered by
Compost, Miami and/or Bedminster to Lionhart, LHI and/or GEP, under and pursuant
to the terms of this Agreement and the Definitive Supplemental Documents
(including, without limitation, the Credit Documents), are duly granted,
conveyed and delivered by Compost, Miami and/or Bedminster to Lionhart, LHI and
GEP, and each such security interest, lien, pledge and encumbrance is duly
attached and perfected under applicable laws.
(f) The 400,000 shares of Series B Preferred Stock, that are (or will
be, as of the Ancillary Transactions Closing, on the Closing Date at the Closing
Location) owned by and registered in the name of Lionhart, as provided and
contemplated under Article III of this Agreement, and pursuant to the terms and
subject to the conditions set forth in the Series B Preferred Shares
Subscription Agreement and the Designation of Rights of Series B Preferred
Stock, 1) are and shall duly authorized, validly issued, fully paid and
non-assessable, 2) shall not be subject to any Encumbrances and 3) are and shall
be subject to the Designation of Rights of Series B Preferred Stock.
(g) The 1998 Dividend Shares, consisting of 35,178 shares of common
stock of Compost, that are (or will be, as of the Ancillary Transactions
Closing, on the Closing Date at the Closing Location) owned by and registered in
the name of Lionhart, as provided and contemplated under Section 3.3 of this
agreement, and pursuant to the Designation of Rights of Series B Preferred
Stock, 1) are and shall duly authorized, validly issued, fully paid and
non-assessable, 2) shall not be subject to any Encumbrances and 3) shall have
accorded to each such share of the 1998 Dividend Shares, full voting rights in
accordance with the Articles of Incorporation of Compost and New Jersey law.
(h) The Outstanding Debentures, as provided and contemplated under
Article IV of this Agreement, and pursuant to the terms of the Debenture
Purchase Agreement and the Outstanding Debentures, are and/or shall be, as of
the Ancillary Transactions Closing, on the Closing Date at the Closing Location,
1) duly converted into the Conversion Shares (consisting of 1,406,593 shares of
Compost Common Stock), and 2) redeemed by Compost. The Conversion Shares,
consisting of such 1,406,593 shares of Compost Common Stock, that are (or will
be, as of the Ancillary Transactions Closing, on the Closing Date
Page 41 of 107 Pages
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at the Closing Location) owned and registered in the name of Lionhart, as
provided and contemplated under Article IV of this Agreement, 1) are and shall
be duly registered with the Securities and Exchange Commission, pursuant to a
registration statement filed with and declared effective by the Securities and
Exchange Commission, 2) are and shall duly authorized, validly issued, fully
paid and non-assessable, 3) shall not be subject to any Encumbrances and 4)
shall have accorded to each and every such Conversion Share, full voting rights
in accordance with the Articles of Incorporation of Compost and New Jersey law.
(i) The LHI-Select Agreement Shares (consisting of 665,00 shares of
common stock of Compost), that are (or will be, as of the Ancillary Transactions
Closing, on the Closing Date at the Closing Location) owned by and registered in
the name of Lionhart, as provided and contemplated under Article V of this
Agreement, 1) are and shall be duly authorized, validly issued, fully paid and
non-assessable, 2) shall not be subject to any Encumbrances and 3) shall have
accorded to each such share of the LHI-Select Agreement Shares, full voting
rights in accordance with the Articles of Incorporation of Compost and New
Jersey law.
(j) The purchase by Compost, from Lionhart, of the Section 6.1 Shares,
consisting of 1,000,000 shares of common stock of Compost that are owned and
held by Lionhart (and being further comprised of the LHI-Select Agreement Shares
(665,000), the 1998 Dividend Shares (35,178) and 299,822 of the Conversion
Shares), for the Purchase Price of US $3,000,000, as provided under Article VI
of this Agreement, 1) is fair to Compost, 2) is duly authorized, and 3) will not
(i) conflict with or violate the Certificate of Incorporation or By-Laws of
Compost, (ii) conflict with or violate the certificates of incorporation or
by-laws or equivalent organizational documents of any of the Subsidiaries of
Compost, (iii) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Compost or any of its Subsidiaries or by which
its or any of their respective properties are bound or affected, or (iv) result
in any breach of or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of Compost
or any of its Subsidiaries pursuant to any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, insurance policy or other
instrument or obligation to which Compost or any of its Subsidiaries is a party,
or by which Compost or any of its Subsidiaries or its or any of their respective
properties are bound or affected.
(k) The transactions that relate to or arise from the Escrow, under the
Debenture Purchase Agreement and the Debentures, and as provided and
contemplated under Article VII of this Agreement, 1) are duly authorized, and 2)
will not (i) conflict with or violate the Certificate of Incorporation or
By-Laws of Compost, (ii) conflict with or violate the certificates of
incorporation or by-laws or equivalent organizational documents of any of the
Subsidiaries of Compost, (iii) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to Compost or any of its
Subsidiaries or by which its or any of their respective properties are bound or
affected, or (iv) result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the properties or assets of Compost or any of its Subsidiaries pursuant to any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
insurance policy or other instrument or obligation to which Compost or any of
its Subsidiaries is a party, or by which Compost or any of its Subsidiaries or
its or any of their respective properties are bound or affected.
(l) The Compost Lionhart Warrant #1, the Compost Lionhart Warrant #2,
the Compost Lionhart Warrant #3, the Compost Lionhart Warrant #4, the Compost
Lionhart Warrant #5 and the Compost Lionhart Warrant #6, that are (or will be,
as of the Ancillary Transactions Closing, on the Closing Date at the Closing
Location) issued by Compost to Lionhart and that are (or will be, as of the
Ancillary Transactions Closing, on the Closing Date at the Closing Location)
owned and held by Lionhart, as provided and contemplated under Article VIII of
this Agreement, 1) are and shall be duly authorized and validly issued and
delivered by Compost, 2) shall not be subject to any Encumbrances, 3) all such
shares of common stock of Compost that are purchased by Lionhart, or any
registered holder thereof, pursuant to the exercise of the Compost Lionhart
Warrant #1, the Compost Lionhart Warrant #2, the Compost Lionhart Warrant #3,
the Compost Lionhart Warrant #4, the Compost Lionhart Warrant #5 and the Compost
Lionhart Warrant #6, are and shall be duly authorized, validly issued, fully
paid and non-assessable, shall not be subject to any Encumbrances, 4) shall have
accorded to each share of Common Stock of Compost, that is attributable to the
exercise by Lionhart (or any registered owner thereof) of the Compost Lionhart
Warrant #1, the Compost Lionhart Warrant #2, the Compost Lionhart Warrant #3,
the Compost Lionhart Warrant #4, the Compost Lionhart Warrant #5 and/or the
Compost Lionhart Warrant #6, full voting rights in accordance with the Articles
of Incorporation of Compost and New Jersey law, and 5) will not (i) conflict
with or violate the Certificate of Incorporation or By-Laws of Compost, (ii)
conflict with or violate the certificates of incorporation or by-laws or
equivalent organizational documents of any of the Subsidiaries
Page 42 of 107 Pages
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of Compost, (iii) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Compost or any of its Subsidiaries or by which
its or any of their respective properties are bound or affected, or (iv) result
in any breach of or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of Compost
or any of its Subsidiaries pursuant to any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, insurance policy or other
instrument or obligation to which Compost or any of its Subsidiaries is a party,
or by which Compost or any of its Subsidiaries or its or any of their respective
properties are bound or affected.
(m) The 400,000 shares of Series B Preferred Stock, that are owned and
held by Lionhart, shall be convertible into shares of common stock of Compost,
pursuant to the terms and subject to the conditions set forth in the Debenture
Purchase Agreement and the Designation of Rights of Series B Preferred Stock,
and all such shares of common stock of Compost, that are so converted from those
400,000 shares of Series B Preferred Stock, 1) are and shall duly authorized,
validly issued, fully paid and non-assessable, 2) shall not be subject to any
Encumbrances and 3) shall have accorded to each such share of Common Stock of
Compost, full voting rights in accordance with the Articles of Incorporation of
Compost and New Jersey law.
(n) The Put Option # 1, that is granted, transferred and conveyed by
Compost to Lionhart, for and with respect to the Series B Preferred Stock and
the Conversion Common Shares, as provided and contemplated under Article IX of
this Agreement, 1) are and shall be duly authorized and validly issued and
delivered by Compost, 2) shall not be subject to any Encumbrances, 3) will not
(upon the issuance thereof by Compost and/or the exercise thereof by Lionhart or
any successor or assign thereto) (i) conflict with or violate the Certificate of
Incorporation or By-Laws of Compost, (ii) conflict with or violate the
certificates of incorporation or by-laws or equivalent organizational documents
of any of the Subsidiaries of Compost, (iii) conflict with or violate any law,
rule, regulation, order, judgment or decree applicable to Compost or any of its
Subsidiaries or by which its or any of their respective properties are bound or
affected, or (iv) result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the properties or assets of Compost or any of its Subsidiaries pursuant to any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
insurance policy or other instrument or obligation to which Compost or any of
its Subsidiaries is a party, or by which Compost or any of its Subsidiaries or
its or any of their respective properties are bound or affected.
(o) The Put Option # 2, that is granted, transferred and conveyed by
Compost to Lionhart, for and with respect to the Excess Common Shares, as
provided and contemplated under Article X of this Agreement, 1) are and shall be
duly authorized and validly issued and delivered by Compost, 2) shall not be
subject to any Encumbrances, 3) will not (upon the issuance thereof by Compost
and/or the exercise thereof by Lionhart or any successor or assign thereto) (i)
conflict with or violate the Certificate of Incorporation or By-Laws of Compost,
(ii) conflict with or violate the certificates of incorporation or by-laws or
equivalent organizational documents of any of the Subsidiaries of Compost, (iii)
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to Compost or any of its Subsidiaries or by which its or any of their
respective properties are bound or affected, or (iv) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or encumbrance on any of the properties or assets of Compost or any of its
Subsidiaries pursuant to any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, insurance policy or other instrument or
obligation to which Compost or any of its Subsidiaries is a party, or by which
Compost or any of its Subsidiaries or its or any of their respective properties
are bound or affected.
Section 11.10. Compliance with Laws. Neither Compost nor any of its
Subsidiaries (including, without limitation, Miami and Bedminster) is in
conflict with, or in violation of, any law, rule, regulation, order, judgment or
decree applicable to Compost or any of its Subsidiaries (including, without
limitation, Miami and Bedminster) or by which Compost or any of its Subsidiaries
(including, without limitation, Miami and Bedminster) or any of its or their
respective properties are bound or affected, except for any such conflicts or
violations which would not, individually or in the aggregate, have a Material
Adverse Effect.
Section 11.11. SEC Filings: Financial Statements. Compost has filed all
forms, reports, statements and documents required to be filed with the SEC since
April 30, 1995 ("SEC Reports"). The SEC Reports (i) were each prepared in
accordance with, and at the time of filing complied in all material respects
with the requirements of the Securities Act or the Securities Exchange Act of
1934, as amended, together with the rules and regulations promulgated thereunder
(the "Exchange Act"), as the case may be, and (ii) except as disclosed in
Section 11.11 of the Disclosure Schedule, did not at the time they were filed
Page 43 of 107 Pages
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contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. None of the Compost's Subsidiaries is required to file any forms,
reports or other documents with the SEC. Each of the consolidated financial
statements (including in each case, any related notes thereto) contained in the
SEC Reports has been prepared in accordance with GAAP (except as may be
indicated in the notes thereto), and each presents fairly the consolidated
financial position of Compost and its consolidated Subsidiaries at the
respective dates thereof and the consolidated results of its operations and
changes in cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments. Except as would not have a Material Adverse Effect, and
except for (i) liabilities reflected in the Disclosure Documents and (ii)
liabilities incurred in the ordinary course of business of Compost and its
Subsidiaries subsequent to April 30, 1998, Compost and its Subsidiaries
(including, without limitation, Miami and Bedminster) have no liabilities that
are material to Compost and its Subsidiaries (including, without limitation,
Miami and Bedminster), taken as a whole, and there is no existing condition or
set of circumstances that could reasonably be expected to result in any such
liability.
Section 11.12. Financial Statements. True and complete copies of (i)
the audited consolidated balance sheets of Compost and its Subsidiaries
(including, without limitation, Miami and Bedminster) for each of the fiscal
years ended as of April 30, 1996, April 30, 1997, and April 30, 1998, and the
related audited consolidated statements of income, cash flows and changes in
financial position of Compost and its Subsidiaries, together with all related
notes and schedules thereto, accompanied by the reports thereon or management
letters from the Compost's accountants (collectively, the "Financial
Statements"), (ii) the unaudited balance sheets of Compost and its Subsidiaries
for the fiscal quarter ended July 31, 1998, and the related unaudited statements
of income, cash flows, and changes in financial positions of Compost and its
Subsidiaries for each, together with all related notes and schedules thereto,
which statements include all material known adjustments as of the date of such
statements, subject to ordinary year-end adjustments which in the aggregate
would not be material (collectively referred to herein as the "Interim Financial
Statement") and (iii) the schedule of Indebtedness of Compost (the "Debt
Schedule") as set forth in Schedule 11.12 of the Disclosure Schedule, as well as
an aging of accounts payable, have been delivered by Compost to Lionhart, LHI
and GEP (including, without limitation, with respect to each debt, (i) the
amount, (ii) the scheduled principal payments and (iii) the date of maturity of
such instrument) and Compost and its Subsidiaries are current in all their
Indebtedness as set forth in the Debt Schedule. The Financial Statements and the
Interim Financial Statements (i) were prepared in accordance with the books of
account and other financial records of Compost and its Subsidiaries, (ii)
present fairly the financial condition, results of operations and cash flows of
Compost and its Subsidiaries as of the dates thereof or for the periods covered
thereby, (iii) have been prepared in accordance with GAAP applied on a basis
consistent with the past practices of Compost and throughout the periods
involved and (iv) include all adjustments that are necessary for a fair
presentation of the consolidated financial condition of Compost and the
Subsidiaries, and the results of the operations and cash flows of Compost and
the Subsidiaries as of the dates thereof or for the periods covered thereby
(subject, in the case of Interim Financial Statements, to normal and recurring
year-end adjustments).
Section 11.13. Absence of Undisclosed Liabilities. There are no
liabilities or obligations of Compost or its Subsidiaries (whether absolute,
accrued, contingent or otherwise) that would be required to be reflected on a
balance sheet or in the footnotes thereto prepared in accordance with GAAP,
other than liabilities (a) reflected in or reserved against on the Financial
Statements or Interim Financial Statements or the notes thereto, (b) described
in Schedule 11.13 or Schedule 11.14 of the Disclosure Schedule or otherwise
disclosed in the Disclosure Documents or (c) incurred by Compost or any of its
Subsidiaries in the ordinary course of business subsequent to April 30, 1998.
Section 11.14. Absence of Certain Changes, Events and Conditions:
Conduct in the Ordinary Course. (a) Since April 30, 1998, except as disclosed in
Schedule 11.14 of the Disclosure Schedule, there has not been any change having
a Material Adverse Effect, with respect to Compost or any of its Subsidiaries
(including, without limitation, Miami and Bedminster). Except as disclosed in
Schedule 11.14 of the Disclosure Schedule, there are no conditions known to
Compost existing, with respect to the markets, proposed marketing plans,
facilities, capabilities or personnel of Compost or any of its Subsidiaries
(including, without limitation, Miami and Bedminster), that reasonably could be
expected to have a Material Adverse Effect on Compost or any of its Subsidiaries
(including, without limitation, Miami and Bedminster).
(b) Since April 30, 1998, Compost and the Subsidiaries have
been operated, consistent with funds made available to them under their
financing facilities, if any, only in the ordinary course and consistent with
past practice. As amplification and not in limitation of the foregoing, except
as disclosed in Schedule 11.14(b) of the Disclosure Schedule, neither Compost
nor any of its Subsidiaries (including, without limitation, Miami and
Bedminster) has, since April 30, 1998:
Page 44 of 107 Pages
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(i) made any change in any method of accounting or accounting
practice or policy used by Compost or any Subsidiary, other than such
changes required by GAAP that are separately identified by Compost to
Lionhart, LHI and GEP in writing;
(ii) consistent with funds made available to it under its
financing facilities, if any, made any material changes in the
customary methods of operations of Compost or any Subsidiary, including
practices and policies relating to purchasing, inventory, marketing,
selling or pricing;
(iii) failed to maintain Compost's or any Subsidiary's
Tangible Personal Property in good repair, ordinary wear and tear
excepted;
(iv) redeemed any of Compost's or any Subsidiary's capital
stock or declared, made or paid any dividends or distributions (whether
in cash, securities or other property) to the holders of Compost's or
any Subsidiary's capital stock or otherwise other than regular
dividends paid by any Subsidiary in the ordinary course of business and
consistent with past practice;
(v) issued or sold any capital stock, notes, bonds or other
securities, or any option, warrant or other right to acquire the same,
of, or any other interest in, Compost or any Subsidiary;
(vi) amended or restated Compost's or any Subsidiary's
Certificate of Incorporation or By-Laws;
(vii) been merged with, entered into a consolidation with or
acquired an interest of 5% or more in any Person, or acquired (by
purchase, merger, consolidation, stock acquisition or otherwise) a
substantial portion of the assets of any Person or any division or line
of business thereof, or otherwise acquired assets other than in the
ordinary course and in accordance with past practice;
(viii) permitted or allowed any of the assets or properties
(whether tangible or intangible) of Compost or any Subsidiary to the
subjected to any Encumbrance;
(ix) made any loan to, guaranteed any indebtedness of or
otherwise incurred any indebtedness on behalf of any Person;
(x) made any capital expenditure or commitment for any capital
expenditure in excess of $100,000 individually or $250,000 in the
aggregate;
(xi) entered into any agreement, arrangement or transaction
with any of its directors, officers, employees or shareholders (or with
any relative, beneficiary, spouse or Affiliate of such Person);
(xii) agreed, whether in writing or otherwise, to take any of
the actions specified in this Section 11.14(b), except for those
contemplated by this Agreement and/or the Definitive Supplemental
Documents;
(xiii) allowed any permit or Environmental Permit that was
issued or related to Compost or any Subsidiary, or that otherwise
relates to any Asset, to lapse or terminate, or failed to renew any
such Permit or Environmental Permit or any insurance policy that is
scheduled to terminate or expire within 45 calendar days of the Term
Loan Closing Date attributable to the Closing and the Ancillary
Transactions Closing.
(xiv) incurred any Indebtedness, or any other financial
obligations, liabilities or undertakings, in excess of $100,000
individually or $250,000 in the aggregate;
(xv) amended, modified or consented to the termination of any
Material Contract, or of any of Compost's or any Subsidiary's rights
thereunder;
(xvi) disclosed any secret or confidential Intellectual
Property (except by way of issuance of a patent) or permitted to lapse
or go abandoned any Intellectual Property (or any registration or grant
thereof or any application
Page 45 of 107 Pages
<PAGE>
relating thereto) to which, or under which, Compost or any Subsidiary
has any right, title, interest or license;
(xvii) failed to pay any creditor any material amount owned to
any holder of any debenture, note or other financial obligation of
Compost (and/or any Subsidiary), or any other creditor, when lawfully
due;
(xviii) sold, transferred, leased, subleased, licensed or
otherwise disposed of any properties or assets, real, personal or mixed
(including, without limitation, leasehold interests and intangible
assets), other than a sale in the ordinary course of business
consistent with past practice;
(xix) (A) granted any increase, or announced any increase, in
the wages, salaries, compensation, bonuses, incentives, pension or
other benefits payable by Compost or any Subsidiary to any of its
employees, including, without limitation, any increase or change
pursuant to any Plan or (B) established or increased or promised to
increase any benefits under any Plan, in either case except as required
by law or any collective bargaining agreement and involving ordinary
increases consistent with the past practices of Compost or such
Subsidiary;
(xx) written down or written up (or failed to write down or
write up in accordance with GAAP consistent with past practice) the
value of any inventories or receivables or revalued any assets of
Compost or any Subsidiary other than in the ordinary course of business
consistent with past practice and in accordance with GAAP;
(xxi) amended, terminated, canceled or compromised any
material claims of Compost or any Subsidiary or waived any other rights
of substantial value to Compost or and Subsidiary; or
(xxii) suffered any Material Adverse Effect.
Section 11.15. Employee Benefit Matters. (a) Plans and Material
Documents. Schedule 11.15(a) of the Disclosure Schedule lists all employee
benefit plans (as defined under Section 3(3) or ERISA) and all bonus, stock
option, stock purchase, restricted stock, incentive, deferred compensation,
retiree medical or life insurance, supplemental retirement, severance or other
benefit plans, programs, or arrangements, and all employment, termination,
severance or other contracts or agreements, whether legally enforceable or not,
to which Compost or any Subsidiary is a party, with respect to which Compost or
any Subsidiary has any obligation or which are maintained, contributed to or
sponsored by Compost or any Subsidiary for the benefit of any current or former
employee, officer or director of Compost or any Subsidiary (collectively, the
"Plan"). Compost has furnished the Purchaser with a complete and accurate copy
of each Plan and a complete and accurate copy of the following: (i) each trust
or other funding arrangement, (ii) each summary plan description and summary of
material modifications, (iii) the moist recently filed IRS form 5500, (iv) the
most recently received IRS determination letter for each such Plan, and (v) the
most recently prepared actuarial report and financial statement in connection
with each such Plan, if applicable. Except as set forth in Schedule 11.15(a) of
the Disclosure Schedule, Compost or any Subsidiary does not have any express or
implied commitment, (i) to create, incur liability with respect to or cause to
exist any other employee benefit plan, program or arrangement, (ii) to enter
into any contract or agreement to provide compensation or benefits to any
individual or (iii) to modify, change or terminate any Plan (other than with
respect to a modification, change or termination required by ERISA or the Code),
that would impose any material additional cost on Compost or any Subsidiary.
(b) Absence of Certain Types of Plans. None of the Plan is a
multiemployer plan (within the meaning of Section 3(37) or 4001(a)(3) of ERISA)
(a "Multiemployer Plan"), a single employer pension plan (within the meaning of
Section 4001(a)(15) of ERISA) or a plan intended to be qualified under Section
401(a) or 401(k) of the Code. None of the Plans provides for the payment of
separation, severance, termination or similar-type benefits to any Person or
obligates Compost or any Subsidiary to pay separation, severance, termination or
similar-type benefits solely as a result of any transaction contemplated by this
Agreement or as a result of a "change in control" of Compost, within the meaning
of such term under Section 280G of the Code. None of the Plans provides for or
promises retiree medical, disability or life insurance benefits to any current
or former employee, officer or director of Compost or any Subsidiary except to
the extent required by law. Each of the Plans is subject only to the laws of the
United States or a political subdivision thereof.
(c) Compliance with Applicable Law. Each Plan is now and always has
been operated in all material respects in accordance with the requirements of
all applicable law, including, without limitation, ERISA and the Code, and
Compost and any Subsidiary and each of their officers, employees and agents who
are "fiduciaries" (within the meaning of Section 3(21) of ERISA) with respect to
the Plans have always acted in accordance with the provisions of all applicable
law, including, without
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limitation, ERISA and the Code; and Compost or any other Subsidiary has
performed all material obligations required to be performed by it under, is not
any respect in material default under or in material violation of, and has no
knowledge of any material default with regard to or material violation by any
party to any Plan. No material legal action, suit or claim is pending or
threatened with respect to any Plan (other than claims for benefits in the
ordinary course) and, to the knowledge of Compost, no fact or event exists that
could reasonably be expected to give rise to any such action, suit or claim.
(d) Absence of Certain Liabilities and Events. There has been no
prohibited transaction (within the meaning of Section 406 of ERISA or Section
4975 of the Code) with respect to any Plan that could give rise to any material
liability being imposed on Compost or any Subsidiary. Compost or any Subsidiary
has not incurred any material liability for any penalty or tax arising under
Section 4971, 4972, 4980B or 6652 of the Code or any material liability under
Section 502 or ERISA, and no fact or event exists which could give rise to any
such material liability. Except as set forth in Schedule 3.12(d) of the
Disclosure Schedule, Compost or any Subsidiary has not incurred any material
liability under, arising out of or by operation of Title IV or ERISA (other than
liability for premiums to the Pension Benefit Guaranty Corporation arising in
the ordinary course), including, without limitation, any material liability in
connection with (i) the termination or reorganization of any employee benefit
plan subject to Title IV of ERISA or (ii) the withdrawal from any Multiemployer
Plan or any single employer plan and, to the best knowledge of Compost after due
inquiry, no fact or event exists which could reasonably be expected to give rise
to any such liability. No complete or partial termination has occurred within
the five years preceding the date hereof with respect to any Plan.
(e) Plan Contributions and Funding. All Contributions, premiums or
payments required to be made with respect to any Plan on or before the date of
this Agreement have been made on or before their due dates. All such
contributions have been fully deducted for income tax purposes (to the extend,
deductible) and no such deduction has been challenged or disallowed by any
government entity and no fact or event exists which could reasonably be expected
to give rise to any such challenge or disallowance.
Section 11.16. Real Property. (a) Schedule 11.16(a) of the Disclosure
Schedule contains a list of all of the Owned Real Property as of the date of
such Schedule. Compost or any Subsidiary, as the cause may be, has valid fee
interests in all of its Owned Real Property and good and marketable title
thereto, and such Owned Real Property is owned by Compost or such Subsidiary
free and clear of all Encumbrances except (i) as disclosed in writing (under
Schedule 11.16(a) of the Disclosure Schedule) to Lionhart, LHI and GEP, and (ii)
Encumbrances for current taxes not yet due and payable or being contested in
good faith by Compost and/or any Subsidiary in appropriate governmental,
regulatory or administrative proceedings.
(b) Schedule 11.16(b) of the Disclosure Schedule contains a list of all
of the Leased Real Property as of the date of such Schedule and a list of all
leases and subleases pertaining to such Leased Property including all agreements
in which Compost or any Subsidiary has an option to purchase or Lease any real
property. Except as described in Schedule 11.16(b) of the Disclosure Schedule
(i) there is no material violation of any law, rule or regulation by Compost or
any Subsidiary, as the case may be, or known to Compost or any Subsidiary, as
the case may be, relating to any of the Leased Real Property, (ii) Compost or
any Subsidiary, as the case may be, is in peaceful and undisturbed possession of
the Leased Real Property, and so long as the lease remains in effect, there are
no contractual or legal restrictions that preclude or restrict the ability to
use the premises for the purposes for which they are currently being used and
(iii) Compost or any Subsidiary, as the case may be, has not leased or subleased
any parcel or any portion of any parcel of Leased Real Property to any other
Person, nor has Compost or any Subsidiary assigned its interest under any lease
or sublease to any third party.
(c) Each of the leases and subleases referred to in Section 11.16(b) is
in full force and effect and constitutes a legal, valid and binding obligation
of the respective parties thereto, and Compost or any Subsidiary, as the case
may be, is not in material default or breach of (with or without the giving of
notice or the passage of time) any such leases or subleases. To the knowledge of
Compost, no third party is in material breach of any of such leases or
subleases.
Section 11.17. Tangible Personal Property. (a) Schedule 11.17(a) of the
Disclosure Schedule contains a list of all Tangible Personal Property valued at
$5,000 or more used in the Business or owned or leased by Compost and its
Subsidiaries as of the date of the Disclosure Schedule. Except for changes made
in the ordinary course of business since April 30, 1998, Compost or any such
Subsidiary owns such Tangible Personal Property reflected on the Financial
Statements, free and clear of all Encumbrances.
(b) Schedule 11.17(b) of the Disclosure Schedule contains a list, as of
the date of such Schedule, of all leased
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Tangible Personal Property requiring lease payments of $25,000 or more per year
leased by Compost and its Subsidiaries. Except for changes made in the ordinary
course of business since April 30, 1998, as would not materially adversely
affect the present use of such leased Tangible Personal Property or as would not
have a Material Adverse Effect, with respect to each such lease: (i) such lease
is in full force and effect and is a legal, valid and binding obligation of
Compost or the Subsidiary party thereto, and is enforceable by Compost or such
Subsidiary in accordance with its terms; (ii) Compost or such Subsidiary is in
peaceful and undisturbed possession of the Tangible Personal Property subject to
such lease; and, (iii) there has been no notice of default under any lease
received by Compost or such Subsidiary that is still in effect, none of Compost
or any Subsidiary is in material breach or default of any such lease, and no
event has occurred that, with a notice or lapse or time or both, would
constitute such a material default or permit the termination, modification or
acceleration of such lease.
Section 11.18. Intellectual Property. (a) Schedule 11.18(a)(i) of the
Disclosure Schedule sets forth a true and complete list and a brief description,
including a complete identification of each patent and patent application and
each trademark registration or application for trademark registration thereof,
of all Owned Intellectual Property (except unregistered copyrights), and
Schedule 11.18(a)(ii) of the Disclosure Schedule sets forth, a true and complete
list and a brief description, including a description of any license or
sublicense thereof, of all Licensed Intellectual Property. Except as otherwise
described in Schedule 11.18(a)(i) of the Disclosure Schedule, in each case where
a trademark registration or patent or application for trademark, registration or
patent listed is held by assignment, the assignment has been dully recorded with
the state or national Trademark Office from which the original trademark
registration issued or before which the application for trademark registration
is pending, or the assignment has been duly recorded in the national or
international Patent Office from which the original patent issued or before
which the application for patent is pending. To the best knowledge of Compost
after due inquiry, the rights of Compost or any Subsidiary, as the case may be,
in or to such Intellectual Property do not conflict with or infringe on the
rights of any other Person, and none of Compost or any Subsidiary has received
any claim or written notice from any Person to such effect.
(b) (i) All the Owned Intellectual Property is owned by Compost or a
Subsidiary, as the case may be, free and clear of any Encumbrance and Compost or
such Subsidiary, as the case may be holds the entire right, title, and interest
in and to same, and (ii) no claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before a Governmental Authority has been made
or asserted or is pending (or, to the best knowledge of Compost after due
inquiry, threatened) against Compost or any Subsidiary either (A) based upon, or
challenging or seeking to deny or restrict the use by Compost or any Subsidiary
of, any of the Owned Intellectual Property or (B) alleging that any services
provided, or products manufactured or sold by Compost or any Subsidiary are
being provided, manufactured or sold in violation of any rights of any Person.
To the best knowledge of Compost, Miami and Bedminster, and after due inquiry,
no Person is using any trademarks, service marks, trade names or similar
property that is confusingly similar to the Owned Intellectual Property, and no
Person is making, using, selling, publishing or copying anything that infringes
upon the Owned Intellectual Property or upon the rights of Compost or any
Subsidiary therein. None of Compost or any Subsidiary has granted any license or
other right to any other Person with respect to the Owned Intellectual Property.
The consummation of the transactions contemplated by this Agreement will not
result in the termination or impairment of any of the Owned Intellectual
Property or Licensed Intellectual Property.
(c) Neither Compost nor any Subsidiary, nor any operation of the
business of Compost or any Subsidiary, infringes or has infringed upon any
patent, trademark, service mark, copyright or similar right of any Person, nor
has Compost or any Subsidiary misappropriated or wrongfully disclosed any trade
secret, proprietary right or similar right of any Person.
(d) To the best knowledge of Compost, Miami and Bedminster, after due
inquiry, no Person has made any claim or allegation that any of Compost or any
Subsidiary infringes any patent, trademark, service work, copyright or similar
right of any Person or has misappropriated or wrongfully disclosed any trade
secret, proprietary right or similar right of any Person.
(e) With respect to all Licensed Intellectual Property and Owned
Intellectual Property, to the best knowledge of Compost, Miami and Bedminster,
and after due inquiry, the registered user provisions of all nations requiring
such registrations have been complied with in all material respects. With
respect to all owned Intellectual Property and Licensed Property, all required
maintenance fees or annuities have been paid in a timely manner.
(f) Compost, Miami and Bedminster have, or have caused to be, delivered
to Lionhart, LHI and GEP, correct and complete copies of all the material
licenses and sublicenses for all Licensed Intellectual Property referred to in
Section 11.18(a) hereof and any and all ancillary documents pertaining thereto
(including but not limited to, all amendments, consents and evidence of
commencement dates and expiration dates). With respect to each of such license
and sublicenses: (i) such license
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or sublicense, together with all ancillary documents delivered pursuant to the
first sentence of this Section 11.18(f), is valid and binding and in full force
and effect and represents the entire agreement between the respective licensor
and licensee with respect to the subject matter of such license or sublicense;
(ii) except as otherwise set forth in Schedule 11.18(a)(ii) of the Disclosure
Schedule, such license or sublicense will not cease to be valid and binding and
in full force and effect on terms identical to those currently in effect as a
result of the consummation of the transactions contemplated by this Agreement,
nor will the consummation of the transactions contemplated by this Agreement
constitute a breach or default under such license or sublicense or otherwise
give the licensor or sublicensor a right to terminate such license or
sublicense; (iii) except as otherwise disclosed in Schedule 11.18(a)(ii) of the
Disclosure Schedule, with respect to each such license or sublicense: (A) none
of Compost or any Subsidiary has received any notice or threat of termination or
cancellation under such license or sublicense and no licensor or sublicensor has
any right of termination or cancellation under such license or sublicense except
in connection with the default of Compost or any such Subsidiary thereunder, (B)
none of Compost or any Subsidiary has received any notice of a breach of or
default under such license or sublicense, which breach or default has not been
cured, and (C) none of Compost or any such Subsidiary has granted to any other
Person any rights, adverse or otherwise, under such license or sublicense; (iv)
none of Compost, any Subsidiary or (to the best knowledge of Compost, Miami and
Bedminster, and after due inquiry) any other party to such license or sublicense
is in breach or default in any material respect, and to the best knowledge of
Compost, Miami and Bedminster, after due inquiry, no event has occurred that,
with notice or lapse of time would constitute such a breach or default or permit
termination, modification or acceleration under such license or sublicense; (v)
no claim, action, suit, arbitration, inquiry, proceeding or investigation by or
before any Governmental Authority has been made or asserted or is pending (or,
to the best knowledge of Compost, Miami and Bedminster, after due inquiry,
threatened) against Compost or any Subsidiary either (A) based upon or
challenging or seeking to deny or restrict the use by Compost or any such
Subsidiary of any of the Licensed Intellectual Property or (B) alleging that any
Licensed Intellectual Property is being licensed, sublicensed or used in
violation of any patents or trademarks or in violation of any other rights of
any Person; and, (vi) to the best knowledge of Compost, Miami and Bedminster,
after due inquiry, no Person is using any trademarks, service marks, trade names
or similar property that is confusingly similar to the Licensed Intellectual
Property, and no Person is making, using selling, publishing or copying anything
that infringes upon the Licensed intellectual Property or upon the rights of
Compost or any Subsidiary thereto.
(g) Compost, Miami and Bedminster are not aware of anything or any
reason that would prevent any pending applications to register trademarks,
service marks or copyrights or any pending patent applications from being
granted.
(h) The Intellectual Property described in Schedules 11.18(a)(i) and
(ii) of the Disclosure Schedule constitutes all the Intellectual Property used
or held or intended to be used by Compost or any Subsidiary and constitutes all
such Intellectual Property necessary for the conduct of the Business, and there
are no other items of Intellectual Property that are material to Compost or any
Subsidiary or the Business.
Section 11.19. Environmental Matters, Risks and Factors. Except as set
forth expressly on Schedule 11.19 of the Disclosure Schedule:
(a) All Owned Real Property, and all other facilities and property
presently owned or leased by Compost or any of its Subsidiaries are, and
continue to be, owned and operated by Compost and its Subsidiaries in material
compliance with all applicable Environmental Laws. All past noncompliance, if
any, with Environmental Laws or Environmental Permits, by or on the part of
Compost, Miami and/or Bedminster, or any other Subsidiaries or Affiliates of
Compost, has been resolved without any material pending, ongoing or future
obligation, cost or liability, and except as to Environmental Permits not yet
obtained for facilities under development or proposed for acquisition, there is
no requirement proposed for adoption or implementation under any Environmental
Law or Environmental Permit that is reasonably expected to be material to
Compost or any Subsidiary or the Business. To the best knowledge and information
of Compost, Miami and Bedminster, and the other Subsidiaries and Affiliates of
Compost, and after due inquiry and investigation, all past noncompliance, if
any, with Environmental Laws or Environmental Permits, by or on the part of any
Person (other than Compost, Miami and/or Bedminster, or any other Subsidiaries
or Affiliates of Compost), has been resolved without any material pending,
ongoing or future obligation, cost or liability, and except as to Environmental
Permits not yet obtained for facilities under development or proposed for
acquisition, there is no requirement proposed for adoption or implementation
under any Environmental Law or Environmental Permit that is reasonably expected
to be material to Compost or any Subsidiary or the Business.
(b) None of Compost or any of its Subsidiaries has received notice of
any pending or threatened claims, complaints or requests for information with
respect to any alleged violation of any Environmental Laws, and there are no
circumstances
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that can reasonably be expected to form the basis of any such environmental
claim, complaint or request.
(c) There have been no material releases, as defined under any
Environmental Laws, of Hazardous Substances that give rise to necessary costs of
response at, on, from or under any property now or previously owned or leased by
Compost or any of its Subsidiaries during the period in which any such property
was owned or leased by Compost or any Subsidiary.
(d) Except as to Environmental Permits not yet obtained for facilities
under development or proposed for acquisition, Compost and its Subsidiaries have
been issued and are in material compliance with all Environmental Permits,
orders, administrative consent orders and any other authorization, approvals or
consents relating to Environmental Laws or Hazardous Substances material to the
operation of their businesses. All such Environmental Permits which are required
for the operation of the Business of Miami, and which have been obtained and
which have not been obtained (but which are necessary to be obtained to conduct
the Business of Miami) are set forth in Schedule 11.19(d) of the Disclosure
Schedule.
(e) None of Compost or any of its Subsidiaries has received notice that
property presently owned or leased, or previously owned or leased, by Compost or
any of its Subsidiaries is listed or proposed for listing in the National
Priorities List created pursuant to CERCLA or on the CERCLIS or any similar
state list of sites requiring investigation or cleanup.
(f) Except for the usual and customary and ordinary course of business,
consistent with past practice, of and by Environmental Protection and
Improvement Company, Inc. ("EPIC"), a New Jersey corporation, which is a
Subsidiary of Compost, none of Compost or any of its Subsidiaries has
transported or arranged for the transportation of an Hazardous Substances to any
location that is listed on the National Priorities List or any similar state
list, nor has any of them received notice of pending or threatened claims as a
result of transporting or arranging to transport Hazardous Substances to any
location except insofar as such transportation or arrangement is not likely to
be material to Compost or any Subsidiary or the Business.
(g) To the best knowledge and information of Compost, Miami and
Bedminster, and all other Subsidiaries and/or Affiliates of Compost, after due
inquiry and investigation, and except as is not likely to be material to Compost
or any Subsidiary or the Business, there are no polychlorinated biphenyls (other
than those that may be contained in lighting ballasts or electrical transformers
that are labeled, operated and maintained in accordance with all Environmental
Laws) or asbestos-containing materials, in quantities prohibited under any
applicable Environmental Laws, present at any property now or previously owned
or leased by Compost or by any Subsidiary during the period in which any such
property was owned or leased by Compost or by a Subsidiary.
(h) To the best knowledge and information of Compost, Miami and
Bedminster, and all other Subsidiaries and/or Affiliates of Compost, after due
inquiry and investigation, none of Compost or any of its Subsidiaries has
received notice of pending or threatened claims against Compost or any of its
Subsidiaries arising out of any operations, action, inaction or status of any
previously divested property, whether or not the subject of any indemnity, under
any Environmental Laws or involving any Hazardous Substances.
(i) Compost, Miami and Bedminster have provided Lionhart, LHI and GEP
with copies of (a) any environmental assessment or audit reports or other
similar studies or analyses with respect to Compost and its Subsidiaries
relating to the Business and the Real Property, and (b) all insurance policies
issued at any time that may provide coverage to Compost or any Subsidiary or the
Business for environmental matters.
(j) Neither the execution of this Agreement and/or the Definitive
Supplemental Documents, nor the consummation of the transactions contemplated
under this Agreement and/or the Definitive Supplemental Documents, will require
any remedial action or notice to (by or on the part of Compost and/or Miami
and/or Bedminster) or consent of Governmental Authorities or third parties
pursuant to any applicable Environmental Law or Environmental Permit, or
otherwise, including, without limitation, the New Jersey Industrial Site
Recovery Act.
Section 11.20. Litigation. Schedule 11.20 of the Disclosure Schedule,
together with the Disclosure Documents, sets forth any pending or to the best
knowledge of Compost or any of its Subsidiaries after due inquiry, threatened
Actions by or against Compost or any Subsidiary or Affiliate before any
Governmental Authority, or to which any of the respective properties of Compost
or any Subsidiary or any Affiliate is or would be subject, except for Actions
known to the best knowledge of Compost after due inquiry by executives of
Compost relating to product warranty or safety claims, involving claims for
damages of not more than $20,000. Schedule 11.20 of the Disclosure Schedule,
together with the Disclosure Documents also
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indicates those Actions that (a) if adversely determined, could reasonably be
expected to have a Material Adverse Effect or (b) relate to, or could affect the
legality or validity of, this Agreement or the transactions contemplated hereby.
Except as set forth in the Disclosure Schedule and Disclosure Documents, there
are no material citations, fines or penalties heretofore asserted against
Compost or its Subsidiaries under any federal, state or local law that remain
unpaid or that otherwise bind the assets of Compost or its Subsidiaries.
Section 11.21. Insurance. (a) Schedule 11.21(a) of the Disclosure
Schedule sets forth the following information with respect to each insurance
policy (including policies providing property, casualty, liability, workers'
compensation, and bond and surety arrangements) under which Compost or any
Subsidiary has been an insured, a named insured or otherwise the principal
beneficiary of coverage at any time within the past three (3) years: (i) the
name, address and telephone number of the agent or broker; (ii) the name of the
insurer and the names of t he principal insured and each named insured; (iii)
the policy number and the period of coverage; (iv) the type, scope (including an
indication of whether the coverage was on a claims-made, occurrence or other
basis) and amount of coverage (including a description of how deductibles,
retentions and aggregates are calculated and operate); and, (v) the premium
charged for the policy, including, without limitation, a description of any
retroactive premium adjustments or other loss-sharing arrangements.
(b) With respect to each such insurance policy: (i) except for policies
that have expired under their terms in the ordinary course, it is in full force
and effect; (ii) neither Compost nor any Subsidiary is in breach or default
(including any breach or default with respect to the payment of premiums or the
giving of notice), and no event had occurred that, with notice or the lapse of
time, would constitute such a breach or default or permit termination or
modification, under the policy; (iii) no party to the policy has repudiated, or
given notice of an intent to repudiate, any provision thereof and (iv) to the
best knowledge of Compost after due inquiry, no insurer on the policy has been
declared insolvent or placed in receivership, conservatorship or liquidation or
currently has a rating of "B+" or below from A.M. Best & Co. or a claims paying
ability rating of "BBB" or below from Standard & Poor's, Inc.
(c) Schedule 11.21(c) of the Disclosure Schedule sets forth all risks
against which Compost or any Subsidiary is self-insured or that are covered
under any risk-retention program in which Compost or any Subsidiary
participates, together with details for the last five years (preceding the date
of the Disclosure Schedule) of Compost's and each Subsidiary's loss experience
with respect to such risks.
(d) Except as disclosed in Schedule 11.21(d) of the Disclosure Schedule
all material assets, properties and risks of Compost and each Subsidiary are,
and for the past five years have been, covered by valid and, except for policies
that have expired under their terms in the ordinary course, currently effective
insurance policies or binders of insurance (including, without limitation,
general liability insurance, property insurance and workers' compensation
insurance issued in favor of Compost or such Subsidiary, as the case may be, in
each case with responsible insurance companies, in such types and amounts and
covering such risks as are consistent with customary practices and standards of
companies engaged in businesses and operations similar to those of Compost or
such Subsidiary, as the case may be.
(e) At no time subsequent to April 30, 1995 has Compost or any
Subsidiary (i) been denied any insurance or indemnity bond coverage that it has
requested, (ii) made any material reduction in the scope or amount of its
insurance coverage or received notice from any of its insurance carriers that
any insurance premiums will be subject to increase in an amount materially
disproportionate to the amount of the increases with respect thereto (or with
respect to similar insurance) in prior years or that any insurance coverage will
not be available in the future substantially on the same terms as are now in
effect or (iii) suffered any extraordinary increase in premium for renewed
coverage. To the best knowledge of Compost after due inquiry, since April 30,
1995, no insurance carrier has canceled, failed to renew or materially reduced
and insurance coverage for Compost or any Subsidiary or given any notice or
other intention to cancel, not renew or reduce any such coverage.
(f) At the time of the Term Loan Closing and the Ancillary Transactions
Closing, all insurance policies currently in effect will be outstanding and duly
in force.
(g) To the best knowledge of Compost, Miami and Bedminster, after due
inquiry, no current insurance policy of Compost , Miami and/or Bedminster will
cease to be legal, valid, binding and enforceable in accordance with its terms
and in full force and effect on terms identical to those in effect as of the
date hereof as a result of the consummation of the transactions contemplated by
this Agreement.
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Section 11.22. Material Contracts. (a) Schedule 11.22(a) of the
Disclosure Schedule lists each of the following contracts and agreements
(including without limitation, oral agreements, and informal arrangements and/or
undertakings) of Compost and the Subsidiaries (including, without limitation,
Miami and Bedminster) (all such contracts, agreements, arrangements and
undertakings together with all contracts, agreements, leases and subleases
concerning the management or operation of any Real Property (including without
limitation, brokerage contracts) to which Compost or any Subsidiary (including,
without limitation, Miami and Bedminster) is a party and all agreements relating
to Intellectual Property, being "Material Contracts"):
(i) each such contract, agreement, arrangement or undertaking
for the purchase of inventory, spare parts, other materials or personal
property with any supplier or for the furnishing of services to Compost
or any Subsidiary (including, without limitation, Miami and/or
Bedminster) or otherwise related to their respective Business that (A)
is likely to pay or otherwise give consideration of more than $100,000
in the aggregate during the calendar year ended April 30, 1999, April
30, 2000 or April 30, 2001, or (B) is likely to pay or otherwise give
consideration of more than $100,000 in the aggregate over the remaining
term of such contract;
(ii) each such contract, agreement, arrangement or undertaking
for the sale of inventory or other personal property or for the
furnishing of services by Compost or any Subsidiary (including, without
limitation, Miami and/or Bedminster) that (A) is likely to pay or
otherwise give consideration of more than $100,000 in the aggregate
during the calendar year ended April 30, 1999, April 30, 2000 or April
30, 2001, or (B) is likely to pay or otherwise give consideration of
more than $100,000 in the aggregate over the remaining term of each
contract;
(iii) all broker, distributor, dealer, manufacture's
representative, franchise, agency, sales promotion, market research,
marketing, consulting and advertising contracts and other agreements to
which Compost or any Subsidiary (including, without limitation, Miami
and/or Bedminster) is a party;
(iv) all management contracts, agreements, arrangements and/or
undertakings, and contracts, agreements, arrangements or undertakings
with independent contractors or consultants (or similar arrangements)
to which Compost or any Subsidiary (including, without limitation,
Miami and/or Bedminster) is a party and that are not cancelable without
penalty or further payment and without more than 30 days' notice;
(v) all contracts, agreements, arrangements and/or
undertakings relating to Indebtedness of Compost or any Subsidiary
(including, without limitation, Miami and/or Bedminster);
(vi) all contracts, agreements, arrangements and/or
undertakings with any Governmental Authority to which Compost or any
Subsidiary (including, without limitation, Miami and/or Bedminster) is
a party;
(vii) all contracts, agreements, arrangements and/or
undertakings that limit or purport to limit the ability of Compost or
any Subsidiary (including, without limitation, Miami and/or Bedminster)
to compete in any line of business or with any Person or in any
geographic area or during any period of time;
(viii) all contracts, agreements, arrangements and/or
undertakings between or among Compost or any Subsidiary (including,
without limitation, Miami and/or Bedminster) or any Affiliate of
Compost; and
(ix) all other contracts, agreements, arrangements and/or
undertakings whether or not made in the ordinary course of business
that are material to Compost or any Subsidiary (including, without
limitation, Miami and/or Bedminster) or the conduct of their respective
Business, or the loss of which contract or agreement would have a
Material Adverse Effect.
For purposes of this Section 11.22 and Sections 11.16, 11.17 and 11.18
of this Agreement, the term "lease" shall include any and all leases, subleases,
sale/leaseback agreements or similar arrangements.
(b) Each Material Contract (i) is valid and binding on Compost and/or
any Subsidiary (including, without limitation, Miami and/or Bedminster), as
applicable, and, to the best knowledge of Compost, Miami and Bedminster, after
due inquiry, on the other parties thereto and is in full force and effect and
(ii) upon consummation of the transactions contemplated by this Agreement and/or
the Definitive Supplemental Documents (including, without limitation, the Credit
Documents), shall continue
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in full force and effect without penalty or other adverse consequence. Neither
Compost nor any Subsidiary (including, without limitation, Miami and/or
Bedminster) is in breach of, or default under, any Material Contract.
(c) There is no continuing act of nonperformance by any other party to
any Material Contract that constitutes a breach thereof or a default thereunder.
(d) Except as set forth in Schedule 11.22 of the Disclosure Schedule,
there is no contract, agreement, arrangement or other undertaking granting any
Person any preferential right to purchase, other than in the ordinary course of
business consistent with past practice, any of the properties or assets of
Compost or any Subsidiary (including, without limitation, Miami and/or
Bedminster).
Section 11.23. Licenses and Permits. Except as is disclosed and set
forth in Schedule 11.23 of the Disclosure Schedule, and/or except as would not
have a Material Adverse Effect, 1) Compost has all governmental licenses,
permits and other governmental authorizations and approvals required for the
conduct of its businesses as now conducted, and all such material licenses,
permits authorizations and approvals will remain in full force and effect
immediately following the consummation of the transactions hereunder; and 2)
Miami has all governmental licenses, permits and governmental authorizations and
approvals (i) for the conduct of its businesses as now conducted, and all such
material licenses, permits authorizations and approvals will remain in full
force and effect immediately following the consummation of the transactions
hereunder, and (ii) for the conduct of its businesses as contemplated currently
by Compost and/or Miami to be conducted by Miami at any time during the period
commencing on the Effective Date and continuing through April 30, 2005; and, 3)
Bedminster has all governmental licenses, permits and governmental
authorizations and approvals (i) for the conduct of its businesses as now
conducted, and all such material licenses, permits authorizations and approvals
will remain in full force and effect immediately following the consummation of
the transactions hereunder, and (ii) for the conduct of its businesses as
contemplated currently by Compost and/or Bedminster to be conducted by
Bedminster at any time during the period commencing on the Effective Date and
continuing through April 30, 2005.
Section 11.24. Labor Matters. Except for the agreements listed in
Schedule 11.24 of the Disclosure Schedule (the "Collective Bargaining
Agreements"), none of Compost or any Subsidiary (including, without limitation,
Miami and/or Bedminster) is a party to any currently effective collective
bargaining or other labor union contract. To the best knowledge of Compost after
due inquiry, except as disclosed on Schedule 11.24 of the Disclosure Schedule,
none of Compost or any Subsidiary (including, without limitation, Miami and/or
Bedminster) has materially breached or otherwise materially failed to comply
with any provision of any Collective Bargaining Agreement. To the best knowledge
of Compost, Miami and Bedminster, after due enquiry, and except as set forth in
Schedule 11.24 of the Disclosure Schedule, there are presently no (a) material
violations of any federal, state or local statutes laws, ordinances, rules,
regulations, orders or directives with respect to the employment of individuals
by, or the employment practices or work conditions of, or the terms and
conditions of employment, wages and hours of Compost or any Subsidiary
(including, without limitation, Miami and/or Bedminster); (b) unfair labor
practices or other unlawful employment practices and no charges of unfair labor
practices or other employee-related complaints pending or threatened against
Compost or any other Subsidiary (including, without limitation, Miami and/or
Bedminster) before the National Labor Relations Board, the Equal Employment
Opportunity Commission, the Occupational Safety and Health Review Commission,
the Department of Labor or any other federal, state, local or other governmental
authority; (c) strikes, picketing, slowdowns or work stoppages or organizational
attempts actually pending, threatened against or involving Compost or any
Subsidiary (including, without limitation, Miami and/or Bedminster); or (d)
material issues with respect to union representation pending or threatened with
respect to the employees of Compost or any Subsidiary (including, without
limitation, Miami and/or Bedminster).
Section 11.25. Taxes. (a) Except as set forth in Schedule 11.25 of the
Disclosure Schedule, (i)(A) all returns and reports in respect of Taxes ("Tax
Returns" or "Returns") required to be filed with respect to Compost and each
Subsidiary (including, without limitation, Miami and Bedminster) (including any
consolidated federal income Tax Returns and state and local income or franchise
Tax Returns that include Compost or any such Subsidiary on a consolidated,
combined or unitary ("combined") basis) have been timely filed, (B) all Taxes
shown to be payable on such Returns or otherwise due, and all assessments of Tax
made against Compost and each Subsidiary (including, without limitation, Miami
and Bedminster) with respect to such Returns, have been paid; (C) all such
Returns are true, correct and complete in all material respects; and (D) no
adjustment relating to such Returns has been proposed formally or informally by
any Tax authority and to the best knowledge of Compost or any Subsidiary
(including, without limitation, Miami and Bedminster), after due inquiry, no
basis exists for any such adjustment; (ii) there are no pending or, to the best
knowledge of Compost and/or any Subsidiary (including,
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without limitation, Miami and Bedminster), after due inquiry, threatened actions
or proceedings for the assessment or collection of Taxes against Compost or any
Subsidiary (including, without limitation, Miami and Bedminster); (iii) there
are no Tax liens on any assets of Compost or any Subsidiary (including, without
limitation, Miami and Bedminster); (iv) there are no outstanding waivers or
agreements extending the statute of limitations with respect to any Tax to which
Compost or any Subsidiary (including, without limitation, Miami and Bedminster)
may be subject; (v) there are no outstanding requests for information made by a
Tax authority to Compost or any Subsidiary (including, without limitation, Miami
and Bedminster); (vi) neither Compost nor any Subsidiary (including, without
limitation, Miami and Bedminster) has been advised by any Tax authority of any
proposed reassessments of the value (or other Tax base) of any property owned by
Compost or any Subsidiary (including, without limitation, Miami and Bedminster)
that could materially increase the amount of a property Tax to which Compost or
any Subsidiary (including, without limitation, Miami and Bedminster) would be
subject; (vii) Compost and any Subsidiary (including, without limitation, Miami
and Bedminster) have made all payments of estimated Taxes required to be made
under section 6655 of the Code and any comparable state or local Tax provision;
(viii) all Taxes required to be withheld, collected or deposited by or with
respect to Compost or any Subsidiary (including, without limitation, Miami and
Bedminster) have been timely withheld, collected or deposited, as the case may
be, and, to the extent required, have been paid to the relevant Tax authority;
(ix) neither Compost nor any Subsidiary (including, without limitation, Miami
and Bedminster) is doing business in, or engaged in a trade or business in, any
jurisdiction in which it has not filed all required Tax Returns; (x) Compost is
not, is not likely to be and has not been subject to Tax in any foreign
jurisdiction; and (xi) no Subsidiary organized under the laws of any foreign
jurisdiction is, is likely to be or has been engaged in the conduct of a trade
or business in the United States for purposes of section 964, 875, 882 or 884 of
the Code.
(b) (i) No consent under section 341(f) of the Code has been filed with
respect to Compost or any Subsidiary (including, without limitation, Miami and
Bedminster); (ii) at the Closing Date, Compost will not be a "United States real
property holding corporation" within the meaning of section 897(c)(2) of the
Code; (iii) neither Compost nor any Subsidiary (including, without limitation,
Miami and Bedminster) has income reportable for a taxable period ending after
the Closing Date, but attributable to a transaction (e.g., an installment sale)
occurring in, or a change in accounting method made for, a taxable period ending
on or prior to such date, that resulted in a deferred reporting of income from
such transaction or change; (iv) neither Compost nor any Subsidiary (including,
without limitation, Miami and Bedminster) has been a "passive foreign investment
company" within the meaning of section 1296 of the Code, and (v) neither Compost
nor any Subsidiary (including, without limitation, Miami and Bedminster) has
been, at any time after April 30, 1995, a member of any partnership or joint
venture or the holder of a beneficial interest in any trust for any period for
which the statute of limitations for Tax has not expired.
(c) Schedule 11.25(c) of the Disclosure Schedule (i) lists by type of
income, franchise and other material Tax Returns or extensions thereof (federal,
state, local, and foreign) filed with respect to each of Compost and any
Subsidiary (including, without limitation, Miami and Bedminster) for taxable
periods ended on or after April 30, 1995; (ii) indicates for which jurisdictions
Returns have been filed on a combined basis for the taxable period ended on or
after April 30, 1995, and the companies joining is such Returns; (iii) indicates
the most recent income, franchise, or other material Tax Returns for each
relevant jurisdiction for which an audit has been completed or the statute of
limitations has lapsed, and (iv) indicates all Tax Returns that currently are
the subject of an audit.
(d) Schedule 11.25(d) of the Disclosure Schedule lists the amount and
expiration dates of any net operating loss, net capital loss, unused business
credit, unused foreign tax credit or excess charitable contribution allocable to
Compost and each Subsidiary (including, without limitation, Miami and
Bedminster) as of and after April 30, 1996.
(e) Except as set forth on Schedule 11.25(e) of the Disclosure
Schedule, reserves and allowances have been provided on the Financial Statements
and the Interim Financial Statements that are adequate to satisfy all
Liabilities for Taxes relating to Compost and any Subsidiary (including, without
limitation, Miami and Bedminster) for periods through the date of such financial
statements.
(f) Compost, Miami and Bedminster have delivered or made available to
Lionhart, LHI and GEP correct and complete copies of all federal, state and
local Tax Returns of Compost or extensions thereof and any Subsidiary
(including, without limitation, Miami and Bedminster) for periods ending on or
after April 30, 1995, and correct and complete copies (or summaries) of all
examination reports, correspondence with Tax authorities, statements of
deficiencies assessed against or agreed to by, Compost or any Subsidiary
(including, without limitation, Miami and Bedminster) since April 30, 1995, and
correct and complete copies of any formal or informal tax sharing arrangement to
which Compost or any Subsidiary (including,
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without limitation, Miami and Bedminster) is a party.
Section 11.26. Miami Project-Specific Representations. Without limiting
the generality of any representation and/or warranty that is set forth in
Article XI of this Agreement, Compost and Miami and Bedminster, on a joint and
several basis, each hereby represent and warrant to Lionhart, LHI and GEP, as
follows:
11.26.01. Specific Definitions. The following additional terms
shall have the following meanings, definitions and denotations, for
purposes of this Agreement (including, particularly, this Section
11.26), as follows:
(a) Miami Project. The term "Miami Project" is and
shall mean the "Miami Recycling and Composting Facility"
("MRCF"), a development stage enclosed organic material
recycling compost manufacturing plant, as is described
generally in (i) the "Executive Summary" ("Summary"),
including particularly pages 52-53 of such Summary, dated on
or about or as of July 30, 1998, that was disclosed and
delivered by Compost and Miami to Lionhart, LHI and/or GEP, on
or about August 8, 1998, and which is hereby incorporated by
reference, a copy of which is set forth in Appendix II-Item 1,
(ii) the "Design Report," prepared by Black & Veatch, for
Miami, dated in or about June 1998, that is set forth in
Volume VI-Item 23 of the 8/14/98 Compost/Miami Disclosure (as
that term is defined under, and as part of, the Miami Project
Disclosures, as defined and described under Section
11.26.01(m) of this Agreement), and, (iii) the "Miami Project
Recap" ("Miami Project Recap"), as that term is defined under
Section 11.26.01(c) of this Agreement, pursuant to such
Summary and Miami Project Recap of which: 1) the Miami Project
is being developed by Compost and Miami, through Miami, on the
Miami Site, and upon which Compost is developing, and will
construct, manage, own and operate, through Miami, on the
Miami Site, the MRCF (i.e., an enclosed organic material
recycling compost manufacturing plant).
(b) Miami Project Permits. The term "Miami Project
Permits" is and shall mean the Current Permits (as that term
is defined under Section 11.26.01(b)(1) hereinbelow) and the
Supplemental Prospective Permits (as that term is defined
under Section 11.26.01(b)(2) hereinbelow), for and with
respect to the Miami Project, as follows:
(1) Current Permits. The "Current Permits"
shall mean those permits that are identified or
referenced under Section 11.26.01(b)(1)(A) and
Section 11.26.01(b)(1)(B), as follows:
(A) Miami has applied for and holds,
and the applicable Governmental Authorities
have approved and issued to Miami, the
following permits, approvals, licenses
and/or authorities, for and with respect to
the Miami Project ("Current Permits"): (i) a
Solid Waste Recycling Facility permit from
the Florida Department of Environmental
Protection ("FDEP") that requires only minor
modification; (ii) an approval for the
issuance of a Class VI permit from the Dade
County Department of Environmental Resource
Management ("DERM") for storm water
management; (iii) a determination by the
Dade County Building and Planning Department
that the modified plan is "substantially in
accordance" with the original submission,
which will allow previous permits and
approvals regarding site configuration to
retain validity; and, (iv) all other Current
Permits that are identified, enumerated and
described in Schedule 11.26.01(b)(1)(A) of
the Disclosure Schedule; and,
(B) Bedminster has applied for and
holds, and the applicable Governmental
Authorities have approved and issued to
Bedminster, all permits, approvals, licenses
and/or authorities that are identified,
enumerated and described in Schedule
11.26.01(b)(1)(B) of the Disclosure Schedule
("Bedminster Current Permits").
(2) Supplemental Prospective Permits. The
"Supplemental Prospective Permits" shall mean those
permits that are identified or referenced under
Section 11.26.01(b)(2)(A) and Section
11.26.01(b)(2)(B), as follows:
(A) Miami has applied for and/or
will apply within a commercially reasonable
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period and in the usual and ordinary course
of business, and Compost and Miami
anticipate reasonably that the applicable
Governmental Authorities will approve and
issue to Miami, within a commercially
reasonable period and in the usual and
ordinary course of business, the following
permits, approvals, licenses and/or
authorities, for and with respect to the
Miami Project: (i) a Joint Air Permit from
FDEP and DERM; (ii) an approval for its
Wetlands Mitigation Plan from FDEP, DERM and
the U.S. Army Corps on Engineers; (iii) a
Management and Storage of Storm Water Permit
from FDEP; (iv) an approval for the railroad
crossing leading to the Miami Project site
from the Florida Department of
Transportation; (v) an approval for the
final Miami Project plat from the Dade
County Planning Department and the Dade
County Department of Public Works; and, (vi)
any other such permits, approvals, licenses
and/or authorities, from any such
Governmental Authorities, that are
contemplated or identified by Compost and
Miami in the "Miami Project Recap" (as that
term is defined under Section 11.26.01(c)
hereinbelow, and/or that are reasonably
necessary and legally required by Compost
and/or Miami as a precondition to
developing, constructing, managing, owning
and operating, through Miami, on the Miami
Site, the MRCF, as described generally under
the Summary and Miami Project Recap, as are
identified, enumerated and described in
Schedule 11.26.01(b)(2)(A) of the Disclosure
Schedule.
(B) Bedminster has applied for
and/or will apply within a commercially
reasonable period and in the usual and
ordinary course of business, and Compost,
Miami and Bedminster anticipate reasonably
that the applicable Governmental Authorities
will approve and issue to Bedminster, within
a commercially reasonable period and in the
usual and ordinary course of business, the
permits, approvals, licenses and/or
authorities, for and with respect to the
Miami Project that are identified,
enumerated and described in Schedule
11.26.01(b)(2)(B) of the Disclosure
Schedule.
(c) Miami Project Recap. The "Miami Project Recap" is
and shall mean a document, entitled "Miami Project Recap,"
dated as of June 13, 1998, that was disclosed and delivered by
Compost, Miami and Bedminster to Lionhart, LHI and GEP, on or
about August 8, 1998, which is hereby incorporated by
reference, as amended and updated by a document, entitled
"Miami Recycling and Composting Company, North Miami-Dade
Project Recap," dated on or about October 18, 1998, that was
disclosed and delivered by Compost, Miami and Bedminster, to
Lionhart, LHI and GEP, which is hereby incorporated by
reference, and copies of which are set forth in Appendix
II-Item 2.
(d) Miami Site. The term "Miami Site" is and shall
mean an approximate 40.14 acre parcel of real estate, that is
a that is located in Unincorporated-Miami-Dade County,
Florida, at or about the southeast quadrant of the
intersection of N.W. 138th Street Extension and the Florida
Turnpike Right of Way Line in Unincorporated Miami-Dade
County, Florida, and approximately eight (8) miles northwest
of the Miami Civic Center, in Unincorporated Miami-Dade
County, Florida, the legal description of which is set forth
in Appendix II-Item 3 to this Agreement.
(e) Put or Pay Contract. The term "Put or Pay
Contract" is and shall mean 1) the "Solid Waste Service
Agreement," dated as of October 29, 1993, by and between the
City of Miami, Florida, and Bedminster Seacor Services Miami
Corporation ("Solid Waste Service Agreement"), a copy of which
is set forth in Appendix II-Item 4, and which is hereby
incorporated by reference, 2) "Amendment One to the Solid
Waste Service Agreement," dated October 20, 1994, by and
between the City of Miami, Florida, and Bedminster Seacor
Services Miami Corporation ("First Amendment"), a copy of
which is set forth in Appendix II-Item 5, and which is hereby
incorporated by reference, 3) the "Restated Compost Recycling
Agreement," dated as of November 30, 1995, by and between the
City of Miami, Florida, and Bedminster Seacor Services Miami
Corporation ("Restated Compost Recycling Agreement"), a copy
of which is set forth in Appendix II-Item 6, and which is
hereby incorporated by reference, and, 4) the "Amendment to
the Restated Compost Recycling Agreement," dated and executed
as of April 17, 1998, by and between the City of Miami,
Florida, and Bedminster Seacor Services Miami Corporation
("Second Amendment"), a copy of which is set forth in Appendix
II-Item 7, and which is hereby incorporated by reference.
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(f) Miami Common Stock. The term "Miami Common Stock"
is and shall mean all shares of common stock, in and to Miami,
that are issued by Miami to Compost or Mestre, that are
presently outstanding and that are owned respectively by
Compost and Mestre.
(g) Miami-Rinker Mortgage. The term "Miami-Rinker
Mortgage" is and shall mean the Deed of Mortgage, dated March
29, 1996, which was executed and delivered by Miami to Rinker
Mortgage Corporation ("Rinker"), and which is recorded in the
Official Records Book 17182, at Page 0528, of the Public
Records of Dated County, Florida, and re-recorded in the
Official Records Book 17815, Page 26033, on October 6, 1997,
of the Public Records of Miami-Dade County, Florida. A copy of
the Miami-Rinker Mortgage is set forth in Appendix II-Item 8.
(h) Miami-Rinker Note. The term "Miami-Rinker Note"
is and shall mean the "Promissory Note," dated March 29, 1996,
in the original principal amount of US $3,730,870.75, that was
executed and delivered by Miami to Rinker. A copy of the
Miami-Rinker Note is set forth in Appendix II-Item 9.
(i) Rinker Complaint. The term "Rinker Complaint" is
and shall mean the Complaint, that was filed by Rinker against
Miami, and Miami-Dade County, Florida, in the Circuit Court of
the Eleventh Judicial Circuit of Florida, in and for
Miami-Dade County (General Jurisdiction Division) ("Court"),
Case No. 98- 16437-CA-01 Sec. 20, and a copy of which is set
forth in Appendix II-Item 10, and which is hereby incorporated
by reference.
(j) Miami Complaint/Miami Claim. The term "Miami
Complaint" is and shall mean the Complaint, that was filed by
Bedminster, and against the City of Miami, in the Circuit
Court of the Eleventh Judicial Circuit of Florida, in and for
Miami-Dade County (General Jurisdiction Division) ("Court"),
Case No. 98- 20458 CA32, on or about September 4, 1998, and a
copy of which is set forth in Appendix II-Item 11, and which
is hereby incorporated by reference. The term "Miami Claim" is
and shall mean the claims of Compost, Miami and Bedminster
against the City of Miami, that relate to or arise from the
Put or Pay Contract and/or the Miami Project, whether or not
asserted in the Miami Complaint.
(k) Rinker Mortgage Extension. The term "Rinker
Mortgage Extension" is and shall mean the "Mortgage
Modification and Extension Agreement," dated April 24, 1998,
by and between Miami and Rinker, which is hereby incorporated
by reference, and a copy of which is set forth in Appendix
II-Item 12.
(l) Miami Site Appraisal Report. The term "Miami Site
Appraisal Report" is and shall mean 1) the "Appraisal Report,"
dated on or about May 20, 1998, and prepared by Appraisal and
Real Estate Economics Associates Inc., for Compost, for and
with respect to the Miami Site, a copy of which is set forth
in Appendix II-Item 13, and which is hereby incorporated by
reference; and, 2) a letter, from Budny & Heath, Inc., to
Compost, dated on and as of June 13, 1998, with respect to the
Miami Site and the above-referenced "Appraisal Report," a copy
of which is set forth in Appendix II-Item 14; and, 3) the
"No-Change Appraisal Letter," dated on or about the Closing
Date, for and with respect to (i) the above-referenced
Appraisal Report, as prepared and issued by Appraisal and Real
Estate Economics Associates Inc., and (ii) the letter, as
prepared and issued by Budny & Heath, Inc., as contemplated
under Section 13.03.01(I), Section 13.03.02(I) and Section
13.03.03(N) of this Agreement.
(m) Miami Project Disclosures. The term "Miami
Project Disclosures" is and shall mean the following:
(1) All reports, memoranda, correspondence
and all other documents that are compiled and set
forth in a notebook, entitled "Miami Recycling and
Composting Company Pertinent Documentation"
(including, without limitation, the Miami Project
Recap), that was compiled by Compost and Miami on or
about August 7, 1998, and that was disclosed and
delivered by Compost and Miami to Lionhart, LHI
and/or GEP on or about August 8, 1998, which is
hereby incorporated by reference; and,
(2) All reports, memoranda, correspondence
and all other documents that are compiled
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and included with an item of correspondence, from
Theodore W. Mason, Esq., to Timothy P. Brazill, Esq.,
dated August 7, 1998, that was and were disclosed and
delivered by Compost and Miami, by Theodore W. Mason,
Esq., to Lionhart, LHI and/or GEP, via Timothy P.
Brazill, Esq., on or about August 8, 1998, which is
hereby incorporated by reference; and,
(3) All reports, memoranda, correspondence
and all other documents that are compiled and
included with an item of correspondence, from
Theodore W. Mason, Esq., to Timothy P. Brazill, Esq.,
dated August 4, 1998, that was disclosed and
delivered by Compost and Miami, by Theodore W. Mason,
Esq., to Lionhart, LHI and/or GEP, via Timothy P.
Brazill, Esq., on or about August 15, 1998, which is
hereby incorporated by reference; and,
(4) The Summary, the Miami Project Recap,
the Miami Project Permits (including the Current
Permits and the Supplemental Prospective Permits),
the Put or Pay Contract (including the Solid Waste
Service Agreement, First Amendment, Restated Compost
Recycling Agreement and the Second Amendment), the
Miami Common Stock, the Miami-Rinker Mortgage, the
Miami-Rinker Note, the Rinker Mortgage Extension and
the Rinker Complaint, all of which are hereby
incorporated by reference; and,
(5) Compost's "SEC Reports" (as that term is
defined and described under Section 11.11 of this
Agreement), which are hereby incorporated by
reference; and,
(6) The Financial Statements and Interim
Financial Statements (as those terms are defined and
described under Section 11.12 of this Agreement),
which are hereby incorporated by reference;
and,
(8) The Miami Complaint and the Rinker
Complaint, both of which are hereby incorporated by
reference; and,
(9) All reports, memoranda, correspondence
and all other documents that are set forth, or
otherwise compiled, in and with the Disclosure
Schedule and/or the Disclosure Documents; and,
(10) The Tax Returns (as that term is
defined under Section 11.25 of this Agreement), which
are hereby incorporated by reference; and,
(11) All reports, memoranda, correspondence
and all other documents that were compiled by Compost
and Miami, in Volumes 1, 2, 3, 4, 5 and 6, each such
Volume 1-6 of which is entitled "Response to Due
Diligence Prepared for Lionhart Global Appreciation
Fund, Ltd., by Compost America Holding Company"
("8/14/98 Compost/Miami Disclosure"), and that were
disclosed and delivered by Compost and Miami to
Lionhart, LHI and/or GEP, via Timothy P. Brazill,
Esq., on or about August 14, 1998, in response to a
Memorandum, from Timothy P. Brazill, Esq., to
Theodore W. Mason, Esq., dated August 10, 1998,
entitled "LGAF/CACH Deal-Due Diligence Protocol," all
of which are hereby incorporated by reference; and,
(12) The "General Company (Compost)
Questionnaire" and the "Officer, Director and
Management Certificates," that are referred to under
Module I-Items 1.1 and 1.2, of the above-referenced
LGAF/CACH Deal-Due Diligence Protocol, and that were
disclosed and delivered by Compost, Miami and
Bedminster to Lionhart, LHI and/or GEP on or about
October 30, 1998, and which are hereby incorporated
by reference; and,
(13) The "General Company (Compost)
Questionnaire" and the "Officer, Director and
Management Certificates," that are referred to under
Module II-Items 2.1 and 2.2, of the above-referenced
LGAF/CACH Deal-Due Diligence Protocol, and that were
disclosed and delivered by Compost, Miami and
Bedminster to Lionhart, LHI and/or GEP on or about
October 30, 1998, and which are hereby incorporated
by reference; and,
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<PAGE>
(14) All disclosures made during the
"Personal Interview of Compost Management, Auditors
and Counsel," that is referred to under Module I,
Item 1.1, of the above-referenced LGAF/CACH Deal-Due
Diligence Protocol, on October 28, 1998, which are
hereby incorporated by reference, and all disclosures
made during the "Personal Interview of Miami
Management, Auditors and Counsel," that is referred
to under Module II, Item 2.1, of the above-referenced
LGAF/CACH Deal-Due Diligence Protocol, on October 28,
1998, which are hereby incorporated by reference;
and,
(15) The Miami Site Appraisal Report; the
Miami Balance Sheet; the Bedminster Balance Sheet;
and,
(16) The "Phase I Report," consisting of (i)
the Environmental Audit Phase I for Rinker Vacant
Land II, dated on or about January 12, 1995, and
issued by Biscayne Engineering Company, Inc., to
Bedminster Bioconversion Corporation, for and with
respect to the Miami Site, (ii) the Phase I
Environmental Report, dated June 22, 1998, and
provided by AB2MT Consultants, Inc., to Compost, for
and with respect to the Miami Site, and (iii) the
"No-Change Phase I Report Letter," dated on or about
the Closing Date, for and with respect to the Miami
Site, as contemplated under Section 13.03.01(I),
Section 13.03.02(I) and Section 13.03.03(N) of this
Agreement; and,
(17) The "Miami Site Boundary Survey," as
contemplated under Section 13.03.01(I), Section
13.03.02(I) and Section 13.03.03(N) of this
Agreement, for and with respect to the Miami Site,
and that is dated on or about the Closing Date, and
that was prepared and issued on or about the Closing
Date by Sergio Redondo & Associates, to and for
Lionhart, LHI and GEP, and all other surveys of or
with respect to the Miami Site that have been
provided and disclosed previously by Compost, Miami
and/or Bedminster, or any of their respective agents
or representatives, to Lionhart, LHI and/or GEP, or
any of their respective agents or representatives;
and,
(18) All reports, memoranda, correspondence
and all other documents that are compiled and
included with an item of correspondence, from
Theodore W. Mason, Esq., to Timothy P. Brazill, Esq.,
dated July 7, 1998, that was and were disclosed and
delivered by Compost and Miami, by Theodore W. Mason,
Esq., to Lionhart, LHI and/or GEP, via Timothy P.
Brazill, Esq., on or about July 8, 1998, which is
hereby incorporated by reference; and,
(19) All reports, memoranda, correspondence,
instruments, certificates and all other documents
that are compiled under Appendix I and Appendix II of
this Agreement, all of which are hereby incorporated
by reference, and the Disclosure Documents under
Appendix III of this Agreement, which are hereby
incorporated by reference; and,
(20) The proposed "Turnkey Agreement for
Engineering, Procurement, Construction and Start-Up
Operating Services," by and between Black & Veatch
Construction, Inc., and Miami, for and with respect
to the Miami Project on the Miami Site, as delivered
by Theodore W. Mason, Esq., to Timothy P. Brazill,
Esq., on October 15, 1998; and,
(21) All disclosures made during a telephone
conference, on or about Friday, October 23, 1998, by
and among Roger E. Tuttle, Theodore W. Mason, Esq.,
Ed Chapman (Goldman Sachs), Terrence P. Duffy
(Lionhart, LHI and GEP), and John Thomas Drics, Esq.,
and Timothy P. Brazill, Esq., which are hereby
incorporated by reference; and,
(22) All other all reports, memoranda,
correspondence and all other documents, and/or other
information and/or disclosures, that are or have been
made by Compost and/or Miami and/or Bedminster, or
any of their respective officers, directors, agents
or representatives, to Lionhart, LHI and/or GEP, via
counsel or otherwise, at any time, between the date
of consummation of the Term Sheet and the Term Loan
Closing and/or Ancillary Transactions Closing
(whichever is later), inclusive, all of which are
hereby incorporated by reference.
Page 59 of 107 Pages
<PAGE>
(n) Miami Project Collateral. The term "Miami Project
Collateral" is and shall mean collateral, that is identified,
described and otherwise specified under the Security
Agreement, including 1) the Miami Project Permits, 2) the
Miami Claim and 3) the Put or Pay Contract.
(o) Miami Project Financing. The term "Miami Project
Financing" shall have the meaning as is ascribed to such term
in Section 11.26.22 of this Agreement.
11.26.02. Miami/Bedminster Capitalization. (a) The exclusive
authorized capital stock of Miami consists of 1,000 shares of common stock, with
no par value ("Miami Common Stock"), of which Miami has issued, sold and
delivered exclusively 1) to Compost, and Compost currently holds and owns, 810
shares of Miami Common Stock, consisting of 80.1% of all issued and outstanding
shares of capital stock of Miami, and 2) to Mestre, and Mestre currently holds
and owns, 190 shares of Miami Common Stock, consisting of 19.9% of all issued
and outstanding shares of capital stock of Miami. Miami is a direct controlled
subsidiary of Compost. Each of such outstanding shares of Miami Common Stock is
validly authorized, validly issued, fully paid and nonassessable, has not been
issued and is not owned or held in violation of any preemptive right of any
shareholders or any other stockholders of Miami, and is owned (of record,
beneficially and equitably), and solely and exclusively, by Compost, free and
clear of all Encumbrances, including (without limitation) all liens, security
interests, pledges, charges, encumbrances, shareholder agreements, voting
trusts, claims or restrictions of any kind. Except for the shares of Miami
Common Stock which are currently issued and outstanding (and owned and held
solely by Compost), Miami has never issued and does not have outstanding any
shares of any other capital stock of Miami. There is no commitment, plan,
agreement, arrangement or undertaking, by or on the part of Compost, Miami or
any other Person, to issue, transfer or otherwise dispose of, and there is no
outstanding option, warrant, or other right calling for the issuance, transfer
or other disposition of, any share of Miami Common Stock or of any other capital
stock of the Miami, or of any security or other instrument convertible into,
exercisable for, or exchangeable for any share of Miami Common Stock or any
other capital stock of Miami.
(b) The exclusive authorized capital stock of Bedminster
consists of 1,000 shares of common stock, with no par value ("Bedminster Common
Stock"), of which Bedminster has issued, sold and delivered to Miami, and Miami
currently holds and owns, all issued and outstanding shares of Bedminster Common
Stock. Bedminster is a direct wholly-owned subsidiary of Miami, and is an
indirect controlled subsidiary of Compost. Each of such outstanding shares of
Bedminster Common Stock is validly authorized, validly issued, fully paid and
nonassessable, has not been issued and is not owned or held in violation of any
preemptive right of any shareholders or any other stockholders of Bedminster,
and is owned (of record, beneficially and equitably), and solely and
exclusively, by Miami, free and clear of all Encumbrances, including (without
limitation) all liens, security interests, pledges, charges, encumbrances,
shareholder agreements, voting trusts, claims or restrictions of any kind.
Except for the shares of Bedminster Common Stock which are currently issued and
outstanding (and owned and held solely by Miami), Bedminster has never issued
and does not have outstanding any shares of any other capital stock of
Bedminster. There is no commitment, plan, agreement, arrangement or undertaking,
by or on the part of Compost, Miami or Bedminster or any other Person, to issue,
transfer or otherwise dispose of, and there is no outstanding option, warrant,
or other right calling for the issuance, transfer or other disposition of, any
share of Bedminster Common Stock or of any other capital stock of the
Bedminster, or of any security or other instrument convertible into, exercisable
for, or exchangeable for any share of Bedminster Common Stock or any other
capital stock of Bedminster.
11.26.03. Miami Common Stock/Bedminster Common Stock-No
Encumbrances. (a) Compost owns and holds solely all of its shares of Miami
Common Stock (as otherwise described and identified under Section 11.26.02 of
this Agreement), free and clear of all Encumbrances, including (without
limitation) all liens, security interests, pledges, charges, encumbrances,
shareholder agreements, voting trusts, claims or restrictions of any kind. To
the best of Miami's knowledge and information after due inquiry and
investigation, Mestre owns and holds solely all of his shares of Miami Common
Stock (as otherwise described and identified under Section 11.26.02 of this
Agreement), free and clear of all Encumbrances, including (without limitation)
all liens, security interests, pledges, charges, encumbrances, shareholder
agreements, voting trusts, claims or restrictions of any kind. Except as
provided and contemplated under this Agreement and/or the Definitive
Supplemental Documents, there is not commitment, plan, agreement, arrangement or
undertaking, by or on the part of Compost, Miami, Mestre or any other Person, to
pledge, impose a lien against, grant a security interest in, or otherwise
encumber, any shares of Miami Common Stock. Furthermore, there is no present
fact, event or circumstance, and there is no present set of facts, events and/or
Page 60 of 107 Pages
<PAGE>
circumstances, pursuant to which, by operation of law, 1) there is or may be
imposed a lien, security interest or other Encumbrance on or against any shares
of the Miami Common Stock that are owned and held by Compost (as otherwise
described and identified under Section 11.26.02 of this Agreement), or 2) to the
best of Miami's knowledge and information after due inquiry and investigation,
there is or may be imposed a lien, security interest or other Encumbrance on or
against any shares of the Miami Common Stock that are owned and held by Mestre
(as otherwise described and identified under Section 11.26.02 of this
Agreement).
(b) Miami owns and holds solely all issued and outstanding
shares of Bedminster Common Stock, free and clear of all Encumbrances, including
(without limitation) all liens, security interests, pledges, charges,
encumbrances, shareholder agreements, voting trusts, claims or restrictions of
any kind. Except as provided and contemplated under this Agreement and/or the
Definitive Supplemental Documents, there is not commitment, plan, agreement,
arrangement or undertaking, by or on the part of Compost, Miami, Bedminster,
Mestre or any other Person, to pledge, impose a lien against, grant a security
interest in, or otherwise encumber, any shares of Bedminster Common Stock.
Furthermore, there is no present fact, event or circumstance, and there is no
present set of facts, events and/or circumstances, pursuant to which, by
operation of law, there is or may be imposed a lien, security interest or other
Encumbrance on or against any shares of the Bedminster Common Stock.
11.26.04. Subsidiaries. Bedminster is a direct wholly-owned
subsidiary of Miami. Except for Bedminster, Miami does not own any shares of
stock or other equity interest in any subsidiary or affiliate corporation, and
does not own any interest (either of record, beneficially or equitably) in any
corporation, limited liability company, association, partnership, joint venture,
unincorporated organization or any other enterprise (whether or not any such
enterprise is a corporation), except as provided in Schedule 11.26.04 of the
Disclosure Schedule. Bedminster does not own any shares of stock or other equity
interest in any subsidiary or affiliate corporation, and does not own any
interest (either of record, beneficially or equitably) in any corporation,
limited liability company, association, partnership, joint venture,
unincorporated organization or any other enterprise (whether or not any such
enterprise is a corporation), except as provided in Schedule 11.26.04 of the
Disclosure Schedule.
11.26.05. Organization and Qualification. Miami is a Delaware
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, with all requisite corporate power and authority to
own, lease, license and to use its properties and assets and to carry on the
business in which it is now engaged. Miami is duly qualified to transact the
business in which it is engaged and, except as disclosed in Schedule 11.26.05 of
the Disclosure Schedule, is in good standing as a foreign corporation in every
jurisdiction in which its ownership, leasing, licensing, or use of property or
assets, or the present conduct of its business makes such qualification
necessary as a foreign corporation, all of such foreign jurisdictions of which
are listed completely and correctly in Schedule 11.26.05 of the Disclosure
Schedule. Bedminster is a Florida corporation duly organized, validly existing
and in good standing under the laws of the State of Florida, with all requisite
corporate power and authority to own, lease, license and to use its properties
and assets and to carry on the business in which it is now engaged. Bedminster
is duly qualified to transact the business in which it is engaged and, except as
disclosed in Schedule 11.26.05 of the Disclosure Schedule, is in good standing
as a foreign corporation in every jurisdiction in which its ownership, leasing,
licensing, or use of property or assets, or the present conduct of its business
makes such qualification necessary as a foreign corporation, all of such foreign
jurisdictions of which are listed completely and correctly in Schedule 11.26.05
of the Disclosure Schedule.
11.26.06. Litigation and Claims. Schedule 11.26.06 of the
Disclosure Schedule contains a true, correct and complete schedule and summary
description of each lawsuit, arbitration, claim, Action, governmental or
administrative or other proceeding, investigation, inquiry or other action, that
involves, relates to or is applicable to Miami and/or Bedminster, which is
anticipated, commenced, pending, threatened or in prospect. There is no
litigation, lawsuit, arbitration, claim, action, governmental or administrative
or other proceeding (formal or informal) or investigation, inquiry or other
Action, that is anticipated, pending, threatened, or in prospect with respect to
Miami and/or Bedminster, or any of its or his business, properties, or assets,
except as described in Schedule 11.26.06 of the Disclosure Schedule. Neither
Miami nor Bedminster is not in violation of, or in default with respect to, any
law, rule, regulation, order, judgment, or decree, and, neither Miami nor
Bedminster is required to take any action in order to avoid any such violation
or default.
11.26.07. Miami/Bedminster Balance Sheets. (a) Schedule
11.26.07-1 of the Disclosure Schedule contains
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<PAGE>
a true, correct, accurate and complete balance sheet of Miami, as of the
Effective Date of this Agreement, that was compile, prepared and presented by
Compost and Miami ("Miami Balance Sheet"). The Miami Balance Sheet presents
fairly the financial condition, assets, liabilities and stockholder's equity as
of the Effective Date of this Agreement. The Miami Balance Sheet has been
prepared on the accrual basis of accounting, in accordance with GAAP,
consistently applied throughout the periods involved; are correct and complete;
present fairly the financial position of Miami for the periods indicated
thereon; and are in accordance with the books and records of Compost, Miami and
Bedminster.
(b) Schedule 11.26.07-2 of the Disclosure Schedule contains a
true, correct, accurate and complete balance sheet of Bedminster, as of the
Effective Date of this Agreement, that was compile, prepared and presented by
Compost, Miami and Bedminster ("Bedminster Balance Sheet"). The Bedminster
Balance Sheet presents fairly the financial condition, assets, liabilities and
stockholder's equity as of the Effective Date of this Agreement. The Bedminster
Balance Sheet has been prepared on the accrual basis of accounting, in
accordance with GAAP, consistently applied throughout the periods involved; are
correct and complete; present fairly the financial position of Bedminster for
the periods indicated thereon; and are in accordance with the books and records
of Compost, Miami and Bedminster.
11.26.08. Assets, Properties and Encumbrances. (a) All
buildings, structures, facilities, equipment, real and personal properties and
other material items of tangible property and assets of Miami, including
(without limitation) all Permits and Material Contracts ("Properties"), which
are owned, held, used or leased by Miami, are set forth, identified and
described reasonably in the Miami Balance Sheet (as set forth in Schedule
11.26.07-1 of the Disclosure Schedule) and/or in Schedule 11.26.08(a) of the
Disclosure Schedule. Miami has good, clear, valid and marketable title to all
such Properties, free and clear of all liens, mortgages, pledges, security
interests, charges, Encumbrances, restrictions, taxes and other defects of title
of any nature whatsoever, except for any such matters disclosed in Schedule
11.26.08(a) of the Disclosure Schedule. All such Properties are reasonably
necessary to the present operations of the business of Miami, and all such
Properties are in good operating condition and repair, subject to normal wear
and maintenance, are useable in the regular and ordinary course of business, and
conform to all applicable laws, ordinances, codes, rules and regulations
relating to their use and operation, including, without limitation, any and all
zoning and/or land use laws, ordinances, codes, rules and regulations. No real
property presently owned, leased, licensed, or used by Miami, or that is
anticipated will be owned, leased, licensed or used by Miami, including, without
limitation, the Miami Site, lies in an area which is, or to the knowledge of
Miami or Compost, will be, subject to zoning, use, or building code restrictions
which would prohibit, and no state of facts relating to the actions or inaction
of another person or entity or his or its ownership, leasing, licensing, or use
of any real or personal property exists which would prevent, the continued or
future effective ownership, leasing, licensing, or use of that real property
(including, without limitation, the Miami Site) in any business in which Miami
is now engaged or that it anticipates it will be engaged (as contemplated under
the Miami Project Disclosures).
(b) All buildings, structures, facilities, equipment, real and
personal properties and other material items of tangible property and assets of
Bedminster, including (without limitation) all Permits and Material Contracts
("Properties"), which are owned, held, used or leased by Bedminster, are set
forth, identified and described reasonably in the Bedminster Balance Sheet (as
set forth in Schedule 11.26.07-2 of the Disclosure Schedule) and/or in Schedule
11.26.08(b) of the Disclosure Schedule. Bedminster has good, clear, valid and
marketable title to all such Properties, free and clear of all liens, mortgages,
pledges, security interests, charges, Encumbrances, restrictions, taxes and
other defects of title of any nature whatsoever, except for any such matters
disclosed in Schedule 11.26.08(b) of the Disclosure Schedule. All such
Properties are reasonably necessary to the present operations of the business of
Bedminster, and all such Properties are in good operating condition and repair,
subject to normal wear and maintenance, are useable in the regular and ordinary
course of business, and conform to all applicable laws, ordinances, codes, rules
and regulations relating to their use and operation, including, without
limitation, any and all zoning and/or land use laws, ordinances, codes, rules
and regulations. No real property presently owned, leased, licensed, or used by
Bedminster, or that is anticipated will be owned, leased, licensed or used by
Bedminster, including, without limitation, the Miami Site, lies in an area which
is, or to the knowledge of Bedminster, Miami or Compost, will be, subject to
zoning, use, or building code restrictions which would prohibit, and no state of
facts relating to the actions or inaction of another person or entity or his or
its ownership, leasing, licensing, or use of any real or personal property
exists which would prevent, the continued or future effective ownership,
leasing, licensing, or use of that real property (including, without limitation,
the Miami Site) in any business in which Bedminster is now
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engaged or that it anticipates it will be engaged (as contemplated under the
Miami Project Disclosures).
11.26.09. Liabilities. Miami does not have any liability of
any nature, accrued or contingent, including without limitation liabilities for
federal, state, local, or foreign taxes, and liabilities to customers or
suppliers, except 1) liabilities for which full provision has been made on the
Miami Balance Sheet, or 2) any such liabilities that are set forth, identified
and described reasonably in Schedule 11.26.09-1 of the Disclosure Schedule, or
3) any immaterial debts, obligations or liabilities that arise, in the usual and
ordinary course of business, after the Effective Date of this Agreement and
prior to or on the Term Loan Closing Date or the Ancillary Transactions Closing,
whichever is later. Bedminster does not have any liability of any nature,
accrued or contingent, including without limitation liabilities for federal,
state, local, or foreign taxes, and liabilities to customers or suppliers,
except 1) liabilities for which full provision has been made on the Bedminster
Balance Sheet, or 2) any such liabilities that are set forth, identified and
described reasonably in Schedule 11.26.09-2 of the Disclosure Schedule, or 3)
any immaterial debts, obligations or liabilities that arise, in the usual and
ordinary course of business, after the Effective Date of this Agreement and
prior to or on the Term Loan Closing Date or the Ancillary Transactions Closing,
whichever is later.
11.26.10. Miami/Bedminster Bank Accounts. Schedule 11.26.10 of
the Disclosure Schedule contains a true, correct and complete list of all
accounts of Miami and/or Bedminster with each and every bank, financial or other
thrift institution, the account numbers thereof, and the name of each person who
is authorized to draw or deposit funds or is otherwise authorized to transact
business with respect to each such account.
11.26.11. Powers of Attorney. Schedule 11.26.11 of the
Disclosure Schedule, contains a true and complete list of the names of all
persons, firms, associations or business organizations holding general or
special powers of attorney from Miami and/or Bedminster, and a summary of the
material terms thereof. Except as set forth in Schedule 11.26.11 of the
Disclosure Schedule, neither Miami nor Bedminster has granted any general or
special powers of attorney to any person, firm, association or business
organization.
11.26.12. Guaranties. Except as set forth in Schedule
11.26.12-1 of the Disclosure Schedule, Miami has not guaranteed any liability or
obligation of Compost or any of its Subsidiaries, or any officer or director or
other employee of Compost or any of its Subsidiaries (including, without
limitation, Miami and Bedminster), or any other Person. Except as set forth in
Schedule 11.26.12-2 of the Disclosure Schedule, Bedminster has not guaranteed
any liability or obligation of Compost or any of its Subsidiaries, or any
officer or director or other employee of Compost or any of its Subsidiaries
(including, without limitation, Miami and Bedminster), or any other Person.
11.26.13. No Violations. Except as set forth in Schedule
11.26.13 of the Disclosure Schedule, neither the execution and delivery of this
Agreement and/or the Definitive Supplemental Documents (including, without
limitation, the Credit Documents), by Miami and/or Bedminster, nor the
consummation of the transactions or the performance of any duties or the
exercise of any rights contemplated or otherwise provided for under this
Agreement and/or the Definitive Supplemental Documents (including, without
limitation, the Credit Documents), will (a) violate any provision of the
Certificate (or Articles) of Incorporation or By-Laws of Compost, Miami and/or
Bedminster, (b) violate any law, statute, rule, regulation, order, ordinance,
injunction, writ or decree by which Compost, Miami and/or Bedminster is bound or
binding upon any of their Properties (including, Permits) or assets, or (c)
result in a violation or breach of, or constitute a default under, any license,
lease, franchise, permit, right, sales order or purchase order, contract,
indenture, agreement or other instrument to which Compost, Miami and/or
Bedminster is a party, or by which Compost, Miami and/or Bedminster, or any of
their respective assets or properties is bound, or otherwise impair the ability
of Compost, Miami and/or Bedminster to use the same, which are material to the
operations of the business of Compost, Miami and/or Bedminster.
11.26.14. Employees, Officers and Directors. (a) Schedule
11.26.14-1 of the Disclosure Schedule sets forth a true, correct and complete
list of all current directors and officers of Miami, and their addresses,
titles, length of service, total compensation (direct and indirect) and all
other benefits. With respect to Miami: (a) Miami has paid in full to all of its
employees all due and owing wages, salaries, commissions, bonuses, benefits and
fringe benefit payments for all services performed by them to the date hereof,
except as disclosed in Schedule 11.26.14-1; (b) Miami is in compliance in all
material respects with (i) all Federal, state, local and foreign laws,
ordinances and regulations dealing with employment and employment practices of
any kind, all of the terms and conditions of employment of any kind with respect
to its business, and all wage and hour requirements and regulations; (c) there
is no unfair labor practice, safety or health, discrimination or wage claim,
charge, complaint or suit pending or threatened against or involving Miami, or
any other officer, director or employee of Miami, before the National Labor
Relations Board, Occupational Safety and Health Administration, Equal Employment
Opportunity Commission, Department of Labor, or any other Federal, state, local
or foreign governmental agency or Governmental Authority; and, (d) Miami has not
violated and is in violation of the immigration laws of the United States.
(b) Schedule 11.26.14-2 of the Disclosure Schedule sets forth
a true, correct and complete list of all current directors and officers of
Bedminster, and their addresses, titles, length of service, total compensation
(direct and indirect) and all other benefits. With respect to Bedminster: (a)
Bedminster has paid in full to all of its employees all due and owing wages,
salaries, commissions, bonuses, benefits and fringe benefit payments for all
services performed by them to the date hereof, except as disclosed in Schedule
11.26.14-2; (b) Bedminster is in compliance in all material respects with (i)
all Federal, state, local and foreign laws, ordinances and regulations dealing
with employment and employment practices of any kind, all of the terms and
conditions of employment of any kind with respect to its business, and all wage
and hour requirements and regulations; (c) there is no unfair
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labor practice, safety or health, discrimination or wage claim, charge,
complaint or suit pending or threatened against or involving Bedminster, or any
other officer, director or employee of Bedminster, before the National Labor
Relations Board, Occupational Safety and Health Administration, Equal Employment
Opportunity Commission, Department of Labor, or any other Federal, state, local
or foreign governmental agency or Governmental Authority; and, (d) Bedminster
has not violated and is in violation of the immigration laws of the United
States.
11.26.15. Miami Site-Purchase/Ownership. On or about March 29,
1996, Miami purchased the Miami Site from Rinker, for the total purchase price
of US $4,100,000, and, pursuant to which, and on March 29, 1998, 1) Miami
executed and delivered to Rinker the Miami-Rinker Note, in the original
principal amount of US $3,730,870.75, and 2) Miami executed and delivered to
Rinker the original Rinker Mortgage, to secure the timely payment by Miami of
the Miami-Rinker Note. Miami is the sole owner, in fee simple absolute, of the
Miami Site, and has and possesses an indefeasible estate and title, in fee
simple absolute, in and to the Miami Site, which is free and clear of every kind
or description of lien, lease, restriction, mortgage and/or Encumbrance, except
for 1) the Miami Rinker Mortgage, and any such Encumbrances that are set forth
on and described under Schedule 11.26.15 of the Disclosure Schedule.
11.26.16. Miami Site-Miscellaneous Representations. With
respect to the Miami Site, the legal description of which is set forth in
Appendix II-Item 3 to this Agreement:
(a) As set forth in Section 11.26.15 of this Agreement, Miami
is the sole owner, in fee simple absolute, and has and possesses an
indefeasible estate and title, in fee simple absolute, in and to the
Miami Site, that is free and clear of every kind or description of
lien, lease, restriction, mortgage and/or Encumbrance, except for 1)
the Miami Rinker Mortgage, and any such Encumbrances that are set forth
on and described under Schedule 11.26.15 of the Disclosure Schedule.
Neither Compost nor Bedminster (or any other Person, including Mestre)
owns, holds or possesses any legal, equitable, possessory or any other
right, title or interest in and to, or against, the Miami Site.
(b) Miami has not executed, or permitted anyone in Miami's
behalf to execute, any conveyance, mortgage, lien, lease, security
agreement, financing statement or encumbrance of or upon the Miami Site
or any fixtures or improvements attached thereto, except as set forth
in Schedule 11.26.15 of the Disclosure Schedule, which is now
outstanding or enforceable against the Miami Site. Except as set forth
and disclosed in the Disclosure Documents, Miami has made no contract
to sell or otherwise dispose of all or a part of the Miami Site to any
Person, and Miami has not given (or granted, conveyed or delivered) to
any Person an option to purchase all or any part of the Miami Site,
which is enforceable or exercisable now or at any time in the future.
There has been no work performed or materials furnished on the Miami
Site which could give rise to a mechanic's lien being filed against the
Miami Site. To the best of the Miami's knowledge and information, there
are no unpaid claims for labor done upon or materials furnished for the
Miami Site in respect of which liens have been or may be filed. The
improvements upon the Miami Site are all located entirely within the
bounds of the Miami Site, and there are no encroachments thereon. There
are no existing violations of zoning ordinances or other restrictions
applicable to the Miami Site, and no proceedings have been commenced or
threatened by any Governmental Authority having power of eminent domain
to condemn any portion of the Miami Site.
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(c) There is no judgment of any court of the States of
Delaware, Florida or New Jersey, or of any other state or territory of
the United States, or of any court of the United States that is or may
become a lien on the Miami Site, or which could prevent or render
ineffective (and/or voidable or void) the valid execution and delivery
of the above-referenced Mortgage, or which could prevent the imposition
of a senior and unsubordinated mortgage, vis-a-vis the Mortgage, on and
against the Miami Site, as contemplated and otherwise provided for
under this Agreement and/or the Definitive Supplemental Documents
(including, without limitation, the Credit Documents).
(d) No petition for bankruptcy, insolvency, receivership
and/or incompetency has ever been filed by or against Miami (or Compost
or Bedminster), nor is any such petition now pending with respect to
Miami (or Compost or Bedminster) for bankruptcy, insolvency,
receivership or incompetency. No proceedings involving remedies for the
protection of Miami's creditors (or Compost's creditors or Bedminster's
creditors) are presently pending or contemplated. Miami is neither
principal nor surety on any bond payable to the States of Delaware,
Florida or New Jersey, or in any other state or territory of the United
States.
(e) The Miami Site is now in possession of Miami, as the fee
simple owner thereof, and no other Person (including, without
limitation, Compost, Bedminster or Mestre) has a right to possession or
claims possession of all or any part of the Miami Site.
(f) The fair market value of the Miami Site, as of the
Effective Date of this Agreement, and to the best information and
knowledge of Compost, Miami and Bedminster, after due inquiry and
investigation (including, without limitation, reliance on the Miami
Site Appraisal Report), is or about US $4,200,000 ("Appraised Value").
With respect to the Appraised Value of the Miami Site, Compost, Miami
and Bedminster have relied upon, and are currently relying upon, and
are authorized to rely unconditionally upon, the Miami Site Appraisal
Report. The Miami Site Appraisal Report is an independent and objective
report, by a qualified and independent expert, of the estimated market
value of the Miami Site. Compost, Miami and Bedminster, individually
and aggregately, know of no fact, event, circumstance, change, event,
transaction, loss, failure, effect or occurrence that, individually or
taken as a whole, has or have or is or are reasonably likely to have a
Material Adverse Effect on the Appraised Value of the Miami Site.
(g) The Miami Site has never been used, and is not being used
presently, by Compost, Miami and/or Bedminster, or, to the best
knowledge of Compost, Miami and Bedminster after due inquiry and
investigation, by Rinker or any predecessor in interest thereto, or any
other Person, in violation of any applicable Environmental Laws, and,
to the best knowledge and information of Compost, Miami and Bedminster
after due inquiry and investigation, there has never been a material
Release of any Hazardous Substances on the surface or in the subsurface
of the Miami Site, or in or about the air or water in or about the
Miami Site. The Phase I Report is an independent and objective "Phase
I" environmental inspection, audit and report, by a qualified and
independent expert, of the Miami Site. The Phase I Report of the Miami
Site, to the best information and knowledge of Compost, Miami and
Bedminster after due inquiry and investigation, is accurate and
complete, and Compost, Miami and Bedminster, individually and
aggregately, know of no fact, event, circumstance, change, event,
transaction, loss, failure, effect or occurrence that, individually or
taken as a whole, has or have or is or are reasonably likely to have a
Material Adverse Effect on the Phase I Report of the Miami Site. With
respect to the Phase I Report, Compost, Miami and Bedminster have
relied upon, and are currently relying upon, and are authorized to rely
unconditionally upon, the Phase I Report.
(h) The Miami Project Disclosures, with respect to the Miami
Project and the Miami Site, and/or otherwise, do not contain any untrue
statement of material fact or omit to state a material fact necessary
in order to make any such statement not misleading.
(i) No special or general assessments for public improvements,
or otherwise, has or have been levied with respect to the Miami Site,
which remains unpaid, and Miami has not received any notice of
assessment, reassessment or otherwise, of the Miami Site, for tax
purposes or otherwise.
(j) Neither Miami nor Bedminster (or Compost or any Subsidiary
thereof) nor, to the best
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knowledge and information of Compost, Miami and Bedminster after due
inquiry and investigation, Rinker or any predecessor in interest
thereto, or any other Person, has ever caused or permitted any
hazardous materials, and/or hazardous chemicals, and/or Hazardous
Substances, and/or hazardous wastes, and/or petroleum, and/or other
environmental hazards, to be placed, held, generated, stored,
transported, treated, located or disposed of on, under or about or at
the Miami Site, and the Miami Site has never been used by Miami,
Bedminster, Compost or any Subsidiary thereof, or, to the best
knowledge and information of Compost, Miami and Bedminster after due
inquiry and investigation, by Rinker, or any predecessor in interest or
any other Person, as a temporary or permanent dump or storage site for
any hazardous materials, and/or hazardous chemicals, and/or Hazardous
Substances, and/or hazardous wastes, and/or petroleum, and/or other
environmental hazards. In addition, there are not now any actual,
possible, contingent or pending liens or claims or liabilities or
obligations against Compost, Miami, Bedminster, or, to the best
knowledge and information of Compost, Miami and Bedminster after due
inquiry and investigation, Rinker, or any predecessor in interest
thereto or any other Person, with respect to the Miami Site, which
relate to and/or arise from any Environmental Laws, or any other
applicable federal, state or local Environmental Law, ordinance, code,
rule, regulation, order or decree, now or hereafter in force, including
(without limitation) the Comprehensive Environmental Responsibility,
Compensation and Liability Act of 1980, as amended ("CERCLA"), the
Resource Conservation and Recovery Act, as amended, the Toxic Substance
Control Act, as amended, any "Superfund" and/or "Superlien" laws,
and/or any other applicable U.S. federal or state Environmental Laws,
ordinances, codes, rules, regulations, orders or decrees, now or
hereafter in force.
11.26.17. Questionable Payments. Neither Miami nor Bedminster
(or any director, officer, agent, employee, or other person associated with or
acting on behalf of Miami or Bedminster), nor Compost (or any director, officer,
agent, employee, or other person associated with or acting on behalf of
Compost), has, directly or indirectly (and notwithstanding the allegations,
impressions, statements or assertions that are set forth in or that may
reasonably be implied from, an article, entitled "Political Ties - How Miami's
Garbage Contract Could Cost Taxpayers Millions Extra," as published in The Miami
Herald, on June 14, 1998): used any corporate funds for unlawful contributions,
gifts, entertainment, or other unlawful expenses relating to political activity;
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns from
corporate funds; violated any provision of the Foreign Corrupt Practice Act of
1977; established or maintained any unlawful or unrecorded fund of corporate
monies or other assets; made any false or fictitious entry on the books or
records of Miami and/or Compost; made any bribe, rebate, payoff, influence
payment, kickback, or other unlawful payment; given any favor or gift which is
not deductible for federal income tax purposes; or made any bribe, kickback, or
other payment of a similar or comparable nature, whether lawful or not, to any
person or entity, private or public, regardless of form, whether in money,
property, or services, to obtain favorable treatment in securing business or to
obtain special concessions, or to pay for favorable treatment for business
secured or for special concessions already obtained.
11.26.18. Compliance with Laws. Except as set forth in
Schedule 11.26.18 of the Disclosure Schedule, Compost, Miami and Bedminster,
with respect to the Miami Project, and otherwise, are in compliance with all
applicable laws, statutes, regulations, orders, ordinances, injunctions, writs,
judgments and decrees, except where the failure to so comply would not have a
Material Adverse Effect on the business, financial condition or results of
operations of Compost, Miami or Bedminster, and/or the Miami Project, taken
individually or as a whole.
11.26.19. Miami Project-Description. The Miami Project, as
defined and described under Section 11.26.01(a) of this Agreement, and as
described in the Miami Project Recap, the Summary, the Compost SEC Reports and
the other Miami Project Disclosures, is feasible, within the time periods
contemplated and otherwise described in the Miami Project Recap, the Summary,
the Compost SEC Reports and the other Miami Project Disclosures. The description
of the Miami Project, as set forth in the Miami Project Recap, the Summary, the
Compost SEC Reports and the other Miami Project Disclosures, is accurate and
complete, does not contain any untrue statement of material fact and does not
omit to state a material fact necessary to make any such statement not
misleading.
11.26.20. Put or Pay Contract-Status. With respect to the Put
and Pay Contract, as that term is defined under Section 11.26.01(e) of the
Agreement, including, without limitation, the Solid Waste Service Agreement, the
First Amendment, the Restated Compost Recycling Agreement and the Second
Amendment:
(a) Bedminster is entitled to and may assign, transfer and
deliver to Miami, all right, title and
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interest of Bedminster, in and to the Put or Pay Contract, and
to delegate all of its duties, under the Put or Pay Contract,
to Miami. Subject to the enforceability of the Put or Pay
Contract against the City of Miami as set forth in Section
11.26.20(b) of this Agreement, the City of Miami, based on the
best knowledge and information of Compost, Miami and
Bedminster, will accept or approve any such assignment from
Bedminster to Miami of the Put or Pay Contract, and any such
delegation by Bedminster to Miami of its duties under the Put
and Pay Contract.
(b) Bedminster is not now and does not reasonably
expect in the future to be in violation or breach of, or in
default with respect to, any term or provision of the Put or
Pay Contract, including the Solid Waste Service Agreement, the
First Amendment, the Restated Compost Recycling Agreement and
the Second Amendment (collectively referred to, in this
Section 11.26.20(b), as the "Put or Pay Undertaking(s)"), and
each of the Put or Pay Undertakings, to the best knowledge,
information and belief of Compost, Bedminster and Miami, after
due inquiry and investigation: 1) is in full force and effect,
2) is the legal, valid and binding obligation of Miami and/or
Bedminster, 3) based on a good faith belief of and by Compost,
Bedminster and Miami, which is based upon the actions of
officials of the City of Miami as more fully described in the
Miami Complaint, the Put or Pay Undertakings are the legal,
valid and binding obligation of the City of Miami as averred
and alleged in the Miami Complaint, notwithstanding (i) the
absence of any signature on the Second Amendment by Jose
Garcia-Pedrosa, as the City Manager of the City of Miami, or
any other duly qualified officer or official of the City of
Miami, or (ii) the absence of any approval, adoption or
ratification of the Second Amendment by the Financial
Oversight Board of the State of Florida, and 4) is enforceable
in accordance with the respective terms thereof, by and
against Miami (including Bedminster). The execution, delivery
and performance of, and the consummation of the transactions
contemplated under, this Agreement, the Credit Documents
and/or the Definitive Supplemental Documents will not
prejudice, or have a Material Adverse Effect upon, the Put and
Pay Contract and/or any such Put and Pay Undertaking, in any
way or manner whatsoever.
11.26.21. Miami Project Permits-Status, Validity and
Enforceability. With respect to the Miami Project Permits, as that term
is defined under Section 11:26.01(b) of this Agreement:
(a) Miami (either directly or through Bedminster)
and/or Bedminster has (have) and holds (hold) all Current
Permits, as that term is defined under Section 11:26.01(b)(1),
and all such Current Permits will remain in full force and
effect immediately following the execution, delivery and
consummation of the transactions under this Agreement, the
Credit Documents and the Definitive Supplemental Documents.
(b) Compost, Miami and Bedminster are currently
exercising commercially reasonable efforts, in good faith, and
will continue to exercise commercially reasonable efforts, in
good faith, following the execution and consummation of the
transactions under this Agreement, the Credit Documents and
the Definitive Supplemental Documents, to apply for or
continue the application of, and to procure and hold, as
promptly as is commercially reasonable, all Supplemental
Prospective Permits, as that term is defined under Section
11:26.01(b)(2) of this Agreement.
(c) The execution and delivery of this Agreement, the
Credit Documents and the Definitive Supplemental Documents,
and/or the consummation and performance of the transactions
contemplated under this Agreement, the Credit Documents and
the Definitive Supplemental Documents, and/or the granting
under the Security Agreement by Compost, Miami and Bedminster,
to Lionhart, LHI and GEP, of a security interest in and to the
Miami Project Collateral (including the Miami Project Permits,
the Put or Pay Contract and the Miami Claim), and/or the
granting by Compost and/or Miami to GEP of the Mortgage, (i)
will not conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to Miami or by which its
or any of the Miami Project Permits are bound or affected, or
otherwise violate the terms and conditions of any such Miami
Project Permits, or (ii) result in any breach of or constitute
a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others
(including any Governmental Authority) any rights of
termination, amendment, nullification, revocation or
cancellation of any of the Miami Project Permits, or (iii)
will not have a Material Adverse Effect on the Miami Project,
the Miami Project Permits, the Put or Pay Contract, the Miami
Claim, the Miami Site or the Appraised Value.
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(d) This execution and delivery of this Agreement and
the Definitive Supplemental Documents (including, without
limitation, the Credit Documents), and the consummation and
performance of the transactions contemplated under this
Agreement and the Definitive Supplemental Documents
(including, without limitation, the Credit Documents), by
Miami and/or Compost, do not and will not require the assent,
consent, approval or authorization of any Governmental
Authority, including (without limitation) any Governmental
Authority which has issued or may issue to Miami any of the
Miami Project Permits.
(e) The Current Permits and the Supplemental
Prospective Permits constitute and represent all such material
licenses, permits authorizations and approvals that are or
will be necessary for the conduct of Miami's Business and the
Miami Project (through the auspices of Miami and/or
Bedminster, or otherwise), as otherwise described under the
Summary, the Miami Project Recap, the Compost SEC Reports and
the other Miami Project Disclosures.
11.26.22. Miami Project Financing. Schedule 11.26.22 of the
Disclosure Schedule contains a true, complete and accurate description
of all material terms, facts and details of the construction and
permanent financing, as contemplated currently by Compost, Miami and
Bedminster, for and with respect to the development, construction and
operation of the Miami Project ("Miami Project Financing"). To the best
knowledge and information of Compost, Miami and Bedminster, after due
inquiry and investigation, the Miami Project Financing is feasible.
Compost, Miami and Bedminster are currently exercising commercially
reasonable efforts, in good faith, and will continue to exercise
commercially reasonable efforts, in good faith, following the execution
and consummation of the transactions under this Agreement, the Credit
Documents and the Definitive Supplemental Documents, to secure and
procure, and to close upon, the Miami Project Financing, on a
commercially reasonable and prompt basis, as contemplated under
Schedule 11.26.22 of the Disclosure Schedule. Compost, Miami and
Bedminster each reasonably anticipates, and each hereby represents that
Compost and Miami and Bedminster do anticipate, based on their best
knowledge and information after due inquiry and investigation, 1) that
it is more probable than not that Compost, Miami and Bedminster will so
secure, procure and close upon the entire Miami Project Financing,
between November 1, 1998, and February 28, 1999, inclusive, and 2) that
such Miami Project Financing will include a corporate bond offering
and/or project bond offering in an approximate amount of at least US
$60,000,000.
11.26.23. Black & Veatch/Professional Services Group-Status.
Compost, Miami and Bedminster are currently engaged in negotiations
with (i) Black & Veatch with respect to providing the engineering,
design, procurement, construction, start-up and testing of the Miami
Project at a guaranteed price, with a guaranteed completion date, and
including Black and Veatch's responsibility for liquidated damages, and
(ii) Professional Services Group, with respect to the provision of
operations, maintenance and management services for the Miami Project.
Schedule 11.26.23 of the Disclosure Schedule contains a true, complete
and accurate description of all material terms, facts and details that
Compost, Miami and Bedminster anticipate will be included within the
terms of any prospective agreement (including, without limitation, the
anticipated execution and closing dates) by and between or among 1)
Compost, Miami, Bedminster and Black & Veatch, and 2) Compost, Miami,
Bedminster and Professional Services Group.
11.26.24. Miscellaneous Supply Initiatives/Contracts. The
anticipated permitted municipal solid waste volume of and for the Miami
Project, pursuant to the Miami Project Permits, is 190,000 tons per
year ("MSW Volume"), and the City of Miami, under the Put or Pay
Contact, has guaranteed to Miami approximately 80% of that MSW Volume.
Schedule 11.26.24 of the Disclosure Schedule sets forth a true and
complete list and description of all other waste material suppliers or
generators who or which 1) have been contacted by or are reasonably
anticipated by Compost, Miami and/or Bedminster to be contacted by
Compost and/or Miami and/or Bedminster with respect to the Miami
Project, and 2) are or could reasonably be a potential, feasible and
material source of municipal solid waste for disposal at and treatment
by the Miami Project.
11.26.25. General. Sections 11.26.01 through 11.26.24,
inclusive, of this Agreement, do not contain any untrue statement of
material fact or omit to state a material fact necessary in order to
make any such statement not misleading.
Section 11.25. Private Offering. (a) Assuming the accuracy of the
representations and warranties of Lionhart, LHI and/or GEP, 1) the offer and/or
sale and/or issuance of any securities, under this Agreement, the Credit
Documents and/or the
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Definitive Supplemental Documents, by Compost and/or Miami (or any Subsidiaries
of Compost and/or Miami) to Lionhart, LHI and/or GEP, and/or 2) the offer and/or
purchase of any securities, under this Agreement, the Credit Documents and/or
the Definitive Supplemental Documents, by Lionhart, LHI and/or GEP from Compost
and/or Miami (and/or any Subsidiaries of Compost and/or Miami), is exempt from
the registration and prospectus delivery requirements of the Securities Act.
(b) No form of general solicitation or general advertising
(including, without limitation, advertisements, articles, notices or other
communications published in any newspaper, magazine or other medium or broadcast
over television or radio, or any seminar or meeting, whose attendees have been
invited by any general solicitation or general advertising) was used by 1)
Compost or Miami (and/or any Subsidiaries of Compost and/or Miami), with respect
to the offer and/or sale and/or issuance of any securities, under this
Agreement, the Credit Documents and/or the Definitive Supplemental Documents, by
Compost and/or Miami (and/or any Subsidiaries of Compost and/or Miami) to
Lionhart, LHI and/or GEP, or 2) Lionhart, LHI and/or GEP, with respect to the
offer and/or purchase of any securities, under this Agreement, the Credit
Documents and/or the Definitive Supplemental Documents, from Compost and/or
Miami (and/or any Subsidiaries of Compost and/or Miami).
Section 11.26. Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions hereunder based upon arrangements made by or on behalf of
Compost and/or Miami.
Section 11.27. Disclosure Schedule and Disclosure Documents: Accuracy
of Information. Compost, Miami and Bedminster each has provided Lionhart, LHI
and/or GEP with all the information reasonably available to it that the
Lionhart, LHI and/or GEP have requested for evaluating and deciding, and that
Compost, Miami and Bedminster believe is reasonably necessary to enable
Lionhart, LHI and GEP to evaluate and determine, whether to execute, deliver
and/or consummate the transactions contemplated under this Agreement, the Credit
Documents and the Definitive Supplemental Documents. Each subsection made a part
of the Disclosure Schedule relates to the corresponding section of the Agreement
and each reference to a specific schedule within the Disclosure Schedule shall
be deemed to include reference to the corresponding amendment, if any, to such
schedule contained within any amendment or addendum to the Disclosure Schedule.
Neither Compost nor Miami (nor Bedminster) is not aware of any facts pertaining
to Compost or Miami or Bedminster, or any other Subsidiary of Compost, or any of
their respective businesses, that could have a Material Adverse Effect and that
have not been disclosed in this Agreement, the Credit Documents, the Definitive
Supplemental Documents, the Disclosure Schedule, the Disclosure Documents, the
Compost Disclosures (as that term is defined under Section 1.1.27 of this
Agreement), the Financial Statements, the Interim Financial Statements, the
Miami Balance Sheet, the Bedminster Balance Sheet, the Miami Project
Disclosures, Appendix I, II and/or III of this Agreement, or any Exhibits or
Schedules of or to this Agreement. This Agreement, the Credit Documents and the
Definitive Supplemental Documents, including, the Disclosure Schedule, the
Disclosure Documents, the Financial Statements, the Interim Financial
Statements, the Miami Balance Sheet, the Bedminster Balance Sheet, the Compost
Disclosures (as that term is defined under Section 1.1.27 of this Agreement),
the Miami Project Disclosures, Appendix I-III of this Agreement, and the
Exhibits and Schedules of or to this Agreement, do not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements herein or therein not misleading.
ARTICLE XII
REPRESENTATIONS AND WARRANTIES RELATING TO LIONHART, LHI AND GEP
Lionhart, LHI and GEP, on a joint and several basis, each hereby
represent and warrant to Compost, Miami and Bedminster, as is set forth in
Section 12.01-Section 12.06, that:
Section 12.01. Organization. Lionhart is a limited liability company,
that is duly organized, validly existing and in good standing under the laws of
the British Virgin Islands, and has the requisite power and authority and any
necessary governmental authority to own, operate or lease the properties that is
purports to own, operate or lease and to carry on its business as it is now
being conducted. LHI is a limited liability company, that is duly organized,
validly existing and in good standing under the laws of the United Kingdom, and
has the requisite power and authority and any necessary governmental authority
to own, operate or lease the properties that is purports to own, operate or
lease and to carry on its business as it is now being conducted. GEP is a
limited liability company, that is duly organized, validly existing and in good
standing under the laws of the State of Indiana USA, and has the requisite power
and authority and any necessary governmental authority to own, operate or lease
the properties that is purports to own, operate or lease and to carry on its
business as it is now being conducted.
Section 12.02. Authority. Lionhart, LHI and GEP each has all necessary
power and authority to execute and deliver
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this Agreement and all Definitive Supplemental Documents (including, without
limitation, the Credit Documents) and to perform its obligations and to
consummate the transactions contemplated under this Agreement and all Definitive
Supplemental Documents (including, without limitation, the Credit Documents).
The execution and delivery of this Agreement, the Credit Documents and the
Definitive Supplemental Documents, by Lionhart, LHI and/or GEP, and the
consummation by Lionhart, LHI and/or GEP of the transactions contemplated under
this Agreement, the Credit Documents and/or the Definitive Supplemental
Documents, have been duly and validly authorized by all necessary action by
Lionhart, LHI and GEP, and no other proceedings on the part of Lionhart, LHI
and/or GEP are necessary to authorize this Agreement, the Credit Documents
and/or the Definitive Supplemental Documents, or to consummate the transactions
contemplated by this Agreement, the Credit Documents and/or the Definitive
Supplemental Documents. This Agreement, the applicable Credit Documents and the
applicable Definitive Supplemental Documents, each has been duly and validly
authorized, executed and delivered by Lionhart, LHI and GEP, and, assuming its
due authorization, execution and delivery by Compost, Miami and Bedminster,
constitutes 1) the legal, valid and binding obligations of Lionhart, LHI and/or
GEP, that are enforceable against Lionhart, LHI and/or GEP in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
Section 12.03. No Conflict: Required Filings and Consent. The execution
and delivery of this Agreement, the applicable Credit Documents and the
applicable Definitive Supplemental Documents by Lionhart, LHI and GEP, do not,
and the performance of this Agreement, the Credit Documents and the Definitive
Supplemental Documents by Lionhart, LHI and GEP, will not (i) conflict with or
violate the Certificate of Incorporation or By-Laws of Lionhart, LHI and/or GEP,
(ii) conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to Lionhart, LHI and/or GEP, or by which any of their
respective properties are bound or affected, or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or encumbrance on any of the properties or assets of Lionhart, LHI and/or GEP,
pursuant to any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, insurance policy or other instrument or obligation to which
Lionhart, LHI and/or GEP is a party, or by which Lionhart, LHI and/or GEP, or
any of their respective properties are bound or affected, except in the case of
clauses (ii), (iii) and (iv) above, for any breaches, defaults or other
occurrences which would not, individually or in the aggregate, have a Material
Adverse Effect on the business, operations, properties (including intangible
properties), condition (financial or otherwise), assets or liabilities of
Lionhart, LHI and/or GEP. The execution and delivery of this Agreement, the
applicable Credit Documents and the applicable Definitive Supplemental
Documents, by Lionhart, LHI and/or GEP, do not, and the performance of this
Agreement and such Credit Documents and Definitive Supplemental Documents by
Lionhart, LHI and/or GEP (including, without limitation, the consummation of the
transactions contemplated hereunder) will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, domestic or foreign.
Section 12.04. Sufficient Unreserved Funds. Lionhart, LHI and GEP have
and, immediately prior to the Term Loan Closing and the Ancillary Transactions
Closing, will have the funds necessary to consummate the applicable transactions
contemplated under this Agreement and the Definitive Supplemental Documents
(including, without limitation, the Credit Documents), including the delivery of
the Credit by GEP to Compost, Miami and Bedminster.
Section 12.05. Investment Purpose. The purchase or acquisition by
Lionhart of 1) the Compost-Lionhart Warrant # 1, the Compost-Lionhart Warrant #
2, the Compost-Lionhart Warrant # 3, the Compost-Lionhart Warrant # 4, the
Compost-Lionhart Warrant # 5 and the Compost-Lionhart Warrant # 6, and 2) the
Put Option # 1, for and with respect to the Series B Preferred Stock and the
Conversion Common Shares, and the Put Option # 2, for and with respect to the
Excess Common Shares, are being acquired by Lionhart for investment only and not
with a view to any sale or distribution (within the meaning of the Securities
Act) thereof. Lionhart agrees at all times to sell or otherwise dispose of all
or any part of 1) the Compost-Lionhart Warrant # 1, the Compost-Lionhart Warrant
# 2, the Compost-Lionhart Warrant # 3, the Compost-Lionhart Warrant # 4, the
Compost-Lionhart Warrant # 5 and the Compost-Lionhart Warrant # 6 (and any
securities, including Compost Common Stock, issued pursuant to or in exchange
therefor), and/or 2) the Put Option # 1, for and with respect to the Series B
Preferred Stock and the Conversion Common Shares, and/or the Put Option # 2, for
and with respect to the Excess Common Shares (and any securities, including
Compost Common Stock, issued in exchange therefor) only pursuant to a
registration or exemption therefrom, under and in compliance with 1) the
Securities Act, and 2) applicable state (US) securities laws.
Section 12.06. Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated under this Agreement, the Credit Documents
and/or the Definitive Supplemental Documents, upon any arrangements made by or
on behalf of Lionhart, LHI and/or GEP, or otherwise.
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ARTICLE XIII
CLOSINGS, CLOSING DATE AND LOCATION, AND CLOSING CONSIDERATIONS
Section 13.01. Closings and Closing Date and Location. The Term Loan
Closing and the Ancillary Transactions Closings, shall transpire as follows:
13.01.01. Closing Date/Location. The Closing Date is and shall
be October 30, 1998, commencing at or about 9:00 a.m., and the Closing
Location is Greenberg Traurig, at 1225 Brickell Avenue, Miami, Florida
33131, and/or 2005 Market Street, Suite 2050, Philadelphia,
Pennsylvania 19103, unless an alternative or different Closing Date
and/or Closing Location is mutually agreed to, in writing, by and among
Compost, Miami, Bedminster, Lionhart, LHI and GEP.
13.01.02 Term Loan Closing. The Term Loan Closing, of and with
respect to this Agreement and the Credit Documents, shall occur on
October 30, 1998, commencing at or about 9:00 a.m., at the offices of
Greenberg Traurig, 1225 Brickell Avenue, Miami, Florida 33131, unless
an alternative or different Term Loan Closing is mutually agreed to, in
writing, by and among Compost, Miami, Bedminster, Lionhart, LHI and
GEP.
13.01.03. Ancillary Transactions Closing. The Ancillary
Transactions Closing, of and with respect to all transactions that are
contemplated under this Agreement and/or the Definitive Supplemental
Documents, exclusive of the Term Loan Closing, shall occur, after but
reasonably concurrent with, the Term Loan Closing, on the Closing Date
at the Closing Location, unless an alternative or different Term Loan
Closing is mutually agreed to, in writing, by and among Compost, Miami,
Bedminster, Lionhart, LHI and GEP.
Section 13.02. Closing Considerations of Lionhart, LHI and GEP. At the
Term Loan Closing and the Ancillary Transactions Closing, on the Closing Date at
the Closing Location, and pursuant to the terms and subject to the conditions
set forth in this Agreement and/or the Definitive Supplemental Documents,
Lionhart, LHI and/or GEP shall execute or deliver the following documents,
instruments and considerations to Compost and/or Miami and/or Bedminster, all of
which shall be in a form that is required under this Agreement and/or the
Definitive Supplemental Documents, and that is acceptable reasonably to Compost
and Miami and their respective counsel:
13.02.01. Lender Closing Considerations/Undertakings to
Compost/Miami/Bedminster. The Lenders (as otherwise defined under
Article II of this Agreement) shall execute and/or deliver to Compost
and/or Miami and/or Bedminster, the following:
(A) Agreement Considerations. 1) The Credit; 2) the
Term Loan Closing Statement; 3) the Schedule of Uses and
Applications of Credit; 4) all Credit Documents that require
the signature of GEP (including, the Compost Stock Pledge
Agreement (Compost Common Stock), the Compost Stock Pledge
Agreement (Miami Common Stock), the Compost Stock Pledge
Agreement (Bedminster Common Stock), the Security Agreement,
the Guaranty Agreement and the Mortgage); 5) the Lender
Receipt # 1, as provided under Section 2.3.1(D) of this
Agreement; 6) the Lender Receipt # 2, as provided under
Section 2.3.1(E) of this Agreement; 7) the Opinion of Lender's
Counsel, as provided under Section 2.3.1(F) of this Agreement;
and, 8) if applicable, any Definitive Supplemental Documents;
and,
(B) Global Closing Statement. The Global Closing
Statement, by and among Compost, Miami, Bedminster, Lionhart,
LHI and GEP, in substantially the form that is set forth in
Exhibit YY of this Agreement; and,
(C) Settlement Agreement. The Settlement Agreement,
by and among Compost, Miami, Bedminster, Lionhart, LHI and
GEP, in substantially the form that is set forth in Exhibit ZZ
of this Agreement, pursuant to which all Disputes are settled,
compromised and resolved on and as of the Effective Date of
this Agreement; and,
(D) Incumbency Certificates. A certificate of the
Secretary of GEP, in substantially the form as is set forth in
Exhibit AAA of this Agreement, certifying to the names and
signatures of the officers of GEP who are authorized to sign,
execute and otherwise deliver, for and on behalf of GEP, any
and all documents
Page 71 of 107 Pages
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that are required to be signed, executed and/or delivered
respectively by GEP under this Agreement, the Credit Documents
and/or the Definitive Supplemental Documents; and,
(F) Miscellaneous. Each and every other document,
certificate, instrument, receipt or agreement, that is
required to be executed and/or delivered by GEP to Compost
and/or Miami and/or Bedminster under this Agreement and/or the
Definitive Supplemental Documents, or that may be requested
reasonably by Compost and/or Miami, and/or their respective
counsel, to consummate or effectuate one (1) or more of the
transactions contemplated under this Agreement and/or the
Definitive Supplemental Documents.
13.02.02. Lionhart Closing Considerations/Undertakings to
Compost/Miami/Bedminster. Lionhart shall execute and/or deliver to
Compost and/or Miami and/or Bedminster, the following:
(A) Agreement Considerations. 1) The joint
resolutions of the Lionhart Board and the LHI Board, as
provided under Section 3.2.4(A), Section 5.2.4(A) and Section
7.2.1(C) of this Agreement; 2) the Legal Opinion of Lionhart's
Counsel, as provided under Section 3.2.4(B), Section 3.3.2(B),
Section 4.3.1(B), Section 5.2.4(B), Section 6.2.1(B) and
Section 7.2.1(D) of this Agreement; 3) the Receipt, as
provided under Section 3.2.4(D) of this Agreement; 4) the
Receipt, as provided under Section 3.3.2(A) of this Agreement;
5) the Receipt, as provided under Section 4.3.1(D) of this
Agreement; 6) the Receipt, as provided under Section 5.2.4(C)
of this Agreement; 7) the Receipt, as provided under Section
6.2.1(C) of this Agreement; 8) the Receipt, as provided under
Section 7.2.1(E) of this Agreement; 9) the Receipt, as
provided under Section 8.2.1(A) of this Agreement; 10) the
Estoppel Certificate, as provided under Section 3.2.1(D) of
this Agreement; 11) the Estoppel Certificate, as provided
under Section 3.2.4(C) of this Agreement; 12) the Estoppel
Certificate, as provided under Section 3.2.4(E) of this
Agreement; 13) the Estoppel Certificate, as provided under
Section 3.3.2(C) of this Agreement; 14) the original
Outstanding Debentures, as provided under Section 4.3.1(A) of
this Agreement; 15) the resolutions of the Lionhart Board, as
provided under Section 4.3.1(C) of this Agreement; 16) the
certificate, power and resolutions, as provided and
contemplated under Section 6.2.1(A) of this Agreement; 17) the
Mutual Escrow Agent Instruction # 1, as provided under Section
7.2.1(A) of this Agreement; 18) the Mutual Escrow Agent
Instruction # 2, as provided under Section 7.2.1(B) of this
Agreement; and, 19) if applicable, any Definitive Supplemental
Documents; and,
(B) Global Closing Statement. The Global Closing
Statement, by and among Compost, Miami, Bedminster, Lionhart,
LHI and GEP, in substantially the form that is set forth in
Exhibit YY of this Agreement; and,
(C) Settlement Agreement. The Settlement Agreement,
by and among Compost, Miami, Bedminster, Lionhart, LHI and
GEP, in substantially the form that is set forth in Exhibit ZZ
of this Agreement, pursuant to which all Disputes are settled,
compromised and resolved on and as of the Effective Date of
this Agreement; and,
(D) Incumbency Certificates. A certificate of the
Secretary of Lionhart, in substantially the form as is set
forth in Exhibit BBB of this Agreement, certifying to the
names and signatures of the officers of Lionhart who are
authorized to sign, execute and otherwise deliver, for and on
behalf of Lionhart, any and all documents that are required to
be signed, executed and/or delivered respectively by Lionhart
under this Agreement, the Credit Documents and/or the
Definitive Supplemental Documents; and,
(E) Commitment Fee Receipt. A written confirmation,
in substantially the form that is set forth in Exhibit CCC of
this Agreement, and pursuant to which Lionhart confirms the
payment by Compost, Miami and Bedminster, to Lionhart, and the
receipt by Lionhart of the payment from Compost, Miami and
Bedminster, on and as of the Term Loan Closing and the
Ancillary Transactions Closing, on the Closing Date at the
Closing Location, of the Deal Commitment Fee, in the amount of
US $150,000, as otherwise provided under this Agreement; and,
(F) Registration Rights Agreement. The Registration
Rights Agreement, by and between Compost and Lionhart, in
substantially the form that is set forth in Exhibit DDD of
this Agreement; and,
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(G) Director Appointment Agreement. The Director
Appointment Agreement, by and between Compost and Lionhart, in
substantially the form that is set forth in Exhibit EEE of
this Agreement; and,
(H) Certificates: Series B Preferred Stock and
Conversion Common Shares. The stock certificates, representing
the Series B Preferred Stock and the Conversion Common Shares
of Lionhart, as provided under, and for the purposes set forth
in, Section 9.2.4 and Section 10.2.3 of this Agreement; and,
(I) Miscellaneous. Each and every other document,
certificate, instrument, receipt or agreement, that is
required to be executed and/or delivered by Lionhart to
Compost and/or Miami and/or Bedminster under this Agreement
and/or the Definitive Supplemental Documents, or that may be
requested reasonably by Compost and/or Miami, and/or their
respective counsel, to consummate or effectuate one (1) or
more of the transactions contemplated under this Agreement
and/or the Definitive Supplemental Documents.
13.02.03. LHI Closing Considerations/Undertakings to
Compost/Miami/Bedminster. LHI shall execute and/or deliver to Compost
and/or Miami and/or Bedminster, the following:
(A) Agreement Considerations. 1) The certificate,
power and resolutions, as provided under Section 3.2.1(A) of
this Agreement; 2) the certificate, power and resolutions, as
provided under Section 5.2.1(A) of this Agreement; 3) the
Legal Opinion of LHI's Counsel, as provided under Section
3.2.1(B) and Section 5.2.1(B) of this Agreement; 4) the Legal
Opinion of Lionhart's Counsel, as provided under Section
5.2.1(B) of this Agreement; 5) the Receipt, as provided under
Section 3.2.1(C) of this Agreement; 6) the Estoppel
Certificate, as provided under Section 3.2.1(D) of this
Agreement; 7) the Estoppel Certificate, as provided under
Section 3.2.4(C) of this Agreement, 7) the Receipt, as
provided under Section 5.2.1(C) of this Agreement; and, 8) if
applicable, any Definitive Supplemental Documents; and,
(B) Global Closing Statement. The Global Closing
Statement, by and among Compost, Miami, Bedminster, Lionhart,
LHI and GEP, in substantially the form that is set forth in
Exhibit YY of this Agreement; and,
(C) Settlement Agreement. The Settlement Agreement,
by and among Compost, Miami, Bedminster, Lionhart, LHI and
GEP, in substantially the form that is set forth in Exhibit ZZ
of this Agreement; pursuant to which all Disputes are settled,
compromised and resolved on and as of the Effective Date of
this Agreement; and,
(D) Incumbency Certificates. A certificate of the
Secretary of LHI, in substantially the form as is set forth in
Exhibit FFF of this Agreement, certifying to the names and
signatures of the officers of LHI who are authorized to sign,
execute and otherwise deliver, for and on behalf of LHI, any
and all documents that are required to be signed, executed
and/or delivered respectively by LHI under this Agreement, the
Credit Documents and/or the Definitive Supplemental Documents;
and,
(E) Miscellaneous. Each and every other document,
certificate, instrument, receipt or agreement, that is
required to be executed and/or delivered by LHI to Compost
and/or Miami and/or Bedminster under this Agreement and/or the
Definitive Supplemental Documents, or that may be requested
reasonably by Compost and/or Miami, and/or their respective
counsel, to consummate or effectuate one (1) or more of the
transactions contemplated under this Agreement and/or the
Definitive Supplemental Documents.
Section 13.03. Closing Considerations of Compost, Miami and/or
Bedminster to Lionhart/LHI/GEP. At the Term Loan Closing and the Ancillary
Transactions Closing, on the Closing Date at the Closing Location, and pursuant
to the terms and subject to the conditions set forth in this Agreement and/or
the Definitive Supplemental Documents, Compost, Miami and/or Bedminster shall
execute or deliver the following documents, instruments and considerations to
Lionhart, LHI and/or GEP, all of which shall be in a form that is required under
this Agreement and/or the Definitive Supplemental Documents, and that is
acceptable reasonably to Lionhart, LHI and GEP, and their respective counsel:
13.03.01. Compost/Miami/Bedminster Closing
Considerations/Undertakings to Lenders. Compost, Miami and/or
Bedminster shall execute and/or deliver to the Lenders (as otherwise
defined under Section 2.01 of this
Page 73 of 107 Pages
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Agreement), the following:
(A) Principal Agreement Considerations. 1) The Credit
Receipt, as provided under Section 2.3.2(A) of this Agreement;
2) the Term Loan Closing Statement, as provided under Section
2.3.2(B) of this Agreement; 3) the Schedule of Uses and
Applications of Credit; 4) the Mortgage Note, the Mortgage,
the Security Agreement, the Compost Stock Pledge Agreement
(Compost Common Stock), the Compost Stock Pledge Agreement
(Miami Common Stock), the Compost Stock Pledge Agreement
(Bedminster Common Stock), the Pledged Compost Shares, the
Pledged Miami Shares, the Pledged Bedminster Shares, the UCC-1
Financing Statement, the Compost-Miami Guaranty, the Legal
Opinion of Compost's Counsel, the Legal Opinion of Miami's
Counsel, the Legal Opinion of Bedminster's Counsel, the
Compost Resolutions, the Compost Certificate of Resolutions,
the Miami Resolutions, the Miami Certificate of Resolutions,
the Bedminster Resolution, the Bedminster Certificate of
Resolutions, the Mortgagee's Title Insurance Commitment, the
Compost/Miami Mortgagor Affidavit, the Compost/Miami Owner's
Affidavit, and the Mortgagor's Certificate and Indemnification
Regarding Hazardous Substances, all as provided under Section
2.3.2(C) of this Agreement; 5) the Release and Satisfaction of
Rinker Mortgage and the Miami-Rinker Note, as provided under
Section 2.3.2(D) of this Agreement; 6) the Stipulated Motion
to Dismiss Complaint with Prejudice and the Order of Dismissal
with Prejudice, as provided under Section 2.3.2(D)of this
Agreement; and, 7) if applicable, any Definitive Supplemental
Documents; and,
(B) Incumbency Certificates. A certificate of the
Secretary of Compost, in substantially the form as is set
forth in Exhibit GGG of this Agreement, and the certificate of
the Secretary of Miami, in substantially the form as is set
forth in Exhibit HHH of this Agreement, and the certificate of
the Secretary of Bedminster, in substantially the form as is
set forth in Exhibit TTT, certifying to the names and
signatures of Compost, Miami and Bedminster respectively that
are authorized to sign, execute and otherwise deliver any and
all documents that are required to be signed, executed and/or
delivered respectively by Compost, Miami and/or Bedminster
under this Agreement, the Credit Documents and/or the
Definitive Supplemental Documents; and,
(C) Organizational Documents. A copy of (i) the
Certificates of Incorporation, as amended (or similar
organizational documents), of Compost, Miami and Bedminster,
and of each Subsidiary, certified by the secretary of state of
the jurisdiction in which each such entity is incorporated or
organized, as of a date not earlier than five (5) Business
Days prior to the Closing Date and accompanied by a
certificate of the Secretary or Assistant Secretary of each
such entity, dated as of the Closing Date, stating that no
amendments have been made to such Certificates of
Incorporation (or similar organizational documents) since such
date, and (ii) the By-laws (or similar organizational
documents) of Compost, Miami and Bedminster, and of each
Subsidiary, certified by the Secretary or Assistant Secretary
of each such entity and dated as of the Closing Date, stating
that such By-laws are the current and complete By-laws of each
such entity; and,
(D) Good Standing/Qualification to do Business. Good
standing certificates for Compost, Miami and Bedminster, and
for each Subsidiary from the secretary of state of the
jurisdiction in which each sun entity in incorporated or
organized and from the secretary of state of each other
jurisdiction in which the properties owned or leased by any of
Compost, Miami, Bedminster or any Subsidiary, or the operation
of its business in such jurisdiction, requires Compost, Miami,
Bedminster or any Subsidiary to qualify to do business as a
foreign corporation, in each case dated as of a date not
earlier than fifteen (15) Business Days prior to the Closing
Date and accompanied by bring-down certificates from the
respective Secretaries of Compost, Miami and each Subsidiary
dated as of and on the Closing Date; and,
(E) Global Closing Statement. The Global Closing
Statement, by and among Compost, Miami, Bedminster, Lionhart,
LHI and GEP, in substantially the form that is set forth in
Exhibit YY of this Agreement; and,
(F) Settlement Agreement. The Settlement Agreement,
by and among Compost, Miami, Bedminster, Lionhart, LHI and
GEP, in substantially the form that is set forth in Exhibit ZZ
of this Agreement, pursuant to which all Disputes are settled,
compromised and resolved on and as of the Effective Date of
this Agreement; and,
Page 74 of 107 Pages
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(G) "Bring-Down Closing Certificates. The
"'Bring-Down" Certificate of Compost," in substantially the
form that is set forth in Exhibit JJJ of this Agreement, the
"'Bring-Down" Certificate of Miami," in substantially the form
that is set forth in Exhibit KKK of this Agreement, and the
"'Bring-Down" Certificate of Bedminster," in substantially the
form that is set forth in Exhibit SSS of this Agreement,
pursuant to which Compost, Miami and Bedminster each
respectively promise, covenant, warrant and represent to
Lionhart, LHI and GEP, as an inducement to consummate the
transactions contemplated under this Agreement and the
Definitive Supplemental Documents, 1) that all representations
and warranties of Compost, Miami and/or Bedminster, that are
set forth in Article XI of this Agreement, the Credit
Documents and all other Definitive Supplemental Documents, are
true, accurate and complete in all material respects, and do
not contain any untrue statement of material fact or omit to
state a material fact necessary in order to make any such
statement not misleading, as of the Term Loan Closing and the
Ancillary Transactions Closing on the Closing Date, and 2)
that Compost, Miami and Bedminster have complied with,
fulfilled and performed each and every promise, covenant,
term, provision and condition to be complied with, fulfilled
or otherwise performed respectively by Compost and/or Miami
and/or Bedminster under this Agreement, the Credit Documents
and all other Definitive Supplemental Documents, as of the
Term Loan Closing and the Ancillary Transactions Closing on
the Closing Date; and,
(H) Closing Costs. The payment by Compost, Miami and
Bedminster, pursuant to the written instructions furnished by
counsel for Lionhart, LHI and GEP at the Term Loan Closing, of
the professional, administrative and closing fees, costs and
expenses of Lionhart, LHI and GEP, in the amount of US
$292,750.00, pursuant to and as provided under Section 2.14 of
the Term Sheet; and,
(I) Miscellaneous Miami Site Documents. A "No Change
Appraisal Letter," a "No Change Phase I Report Letter" and a
"Miami Site Boundary Survey," all dated on or about the
Closing Date, and each of which shall be in a form and and
substance as is acceptable reasonably to Lionhart, LHI and
GEP, and their respective counsel; and,
(J) Miscellaneous. Each and every other document,
certificate, instrument, receipt or agreement, that is
required to be executed and/or delivered by Compost, Miami
and/or Bedminster to GEP under this Agreement and/or the
Definitive Supplemental Documents, or that may be requested
reasonably by GEP and/or its counsel, to consummate or
effectuate one (1) or more of the transactions contemplated
under this Agreement and/or the Definitive Supplemental
Documents.
13.03.02. Compost/Miami/Bedminster Closing
Considerations/Undertakings to LHI. Compost, Miami and/or Bedminster
shall execute and/or deliver to LHI, the following:
(A) Agreement Considerations. 1) The Receipt, as
provided under Section 3.2.2(A) of this Agreement; 2) the
Compost Resolutions and Compost Certificate of Resolutions, as
provided under Section 3.2.2(B) and Section 5.2.2(B) of this
Agreement; 3) the Legal Opinion of Compost's Counsel, as
provided under Section 3.2.2(C) and Section 5.2.2(C) of this
Agreement; 4) the Receipt, as provided under Section 5.2.2(A)
of this Agreement; and, 5) if applicable, any Definitive
Supplemental Documents; and,
(B) Global Closing Statement. The Global Closing
Statement, by and among Compost, Miami, Bedminster, Lionhart,
LHI and GEP, in substantially the form that is set forth in
Exhibit YY of this Agreement; and,
(C) Settlement Agreement. The Settlement Agreement,
by and among Compost, Bedminster, Miami, Lionhart, LHI and
GEP, in substantially the form that is set forth in Exhibit ZZ
of this Agreement; and,
(D) "Bring-Down Closing Certificates. The
"'Bring-Down" Certificate of Compost," in substantially the
form that is set forth in Exhibit JJJ of this Agreement, the
"'Bring-Down" Certificate of Miami," in substantially the form
that is set forth in Exhibit KKK of this Agreement, and the
"'Bring-Down" Certificate of Bedminster," in substantially the
form that is set forth in Exhibit SSS of this Agreement,
pursuant to which Compost, Miami and Bedminster each
respectively promise, covenant, warrant and
Page 75 of 107 Pages
<PAGE>
represent to Lionhart, LHI and GEP, as an inducement to
consummate the transactions contemplated under this Agreement
and the Definitive Supplemental Documents, 1) that all
representations and warranties of Compost, Miami and/or
Bedminster, that are set forth in Article XI of this
Agreement, the Credit Documents and all other Definitive
Supplemental Documents, are true, accurate and complete in all
material respects, and do not contain any untrue statement of
material fact or omit to state a material fact necessary in
order to make any such statement not misleading, as of the
Term Loan Closing and the Ancillary Transactions Closing on
the Closing Date, and 2) that Compost, Miami and Bedminster
have complied with, fulfilled and performed each and every
promise, covenant, term, provision and condition to be
complied with, fulfilled or otherwise performed respectively
by Compost and/or Miami and/or Bedminster under this
Agreement, the Credit Documents and all other Definitive
Supplemental Documents, as of the Term Loan Closing and the
Ancillary Transactions Closing on the Closing Date; and,
(E) Incumbency Certificates. A certificate of the
Secretary of Compost, in substantially the form as is set
forth in Exhibit GGG of this Agreement, and the certificate of
the Secretary of Miami, in substantially the form as is set
forth in Exhibit HHH of this Agreement, and the certificate of
the Secretary of Bedminster, in substantially the form as is
set forth in Exhibit TTT, certifying to the names and
signatures of Compost, Miami and Bedminster respectively that
are authorized to sign, execute and otherwise deliver any and
all documents that are required to be signed, executed and/or
delivered respectively by Compost, Miami and/or Bedminster
under this Agreement, the Credit Documents and/or the
Definitive Supplemental Documents; and,
(F) Organizational Documents. A copy of (i) the
Certificates of Incorporation, as amended (or similar
organizational documents), of Compost, Miami and Bedminster,
and of each Subsidiary, certified by the secretary of state of
the jurisdiction in which each such entity is incorporated or
organized, as of a date not earlier than five (5) Business
Days prior to the Closing Date and accompanied by a
certificate of the Secretary or Assistant Secretary of each
such entity, dated as of the Closing Date, stating that no
amendments have been made to such Certificates of
Incorporation (or similar organizational documents) since such
date, and (ii) the By-laws (or similar organizational
documents) of Compost, Miami and Bedminster, and of each
Subsidiary, certified by the Secretary or Assistant Secretary
of each such entity and dated as of the Closing Date, stating
that such By-laws are the current and complete By-laws of each
such entity; and,
(G) Good Standing/Qualification to do Business. Good
standing certificates for Compost, Miami and Bedminster, and
for each Subsidiary from the secretary of state of the
jurisdiction in which each sun entity in incorporated or
organized and from the secretary of state of each other
jurisdiction in which the properties owned or leased by any of
Compost, Miami, Bedminster or any Subsidiary, or the operation
of its business in such jurisdiction, requires Compost, Miami,
Bedminster or any Subsidiary to qualify to do business as a
foreign corporation, in each case dated as of a date not
earlier than fifteen (15) Business Days prior to the Closing
Date and accompanied by bring-down certificates from the
respective Secretaries of Compost, Miami and each Subsidiary
dated as of and on the Closing Date; and,
(H) Closing Costs. The payment by Compost, Miami and
Bedminster, pursuant to the written instructions furnished by
counsel for Lionhart, LHI and GEP at the Term Loan Closing, of
the professional, administrative and closing fees, costs and
expenses of Lionhart, LHI and GEP, in the amount of US
$292,750.00, pursuant to and as provided under Section 2.14 of
the Term Sheet; and,
(I) Miscellaneous Miami Site Documents. A "No Change
Appraisal Letter," a "No Change Phase I Report Letter" and a
"Miami Site Boundary Survey," all dated on or about the
Closing Date, and each of which shall be in a form and
substance as is acceptable reasonably to Lionhart, LHI and
GEP, and their respective counsel; and,
(J) Miscellaneous. Each and every other document,
certificate, instrument, receipt or agreement, that is
required to be executed and/or delivered by Compost, Miami
and/or Bedminster to LHI under this Agreement and/or the
Definitive Supplemental Documents, or that may be requested
reasonably by LHI and/or its counsel, to consummate or
effectuate one (1) or more of the transactions contemplated
under this Agreement and/or the Definitive Supplemental
Documents.
Page 76 of 107 Pages
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13.03.03. Compost/Miami/Bedminster Closing
Considerations/Undertakings to Lionhart. Compost, Miami and/or
Bedminster shall execute and/or deliver to Lionhart, the following:
(A) Agreement Considerations. 1) The Receipt, as
provided under Section 3.2.3(A) of this Agreement; 2) the
Replacement Certificate No. B-1, as provided under Section
3.2.3(B) of this Agreement; 3) the Compost Resolutions and
Compost Certificate of Resolutions, as provided under Section
3.2.3(C), Section 3.3.1(B), Section 4.3.2(D), Section
5.2.3(C), Section 6.2.2(C), Section 7.2.2(D) and Section
8.2.2(B) of this Agreement; 4) the 1998 Dividend Shares, and
the stock certificate, for and with respect to the 1998
Dividend Shares, as provided under Section 3.3.1(A) of this
Agreement; 5) the Legal Opinion of Compost's Counsel, as
provided under Section 3.3.1(C), Section 4.3.2(C), Section
6.2.2(D), Section 7.2.2(E) and Section 8.2.2(C) of this
Agreement; 6) the Conversion Shares, and the stock
certificate, for and with respect to the Conversion Shares, as
provided under Section 4.3.2(A) of this Agreement; 3) the
Legal Opinion of Compost's Counsel, as provided under Section
3.2.2(C) and Section 3.3.1(C), Section 4.3.2(C), Section
7.2.2(E) and Section 8.2.2(C) of this Agreement; 7) a check,
in good and certified US funds, in the amount of the Accrued
Cumulative Interest attributable to the Outstanding
Debentures, as provided under Section 4.3.2(B) of this
Agreement; 8) the Receipt, as provided under Section 4.3.2(E)
of this Agreement; 9) the Receipt, as provided under Section
5.2.3(A) of this Agreement; 10) the stock certificate, for and
with respect to the LHI-Select Agreement Shares, as provided
under Section 5.2.3(B) of this Agreement; 11) the Receipt, as
provided under Section 6.2.2(A) of this Agreement; 12) US
$3,000,000, in good US funds, by wire transfer or other
written instruction, as the Purchase Price for the purchase
and redemption by Compost from Lionhart of the Section 6.1
Shares, as provided under Section 6.2.2(B) of this Agreement;
13) if necessary, the new stock certificate, for and with
respect to 1,106,771 shares of Compost Common Stock, as owned
and held by Lionhart immediately after the Term Loan Closing
and the Ancillary Transactions Closing on the Closing Date
(subsequent to the purchase and redemption by Compost from
Lionhart of the Section 6.1 Shares), as provided under Section
6.2.2(E) of this Agreement; 14) the Receipt, as provided under
Section 7.2.2(A) of this Agreement; 15) the Mutual Escrow
Agent Instruction # 1, as provided under Section 7.2.2(B) of
this Agreement; 16) the Mutual Escrow Agent Instruction # 2,
as provided under Section 7.2.2(C) of this Agreement; 17) the
Compost-Lionhart Warrant # 1, the Compost-Lionhart Warrant #
1, the Compost-Lionhart Warrant # 2, the Compost-Lionhart
Warrant # 3, the Compost-Lionhart Warrant # 4, the
Compost-Lionhart Warrant # 5 and the Compost-Lionhart Warrant
# 6, as provided under Section 8.2.2(A) of this Agreement;
and, 18) if applicable, any Definitive Supplemental Documents;
and,
(B) Global Closing Statement. The Global Closing
Statement, by and among Compost, Miami, Bedminster, Lionhart,
LHI and GEP, in substantially the form that is set forth in
Exhibit YY of this Agreement; and,
(C) Settlement Agreement. The Settlement Agreement,
by and among Compost, Bedminster, Miami, Lionhart, LHI and
GEP, in substantially the form that is set forth in Exhibit ZZ
of this Agreement; and,
(D) Incumbency Certificates. A certificate of the
Secretary of Compost, in substantially the form as is set
forth in Exhibit GGG of this Agreement, and the certificate of
the Secretary of Miami, in substantially the form as is set
forth in Exhibit HHH of this Agreement, and the certificate of
the Secretary of Bedminster, in substantially the form as is
set forth in Exhibit TTT, certifying to the names and
signatures of Compost, Miami and Bedminster respectively that
are authorized to sign, execute and otherwise deliver any and
all documents that are required to be signed, executed and/or
delivered respectively by Compost, Miami and/or Bedminster
under this Agreement, the Credit Documents and/or the
Definitive Supplemental Documents; and,
(E) Organizational Documents. A copy of (i) the
Certificates of Incorporation, as amended (or similar
organizational documents), of Compost, Miami and Bedminster,
and of each Subsidiary, certified by the secretary of state of
the jurisdiction in which each such entity is incorporated or
organized, as of a date not earlier than five (5) Business
Days prior to the Closing Date and accompanied by a
certificate of the Secretary or Assistant Secretary of each
such entity, dated as of the Closing Date, stating that no
amendments
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have been made to such Certificates of Incorporation (or
similar organizational documents) since such date, and (ii)
the By-laws (or similar organizational documents) of Compost,
Miami and Bedminster, and of each Subsidiary, certified by the
Secretary or Assistant Secretary of each such entity and dated
as of the Closing Date, stating that such By-laws are the
current and complete By-laws of each such entity; and,
(F) Good Standing/Qualification to do Business. Good
standing certificates for Compost, Miami and Bedminster, and
for each Subsidiary from the secretary of state of the
jurisdiction in which each sun entity in incorporated or
organized and from the secretary of state of each other
jurisdiction in which the properties owned or leased by any of
Compost, Miami, Bedminster or any Subsidiary, or the operation
of its business in such jurisdiction, requires Compost, Miami,
Bedminster or any Subsidiary to qualify to do business as a
foreign corporation, in each case dated as of a date not
earlier than fifteen (15) Business Days prior to the Closing
Date and accompanied by bring-down certificates from the
respective Secretaries of Compost, Miami and each Subsidiary
dated as of and on the Closing Date; and,
(G) Commitment Fee. The payment by Compost, Miami and
Bedminster to Lionhart, on and as of the Term Loan Closing and
the Ancillary Transactions Closing, on the Closing Date at the
Closing Location, of the Deal Commitment Fee, in the amount of
US 150,000, in good and certified funds; and,
(H) Registration Rights Agreement. The Registration
Rights Agreement, by and between Compost and Lionhart, in
substantially the form that is set forth in Exhibit DD of this
Agreement; and,
(I) Director Appointment Agreement. The Director
Appointment Agreement, by and between Compost and Lionhart, in
substantially the form that is set forth in Exhibit EE of this
Agreement; and,
(J) "Bring-Down Closing Certificates. The
"'Bring-Down" Certificate of Compost," in substantially the
form that is set forth in Exhibit JJJ of this Agreement, the
"'Bring-Down" Certificate of Miami," in substantially the form
that is set forth in Exhibit KKK of this Agreement, and the
"'Bring-Down" Certificate of Bedminster," in substantially the
form that is set forth in Exhibit SSS of this Agreement,
pursuant to which Compost, Miami and Bedminster each
respectively promise, covenant, warrant and represent to
Lionhart, LHI and GEP, as an inducement to consummate the
transactions contemplated under this Agreement and the
Definitive Supplemental Documents, 1) that all representations
and warranties of Compost, Miami and/or Bedminster, that are
set forth in Article XI of this Agreement, the Credit
Documents and all other Definitive Supplemental Documents, are
true, accurate and complete in all material respects, and do
not contain any untrue statement of material fact or omit to
state a material fact necessary in order to make any such
statement not misleading, as of the Term Loan Closing and the
Ancillary Transactions Closing on the Closing Date, and 2)
that Compost, Miami and Bedminster have complied with,
fulfilled and performed each and every promise, covenant,
term, provision and condition to be complied with, fulfilled
or otherwise performed respectively by Compost and/or Miami
and/or Bedminster under this Agreement, the Credit Documents
and all other Definitive Supplemental Documents, as of the
Term Loan Closing and the Ancillary Transactions Closing on
the Closing Date; and,
(K) Compost-Miami Guaranty. The Compost-Miami
Guaranty, in substantially the form as is set forth in Exhibit
UUU of this Agreement; and,
(L) Closing Costs. The payment by Compost, Miami and
Bedminster, pursuant to the written instructions furnished by
counsel for Lionhart, LHI and GEP at the Term Loan Closing, of
the professional, administrative and closing fees, costs and
expenses of Lionhart, LHI and GEP, in the amount of US
$292,750.00, pursuant to and as provided under Section 2.14 of
the Term Sheet; and,
(M) Certificates: Series B Preferred Stock and
Conversion Common Shares. The stock certificates, representing
the Series B Preferred Stock and the Conversion Common Shares
of Lionhart, that are otherwise delivered by Lionhart to
Compost at the Ancillary Transactions Closing under Section
13.02.02(H) of this Agreement, and on which Compost has placed
and inscribed the applicable legends, as provided under, and
for the purposes set forth in, Section 9.3 and Section 10.3 of
this Agreement; and,
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(N) Miscellaneous Miami Site Documents. A "No Change
Appraisal Letter," a "No Change Phase I Report Letter" and a
"Miami Site Boundary Survey," all dated on or about the
Closing Date, and each of which shall be in a form and
substance as is acceptable reasonably to Lionhart, LHI and
GEP, and their respective counsel; and,
(O) Miscellaneous. Each and every other document,
certificate, instrument, receipt or agreement, that is
required to be executed and/or delivered by Compost, Miami
and/or Bedminster to LHI under this Agreement and/or the
Definitive Supplemental Documents, or that may be requested
reasonably by LHI and/or its counsel, to consummate or
effectuate one (1) or more of the transactions contemplated
under this Agreement and/or the Definitive Supplemental
Documents.
ARTICLE XIV
MISCELLANEOUS TAX INDEMNIFICATION
Section 14.01. Indemnity. (a) Compost, Miami and Bedminster each hereby
agree, promise and covenant to indemnify and hold harmless Lionhart, LHI and GEP
from and against the following Taxes, and against any loss (including, without
limitation, loss of value of Lionhart's investment in Compost, and/or loss of
value in any collateral that is pledged or otherwise encumbered by Compost,
Miami and/or Bedminster under 1) the Mortgage (including the Miami Site), 2) the
Security Agreement (including the Miami Project Collateral) and/or the Compost
Stock Pledge Agreement (Compost Common Stock), the Compost Stock Pledge
Agreement (Miami Common Stock) and/or the Compost Stock Pledge Agreement
(Bedminster Common Stock)), damage, liability or expense, including reasonable
fees for attorneys and other outside consultants, incurred in contesting or
otherwise in connection with any such Taxes: (i) Taxes imposed on Compost,
Miami, Bedminster or any Subsidiary with respect to taxable periods of such
corporation ending on or before the Closing Date; and (ii) Taxes imposed on any
member of any affiliated group with which any of Compost, Miami, Bedminster and
any Subsidiary file or have filed a Tax Return on a consolidated, combined or
unitary basis for taxable period ending on or before the Closing Date (together,
hereinafter "Tax Loss").
(b) The right of Lionhart, LHI and/or GEP to be indemnified pursuant to
this Section 14.01 shall be subject to the dollar threshold as is set forth in
Section 16.01.05 of this Agreement. Claims relating to Taxes and Tax Losses (as
provided under Section 14.01(a) of this Agreement) and claims for indemnity that
are otherwise within the scope of Article XVI of this Agreement, shall be
aggregated for the purpose of applying those limitations.
(c) The amount of any Tax Loss shall be the amount of Taxes and other
items described in Section 14.01 of this Agreement that are actually incurred by
Lionhart, LHI and/or GEP.
Section 14.02. Returns and Payments. Compost shall prepare and file or
otherwise furnish to the appropriate Tax-Governmental Authority (or cause to be
prepared and filed or so furnished) in a timely manner all Tax Returns, reports
or forms relating to or arising from Compost, Miami, Bedminster and any
Subsidiary that are due on or before, or relate to any taxable period ending on
or before, the Closing Date. Tax Returns of Compost, Miami, Bedminster and any
Subsidiary not yet filed for any taxable period that begins before the Closing
Date shall be prepared, and each item thereon treated, in a manner consistent
with past practices employed with respect to Compost, Miami, Bedminster and any
Subsidiary (except to the extent counsel for Compost, Miami, Bedminster and/or
any Subsidiary determines there is no reasonable basis in law therefor or
determines that a Tax Return cannot be so prepared and filed or an item so
reported without being subject to penalties).
Section 14.03. Contests. (a) After the Closing Date, Compost (or Miami,
Bedminster or any applicable Subsidiary) shall promptly notify Lionhart, LHI and
GEP in writing of any written notice of a proposed assessment or claim in an
audit or administrative or judicial proceeding involving Compost, Miami,
Bedminster or any applicable Subsidiary which, if determined adversely to the
taxpayer, would be grounds for indemnification under this Article XIV.
(b) Lionhart, LHI and GEP shall have the right to participate in any
audit or administrative or judicial proceedings to which Compost (or Miami, or
Bedminster or any such Subsidiary) may become a party that are reasonably likely
to result in an obligation on the part of Compost (or Miami, Bedminster or any
such Subsidiary) to Lionhart, LHI and/or GEP under this Article XIV.
(c) Compost (or Miami, Bedminster or any applicable Subsidiary) shall
not enter into any compromise or agree to
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settle any claim pursuant to any Tax audit or proceeding which would adversely
affect Lionhart, LHI and/or GEP for such year or a subsequent year without the
written consent of Lionhart, LHI and GEP, which consent may not be unreasonably
withheld.
Section 14.04. Time of Payment. Payment by Compost (or Miami or
Bedminster) to Lionhart, LHI and/or GEP of any amounts due under this Article
XIV, in respect of Taxes, shall be made within ten (10) Business Days following
the earliest of (i) an agreement between Compost (or Miami or Bedminster) and
Lionhart, LHI and/or GEP that an indemnity amount is payable; (ii) payment by
Compost (or Miami or Bedminster) of any Taxes which payment gives rise to an
indemnity obligation pursuant to this Article XIV; or (iii) a "determination" as
defined in Section 1313(a) of the Code giving rise to an indemnity obligation
pursuant to this Article XIV. If liability under this Article XIV is in respect
of costs or expenses other than Taxes, payment by Compost (or Miami or
Bedminster) of any amounts due under this Article XIV shall be made as promptly
as any such amount can be reasonably determined.
Section 14.05. Conveyance Taxes. Compost, Miami and Bedminster shall be
liable for and shall hold Lionhart, LHI and GEP harmless against any transfer,
recording, registration, and other fees, and any similar Taxes, if any, that
become payable in connection with the transactions contemplated under this
Agreement, the Credit Documents and/or the Definitive Supplemental Documents,
and shall file such applications and documents as shall permit any such Tax to
be assessed and paid on or prior to the Closing Date in accordance with any
available pre-sale filing procedure. Lionhart, LHI and GEP shall execute and
deliver all instruments and certificates necessary to enable Compost, Miami and
Bedminster to reasonably comply with the foregoing.
Section 14.06. Miscellaneous. (a) Compost, Miami and Bedminster, and
Lionhart, LHI and GEP, agree to treat all payments made to Lionhart, LHI and/or
GEP under this Article XIV, under other indemnity provisions of this Agreement
and for any misrepresentations or breach of warranties or covenants, to the
extent possible or practical, as adjustments to the purchase price or as capital
contributions for Tax purposes and that such treatment shall govern for purposes
hereof except to the extent that the laws of a particular jurisdiction provide
otherwise, in which case such payments shall be made in an amount sufficient to
indemnify the relevant party on an after-Tax basis.
(b) Notwithstanding any provision herein to the contrary, the
obligations of Compost, Miami and Bedminster to indemnify and hold harmless
Lionhart, LHI and GEP, pursuant to this Article XIV, and the representations and
warranties contained in Section 11.25 of this Agreement, shall terminate at the
close of business on the 180th day following the expiration of the applicable
statue of limitations with respect to the Tax liabilities in question (giving
effect to any waiver, mitigation or extension thereof).
(c) From and after the date hereof, Compost, Miami and Bedminster shall
not, without the prior written consent of Lionhart, LHI and GEP (which may, in
their sole and absolute discretion, withhold such consent) make or revoke, or
cause or permit to be made or revoked, any Tax election, or adopt or change any
method of accounting, that would affect Compost, Miami, Bedminster or any other
Subsidiary.
ARTICLE XV
CONDITIONS TO TERM LOAN CLOSING AND ANCILLARY TRANSACTIONS CLOSING
Section 15.01. Conditions to Obligations of Lionhart, LHI and GEP. The
obligations of Lionhart, LHI and GEP, 1) to consummate the transactions
contemplated under this Agreement, 2) to execute and deliver, and to consummate
the transactions contemplated under, the Credit Documents and/or the Definitive
Supplemental Documents, 3) to perform or discharge all of their respective
duties under Article II-Article X of this Agreement and/or Section 13.02 of this
Agreement, and/or 4) to otherwise effect the Term Loan Closing and/or the
Ancillary Transactions Closing, shall be subject to the prior fulfillment of
each of the following conditions:
15.01.01. Representations and Warranties/Agreements and
Covenants. (i) The representations and warranties of Compost, Miami
and/or Bedminster, as set forth in this Agreement, the Credit Documents
and the Definitive Supplemental Documents, that are qualified as to
materiality shall be true and correct in all aspects and all other
representations and warranties shall be true and correct in all
material respects on and as of the Closing Date, with the same force
and effect as if made as of the Closing Date, (ii) all of the
agreements, promises, covenants and undertakings of Compost, Miami
and/or Bedminster, as contained in this Agreement, the Credit Documents
and the Definitive Supplemental Documents, and that are to be performed
or complied with by Compost, Miami and/or
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Bedminster at or before the Closing Date, including, without
limitation, all such agreements, promises, covenants and undertakings
of Compost, Miami and/or Bedminster that are set forth in Section
13.03.01, Section 13.03.02 and Section 13.03.03 of this Agreement,
shall have been performed or complied with in all material respects at
or before and as of the Closing Date, and (iii) Roger E. Tuttle, as the
President and Chief Executive Officer of Compost and Miami, and for and
on behalf of Compost and Miami, shall have provided to Lionhart, LHI
and GEP on and as of the Closing Date, and Lionhart, LHI and GEP shall
have received from Compost and Miami on and as of the Closing Date, the
"'Bring-Down' Certificate of Compost," in substantially the form of
Exhibit JJJ of this Agreement, the "'Bring-Down' Certificate of Miami,"
in substantially the form of Exhibit KKK of this Agreement, and
"'Bring-Down' Certificate of Bedminster," in substantially the form of
Exhibit SSS of this Agreement, each signed by Roger E. Tuttle, as the
President and Chief Executive Officer of Compost, Miami and Bedminster,
as to the fulfillment of the conditions set forth in this Section
15.01.01(i)-(ii), and for the purposes that are otherwise contemplated
under Section 13.03 of this Agreement.
15.01.02. Litigation. There shall have been no order or
preliminary or permanent injunction entered in any action or proceeding
before any federal, state or foreign court or governmental,
administrative or regulatory authority or agency, and no other action
taken or threatened, or statute, rule, regulation, legislative,
interpretation, judgment or order enacted, entered, enforced,
promulgated, amended, issued or deemed applicable to Lionhart, LHI
and/or GEP, or to Compost, Miami and/or Bedminster, and/or any
Subsidiaries or Affiliates, by and federal, state or foreign
legislative body, court, government or governmental, administrative or
regulatory authority or agency which shall have remained in effect and
which shall have had the effect of making illegal, materially delaying
or otherwise directly or indirectly restraining or prohibiting the
consummation of any one (1) or more of the transactions contemplated or
otherwise provided for under this Agreement, the Credit Documents
and/or the Definitive Supplemental Documents.
15.01.03. Compost Resolutions/Certificate. Compost shall have
provided to Lionhart, LHI and GEP, on and as of the Closing Date, and
Lionhart, LHI and GEP shall have received from Compost, on and as of
the Closing Date, a true and complete copy of the Compost Resolutions,
in substantially the form as is set forth in Exhibit N of this
Agreement, and a true and complete original of the Compost Certificate
of Resolutions, in substantially the form as is set forth in Exhibit O
of this Agreement, certified by the Secretary of Compost, of the
resolutions duly and validly adopted by the Compost Board evidencing
its authorization of the execution and delivery of this Agreement, the
Credit Documents and the Definitive Supplemental Documents, and the
consummation of the transactions contemplated under this Agreement, the
Credit Documents and the Definitive Supplemental Documents.
15.01.04. Miami Resolutions/Certificate. Miami shall have
provided to Lionhart, LHI and GEP, on and as of the Closing Date, and
Lionhart, LHI and GEP shall have received from Miami, on and as of the
Closing Date, a true and complete copy of the Miami Resolutions, in
substantially the form as is set forth in Exhibit P of this Agreement,
and a true and complete original of the Miami Certificate of
Resolutions, in substantially the form as is set forth in Exhibit Q of
this Agreement, certified by the Secretary of Miami, of the resolutions
duly and validly adopted by the Miami Board evidencing its
authorization of the execution and delivery of this Agreement, the
Credit Documents and the Definitive Supplemental Documents, and the
consummation of the transactions contemplated under this Agreement, the
Credit Documents and the Definitive Supplemental Documents.
15.01.05. Bedminster Resolutions/Certificate. Bedminster shall
have provided to Lionhart, LHI and GEP, on and as of the Closing Date,
and Lionhart, LHI and GEP shall have received from Bedminster, on and
as of the Closing Date, a true and complete copy of the Bedminster
Resolutions, in substantially the form as is set forth in Exhibit QQQ
of this Agreement, and a true and complete original of the Bedminster
Certificate of Resolutions, in substantially the form as is set forth
in Exhibit RRR of this Agreement, certified by the Secretary of
Bedminster, of the resolutions duly and validly adopted by the
Bedminster Board evidencing its authorization of the execution and
delivery of this Agreement, the Credit Documents and the Definitive
Supplemental Documents, and the consummation of the transactions
contemplated under this Agreement, the Credit Documents and the
Definitive Supplemental Documents.
15.01.06. Incumbency Certificate of Compost/Miami/Bedminster.
Compost, Miami and Bedminster shall have provided to Lionhart, LHI and
GEP, on and as of the Closing Date, and Lionhart, LHI and GEP shall
have received from Compost, Miami and Bedminster, on and as of the
Closing Date, 1) an incumbency certificate of the Secretary of Compost,
in substantially the form as is set forth in Exhibit GGG of this
Agreement, certifying the names
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and signatures of the officers of Compost who are authorized to sign
and deliver, for and on behalf of Compost, this Agreement, the Credit
Documents and the Definitive Supplemental Documents, including any
other documents or other considerations to be executed and/or delivered
thereunder; and, 2) an incumbency certificate of the Secretary of
Miami, in substantially the form as is set forth in Exhibit GGG of this
Agreement, certifying the names and signatures of the officers of Miami
who are authorized to sign and deliver, for and on behalf of Miami,
this Agreement, the Credit Documents and the Definitive Supplemental
Documents, including any other documents or other considerations to be
executed and/or delivered thereunder; and, 3) an incumbency certificate
of the Secretary of Bedminster, in substantially the form as is set
forth in Exhibit TTT of this Agreement, certifying the names and
signatures of the officers of Bedminster who are authorized to sign and
deliver, for and on behalf of Bedminster, this Agreement, the Credit
Documents and the Definitive Supplemental Documents, including any
other documents or other considerations to be executed and/or delivered
thereunder.
15.01.07. Consents and Approvals. Lionhart, LHI and GEP, and
Compost, Miami and Bedminster, shall have received, on and as of the
Closing Date, each in form and substance satisfactory to Lionhart, LHI
and GEP, in their sole and absolute discretion, all authorizations,
consents, orders and approvals of all Governmental Authorities and
officials and all third-party consents and estoppel certificates
identified to Compost, Miami and/or Bedminster, which Lionhart, LHI and
GEP in their sole and absolute discretion deems necessary or desirable
for the consummation of the transactions contemplated by or under this
Agreement, the Credit Documents and the Definitive Supplemental
Documents.
15.01.08. Organizational Documents. Lionhart, LHI and GEP,
shall have received, on and as of the Closing Date, a copy of (i) the
Certificates of Incorporation, as amended (or similar organizational
documents), of Compost, Miami, Bedminster and each Subsidiary,
certified by the secretary of state of the jurisdiction in which each
such entity is incorporated or organized, as of a date not earlier than
five Business Days prior to the Closing Date and accompanied by a
certificate of the Secretary or Assistant Secretary of each such
entity, dated as of the Closing Date, stating that no amendments have
been made to such Certificates of Incorporation (or similar
organizational documents) since such date, and (ii) the By-laws (or
similar organizational documents) of Compost, Miami, Bedminster and
each Subsidiary, certified by the Secretary or Assistant Secretary of
each such entity, certified by the Secretary or Assistant Secretary of
each such entity and dated as of the Closing Date, stating that such
By-laws are the current and complete By-laws of each such entity.
15.01.09. Good Standing/Qualification to do Business.
Lionhart, LHI and GEP, shall have received, on and as of the Closing
Date, good standing certificates for Compost, Miami, Bedminster and
each Subsidiary from the secretary of state of the jurisdiction in
which each sun entity in incorporated or organized and from the
secretary of state of each other jurisdiction in which the properties
owned or leased by any of Compost, Miami, Bedminster or any Subsidiary,
or the operation of its business in such jurisdiction, requires
Compost, Miami, Bedminster or any Subsidiary to qualify to do business
as a foreign corporation, in each case dated as of a date not earlier
than fifteen (15) Business Days prior to the Closing Date and
accompanied by bring-down certificates from the respective Secretaries
of Compost, Miami, Bedminster and each Subsidiary dated as of and on
the Closing Date.
15.01.10. Calamities. There shall not have occurred and be
continuing (i) any general suspension of, or limitation on prices for
or trading in securities on any United States securities exchange, (ii)
a declaration of a banking moratorium or any suspension of payments in
respect of banks in the Unites States, (iii) any limitation (whether or
not mandatory) by any government or governmental, administrative or
regulatory authority or agency, domestic or foreign, or other event
that materially adversely affects the ability of Lionhart, LHI or GEP,
and/or Miami, Compost or Bedminster, to consummate the transactions
contemplated under this Agreement, the Credit Documents and/or the
Definitive Supplemental Documents, or (iv) a commencement of a war or
armed hostilities or other national or international calamity directly
involving the United States.
15.01.11 Bankruptcy or Insolvency. No proceeding shall have
been instituted or consented to by or against Compost, Miami,
Bedminster or any other Subsidiary seeking to adjudicate it bankrupt or
insolvent, or seeking liquidation, winding-up, reorganization,
arrangement, adjustment, protection, relief or composition of its debts
under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official
for it or any substantial part of its property (each such action being
a "Bankruptcy Proceeding"), and none of Compost, Miami, Bedminster or
any other
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Subsidiary shall have taken any corporate action to authorize and
Bankruptcy Proceeding.
15.01.12. No Material Adverse Effect. No fact, event or
condition (financial or otherwise) shall have occurred with respect to
Compost, Miami, Bedminster or any of the Subsidiaries having,
individually or in the aggregate, a Material Adverse Effect.
15.01.13. Legal Opinions. Lionhart, LHI and GEP, shall have
received, on and as of the Closing Date, 1) an opinion from Greenberg
Traurig, the Legal Opinion of Compost's Counsel, in substantially the
form and to the effect as is set forth in Exhibit L of this Agreement;
2) an opinion from Greenberg Traurig, P.A., the Legal Opinion of
Miami's Counsel, in substantially the form and to the effect as is set
forth in Exhibit M of this Agreement; 3) an opinion from Greenberg
Traurig, P.A., the Legal Opinion of Bedminster's Counsel, in
substantially the form and to the effect as is set forth in Exhibit OOO
of this Agreement; and, 4) any other opinions that are required to be
delivered by Compost, Miami and/or Bedminster, via their respective
counsel, to Lionhart, LHI and/or GEP, pursuant to this Agreement.
15.01.14. Registration Rights Agreement. Lionhart shall have
received, on and as of the Closing Date, the Registration Rights
Agreement, in substantially the form of Exhibit DDD of this Agreement,
that is duly authorized, executed and delivered by Compost.
15.01.15. Director Appointment Agreement. Lionhart shall have
received, on and as of the Closing Date, the Director Appointment
Agreement, in substantially the form of Exhibit EEE of this Agreement,
that is duly authorized, executed and delivered by Compost.
15.01.16. Other Considerations. Lionhart, LHI and GEP shall
have received, on and as of the Closing Date, all other considerations
that are required to be executed and/or delivered by Compost, Miami
and/or Bedminster, to Lionhart, LHI and/or GEP, as provided under this
Agreement (including, Section 13.03 hereof).
15.01.17. Due Diligence. Lionhart, LHI and GEP shall have
completed all their business, legal, accounting and environmental due
diligence with respect to Compost, Miami and the Subsidiaries and
shall, in their sole and absolute judgment, be satisfied with the
results thereof.
Section 15.02. Conditions to Obligations of Compost, Miami and
Bedminster. The obligations of Compost, Miami and Bedminster, 1) to consummate
the transactions contemplated under this Agreement, 2) to execute and deliver,
and to consummate the transactions contemplated under, the Credit Documents
and/or the Definitive Supplemental Documents, 3) to perform or discharge all of
their respective duties under Article II-Article X of this Agreement and/or
Section 13.03 of this Agreement, and/or 4) to otherwise effect the Term Loan
Closing and/or the Ancillary Transactions Closing, shall be subject to the prior
fulfillment of each of the following conditions:
15.02.01. Representations and Warranties/Agreements and
Covenants. (i) The representations and warranties of Lionhart, LHI and
GEP, as set forth in this Agreement, the Credit Documents and the
Definitive Supplemental Documents, that are qualified as to materiality
shall be true and correct in all aspects and all other representations
and warranties shall be true and correct in all material respects on
and as of the Closing Date, with the same force and effect as if made
as of the Closing Date, (ii) all of the agreements, promises, covenants
and undertakings of Lionhart, LHI and GEP, as contained in this
Agreement, the Credit Documents and the Definitive Supplemental
Documents, and that are to be performed or complied with by Lionhart,
LHI and/or GEP, at or before the Closing Date, including, without
limitation, all such agreements, promises, covenants and undertakings
of Lionhart, LHI and/or GEP that are set forth in Section 13.02.01,
Section 13.02.02 and Section 13.02.03 of this Agreement, shall have
been performed or complied with in all material respects at or before
and as of the Closing Date, and (iii) Terrence P. Duffy, as the
Managing Director of Lionhart, LHI and GEP, and for and on behalf of
Lionhart, LHI and GEP, shall have provided to Compost, Miami and
Bedminster on and as of the Closing Date, and Compost, Miami and
Bedminster shall have received from Lionhart, LHI and GEP, on and as of
the Closing Date, the "'Bring-Down' Certificate of Lionhart, LHI and
GEP," in substantially the form of Exhibit KKK of this Agreement, and
signed by Terrence P. Duffy, as the Managing Director of Lionhart, LHI
and GEP, as to the fulfillment of the conditions set forth in this
Section 15.02.01(i)-(ii).
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15.02.02. Litigation. There shall have been no order or
preliminary or permanent injunction entered in any action or proceeding
before any federal, state or foreign court or governmental,
administrative or regulatory authority or agency, and no other action
taken or threatened, or statute, rule, regulation, legislative,
interpretation, judgment or order enacted, entered, enforced,
promulgated, amended, issued or deemed applicable to Lionhart, LHI
and/or GEP, or to Compost, Miami and/or Bedminster, and/or any
Subsidiaries or Affiliates, by and federal, state or foreign
legislative body, court, government or governmental, administrative or
regulatory authority or agency which shall have remained in effect and
which shall have had the effect of making illegal, materially delaying
or otherwise directly or indirectly restraining or prohibiting the
consummation of any one (1) or more of the transactions contemplated or
otherwise provided for under this Agreement, the Credit Documents
and/or the Definitive Supplemental Documents.
15.02.03. Joint Resolutions/Certificate. Lionhart, LHI and GEP
shall have provided to Compost, Miami and Bedminster, on and as of the
Closing Date, and Compost, Miami and Bedminster shall have received
from Lionhart, LHI and GEP, on and as of the Closing Date, a true and
complete copy of the Joint Resolutions, in substantially the form as is
set forth in Exhibit Z of this Agreement, and a true and complete
original of the Certificate of Joint Resolutions, in substantially the
form as is set forth in Exhibit Z of this Agreement, certified by the
respective Secretaries of Lionhart, LHI and GEP of the resolutions duly
and validly adopted by the Lionhart Board, the LHI Board and the GEP
Board, evidencing their respective authorization of the execution and
delivery of this Agreement, the Credit Documents and the Definitive
Supplemental Documents, and the consummation of the transactions
contemplated under this Agreement, the Credit Documents and the
Definitive Supplemental Documents.
15.02.04. Incumbency Certificate of Lionhart, LHI and GEP.
Lionhart, LHI and GEP shall have provided to Compost, Miami and
Bedminster, on and as of the Closing Date, and Compost, Miami and
Bedminster shall have received from Lionhart, LHI and GEP, on and as of
the Closing Date, 1) an incumbency certificate of the Secretary of
Lionhart, in substantially the form as is set forth in Exhibit BBB of
this Agreement, certifying the names and signatures of the officers of
Lionhart who are authorized to sign and deliver, for and on behalf of
Lionhart, this Agreement, the Credit Documents and the Definitive
Supplemental Documents, including any other documents or other
considerations to be executed and/or delivered thereunder; and, 2) an
incumbency certificate of the Secretary of GEP, in substantially the
form as is set forth in Exhibit AAA of this Agreement, certifying the
names and signatures of the officers of GEP who are authorized to sign
and deliver, for and on behalf of GEP, this Agreement, the Credit
Documents and the Definitive Supplemental Documents, including any
other documents or other considerations to be executed and/or delivered
thereunder; and, 3) an incumbency certificate of the Secretary of LHI,
in substantially the form as is set forth in Exhibit LLL of this
Agreement, certifying the names and signatures of the officers of LHI
who are authorized to sign and deliver, for and on behalf of GEP, this
Agreement, the Credit Documents and the Definitive Supplemental
Documents, including any other documents or other considerations to be
executed and/or delivered thereunder.
15.02.05. Legal Opinions. Compost, Miami and Bedminster shall
have received, on and as of the Closing Date, an opinion from O'Bryan,
Brazill & Drics, L.L.P., 1) the Legal Opinion of Lionhart's Counsel, in
substantially the form and to the effect as is set forth in Exhibit FF
of this Agreement, 2) the Legal Opinion of LHI's Counsel, in
substantially the form and to the effect as is set forth in Exhibit AA
of this Agreement, and 3) the Legal Opinion of GEP's Counsel, in
substantially the form and to the effect as is set forth in Exhibit PPP
of this Agreement.
15.02.06. Registration Rights Agreement. Compost shall have
received, on and as of the Closing Date, the Registration Rights
Agreement, in substantially the form of Exhibit DDD of this Agreement,
that is duly authorized, executed and delivered by Lionhart.
15.02.07. Other Considerations. Compost, Miami and/or
Bedminster shall have received, on and as of the Closing Date, all
other considerations that are required to be executed and/or delivered
by Lionhart, LHI and/or GEP, to Compost, Miami and/or Bedminster, as
provided under this Agreement (including, Section 13.02 hereof).
15.02.08. Director Appointment Agreement. Compost shall have
received, on and as of the Closing Date, the Director Appointment
Agreement, in substantially the form of Exhibit EEE of this Agreement,
that is duly authorized, executed and delivered by Lionhart.
ARTICLE XVI
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INDEMNIFICATION
Section 16.01. Compost, Miami and Bedminster Indemnity. Compost, Miami
and Bedminster hereby agree, promise and covenant, and otherwise undertake, the
following indemnification duties, as provided under (and pursuant to the terms
and subject to the conditions set forth in) Section 16.01.01, Section 16.01.02,
Section 16.01.03, Section 16.01.04 and Section 16.01.05 of this Agreement, as
follows:
16.01.01. Indemnification Undertaking. Compost, Miami and
Bedminster hereby agree, promise and covenant, jointly and severally,
to indemnify, defend and hold harmless, Lionhart, LHI and GEP, and
their respective officers, directors, managers, employees, advisors,
consultants, agents and representatives and successors and assigns, as
well as their respective Affiliates and their respective officers,
directors, managers, employees, advisors, consultants, agents and
representatives and successors and assigns (collectively, "Indemnified
Party(ies)"), during the Survival Period (as provided under Section
16.01.03 of this Agreement), from and against, and for and in respect
of, any and all Liabilities, losses, depreciations in value, damages,
claims, costs and expenses, interest, awards, judgments and penalties,
forfeitures, actions, assessments, liabilities, obligations,
settlements and lawsuits and proceedings (including, without
limitation, reasonable attorneys' fees, expert witness fees and
charges, and court costs), as and when incurred or suffered by any one
(1) or more Indemnified Parties, including any Action brought or
otherwise initiated by any one (1) or more of such Indemnified
Parties(hereinafter, an "Indemnified Party Loss"), that relate to or
arise from:
(i) Any material breach, violation or default of any
representation or warranty made by Compost, Miami or
Bedminster as contained or otherwise set forth in any one (1)
or more of the Transaction Documents (as that term is defined
under Section 16.01.02 of this Agreement); or,
(ii) Any material breach, default or violation of any
covenant, promise, agreement or undertaking by Compost, Miami
or Bedminster as contained or otherwise set forth in any one
(1) or more of the Transaction Documents (as that term is
defined under Section 16.02 of this Agreement); or,
(iii) Any material liabilities or Indebtedness of
Compost, Miami, Bedminster or any Subsidiary not reflected on
the Financial Statements, the Interim Financial Statements,
the Miami Balance Sheet and/or the Bedminster Balance Sheet,
whether arising before or after the Closing Date; or,
(iv) Any material liabilities of Compost, Miami,
Bedminster or any Subsidiary, whether arising before or after
the Closing Date, and that relate to or arise from any of the
Transaction Documents; or,
(v) Any judgment or order of the Court, in and with
respect to the Miami Complaint and the Miami Claim, and/or any
material event relating to or arising from the Miami Complaint
and the Miami Claim (including, without limitation, any
settlement or arbitration award relating to or arising from
the Miami Complaint and the Miami Claim), which has a Material
Adverse Effect on the Miami Project, the Miami Project
Collateral, the Put or Pay Contract, the Miami Project
Permits, the Miami Site, the Miami Project Financing, the
Miami Balance Sheet, the Bedminster Balance Sheet and/or the
Appraised Value of the Miami Site; or,
(vi) Any Losses incurred by Compost, Miami or
Bedminster, or incurred by Lionhart, LHI and/or GEP, by reason
of, or in connection with, any termination, nullification,
cancellation, avoidance, expiration or invalidity or
unenforceability of the Put or Pay Contract, and/or any event
or occurrence that has a Material Adverse Effect on the Put or
Pay Contract; or,
(vii) Any material breach, violation or default by
Compost, Miami and/or Bedminster of any negative and/or
affirmative covenants or undertakings that are set forth in
Article XVII of this Agreement; or,
(viii) Any and all Losses suffered or incurred by
Lionhart, LHI and/or GEP, and/or Compost, Miami, Bedminster or
any Subsidiary, by reason of or in connection with any claim
or cause of action of any third party to the extent arising
out of any action, inaction, event, condition, liability or
obligation of Compost
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and/or Miami and/or Bedminster occurring or existing prior to
the Closing Date; or,
(ix) Any diminuation in the value of any collateral,
under the Mortgage (including, the Miami Site), or under the
Security Agreement (including, the Miami Claim, the Miami
Project Collateral, the Put or Pay Contract, the Miami Project
Financing and the Miami Project Permits) or under the Compost
Stock Pledge Agreement (Compost Common Stock), the Compost
Stock Pledge Agreement (Miami Common Stock) or the Compost
Stock Pledge Agreement (Bedminster Common Stock) (including,
the Pledged Compost Shares, the Pledged Miami Shares and the
Pledged Bedminster Shares), by reason of or in connection
with, or relating to or arising or resulting from any cause,
or breach, violation or default that is described or
contemplated under this Section 16.01; or,
(x) Any diminuation in the value of any material
asset of Compost, Miami or Bedminster (or any other
Subsidiary) by reason of or in connection with, or relating to
or arising or resulting from any cause, or breach, violation
or default that is described or contemplated under this
Section 16.01; or,
(xi) (A) Any and all Remedial Actions after the
Closing Date relating to any Release of Hazardous Materials or
Hazardous Substances in or upon the Environment or on or about
the Real Property and/or the Miami Site prior to or after the
Closing Date to the extent any such Remedial Action is
required under any Environmental Law or by any Governmental
Authority or is necessary to prevent or abate a significant
and material risk to human health or the environment; or, (B)
any and all Environmental Claims arising at any time that
relate to the business or the operation of Compost, Miami,
Bedminster or any Subsidiary prior to or after the Closing
Date; or, (C) any and all noncompliances with or violations of
any applicable Environmental Law or Environmental Permit by
Compost, Miami, Bedminster or any Subsidiary prior to or after
the Closing Date.
To the extent that any undertakings set forth in this Section 16.01 may
be unenforceable, Compost and Miami shall contribute the maximum amount
that it is permitted to contribute under applicable law to the payment
and satisfaction of all Losses incurred by Lionhart, LHI and GEP. In
addition, and notwithstanding anything to the contrary in this Article
XVI, the rights and obligations of the parties with respect to any and
all Tax matters shall be governed by Article XIV of this Agreement. In
particular, this Article XVI shall not apply to any indemnity to which
Lionhart, LHI and/or GEP may be entitled under Article XIV of this
Agreement (relating to Taxes), except to the extent specified therein.
16.01.02. Transaction Documents-Definition. The term
"Transaction Documents," for purposes of this Section 16.01, shall mean
and include 1) this Agreement, 2) the Credit Documents (including,
without limitation, the Mortgage, the Mortgage Note, the Security
Agreement, the Compost Stock Pledge Agreement (Compost Common Stock),
the Compost Stock Pledge Agreement (Miami Common Stock), the Compost
Stock Pledge Agreement (Bedminster Common Stock) and the Compost-Miami
Guaranty), 3) the Definitive Supplemental Documents, 4) Appendix I,
Appendix II and Appendix III of this Agreement, 5) the Exhibits of this
Agreement, 6) the Disclosure Schedule, 7) the Disclosure Documents, 8)
the Miami Project Disclosures, 9) the Compost Disclosures, 10) the
8/14/98 Compost/Miami Disclosure, 11) the Financial Statements and
Interim Financial Statements, 12) the Miami Balance Sheet, 13) the
Bedminster Balance Sheet, 14) the SEC Reports, and, 15) all other
documents, reports, schedules, disclosures, certificates, and all other
written information and all considerations that are provided or
delivered by (or on behalf of) Compost and/or Miami and/or Bedminster
to (or on behalf of) Lionhart, LHI and/or GEP, pursuant to or in
connection with the execution and/or delivery of this Agreement, the
Credit Documents and/or the Definitive Supplemental Documents, and/or
pursuant to or in connection with the consummation of the transactions
contemplated by or under this Agreement, the Credit Documents and/or
the Definitive Supplemental Documents.
Section 16.01.03. Survival Period. The representations,
warranties, promises, agreements, covenants, statements and
undertakings of Compost, Miami and/or Bedminster, as are set forth in
any of the Transaction Documents, shall survive and remain operative
through the Term Loan Closing and the Ancillary Transactions Closing on
the Closing Date, and shall survive and remain operative thereafter,
until November 1, 2005 ("Survival Period"). The indemnification duties,
obligations and undertakings of Compost, Miami and Bedminster, under
this Section 16.01, shall continue during, and terminate with the
expiration of, the Survival Period. Any claim or demand that is pending
or asserted by any Indemnified Party (including, Lionhart, LHI and GEP)
against Compost, Miami and/or
Page 86 of 107 Pages
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Bedminster, under this Section 16.01, prior to the expiration of the
Survival Period, may continue to be asserted under this Section 16.01
(notwithstanding the expiration of the Survival Period). Neither the
Survival Period nor the liability of any party with respect to the
parties' representations and warranties shall be reduced by any
investigation made at any time by or on behalf of any party.
Section 16.01.04. Claim Procedures. (a) An Indemnified Party
shall give Compost, Miami and Bedminster notice of any matter which an
Indemnified Party has determined, in good faith, and based on actual
disclosure to or actual knowledge by any such Indemnified Party, has
given or could give rise to a right of indemnification under Section
16.01 of this Agreement, within ninety (90) days of such determination,
stating the estimated amount of the Loss, if known, and the method of
computation thereof, and containing a reference to the provisions of
this Agreement and the applicable Transaction Documents in respect of
which such right of indemnification is claimed or arises.
(b) The obligations and Liabilities of Compost, Miami and
Bedminster, under Section 16.01 of this Agreement, with respect to
Losses arising from claims of any third party which are subject to the
indemnification provided for in this Section 16.01 ("Third Party
Claims") shall be governed by and contingent upon the following
additional terms and conditions: (i) if an Indemnified Party shall
receive notice of any Third Party Claim, the Indemnified Party shall
give Compost, Miami and Bedminster notice of such Third Party Claim
within thirty (30) days of the receipt by the Indemnified Party of such
notice, provided, however, that the failure to provide such notice
shall not release Compost, Miami or Bedminster from any of its or their
obligations under this Article XVI except to the extent that Compost,
Miami and/or Bedminster is or are materially prejudiced by such
failure, and shall not relieve Compost, Miami or Bedminster from any
other obligation or Liability that it or they may have to any
Indemnified Party otherwise than under this Article XVI; and, (ii) if
Compost, Miami or Bedminster acknowledges in writing its or their
obligation to indemnify the Indemnified Party hereunder against any
Losses that may result from such Third Party Claim, then Compost, Miami
and Bedminster shall be entitled to assume and control the defense of
such Third Party Claim at its and their expense and through counsel of
its and their choice if Compost, Miami and/or Bedminster give notice of
their intention to do so to the Indemnified Party within five (5) days
of the receipt of such notice from the Indemnified Party, provided,
however, that if there exists or is reasonably likely to exist a
conflict of interest that would make it inappropriate in the judgment
of the Indemnified Party, in its sole and absolute discretion, for the
same counsel to represent both the Indemnified Party and Compost and/or
Miami and/or Bedminster, then the Indemnified Party shall be entitled
to retain its own counsel, in each jurisdiction for which the
Indemnified Party determines counsel is required, at the expense of
Compost, Miami and Bedminster. In the event that Compost, Miami and
Bedminster exercise the right to undertake any such defense against any
such Third Party Claim as provided above, the Indemnified Party shall
cooperate with Compost, Miami and Bedminster in such defense and make
available to Compost, Miami and Bedminster, at Compost's and Miami's
and Bedminster's sole expense, all witnesses, pertinent records,
materials and information in the Indemnified Party's possession or
under the Indemnified Party's control relating thereto as is reasonable
required by Compost, Miami and/or Bedminster. Similarly, in the event
the Indemnified Party is, directly or indirectly, conducting the
defense against any such Third Party Claim, Compost, Miami and
Bedminster shall cooperate with the Indemnified Party in such defense
and make available to the Indemnified Party, at Compost's and Miami's
and Bedminster's expense, all such witnesses, records, materials and
information in Compost's or Miami's or Bedminster's possession or under
Compost's and/or Miami's and/or Bedminster's control relating thereto
as is reasonably required by the Indemnified Party. No such Third Party
Claim may be settled by Compost, Miami or Bedminster without the prior
written consent of the Indemnified Party.
(c) Each party shall within ninety (90) days of learning of
any asserted liability or damage claimed to give rise to
indemnification hereunder notify the party obligated to indemnify it
hereof in writing provided, however, that the failure of the
Indemnified Party to so notify the indemnifying party shall not relieve
the indemnifying party of its obligations hereunder unless, and only to
the extent that, such failure to notify prejudices the indemnifying
party. Thereafter, the indemnifying party shall have, at its election,
the right to compromise or defend any such matter at its sole cost and
expense through counsel chosen by it. If the indemnifying party so
undertakes to compromise and defend, the indemnifying party shall
notify the other party of its intention to do so. If the indemnifying
party fails to defend such matter diligently, the Indemnified Party may
assume control of the defense of such matter. Each party agrees in all
cases to cooperate with the defending party and its counsel in the
compromise of or defending of any such liabilities or claims. The
defending party and the nondefending party may be represented by the
same counsel unless such representation would be inappropriate due to
actual or potential differing interests between them. In addition, the
nondefending party shall at all times be entitled to monitor such
defense through the appointment of counsel of
Page 87 of 107 Pages
<PAGE>
its own choosing, at its own cost and expense.
Section 16.01.05. Damage Threshold. Neither Lionhart, nor LHI
or GEP shall be entitled to indemnification under this Section 16.01
unless and until the aggregate amount of the claims against Compost,
Miami and/or Bedminster, by Lionhart, LHI or GEP, equals or exceeds US
$100,000. If the aggregate amount of such claims, by Lionhart, LHI or
GEP, and against Compost and/or Miami and/or Bedminster, equals or
exceeds US $100,000, then Lionhart, LHI and/or GEP may claim
indemnification for the entire aggregate amount of such claims, whether
or not any such Loss or Losses are material or immaterial.
Notwithstanding the preceding terms and provisions of this Section
16.01.05, any claim by any Indemnified Party under Section 16.01 for
any Indemnified Party Loss, and which relates to or arises from the
failure or omission by Compost (or Miami or Bedminster), under the
Transaction Documents, 1) to issue any shares of Compost Common Stock
to Lionhart, or any other Indemnified Party, 2) to issue any
Compost-Lionhart Warrant (#1-#6), or any part thereof, to Lionhart, or
any other Indemnified Party, 3) to issue any stock certificate (for any
Compost Common Stock or Series B Preferred Stock) to Lionhart or any
other Indemnified Party, or 4) to execute or deliver any document,
agreement, certificate, receipt, resolution and/or any other
considerations to Lionhart, or any other Indemnified Party, on the Term
Loan Closing and Ancillary Transactions Closing on the Closing Date as
required under the Agreement, the Credit Documents and/or the
Definitive Supplemental Documents, shall not be subject to the dollar
threshold as set forth in this Section 16.01.05
Section 16.02. Lionhart, LHI and GEP Indemnity. Lionhart, LHI and GEP
hereby agree, promise and covenant, and otherwise undertake, the following
indemnification duties, as provided under (and pursuant to the terms and subject
to the conditions set forth in) Section 16.02.01, Section 16.02.02, Section
16.02.03 and Section 16.02.04 of this Agreement, as follows:
16.02.01. Indemnification Undertaking. Lionhart, LHI and GEP
hereby agree, promise and covenant, jointly and severally, to
indemnify, defend and hold harmless, Compost, Miami and Bedminster, and
their respective officers, directors, managers, employees, advisors,
consultants, agents and representatives and successors and assigns, as
well as their respective Affiliates and their respective officers,
directors, managers, employees, advisors, consultants, agents and
representatives and successors and assigns (collectively, "Indemnified
Party(ies)"), during the Survival Period (as provided under Section
16.02.02 of this Agreement), from and against, and for and in respect
of, any and all Liabilities, losses, depreciations in value, damages,
claims, costs and expenses, interest, awards, judgments and
penalties, forfeitures, actions, assessments, liabilities, obligations,
settlements and lawsuits and proceedings (including, without
limitation, reasonable attorneys' fees, expert witness fees and
charges, and court costs), as and when incurred or suffered by any one
(1) or more Indemnified Parties, including any Action brought or
otherwise initiated by any one (1) or more of such Indemnified
Parties(hereinafter, an "Indemnified Party Loss"), that relate to or
arise from:
(i) Any material breach, violation or default of any
representation or warranty made by Lionhart, LHI or GEP as
contained or otherwise set forth in this Agreement, the Credit
Documents or the Definitive Supplemental Documents, prior to
the Closing Date; or,
(ii) Any material breach, violation or default of any
agreement or covenant by Lionhart, LHI and/or GEP under this
Agreement, the Credit Documents or the Definitive Supplemental
Documents.
Section 16.02.02. Survival Period. The representations,
warranties, promises, agreements, covenants, statements and
undertakings of Lionhart, LHI and/or GEP, as are set forth in this
Agreement, the Credit Documents and/or the Definitive Supplemental
Documents, shall survive and remain operative through the Term Loan
Closing and the Ancillary Transactions Closing on the Closing Date, and
shall survive and remain operative thereafter, until August 1, 2001
("Survival Period"). The indemnification duties, obligations and
undertakings of Lionhart, LHI and/or GEP, under this Section 16.02,
shall continue during, and terminate with the expiration of, the
Survival Period. Any claim or demand that is pending or asserted by any
Indemnified Party (including, Compost, Miami and Bedminster) against
Lionhart, LHI and/or GEP, under this Section 16.02, prior to the
expiration of the Survival Period, may continue to be asserted under
this Section 16.02 (notwithstanding the expiration of the Survival
Period). Neither the Survival Period nor the liability of any party
with respect to the parties' representations and warranties shall be
reduced by any investigation made at any time by or on behalf of any
party.
Section 16.02.03. Claim Procedures. (a) An Indemnified Party
shall give Lionhart, LHI and GEP notice
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of any matter which an Indemnified Party has determined, in good faith,
and based on actual disclosure to or actual knowledge by any such
Indemnified Party, has given or could give rise to a right of
indemnification under Section 16.02 of this Agreement, within ninety
(90) days of such determination, stating the estimated amount of the
Loss, if known, and the method of computation thereof, and containing a
reference to the provisions of this Agreement and the applicable Credit
Documents and Definitive Supplemental Documents in respect of which
such right of indemnification is claimed or arises.
(b) The obligations and Liabilities of Lionhart, LHI and GEP,
under Section 16.02 of this Agreement, with respect to Losses arising
from claims of any third party which are subject to the indemnification
provided for in this Section 16.02 ("Third Party Claims") shall be
governed by and contingent upon the following additional terms and
conditions: (i) if an Indemnified Party shall receive notice of any
Third Party Claim, the Indemnified Party shall give Lionhart, LHI and
GEP notice of such Third Party Claim within thirty (30) days of the
receipt by the Indemnified Party of such notice, provided, however,
that the failure to provide such notice shall not release Lionhart, LHI
or GEP from any of its or their obligations under this Article XVI
except to the extent that Lionhart, LHI and/or GEP is or are materially
prejudiced by such failure, and shall not relieve Lionhart, LHI or GEP
from any other obligation or Liability that it or they may have to any
Indemnified Party otherwise than under this Article XVI; and, (ii) if
Lionhart, LHI or GEP acknowledges in writing its or their obligation to
indemnify the Indemnified Party hereunder against any Losses that may
result from such Third Party Claim, then Lionhart, LHI and GEP shall be
entitled to assume and control the defense of such Third Party Claim at
its and their expense and through counsel of its and their choice if
Lionhart, LHI and/or GEP give notice of their intention to do so to the
Indemnified Party within five (5) days of the receipt of such notice
from the Indemnified Party, provided, however, that if there exists or
is reasonably likely to exist a conflict of interest that would make it
inappropriate in the judgment of the Indemnified Party, in its sole and
absolute discretion, for the same counsel to represent both the
Indemnified Party and Lionhart and/or LHI and/or GEP, then the
Indemnified Party shall be entitled to retain its own counsel, in each
jurisdiction for which the Indemnified Party determines counsel is
required, at the expense of Lionhart, LHI and GEP. In the event that
Lionhart, LHI and GEP exercise the right to undertake any such defense
against any such Third Party Claim as provided above, the Indemnified
Party shall cooperate with Lionhart, LHI and GEP in such defense and
make available to Lionhart, LHI and GEP, at Lionhart's, LHI's and GEP's
sole expense, all witnesses, pertinent records, materials and
information in the Indemnified Party's possession or under the
Indemnified Party's control relating thereto as is reasonable required
by Lionhart, LHI and/or GEP. Similarly, in the event the Indemnified
Party is, directly or indirectly, conducting the defense against any
such Third Party Claim, Lionhart, LHI and GEP shall cooperate with the
Indemnified Party in such defense and make available to the Indemnified
Party, at Lionhart's, LHI's and GEP's expense, all such witnesses,
records, materials and information in Lionhart's or LHI's or GEP's
possession or under Lionhart's and/or LHI's and/or GEP's control
relating thereto as is reasonably required by the Indemnified Party. No
such Third Party Claim may be settled by Lionhart, LHI or GEP without
the prior written consent of the Indemnified Party.
(c) Each party shall within ninety (90) days of learning of
any asserted liability or damage claimed to give rise to
indemnification hereunder notify the party obligated to indemnify it
hereof in writing provided, however, that the failure of the
Indemnified Party to so notify the indemnifying party shall not relieve
the indemnifying party of its obligations hereunder unless, and only to
the extent that, such failure to notify prejudices the indemnifying
party. Thereafter, the indemnifying party shall have, at its election,
the right to compromise or defend any such matter at its sole cost and
expense through counsel chosen by it. If the indemnifying party so
undertakes to compromise and defend, the indemnifying party shall
notify the other party of its intention to do so. If the indemnifying
party fails to defend such matter diligently, the Indemnified Party may
assume control of the defense of such matter. Each party agrees in all
cases to cooperate with the defending party and its counsel in the
compromise of or defending of any such liabilities or claims. The
defending party and the nondefending party may be represented by the
same counsel unless such representation would be inappropriate due to
actual or potential differing interests between them. In addition, the
nondefending party shall at all times be entitled to monitor such
defense through the appointment of counsel of its own choosing, at its
own cost and expense.
Section 16.02.04. Damage Threshold. Neither Compost nor Miami
or Bedminster (or any other Indemnified Party under Section 16.02.01 of
this Agreement) shall be entitled to indemnification under this Section
16.02 unless and until the aggregate amount of the claims against
Lionhart and/or LHI and/or GEP, by Compost, Miami and/or Bedminster
(and all other Indemnified Parties under Section 16.02.01 of this
Agreement), equals or exceeds US $100,000. If the aggregate amount of
such claims, against Lionhart and/or LHI and/or GEP, by Compost, Miami
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and/or Bedminster, equals or exceeds US $100,000, then Compost, Miami
and Bedminster (and all other Indemnified Parties under Section
16.02.01 of this Agreement) may claim indemnification for the entire
aggregate amount of such claims, whether or not any such Loss or Losses
are material or immaterial. Notwithstanding the preceding terms and
provisions of this Section 16.02.04, any claim by any Indemnified Party
under Section 16.02 for any Indemnified Party Loss, and which relates
to or arises from the failure or omission by Lionhart and/or LHI and/or
GEP, under this Agreement, the Credit Documents or the Definitive
Supplemental Documents, to execute or deliver any document, agreement,
certificate, receipt, resolution and/or any other considerations to
Compost, Miami and/or Bedminster, or any other Indemnified Party, on
the Term Loan Closing and Ancillary Transactions Closing on the Closing
Date as required under the Agreement, the Credit Documents and/or the
Definitive Supplemental Documents, shall not be subject to the dollar
threshold as set forth in this Section 16.02.04.
ARTICLE XVII
COVENANTS AND UNDERTAKINGS OF COMPOST, MIAMI AND BEDMINSTER
Section 17.01. Pre-Closing Covenants and Undertakings. Compost, Miami
and Bedminster hereby agree, promise and covenant, jointly and severally, that,
pending the Term Loan Closing and the Ancillary Transactions Closings on the
Closing Date, and in addition to any and all other pre-closing agreements,
promises, covenants and other undertakings of Compost, Miami or Bedminster that
is or are set forth in this Agreement, the Credit Documents and/or the
Definitive Documents:
17.01.01. Access/Review/Due Diligence. Compost, Miami and
Bedminster 1) will afford and provide to the officers, directors,
employees, counsel, agents, investment bankers, accountants, and other
professionals and agents and/or representatives of Lionhart, LHI and
GEP, open, friendly and full access to the Business, all other
business, the assets, the Properties, the Real Estate, and the offices,
facilities, properties, books, and legal, financial and business files
and records of Compost, Miami and Bedminster, and 2) will cooperate
with Lionhart, LHI and GEP, on a commercially reasonable basis with
respect to all due diligence questions, investigations or audits
conducted or sponsored by or on behalf of Lionhart, LHI and/or GEP,
that relate to or arise from Compost, Miami and/or Bedminster.
17.01.02. Maintenance/Disclosure of Financial Records.
Compost, Miami and Bedminster shall maintain their respective books,
accounts and records in the usual and regular manner, on a basis
consistent with GAAP and prior periods, and Compost, Miami and
Bedminster shall provide Lionhart, LHI and GEP with financial
statements prepared on a monthly basis and such additional financial
and operating data and other information relating to Compost, Miami
and/or Bedminster as may be requested reasonably by Lionhart, LHI
and/or GEP, or any authorized officer, director, employee counsel,
agent, investment banker, accountant or other professional or agent or
representative thereof.
17.01.03. Conduct of Business. Compost, Miami and Bedminster
shall conduct their Business, all other businesses, affairs and
operations, and shall manage, operate, preserve and conserve the
Business, all other business, and the assets and Properties of Compost,
Miami and Bedminster, such that at the Term Loan Closing and the
Ancillary Transactions Closing on the Closing Date, no representation
or warranty of Compost, Miami and/or Bedminster (as set forth in this
Agreement, the Credit Documents and/or the Definitive Supplemental
Documents), will be inaccurate or misleading, no covenant or agreement
of Compost, Miami and/or Bedminster (as set forth in this Agreement,
the Credit Documents and/or the Definitive Supplemental Documents) will
be breached, and no condition in this Agreement, the Credit Documents
or the Definitive Supplemental Documents, will remain unfulfilled by
reason of the actions or omissions of Compost, Miami and/or Bedminster.
Compost, Miami and Bedminster shall use their respective best efforts,
in good faith, in the ordinary course of business, 1) to preserve,
conserve and maintain the business operations of the Business, all
other business, the assets, Properties and the Real Estate of Compost,
Miami and Bedminster, 2) to preserve in full force and effect the
contracts, agreements, instruments, leases, licenses, arrangements, and
understandings of Compost, Miami and Bedminster, including, without
limitation, the Put or Pay Contract and all other Material Contracts,
3) to prosecute vigorously, in the Court, the Miami Claims as set forth
in the Miami Complaint, and 4) to preserve the goodwill by and among
the City of Miami, and Compost, Miami and Bedminster, and with respect
to all other municipalities in which Compost, Miami and/or Bedminster
is doing business or anticipates that it will do business with at any
time in the next twelve (12) months. Compost, Miami and Bedminster
shall conduct their respective Business, and all other business, and
their respective operations in all
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respects only in the ordinary and usual course, consistent with past
lawful practice, and in accordance with all applicable laws, rules and
regulations.
17.01.04. No Securities Transactions. Neither Miami nor
Bedminster shall issue, or enter into any commitment, plan, agreement,
arrangement or undertaking to issue, transfer, redeem or otherwise
dispose of, any Miami Common Stock and/or Bedminster Common Stock, any
other capital stock (or debt or equity securities) of Miami and/or
Bedminster, or any option, instrument, rights or other security that is
exercisable for, convertible into or exchangeable for any share of any
capital stock of Miami and/or Bedminster.
17.01.05. Advice of Changes. Compost, Miami and Bedminster
shall immediately advise and disclose to Lionhart, LHI and GEP, by a
detailed written notice, of any material fact or occurrence or any
pending or threatened occurrence of which any of them obtains knowledge
and which (if existing and known at the date of the execution of this
Agreement) would have been required to be set forth or disclosed in or
pursuant to this Agreement or in a Schedule or an Appendix hereto,
which (if existing and known at any time prior to or at the Closing
Date) would make the performance by any party of a covenant contained
in this Agreement (or the Credit Documents or Definitive Supplemental
Documents) impossible or make such performance materially more
difficult than in the absence of such fact or occurrence, or which, if
existing and known at the time of the Closing Date, would cause a
condition to any party's obligations under this Agreement (or the
Credit Documents or Definitive Supplemental Documents) not to be fully
satisfied.
17.01.06. Confidentiality. Compost, Miami and Bedminster shall
maintain and preserve the confidentiality of, and shall not publish,
disclose, disseminate or otherwise make available any information that
they (or any one of them) now possess or may hereafter create or obtain
relating to the financial condition, results of operations, business,
properties, assets, liabilities, or future prospects of Lionhart, LHI
and/or GEP, without the prior written consent of Lionhart, LHI and GEP.
17.01.07. Compliance with Laws. Compost, Miami and Bedminster
shall comply with all federal, state local and foreign laws,
ordinances, rules, regulations and orders applicable to the business
and operations of Compost, Miami and Bedminster, including, without
limitation, the Exchange Act and the Securities Act.
17.01.08. Public Statements. Except as required by applicable
law, and unless and until the Term Loan Closing and the Ancillary
Transactions Closing have been consummated on the Closing Date,
Compost, Miami and Bedminster shall not issue any public statements or
releases which relate to this Agreement, the Credit Documents and/or
the Definitive Supplemental Documents, or the transactions contemplated
thereunder, except for any such written statements as shall have been
approved in advance as to form and content by Lionhart, LHI and GEP.
Nothing contained herein shall prevent Compost, Miami and/or Bedminster
from furnishing any information to any Governmental Authority
(including, without limitation, the SEC) if required to do so by
applicable law, including, without limitation, disclosing any such
information (based solely on the determination by Compost, Miami and/or
Bedminster) in any SEC Report (under the Exchange Act), or otherwise.
17.01.09. Schedule/Appendices/Updates. Between the Effective
Date of this Agreement and the Closing Date, Compost, Miami and
Bedminster shall update the Schedules, Appendices, Exhibits, Disclosure
Schedule, Disclosure Documents, the Financial Statements, the Interim
Financial Statements, the Miami Balance Sheet, the Bedminster Balance
Sheet, the Miami Project Disclosures, and the Compost Disclosures, that
are annexed to this Agreement, promptly after the occurrence of any
change or event making any such document or disclosure inaccurate or
incomplete, or otherwise requiring changes thereon.
17.01.10. Consents Without Any Condition. Compost, Miami and
Bedminster shall not make any agreement or understanding, which is not
approved in advance and in writing by Lionhart, LHI and GEP, as a
condition for obtaining any consent, authorization, approval, order,
license, certificate, or permit required for the consummation of the
transactions contemplated by this Agreement, the Credit Documents
and/or the Definitive Supplemental Documents.
17.01.11. Transactions. Compost, Miami and Bedminster agree,
promise and covenant that Miami and Bedminster, vis-a-vis their
respective Boards of Directors and/or Shareholders, or otherwise, will
not approve and/or
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shall reject:
(a) Any merger, consolidation, reorganization, or
other business combination involving or relating to or arising
from Miami and/or Bedminster; or,
(b) Any sale of material assets or substantially all
of the assets of Miami and/or Bedminster, to any Person; or,
(c) Any stock split, stock dividend, or reverse stock
split relating to the Miami Common Stock and/or the Bedminster
Common Stock, or any other class of capital stock of Miami
and/or Compost; or,
(d) Any issuance of any shares of capital stock of
Miami and/or Bedminster, any option, warrant, or other right
calling for the issuance of any such share of capital stock of
Miami and/or Bedminster, or any security convertible into or
exchangeable for any such share of capital stock of Miami
and/or Bedminster; or,
(e) (i) Any issuance by or on the part of Miami
and/or Bedminster of any debt securities, debentures or notes,
or (ii) any incurrence of any debt, credit or other
Indebtedness by Miami and/or Bedminster (except in the usual
and ordinary course of business consistent with past lawful
practice); or,
(f) Any authorization of any other class of stock of
Miami and/or Bedminster, other than the current classes of
capital stock that are authorized currently in the Articles of
Incorporation of Miami and/or Bedminster; or,
(g) Any amendment of the Articles of Incorporation
and/or Bylaws of Miami and/or Bedminster, other than as
contemplated or provided expressly under this Agreement, any
Credit Documents or Definitive Supplemental Documents; or,
(h) Any proposition, disposition, action, plan,
transaction or other undertaking, the effect of which may be
to inhibit, restrict, or delay the consummation of or
otherwise have a Material Adverse Effect with respect to, any
of the transactions contemplated by or otherwise provided
under this Agreement, the Credit Documents and/or the
Definitive Supplemental Documents.
17.1.12. Best Efforts. Compost, Miami and Bedminster each
agree, promise and covenant to use their respective commercially
reasonable efforts, in good faith:
(a) To cooperate reasonably with Lionhart, LHI and
GEP, and its and their respective agents and representatives,
to take all actions, and to cause to be done, and to assist
and cooperate with Lionhart, LHI and GEP, and its and their
respective agents and representatives, to close and otherwise
consummate, on the Term Loan Closing and the Ancillary
Transactions Closing, on the Closing Date, all transactions
that are contemplated under this Agreement, the Credit
Documents and the Definitive Supplemental Documents; and,
(b) To take or cause to be taken all action, to do or
cause to be done, and to assist and cooperate with the other
parties hereto in doing, all things necessary, proper or
advisable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated
by and under this Agreement, the Credit Documents and the
Definitive Supplemental Documents, including, but not limited
to: (i) the obtaining of all necessary waivers, consents and
approvals from governmental or regulatory agencies or
authorities and the making of all necessary registrations and
filings (including, but not limited to, filings with
governmental or regulatory agencies or authorities, if any)
and the taking of all reasonable steps as may be necessary to
obtain any approval or waiver from, or to avoid any action or
proceeding by, any governmental agency or authority; (ii) the
obtaining of all necessary consents, approvals or waivers from
any applicable third parties, that relate to or arise from
this Agreement, the Credit Documents and/or the Definitive
Supplemental Documents; (iii) the defending of any lawsuits or
any other legal proceedings whether judicial or
administrative, challenging this Agreement, the Credit
Documents and/or the Definitive Supplemental Documents, or the
consummation of the transactions contemplated thereunder, and,
(iv)
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causing all conditions to the obligations of Compost, Miami
and/or Bedminster, and/or Lionhart, LHI and/or GEP, under this
Agreement, the Credit Documents and the Definitive
Supplemental Documents, to be satisfied on or before the Term
Loan Closing and the Ancillary Transactions Closing on the
Closing Date.
Section 17.02. Post-Closing Covenants and Undertakings. Compost, Miami
and Bedminster hereby agree, promise and covenant, jointly and severally, that,
subsequent to the Term Loan Closing and the Ancillary Transactions Closings on
the Closing Date, and in addition to any other agreements, promises, covenants
or undertakings of Compost, Miami or Bedminster that are set forth in this
Agreement, the Credit Documents and/or the Definitive Supplemental Documents
(including, without limitation, the Transaction Documents as that term is
defined under Section 16.01.02 of this Agreement):
17.02.01. Continuing Disclosure. Until all Indebtedness is
paid and discharged in full and all Obligations are performed and
discharged in full by Compost and/or Miami and/or Bedminster, Compost,
Miami and Bedminster hereby agree, promise and covenant, jointly and
severally, that Compost, Miami and Bedminster shall provide, disclose
and deliver to Lionhart, LHI and GEP, the following:
(a) SEC Reports/Registration Statements. (i)
Conformed, accurate and complete copies of the all SEC Reports
of Compost, on a reasonably contemporaneous basis when and as
any such SEC Reports are filed with the SEC by Compost,
including, without limitation, any such Form 10-QSB, Form
10-KSB and Form 8-K, and (ii) any and all Registration
Statements of Compost, on a reasonably contemporaneous basis
when any such Registration Statements are filed with the SEC
by Compost, including, without limitation, any such
Registration Statement on Form S-3; and,
(b) Miami Project Permits. (i) A written notice,
disclosure and description of all applications for any
Environmental Permits, for and with respect to the Miami
Project, including, without limitation, all Miami Project
Permits, on a reasonably contemporaneous basis when and as any
such applications are filed by Compost, Miami and/or
Bedminster with any applicable Governmental Authority, and
(ii) a written notice and description of all facts, events or
occurrences that are material to the Miami Project Permits,
including all such facts, event or occurrences that may have a
Materially Adverse Effect on any such Miami Project Permits or
other Environmental Permits; and,
(c) Miami Complaint/Miami Claim. A written notice,
disclosure and description of all material facts, events or
occurrences (including any material pleadings, motions,
hearings, orders, mediations, settlement conferences,
settlements or judgments), on a reasonably contemporaneous
basis upon discovery or knowledge thereof by Compost, Miami
and/or Bedminster, that relate to or arise from the Miami
Complaint and/or the Miami Claim, including any and all such
material facts, events or occurrences that may have a Material
Adverse Effect on the Miami Claim; and,
(d) Put or Pay Contract. A written notice, disclosure
and description of all material facts, events or occurrences,
on a reasonably contemporaneous basis upon discovery or
knowledge thereof by Compost, Miami and/or Bedminster, that
relate to or arise from the Put or Pay Contract, and
notwithstanding whether or not any such material fact, event
or occurrence may have a Materially Adverse Effect on the Put
or Pay Contract, including, without limitation, all acts
and/or actions of the City of Miami (and/or its respective
counsel or other professionals) and/or the Court, that relate
to or arise from the Put or Pay Contract; and,
(e) Miami Project Scope. A written notice, disclosure
and description of all material facts, events or occurrences,
on a reasonably contemporaneous basis upon discovery or
knowledge thereof by Compost, Miami and/or Bedminster,
pursuant to which the executive management of Compost, Miami
and/or Bedminster modify, change, supplement or limit
materially the description of the Miami Project as is set
forth in Section 11.26.01(a) of this Agreement, and as is
described under the Miami Project Recap, the Summary and/or
the Design Report as otherwise set forth and referenced in
Section 11.26.01(a) of this Agreement; and,
(f) Miami Project Financing. A written notice,
disclosure and description of all material facts, events or
occurrences, on a reasonably contemporaneous basis upon
discovery or knowledge thereof by Compost, Miami and/or
Bedminster, that relate to or arise from or have a Materially
Adverse Effect on or with respect to the Miami Project
Financing; and,
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(g) Miami Project-General. A written notice, disclosure and
description of all material facts, events or occurrences, on a
reasonably contemporaneous basis upon discovery or knowledge thereof by
Compost, Miami and/or Bedminster, that relate to or arise from or have
a Material Adverse Effect on, the Miami Project, including any such
material facts, events or occurrences that relate to or arise from the
Miami Site, the Properties or Material Contracts of Miami and/or
Bedminster, or otherwise; and,
(h) Financial Statements. Accurate and complete copies of (i)
the audited consolidated financial statements and audit reports of and
for Compost and/or its Subsidiaries, for each of the fiscal years of
Compost, commencing with the fiscal year of Compost ending on April 30,
1998, including, without limitation, the related audited consolidated
statements of income, cash flows and changes in financial position of
Compost and its Subsidiaries, together with all related notes and
schedules thereto, accompanied by the reports thereon and management
letters from the accountants and auditors of Compost, on a reasonably
contemporaneous basis upon receipt thereof by Compost, Miami and/or
Bedminster; and, (ii) the unaudited balance sheets of Compost and its
Subsidiaries for each fiscal quarter beginning with the fiscal quarter
ending on October 31, 1998, including the related unaudited statements
of income, cash flows, and changes in financial positions of Compost
and its Subsidiaries for each, together with all related notes and
schedules thereto, which statements include all material known
adjustments as of the date of such statements, subject to ordinary
year-end adjustments which in the aggregate would not be material, on
the earlier of the date that any such unaudited balance sheets are
prepared, or forty-five (45) days after the end of each such fiscal
quarter of Compost; and,
(i) Press Releases. A copy of all material press releases with
respect to Compost and/or its Subsidiaries (including Miami and/or
Bedminster), when publicly issued or disseminated by Compost (Miami or
Bedminster, or any other Subsidiary) or any other Person, on a
reasonably contemporaneous basis upon discovery or knowledge thereof by
Compost, Miami and/or Bedminster; and,
(j) Management. A written notice, disclosure and description
of all material changes in management of Compost, Miami or any other
Subsidiaries, on a reasonably contemporaneous basis upon the occurrence
of any such material changes in management of Compost, Miami and/or any
other Subsidiaries; and,
(k) Collateral. A written notice, disclosure and description
of all material facts, events or occurrences, on a reasonably
contemporaneous basis upon discovery or knowledge thereof by Compost,
Miami and/or Bedminster, that have or may have a Materially Adverse
Effect on any collateral that is pledged or otherwise encumbered by
Compost, Miami and/or Bedminster, to secure the performance of any
obligations, duties or undertakings of Compost, Miami and/or Bedminster
under this Agreement, the Credit Documents and/or the Definitive
Supplemental Documents (including, without limitation, the Miami Site,
the Miami Claim, the Miami Project Permits, the Put or Pay Contract,
the Miami Project Financing, the Pledged Compost Shares, the Pledged
Miami Shares and/or the Pledged Bedminster Shares).
17.02.02. Miscellaneous Affirmative Covenants. Until all Indebtedness
is paid and discharged in full and all Obligations are performed and discharged
in full by Compost and/or Miami and/or Bedminster, Compost, Miami and Bedminster
hereby agree, promise and covenant, jointly and severally, that Compost, Miami
and Bedminster shall use commercially reasonable efforts, in good faith, unless
waived or modified (in writing and signed) by Lionhart, LHI and GEP, to:
(a) Sound Management. Conduct and manage the business and
operations of Compost, Miami and Bedminster, and all material
Subsidiaries, in a sound and prudent manner, in accordance with sound
and commercially reasonable business judgment, after due investigation
and consideration, and based on sound management policies that are
consistent, in all material respects, with the SEC Reports, the Miami
Project Disclosures and the Compost Disclosures; and,
(b) Material Contracts. Maintain each Material Contract of
Compost, Miami and Bedminster in full force and effect in accordance
with their respective terms; and,
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(c) Material Changes-Disclosure. On a reasonably prompt and
commercially reasonable basis, notify Lionhart, LHI and GEP, in
writing, of any material change in business, results of operations,
financial condition, assets, liabilities or prospects of Compost, Miami
and/or Bedminster that, either singly or in the aggregate, may have a
Materially Adverse Effect on their respective Properties, Business or
assets; and,
(d) Representations/Warranties. On a reasonably prompt and
commercially reasonable basis, notify Lionhart, LHI and GEP, in
writing, at any prospective date, if any representation or warranty of
Compost, Miami or Bedminster, that is made or asserted in this
Agreement, the Credit Documents and/or the Definitive Supplemental
Documents, or in any other Transaction Document (as that term is
defined under Section 16.01.02 of this Agreement), and contains on any
such prospective date any untrue statement of a material fact or omits
on any such prospective date to then state a material fact necessary in
order to then make the statement of facts made not misleading; and,
(e) Permits. On a reasonably prompt and commercially
reasonable basis, and based on sound management policies, use
commercially reasonable efforts, in good faith, to maintain each
Environmental Permit (including, the Miami Project Permits) that is or
has been issued by any Governmental Authority to Compost, Miami,
Bedminster or any other Subsidiary, and apply for (and vigilantly
prosecute all such applications for) any other Environmental Permits
(including, without limitation, the Supplemental Prospective Permits,
as defined under Section 11.26.01(b)(1) of this Agreement), that are
reasonably necessary for Compost, Miami and Bedminster, and all other
Subsidiaries, to conduct and operate their respective Business; and,
(f) Periodic Assessments. Afford Lionhart, LHI and GEP, or
their respective agents, representatives and professionals, open, free
and friendly access, during reasonable business hours on Business Days
and upon reasonable notice, (i) to the offices, buildings, equipment,
assets, Properties, records, files, books and records of account, Tax
Returns, Real Estate, and all other information relating to or arising
from Compost, Miami and Bedminster, and (ii) to the management of
Compost, Miami and/or Bedminster, for purposes of conducting any
commercially reasonable due diligence investigations, audits,
inspections or assessments of Compost, Miami and/or Bedminster, and/or
their respective Business; and,
(g) Valid Existence. Ensure that Compost, Miami and
Bedminster, as well as all material Subsidiaries, each continue to be a
corporation duly organized, validly existing, and in good standing, and
qualified to do business, in any reasonably necessary or required
jurisdictions; and,
(h) Corporate Authority. Ensure that Compost, Miami and
Bedminster, as well as all material Subsidiaries, each has all
requisite power and legal authority (i) to own and operate its
Properties and Business, (ii) to carry on its Business as now conducted
or as may be conducted prospectively, and (iii) to execute, consummate
and deliver, and to otherwise perform any of their respective duties
and obligations under, this Agreement, the Credit Documents and the
Definitive Supplemental Documents; and,
(i) Financings. Continue to use commercially reasonable
efforts, in good faith, to resource, structure and secure all
financings, for and with respect to Compost, Miami and Bedminster, as
described in and as contemplated under, and within such time periods as
are described in, the Miami Project Disclosures and the Compost
Disclosures, including, without limitation, the Miami Project
Financing; and,
(j) Compliance with Laws. Ensure that neither Compost nor any
of its Subsidiaries (including, without limitation, Miami and
Bedminster) is in conflict with, or in violation of, any law, rule,
regulation, order, judgment or decree applicable to Compost or any of
its Subsidiaries (including, without limitation, Miami and Bedminster)
or by which Compost or any of its Subsidiaries (including, without
limitation, Miami and Bedminster) or any of its or their respective
Properties are bound or affected, except for any such conflicts or
violations which would not, individually or in the aggregate, have a
Material Adverse Effect; and,
(i) Uses/Applications of Credit. Ensure that the Credit, that
is otherwise extended, made and delivered by Lionhart, LHI and GEP to
Compost, Miami and Bedminster, as otherwise provided and contemplated
under Article II of this Agreement, and as contemplated under the
Credit Documents and the
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Definitive Supplemental Documents, is used or applied by or on the part
of Compost, Miami and Bedminster as otherwise provided and prescribed
under the Schedule of Uses and Applications of Credit, as is set forth
in Exhibit B of this Agreement, and, pursuant to which, all such
amounts (of and from the Credit) that are otherwise allocated and
appropriated thereunder: 1) for uses by Compost as "Working Capital,"
shall be used exclusively by Compost, based on sound and commercially
prudent management policies, for bona fide, reasonable and legitimate
operating needs and working capital requirements of Compost, and,
pursuant to which, shall be invested and used by Compost in and with
respect to its current assets, and shall not be channeled into
Compost's long-term assets; and 2) for uses by Miami as "Working
Capital," shall be used exclusively by Miami, based on sound and
commercially prudent management policies, for bona fide, reasonable and
legitimate operating needs and working capital requirements of Miami,
and, pursuant to which, shall be invested and used by Miami in and with
respect to its current assets, and shall not be channeled into Miami's
long-term assets.
17.02.03. Miscellaneous Negative Covenants. Until all Indebtedness is
paid and discharged in full and all Obligations are performed and discharged in
full by Compost and/or Miami and/or Bedminster, Compost, Miami and Bedminster
hereby agree, promise and covenant, jointly and severally, that Compost, Miami
and Bedminster shall not, without the prior written consent of Lionhart, LHI and
GEP, take any of the following actions:
(a) Equity Securities-No Encumbrances. Create, assume, grant,
convey, deliver, or permit to exist, either voluntarily or by operation
of law, any Encumbrance or other lien on or pledge against any of the
Equity Securities of Miami or Bedminster (For purposes of this Section
17.02.03, the term "Equity Securities" shall mean, with respect to
Miami, the Miami Common Stock, any other capital stock of Miami, and
any option, warrant, security and/or other right (including any debt
securities) that is (are) directly or indirectly exercisable,
convertible or exchangeable for any such capital stock of Miami, and
shall mean, with respect to Bedminster, the Bedminster Common Stock,
any other capital stock of Bedminster, and any option, warrant,
security and/or other right (including any debt securities) that is
(are) directly or indirectly exercisable, convertible or exchangeable
for any such capital stock of Bedminster); or
(b) Redemptions/Dividends. Redeem any capital stock or
declare, make or pay any dividends or distributions (whether in cash,
securities or other property) to the holders of Miami's or Bedminster's
capital stock or otherwise except as contemplated by the Credit
Documents; or, redeem any capital stock or declare, make or pay any
dividends or distributions (whether in cash, securities or other
property) to the holders of Compost's capital stock, except (i) as
contemplated by or under the Credit Documents, and/or (ii) monthly
dividends inclusive of tax distributions as may be permitted from time
to time by the Wasteco Stock Purchase Agreement and the AW Compost
Stock Purchase Agreement.
(c) Miscellaneous Pledged Collateral-No Additional
Encumbrances. Create, assume, grant, convey, deliver, or permit to
exist, either voluntarily or by operation of law, any Encumbrance or
other lien on or pledge against any collateral that is pledged or
otherwise encumbered by Compost, Miami and/or Bedminster, to secure the
performance of any obligations, duties or undertakings of Compost,
Miami and/or Bedminster under this Agreement, the Credit Documents
and/or the Definitive Supplemental Documents (including, without
limitation, the Miami Site, the Miami Claim, the Miami Project Permits,
the Put or Pay Contract, the Miami Project Financing, the Pledged
Compost Shares, the Pledged Miami Shares and/or the Pledged Bedminster
Shares); or,
(d) Asset Dispositions. Sell, lease or otherwise transfer any
of the assets, Material Contracts, Business, Properties or
Environmental Permits of Compost, Miami and/or Bedminster, or cancel
any rights or claims of Compost, Miami and/or Bedminster in and to any
such assets, Material Contracts, Business, Properties or Environmental
Permits of Compost, Miami and/or Bedminster, other than in the ordinary
course of business for fair and adequate consideration in money or
money's worth; or,
(e) Intellectual Properties. Sell, assign, transfer, encumber
or otherwise dispose of any Intellectual Property or other intangible
asset of Compost, Miami and/or Bedminster, other than in the ordinary
course of business for fair and adequate consideration in money or
money's worth; or,
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(f) Miami-Bedminster Indebtedness. Incur any material
indebtedness, for or on the part of Miami and/or Bedminster, whether
absolute or contingent, other than 1) current liabilities incurred in
the ordinary course of business for fair and adequate consideration in
money or money's worth, or 2) the refinancing of existing indebtedness
in the ordinary course of business and pursuant to usual and customary
credit terms and conditions; or, pay, prepay or discharge any
indebtedness of Miami and/or Bedminster, except in the ordinary course
of business for fair and adequate consideration in money or money's
worth; or,
(g) Compost Indebtedness. Incur any cumulative indebtedness,
for or on the part of Compost, in excess of $250,000, other than 1)
current liabilities incurred in the ordinary course of business for
fair and adequate consideration in money or money's worth, or 2) the
refinancing of existing indebtedness in the ordinary course of business
and pursuant to usual and customary credit terms and conditions; or,
pay, prepay or discharge any indebtedness of Compost, except in the
ordinary course of business for fair and adequate consideration in
money or money's worth; or,
(h) Permits. Lose, surrender or have revoked, limited,
terminated or restricted, any license, permit or other right granted by
any Governmental Authority to Compost and/or Miami and/or Bedminster;
or,
(i) Contracts. Enter into any contract, for or on the part of
Compost, Miami and/or Bedminster, not in the ordinary course of
business, or cancel, modify adversely, assign, encumber or in any way
discharge or terminate (other than by performance) any Material
Contract, except as may be reasonably required in the ordinary course
of business; or,
(j) Material Defaults. Allow to occur or exist any event of
material default under any Material Contract (including, without
limitation, the Put or Pay Contract), except in the case of a bona fide
dispute, inadvertence or mistake, provided that, with respect to any
event of default that is the result of any such inadvertence or
mistake, any such event of default is cured substantially after
discovery or knowledge thereof; or,
(k) Loans/Credit. Make any loan or advance or extend any
credit, except to customers in the ordinary course of business pursuant
to established credit policies, or acquire the securities or
obligations of any Person, except in the ordinary course of business,
and for fair and adequate consideration, consistent with past practice;
or,
(l) Capital Expenditures. Make any capital expenditure or any
commitment therefor, by or on the part of Miami and/or Bedminster,
except as may be required in the ordinary course of business consistent
with past practice; or, make any material capital expenditure or any
commitment therefor, by or on the part of Compost, in excess of
$250,000, except as may be required in the ordinary course of business
consistent with past practice; or,
(m) Accounting Principles. Alter or revise any accounting
principles, procedures, methods or practices of Compost, Miami or
Bedminster, or any material Subsidiary thereof, except as may be
recommended by independent professionals, and only then in accordance
with GAAP; or,
(n) Special Transactions. Engage, or participate in, or
otherwise consummate, any of the following actions or transactions:
(i) Any merger, consolidation,
reorganization, or other business combination involving or
relating to or arising from Miami and/or Bedminster; or,
(ii) Any sale of material assets or
substantially all of the assets of Miami and/or Bedminster, to
any Person; or,
(iii) Any stock split, stock dividend, or
reverse stock split relating to the Miami Common Stock and/or
the Bedminster Common Stock, or any other class of capital
stock of Miami and/or Bedminster; or,
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(iv) Any issuance of any Equity Securities
of Miami and/or Bedminster, or, without limiting the
foregoing, any issuance of any shares of capital stock of
Miami and/or Bedminster, or any option, warrant, or other
right calling for the issuance of any such share of capital
stock of Miami and/or Bedminster, or any security convertible
into or exchangeable for any such share of capital stock of
Miami and/or Bedminster; or,
(v) Any issuance by or on the part of Miami
and/or Bedminster of any debt securities, debentures or notes
or any other debt or bond obligations whatsoever; or,
(vi) Any authorization of any other class of
stock of Miami and/or Bedminster, other than the current
classes of capital stock that are authorized currently in the
Articles or Certificate of Incorporation of Miami and/or
Bedminster; or,
(vii) Any amendment of the Articles of
Incorporation and/or Bylaws of Miami and/or Bedminster, other
than as contemplated or provided expressly under this
Agreement, any Credit Documents or Definitive Supplemental
Documents; or,
(viii) Any proposition, disposition, action,
plan, transaction or other undertaking, the effect of which
may be to inhibit, restrict, or delay the consummation of or
otherwise have a Material Adverse Effect with respect to, any
of the transactions contemplated by or otherwise provided
under this Agreement, the Credit Documents and/or the
Definitive Supplemental Documents; or,
(ix) Any direct or indirect payments,
distributions, exchanges or transfers of cash, any cash
equivalents, Properties or other assets, by and between and/or
among Compost and/or Miami and/or Bedminster, or any of their
respective Subsidiaries or Affiliates (including, without
limitation, all such upstream, downstream and lateral
payments, distributions, exchanges or transfers thereof),
which are not reasonably in the usual and ordinary course of
business consistent with past practice, and which in the
aggregate exceed US $50,000 (in cash, cash equivalents or
value).
(o) Uses/Applications of Credit. Use or apply the proceeds of the
Credit, as otherwise provided and contemplated under Article II of this
Agreement, and as contemplated under the Credit Documents and the Definitive
Supplemental Documents, in any manner or for any purpose that is materially
inapposite of, contrary to or in contravention of the Schedule of Uses and
Applications of Credit, as is set forth in Exhibit B of this Agreement, and,
with respect to all such amounts (of and from the Credit) that are otherwise
allocated and appropriated thereunder: 1) for uses by Compost as "Working
Capital," use or apply any such amounts for other than bona fide, reasonable and
legitimate operating needs and working capital requirements of Compost, in and
with respect to its current assets; and, 2) for uses by Miami as "Working
Capital," use or apply any such amounts for other than bona fide, reasonable and
legitimate operating needs and working capital requirements of Miami, in and
with respect to its current assets; or,
(p) General. Without limiting any of foregoing provisions of this
Section 17.02.03, make any material changes in the customary methods of
operations of Compost, Miami or Bedminster including practices and policies
relating to purchasing, inventory, marketing, selling or pricing; fail to
maintain Compost, Miami or Bedminster's tangible personal property in good
repair, ordinary wear and tear excepted; issue or sell any capital stock, notes
bonds or other securities, or any option, warrant or other right to acquire the
same, of, or any other interest in Compost, Miami or Bedminster; amended or
restate Compost, Miami or Bedminster's Certificate of Incorporation or By-Laws;
merge with or enter into a consolidation or acquire an interest of 5% or more in
any Person, or acquire (by purchase, merger, consolidation, stock acquisition or
otherwise) a substantial portion of the assets of any Person or any division or
line of business thereof, or otherwise acquired assets other than in the
ordinary course and in accordance with past practice; disclose any secret or
confidential Intellectual Property (except by way of issuance of a patent) or
permit to lapse or abandon any Intellectual Property (or any registration or
grant thereof of any application relating thereto) to which, or under which,
Compost, Miami or Bedminster has any right, title, interest or license; or,
except as set forth in the Disclosure Documents, fail to pay any creditor any
material amount owed to such creditor when due; except as contemplated by the
Disclosure Documents, sell, transfer, lease, sublease, license or
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otherwise dispose of any properties or assets, real, personal or mixed
(including, without limitation, leasehold interests and intangible assets),
other than a sale in the ordinary course of business consistent with past
practice; or, except as set forth in the Disclosure Documents, write down or
write up (or fail to write down or write up in accordance with GAAP consistent
with past practice) the value of any inventories or receivables or revalue any
assets of Compost, Miami or Bedminster other than in the ordinary course of
business consistent with past practice and in accordance with GAAP.
ARTICLE XVIII
DEFAULTS, CROSS-DEFAULTS AND REMEDIES
Section 18.01. Definitions: Obligations/Indebtedness. The terms
"Indebtedness" and "Obligations," for purposes of this Agreement, and the Credit
Documents and the other Definitive Supplemental Documents as otherwise described
under this Agreement, shall be defined and mean as follows:
18.01.01. Indebtedness. The term "Indebtedness," for purposes of this
Agreement, the Credit Documents and the other Definitive Supplemental Documents,
shall mean and include the following:
(a) Mortgage Note. All monetary, pecuniary and financial
duties, obligations, liabilities, responsibilities, debts and
undertakings of Compost, Miami and/or Bedminster, that are owed or
owing or that may be owed or owing to Lionhart, LHI and/or GEP under
and pursuant to a Mortgage Note, in the principal amount of US
$10,500,000, including, without limitation, all interest, prepayment
fees and other charges and other undertakings that are set forth in
such Mortgage Note; and,
(b) Closing Costs. The duty, obligation and undertaking, by
and on the part of Compost, Miami and Bedminster, under Section
13.03.01(H), Section 13.03.02(H) and Section 13.03.02(L) of this
Agreement, to pay and discharge, to and for the benefit of Lionhart,
LHI and GEP, at the Term Loan Closing and the Ancillary Transactions
Closing, on the Closing Date, the Closing Costs attributable to the
execution, delivery and consummation of the CCF Agreement, the Credit
Documents and the Supplemental Definitive Documents; and,
(c) Deal Commitment Fee. The duty, obligation and undertaking,
by and on the part of Compost, Miami and Bedminster, under Section
13.03.03(G) of the this Agreement, to pay and discharge, to and for the
benefit of Lionhart, at the Term Loan Closing and the Ancillary
Transactions Closing, on the Closing Date, the Deal Commitment Fee;
and,
(d) Debentures-Accrued Cumulative Interest. The duty,
obligation and undertaking, by and on the part of Compost, as provided
under Section 13.03.03(A)(7), to pay and deliver, to and for the
benefit of Lionhart, at the Term Loan Closing and the Ancillary
Transactions Closing, on the Closing Date, the Accrued Cumulative
Interest attributable to the Outstanding Debentures; and,
(e) Purchase Price-Section 6.1 Shares. The duty, obligation
and undertaking, by and on the part of Compost, as provided under
Section 13.03.03(A)(12), to pay and discharge, to and for the benefit
of Lionhart, the Purchase Price, for and with respect to the purchase
and redemption by Compost from Lionhart of the Section 6.1 Shares, at
the Term Loan Closing and Ancillary Transactions Closing on the Closing
Date; and,
(f) Puts. The duty, obligation and undertaking, by and on the
party of Compost, 1) to pay and deliver the Put Purchase Price, as
provided and contemplated under Section 9.2.3(b) of this Agreement,
upon the exercise of any Put Option # 1, pursuant to the terms and
subject to the conditions as are set forth in Article IX of this
Agreement, and 2) to pay and deliver the Put Purchase Price, as
provided and contemplated under Section 10.2.2(b) of this Agreement,
upon the exercise of any Put Option # 2, pursuant to the terms and
subject to the conditions as are set forth in Article X of this
Agreement; and,
(g) Miscellaneous Material Undertakings. All other such
monetary, pecuniary and financial duties, obligations, promises and/or
covenants to pay or discharge, and all liabilities, responsibilities,
debts and
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undertakings, by and on the part of Compost and/or Miami
and/or Bedminster, that are owed or owing to or that may be owed or
owing to and for the benefit of Lionhart and/or LHI and/or GEP, and
their respective successors and assigns:
(i) As provided under and pursuant to,
and/or that relate to or arise from, 1) the Mortgage, 2) the
Mortgage Note, 3) this Agreement, 4) the Compost-Miami
Guaranty, 5) the Security Agreement, 6) the Compost Stock
Pledge Agreement (Compost Common Stock), 7) the Compost Stock
Pledge Agreement (Miami Common Stock) 8) the Compost Stock
Pledge Agreement (Bedminster Common Stock), 9) any of the
Credit Documents, 10) any of the Definitive Supplemental
Documents, or 11) any and all of the Obligations; and/or,
(ii) Any and all other loans, advances,
credit, debts, liabilities, obligations, covenants and duties,
by Compost, Miami and/or Bedminster, that are owed or owing or
that may be owed or owing to or for the benefit of Lionhart,
LHI and/or GEP, of any kind or nature, present or future
(including, without limitation, any interest accruing thereon
after maturity, or after the filing of any petition in
bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding relating to or arising from
Compost, Miami and/or Bedminster, whether or not a claim for
post-filing or post-petition interest is allowed in any such
proceeding), whether or not evidenced by any note, guaranty or
instrument, whether arising under any agreement, instrument or
document, whether or not for the payment of money, whether
arising by reason of any extension of credit, opening of a
letter of credit, loan or guarantee, or in any other manner,
whether direct or indirect, absolute or contingent, joint or
several, due or to become due, now existing or hereafter
arising, and any amendments, extensions, renewals, or
increases and all costs and expenses of Lionhart, LHI and/or
GEP incurred in the documentation, negotiation, modification,
enforcement, collection or otherwise in connection with any of
the foregoing Indebtedness, including, without limitation, any
and all reasonable attorneys' fees and other reasonable
professional and para-professional fees incurred by or on the
part of Lionhart, LHI and/or GEP.
18.01.02. Obligations. The term "Obligations," for purposes of this
Agreement, the Credit Documents and the other Definitive Supplemental shall mean
and include all duties, obligations, promises, agreements, covenants,
representations and warranties, and all other undertakings (including, without
limitation, all Indebtedness), by and on the part of Compost and/or Miami and/or
Bedminster, that are owed or owing or that may be owed or owing to (and that are
required to be performed and discharged for the benefit of) Lionhart and/or LHI
and/or GEP, and all successors and assigns thereof, as provided under and
pursuant to, and/or that relate to or arise from, 1) the Mortgage, 2) the
Mortgage Note, 3) this Agreement, 4) the Compost-Miami Guaranty, 5) the Security
Agreement, 6) the Compost Stock Pledge Agreement (Compost Common Stock), 7) the
Compost Stock Pledge Agreement (Miami Common Stock) 8) the Compost Stock Pledge
Agreement (Bedminster Common Stock), 9) any of the Credit Documents, and/or 10)
any of the Definitive Supplemental Documents, including, without limitation, and
in addition to all other such duties, obligations, promises, agreements,
covenants, representations and warranties, and all other undertakings that are
set forth therein or prescribed thereunder, all such duties, obligations,
promises, agreements, covenants, representations and warranties and/or
undertakings of or by Compost, Miami and/or Bedminster, that are owed or owing
or that may be owed or owing to Lionhart, LHI and/or GEP, that are set forth in
or are prescribed under, and/or that relate to or arise from, the following:
(a) Compost-Lionhart Warrants (#1-#6). The Compost-Lionhart
Warrant # 1, the Compost-Lionhart Warrant # 2, the Compost-Lionhart
Warrant # 3, the Compost-Lionhart Warrant # 4, the Compost-Lionhart
Warrant # 5 and/or the Compost-Lionhart Warrant # 6, as provided and
otherwise contemplated under Article VIII of the this Agreement; and,
(b) Put Option # 1. The Put Option # 1, as provided and
otherwise contemplated under Article IX of the CCF Agreement; and,
(c) Put Option # 2. The Put Option # 2, as provided and
otherwise contemplated under Article X of the CCF Agreement; and,
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(d) Compost-Miami Guaranty. The Compost-Miami Guaranty, as
provided and otherwise contemplated under Section 13.03.03(K) of this
Agreement; and,
(e) Compost Stock Pledge Agreement (Compost Common Stock). The
Compost Stock Pledge Agreement (Compost Common Stock), as defined,
provided and contemplated under Section 1.1.33 of this Agreement; and,
(f) Compost Stock Pledge Agreement (Miami Common Stock). The
Compost Stock Pledge Agreement (Miami Common Stock), as defined,
provided and contemplated under Section 1.1.34 of this Agreement; and,
(g) Compost Stock Pledge Agreement (Bedminster Common Stock).
The Compost Stock Pledge Agreement (Bedminster Common Stock), as
defined, provided and contemplated under Section 1.1.32 of this
Agreement; and,
(h) Security Agreement. The Security Agreement, as defined,
provided and contemplated under Section 1.1.130 of this Agreement; and,
(i) Debentures/Debenture Purchase Agreement. The Debentures
and Debenture Purchase Agreement, as those terms are defined
respectively under Section 1.1.40 and Section 1.1.41 of this Agreement;
and,
(j) Series B Preferred Stock. The Series B Preferred Stock,
including the Series B Preferred Shares Subscription Agreement and the
Designation of Rights of Series B Preferred Stock, as those terms are
defined respectively under Section 1.1.131, Section 1.1.132 and Section
1.1.43 of this Agreement; and,
(k) Director Appointment Agreement. The Director Appointment
Agreement, as defined, provided and contemplated under Section 1.1.44
of this Agreement; and,
(l) Registration Rights Agreement. The Registration Rights
Agreement, as defined, provided and contemplated under Section 1.1.120
of this Agreement; and,
(m) General Indemnification Undertakings. Any and all
indemnification duties, obligations and/or undertakings that are set
forth in or that relate to or arise from Article XIV and/or Article XVI
of this Agreement; and,
(n) General Affirmative/Negative Covenants. Any and all
affirmative and negative duties, covenants and undertakings that are
set forth in, or that relate to or arise from, Article XVII of this
Agreement; and,
(o) General Representations and Warranties. Any and all
affirmative and negative representations and warranties that are set
forth, or that relate to or arise from, Article XI of this Agreement;
and,
(p) Miscellaneous Material Undertakings. All duties,
obligations, promises, agreements, covenants, representations and
warranties, and all other undertakings, by and on the part of Compost
and/or Miami and/or Bedminster, that are owed or owing or that may be
owed or owing to (and that are required to be performed and discharged
for the benefit of) Lionhart and/or LHI and/or GEP, and their
respective successors and assigns:
(i) As provided under and pursuant to,
and/or that relate to or arise from, 1) the Mortgage, 2) the
Mortgage Note, 3) this Agreement, 4) the Compost-Miami
Guaranty, 5) the Security Agreement, 6) the Compost Stock
Pledge Agreement (Compost Common Stock), 7) the Compost Stock
Pledge Agreement (Miami Common Stock) 8) the Compost Stock
Pledge Agreement (Bedminster Common Stock), 9) any of the
Credit Documents, and/or 10) any of the Definitive
Supplemental Documents; and/or,
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(ii) Any and all other loans, advances,
credit, debts, liabilities, obligations, representations,
warranties, covenants and duties, and all other undertakings,
that are owed or owing or that may be owed or owing at any
time by Compost, Miami and/or Bedminster to or for the benefit
of Lionhart, LHI and/or GEP, of any kind or nature, present or
future (including, without limitation, any interest accruing
thereon after maturity, or after the filing of any petition in
bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding relating to or arising from
Compost, Miami and/or Bedminster, whether or not a claim for
post-filing or post-petition interest is allowed in any such
proceeding), whether or not evidenced by any note, guaranty or
instrument, whether arising under any agreement, instrument or
document, whether or not for the payment of money, whether
arising by reason of any extension of credit, opening of a
letter of credit, loan or guarantee, or in any other manner,
whether direct or indirect, absolute or contingent, joint or
several, due or to become due, now existing or hereafter
arising, and any amendments, extensions, renewals, or
increases and all costs and expenses of Lionhart, LHI and/or
GEP incurred in the documentation, negotiation, modification,
enforcement, collection or otherwise in connection with any of
the foregoing Indebtedness and/or Obligations, including,
without limitation, any and all reasonable attorneys' fees and
other reasonable professional fees incurred by or on the part
of Lionhart, LHI and/or GEP.
Section 18.02. Event(s) of Default-Definition. Any of the following
acts or omissions, or events or circumstances, are and shall be deemed to be a
default, breach and violation (separately and collectively referred to as an
"Event(s) of Default") of and under this Agreement (and all other Credit
Documents and Definitive Supplemental Documents as provided under Section 18.03
of this Agreement) by Compost, Miami and/or Bedminster:
18.02.01. Indebtedness. Any default, breach, violation,
failure and/or omission, by or on the part of Compost and/or Miami and/or
Bedminster, to pay and discharge, on a timely, punctual, complete and full
basis, 1) any Indebtedness under the Mortgage Note, when any such Indebtedness
is or becomes due and payable, including, without limitation, any default,
breach, violation, failure or omission, by or on the part of Compost, Miami
and/or Bedminster, in the payment of any Principal and/or Interest (as those
terms are defined under the Mortgage Note), whether on the Maturity Date (as
defined under the Mortgage Note) or by acceleration, or otherwise, or 2) any
other Indebtedness, when any other such Indebtedness is or becomes due and
payable (pursuant to the terms of this Agreement, or any of the Credit Documents
and/or the Definitive Supplemental Documents.
18.02.02. Obligations. Any default, breach, violation, failure
and/or omission, by or on the part of Compost and/or Miami and/or Bedminster, to
perform, observe or discharge, on a timely, punctual, complete and full basis,
any Obligation (sometimes referred to, for purposes of Article XVIII of this
Agreement, as a "Defaulted Obligation"); provided, however, that:
(a) If any such Defaulted Obligation is not an
Indebtedness-Related Obligation, as that term is defined under
Section 18.02.02(b) of this Agreement, then, notwithstanding
the occurrence of any such Defaulted Obligation, Compost,
Miami and Bedminster shall have the right under this Section
18.02.02(a), commencing on the date of such Defaulted
Obligation, and continuing thereafter for a commercially
reasonable period not to exceed sixty (60) days after the date
of any such Event of Default attributable to such Defaulted
Obligation ("Cure Period"), to proceed diligently to cure any
such Defaulted Obligation, and, whereupon, if Compost, Miami
and/or Bedminster do in fact cure any such Defaulted
Obligation on or before the expiration of such Cure Period,
then any such Defaulted Obligation shall not then or
thereafter be deemed to be an Event of Default.
Notwithstanding the foregoing, if Compost, Miami and/or
Bedminster, after any such Defaulted Obligation, act with
reasonable diligence to cure any such Defaulted Obligation
during the Cure Period and continue to proceed diligently to
cure the same thereafter, then and in that event the Cure
Period shall be deemed to be extended for a commercially
reasonable period to permit Compost, Miami or Bedminster to
cure any such Defaulted Obligation. If Compost, Miami and/or
Bedminster, after any such Defaulted Obligation, do not act
with reasonable diligence to cure any such Defaulted
Obligation during any such Cure Period, then any
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such Defaulted Obligation shall be and constitute an "Event of
Default." If, after the date of any such Defaulted Obligation,
Compost, Miami and/or Bedminster do act with reasonable
diligence to cure any such Defaulted Obligation during any
applicable Cure Period, but fail to cure any such Defaulted
Obligation within any such commercially reasonable period
after any such Cure Period, then any such Defaulted Obligation
shall be and constitute an "Event of Default."
(b) A Defaulted Obligation is an Indebtedness-Related
Obligation, for purposes of Section 18.02.02 of this
Agreement, if any such Defaulted Obligation is, or relates to
or arises from or otherwise involves, directly or indirectly,
any monetary, pecuniary or financial duty, obligation,
agreement, promise, covenant or other undertaking, by or on
the part of Compost, Miami and/or Bedminster, to pay or repay
any Indebtedness that is owed or owing to Lionhart, LHI and/or
GEP, or to pay and discharge any Indebtedness, in whole or in
part, to Lionhart, LHI and/or GEP, under this Agreement, the
Credit Documents and/or the Definitive Supplemental Documents.
18.02.03. Abandonment. Any abandonment by Compost and/or Miami
and/or Bedminster of the Miami Project, the Miami Project Permits, the Miami
Project Financing, the Miami Project Site, and/or the Put or Pay Contract.
18.02.04. False Representation. Any material misrepresentation
or warranty, or any false representation or warranty, made or otherwise asserted
by Compost and/or Miami and/or Bedminster, to Lionhart and/or LHI and/or GEP, as
set forth in or under this Agreement, the Credit Documents and/or the Definitive
Supplemental Documents.
18.02.05. Judgment. A judgment, writ or warrant or other order
of attachment, garnishment, levy or execution, or similar process, in excess of
US $100,000 individually, or in excess of US $200,000 cumulatively, shall, after
the Effective Date of this Agreement, be entered and become a lien, or issued or
levied or assessed against, Compost, Miami and/or Bedminster, and/or the
Mortgaged Miami Site or Collateral, or any part thereof (as those terms are
defined respectively under the Mortgage), or any of the Collateral (as that term
is defined under the Security Agreement), or any of the Collateral (as that term
is defined respectively under the Compost Stock Pledge Agreement (Compost Common
Stock), the Compost Stock Pledge Agreement (Miami Common Stock), the Compost
Stock Pledge Agreement (Bedminster Common Stock)).
18.02.06. Voluntary Bankruptcy. If Compost, Miami and/or
Bedminster shall (1) voluntarily be adjudicated a bankrupt or insolvent, (2)
seek or consent to the appointment of a receiver, trustee or conservator for any
or all of them, or for all or any part of their respective properties or assets,
(3) file a petition seeking relief under the bankruptcy or similar laws of the
United States (under Title 11 of the United States Bankruptcy Code, or
otherwise), or any state or any other competent jurisdiction, (4) make any
general assignment for the benefit of creditors, or (5) admit in writing that
any or all of them is or are bankrupt or insolvent or unable to pay debts as
such debts mature.
18.02.07. Involuntary Bankruptcy. If any United States
Bankruptcy Court or any other court of competent jurisdiction shall enter an
order, judgment, or decree appointing, a receiver or trustee for Compost, Miami
and/or Bedminster, or for all or any part of any or all of their respective
properties or assets, or approving a petition filed against Compost, Miami
and/or Bedminster seeking relief under Title 11 of the United States Bankruptcy
Code, or other similar laws of the United States or any state or other competent
jurisdiction, and such order, judgment or decree shall remain in force
undischarged for a period of sixty (60) or more days.
18.02.08. Dissolution/Cessation of Business. If Compost, Miami
and/or Bedminster shall dissolve or liquidate, or otherwise cease doing
business, and any such dissolution or liquidation or cessation of business is
not pursuant to, or in connection with, a merger or consolidation that is
approved and consented to in advance by Lionhart, LHI and GEP.
18.02.09. Impairment. Either Compost, Miami and/or Bedminster
knowingly, willfully, recklessly or negligently does or permits or suffers to be
done, anything that may reasonably be expected to impair, weaken or diminish (in
whole or in part) the security, value and/or lien of the Mortgage or of any
collateral that is pledged to or in which a security interest is granted to
Lionhart, LHI and/or GEP under this Agreement, the Credit Documents and/or the
Definitive Supplemental Documents, as security and/or collateral for the payment
and repayment of any Indebtedness or the performance of any Obligations under
this Agreement, the Credit Documents and/or the Definitive Supplemental
Documents.
18.02.10. General. Subject to Section 18.02.02 of this
Agreement, if Compost, Miami and/or Bedminster
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fail or omit to perform, observe or discharge, or otherwise default in, any
other duty or undertaking of Compost, Miami and/or Bedminster, that is set forth
under this Agreement, any of the Credit Documents and/or the any of the
Definitive Supplemental Documents, or otherwise commit any other act (or engage
in any other omission) of default under this Agreement, any of the Credit
Documents and/or the any of the Definitive Supplemental Documents.
Section 18.03. Cross Default(s). Any Event of Default, by or on the
part of Compost, Miami and/or Bedminster (and/or their respective successors and
assigns), of any of their respective Indebtedness and/or Obligations, as
provided under Section 18.02 of this Agreement and subject to Section 18.02.02
of this Agreement, is and shall be, and shall be deemed and construed
conclusively as, a default by each "Signatory Compost Party" who or which is a
signatory party (and all successors and assigns of each such Signatory Compost
Party) under all Credit Documents, and all Definitive Supplemental Documents.
The term "Signatory Compost Party," for purposes of this Section 18.03, means,
and shall be defined to include, 1) Compost, 2) Miami and 3) Bedminster (and/or
their respective successors and assigns).
Section 18.04. Remedies. Upon any Event of Default, then and subject to
Section 18.02.02 of this Agreement, Lionhart, LHI and GEP shall have the right,
but not the obligation, in their sole discretion and option, to exercise any one
(1) or more of the following remedies, in addition to any other rights or
remedies that Lionhart, LHI and/or GEP may be entitled to assert and/or claim,
at law or in equity:
18.04.01. Acceleration-Indebtedness. Lionhart, LHI and GEP
may, from time to time and at any time(s), declare the entire unpaid amount or
portion of any, some or all of the Indebtedness (including, without limitation,
the unpaid amount or portion of all Principal and Interest under the Mortgage
Note), immediately due and payable, without further notice or demand, or
presentment, protest, notice of protest or notice of dishonor (of which Compost,
Miami and Bedminster each hereby expressly waive any such notice, demand,
presentment, protest, notice of protest or notice of dishonor), whereupon all
such Indebtedness, as accelerated under this Section 18.04.01, shall become
immediately due and payable in full.
18.04.02. Acceleration-Obligations. Lionhart, LHI and GEP may,
from time to time at any time(s), declare any and all Obligations, that have not
been theretofore performed and discharged, immediately due and required to be
performed and discharged immediately, without further notice or demand, or
presentment, protest, notice of protest or notice of dishonor (of which Compost,
Miami and Bedminster each hereby expressly waive any such notice, demand,
presentment, protest, notice of protest or notice of dishonor), whereupon all
such Obligations, as accelerated under this Section 18.04.02, shall become due
and immediately required to be performed and discharged completely.
18.04.03. Non-Exclusive Rights/Remedies/Reasonable
Professional Fees. Lionhart, LHI and GEP may, from time to time and at any
time(s), exercise any rights or remedies that Lionhart, LHI and/or GEP is or are
entitled or may be entitled to assert, under 1) this Agreement, 2) the Credit
Documents, 3) the Definitive Supplemental Documents and/or 4) any applicable
law; and, Lionhart, LHI and GEP shall have the right to recover from Compost,
Miami and Bedminster, jointly and severally, and Compost, Miami and Bedminster
shall have the affirmative duty and obligation, on a joint and several basis, to
pay or otherwise reimburse Lionhart, LHI and GEP for, any and all reasonable
attorneys' fees and other professional fees, as well as costs of collection,
that are or may be incurred by Lionhart, LHI and/or GEP in the exercise of any
of their rights or remedies as contemplated under Article XVIII of this
Agreement.
18.04.04. Lawsuits/Proceedings. Lionhart, LHI and GEP each
shall have the power and authority to institute, commence, maintain and
otherwise prosecute any suits, Actions, lawsuits, claims and proceedings against
Compost, Miami and/or Bedminster, as Lionhart, LHI and GEP may deem advisable.
18.04.05. Remedies-Cumulative and Concurrent. No right, power
or remedy conferred upon or reserved to Lionhart, LHI and/or GEP, by or under
this Agreement, or any of the Credit Documents or Definitive Supplemental
Documents, or under any applicable law, is exclusive of any other right, power
or remedy, but each and every such right, power and remedy shall be cumulative
and concurrent and shall be in addition to any other right, power and remedy
provided under this Agreement, or any of the Credit Documents or Definitive
Supplemental Documents, or under any applicable law, as now or hereafter
existing at law, in equity or by statute. The rights and remedies of Lionhart,
LHI and GEP, as provided under this Agreement, the Credit Documents and/or the
Definitive Supplemental Documents, and/or as may be available to Lionhart, LHI
and/or GEP under applicable law, are and shall be cumulative and concurrent, and
may be pursued separately, successively or together against Compost, Miami
and/or Bedminster,
Page 104 of 107 Pages
<PAGE>
or any one or more of them, at the sole discretion of Lionhart, LHI and GEP, and
may be executed as often a occasion therefor shall arise. The failure to
exercise any such right or remedy shall in no event be construed as a waiver or
release thereof.
18.04.06. Delays or Omissions. No delay or omission of
Lionhart, LHI and/or GEP to exercise any right, power or remedy accruing upon
any default shall exhaust or impair any such other right, power or remedy or
shall be construed to waive any such default or to constitute acquiescence
therein. Every right, power and remedy given to Lionhart, LHI and GEP shall be
exercised from time to time and often as may be deemed expedient by Lionhart,
LHI and GEP.
18.04.07. Waiver/Forbearance. No waiver of any default
hereunder shall extend to or affect any subsequent or any other default then
existing, or impair any rights, powers or remedies available in connection with
such other or subsequent default. If Lionhart, LHI and/or GEP, (i) grant
forbearance or an extension of time or other accommodation for the payment of
any Indebtedness or the performance or observance of any Obligations, (ii) take
other or additional security for the payment thereof, (iii) waive or do not
exercise any right granted under this Agreement, the Credit Documents and/or the
Definitive Supplemental Documents, or under applicable law, (iv) release any
part of any collateral or any other instrument securing the Indebtedness or
Obligations; or (v) make or consent to any agreement changing the terms of this
Agreement, the Credit Documents and/or the Definitive Supplemental Documents,
then, and notwithstanding any such act or omission, no such act or omission
shall release, discharge, modify, change or affect the original Indebtedness
and/or Obligations of Compost, Mortgagor and/or Bedminster, under this
Agreement, the Credit Documents and/or the Supplemental Definitive Documents. No
such act or omission shall preclude Lionhart, LHI and/or GEP from exercising any
right, power or privilege herein granted or intended to be granted in case of
any default then existing or of any subsequent default.
18.04.08. Strict Performance. Any failure by Lionhart, LHI
and/or GEP to insist upon strict performance by Compost, Miami and/or Bedminster
of any of the terms or provisions of this Agreement, the Credit Documents and/or
the Definitive Supplemental Documents, shall not be deemed to be a waiver of any
of the terms or provisions of this Agreement, the Credit Documents and/or the
Definitive Supplemental Documents, and Lionhart, LHI and GEP shall have the
right thereafter to insist upon strict performance by Compost, Miami and
Bedminster of and under this Agreement, the Credit Documents and/or the
Definitive Supplemental Documents. Failure of Lionhart, LHI and/or GEP to
exercise any option for acceleration of any Indebtedness or Obligations,
following any default, or to exercise any other option granted to Lionhart, LHI
and GEP hereunder, or the acceptance by Lionhart, LHI and GEP of partial
payments or late payments with respect to any Indebtedness and/or partial
performance or late performance of any Obligations, shall not constitute a
waiver of any such default. Acceleration of maturity, once claimed or asserted
by Lionhart, LHI and GEP, may, at the option of Lionhart, LHI and GEP, be
rescinded by written acknowledgment to that effect by Lionhart, LHI and GEP, but
the tender and acceptance of partial payment or partial performance alone shall
not in any way affect or rescind any such acceleration of maturity.
18.04.09. Post-Maturity Payments/Performances. The acceptance
by Lionhart, LHI and GEP, of the payment of any Indebtedness or the performance
of any Obligation after any due or maturity date, as provided under this
Agreement, the Credit Documents and/or the Definitive Supplemental Documents, is
not and shall not be construed as a waiver by Lionhart, LHI and/or GEP of their
respective right to require the full and prompt payment, when due, of all other
Indebtedness, or the full and complete performance, when due, of all other
Obligations, or to exercise any legal rights that Lionhart, LHI and/or GEP may
have to collect any unpaid balance of the outstanding Indebtedness or to require
the performance of any Obligations. If Lionhart, LHI and GEP hold any security
for any Indebtedness or Obligation secured under any Credit Documents and/or
Definitive Supplemental Documents, Lionhart, LHI and GEP may enforce the sale
thereof, at the sole option of Lionhart, LHI and GEP, either before or
contemporaneously therewith.
18.04.10. Releases and Extensions. Without affecting the
liability of any person, including Compost, Miami and Bedminster, for the
payment of any Indebtedness or the performance of any Obligation, or any
security or collateral under any of the Credit Documents and/or the Definitive
Supplemental Documents, Lionhart, LHI and GEP shall have the right, from time to
time, and without notice, 1) to release any Person liable for the payment of any
Indebtedness or the performance of any Obligations, 2) extend the time or
otherwise alter the terms of payment of any of the Indebtedness or of
performance of any of the Obligations, 3) accept original, supplemental,
alternative or
Page 105 of 107 Pages
<PAGE>
additional security therefor of any kind, including deeds of trust or other
mortgages, 4) alter, substitute, or release any security or collateral that is
securing the Indebtedness or the Obligations, or 5) join in any subordination or
other agreement affecting the priorities of any security or collateral that
otherwise secures the payment of any Indebtedness or the performance of any
Obligations.
ARTICLE XIX
UNTITLED
[This Article XIX is intentionally left blank.]
ARTICLE XX
MISCELLANEOUS AND GENERAL
Section 20.01. Further Actions. At any time and from time to time,
Lionhart, LHI and GEP, and Compost, Miami and Bedminster (hereinafter referred
to sometimes in this Article XVIII as the "Party" and/or "Parties") each agrees
to take such actions and to execute and deliver such documents as may be
required under this Agreement, the Credit Documents and/or the Definitive
Supplemental Documents, and to take such other reasonable actions and to execute
and deliver any other usual and customary documents (without additional material
expense to any Party to this Agreement) as may be reasonably necessary and/or
requested to effectuate the purposes of this Agreement, the Credit Documents
and/or the Definitive Supplemental Documents.
Section 20.02. Availability of Equitable Remedies. Since a breach,
default or violation of any term or provision, or any promise, covenant or other
undertaking, of or under this Agreement, the Credit Documents and/or the
Definitive Supplemental Documents, could not adequately be compensated by money
damages, any Party shall be entitled, either before or after the Closing Date,
in addition to any other right or remedy available to it, to an injunction
restraining such breach or a threatened breach and to specific performance of
any such provision of this Agreement, the Credit Documents and/or the Definitive
Supplemental Documents, and in either case no bond or other security shall be
required in connection therewith, and the Parties hereby consent to the issuance
of such an injunction and to the ordering of specific performance.
Section 20.03. Modification. This Agreement, the Definitive
Supplemental Documents (including the Credit Documents), and all Appendices,
Exhibits and schedules of and to this Agreement, and all other documents
delivered pursuant to this Agreement, the Credit Documents and/or the
Supplemental Definitive Documents, set forth the entire understanding of the
Parties with respect to the subject matter hereof, supersede all existing
agreements among them concerning such subject matter, and may be modified only
by a written instrument duly executed by each Party (with the approval of the
Board of Directors of each corporate Party and the approval of the Managers or
Board of Managers or Directors of any limited liability company Party).
Section 20.04. Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be mailed by
certified mail, return receipt requested (or by the most nearly comparable
method if mailed from or to a location outside of the United States), or
delivered against receipt to the Party to whom it is to be given, by direct hand
delivery or facsimile, with a copy to each of the other Parties hereto, to the
following addresses:
To Compost: Compost America Holding Company, Inc.
320 Grand Avenue
Englewood, New Jersey 07631
Attn: Roger E. Tuttle, President
Tx: 201.541.9393
Page 106 of 107 Pages
<PAGE>
Fx: 201.541.1303
Copy to:
Greenberg Traurig
2005 Market Street
Suite 2050
Philadelphia, Pennsylvania 19103
Attn: Theodore W. Mason, Esq.
Tx: 215.988.7805
Fx: 215.988.7801
To Miami: Miami Recycling and Composting Co., Inc.
c/o: Compost America Holding Company, Inc.
320 Grand Avenue
Englewood, New Jersey 07631
Attn: Roger E. Tuttle, President
Tx: 201.541.9393
Fx: 201.541.1303
Copy to:
Greenberg Traurig
2005 Market Street
Suite 2050
Philadelphia, Pennsylvania 19103
Attn: Theodore W. Mason, Esq.
Tx: 215.988.7805
Fx: 215.988.7801
To Bedminster: Bedminster Seacor Services Miami Corporation
c/o: Compost America Holding Company, Inc.
320 Grand Avenue
Englewood, New Jersey 07631
Attn: Roger E. Tuttle, President
Tx: 201.541.9393
Fx: 201.541.1303
Copy to:
Greenberg Traurig
2005 Market Street
Suite 2050
Philadelphia, Pennsylvania 19103
Attn: Theodore W. Mason, Esq.
Tx: 215.988.7805
Fx: 215.988.7801
To: Lionhart: Lionhart Global Appreciation Fund, Ltd.
c/o: John Thomas Drics, Esq.
111 Monument Circle
Suite 312
Indianapolis, Indiana 46204
Page 107 of 107 Pages
<PAGE>
Tx: 317.972.1112
Fx: 317.972.1118
Copy To:
O'Bryan, Brazill & Drics, L.L.P.
111 Monument Circle
Suite 312
Indianapolis, Indiana 46204
Attn: Timothy P. Brazill, Esq.
Tx: 317.972.1112
Fx: 317.972.1118
To: LHI: Lionhart Investments, Ltd.
c/o: John Thomas Drics, Esq.
111 Monument Circle
Suite 312
Indianapolis, Indiana 46204
Tx: 317.972.1112
Fx: 317.972.1118
Copy To:
O'Bryan, Brazill & Drics, L.L.P.
111 Monument Circle
Suite 312
Indianapolis, Indiana 46204
Attn: Timothy P. Brazill, Esq.
Tx: 317.972.1112
Fx: 317.972.1118
To: GEP: Global EarthFund Partners, Ltd.
c/o: John Thomas Drics, Esq.
111 Monument Circle
Suite 312
Indianapolis, Indiana 46204
Tx: 317.972.1112
Fx: 317.972.1118
Copy To:
O'Bryan, Brazill & Drics, L.L.P.
111 Monument Circle
Suite 312
Indianapolis, Indiana 46204
Attn: Timothy P. Brazill, Esq.
Tx: 317.972.1112
Fx: 317.972.1118
Any notice given to any corporate Party shall be addressed to the person as
provided in this Section 20.04. Notice to the estate of any Party shall be
sufficient if addressed to the persons as provided in this Section 20.04. Any
notice or other communication given by certified mail (or by such comparable
method) shall be deemed given on the fifth (5th) day after the date of
certification thereof (or comparable act), except for a notice changing a
Party's address which will be deemed given at the time of receipt
Page 108 of 107 Pages
<PAGE>
thereof, and any notice given by direct hand or facsimile delivery shall be
deemed given at the time of receipt or transmission thereof.
Section 20.05. Waivers. (a) No failure or delay on the part of any
Party in exercising any right, power, or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power, or remedy preclude any other or further exercise thereof or the exercise
of any other right, power, or remedy hereunder. Any waiver by any Party of a
breach of any provision of this Agreement shall not operate as or be construed
to be a waiver of any other breach of that provision or of any breach of any
other provision of this Agreement. The failure of a Party to insist upon strict
adherence to any term of this Agreement on one or more occasions will not be
considered a waiver or deprive that Party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement. The remedies
herein are cumulative and not exclusive of any remedies provided by law.
(b) Any Party to this Agreement may (i) extend the time for the
performance of any of the obligations or duties or other acts of any other Party
to this Agreement, (ii) waive any inaccuracies in the representations and
warranties set forth in this Agreement, the Definitive Supplemental Documents,
the Credit Documents, or any other document delivered hereof, and (iii) waive
compliance with any of the agreements, conditions or other terms or provisions
set forth herein. Any such extension or waiver shall be valid, and may be relied
upon by all Parties to this Agreement, if and only if any such extension or
waiver is set forth in an written instrument and duly signed by the Party to be
bound thereby.
Section 20.06. Binding Effect. The terms and provisions of this
Agreement shall be binding upon and inure to the benefit of the Parties to this
Agreement, and their respective successors and assigns, and shall inure to the
benefit of the Indemnified Parties (under Article XVI of this Agreement) and
their respective successors and assigns.
Section 20.07. Confidential Nature of Information. After Term Loan
Closing and the Ancillary Transactions Closing on the Closing Date, or if this
Agreement is terminated rightfully before the Term Loan Closing and/or the
Ancillary Closing Transactions on the Closing Date, each Party promises, agrees
and covenants that it will treat in confidence all documents, materials and
other information which it shall have obtained regarding the other Party during
the course of the negotiations leading to the consummation of the transactions
contemplated herein (whether obtained before or after the date hereof), the
investigation provided for herein, and the preparation of this Agreement, the
Credit Documents, the Definitive Supplemental Documents, the Transactions
Documents, and any other related documents. The obligation of each Party to
treat such documents, materials and other information in confidence shall not
apply to any information which (i) such Party can demonstrate was already
lawfully in its possession prior to the disclosure thereof by the other Party,
(ii) is known to the public and did not become so known through any violation of
a legal obligation, (iii) became known to the public through no fault of such
Party, (iv) is later lawfully acquired by such Party from other sources, (v) is
required to be disclosed under the provisions of any state or United States
statute or regulation issued by a duly authorized agency, board or commission
thereof, or (vi) is required to be disclosed by a rule or order of any court of
competent jurisdiction.
Section 20.08. No Third Party Beneficiaries. This Agreement does not
create, and shall not be construed as creating, any rights enforceable by any
person not a Party to this Agreement, except as provided expressly under this
Agreement.
Section 20.09. Separability. If any provision of this Agreement is
invalid, illegal, or unenforceable, the balance of this Agreement shall remain
in effect, and if any provision is inapplicable to any person or circumstance,
it shall nevertheless remain applicable to all other persons and circumstances.
Section 20.10. Applicable Law, Jurisdiction and Venue. Compost, Miami
and Bedminster, and Lionhart, LHI and GEP, each hereby agrees, promises and
covenants, as follows:
20.10.01. This Agreement, and the Credit Documents (except as
provided in the Mortgage) and Definitive Supplemental Documents shall be
governed by, construed in accordance with, and shall be enforced under, the laws
of the State of New Jersey, exclusive of its rules relating to conflict of laws.
20.10.02. Subject to applicable conflict of laws principles,
Compost, Miami, Bedminster, Lionhart, LHI and GEP each shall accept venue with
respect to all claims, actions or lawsuits that relate to or arise from this
Agreement, in any state court or U.S. Court of competent jurisdiction that sits
in Newark, New Jersey. Compost, Miami, Bedminster, Lionhart, LHI and GEP each
hereby, and irrevocably and unconditionally submits to the jurisdiction of any
such New Jersey court or U.S. Court sitting in Newark, New Jersey, and any
appellate court with jurisdiction
Page 109 of 107 Pages
<PAGE>
thereover, in any action or proceeding relating to or arising from this
Agreement, the CCF Agreement (except as provided in the Mortgage), the Credit
Documents and/or the Definitive Supplemental Documents, or for the recognition
or enforcement of any judgment, and Compost hereby, and irrevocably and
unconditionally, agrees, promises and covenants that all such claims in respect
of any such action or proceeding shall be heard, determined and adjudicated in
by any such New Jersey court or, to the extent permitted by applicable law, by
any such U.S. Court. Compost hereby agrees, promises and covenants that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
20.10.03. Compost, Miami, Bedminster, Lionhart, LHI and GEP
each hereby, and irrevocably and unconditionally, waives, to the fullest extent
under applicable law, any defense or objection that it may now or hereafter have
1) to the laying of venue of any suit, action or proceeding relating to or
arising from this Mortgage Note, the CCF Agreement, the Credit Documents (except
as provided under the Mortgage) and/or the Definitive Supplemental Documents, in
any such New Jersey court or U.S. Court sitting in Newark, New Jersey, or 2) to
the personal jurisdiction and/or preferred and proper venue of any such New
Jersey court or any such U.S. Court in Newark, New Jersey.
SECTION 20.11. JURY WAIVER. COMPOST, MIAMI AND BEDMINSTER, AND
LIONHART, LHI AND GEP, EACH DO HEREBY KNOWINGLY, VOLUNTARILY, IRREVOCABLE,
UNCONDITIONALLY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT, THE CREDIT DOCUMENTS AND THE DEFINITIVE SUPPLEMENTAL DOCUMENTS,
OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF ANY PERSON. THIS IRREVOCABLE WAIVER OF THE RIGHT TO A
JURY TRIAL IS A MATERIAL INDUCEMENT FOR LIONHART, LHI AND/OR GEP TO DELIVER THE
CREDIT, AND TO EXECUTE AND DELIVER, AND OTHERWISE CONSUMMATE THE TRANSACTIONS
CONTEMPLATED UNDER, THIS AGREEMENT, THE CREDIT DOCUMENTS AND THE DEFINITIVE
SUPPLEMENTAL DOCUMENTS.
Section 20.12. Counterparts. This Agreement may be executed in two (2)
or more counterparts each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument and agreement.
Section 20.13. Capitalized Terms. Any terms which are capitalized in
this Agreement shall have the meaning of such capitalized term as set forth in
this Agreement and in any applicable document referred to in this Agreement, and
any document which is referred to in this Agreement shall be deemed to be
incorporated by reference in this Agreement.
Section 20.14. Headings. The sections and other headings contained in
this Agreement are for reference purposes only and shall not effect in any way
the construction, meaning or interpretation of this Agreement.
Section 20.15. Exhibits/Schedules/Appendices. All exhibits, schedules
and appendices, that are attached to or are otherwise part of this Agreement,
are incorporated by reference and made a part hereof in the same manner as if
such appendices, exhibits and/or schedules are set forth in their entirety in
this Agreement.
Section 20.16. Facsimile Execution. This Agreement and or any exhibit,
appendix, schedule or other document, instrument or agreement which is required
to be delivered in conjunction with this Agreement (including, without
limitation, the Credit Documents and/or the Definitive Supplemental Documents),
may be executed by any Party by means of telephonic facsimile transmission, and
all Parties to this Agreement are entitled and authorized to rely on any such
telephonic facsimile transmission signature as an original signature.
Section 20.17. Assignment. This Agreement, and the rights of Lionhart,
LHI and/or GEP that relate to or arise from this Agreement, are and shall be
assignable by Lionhart, LHI and GEP, in their respective sole discretion.
Compost, Miami and Bedminster shall not have any right under this Agreement to
assign any rights or to delegate any duties under this Agreement, and Compost,
Miami and Bedminster shall not assign any rights or delegate any duties under
this Agreement, without the advance written consent of Lionhart, LHI and GEP
(which may be granted or withheld in the sole discretion of Lionhart, LHI and
GEP).
Section 20.18. Expenses. Except as otherwise specified or provided for
in this Agreement, all costs and expenses,
Page 110 of 107 Pages
<PAGE>
including, without limitation, fees and disbursements of counsel, financial
advisors and accountants, that are or may be incurred in connection with the
negotiation, execution or delivery of this Agreement, the Credit Documents
and/or the Definitive Supplemental Documents, and/or in connection with the
consummation of the transactions contemplated under this Agreement, the
Definitive Supplemental Documents and/or the Credit Documents, shall be assumed,
paid and discharged by the Party who or which incurs any such costs and
expenses, whether or not the Term Loan Closing and the Ancillary Transactions
Closing shall have occurred on the Closing Date, or otherwise.
Section 20.19. Inter-Creditor Agent. Lionhart, LHI and GEP (hereinafter
referred to sometimes in this Section 20.19 as the "Creditor(s)," pursuant to
the terms and subject to the conditions set forth in an agreement, entitled
"Inter-Creditor Agreement," that is dated and was executed by and among the
Creditors, on or about October 30, 1998, and that is intended to be recorded
promptly hereafter in the Official Records Book or other Public Records of
Miami-Dade County, Florida, and any other appropriate public records as may
determined by the Creditors, each duly appointed GEP, as the their exclusive
agent and power of attorney ("Agent"), which power is coupled with an interest,
for all Creditors, with respect to this Agreement, the CCF Agreement, the Credit
Agreement and the Definitive Supplemental Documents, and the exercise of the
rights and remedies of each Creditor with respect thereto. Pursuant to and as
provided under the Inter-Creditor Agreement, 1) GEP, as Agent for all Creditors,
is authorized and empowered, in their respective name, place and stead, with
full power of substitution, to exercise and perform from time to time, and
without joinder of or by any Creditor, any act, power, duty, right or obligation
whatsoever that any Creditor or the Creditors (under this Agreement, the CCF
Agreement, the Credit Documents and/or the Definitive Supplemental Documents)
may now or hereafter exercise or perform, and to deal in all respects with
Compost, Miami and Bedminster with respect to the transactions evidenced under
this Agreement, the CCF Agreement, the Credit Documents and/or the Definitive
Supplemental Documents; and, 2) Compost, Miami and Bedminster, and any third
party dealing with the Agent, under this Agreement, the CCF Agreement, the
Credit Documents and/or the Definitive Supplemental Documents, shall have the
right to rely upon the power and authority of the Agent to bind each Creditor
with respect to the exercise of remedies or the giving of notices or consents
under and pursuant to this Agreement, the CCF Agreement, the Credit Documents
and/or the Definitive Supplemental Documents.
Signatures:
IN WITNESS WHEREOF, Lionhart, LHI and GEP, by their respective duly
authorized and appointed officers, and Compost, Miami and Bedminster, by their
respective duly authorized and appointed officers, have executed and delivered
this Agreement, on this 30th day of October, 1998, as follows:
Lionhart Global Appreciation Fund, Ltd. Compost America Holding Company, Inc.
- ---------------------------------- -------------------------------------------
Terrence P. Duffy, Director Roger E. Tuttle
President and Chief Executive Officer
Lionhart Investments, Ltd. Miami Recycling and Composting Company, Inc.
- ---------------------------------- -------------------------------------------
Terrence P. Duffy, Director Roger E. Tuttle
President and Chief Executive Officer
Global EarthFund Partners, L.L.C. Bedminster Seacor Services Miami Corporation
- ---------------------------------- -------------------------------------------
Jay A. Duffy, President Roger E. Tuttle
President and Chief Executive Officer
Page 111 of 107 Pages
<PAGE>
Exhibit 99.2
MORTGAGE NOTE
Mortgage Note Pursuant to CCF Agreement
(NEGOTIABLE)
--------------------------------
US $10,500,000.00 Philadelphia, Pennsylvania
October 30, 1998
Principal and Interest Payment:
FOR VALUE RECEIVED, the undersigned, Compost America Holding Company,
Inc. ("Compost"), a New Jersey corporation, Miami Recycling and Composting Co.,
Inc. ("Miami"), a Delaware corporation, and Bedminster Seacor Services Miami
Corporation ("Bedminster"), a Florida corporation (collectively, Compost, Miami
and Bedminster are referred to sometimes in this Mortgage Note as the
"Borrower(s)"), hereby agree, promise and covenant, jointly and severally, to
pay to the order of Lionhart Global Appreciation Fund, Ltd. ("Lionhart"), a
British Virgin Islands international business company, Lionhart Investments,
Ltd. ("LHI"), a United Kingdom limited liability company, and Global EarthFund
Partners, L.L.C. ("GEP"), an Indiana limited liability company (collectively,
Lionhart, LHI and GEP are referred to sometimes in this Mortgage Note as the
"Lender(s)"), and its and their respective participants and/or successors and
assigns, or any holder hereof, on the Maturity Date (as defined in Section 8 of
this Mortgage Note, but in any event no later than October 1, 2000), pursuant to
the terms of this Mortgage Note (and as otherwise contemplated under the Credit,
Capitalization and Financing Agreement ("CCF Agreement"), dated, executed and
consummated on or about October 30, 1998, by and among the Borrowers and the
Lenders, and all Credit Documents ("Credit Documents") and Definitive
Supplemental Documents ("Definitive Supplemental Documents"), as those terms are
defined respectively under the CCF Agreement, the terms of such CCF Agreement,
Credit Documents and Definitive Supplemental Documents of which are hereby
incorporated by reference), the following Principal ("Principal") and Interest
("Interest"):
Principal. The principal sum ("Principal") of US $10,500,000.00,
plus any additional amounts or sums that are required to be added to
the Principal under this Mortgage Note (pursuant to the terms and
subject to the conditions as are set forth in this Mortgage Note, the
CCF Agreement, and/or any of the Credit Documents or Definitive
Supplemental Documents); and,
Interest. Interest, on the unpaid Principal hereof, from time to
time outstanding from the date hereof, until paid and repaid in full,
that is and shall be computed at a fixed rate equal to ten and one-half
percent (10.5%) per annum, and shall be calculated and shall accrue
monthly on and against the actual outstanding amount of the Principal
under this Mortgage Note from time to time, as of the last day of each
calendar month, commencing on the Term Loan Closing on the Closing Date
(as those terms are defined respectively under the CCF Agreement),
based upon a calendar year of three hundred sixty (360) days consisting
of twelve (12) thirty (30) day months; provided, however, upon the
occurrence of an Event of Default (as defined under this Mortgage
Note), the interest rate on this Mortgage Note shall be increased to
twelve and one-half percent (12.5%) per annum, and if any such Default
shall continue for a period of more than ninety (90) days, the interest
rate on this Mortgage Note shall be increased to fifteen percent (15%),
all such interest of which shall be calculated as aforesaid, until such
time as such Event of Default has been cured to the extent permitted,
if at all, under Section 18.02.02 of the CCF Agreement. Interest on any
portion of Principal of this Note, accrued as provided under this
Mortgage Note, shall be payable, together with all Principal due
hereunder, on the Maturity Date, or, if applicable, upon acceleration
of this Mortgage Note after an Event of Default as provided under this
Mortgage Note.
General and Miscellaneous Terms:
Section 1. Definitions. Except as otherwise defined separately in
Mortgage Note, and/or except as otherwise indicated by the context in this
Mortgage Note, any terms that are capitalized in this Mortgage Note shall have
the same definition and meaning as ascribed to such terms in the CCF Agreement.
This Mortgage Note is the same instrument, agreement and
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document that is referred to, and as is otherwise defined as, the Mortgage Note,
under and pursuant to the CCF Agreement, and that is referred to, and as is
otherwise defined as, the Note and/or the Mortgage Note, under and pursuant to
the Mortgage ("Mortgage"), the Security Agreement ("Security Agreement") and the
Compost Stock Pledge Agreement (Compost Common Stock), the Compost Stock Pledge
Agreement (Miami Common Stock) and the Compost Stock Pledge Agreement
(Bedminster Common Stock) ("Stock Pledge Agreements"), all of which are dated
and were consummated and delivered by one (1) or more of the Borrowers, for the
benefit of the Lenders under and pursuant to the CCF Agreement, on or about
October 30, 1998.
Section 2. Payments/Credits. All payments, both of Principal and
Interest, or otherwise, shall be paid in lawful currency of the United States,
or equivalent good and immediately available federal funds, without relief from
valuation and appraisement laws, at the office of the Lenders or its agent at
111 Monument Circle, Suite 312, Indianapolis, Indiana 46204 (or at any other
location as may be instructed periodically, in writing, by the Lenders to the
Borrowers), and, except as provided under Section 5 of this Mortgage Note, each
such payment shall be credited 1) first to accrued Interest under this Mortgage
Note, 2) then and secondly to any Prepayment Fee, if any, as provided under
Section 6 of this Mortgage Note, 3) then and thirdly to any other sums or
charges (exclusive of any Principal payable under this Mortgage Note) payable
under this Mortgage Note, the CCF Agreement and any other applicable Credit
Documents and/or Definitive Supplemental Documents, including, without
limitation, any reasonable attorneys' and other applicable reasonable
professional fees of the Lender (and/or Lionhart or LHI) and other costs of
collection, and 4) then and lastly to the Principal of this Mortgage Note. If
any payment of Principal or Interest on this Mortgage Note shall become due and
payable on a day that is not a Business Day (as that term is defined under the
CCF Agreement), then any such payment shall be made on the next following
Business Day, and such extension of time shall be included in computing interest
or other fees or expenses due hereunder, if any, in connection with any such
payment, or otherwise.
Section 3. Security. This Mortgage Note (and all other "Indebtedness"
and "Obligations" as those terms are defined under Section 18.01 of the CCF
Agreement), and all Principal and Interest and all other sums due to the Lenders
under this Mortgage Note, and the CCF Agreement, the Credit Documents and the
Definitive Supplemental Documents, are secured by, and the holder hereof of this
Mortgage Note is entitled to the benefits of and under, 1) the Mortgage, 2) the
Security Agreement and 3) the Stock Pledge Agreements.
Section 4. Default. An "Event of Default," under this Mortgage Note, is
and shall be defined as, and shall mean and include, any "Event of Default" as
that term is defined under Section 18.02 (and as otherwise qualified under
Section 18.02.02) of the CCF Agreement, including, without limitation, and as
provided specifically under Section 18.02.01 of the CCF Agreement, any default,
breach, violation, failure and/or omission, by or on the part of any Borrower or
the Borrowers, to pay and discharge, on a timely, punctual, complete and full
basis, the Principal and Interest when the Principal and Interest are or become
due and payable under this Mortgage Note, whether on the Maturity Date or by
acceleration, or otherwise.
Section 5. Remedies. Upon the occurrence of an Event of Default (as
defined under Section 4 of this Mortgage Note), the Lenders shall have the
right, in their sole discretion and option, to exercise all rights and remedies
that are set forth and described under Section 18.04 of the CCF Agreement,
including, without limitation, and in addition to all other rights and remedies
of the Lenders (or any holder hereof), the right to accelerate this Mortgage
Note, and all promises, covenants, agreements and other undertakings of the
Borrowers under this Mortgage Note, and thereupon, and notwithstanding the
Maturity Date of this Mortgage Note (as defined under Section 8 of this Mortgage
Note), all Principal and Interest (and all other sums that are otherwise due
under this Mortgage Note) are and shall be and become immediately due and
payable by and on the part of the Borrowers, jointly and severally.
Section 6. Prepayment. The Borrowers, jointly and severally, each
hereby represent and warrant, and hereby promise, agree and covenant, as
follows:
6.1 The Borrowers shall have the right, but shall not be required,
under this Mortgage Note, to prepay in part the Principal and Interest
of this Mortgage Note, on the First Anniversary Date of the Term Loan
Closing (as that term is defined under this Section 6), upon an advance
and prior sixty (60) day written notice that is delivered by the
Borrowers to the Lenders, but in no event shall such prepayment be less
than the amount of US $5,250,000, which shall be paid in good and
immediately available US funds ("Partial Prepayment Amount"), and
pursuant to which any such Partial Prepayment Amount shall be
accompanied by the Prepayment Fee (as defined under Section 6.4 of this
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Mortgage Note).
6.2 If the Borrowers elect to and do pay and deliver to the
Lender, or any holder hereof, the Partial Prepayment Amount on the
First Anniversary Date of the Term Loan Closing, and provided under
Section 6.1 of this Mortgage Note, then any such Partial Prepayment
Amount shall be applied and credited as prescribed under Section 2 of
this Mortgage Note.
6.3. Notwithstanding any term contained herein to the contrary,
the Borrowers, or any Borrower, may prepay this Mortgage Note, in whole
but not in part, at any time upon ten (10) days advance written notice
(by the Borrowers, or any Borrower, to the Lenders, or any other holder
hereof) and which shall be paid in good and immediately available US
funds ("Total Prepayment Amount"), and provided that such Total
Prepayment Amount is accompanied by the Prepayment Fee (as defined
under Section 6.4 of this Mortgage Note); provided, however, that if
the Borrowers, or any Borrower, have paid the Partial Prepayment Amount
(including the Prepayment Fee) before the date of the Total Prepayment
Amount, then no additional Prepayment Fee shall be due and payable with
respect to such Total Prepayment Amount. If the Borrowers elect to and
do pay and deliver to the Lender, or any holder hereof, the Total
Prepayment Amount, as provided under this Section 6.3, then any such
Total Prepayment Amount shall be applied and credited as prescribed
under Section 2 of this Mortgage Note.
6.4. The "Prepayment Fee" is and shall be the sum of US $275,625,
which is intended to be equal to the equivalent of accrued Interest (as
otherwise calculated under and pursuant to such rate as is specified
under this Mortgage Note) against the initial credit component of the
Principal of this Mortgage Note (i.e., US $10,500,000.00), for a period
equal to three (3) complete calendar months of thirty (30) days each.
6.5. The "First Anniversary Date of the Term Loan Closing" is and
shall mean October 1, 1999, which is the day and date corresponding to
twelve (12) months from the first day of the first calendar month that
is inclusive of the Term Loan Closing on the Closing Date (as those
terms are defined respectively under the CCF Agreement).
6.6. Any such written notice of prepayment, as otherwise
contemplated under this Section 6, shall not suspend any promise,
covenant, agreement, Indebtedness or Obligation (as those terms are
defined under Section 18.01 of the CCF Agreement), duty, liability or
any other undertaking (of any one or more of the Borrowers) under this
Mortgage Note, the CCF Agreement, the Credit Documents and/or the
Definitive Supplemental Documents.
Section 7. Waivers-Consents. The Borrowers, and all other Persons or
parties now or hereafter liable for any payments hereof, whether as endorser,
guarantor, surety or otherwise, jointly and severally, 1) waive demand,
presentment, notice of dishonor, notice of default, notice of intent to
accelerate, diligence in collection, grace (if applicable), and/or any notice
and protest or any substantially equivalent notice or protest, in connection
with or that relate to or arise from, the delivery, execution, acceptance,
performance, default or enforcement of this Mortgage Note, the CCF Agreement,
the Credit Documents and/or the Definitive Supplemental Documents, and 2)
consent to all extensions and/or forbearances or other concessions or
accommodations that may be granted or otherwise allowed or acquiesced to from
time to time by the Lenders, or any holder hereof, to or for the benefit of any
or all of the Borrowers, under this Mortgage Note, the Credit Documents and/or
the Definitive Supplemental Documents, and/or to any and all partial payments
under this Mortgage Note, whether before or after the Maturity Date, by
acceleration or prepayment, or otherwise.
Section 8. Maturity Date. The Maturity Date, for purposes of this
Mortgage Note, is and shall be the first and earlier to occur of the following:
1) the day and date corresponding to the Second Anniversary Date of the Term
Loan Closing; or, 2) the day and date corresponding to the Financial Closing of
the Miami Project Financing. For purposes of this Section 8:
8.1. The term "Second Anniversary Date of the Term Loan Closing"
shall mean October 1, 2000, which is the day and date corresponding to
twenty-four (24) months from the first day of the first calendar month
that is inclusive of the Term Loan Closing on the Closing Date (as
those terms are defined respectively under the CCF Agreement).
8.2. The term "Financial Closing of the Miami Project Financing"
shall mean the day and date corresponding to the first Business Day
that any Borrower, or any Affiliate or Subsidiary thereof, or any
successor or assign thereof,
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is legally entitled to draw from, or otherwise use, directly or
indirectly, any construction and/or permanent financing, for and
with respect to the development, construction and/or operation of
the Miami Project, as contemplated under Section 11.26.22 of the
CCF Agreement, including Schedule 11.26.22 of the Disclosure
Schedule of and to the CCF Agreement.
Section 9. Applicable Law, Jurisdiction and Venue. The Borrowers,
jointly and severally, each hereby represent and warrant, and hereby promise,
agree and covenant, as follows:
9.1. This Mortgage Note shall be governed by, construed in
accordance with, and shall be enforced under, the laws of the State of
New Jersey, exclusive of its rules relating to conflict of laws.
9.2. Subject to applicable conflict of laws principles, Compost,
Miami and Bedminster each shall accept venue with respect to all
claims, actions or lawsuits that relate to or arise from this Mortgage
Note, in any state court or U.S. Court of competent jurisdiction that
sits in Newark, New Jersey. Compost, Miami and Bedminster under this
Mortgage Note each hereby, and irrevocably and unconditionally, for
itself and its Properties, submits to the jurisdiction of any such New
Jersey court or U.S. Court sitting in Newark, New Jersey, and any
appellate court with jurisdiction thereover, in any action or
proceeding relating to or arising from this Mortgage Note, the CCF
Agreement (exclusive of the Mortgage), the Credit Documents and/or the
Definitive Supplemental Documents, or for the recognition or
enforcement of any judgment, and each of the Borrowers under this
Mortgage Note hereby, and irrevocably and unconditionally, agrees,
promises and covenants that all such claims in respect of any such
action or proceeding shall be heard, determined and adjudicated in by
any such New Jersey court or, to the extent permitted by applicable
law, by any such U.S. Court. Each of the Borrowers under this Mortgage
Note agrees, promises and covenants that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided
by law.
9.3. Each of the Borrowers under this Mortgage Note hereby, and
irrevocably and unconditionally, waives, to the fullest extent under
applicable law, any defense or objection that it may now or hereafter
have 1) to the laying of venue of any suit, action or proceeding
relating to or arising from this Mortgage Note, the CCF Agreement, the
Credit Documents (exclusive of the Mortgage) and/or the Definitive
Supplemental Documents, in any such New Jersey court or U.S. Court
sitting in Newark, New Jersey, or 2) to the personal jurisdiction
and/or preferred and proper venue of any such New Jersey court or any
such U.S. Court in Newark, New Jersey.
Section 10. Notices. Any notices by or to any Borrower, or by or to any
Lender, under this Mortgage Note, shall be given as provided under Section 20.04
of the CCF Agreement.
Section 11. Captions/Headings. The captions and headings that are set
forth in this Mortgage Note are for the purpose of convenience only and are not
intended to be a part of this Mortgage Note and shall not be deemed to modify,
explain, enlarge or restrict any of the provisions hereof.
Section 12. Severability. Any provision of this Mortgage Note which is
prohibited or unenforceable in any applicable jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provisions in any other
jurisdiction.
Section 13. Binding Obligations. The terms and provisions, and
promises, covenants and undertakings of this Mortgage Note, shall be binding
upon and shall inure to the benefit of the Borrowers, and their respective
successors and assigns, and shall be binding upon and shall inure to the benefit
of the Lenders, and their respective participants and successors and assigns,
including subsequent holders and assignees of this Mortgage Note.
Section 14. Negotiability. This Mortgage Note is negotiable and
assignable, and may be disposed of, at the sole and exclusive discretion of the
Lender, and its successors and assigns, or any subsequent holder of this
Mortgage Note.
Section 15. Assignment. This Mortgage Note, and any rights hereunder,
may be assigned by the Lenders, or any of their respective participants and/or
successors and assigns, at their sole discretion and option. This Mortgage Note
may not
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be assigned by any Borrower or the Borrowers, and the Borrowers shall not
delegate any of their duties under this Mortgage Note, in whole or in part,
without the advance written consent of the Lenders (pursuant to which any such
consent may be granted or withheld in the sole discretion of the Lenders).
Section 16. Agreements/Documents/Instruments. The Mortgage, the
Security Agreement, the Stock Pledge Agreements, the CCF Agreement, the Credit
Documents and the Definitive Supplemental Documents, and all other agreements,
instruments or other documents that are referred to in this Mortgage Note, are
incorporated herein by reference and form a part of this Mortgage Note.
Section 17. Legal Authority/Compliance/Miscellaneous. The Borrowers,
jointly and severally, each hereby represent and warrant, and hereby promise,
agree and covenant, as follows:
17.1. The Borrowers, jointly and severally, each hereby represent
and warrant that the execution and delivery of (and the performance and
consummation transactions contemplated under) this Mortgage Note, and
the Mortgage, the Security Agreement, the Stock Pledge Agreements, the
CCF Agreement, the Credit Documents and the Definitive Supplemental
Documents, will not (i) conflict with or violate the Certificate of
Incorporation or By-Laws of any Borrower, (ii) conflict with or violate
any law, rule, regulation, order, judgment or decree applicable to any
Borrower or by which its or any of their respective Properties are
bound or affected, or (iii) result in any breach of or constitute a
default (or an event which with notice or lapse of time or both would
become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation
of a lien or encumbrance on any of the Properties or assets of any of
the Borrowers pursuant to any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, insurance policy or other
instrument or obligation to which any such Borrower is a party, or by
which any such Borrower or its or any of their respective Properties
are bound or affected.
17.2. The execution and delivery of (and the performance and
consummation transactions contemplated under) this Mortgage Note, and
the Mortgage, the Security Agreement, the Stock Pledge Agreements, the
CCF Agreement, the Credit Documents and the Definitive Supplemental
Documents by each of the Borrowers does not and will not, require any
consent, approval, authorization or permit from any Governmental
Authority which has not been obtained.
17.3. The Borrowers each have good right and lawful authority,
through their designated and respective officers and representatives
who have signed and delivered this Mortgage Note, for and on behalf of
the respective Borrowers, to execute, deliver and consummate the
transactions contemplated under this Mortgage Note.
Section 18. Execution by Parties. Any person or party executing this
Mortgage Note in a representative capacity, acknowledges, warrants and
represents 1) that he or she is an official representative of the firm or
corporation in whose name he or she is executing this Mortgage Note, 2) that he
or she possesses full and complete authority to bind said firm or corporation to
the full and faithful performance of all conditions, terms, provisions,
covenants, warranties and representations as contained in this Mortgage Note,
and 3) that all other parties are relying on these representations and
warranties as a material inducement to accept delivery of this Mortgage Note, in
consideration of and in exchange for the delivery and/or execution by the
Lenders of 1) the Credit, 2) the CCF Agreement, 3) the Credit Documents and 4)
the Definitive Supplemental Documents, and the acceptance by the Lenders from
the Borrowers of 1) the CCF Agreement, 2) the Credit Documents and 3) the
Definitive Supplemental Documents.
Section 19. Time of the Essence. Time is hereby declared to be of the
essence of this Mortgage Note, and of every part hereof.
Section 20. Stamp or Tax. Should any stamp tax, intangible tax, or
other tax now or hereafter become payable with respect to this Mortgage Note,
Borrowers shall pay the same prior to the due date thereof and indemnify and
hold the Lenders harmless from the cost of same.
SECTION 21. JURY WAIVER. THE BORROWERS EACH DO HEREBY KNOWINGLY,
VOLUNTARILY,
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IRREVOCABLE, UNCONDITIONALLY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS MORTGAGE NOTE, THE CCF AGREEMENT, THE CREDIT DOCUMENTS
AND/OR THE DEFINITIVE SUPPLEMENTAL DOCUMENTS. OR ANY COURSE OR CONDUCT, COURSE
OF DEALINGS, STATEMENTS (VERBAL OR WRITTEN) OR ACTIONS OF ANY PERSON. THIS
IRREVOCABLE WAIVER OF THE RIGHT TO A JURY TRIAL IS A MATERIAL INDUCEMENT BY THE
BORROWERS TO THE LENDERS TO DELIVER THE CREDIT, AND TO EXECUTE AND DELIVER AND
OTHERWISE CONSUMMATE THE TRANSACTIONS CONTEMPLATED UNDER THIS MORTGAGE NOTE, THE
CCF AGREEMENT, THE CREDIT DOCUMENTS AND THE DEFINITIVE SUPPLEMENTAL DOCUMENTS.
Section 22. Counterparts. This Mortgage Note may be executed in any
number of counterparts, each of which shall be an original, but all of which
together will constitute one and the same instrument.
Section 23. Waivers/Cumulative Remedies. No failure or delay on the
part of the Lenders (or any successor or assign, or any holder of this Mortgage
Note) in exercising any right, power, or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power, or remedy preclude any other or further exercise thereof or the
exercise of any other right, power, or remedy hereunder. Any waiver by the
Lenders (or any successor or assign, or any holder of this Mortgage Note) of a
breach of any provision of this Mortgage Note shall not operate as or be
construed to be a waiver of any other breach of that provision or of any breach
of any other provision of this Mortgage Note. The failure of the Lenders (or any
successor or assign, or any holder of this Mortgage Note) to insist upon strict
adherence to any term of this Mortgage Note, and/or any extension, forbearance,
concession and/or accommodation by or on the part of the Lenders (or any
successor or assign, or any holder of this Mortgage Note) under this Mortgage
Note, on one or more or any occasions, shall not be considered a waiver or
otherwise deprive the Lenders (or any successor or assign, or any holder of this
Mortgage Note) of the right thereafter to insist upon strict adherence to or
otherwise enforce strictly that term or any other term of this Mortgage Note.
All remedies, to which the Lenders (or any successor or assign, or any holder of
this Mortgage Note) are entitled to assert, or otherwise claim and/or prosecute,
under this Mortgage Note, the CCF Agreement, the Credit Documents and/or the
Definitive Supplemental Documents, or under any applicable law, are cumulative
and not exclusive of any remedies provided by law or in equity, or otherwise.
Section 24. Written Instrument Requirement. This Mortgage Note cannot
be altered, amended, modified or discharged orally and no executory agreement
shall be effective to modify or discharge this Mortgage Note, in whole or in
part, unless it is in writing and signed by the party against whom enforcement
of the modification, alteration, amendment or discharge is sought.
Section 25. Document Disclosure. The Borrowers, jointly and severally,
hereby promise and covenant that, upon any reasonable request(s) of the Lenders,
or any successors or assigns or holders hereof, the Borrowers shall promptly
provide, disclose and deliver to any such holders or prospective holders, copies
of the CCF Agreement, the Credit Documents and/or the Definitive Supplemental
Documents, and shall use commercially reasonable efforts, in good faith, to
cooperate with any reasonable inquiries or investigations of any Lender, or any
such successor or assign or holder hereof, with respect to, or that relate to or
arise from, this Mortgage Note, the CCF Agreement, the Credit Documents and/or
the Definitive Supplemental Documents.
Section 26. Inter-Lender Agent. The Lenders, pursuant to the terms and
subject to the conditions set forth in an agreement, entitled "Inter-Creditor
Agreement," that is dated and was executed by and among the Lenders, on or about
October 30, 1998, and that is intended to be recorded promptly hereafter in the
Official Records Book or other Public Records of Miami-Dade County, Florida, and
any other appropriate public records as may determined by the Lenders, each duly
appointed GEP, as the their exclusive agent and power of attorney ("Agent"),
which power is coupled with an interest, for all Lenders, with respect to this
Mortgage Note, the CCF Agreement, the Credit Agreement and the Definitive
Supplemental Documents, and the exercise of the rights and remedies of each
Lender with respect thereto. Pursuant to and as provided under the
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Inter-Creditor Agreement, 1) GEP, as Agent for all Lenders, is authorized and
empowered, in their respective name, place and stead, with full power of
substitution, to exercise and perform from time to time, and without joinder of
or by any Lender, any act, power, duty, right or obligation whatsoever that any
Lender or the Lenders (under this Mortgage Note, the CCF Agreement, the Credit
Documents and/or the Definitive Supplemental Documents) may now or hereafter
exercise or perform, and to deal in all respects with the Borrowers, with
respect to the transactions evidenced under this Mortgage Note, the CCF
Agreement, the Credit Documents and/or the Definitive Supplemental Documents;
and, 2) the Borrowers and any third party dealing with the Agent, under this
Mortgage Note, the CCF Agreement, the Credit Documents and/or the Definitive
Supplemental Documents, shall have the right to rely upon the power and
authority of the Agent to bind each Lender with respect to the exercise of
remedies or the giving of notices or consents under and pursuant to this
Mortgage Note, the CCF Agreement, the Credit Documents and/or the Definitive
Supplemental Documents.
IN WITNESS WHEREOF, Compost, Miami and Bedminster, as the Borrowers,
have executed and delivered this Mortgage Note on and as of this 30th day of
October, 1998.
Borrowers: COMPOST AMERICA HOLDING COMPANY, INC.
-------------------------------------
Roger E. Tuttle
President and Chief Executive Officer
MIAMI RECYCLING AND COMPOSTING COMPANY, INC.
-------------------------------------
Roger E. Tuttle
President and Chief Executive Officer
BEDMINSTER SEACOR SERVICES MIAMI CORPORATION
-------------------------------------
Roger E. Tuttle
President and Chief Executive Officer
Page 7 of 7 Pages
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Exhibit 99.3
COMPOST STOCK PLEDGE AGREEMENT
(COMPOST COMMON STOCK)
Compost Stock Pledge Agreement (Compost Common Stock) Pursuant to CCF Agreement
October 30, 1998
------------------------------------------------------------
THIS COMPOST STOCK PLEDGE AGREEMENT ("Agreement") is made, executed and
consummated effectively this 30th day of October, 1998 ("Effective Date"), by
and among COMPOST AMERICA HOLDING COMPANY, INC. ("Compost"), and, LIONHART
GLOBAL APPRECIATION FUND, LTD. ("Lionhart"), LIONHART INVESTMENTS, LTD. ("LHI")
and GLOBAL EARTHFUND PARTNERS, L.L.C. ("GEP") (Lionhart, LHI and GEP are
sometimes collectively referred to in this Agreement as the "Pledgee(s)").
Recitals:
1. Compost is a New Jersey corporation. The principal office of Compost
is located at 320 Grand Avenue, Englewood, New Jersey 07631.
2. Miami Recycling and Composting Co., Inc. ("Miami") is a Delaware
corporation. The principal office of Miami is located at 320 Grand Avenue,
Englewood, New Jersey 07631. Bedminster Seacor Services Miami Corporation
("Bedminster") is a Florida corporation. The principal office of Bedminster is
located at 320 Grand Avenue, Englewood, New Jersey 07631. Compost is the direct
parent of Miami, owns and controls 80.1% of all issued and outstanding capital
stock of Miami, and controls Miami. Miami is the direct parent of Bedminster,
Bedminster is a direct wholly-owned subsidiary of Miami, and Compost controls
Bedminster (which is an indirect controlled subsidiary of Compost).
3. Lionhart is a British Virgin Islands international business company.
The principal office of Lionhart, in the British Virgin Islands, is located at
c/o Citco B.V.I. Limited, Post Office Box 662, Road Town, Tortola, British
Virgin Islands.
4. LHI is a United Kingdom limited liability company. The principal
office of LHI, in the United Kingdom, is located at 19 Camp Road, Heston Court,
Wimbledon, London SW19 4 RH, England. As of the Effective Date of this
Agreement, LHI is engaged by Lionhart as its investment advisor.
5. GEP is an Indiana limited liability company. The principal office of
GEP in the United States is c/o John Thomas Drics, Esq., 111 Monument Circle,
Suite 312, Indianapolis, Indiana 46204. As of the Effective Date of this
Mortgage, Lionhart is the direct parent of GEP, and GEP is a direct wholly-owned
subsidiary of Lionhart.
6. On and effective as of October 30, 1998, Compost, Miami, Bedminster,
Lionhart, LHI and GEP are executing, consummating and delivering, or will or are
about to execute, consummate and deliver, an agreement, entitled "Credit,
Capitalization and Financing Agreement" ("CCF Agreement"), which is hereby
incorporated by reference. Except as otherwise defined separately in this
Agreement, and/or except as otherwise indicated by the context in this
Agreement, any terms that are capitalized in this Agreement shall have the same
definition and meaning as is ascribed to such terms in the CCF Agreement (and/or
in any Credit Document(s) or Supplemental Definitive Document(s) (as those terms
are defined under the CCF Agreement)). This Agreement is the same instrument,
agreement and document that is referred to, and as is otherwise defined as, the
Compost Stock Pledge Agreement (Compost Common Stock), under Section 1.1.33 of
the CCF Agreement.
7. Pursuant to the terms and subject to the conditions set forth in the
CCF Agreement, the Credit Documents and the Definitive Supplemental Documents,
Compost, Miami and/or Bedminster have the affirmative duty and obligation, inter
alia, to and for the benefit of Lionhart, LHI and/or GEP, 1) to pay and
discharge timely punctually, completely and fully certain Indebtedness (as that
term is defined under Section 18.01.01 of the CCF Agreement) and 2) to perform
and discharge timely, punctually, completely and fully certain Obligations (as
that term is defined under Section 18.01.02 of the CCF Agreement). For purposes
of this Agreement, the terms "Indebtedness" and "Obligations" shall have the
same meanings and definitions as ascribed respectively to such terms under
Section 18.01.01 and Section 18.01.02 of the CCF Agreement.
8. Compost, 1) for and in consideration of (i) the delivery by
Lionhart, LHI and GEP, to Compost, Miami and Bedminster, of the Credit (as
defined under Section 2.1 of the CCF Agreement) and (ii) the execution, delivery
or consummation of the agreements, promises, covenants and other undertakings by
Lionhart, LHI and/or GEP as otherwise provided under the CCF Agreement, the
Credit Documents and/or the Supplemental Definitive Documents ("Consideration"),
Page 1 of 9 Pages
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and 2) as an inducement to Lionhart, LHI and GEP to enter into, agree, execute
and deliver, and otherwise consummate the transactions contemplated under, the
CCF Agreement, the Credit Documents and the Supplemental Definitive Documents,
and, 3) to additionally secure (to and for the benefit of Lionhart, LHI and GEP)
the timely and complete payment of the Indebtedness and the performance and
discharge of the Obligations, by and on the part of Compost, Miami and
Bedminster, under and pursuant the CCF Agreement, the Credit Documents and/or
the Definitive Supplemental Documents, has agreed to execute or deliver (at the
Term Loan Closing on the Closing Date), or cause to be executed and delivered
(on the Term Loan Closing on the Closing Date), to and for the benefit of
Lionhart, LHI and GEP, this Agreement, without the delivery of which Lionhart,
LHI and GEP would not exchange, execute or otherwise deliver the Consideration
to or for the benefit of Compost, Miami and/or Bedminster, and 4) for other good
and valuable consideration, the receipt and adequacy of which is hereby
acknowledged.
NOW, THEREFORE, for good and valuable consideration, the receipt and
legal adequacy of which are hereby acknowledged, and as part of the
consideration of Compost for the Consideration of Lionhart, LHI and GEP, as
otherwise provided under the CCF Agreement, the Credit Documents and the
Definitive Supplemental Documents, Compost hereby promises, covenants, and
represents and warrants to Lionhart, LHI and GEP, and hereby agrees with
Lionhart, LHI and GEP, as follows:
Agreement:
Section 1. Pledge/Security Interest/Collateral. In consideration of and
as an inducement for the Consideration specified in this Agreement, and to
secure the timely, punctual, complete and full payment and discharge of the
Indebtedness and the timely, punctual, complete and full performance and
discharge of the Obligations, by and on the part of Compost, Miami and
Bedminster, under and pursuant to this Agreement, the CCF Agreement, the Credit
Documents and the Definitive Supplemental Documents:
1.01. Pledge. Compost hereby grants, pledges, bargains,
releases, conveys, warrants, sells, assigns, transfers, sets over,
confirms and delivers unto Lionhart, LHI and GEP, and all of their
respective successors and assigns, a security interest in, and hereby
delivers to Lionhart, LHI and GEP to perfect such pledge and security
interest, 600,000 registered (freely tradable) shares of Compost Common
Stock that are represented by Certificate No. CA1370 (which indicates
thereon that Lionhart is the registered owner thereof), and all
amendments, additions, adjustments, modifications, substitutions,
replacements, extensions and additions thereof, including, without
limitation, all cash and non-cash proceeds thereof, and all such
additional shares or securities, or other rights, warrants or options,
as provided or otherwise contemplated under Section 6.02 and/or Section
6.04 of this Agreement ("Pledged Compost Shares" and/or "Collateral").
1.02. Transfer. Compost, in all appropriate books, records and
ledgers of Compost, shall immediately transfer to and shall maintain in
the name of Lionhart, the Pledged Compost Shares, pursuant to which
Lionhart shall serve as custodian and agent for LHI and GEP, of such
Pledged Compost Shares, pursuant to the terms and subject to the
conditions of this Agreement.
1.03. Certificate/Legend. Prior to delivery to of the Pledged
Compost Shares to Lionhart, LHI and GEP, as provided under Section 1.01
of this Agreement, Compost shall place or cause to be placed on each
certificate, that represents any one (1) or more of the
above-referenced Pledged Compost Shares (including the above-referenced
Certificate No. 1370), and such certificate shall bear, the following
legend:
"The securities represented hereby are pledged by Compost America
Holding Company, Inc. ("CAHC"), to Lionhart Global Investments,
Ltd. ("Lionhart"), Lionhart Investments, Ltd. ("LHI"), and Global
EarthFund Partners, Ltd. ("GEP"), pursuant to the terms and
subject to the conditions of an agreement, entitled "Compost
Stock Pledge Agreement (Compost Common Stock)," by and among
CAHC, Lionhart, LHI and GEP, that is dated on and as of October
30, 1998, and pursuant to which Lionhart (for and on behalf of
Lionhart, LHI and GEP) is and shall remain as the registered
holder of these securities, as security and collateral for the
payment in full of certain Indebtedness and the performance in
full of certain Obligations as those terms are defined under such
Compost Stock Pledge Agreement (Compost Common Stock), until such
Indebtedness is paid in full and such Obligations are performed
in full."
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Section 2. Inter-Pledgee Agent. The Pledgees, pursuant to the terms and
subject to the conditions set forth in an agreement, entitled "Inter-Creditor
Agreement," that is dated and was executed by and among the Pledgees, on or
about October 30, 1998, and that is intended to be recorded promptly hereafter
in the Official Records Book or other Public Records of Miami-Dade County,
Florida, and any other appropriate public records as may determined by the
Pledgees, each duly appointed GEP, as the their exclusive agent and power of
attorney ("Agent"), which power is coupled with an interest, for all Pledgees,
with respect to this Agreement, the CCF Agreement, the Credit Agreement and the
Definitive Supplemental Documents, and the exercise of the rights and remedies
of each Pledgee with respect thereto. Pursuant to and as provided under the
Inter-Creditor Agreement, 1) GEP, as Agent for all Pledgees, is authorized and
empowered, in their respective name, place and stead, with full power of
substitution, to exercise and perform from time to time, and without joinder of
or by any Pledgee, any act, power, duty, right or obligation whatsoever that any
Pledgee or the Pledgees (under this Agreement, the CCF Agreement, the Credit
Documents and/or the Definitive Supplemental Documents) may now or hereafter
exercise or perform, and to deal in all respects with Compost, with respect to
the transactions evidenced under this Agreement, the CCF Agreement, the Credit
Documents and/or the Definitive Supplemental Documents; and, 2) Compost and any
third party dealing with the Agent, under this Agreement, the CCF Agreement, the
Credit Documents and/or the Definitive Supplemental Documents, shall have the
right to rely upon the power and authority of the Agent to bind each Pledgee
with respect to the exercise of remedies or the giving of notices or consents
under and pursuant to this Agreement, the CCF Agreement, the Credit Documents
and/or the Definitive Supplemental Documents. Notwithstanding the foregoing, the
Pledgees hereby appoint Lionhart, as its agent and limited power of attorney,
which power is coupled with an interest, for the limited purpose that is set
forth in Section 6 of this Agreement, but with the same effect, actual and
apparent authority, and power as are otherwise granted to the Agent under this
Section 2.
Section 3. Agreement Purpose and Security. This Agreement is executed
and delivered by Compost, to Lionhart, LHI and GEP, pursuant to the terms and
subject to the conditions of the CCF Agreement. The pledge of and security
interest in and to the Pledged Compost Shares, is hereby given by Compost, to
Lionhart, LHI and GEP, to secure the timely, punctual, complete and full payment
and discharge of the Indebtedness and the timely, punctual, complete and full
performance and discharge of the Obligations, by and on the part of Compost,
Miami and Bedminster, under and pursuant to this Agreement, the CCF Agreement,
the Credit Documents and the Definitive Supplemental Documents, including,
without limitation, all such Indebtedness and Obligations that relate to or
arise from the Mortgage Note, and any and all modifications, amendments,
restatements, extensions, renewals, supplements and replacements thereof, as any
of the foregoing may be amended and/or restated from time to time and at any
time, and all reasonable costs and expenses incurred or paid or incurred by
Lionhart, LHI and/or GEP to preserve and protect the Pledged Compost Shares and
to enforce the security interests and pledge of Lionhart, LHI and/or GEP
therein, all of which Compost, Miami and Bedminster have promised and
covenanted, and Compost reaffirms its undertakings, to pay and discharge all
such Indebtedness when due and to perform and discharge all Obligations when due
or required to be performed in accordance with the terms and conditions set
forth in the CCF Agreement, without relief from valuation and appraisement laws
and with reasonable attorneys' fees. The pledge and security interest in the
Pledged Compost Shares shall remain, and shall not be released, unless and until
all Indebtedness is paid in full and all Obligations are performed and
discharged in full, whereupon the Pledgees shall have the affirmative duty, in a
commercial reasonable and prompt manner, to return the Pledged Compost Shares to
Compost and, upon any reasonable request from time to time by Compost, to
execute any documents, instruments or certificates necessary to terminate the
security interest and pledge evidenced by this Agreement.
Section 4. Release/Waiver. Compost hereby and expressly releases and
waives each and every of the following: 1) all rights, privileges and/or claims
under and/or by virtue of any homestead, stay, appraisement or exemption laws
that may now exist or hereinafter be enacted; 2) all rights, privileges and/or
claims to acquire or retain possession, custody or control of the Pledged
Compost Shares, or any part thereof, after any Event of Default under the CCF
Agreement, the Credit Documents (including this Agreement) and/or the Definitive
Supplemental Documents, as otherwise defined under Section 9 of this Agreement;
and, 3) all rights of redemption from the sale of the Pledged Compost Shares, or
any part thereof, under any order or decree of foreclosure or public or private
sale of and with respect to the Pledged Compost Shares, or any part thereof.
Section 5. Recital Paragraphs/Incorporation. The Recital Paragraphs
that are set forth on Pages 1-2 of this Agreement, are hereby made part of this
Agreement, as if set forth in their complete terms under this Section 5.
Page 3 of 9 Pages
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Section 6. Voting Rights, Dividends, Warrants and Adjustments. Compost
hereby represents and warrants to Lionhart, LHI and GEP, and hereby agrees,
promises and covenants, as follows:
6.01. Cash Dividends. Until all Indebtedness is paid and
discharged in full and all Obligations are performed and discharged in
full, all cash dividends and other pecuniary amounts received by
Lionhart, as a result of its record ownership of and that are otherwise
attributable to the Pledged Compost Shares, shall be applied by
Lionhart (and LHI and GEP), net of any taxes whatsoever assessed to or
against Lionhart (and/or LHI and/or GEP) for and with respect to any
such cash dividends, to the payment of Principal and Interest and other
charges under the Mortgage Note, pursuant to Section 2 thereof.
6.02. Adjustments. If, and in the event, during the period
that any Indebtedness is not paid and discharged in full or that any
Obligation is not performed and discharged in full, any share dividend,
reclassification, readjustment, or other change is declared or made in
the capital structure of Compost, and that relate to or arise from or
otherwise affect the Pledged Compost Shares, all new, substituted and
additional shares or other securities that are then or thereby issued
by reason of any such share dividend, reclassification, readjustment or
other such change, shall continue to be held by Lionhart (for and on
behalf of itself, LHI and GEP), as additional pledged Collateral and
security (and as part of the Pledged Compost Shares), pursuant to the
terms and subject to the conditions of this Agreement (in the same
manner as if such shares or securities were originally pledged and
delivered under this Agreement upon execution, consummation and
delivery hereof).
6.03. Voting Rights. Until all Indebtedness is paid and
discharged in full and all Obligations are performed and discharged in
full, Lionhart (for and on behalf of itself, LHI and GEP), at its sole
option and election, shall be entitled 1) to vote the Pledged Compost
Shares, on all questions, issues, positions, matters and/or
transactions that are otherwise submitted to the shareholders of
Compost for consideration thereof and/or a vote thereupon, or
otherwise, or 2) to periodically execute and grant one (1) or more
general or limited proxies to Compost, in and pursuant to any such
proxy or proxy forms as are reasonable and usual and customary, as
determined by Lionhart, to vote the Pledged Compost Shares on all
questions, issues, positions, matters and/or transactions that are
otherwise submitted to the shareholders of Compost for consideration
thereof and/or a vote thereupon, or otherwise.
6.04. Warrants/Options/Rights. If, and in the event, during
the period that any Indebtedness is not paid and discharged in full or
that any Obligation is not performed and discharged in full, any
subscription warrants or any other rights, warrants or options shall be
issued in connection with the Pledged Compost Shares, then any and all
such rights, warrants and options shall be held by Lionhart (for
itself, and for and on behalf of LHI and GEP) as additional pledged
Collateral and security and as part of the Pledged Compost Shares, and
if exercised by Compost (and/or Lionhart, LHI and/or GEP), all such new
shares or other securities so acquired by and that are otherwise
attributable to the exercise of any such rights, warrants or options
shall be delivered to and shall be held by Lionhart (for itself, and
for and on behalf of LHI and GEP) as additional pledged Collateral and
security and shall be deemed as part of the Pledged Compost Shares, and
shall be deemed as immediately assigned, pledged, transferred and
delivered to Lionhart, LHI and GEP (and in the name of Lionhart, for
itself, LHI and GEP), in the same manner as is otherwise provided and
contemplated under Section 1 of this Agreement, all of which shall
thereafter be held by Lionhart (for itself and LHI and GEP) as security
and as part of the Pledged Compost Shares pursuant to the terms and
subject to the conditions set forth under this Agreement.
Section 7. General Representations and Warranties. Compost hereby
represents and warrants to Lionhart, LHI and GEP, and hereby promises and
covenants, as follows:
7.01. Collateral.
(a) Title. Compost owns and will maintain full and absolute title
in and to the Pledged Compost Shares, free of all pledges, security
interests, liens and encumbrances other than the pledge and security
interest herein granted to Lionhart, LHI and GEP under this Agreement,
and has good and legal right to subject and otherwise encumber the
Pledged Compost Shares to the pledge and security interest granted by
and under this Agreement. Compost shall defend the Pledged Compost
Shares against all adverse claims. The Pledged Compost Shares are not
and will not be the subject of any financing statement (other than any
filed by Lionhart, LHI and/or GEP) on file in any public office, or
pledged to or subjected to the interest of any Person except as
provided specifically under this Agreement.
Page 4 of 9 Pages
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(b) Taxes and Assessments. Compost shall promptly pay, as they
become due and payable, all taxes and assessments imposed upon the
Pledged Compost Shares, if any.
(c) Protection of Pledged Compost Shares. Compost shall not,
without the prior and advance written consent and approval of and by
Lionhart, LHI and GEP (pursuant to which any such consent and approval
may be granted or withheld in the sole and exclusive discretion of
Lionhart, LHI and GEP), sell, assign, transfer, or otherwise dispose of
any of the Pledged Compost Shares, or any of its right, title or
interest therein or in any part thereof, and shall not otherwise do or
permit anything to be done or occur that may impair the Pledged Compost
Shares as security hereunder.
7.02. Financing Statements, Certificates, Etc. Compost shall do
such acts as Lionhart, LHI and/or GEP may reasonably deem necessary or
appropriate to establish and maintain in Lionhart, LHI and/or GEP a
valid security interest and pledge in the Pledged Compost Shares, free
of all other liens, pledges and claims not permitted under this
Agreement, to secure full and prompt payment and discharge of the
Indebtedness and the full and prompt performance and discharge of the
Obligations. Compost authorizes the Agent (for and on behalf of
Lionhart, LHI and/or GEP), at the sole expense of Compost, to sign and
file, without the signature of Compost, such financing and continuation
statements, amendments and supplements thereto, and other documents
which the Agent (for and on behalf of Lionhart, LHI and/or GEP) may
from time to time deem necessary to perfect, preserve and protect their
respective pledges and security interests in the Pledged Compost
Shares. Compost shall from time to time, upon any request by the Agent
(for and on behalf of Lionhart, LHI and/or GEP), deliver to the Agent,
for and on behalf of Lionhart, LHI and/or GEP, certified schedules, in
such form as may be specified by the Agent (for and on behalf of
Lionhart, LHI and/or GEP), identifying the Pledged Compost Shares, or
such part thereof as may be specified by the Agent (for and on behalf
of Lionhart, LHI and/or GEP), together with such supporting documents
and information as the Agent (for and on behalf of Lionhart, LHI and/or
GEP) reasonably may request.
7.03. Taxes, Assessments and Expenses.
(a) Taxes and Assessments. Compost, agrees to pay promptly when
due all taxes, assessments and governmental charges upon or against
Compost, for the property or operations of Compost, Miami and
Bedminster, or otherwise, in each case before the same become
delinquent and before penalties accrue thereon, unless and to the
extent that the same are being contested in good faith by appropriate
proceedings and for which Compost, either directly or through Miami and
Bedminster, has established adequate reserves.
(b) Material Occurrences. Compost shall give written notice to the
Agent (for and on behalf of Lionhart, LHI and GEP) of all material
occurrences and events adversely affecting the Pledged Compost Shares
or the value, security or amount thereof.
(c) Secured Party Expenses. In the event that Compost fails to pay
taxes, assessments, costs and expenses which Compost is required to pay
under this Section 7, or in the event that Compost fails to keep the
Pledged Compost Shares free from other security interests, liens,
pledges, or encumbrances not permitted under the terms of this
Agreement, Lionhart, LHI and/or GEP may make reasonable expenditures
for any and all such purposes. All reasonable costs and expenses of
Lionhart, LHI and/or GEP in retaking, holding, preparing for sale and
selling or otherwise realizing upon any Pledged Compost Shares or
enforcing any provisions hereof in the event of any default by Compost,
including reasonable attorneys' fees, shall constitute part of the
Indebtedness and Obligations that are otherwise secured under this
Agreement by the Pledged Compost Shares, and Compost shall forthwith
reimburse Lionhart, LHI and GEP for any such reasonable payments made
or any such reasonable expenses incurred by Lionhart, LHI and/or GEP.
Section 8. Performance by Secured Party of Debtor's Agreements. Lionhart, LHI
and/or GEP may, but shall have no duty, to perform any agreement, promise or
covenant of Compost hereunder, which Compost shall have failed to perform or
discharge, and Compost shall forthwith reimburse Lionhart, LHI and GEP for any
such reasonable payments made or any such reasonable expenses incurred by
Lionhart, LHI and/or GEP, including reasonable attorneys' fees, and all such
reasonable payments, costs and expenses, including reasonable attorneys' fees,
shall constitute part of the Indebtedness and Obligations that are otherwise
secured under this Agreement by the Pledged Compost Shares.
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Section 9. Event of Default. An "Event of Default," under this
Agreement, is and shall be defined as, and shall mean and include, any "Event of
Default" as that term is defined under Section 18.02 (and as otherwise qualified
under Section 18.02.02) of the CCF Agreement, including, without limitation, any
default, breach, violation, failure and/or omission, by or on the part of
Compost, to pay and discharge, on a timely, punctual, complete and full basis,
the Principal and Interest when the Principal and Interest are or become due and
payable under the Mortgage Note.
Section 10. Remedies Upon Default. Upon the occurrence of an Event of
Default (as defined under Section 9 of this Agreement), Lionhart, LHI and GEP
shall have the right, but not the obligation, in their sole discretion and
option, to exercise all rights and remedies that are set forth and described
under Section 18.04 of the CCF Agreement, and to exercise any one (1) or all of
the following remedies, in addition to any other rights or remedies that
Lionhart, LHI and/or GEP may be entitled to assert and/or claim, at law of in
equity:
10.01. Acceleration-Indebtedness. Lionhart, LHI and GEP may, from
time to time and at any time(s), declare the entire unpaid amount or
portion of any, some or all of the Indebtedness (including, without
limitation, the unpaid amount or portion of all Principal and Interest
under the Mortgage Note), immediately due and payable, without further
notice or demand, or presentment, protest, notice of protest or notice
of dishonor (of which Compost, hereby expressly waives any such notice,
demand, presentment, protest, notice of protest or notice of dishonor),
whereupon all such Indebtedness, as accelerated under this Section
10.01, shall become immediately due and payable in full, and Lionhart,
LHI and GEP shall the right immediately to foreclose upon the lien
created by the Mortgage against the Mortgaged Miami Site (as provided
and otherwise contemplated under the Mortgage), or any part thereof; to
enforce and use lawful self-help or foreclose upon every other security
interest in any and all Collateral as otherwise created or confirmed
under this Agreement, or any part thereof; to enforce, use lawful
self-help or foreclose upon every security interest in any of the
pledged Collateral or any other Collateral under the Security
Agreement, the Compost Stock Pledge Agreement (Miami Common Stock)
and/or the Compost Stock Pledge Agreement (Bedminster Common Stock), or
any part thereof; and/or, to commence or institute any action, suit or
other proceeding which Lionhart, LHI and/or GEP may deem necessary or
proper to protect their respective interests.
10.02. Acceleration-Obligations. Lionhart, LHI and GEP may, from
time to time at any time(s), declare any and all Obligations, that have
not been theretofore performed and discharged, immediately due and
required to be performed and discharged immediately, without further
notice or demand, or presentment, protest, notice of protest or notice
of dishonor (of which Compost hereby expressly waives any such notice,
demand, presentment, protest, notice of protest or notice of dishonor),
whereupon all such Obligations, as accelerated under this Section
10.02, shall become due and immediately required to be performed and
discharged completely, and Lionhart, LHI and GEP shall the right
immediately to foreclose upon the lien created by the Mortgage against
the Mortgaged Miami Site (as provided and otherwise contemplated under
the Mortgage), or any part thereof; to enforce and use lawful self-help
or foreclose upon every other security interest in any and all
Collateral as otherwise created or confirmed under this Agreement, or
any part thereof; to enforce, use lawful self-help or foreclose upon
every security interest in any of the pledged Collateral or any other
Collateral under the Security Agreement, the Compost Stock Pledge
Agreement (Miami Common Stock) and/or the Compost Stock Pledge
Agreement (Bedminster Common Stock), or any part thereof; and/or, to
commence or institute any action, suit or other proceeding which
Lionhart, LHI and/or GEP may deem necessary or proper to protect their
respective interests.
10.03. Other Recourse and Remedies. Lionhart, LHI and GEP each
shall have all the remedies of a creditor and a secured party under the
New Jersey Uniform Commercial Code and all other applicable law, and as
otherwise provided by applicable law, including but not limited to, the
following:
(1) Possession/Sale. Lionhart, LHI and/or GEP shall have the
right, without notice to Compost, and without liability for any
diminution in price that may have occurred, sell all or any amount
or part of the Pledged Compost Shares in such a manner and for
such a price as may be determined by Lionhart, LHI and GEP.
Without limiting any rights or remedies that are otherwise
available to Lionhart, LHI and/or GEP, at any bona fide public
sale, Lionhart, LHI and/or GEP shall have the sole right and
authority to bid for and otherwise purchase any amount or part of
the Pledged Compost Shares. If, and in the event, Lionhart, LHI
and/or GEP do sell any such amount or part of the Pledged Compost
Shares at any such sale (public or private), the proceeds derived
from any such sale, after the payment and discharge of expenses
(including,
Page 6 of 9 Pages
<PAGE>
if applicable, reasonable expenses of retaking, holding, preparing
for sale, selling and the like, and reasonable attorneys' fees
that relate to or arise from any such sale), shall be applied or
otherwise credited to the payment of Principal and Interest and
other charges under the Mortgage Note, pursuant to Section 2
thereof.
(2) Cumulative Remedies. All remedies of Lionhart, LHI and/or
GEP shall be cumulative to the fullest extent provided by law. Any
pursuance by Lionhart, LHI and/or GEP of any single judicial or
other remedies shall not abate nor bar resort to other remedies
with respect to the Pledged Compost Shares, and pursuit of certain
remedies with respect to all or some of the Pledged Compost Shares
shall not bar other remedies with respect to the Indebtedness, the
Obligations, or other portions of the Pledged Compost Shares, or
as may otherwise be provided under the CCF Agreement, the Credit
Documents (including the Mortgage Note) and/or the Definitive
Supplemental Documents, and/or under any applicable law. Lionhart,
LHI and GEP may exercise its rights to the Pledged Compost Shares,
or any part thereof, without resorting or regard to other Pledged
Compost Shares or sources of security or reimbursement for the
Indebtedness and/or Obligations (whether under the CCF Agreement,
the Credit Documents the Definitive Supplemental Documents, or
otherwise).
Section 11. Nonwaiver-Expenses, Proceeds of Collateral. No waiver by
Lionhart, LHI and/or GEP of any of its or their respective rights or of any
Event of Default shall be effective unless in writing, and in no event shall it
operate as a waiver of any other of its or their respective rights or any other
Event of Default, nor of the same rights or Event of Default on any future
occasion. Compost shall pay to Lionhart, LHI and GEP, on demand by Lionhart, LHI
and/or GEP, any and all reasonable expenses, including reasonable attorneys'
fees, incurred or paid by Lionhart, LHI and/or GEP in protecting or enforcing
its rights upon or under the Indebtedness, the Obligations, the Pledged Compost
Shares or this Agreement.
Section 12. Legal Authority/Compliance/Miscellaneous. Compost hereby
represents and warrants, and hereby promises, agrees and covenants, as follows:
12.01. General Board Authorization. Compost has all necessary
corporate power and authority, pursuant to the approval by and the duly
adopted resolutions of its Board of Directors, and otherwise, to
execute and deliver this Agreement, and to perform their respective
duties and obligations contemplated and as otherwise provided under
this Agreement, including, without limitation, the granting and
pledging to Lionhart, LHI and GEP of a security interest in and to, and
otherwise pledging, the Pledged Compost Shares.
12.02. No Violations. The execution and delivery of (and the
performance and consummation transactions contemplated under) this
Agreement, will not (i) conflict with or violate the Certificate of
Incorporation or By-Laws of Compost, (ii) conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to Compost
or by which its Properties are bound or affected, or (iii) result in
any breach of or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of,
or result in the creation of a lien or encumbrance on any of the
Properties or assets of Compost, pursuant to any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, insurance
policy or other instrument or obligation to which is a party, or by
which Compost or its Properties are bound or affected.
12.03. No Required Governmental Consents. The execution and
delivery of (and the performance and consummation transactions
contemplated under) this Agreement by Compost, does not and will not,
require any consent, approval, authorization or permit from any
Governmental Authority which has not been obtained.
12.04. Authority of Officers. Compost has good right and lawful
authority, through its designated and officers and representatives who
have signed and delivered this Agreement, for and on behalf of Compost,
to execute, deliver and consummate the transactions contemplated under
this Agreement.
12.05. Enforceability. This Agreement is a legal, valid and
binding obligation of and is enforceable against Compost, in accordance
with the terms of this Agreement, and there is no action or proceeding
at law or in equity, or by or before any court or Governmental
Authority now pending or to the knowledge of Compost threatened or
affecting Compost that may materially and adversely affect Compost.
12.06. Execution by Parties. Any person or party executing this
Agreement in a representative capacity,
Page 7 of 9 Pages
<PAGE>
acknowledges, warrants and represents 1) that he or she is an official
representative of the firm or corporation in whose name he or she is
executing this Agreement, 2) that he or she possesses full and complete
authority to bind said firm or corporation to the full and faithful
performance of all conditions, terms, provisions, covenants, warranties
and representations as contained in this Agreement, and 3) that all
other parties are relying on these representations and warranties as a
material inducement to execute, deliver and otherwise consummate the
transactions contemplated under this Agreement, the CCF Agreement, the
Credit Documents and the Definitive Supplemental Documents.
Section 13. Applicable Law, Jurisdiction and Venue. Compost hereby
represents and warrants, and hereby promises, agrees (with Lionhart, LHI and
GEP) and covenants, as follows:
13.01. This Mortgage Note shall be governed by, construed in
accordance with, and shall be enforced under, the laws of the State of
New Jersey, exclusive of its rules relating to conflict of laws.
13.02. Subject to applicable conflict of laws principles, Compost
shall accept venue with respect to all claims, actions or lawsuits that
relate to or arise from this Agreement, in any state court or U.S.
Court of competent jurisdiction that sits in Newark, New Jersey.
Compost hereby, and irrevocably and unconditionally, for itself and its
Properties, submits to the jurisdiction of any such New Jersey court or
U.S. Court sitting in Newark, New Jersey, and any appellate court with
jurisdiction thereover, in any action or proceeding relating to or
arising from this Agreement, the CCF Agreement (exclusive of the
Mortgage), the Credit Documents and/or the Definitive Supplemental
Documents, or for the recognition or enforcement of any judgment, and
Compost hereby, and irrevocably and unconditionally, agrees, promises
and covenants that all such claims in respect of any such action or
proceeding shall be heard, determined and adjudicated in by any such
New Jersey court or, to the extent permitted by applicable law, by any
such U.S. Court. Compost hereby agrees, promises and covenants that a
final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in
any other manner provided by law.
13.03. Compost hereby, and irrevocably and unconditionally,
waives, to the fullest extent under applicable law, any defense or
objection that it may now or hereafter have 1) to the laying of venue
of any suit, action or proceeding relating to or arising from this
Mortgage Note, the CCF Agreement, the Credit Documents (exclusive of
the Mortgage) and/or the Definitive Supplemental Documents, in any such
New Jersey court or U.S. Court sitting in Newark, New Jersey, or 2) to
the personal jurisdiction and/or preferred and proper venue of any such
New Jersey court or any such U.S. Court in Newark, New Jersey.
Section 14. Captions/Headings. The captions and headings that are set
forth in this Agreement are for the purpose of convenience only and are not
intended to be a part of this Agreement and shall not be deemed to modify,
explain, enlarge or restrict any of the provisions hereof.
Section 15. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any applicable jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provisions in any other
jurisdiction.
Section 16. Binding Obligations. The terms and provisions, and
promises, covenants and undertakings of this Agreement, shall bind and be
enforceable against and upon Compost, and its successors and assigns and other
legal agents and representatives, and shall inure to the benefit of Lionhart,
LHI and GEP, and their respective successors and assigns, transferees, credit
participants, guarantors and endorsees. If, at any time or times, by assignment
or otherwise, Lionhart, LHI and/or GEP transfers any of the Indebtedness or
Obligations, any such transfer shall carry with it Lionhart's, LHI's and GEP's
rights, interests and powers under this Agreement, including all such rights,
interests and powers that relate to or arise from this Agreement and the Pledged
Compost Shares. Lionhart, LHI and GEP, in their sole discretion and at their
sole option, shall have the right to assign this Agreement, as well as the CCF
Agreement, the other Credit Documents and the Definitive Supplemental Documents,
to any successor(s) or assign(s) of Lionhart, LHI and/or GEP.
Section 17. Time of the Essence. Time is hereby declared to be of the
essence of this Agreement, and of every part hereof.
SECTION 18. JURY WAIVER. COMPOST DOES HEREBY KNOWINGLY, VOLUNTARILY,
IRREVOCABLE, UNCONDITIONALLY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY
JURY
Page 8 of 9 Pages
<PAGE>
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT, THE CCF AGREEMENT, THE CREDIT DOCUMENTS AND/OR
THE DEFINITIVE SUPPLEMENTAL DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF
DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PERSON. THIS
IRREVOCABLE WAIVER OF THE RIGHT TO A JURY TRIAL IS A MATERIAL INDUCEMENT FOR
LIONHART, LHI AND/OR GEP TO DELIVER THE CREDIT, AND TO EXECUTE AND DELIVER, AND
OTHERWISE CONSUMMATE THE TRANSACTIONS CONTEMPLATED UNDER, THE CCF AGREEMENT, THE
CREDIT DOCUMENTS AND THE DEFINITIVE SUPPLEMENTAL DOCUMENTS.
Section 19. Counterparts/Facsimile. This Agreement may be executed in
any number of counterparts, and each by fax, e-mail or other digital or
telephonic transmission, and each of which shall be an original, but all of
which together will constitute one and the same instrument.
Section 20. Notices. Any notices by or to Compost, Miami and/or
Bedminster, or by or to Lionhart, LHI and/or GEP, under this Agreement, shall be
given as provided under Section 20.04 of the CCF Agreement.
Section 21. Written Instrument Requirement. This Agreement cannot be
altered, amended, modified or discharged orally and no executory agreement shall
be effective to modify or discharge this Agreement, in whole or in part, unless
it is in writing and signed by the party against whom enforcement of the
modification, alteration, amendment or discharge is sought.
Section 22. Assignment. This Agreement, and any rights hereunder, may
be assigned by Lionhart, LHI and GEP, or any of their respective participants
and/or successors and assigns, at their sole discretion and option. This
Agreement may not be assigned by Compost, and Compost shall not delegate any of
its duties under this Agreement, in whole or in part, without the advance
written consent of Lionhart, LHI and GEP (pursuant to which any such consent may
be granted or withheld in the sole discretion of the Pledgees).
Section 23. Definitions. All capitalized terms that are set forth in
this Agreement, and that are not expressly defined under this Agreement, shall
have the meanings and definitions that are assigned or ascribed to such terms in
the CCF Agreement, the Credit Documents and/or the Definitive Supplemental
Documents.
Section 24. Incorporation of Documents. The CCF Agreement, the Credit
Documents (including the Mortgage, the Mortgage Note, the Compost-Miami
Guaranty, the Security Agreement, the Compost Stock Pledge Agreement (Miami
Common Stock) and the Compost Stock Pledge Agreement (Bedminster Common Stock))
and the Definitive Supplemental Documents, and all other agreements, instruments
or other documents that are referred to in this Agreement, are hereby
incorporated by reference and form a part of this Agreement.
IN WITNESS WHEREOF, Compost, and Lionhart, LHI and GEP, have executed
and delivered this Agreement on and as of this 30th day of October, 1998.
Pledgor/Debtor: COMPOST AMERICA HOLDING COMPANY, INC.
----------------------------------------
Roger E. Tuttle
President and Chief Executive Officer
Pledgees/Secured Parties: LIONHART GLOBAL APPRECIATION FUND, LTD.
----------------------------------------
Terrence P. Duffy
Director
Page 9 of 9 Pages
<PAGE>
LIONHART INVESTMENTS, LTD.
----------------------------------------
Terrence P. Duffy
Director
GLOBAL EARTHFUND PARTNERS, L.L.C.
----------------------------------------
Jay A. Duffy
President
Page 9 of 9 Pages
<PAGE>
Exhibit 99.4
COMPOST STOCK PLEDGE AGREEMENT
(MIAMI COMMON STOCK)
Compost Stock Pledge Agreement (Miami Common Stock) Pursuant to CCF Agreement
October 30, 1998
THIS COMPOST STOCK PLEDGE AGREEMENT ("Agreement") is made, executed and
consummated effectively this 30th day of October, 1998 ("Effective Date"), by
and among COMPOST AMERICA HOLDING COMPANY, INC. ("Compost") and TOMAS ANDRES
MESTRE ("Mestre") (Compost and Mestre are sometimes collectively referred to in
this Agreement as the "Pledgor(s)"), and, LIONHART GLOBAL APPRECIATION FUND,
LTD. ("Lionhart"), LIONHART INVESTMENTS, LTD. ("LHI") and GLOBAL EARTHFUND
PARTNERS, L.L.C. ("GEP") (Lionhart, LHI and GEP are sometimes collectively
referred to in this Agreement as the "Pledgee(s)").
Recitals:
1. Compost is a New Jersey corporation. The principal office of Compost
is located at 320 Grand Avenue, Englewood, New Jersey 07631. Mestre is a
resident and domicile of the State of Florida.
2. Miami Recycling and Composting Co., Inc. (Miami"), is a Delaware
corporation. The principal office of Miami is located at 320 Grand Avenue,
Englewood, New Jersey 07631. Bedminster Seacor Services Miami Corporation
("Bedminster") is a Florida corporation. The principal office of Bedminster is
located at 320 Grand Avenue, Englewood, New Jersey 07631. Compost is the direct
parent of Miami, owns and controls 80.1% of all issued and outstanding capital
stock of Miami, and controls Miami. Miami is the direct parent of Bedminster,
Bedminster is a direct wholly-owned subsidiary of Miami, and Compost controls
Bedminster (which is an indirect controlled subsidiary of Compost).
3. Compost owns and controls 80.1% of all issued and outstanding
capital stock of Miami, and Mestre owns and controls 19.9% of all issued and
outstanding capital stock of Miami. Compost and Mestre own and control
collectively all of the issued and outstanding capital stock of Miami. Both
Compost and Mestre expect to benefit financially from the extension of the
Credit, by the Pledgees to Compost, Miami and Bedminster, as otherwise
contemplated under the CCF Agreement, as defined in Recital Paragraph 7 of this
Agreement.
4. Lionhart is a British Virgin Islands international business company.
The principal office of Lionhart, in the British Virgin Islands, is located at
c/o Citco B.V.I. Limited, Post Office Box 662, Road Town, Tortola, British
Virgin Islands.
5. LHI is a United Kingdom limited liability company. The principal
office of LHI, in the United Kingdom, is located at 19 Camp Road, Heston Court,
Wimbledon, London SW19 4 RH, England. As of the Effective Date of this
Agreement, LHI is engaged by Lionhart as its investment advisor.
6. GEP is an Indiana limited liability company. The principal office of
GEP in the United States is c/o John Thomas Drics, Esq., 111 Monument Circle,
Suite 312, Indianapolis, Indiana 46204. As of the Effective Date of this
Mortgage, Lionhart is the direct parent of GEP, and GEP is a direct wholly-owned
subsidiary of Lionhart.
7. On and effective as of October 30, 1998, Compost, Miami, Bedminster,
Lionhart, LHI and GEP are executing, consummating and delivering, or will or are
about to execute, consummate and deliver, an agreement, entitled "Credit,
Capitalization and Financing Agreement" ("CCF Agreement"), which is hereby
incorporated by reference. Except as otherwise defined separately in this
Agreement, and/or except as otherwise indicated by the context in this
Agreement, any terms that are capitalized in this Agreement shall have the same
definition and meaning as is ascribed to such terms in the CCF Agreement (and/or
in any Credit Document(s) or Supplemental Definitive Document(s) (as those terms
are defined under the CCF Agreement)). This Agreement is the same instrument,
agreement and document that is referred to, and as is otherwise defined as, the
Compost Stock Pledge Agreement (Miami Common Stock), under Section 1.1.34 of the
CCF Agreement.
8. Pursuant to the terms and subject to the conditions set forth in the
CCF Agreement, the Credit Documents and the Definitive Supplemental Documents,
Compost, Miami and/or Bedminster have the affirmative duty and obligation, inter
alia, to and for the benefit of Lionhart, LHI and/or GEP, 1) to pay and
discharge timely punctually, completely and fully certain Indebtedness (as that
term is defined under Section 18.01.01 of the CCF Agreement) and 2) to perform
and discharge timely, punctually, completely and fully certain Obligations (as
that term is defined under Section 18.01.02 of the CCF Agreement).
Page 1 of 10 Pages
<PAGE>
For purposes of this Agreement, the terms "Indebtedness" and "Obligations" shall
have the same meanings and definitions as ascribed respectively to such terms
under Section 18.01.01 and Section 18.01.02 of the CCF Agreement.
8. Compost and Mestre, 1) for and in consideration of (i) the delivery
by GEP to Compost, Miami and Bedminster of the Credit (as defined under Section
2.1 of the CCF Agreement) and (ii) the execution, delivery or consummation of
the agreements, promises, covenants and other undertakings by Lionhart, LHI
and/or GEP as otherwise provided under the CCF Agreement, the Credit Documents
and/or the Supplemental Definitive Documents ("Consideration"), and 2) as an
inducement to Lionhart, LHI and GEP to enter into, agree, execute and deliver,
and otherwise consummate the transactions contemplated under, the CCF Agreement,
the Credit Documents and the Supplemental Definitive Documents, and, 3) to
additionally secure (to and for the benefit of Lionhart, LHI and GEP) the timely
and complete payment of the Indebtedness and the performance and discharge of
the Obligations, by and on the part of Compost, Miami and Bedminster, under and
pursuant the CCF Agreement, the Credit Documents and/or the Definitive
Supplemental Documents, have agreed to execute or deliver (at the Term Loan
Closing on the Closing Date), or cause to be executed and delivered (on the Term
Loan Closing on the Closing Date), to and for the benefit of Lionhart, LHI and
GEP, this Agreement, without the delivery of which Lionhart, LHI and GEP would
not exchange, execute or otherwise deliver the Consideration to or for the
benefit of Compost, Miami and/or Bedminster.
NOW, THEREFORE, for good and valuable consideration, the receipt and
legal adequacy of which are hereby acknowledged, and as part of the
consideration of Compost and as the consideration of Mestre for the
Consideration of Lionhart, LHI and GEP, as otherwise provided under the CCF
Agreement, the Credit Documents and the Definitive Supplemental Documents,
Compost and Mestre hereby promise, covenant, and represent and warrant to
Lionhart, LHI and GEP, and hereby agree with Lionhart, LHI and GEP, as follows:
Agreement:
Section 1. Pledge/Security Interest/Collateral. In consideration of and
as an inducement for the Consideration specified in this Agreement, and to
secure the timely, punctual, complete and full payment and discharge of the
Indebtedness and the timely, punctual, complete and full performance and
discharge of the Obligations, by and on the part of Compost, Miami and
Bedminster, under and pursuant to this Agreement, the CCF Agreement, the Credit
Documents and the Definitive Supplemental Documents:
1.01. Pledge. Compost and Mestre (hereinafter and collectively
referred to sometimes in this Agreement as the "Pledger(s)") hereby
grant, pledge, bargain, release, convey, warrant, sell, assign,
transfer, set over, confirm and deliver unto Lionhart, LHI and GEP, and
all of their respective successors and assigns, a security interest in,
and hereby deliver to Lionhart, LHI and GEP to perfect such pledge and
security interest, (i) 810 shares of Miami Common Stock that are
otherwise represented by Certificate No. 1, and, (ii) 190 shares of
Miami Common Stock that are otherwise represented by Certificate No. 2
(both such Certificates of which indicate thereon that the Agent, for
and on behalf of Lionhart, LHI and GEP, is the registered owner
thereof), and all amendments, additions, adjustments, modifications,
substitutions, replacements, extensions and additions thereof,
including, without limitation, all cash and non-cash proceeds thereof,
and all such additional shares or securities, or other rights, warrants
or options, as provided or otherwise contemplated under Section 6.02
and/or Section 6.04 of this Agreement ("Pledged Miami Shares" and/or
"Collateral"), which together constitute and represent, and shall
hereafter constitute all of the authorized, issued and outstanding
capital stock of Miami until such time that all Indebtedness is paid
and discharged in full and all Obligations are performed and discharged
in full. The Pledged Miami Shares, that are otherwise pledged by
Compost under this Agreement, are referred to sometimes in this
Agreement as the "Pledged Compost-Miami Shares," and the Pledged Miami
Shares that are otherwise pledged by Mestre under this Agreement, are
referred to sometimes in this Agreement as the "Pledged Mestre-Miami
Shares."
1.02. Transfer. The Pledgors shall immediately transfer to and
maintain in the name of the Agent (for and on behalf of Lionhart, LHI
and GEP under this Agreement), and Compost (by itself or through the
auspices of Miami) shall immediately transfer to and shall maintain in
the name of Agent (for and on behalf of Lionhart, LHI and GEP under
this Agreement) in all appropriate books, records and ledgers of Miami,
the Pledged Miami Shares, pursuant to which the Agent shall serve as
custodian and agent, for and on behalf of Lionhart, LHI and GEP, of
such Pledged Miami Shares, pursuant to the terms and subject to the
conditions of this Agreement.
1.03. Certificate/Legend. Prior to delivery of the Pledged Miami
Shares to the Agent, for and on behalf of
Page 2 of 10 Pages
<PAGE>
Lionhart, LHI and GEP, as provided under Section 1.01 of this
Agreement, Compost (by itself or through the auspices of Miami), for
and on behalf of the Pledgors, shall place or cause to be placed on
each certificate, that represents any one (1) or more of the
above-referenced Pledged Miami Shares (including the above-referenced
Certificate No. 1 and Certificate No. 2), and each such certificate
shall bear, the following legend, as appropriate:
"The securities represented hereby are pledged by Compost America
Holding Company, Inc. [Tomas Andres Mestre], to Lionhart Global
Investments, Ltd. ("Lionhart"), Lionhart Investments, Ltd.
("LHI"), and Global EarthFund Partners, Ltd. ("GEP"), pursuant to
the terms and subject to the conditions of an agreement, entitled
"Compost Stock Pledge Agreement (Miami Common Stock)," by and
among Compost America Holding Company, Inc., Tomas Andres Mestre,
Lionhart, LHI and GEP, that is dated on and as of October 30,
1998, and pursuant to which GEP (for and on behalf of Lionhart,
LHI and GEP) is and shall remain as the registered holder of these
securities, as security and collateral for the payment in full of
certain Indebtedness and the performance in full of certain
Obligations as those terms are defined under such Compost Stock
Pledge Agreement (Miami Common Stock), until such Indebtedness is
paid in full and such Obligations are performed in full."
Section 2. Inter-Pledgee Agent. The Pledgees, pursuant to the terms and
subject to the conditions set forth in an agreement, entitled "Inter-Creditor
Agreement," that is dated and was executed by and among the Pledgees, on or
about October 30, 1998, and that is intended to be recorded promptly hereafter
in the Official Records Book or other Public Records of Miami-Dade County,
Florida, and any other appropriate public records as may determined by the
Pledgees, each duly appointed GEP, as the their exclusive agent and power of
attorney ("Agent"), which power is coupled with an interest, for all Pledgees,
with respect to this Agreement, the CCF Agreement, the Credit Agreement and the
Definitive Supplemental Documents, and the exercise of the rights and remedies
of each Pledgee with respect thereto. Pursuant to and as provided under the
Inter-Creditor Agreement, 1) GEP, as Agent for all Pledgees, is authorized and
empowered, in their respective name, place and stead, with full power of
substitution, to exercise and perform from time to time, and without joinder of
or by any Pledgee, any act, power, duty, right or obligation whatsoever that any
Pledgee or the Pledgees (under this Agreement, the CCF Agreement, the Credit
Documents and/or the Definitive Supplemental Documents) may now or hereafter
exercise or perform, and to deal in all respects with Compost, with respect to
the transactions evidenced under this Agreement, the CCF Agreement, the Credit
Documents and/or the Definitive Supplemental Documents; and, 2) Miami and Mestre
and any third party dealing with the Agent, under this Agreement, the CCF
Agreement, the Credit Documents and/or the Definitive Supplemental Documents,
shall have the right to rely upon the power and authority of the Agent to bind
each Pledgee with respect to the exercise of remedies or the giving of notices
or consents under and pursuant to this Agreement, the CCF Agreement, the Credit
Documents and/or the Definitive Supplemental Documents.
Section 3. Agreement Purpose and Security. This Agreement is executed
and delivered by the Pledgors, to Lionhart, LHI and GEP, pursuant to the terms
and subject to the conditions of the CCF Agreement. The pledge of and security
interest in and to the Pledged Miami Shares, is hereby given by the Pledgors, to
Lionhart, LHI and GEP, to secure the timely, punctual, complete and full payment
and discharge of the Indebtedness and the timely, punctual, complete and full
performance and discharge of the Obligations, by and on the part of Compost,
Miami and Bedminster, under and pursuant to this Agreement, the CCF Agreement,
the Credit Documents and the Definitive Supplemental Documents, including,
without limitation, all such Indebtedness and Obligations that relate to or
arise from the Mortgage Note, and any and all modifications, amendments,
restatements, extensions, renewals, supplements and replacements thereof, as any
of the foregoing may be amended and/or restated from time to time and at any
time, and all reasonable costs and expenses incurred or paid or incurred by
Lionhart, LHI and/or GEP to preserve and protect the Pledged Miami Shares and to
enforce the security interests and pledge of Lionhart, LHI and/or GEP therein,
all of which Compost promises and covenants to pay and discharge all such
Indebtedness when due and to perform and discharge all Obligations when due or
required to be performed, without relief from valuation and appraisement laws
and with reasonable attorneys' fees. The pledge and security interest in the
Pledged Miami Shares shall remain, and shall not be released, unless and until
all Indebtedness is paid in full and all Obligations are performed and
discharged in full. Upon the payment in full of the Indebtedness and the
performance in full of all of the Obligations, whereupon the Pledgees shall have
the affirmative duty, in a commercial reasonable and prompt manner, to return
the Pledged Miami Shares to Compost and Mestre and, upon any reasonable request
from time to time by Compost and/or Mestre, to execute any documents,
instruments
Page 3 of 10 Pages
<PAGE>
or certificates necessary to terminate the security interest and pledge
evidenced by this Agreement.
Section 4. Release/Waiver. The Pledgors hereby and expressly release
and waive each and every of the following: 1) all rights, privileges and/or
claims under and/or by virtue of any homestead, stay, appraisement or exemption
laws that may now exist or hereinafter be enacted; 2) all rights, privileges
and/or claims to acquire or retain possession, custody or control of the Pledged
Miami Shares, or any part thereof, after any Event of Default under the CCF
Agreement, the Credit Documents (including this Agreement) and any Definitive
Supplemental Documents, as otherwise provided under Section 9 of this Agreement;
and, 3) all rights of redemption from the sale of the Pledged Miami Shares, or
any part thereof, under any order or decree of foreclosure or public or private
sale of and with respect to the Pledged Miami Shares, or any part thereof.
Section 5. Recital Paragraphs/Incorporation. The Recital Paragraphs
that are set forth on Pages 1-2 of this Agreement, are hereby made part of this
Agreement, as if set forth in their complete terms under this Section 5.
Section 6. Voting Rights, Dividends, Warrants and Adjustments. The
Pledgors hereby represent and warrant to Lionhart, LHI and GEP, and hereby
agree, promise and covenant, as follows:
6.01. Cash Dividends. Until all Indebtedness is paid and
discharged in full and all Obligations are performed and discharged in
full, all cash dividends and other pecuniary amounts received by the
Agent, as a result of its record ownership of and that are otherwise
attributable to the Pledged Miami Shares, shall be applied by the Agent
(for and on behalf of Lionhart, LHI and GEP), net of any taxes
whatsoever assessed to or against the Agent (and/or Lionhart, LHI
and/or GEP) for and with respect to any such cash dividends, to the
payment of Principal and Interest and other charges under the Mortgage
Note, pursuant to Section 2 thereof.
6.02. Adjustments. If, and in the event, during the period that
any Indebtedness is not paid and discharged in full or that any
Obligation is not performed and discharged in full, any share dividend,
reclassification, readjustment, or other change is declared or made in
the capital structure of Miami, and that relate to or arise from or
otherwise affect the Pledged Miami Shares, all new, substituted and
additional shares or other securities that are then or thereby issued
by reason of any such share dividend, reclassification, readjustment or
other such change, shall continue to be held by the Agent (for and on
behalf of Lionhart, LHI and GEP), as additional pledged Collateral and
security (and as part of the Pledged Miami Shares), pursuant to the
terms and subject to the conditions of this Agreement (in the same
manner as if such shares or securities were originally pledged and
delivered under this Agreement upon execution, consummation and
delivery hereof).
6.03. Voting Rights. Until all Indebtedness is paid and discharged
in full and all Obligations are performed and discharged in full, the
Agent (for and on behalf of Lionhart, LHI and GEP), at its sole option
and election, shall be entitled 1) to vote the Pledged Miami Shares, on
all questions, issues, positions, matters and/or transactions that are
otherwise submitted to the shareholders of Miami for consideration
thereof and/or a vote thereupon, or otherwise, or 2) to execute and
grant one (1) or more general or limited proxies to Compost in the
amount of its respective Pledged Miami Shares, that are pledged under
this Agreement, in and pursuant to any such proxy or proxy form as is
reasonable and usual and customary, as determined by the Agent, to vote
the Pledged Miami Shares on all questions, issues, positions, matters
and/or transactions that are otherwise submitted to the shareholders of
Miami for consideration thereof and/or a vote thereupon, or otherwise,
or 3) to execute and grant one (1) or more general or limited proxies
to Mestre in the amount of their respective Pledged Mestre Shares, that
are pledged under this Agreement, in and pursuant to any such proxy or
proxy form as is reasonable and usual and customary, as determined by
Lionhart, to vote the Pledged Mestre Shares, on all questions, issues,
positions, matters and/or transactions that are otherwise submitted to
the shareholders of Miami for consideration thereof and/or a vote
thereupon, or otherwise,
6.04. Warrants/Options/Rights. If, and in the event, during the
period that any Indebtedness is not paid and discharged in full or that
any Obligation is not performed and discharged in full, any
subscription warrants or any other rights, warrants or options shall be
issued in connection with the Pledged Miami Shares, then any and all
such rights, warrants and options shall be held by the Agent ( for and
on behalf of Lionhart, LHI and GEP) as additional pledged Collateral
and security and as part of the Pledged Miami Shares, and if exercised
by Compost or Mestre (and/or Lionhart, LHI and/or GEP), all such new
shares or other securities so acquired by and that are otherwise
attributable to the exercise of any such rights, warrants or options
shall be delivered to and shall be held by the Agent (for and on behalf
of Lionhart, LHI and GEP) as additional pledged Collateral and security
and shall be deemed as part of the Pledged Miami Shares, and shall be
deemed as immediately assigned, pledged, transferred and delivered to
the Agent
Page 4 of 10 Pages
<PAGE>
(for and on behalf of Lionhart, LHI and GEP), in the same manner as is
otherwise provided and contemplated under Section 1 of this Agreement,
all of which shall thereafter be held by the Agent (for and on behalf
of Lionhart, LHI and GEP) as security and as part of the Pledged Miami
Shares pursuant to the terms and subject to the conditions set forth
under this Agreement.
Section 7. General Representations and Warranties. Each Pledger hereby
represents and warrants to Lionhart, LHI and GEP, and hereby promises and
covenants, as follows:
7.01. Collateral.
(a) Title. Compost owns and will maintain full and absolute title
in and to its Pledged Compost-Miami Shares, free of all security
interests, pledges, liens and encumbrances other than the pledge and
security interest herein granted to Lionhart, LHI and GEP under this
Agreement, and has good and legal right to subject, pledge and
otherwise encumber its Pledged Compost-Miami Shares to the pledge and
security interest granted by and under this Agreement. Mestre owns and
will maintain full and absolute title in and to his Pledged
Mestre-Miami Shares, free of all security interests, pledges, liens and
encumbrances other than the pledge and security interest herein granted
to Lionhart, LHI and GEP under this Agreement, and has good and legal
right to subject, pledge and otherwise encumber his Pledged
Mestre-Miami Shares to the pledge and security interest granted by and
under this Agreement. Compost shall defend the Pledged Miami Shares,
that are pledged under this Agreement, against all adverse claims, and
Mestre shall defend his Pledged Mestre-Miami Shares, that he has
pledged under this Agreement, against all adverse claims. The Pledged
Miami Shares, in whole or in part, are not and will not be the subject
of any financing statement (other than any filed by Lionhart, LHI
and/or GEP) on file in any public office, or pledged to or subjected to
the interest of any Person except as provided specifically under this
Agreement.
(b) Taxes and Assessments. Compost shall promptly pay, as they
become due and payable, all taxes and assessments imposed upon the
Pledged Miami Shares, if any, that either Compost or Mestre pledged
under this Agreement.
(c) Protection of Pledged Miami Shares. Compost shall not, without
the prior and advance written consent and approval of and by Lionhart,
LHI and GEP (pursuant to which any such consent and approval may be
granted or withheld in the sole and exclusive discretion of Lionhart,
LHI and GEP), sell, assign, transfer, encumber, hypothecate, pledge,
mortgage, or otherwise dispose of any of the Pledged Compost-Miami
Shares, that it has pledged under this Agreement, or any of its right,
title or interest therein or in any part thereof, and shall not
otherwise do or permit anything to be done or occur that may impair any
such Pledged Miami Shares as security hereunder. Mestre shall not,
without the prior and advance written consent and approval of and by
Lionhart, LHI and GEP (pursuant to which any such consent and approval
may be granted or withheld in the sole and exclusive discretion of
Lionhart, LHI and GEP), sell, assign, transfer, encumber, hypothecate,
pledge, mortgage, or otherwise dispose of any of the Pledged
Mestre-Miami Shares, that he has pledged under this Agreement, or any
of his right, title or interest therein or in any part thereof, and
shall not otherwise do or permit anything to be done or occur that may
impair any such Pledged Mestre-Miami Shares as security hereunder.
7.02. Financing Statements, Certificates, Etc. (i) Compost shall
do such acts as Lionhart, LHI and/or GEP may deem necessary or appropriate to
establish and maintain in Lionhart, LHI and/or GEP a valid security interest and
pledge in the Pledged Miami Shares (that either Compost or Mestre has otherwise
pledged under this Agreement), free of all other liens, pledges and claims not
permitted under this Agreement, to secure full and prompt payment and discharge
of the Indebtedness and the full and prompt performance and discharge of the
Obligations. Compost authorizes Lionhart, LHI and/or GEP, at the sole expense of
Compost, to sign and file, without the signature of Compost, such financing and
continuation statements, amendments and supplements thereto, and other documents
which Lionhart, LHI and/or GEP may from time to time deem necessary to perfect,
preserve and protect their respective pledges and security interests in such
Pledged Miami Shares (including the Pledged Compost-Miami Shares). Compost shall
from time to time, upon any request by Lionhart, LHI and/or GEP, deliver to
Lionhart, LHI and/or GEP, certified schedules, in such form as may be specified
by Lionhart, LHI and/or GEP, identifying the Pledged Miami Shares, or such part
thereof as may be specified by Lionhart, LHI and/or GEP, together with such
supporting documents and information as Lionhart, LHI and/or GEP reasonably may
request. (ii) Mestre shall do such acts as Lionhart, LHI and/or GEP may deem
necessary or appropriate to establish and maintain in Lionhart, LHI
Page 5 of 10 Pages
<PAGE>
and/or GEP a valid pledge and security interest in the Pledged Mestre-Miami
Shares (that he has otherwise pledged under this Agreement), free of all other
liens, pledges and claims not permitted under this Agreement, to secure full and
prompt payment and discharge of the Indebtedness and the full and prompt
performance and discharge of the Obligations. Mestre authorizes Lionhart, LHI
and/or GEP, at the sole expense of Compost, to sign and file, without the
signature of Mestre, such financing and continuation statements, amendments and
supplements thereto, and other documents which Lionhart, LHI and/or GEP may from
time to time deem necessary to perfect, preserve and protect their respective
pledges and security interests in such Pledged Mestre-Miami Shares. Mestre shall
from time to time, upon any request by Lionhart, LHI and/or GEP, deliver to
Lionhart, LHI and/or GEP, certified schedules, in such form as may be specified
by Lionhart, LHI and/or GEP, identifying the Pledged Mestre-Miami Shares, or
such part thereof as may be specified by Lionhart, LHI and/or GEP, together with
such supporting documents and information as Lionhart, LHI and/or GEP reasonably
may request.
7.03. Taxes, Assessments and Expenses.
(a) Taxes and Assessments. Compost, agrees to pay promptly when
due all taxes, assessments and governmental charges upon or against
Compost, Miami and/or Bedminster, for the property or operations of
Compost, Miami and Bedminster, or otherwise, in each case before the
same become delinquent and before penalties accrue thereon, unless and
to the extent that the same are being contested in good faith by
appropriate proceedings and for which Compost, either directly or
through Miami and/or Bedminster, has established adequate reserves.
(b) Material Occurrences. Compost shall give written notice to the
Agent (for and on behalf of Lionhart, LHI and GEP) of all material
occurrences and events adversely affecting the Pledged Miami Shares
(that either Compost or Mestre has pledged under this Agreement) or the
value, security or amount thereof. Mestre shall give written notice to
Lionhart, LHI and GEP of all material occurrences and events adversely
affecting the Pledged Mestre-Miami Shares (that he has pledged under
this Agreement).
(c) Secured Party Expenses. In the event that Compost fails to pay
taxes, assessments, costs and expenses that Compost or Mestre is
required to pay under this Section 7, or in the event that either
Compost or Mestre fails to keep the Pledged Miami Shares, or any part
thereof, free from other security interests, pledges, liens, or
encumbrances not permitted under the terms of this Agreement, Lionhart,
LHI and/or GEP may make reasonable expenditures for any and all such
purposes. All reasonable costs and expenses of Lionhart, LHI and/or GEP
in retaking, holding, preparing for sale and selling or otherwise
realizing upon any Pledged Miami Shares or enforcing any provisions
hereof in the event of any default by Compost and/or Mestre, including
reasonable attorneys' fees, shall constitute part of the Indebtedness
and Obligations that are otherwise secured under this Agreement by the
Pledged Miami Shares, and Compost and Mestre shall forthwith reimburse
Lionhart, LHI and GEP for any such reasonable payments made or any such
reasonable expenses incurred by Lionhart, LHI and/or GEP.
Section 8. Performance by Secured Party of Debtor's Agreements.
Lionhart, LHI and/or GEP may, but shall have no duty, to perform any agreement,
promise or covenant of Compost and/or Mestre hereunder, which Compost and/or
Mestre shall have failed to perform or discharge, and Compost shall forthwith
reimburse Lionhart, LHI and GEP for any such reasonable payments made or any
such reasonable expenses incurred by Lionhart, LHI and/or GEP, including
reasonable attorneys' fees, and all such reasonable payments, costs and
expenses, including reasonable attorneys' fees, shall constitute part of the
Indebtedness and Obligations that are otherwise secured under this Agreement by
the Pledged Miami Shares.
Section 9. Event of Default. An "Event of Default," under this
Agreement, is and shall be defined as, and shall mean and include, any "Event of
Default" as that term is defined under Section 18.02 (and as otherwise qualified
under Section 18.02.02) of the CCF Agreement, including, without limitation, any
default, breach, violation, failure and/or omission, by or on the part of
Compost, to pay and discharge, on a timely, punctual, complete and full basis,
the Principal and Interest when the Principal and Interest are or become due and
payable under the Mortgage Note.
Section 10. Remedies Upon Default. Upon the occurrence of an Event of
Default (as defined under Section 9 of this Agreement), Lionhart, LHI and GEP
shall have the right, but not the obligation, in their sole discretion and
option, to exercise all rights and remedies that are set forth and described
under Section 18.04 of the CCF Agreement, and to exercise any one (1) or all of
the following remedies, in addition to any other rights or remedies that
Lionhart, LHI and/or GEP may be entitled to assert and/or claim, at law or in
equity:
Page 6 of 10 Pages
<PAGE>
10.01. Acceleration-Indebtedness. Lionhart, LHI and GEP may, from
time to time and at any time(s), declare the entire unpaid amount or
portion of any, some or all of the Indebtedness (including, without
limitation, the unpaid amount or portion of all Principal and Interest
under the Mortgage Note), immediately due and payable, without further
notice or demand, or presentment, protest, notice of protest or notice
of dishonor (of which Compost and Mestre each hereby expressly waives
any such notice, demand, presentment, protest, notice of protest or
notice of dishonor), whereupon all such Indebtedness, as accelerated
under this Section 10.01, shall become immediately due and payable in
full, and Lionhart, LHI and GEP shall the right immediately to
foreclose upon the lien created by the Mortgage against the Mortgaged
Miami Site (as provided and otherwise contemplated under the Mortgage),
or any part thereof; to enforce and use lawful self-help or foreclose
upon every other security interest in any and all Collateral as
otherwise created or confirmed under this Agreement, or any part
thereof; to enforce, use lawful self-help or foreclose upon every
security interest in any of the pledged Collateral or any other
Collateral under the Security Agreement, the Compost Stock Pledge
Agreement (Compost Common Stock) and/or the Compost Stock Pledge
Agreement (Bedminster Common Stock), or any part thereof; and/or, to
commence or institute any action, suit or other proceeding which
Lionhart, LHI and/or GEP may deem necessary or proper to protect their
respective interests.
10.02. Acceleration-Obligations. Lionhart, LHI and GEP may, from
time to time at any time(s), declare any and all Obligations, that have
not been theretofore performed and discharged, immediately due and
required to be performed and discharged immediately, without further
notice or demand, or presentment, protest, notice of protest or notice
of dishonor (of which Compost and Mestre each hereby expressly waives
any such notice, demand, presentment, protest, notice of protest or
notice of dishonor), whereupon all such Obligations, as accelerated
under this Section 10.02, shall become due and immediately required to
be performed and discharged completely, and Lionhart, LHI and GEP shall
the right immediately to foreclose upon the lien created by the
Mortgage against the Mortgaged Miami Site (as provided and otherwise
contemplated under the Mortgage), or any part thereof; to enforce and
use lawful self-help or foreclose upon every other security interest in
any and all Collateral as otherwise created or confirmed under this
Agreement, or any part thereof; to enforce, use lawful self-help or
foreclose upon every security interest in any of the pledged Collateral
or any other Collateral under the Security Agreement, the Compost Stock
Pledge Agreement (Compost Common Stock) and/or the Compost Stock Pledge
Agreement (Bedminster Common Stock), or any part thereof; and/or, to
commence or institute any action, suit or other proceeding which
Lionhart, LHI and/or GEP may deem necessary or proper to protect their
respective interests.
10.03. Other Recourse and Remedies. Lionhart, LHI and GEP each
shall have all the remedies of a creditor and a secured party under the
New Jersey Uniform Commercial Code and all other applicable law, and as
otherwise provided by applicable law, including but not limited to, the
following:
(1) Possession/Sale. Lionhart, LHI and/or GEP shall have the
right, without notice to Compost and/or Mestre, and without
liability for any diminution in price that may have occurred, sell
all or any amount or part of the Pledged Miami Shares in such a
manner and for such a price as may be determined by Lionhart, LHI
and GEP. Without limiting any rights or remedies that are
otherwise available to Lionhart, LHI and/or GEP, at any bona fide
public sale, Lionhart, LHI and/or GEP shall have the sole right
and authority to bid for and otherwise purchase any amount or part
of the Pledged Miami Shares. If, and in the event, Lionhart, LHI
and/or GEP do sell any such amount or part of the Pledged Miami
Shares at any such sale (public or private), the proceeds derived
from any such sale, after the payment and discharge of expenses
(including, if applicable, reasonable expenses of retaking,
holding, preparing for sale, selling and the like, and reasonable
attorneys' fees that relate to or arise from any such sale), shall
be applied or otherwise credited to the payment of Principal and
Interest and other charges under the Mortgage Note, pursuant to
Section 2 thereof.
(2) Cumulative Remedies. All remedies of Lionhart, LHI and/or
GEP shall be cumulative to the fullest extent provided by law. Any
pursuance by Lionhart, LHI and/or GEP of any single judicial or
other remedies shall not abate nor bar resort to other remedies
with respect to the Pledged Miami Shares, and pursuit of certain
remedies with respect to all or some of the Pledged Miami Shares
shall not bar other remedies with respect to the Indebtedness, the
Obligations, or other portions of the Pledged Miami Shares, or as
may otherwise be provided under the CCF Agreement, the Credit
Documents (including the Mortgage Note) and/or the Definitive
Supplemental Documents, and/or under any applicable law. Lionhart,
LHI and GEP may exercise its rights to the Pledged Miami Shares,
or any part thereof, without resorting or regard to
Page 7 of 10 Pages
<PAGE>
other Pledged Miami Shares or sources of security or reimbursement
for the Indebtedness and/or Obligations (whether under the CCF
Agreement, the Credit Documents the Definitive Supplemental
Documents, or otherwise).
Section 11. Nonwaiver-Expenses, Proceeds of Collateral. No waiver by
Lionhart, LHI and/or GEP of any of its or their respective rights or of an Event
of Default shall be effective unless in writing, and in no event shall it
operate as a waiver of any other of its or their respective rights or any other
Event of Default, nor of the same rights or Event of Default on any future
occasion. Compost and Mestre shall pay to Lionhart, LHI and GEP, on demand by
Lionhart, LHI and/or GEP, any and all reasonable expenses, including reasonable
attorneys' fees, incurred or paid by Lionhart, LHI and/or GEP in protecting or
enforcing its rights upon or under the Indebtedness, the Obligations, the
Pledged Miami Shares or this Agreement.
Section 12. Legal Authority/Compliance/Miscellaneous. Compost hereby
represents and warrants, and hereby promises, agrees and covenants, as follows:
12.01. General Board Authorization. Compost has all necessary
corporate power and authority, pursuant to the approval by and the duly
adopted resolutions of its Board of Directors, and otherwise, to
execute and deliver this Agreement, and to perform their respective
duties and obligations contemplated and as otherwise provided under
this Agreement, including, without limitation, the granting and
pledging to Lionhart, LHI and GEP of a security interest in and to, and
otherwise pledging, the Pledged Compost-Miami Shares.
12.02. No Violations. The execution and delivery of (and the
performance and consummation transactions contemplated under) this
Agreement, will not (i) conflict with or violate the Certificate of
Incorporation or By-Laws of Compost, (ii) conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to Compost
or by which any of its Properties are bound or affected, or (iii)
result in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give
to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on
any of the Properties or assets of Compost, pursuant to any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit,
insurance policy or other instrument or obligation to which is a party,
or by which Compost or its Properties, are bound or affected.
12.03. No Required Governmental Consents. The execution and
delivery of (and the performance and consummation transactions
contemplated under) this Agreement by Compost, does not and will not,
require any consent, approval, authorization or permit from any
Governmental Authority which has not been obtained.
12.04. Authority of Officers. Compost has good right and lawful
authority, through its designated and officers and representatives who
have signed and delivered this Agreement, for and on behalf of Compost,
to execute, deliver and consummate the transactions contemplated under
this Agreement.
12.05. Enforceability. This Agreement is a legal, valid and
binding obligation of and is enforceable against Compost, in accordance
with the terms of this Agreement, and there is no action or proceeding
at law or in equity, or by or before any court or Governmental
Authority now pending or to the knowledge of Compost threatened or
affecting Compost that may materially and adversely affect Compost.
12.06. Execution by Parties. Any person or party executing this
Agreement in a representative capacity, acknowledges, warrants and
represents 1) that he or she is an official representative of the firm
or corporation in whose name he or she is executing this Agreement, 2)
that he or she possesses full and complete authority to bind said firm
or corporation to the full and faithful performance of all conditions,
terms, provisions, covenants, warranties and representations as
contained in this Agreement, and 3) that all other parties are relying
on these representations and warranties as a material inducement to
execute, deliver and otherwise consummate the transactions contemplated
under this Agreement, the CCF Agreement, the Credit Documents and the
Definitive Supplemental Documents.
Section 13. Mestre Authority. Mestre hereby represents and warrants,
and hereby promises, agrees and covenants, that Mestre is emancipated and
competent; Mestre is legally authorized and entitled to execute and deliver this
Agreement, and to pledge the Pledged Mestre-Miami Shares as contemplated under
this Agreement; the execution and delivery of this Agreement and the
consummation of the transactions contemplated under this Agreement, will not
conflict with or violate any
Page 8 of 10 Pages
<PAGE>
applicable law, judgment, order or agreement which is applicable to Mestre, and
will not result in a reach of constitute any default under, or give to others
any rights of termination, amendment, acceleration or cancellation of, or result
in the creation of a lien or encumbrance on any of the properties or assets of
Mestre (pursuant to any undertaking whatsoever of Mestre); and, this Agreement
is a legal, valid and binding obligation of Mestre and is enforceable against
Mestre, in accordance with the terms of this Agreement, and there is not action
or proceeding at law or in equity, or by before any court or governmental agency
or authority, now pending, or to the knowledge of Mestre threatened or affecting
Mestre that may materially and adversely affect Mestre.
Section 14. Applicable Law, Jurisdiction and Venue. Compost and Mestre
hereby represent and warrant, and hereby promise, agree (with Lionhart, LHI and
GEP) and covenant, as follows:
14.01. This Agreement shall be governed by, construed in
accordance with, and shall be enforced under, the laws of the State of
New Jersey, exclusive of its rules relating to conflict of laws.
14.02. Subject to applicable conflict of laws principles, Compost
and Mestre shall accept venue with respect to all claims, actions or
lawsuits that relate to or arise from this Agreement, in any state
court or U.S. Court of competent jurisdiction that sits in Newark, New
Jersey. Compost and Mestre hereby, and irrevocably and unconditionally,
for themselves and their respective Properties, submits to the
jurisdiction of any such New Jersey court or U.S. Court sitting in
Newark, New Jersey, and any appellate court with jurisdiction
thereover, in any action or proceeding relating to or arising from this
Agreement, the CCF Agreement (exclusive of the Mortgage), the Credit
Documents and/or the Definitive Supplemental Documents, or for the
recognition or enforcement of any judgment, and Compost and Mestre each
hereby, and irrevocably and unconditionally, agrees, promises and
covenants that all such claims in respect of any such action or
proceeding shall be heard, determined and adjudicated in by any such
New Jersey court or, to the extent permitted by applicable law, by any
such U.S. Court. Compost and Mestre each hereby agrees, promises and
covenants that a final judgment in any such action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
14.03. Compost and Mestre hereby, and irrevocably and
unconditionally, waives, to the fullest extent under applicable law,
any defense or objection that it may now or hereafter have 1) to the
laying of venue of any suit, action or proceeding relating to or
arising from this Agreement, the CCF Agreement, the Credit Documents
(exclusive of the Mortgage) and/or the Definitive Supplemental
Documents, in any such New Jersey court or U.S. Court sitting in
Newark, New Jersey, or 2) to the personal jurisdiction and/or preferred
and proper venue of any such New Jersey court or any such U.S. Court in
Newark, New Jersey.
Section 15. Captions/Headings. The captions and headings that are set
forth in this Agreement are for the purpose of convenience only and are not
intended to be a part of this Agreement and shall not be deemed to modify,
explain, enlarge or restrict any of the provisions hereof.
Section 16. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any applicable jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provisions in any other
jurisdiction.
Section 17. Binding Obligations. The terms and provisions, and
promises, covenants and undertakings of this Agreement, shall bind and be
enforceable against and upon Compost and Mestre, and its and his respective
successors and assigns and other legal agents and representatives, and shall
inure to the benefit of Lionhart, LHI and GEP, and their respective successors
and assigns, transferees, credit participants, guarantors and endorsees. If, at
any time or times, by assignment or otherwise, Lionhart, LHI and/or GEP
transfers any of the Indebtedness or Obligations, any such transfer shall carry
with it Lionhart's, LHI's and GEP's rights, interests and powers under this
Agreement, including all such rights, interests and powers that relate to or
arise from this Agreement and the Pledged Miami Shares (including the Pledged
Compost-Miami Shares and the Pledged Mestre-Miami Shares). Lionhart, LHI and
GEP, in their sole discretion and at their sole option, shall have the right to
assign this Agreement, as well as the CCF Agreement, the other Credit Documents
and the Definitive Supplemental Documents, to any successor(s) or assign(s) of
Lionhart, LHI and/or GEP.
Section 18. Time of the Essence. Time is hereby declared to be of the
essence of this Agreement, and of every part hereof.
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SECTION 19. JURY WAIVER. COMPOST AND MESTRE EACH DOES HEREBY KNOWINGLY,
VOLUNTARILY, IRREVOCABLE, UNCONDITIONALLY AND INTENTIONALLY WAIVE THE RIGHT TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE CCF AGREEMENT, THE CREDIT
DOCUMENTS AND/OR THE DEFINITIVE SUPPLEMENTAL DOCUMENTS, OR ANY COURSE OF
CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF ANY PERSON. THIS IRREVOCABLE WAIVER OF THE RIGHT TO A JURY TRIAL IS A
MATERIAL INDUCEMENT FOR LIONHART, LHI AND/OR GEP TO DELIVER THE CREDIT, AND TO
EXECUTE AND DELIVER, AND OTHERWISE CONSUMMATE THE TRANSACTIONS CONTEMPLATED
UNDER, THE CCF AGREEMENT, THE CREDIT DOCUMENTS AND THE DEFINITIVE SUPPLEMENTAL
DOCUMENTS.
Section 20. Counterparts/Facsimile. This Agreement may be executed in
any number of counterparts, and each by fax, e-mail or other digital or
telephonic transmission, and each of which shall be an original, but all of
which together will constitute one and the same instrument.
Section 21. Notices. Any notices by or to Compost, Miami and/or
Bedminster, or by or to Lionhart, LHI and/or GEP, under this Agreement, shall be
given as provided under Section 20.04 of the CCF Agreement. Any notices to
Mestre shall be mailed to Compost and Miami, c/o Roger E. Tuttle and/or Tomas
Andres Mestre, as provided under Section 20.04 of the CCF Agreement.
Section 22. Written Instrument Requirement. This Agreement cannot be
altered, amended, modified or discharged orally and no executory agreement shall
be effective to modify or discharge this Agreement, in whole or in part, unless
it is in writing and signed by the party against whom enforcement of the
modification, alteration, amendment or discharge is sought.
Section 23. Assignment. This Agreement, and any rights hereunder, may
be assigned by Lionhart, LHI and GEP, or any of their respective participants
and/or successors and assigns, at their sole discretion and option. This
Agreement may not be assigned by Compost or Mestre, and Compost and Mestre shall
not delegate any of its, his or their respective duties under this Agreement, in
whole or in part, without the advance written consent of Lionhart, LHI and GEP
(pursuant to which any such consent may be granted or withheld in the sole
discretion of the Pledgees).
Section 24. Definitions. All capitalized terms that are set forth in
this Agreement, and that are not expressly defined under this Agreement, shall
have the meanings and definitions that are assigned or ascribed to such terms in
the CCF Agreement, the Credit Documents and/or the Definitive Supplemental
Documents.
Section 25. Incorporation of Documents. The CCF Agreement, the Credit
Documents (including the Mortgage, the Mortgage Note, the Compost-Miami
Guaranty, the Security Agreement, the Compost Stock Pledge Agreement (Bedminster
Common Stock) and the Compost Stock Pledge Agreement (Compost Common Stock)) and
the Definitive Supplemental Documents, and all other agreements, instruments or
other documents that are referred to in this Agreement, are hereby incorporated
by reference and form a part of this Agreement.
IN WITNESS WHEREOF, Compost and Mestre, and Lionhart, LHI and GEP, have
executed and delivered this Agreement on and as of this 30th day of October,
1998.
Pledgors: MIAMI RECYCLING AND COMPOSTING CO., INC.
--------------------------------------
Roger E. Tuttle
President and Chief Executive Officer
TOMAS ANDRES MESTRE
--------------------------------------
Tomas Andres Mestre
Page 10 of 10 Pages
<PAGE>
Pledgees/Secured Parties: LIONHART GLOBAL APPRECIATION FUND, LTD.
--------------------------------------
Terrence P. Duffy
Director
LIONHART INVESTMENTS, LTD.
--------------------------------------
Terrence P. Duffy
Director
GLOBAL EARTHFUND PARTNERS, LTD.
--------------------------------------
Jay A. Duffy
President
Page 11 of 10 Pages
<PAGE>
Exhibit 99.5
COMPOST STOCK PLEDGE AGREEMENT
(BEDMINSTER COMMON STOCK)
Compost Stock Pledge Agreement (Bedminster Common Stock)
Pursuant to CCF Agreement
October 30, 1998
THIS COMPOST STOCK PLEDGE AGREEMENT ("Agreement") is made, executed and
consummated effectively this 30th day of October, 1998 ("Effective Date"), by
and among MIAMI RECYCLING AND COMPOSTING CO., INC. (Miami"), and, LIONHART
GLOBAL APPRECIATION FUND, LTD. ("Lionhart"), LIONHART INVESTMENTS, LTD. ("LHI")
and GLOBAL EARTHFUND PARTNERS, L.L.C. ("GEP").
Recitals:
1. Compost America Holding Company, Inc. ("Compost"), is a New Jersey
corporation. The principal office of Compost is located at 320 Grand Avenue,
Englewood, New Jersey 07631.
2. Miami is a Delaware corporation. The principal office of Miami is
located at 320 Grand Avenue, Englewood, New Jersey 07631. Bedminster Seacor
Services Miami Corporation ("Bedminster") is a Florida corporation. The
principal office of Bedminster is located at 320 Grand Avenue, Englewood, New
Jersey 07631. Compost is the direct parent of Miami, owns and controls 80.1% of
all issued and outstanding capital stock of Miami, and controls Miami. Miami is
the direct parent of Bedminster, Bedminster is a direct wholly-owned subsidiary
of Miami, and Compost controls Bedminster (which is an indirect controlled
subsidiary of Compost).
3. Lionhart is a British Virgin Islands international business company.
The principal office of Lionhart, in the British Virgin Islands, is located at
c/o Citco B.V.I. Limited, Post Office Box 662, Road Town, Tortola, British
Virgin Islands.
4. LHI is a United Kingdom limited liability company. The principal
office of LHI, in the United Kingdom, is located at 19 Camp Road, Heston Court,
Wimbledon, London SW19 4 RH, England. As of the Effective Date of this
Agreement, LHI is engaged by Lionhart as its investment advisor.
5. GEP is an Indiana limited liability company. The principal office of
GEP in the United States is c/o John Thomas Drics, Esq., 111 Monument Circle,
Suite 312, Indianapolis, Indiana 46204. As of the Effective Date of this
Mortgage, Lionhart is the direct parent of GEP, and GEP is a direct wholly-owned
subsidiary of Lionhart.
6. On and effective as of October 30, 1998, Compost, Miami, Bedminster,
Lionhart, LHI and GEP are executing, consummating and delivering, or will or are
about to execute, consummate and deliver, an agreement, entitled "Credit,
Capitalization and Financing Agreement" ("CCF Agreement"), which is hereby
incorporated by reference. Except as otherwise defined separately in this
Agreement, and/or except as otherwise indicated by the context in this
Agreement, any terms that are capitalized in this Agreement shall have the same
definition and meaning as is ascribed to such terms in the CCF Agreement (and/or
in any Credit Document(s) or Supplemental Definitive Document(s) (as those terms
are defined under the CCF Agreement)). This Agreement is the same instrument,
agreement and document that is referred to, and as is otherwise defined as, the
Compost Stock Pledge Agreement (Bedminster Common Stock), under Section 1.1.32
of the CCF Agreement.
7. Pursuant to the terms and subject to the conditions set forth in the
CCF Agreement, the Credit Documents and the Definitive Supplemental Documents,
Compost, Miami and/or Bedminster have the affirmative duty and obligation, inter
alia, to and for the benefit of Lionhart, LHI and/or GEP, 1) to pay and
discharge timely punctually, completely and fully certain Indebtedness (as that
term is defined under Section 18.01.01 of the CCF Agreement) and 2) to perform
and discharge timely, punctually, completely and fully certain Obligations (as
that term is defined under Section 18.01.02 of the CCF Agreement). For purposes
of this Agreement, the terms "Indebtedness" and "Obligations" shall have the
same meanings and definitions as ascribed respectively to such terms under
Section 18.01.01 and Section 18.01.02 of the CCF Agreement.
8. Miami, 1) for and in consideration of (i) the delivery by GEP to
Compost, Miami and Bedminster of the Credit (as defined under Section 2.1 of the
CCF Agreement) and (ii) the execution, delivery or consummation of the
agreements, promises, covenants and other undertakings by Lionhart, LHI and/or
GEP as otherwise provided under the CCF Agreement, the Credit Documents and/or
the Supplemental Definitive Documents ("Consideration"), and 2) as an inducement
to Lionhart, LHI and GEP to enter into, agree, execute and deliver, and
otherwise consummate the transactions contemplated under, the CCF
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Agreement, the Credit Documents and the Supplemental Definitive Documents, and,
3) to additionally secure (to and for the benefit of Lionhart, LHI and GEP) the
timely and complete payment of the Indebtedness and the performance and
discharge of the Obligations, by and on the part of Compost, Miami and
Bedminster, under and pursuant the CCF Agreement, the Credit Documents and/or
the Definitive Supplemental Documents, has agreed to execute or deliver (at the
Term Loan Closing on the Closing Date), or cause to be executed and delivered
(on the Term Loan Closing on the Closing Date), to and for the benefit of
Lionhart, LHI and GEP, this Agreement, without the delivery of which Lionhart,
LHI and GEP would not exchange, execute or otherwise deliver the Consideration
to or for the benefit of Compost, Miami and/or Bedminster.
NOW, THEREFORE, for good and valuable consideration, the receipt and
legal adequacy of which are hereby acknowledged, and as part of the
consideration of Miami for the Consideration of Lionhart, LHI and GEP, as
otherwise provided under the CCF Agreement, the Credit Documents and the
Definitive Supplemental Documents, Miami hereby promises, covenants, and
represents and warrants to Lionhart, LHI and GEP, and hereby agrees with
Lionhart, LHI and GEP, as follows:
Agreement:
Section 1. Pledge/Security Interest/Collateral. In consideration of and
as an inducement for the Consideration specified in this Agreement, and to
secure the timely, punctual, complete and full payment and discharge of the
Indebtedness and the timely, punctual, complete and full performance and
discharge of the Obligations, by and on the part of Compost, Miami and
Bedminster, under and pursuant to this Agreement, the Mortgage Note, the CCF
Agreement, the Credit Documents and the Definitive Supplemental Documents:
1.01. Pledge. Miami hereby grants, pledges, bargains, releases,
conveys, warrants, sells, assigns, transfers, sets over, confirms and
delivers unto Lionhart, LHI and GEP, and all of their respective
successors and assigns, a security interest in, and hereby delivers to
Lionhart, LHI and GEP to perfect such pledge and security interest,
1,000 shares of Bedminster Common Stock that are otherwise represented
by Certificate No. 1 (which indicates thereon that the Agent, for and
on behalf of Lionhart, LHI and GEP, is the registered owner thereof),
and all amendments, additions, adjustments, modifications,
substitutions, replacements, extensions and additions thereof,
including, without limitation, all cash and non-cash proceeds thereof,
and all such additional shares or securities, or other rights, warrants
or options, as provided or otherwise contemplated under Section 6.02
and/or Section 6.04 of this Agreement ("Pledged Bedminster Shares"
and/or "Collateral").
1.02. Transfer. Miami, in all appropriate books, records and
ledgers of Miami, shall immediately transfer to and shall maintain in
the name of the Agent, for and on behalf of Lionhart, LHI and GEP, the
Pledged Bedminster Shares, pursuant to which the Agent shall serve as
custodian and agent for Lionhart, LHI and GEP, of such Pledged
Bedminster Shares, pursuant to the terms and subject to the conditions
of this Agreement.
1.03. Certificate/Legend. Prior to delivery of the Pledged
Bedminster Shares to the Agent, for and on behalf of Lionhart, LHI of
and GEP, as provided under Section 1.01 of this Agreement, Miami shall
place or cause to be placed on each certificate, that represents any
one (1) or more of the above-referenced Pledged Bedminster Shares
(including the above-referenced Certificate No. 1 ), and each such
certificate shall bear, the following legend:
"The securities represented hereby are pledged by Miami Recycling
and Composting Co., Inc. ("Miami"), to Lionhart Global
Investments, Ltd. ("Lionhart"), Lionhart Investments, Ltd.
("LHI"), and Global EarthFund Partners, Ltd. ("GEP"), pursuant to
the terms and subject to the conditions of an agreement, entitled
"Compost Stock Pledge Agreement (Bedminster Common Stock)," by and
among Miami, Lionhart, LHI and GEP, that is dated on and as of
October 30, 1998, and pursuant to which GEP (for and on behalf of
Lionhart, LHI and GEP) is and shall remain as the registered
holder of these securities, as security and collateral for the
payment in full of certain Indebtedness and the performance in
full of certain Obligations as those terms are defined under such
Compost Stock Pledge Agreement (Bedminster Common Stock), until
such Indebtedness is paid in full and such Obligations are
performed in full."
Section 2. Inter-Pledgee Agent. The Pledgees, pursuant to the terms and
subject to the conditions set forth in an agreement, entitled "Inter-Creditor
Agreement," that is dated and was executed by and among the Pledgees, on or
about October 30, 1998, and that is intended to be recorded promptly hereafter
in the Official Records Book or other Public Records of Miami-Dade County,
Florida, and any other appropriate public records as may determined by the
Pledgees, each duly appointed GEP, as the their exclusive agent and power of
attorney ("Agent"), which power is coupled with an interest, for all Pledgees,
with respect to this Agreement, the CCF Agreement, the Credit Agreement and the
Definitive Supplemental Documents, and the exercise of the rights and remedies
of each Pledgee with respect thereto. Pursuant to and as provided under the
Inter-Creditor
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Agreement, 1) GEP, as Agent for all Pledgees, is authorized and empowered, in
their respective name, place and stead, with full power of substitution, to
exercise and perform from time to time, and without joinder of or by any
Pledgee, any act, power, duty, right or obligation whatsoever that any Pledgee
or the Pledgees (under this Agreement, the CCF Agreement, the Credit Documents
and/or the Definitive Supplemental Documents) may now or hereafter exercise or
perform, and to deal in all respects with Miami, with respect to the
transactions evidenced under this Agreement, the CCF Agreement, the Credit
Documents and/or the Definitive Supplemental Documents; and, 2) Miami and any
third party dealing with the Agent, under this Agreement, the CCF Agreement, the
Credit Documents and/or the Definitive Supplemental Documents, shall have the
right to rely upon the power and authority of the Agent to bind each Pledgee
with respect to the exercise of remedies or the giving of notices or consents
under and pursuant to this Agreement, the CCF Agreement, the Credit Documents
and/or the Definitive Supplemental Documents. Notwithstanding the foregoing,
the Pledgees hereby appoint Lionhart, as its agent and limited power of
attorney, which power is coupled with an interest, for the limited purpose
that is set forth in Section 6 of this Agreement, but with the same effect,
actual and apparent authority, and power as are otherwise granted to the
Agent under this Section 2.
Section 3. Agreement Purpose and Security. This Agreement is
executed and delivered by Miami, to Lionhart, LHI and GEP, pursuant to the
terms and subject to the conditions of the CCF Agreement. The pledge of and
security interest in and to the Pledged Bedminster Shares, is hereby given by
Miami, to Lionhart, LHI and GEP, to secure the timely, punctual, complete and
full payment and discharge of the Indebtedness and the timely, punctual,
complete and full performance and discharge of the Obligations, by and on the
part of Compost, Miami and Bedminster, under and pursuant to this Agreement,
the CCF Agreement, the Credit Documents and the Definitive Supplemental
Documents, including, without limitation, all such Indebtedness and
Obligations that relate to or arise from the Mortgage Note, and any and all
modifications, amendments, restatements, extensions, renewals, supplements
and replacements thereof, as any of the foregoing may be amended and/or
restated from time to time and at any time, and all reasonable costs and
expenses incurred or paid or incurred by Lionhart, LHI and/or GEP to preserve
and protect the Pledged Bedminster Shares and to enforce the pledge and
security interests of Lionhart, LHI and/or GEP therein, all of which Compost,
Miami and Bedminster have promised and covenanted, and Compost reaffirms its
undertakings, to pay and discharge all such Indebtedness when due and to
perform and discharge all Obligations when due or required to be performed in
accordance with the terms and conditions set forth in the CCF Agreement,
without relief from valuation and appraisement laws and with reasonable
attorneys' fees. The pledge and security interest in the Pledged Bedminster
Shares shall remain, and shall not be released, unless and until all
Indebtedness is paid in full and all Obligations are performed and discharged
in full, whereupon the Pledgees shall have the affirmative duty, in a
commercial reasonable and prompt manner, to return the Pledged Bedminster
Shares to Miami and, upon any reasonable request from time to time by Miami,
to execute any documents, instruments or certificates necessary to terminate
the security interest and pledge evidenced by this Agreement.
Section 4. Release/Waiver. Miami hereby and expressly releases and
waives each and every of the following: 1) all rights, privileges and/or claims
under and/or by virtue of any homestead, stay, appraisement or exemption laws
that may now exist or hereinafter be enacted; 2) all rights, privileges and/or
claims to acquire or retain possession, custody or control of the Pledged
Bedminster Shares, or any part thereof, after any Event of Default under the CCF
Agreement, the Credit Documents (including this Agreement) and any Definitive
Supplemental Documents; and, 3) all rights of redemption from the sale of the
Pledged Bedminster Shares, or any part thereof, under any order or decree of
foreclosure or public or private sale of and with respect to the Pledged
Bedminster Shares, or any part thereof.
Section 5. Recital Paragraphs/Incorporation. The Recital Paragraphs
that are set forth on Pages 1-2 of this Agreement, are hereby made part of this
Agreement, as if set forth in their complete terms under this Section 5.
Section 6. Voting Rights, Dividends, Warrants and Adjustments. Miami
hereby represents and warrants to Lionhart, LHI and GEP, and hereby agrees,
promises and covenants, as follows:
6.01. Cash Dividends. Until all Indebtedness is paid and
discharged in full and all Obligations are performed and discharged in
full, all cash dividends and other pecuniary amounts received by the
Agent, as a result of its record ownership of and that are otherwise
attributable to the Pledged Bedminster Shares, shall be applied by the
Agent (for
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and on behalf of Lionhart, LHI and GEP), net of any taxes whatsoever
assessed to or against the Agent (and/or Lionhart, LHI and/or GEP) for
and with respect to any such cash dividends, to the payment of
principal and interest and other charges under the Mortgage Note,
pursuant to Section 2 thereof.
6.02. Adjustments. If, and in the event, during the period that
any Indebtedness is not paid and discharged in full or that any
Obligation is not performed and discharged in full, any share dividend,
reclassification, readjustment, or other change is declared or made in
the capital structure of Miami, and that relate to or arise from or
otherwise affect the Pledged Bedminster Shares, all new, substituted
and additional shares or other securities that are then or thereby
issued by reason of any such share dividend, reclassification,
readjustment or other such change, shall continue to be held by the
Agent (for and on behalf of Lionhart, LHI and GEP), as additional
pledged Collateral and security (and as part of the Pledged Bedminster
Shares), pursuant to the terms and subject to the conditions of this
Agreement (in the same manner as if such shares or securities were
originally pledged and delivered under this Agreement upon execution,
consummation and delivery hereof).
6.03. Voting Rights. Until all Indebtedness is paid and discharged
in full and all Obligations are performed and discharged in full, the
Agent (for and on behalf of Lionhart, LHI and GEP), at its sole option
and election, shall be entitled 1) to vote the Pledged Bedminster
Shares, on all questions, issues, positions, matters and/or
transactions that are otherwise submitted to the shareholders of
Bedminster for consideration thereof and/or a vote thereupon, or
otherwise, or 2) to execute and grant a proxy to Miami, in and pursuant
to any such proxy or proxy form as prescribed reasonably by Miami, to
vote the Pledged Bedminster Shares, on all questions, issues,
positions, matters and/or transactions that are otherwise submitted to
the shareholders of Bedminster for consideration thereof and/or a vote
thereupon, or otherwise.
6.04. Warrants/Options/Rights. If, and in the event, during the
period that any Indebtedness is not paid and discharged in full or that
any Obligation is not performed and discharged in full, any
subscription warrants or any other rights, warrants or options shall be
issued in connection with the Pledged Bedminster Shares, then any and
all such rights, warrants and options shall be held by the Agent (for
and on behalf of Lionhart, LHI and GEP) as additional pledged
Collateral and security and as part of the Pledged Bedminster Shares,
and if exercised by Miami (and/or Lionhart, LHI and/or GEP), all such
new shares or other securities so acquired by and that are otherwise
attributable to the exercise of any such rights, warrants or options
shall be delivered to and shall be held by the Agent ( for and on
behalf of Lionhart, LHI and GEP) as additional pledged Collateral and
security and shall be deemed as part of the Pledged Bedminster Shares,
and shall be deemed as immediately assigned, pledged, transferred and
delivered to the Agent (for and on behalf of Lionhart, LHI and GEP), in
the same manner as is otherwise provided and contemplated under Section
1 of this Agreement, all of which shall thereafter be held by the Agent
(for and on behalf of Lionhart, LHI and GEP) as security and as part of
the Pledged Bedminster Shares pursuant to the terms and subject to the
conditions set forth under this Agreement.
Section 7. General Representations and Warranties. Miami hereby
represents and warrants to Lionhart, LHI and GEP, and hereby promises and
covenants, as follows:
7.01. Collateral.
(a) Title. Miami owns and will maintain full and absolute title in
and to the Pledged Bedminster Shares, free of all security interests,
liens, pledges and encumbrances other than the pledge and security
interest herein granted to Lionhart, LHI and GEP under this Agreement,
and has good and legal right to subject, pledge and otherwise encumber
the Pledged Bedminster Shares to the pledge and security interest
granted by and under this Agreement. Miami shall defend the Pledged
Bedminster Shares against all adverse claims. The Pledged Bedminster
Shares are not and will not be the subject of any financing statement
(other than any filed by Lionhart, LHI and/or GEP) on file in any
public office, or pledged to or subjected to the interest of any Person
except as provided specifically under this Agreement.
(b) Taxes and Assessments. Miami shall promptly pay, as they
become due and payable, all taxes and assessments imposed upon the
Pledged Bedminster Shares, if any.
(c) Protection of Pledged Bedminster Shares. Miami shall not,
without the prior and advance written consent and approval of and by
Lionhart, LHI and GEP (pursuant to which any such consent and approval
may be
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granted or withheld in the sole and exclusive discretion of
Lionhart, LHI and GEP), sell, assign, transfer, or otherwise
dispose of any of the Pledged Bedminster Shares, or any of their
respective right, title or interest therein or in any part
thereof, and shall not otherwise do or permit anything to be done
or occur that may impair the Pledged Bedminster Shares as security
hereunder.
7.02. Financing Statements, Certificates, Etc. Miami shall do such
acts as Lionhart, LHI and/or GEP may deem necessary or appropriate to
establish and maintain in Lionhart, LHI and/or GEP a valid pledge and
security interest in the Pledged Bedminster Shares, free of all other
liens, pledges and claims not permitted under this Agreement, to secure
full and prompt payment and discharge of the Indebtedness and the full
and prompt performance and discharge of the Obligations. Miami
authorizes Lionhart, LHI and/or GEP, at the sole expense of Miami, to
sign and file, without the signature of Miami, such financing and
continuation statements, amendments and supplements thereto, and other
documents which Lionhart, LHI and/or GEP may from time to time deem
necessary to perfect, preserve and protect their respective pledges and
security interests in the Pledged Bedminster Shares. Miami shall from
time to time, upon any request by Lionhart, LHI and/or GEP, deliver to
Lionhart, LHI and/or GEP, certified schedules, in such form as may be
specified by Lionhart, LHI and/or GEP, identifying the Pledged
Bedminster Shares, or such part thereof as may be specified by
Lionhart, LHI and/or GEP, together with such supporting documents and
information as Lionhart, LHI and/or GEP reasonably may request.
7.03. Taxes, Assessments and Expenses.
(a) Taxes and Assessments. Miami, agrees to pay promptly when due
all taxes, assessments and governmental charges upon or against Miami,
for the property or operations of Miami and Bedminster, or otherwise,
in each case before the same become delinquent and before penalties
accrue thereon, unless and to the extent that the same are being
contested in good faith by appropriate proceedings and for which Miami,
either directly or through Bedminster, has established adequate
reserves.
(b) Material Occurrences. Miami shall give written notice to
Lionhart, LHI and GEP of all material occurrences and events adversely
affecting the Pledged Bedminster Shares or the value, security or
amount thereof.
(c) Secured Party Expenses. In the event that Miami fails to pay
taxes, assessments, costs and expenses which Miami is required to pay,
or in the event that Miami fails to keep the Pledged Bedminster Shares
free from other security interests, liens, pledges, or encumbrances not
permitted under the terms of this Agreement, Lionhart, LHI and/or GEP
may make reasonable expenditures for any and all such purposes. All
reasonable costs and expenses of Lionhart, LHI and/or GEP in retaking,
holding, preparing for sale and selling or otherwise realizing upon any
Pledged Bedminster Shares or enforcing any provisions hereof in the
event of any default by Miami, including reasonable attorneys' fees,
shall constitute part of the Indebtedness and Obligations that are
otherwise secured under this Agreement by the Pledged Bedminster
Shares, and Miami shall forthwith reimburse Lionhart, LHI and GEP for
any such reasonable payments made or any such reasonable expenses
incurred by Lionhart, LHI and/or GEP.
Section 8. Performance by Secured Party of Debtor's Agreements.
Lionhart, LHI and/or GEP may, but shall have no duty, to perform any agreement,
promise or covenant of Miami hereunder, which Miami shall have failed to perform
or discharge, and Miami shall forthwith reimburse Lionhart, LHI and GEP for any
such reasonable payments made or any such reasonable expenses incurred by
Lionhart, LHI and/or GEP, including reasonable attorneys' fees, and all such
reasonable payments, costs and expenses, including reasonable attorneys' fees,
shall constitute part of the Indebtedness and Obligations that are otherwise
secured under this Agreement by the Pledged Bedminster Shares.
Section 9. Event of Default. An "Event of Default," under this
Agreement, is and shall be defined as, and shall mean and include, any "Event of
Default" as that term is defined under Section 18.02 (and as otherwise qualified
under Section 18.02.02) of the CCF Agreement, including, without limitation, any
default, breach, violation, failure and/or omission, by or on the part of Miami,
to pay and discharge, on a timely, punctual, complete and full basis, the
Principal and Interest when the Principal and Interest are or become due and
payable under the Mortgage Note.
Section 10. Remedies Upon Default. Upon the occurrence of an Event of
Default (as defined under Section 9 of this Agreement), Lionhart, LHI and GEP
shall have the right, but not the obligation, in their sole discretion and
option, to exercise all rights and remedies that are set forth and described
under Section 18.04 of the CCF Agreement, and to exercise any one (1)
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or all of the following remedies, in addition to any other rights or remedies
that Lionhart, LHI and/or GEP may be entitled to assert and/or claim, at law or
in equity:
10.01. Acceleration-Indebtedness. Lionhart, LHI and GEP may, from
time to time and at any time(s), declare the entire unpaid amount or
portion of any, some or all of the Indebtedness (including, without
limitation, the unpaid amount or portion of all Principal and Interest
under the Mortgage Note), immediately due and payable, without further
notice or demand, or presentment, protest, notice of protest or notice
of dishonor (of which Miami hereby expressly waives any such notice,
demand, presentment, protest, notice of protest or notice of dishonor),
whereupon all such Indebtedness, as accelerated under this Section
10.01, shall become immediately due and payable in full, and Lionhart,
LHI and GEP shall the right immediately to foreclose upon the lien
created by the Mortgage against the Mortgaged Miami Site (as provided
and otherwise contemplated under the Mortgage), or any part thereof; to
enforce and use lawful self-help or foreclose upon every other security
interest in any and all Collateral as otherwise created or confirmed
under this Agreement, or any part thereof; to enforce, use lawful
self-help or foreclose upon every security interest in any of the
pledged Collateral or any other Collateral under the Security
Agreement, the Compost Stock Pledge Agreement (Compost Common Stock)
and/or the Compost Stock Pledge Agreement (Miami Common Stock), or any
part thereof; and/or, to commence or institute any action, suit or
other proceeding which Lionhart, LHI and/or GEP may deem necessary or
proper to protect their respective interests.
10.02. Acceleration-Obligations. Lionhart, LHI and GEP may, from
time to time at any time(s), declare any and all Obligations, that have
not been theretofore performed and discharged, immediately due and
required to be performed and discharged immediately, without further
notice or demand, or presentment, protest, notice of protest or notice
of dishonor (of which Miami hereby expressly waives any such notice,
demand, presentment, protest, notice of protest or notice of dishonor),
whereupon all such Obligations, as accelerated under this Section
10.02, shall become due and immediately required to be performed and
discharged completely, and Lionhart, LHI and GEP shall the right
immediately to foreclose upon the lien created by the Mortgage against
the Mortgaged Miami Site (as provided and otherwise contemplated under
the Mortgage), or any part thereof; to enforce and use lawful self-help
or foreclose upon every other security interest in any and all
Collateral as otherwise created or confirmed under this Agreement, or
any part thereof; to enforce, use lawful self-help or foreclose upon
every security interest in any of the pledged Collateral or any other
Collateral under the Security Agreement, the Compost Stock Pledge
Agreement (Compost Common Stock) and/or the Compost Stock Pledge
Agreement (Miami Common Stock), or any part thereof; and/or, to
commence or institute any action, suit or other proceeding which
Lionhart, LHI and/or GEP may deem necessary or proper to protect their
respective interests.
10.03. Other Recourse and Remedies. Lionhart, LHI and GEP each
shall have all the remedies of a creditor and a secured party under the
New Jersey Uniform Commercial Code and all other applicable law, and as
otherwise provided by applicable law, including but not limited to, the
following:
(1) Possession/Sale. Lionhart, LHI and/or GEP shall have the
right, without notice to Miami, and without liability for any
diminution in price that may have occurred, sell all or any amount
or part of the Pledged Bedminster Shares in such a manner and for
such a price as may be determined by Lionhart, LHI and GEP.
Without limiting any rights or remedies that are otherwise
available to Lionhart, LHI and/or GEP, at any bona fide public
sale, Lionhart, LHI and/or GEP shall have the sole right and
authority to bid for and otherwise purchase any amount or part of
the Pledged Bedminster Shares. If, and in the event, Lionhart, LHI
and/or GEP do sell any such amount or part of the Pledged
Bedminster Shares at any such sale (public or private), the
proceeds derived from any such sale, after the payment and
discharge of expenses (including, if applicable, reasonable
expenses of retaking, holding, preparing for sale, selling and the
like, and reasonable attorneys' fees that relate to or arise from
any such sale), shall be applied or otherwise credited to the
payment of Principal and Interest and other charges under the
Mortgage Note, pursuant to Section 2 thereof.
(2) Cumulative Remedies. All remedies of Lionhart, LHI and/or
GEP shall be cumulative to the fullest extent provided by law. Any
pursuance by Lionhart, LHI and/or GEP of any single judicial or
other remedies shall not abate nor bar resort to other remedies
with respect to the Pledged Bedminster Shares, and pursuit of
certain remedies with respect to all or some of the Pledged
Bedminster Shares shall not bar other remedies with respect to the
Indebtedness, the Obligations, or other portions of the Pledged
Bedminster Shares, or as may otherwise be provided under the CCF
Agreement, the Credit Documents (including the
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Mortgage Note) and/or the Definitive Supplemental Documents,
and/or under any applicable law. Lionhart, LHI and GEP may
exercise its rights to the Pledged Bedminster Shares, or any part
thereof, without resorting or regard to other Pledged Bedminster
Shares or sources of security or reimbursement for the
Indebtedness and/or Obligations (whether under the CCF Agreement,
the Credit Documents the Definitive Supplemental Documents, or
otherwise).
Section 11. Nonwaiver-Expenses, Proceeds of Collateral. No waiver by
Lionhart, LHI and/or GEP of any of its or their respective rights or of an Event
of Default shall be effective unless in writing, and in no event shall it
operate as a waiver of any other of its or their respective rights or any other
Event of Default, nor of the same rights or Event of Default on any future
occasion. Miami shall pay to Lionhart, LHI and GEP, on demand by Lionhart, LHI
and/or GEP, any and all reasonable expenses, including reasonable attorneys'
fees, incurred or paid by Lionhart, LHI and/or GEP in protecting or enforcing
its rights upon or under the Indebtedness, the Obligations, the Pledged
Bedminster Shares or this Agreement.
Section 12. Legal Authority/Compliance/Miscellaneous. Miami hereby
represents and warrants, and hereby promises, agrees and covenants, as follows:
12.01. General Board Authorization. Miami has all necessary
corporate power and authority, pursuant to the approval by and the duly
adopted resolutions of its Board of Directors, and otherwise, to
execute and deliver this Agreement, and to perform their respective
duties and obligations contemplated and as otherwise provided under
this Agreement, including, without limitation, the granting and
pledging to Lionhart, LHI and GEP of a security interest in and to the
Pledged Bedminster Shares.
12.02. No Violations. The execution and delivery of (and the
performance and consummation transactions contemplated under) this
Agreement, will not (i) conflict with or violate the Certificate of
Incorporation or By-Laws of Miami, (ii) conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to Miami or
by which its Properties are bound or affected, or (iii) result in any
breach of or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of,
or result in the creation of a lien or encumbrance on any of the
Properties or assets of Miami, pursuant to any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, insurance
policy or other instrument or obligation to which is a party, or by
which Miami or its Properties are bound or affected.
12.03. No Required Governmental Consents. The execution and
delivery of (and the performance and consummation transactions
contemplated under) this Agreement by Miami, does not and will not,
require any consent, approval, authorization or permit from any
Governmental Authority which has not been obtained.
12.04. Authority of Officers. Miami has good right and lawful
authority, through its designated and officers and representatives who
have signed and delivered this Agreement, for and on behalf of Miami,
to execute, deliver and consummate the transactions contemplated under
this Agreement.
12.05. Enforceability. This Agreement is a legal, valid and
binding obligation of and is enforceable against Miami, in accordance
with the terms of this Agreement, and there is no action or proceeding
at law or in equity, or by or before any court or Governmental
Authority now pending or to the knowledge of Miami threatened or
affecting Miami that may materially and adversely affect Miami.
12.06. Execution by Parties. Any person or party executing this
Agreement in a representative capacity, acknowledges, warrants and
represents 1) that he or she is an official representative of the firm
or corporation in whose name he or she is executing this Agreement, 2)
that he or she possesses full and complete authority to bind said firm
or corporation to the full and faithful performance of all conditions,
terms, provisions, covenants, warranties and representations as
contained in this Agreement, and 3) that all other parties are relying
on these representations and warranties as a material inducement to
execute, deliver and otherwise consummate the transactions contemplated
under this Agreement, the CCF Agreement, the Credit Documents and the
Definitive Supplemental Documents.
Section 13. Applicable Law, Jurisdiction and Venue. Miami hereby
represents and warrants, and hereby promises, agrees (with Lionhart, LHI and
GEP) and covenants, as follows:
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13.01. This Agreement shall be governed by, construed in
accordance with, and shall be enforced under, the laws of the State of
New Jersey, exclusive of its rules relating to conflict of laws.
13.02. Subject to applicable conflict of laws principles, Miami
shall accept venue with respect to all claims, actions or lawsuits that
relate to or arise from this Agreement, in any state court or U.S.
Court of competent jurisdiction that sits in Newark, New Jersey. Miami
hereby, and irrevocably and unconditionally, for itself and its
Properties, submits to the jurisdiction of any such New Jersey court or
U.S. Court sitting in Newark, New Jersey, and any appellate court with
jurisdiction thereover, in any action or proceeding relating to or
arising from this Agreement, the CCF Agreement (exclusive of the
Mortgage), the Credit Documents and/or the Definitive Supplemental
Documents, or for the recognition or enforcement of any judgment, and
Miami hereby, and irrevocably and unconditionally, agrees, promises and
covenants that all such claims in respect of any such action or
proceeding shall be heard, determined and adjudicated in by any such
New Jersey court or, to the extent permitted by applicable law, by any
such U.S. Court. Miami hereby agrees, promises and covenants that a
final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in
any other manner provided by law.
13.03. Miami hereby, and irrevocably and unconditionally, waives,
to the fullest extent under applicable law, any defense or objection
that it may now or hereafter have 1) to the laying of venue of any
suit, action or proceeding relating to or arising from this Agreement,
the CCF Agreement, the Credit Documents (exclusive of the Mortgage)
and/or the Definitive Supplemental Documents, in any such New Jersey
court or U.S. Court sitting in Newark, New Jersey, or 2) to the
personal jurisdiction and/or preferred and proper venue of any such New
Jersey court or any such U.S. Court in Newark, New Jersey.
Section 14. Captions/Headings. The captions and headings that are set
forth in this Agreement are for the purpose of convenience only and are not
intended to be a part of this Agreement and shall not be deemed to modify,
explain, enlarge or restrict any of the provisions hereof.
Section 15. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any applicable jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provisions in any other
jurisdiction.
Section 16. Binding Obligations. The terms and provisions, and
promises, covenants and undertakings of this Agreement, shall bind and be
enforceable against and upon Miami, and its successors and assigns and other
legal agents and representatives, and shall inure to the benefit of Lionhart,
LHI and GEP, and their respective successors and assigns, transferees, credit
participants, guarantors and endorsees. If, at any time or times, by assignment
or otherwise, Lionhart, LHI and/or GEP transfers any of the Indebtedness or
Obligations, any such transfer shall carry with it Lionhart's, LHI's and GEP's
rights, interests and powers under this Agreement, including all such rights,
interests and powers that relate to or arise from this Agreement and the Pledged
Bedminster Shares. Lionhart, LHI and GEP, in their sole discretion and at their
sole option, shall have the right to assign this Agreement, as well as the CCF
Agreement, the other Credit Documents and the Definitive Supplemental Documents,
to any successor(s) or assign(s) of Lionhart, LHI and/or GEP.
Section 17. Time of the Essence. Time is hereby declared to be of the
essence of this Agreement, and of every part hereof.
SECTION 18. JURY WAIVER. MIAMI DOES HEREBY KNOWINGLY, VOLUNTARILY,
IRREVOCABLE, UNCONDITIONALLY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT, THE CCF AGREEMENT, THE CREDIT DOCUMENTS AND/OR
THE DEFINITIVE SUPPLEMENTAL DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF
DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PERSON. THIS
IRREVOCABLE WAIVER OF THE RIGHT TO A JURY TRIAL IS A MATERIAL INDUCEMENT FOR
LIONHART, LHI AND/OR GEP TO DELIVER THE CREDIT, AND TO EXECUTE AND DELIVER, AND
OTHERWISE CONSUMMATE THE TRANSACTIONS CONTEMPLATED UNDER, THE CCF AGREEMENT, THE
CREDIT DOCUMENTS AND THE DEFINITIVE SUPPLEMENTAL DOCUMENTS.
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Section 19. Counterparts/Facsimile. This Agreement may be executed in
any number of counterparts, and each by fax, e-mail or other digital or
telephonic transmission, and each of which shall be an original, but all of
which together will constitute one and the same instrument.
Section 20. Notices. Any notices by or to Compost, Miami and/or
Bedminster, or by or to Lionhart, LHI and/or GEP, under this Agreement, shall be
given as provided under Section 20.04 of the CCF Agreement.
Section 21. Written Instrument Requirement. This Agreement cannot be
altered, amended, modified or discharged orally and no executory agreement shall
be effective to modify or discharge this Agreement, in whole or in part, unless
it is in writing and signed by the party against whom enforcement of the
modification, alteration, amendment or discharge is sought.
Section 22. Assignment. This Agreement, and any rights hereunder, may
be assigned by Lionhart, LHI and GEP, or any of their respective participants
and/or successors and assigns, at their sole discretion and option. This
Agreement may not be assigned by Miami, and Miami shall not delegate any of its,
his or their respective duties under this Agreement, in whole or in part,
without the advance written consent of Lionhart, LHI and GEP (pursuant to which
any such consent may be granted or withheld in the sole discretion of the
Pledgees).
Section 23. Definitions. All capitalized terms that are set forth in
this Agreement, and that are not expressly defined under this Agreement, shall
have the meanings and definitions that are assigned or ascribed to such terms in
the CCF Agreement, the Credit Documents and/or the Definitive Supplemental
Documents.
Section 24. Incorporation of Documents. The CCF Agreement, the Credit
Documents (including the Mortgage, the Mortgage Note, the Compost-Miami
Guaranty, the Security Agreement, the Compost Stock Pledge Agreement (Miami
Common Stock) and the Compost Stock Pledge Agreement (Compost Common Stock)) and
the Definitive Supplemental Documents, and all other agreements, instruments or
other documents that are referred to in this Agreement, are hereby incorporated
by reference and form a part of this Agreement.
IN WITNESS WHEREOF, Miami, and Lionhart, LHI and GEP, have executed and
delivered this Agreement on and as of this 30th day of October, 1998.
Pledgor/Debtor: MIAMI RECYCLING AND COMPOSTING CO., INC.
----------------------------------------
Roger E. Tuttle
President and Chief Executive Officer
Pledgees/Secured Parties: LIONHART GLOBAL APPRECIATION FUND, LTD.
----------------------------------------
Terrence P. Duffy
Director
LIONHART INVESTMENTS, LTD.
----------------------------------------
Terrence P. Duffy
Director
Page 9 of 9 Pages
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GLOBAL EARTHFUND PARTNERS, LTD.
----------------------------------------
Jay A. Duffy
President
Page 10 of 9 Pages
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Exhibit 99.6
PLEDGE AND SECURITY AGREEMENT
Security Agreement Pursuant to CCF Agreement
October 30, 1998
THIS PLEDGE AND SECURITY AGREEMENT ("Agreement") is made, executed and
consummated effectively this 30th day of October, 1998 ("Effective Date"), by
and among 1) COMPOST AMERICA HOLDING COMPANY, INC. ("Compost"), MIAMI RECYCLING
AND COMPOSTING CO., INC. ("Miami") and BEDMINSTER SEACOR SERVICES MIAMI
CORPORATION ("Bedminster"); and, 2) LIONHART GLOBAL APPRECIATION FUND, LTD.
("Lionhart"), LIONHART INVESTMENTS, LTD. ("LHI") and GLOBAL EARTHFUND PARTNERS,
L.L.C. ("GEP") (Lionhart, LHI and GEP are sometimes collectively referred to
herein as the "Secured Party(ies)").
Recitals:
1. Compost is a New Jersey corporation. The principal office of Compost
is located at 320 Grand Avenue, Englewood, New Jersey 07631.
2. Miami is a Delaware corporation. The principal office of Miami is
located at 320 Grand Avenue, Englewood, New Jersey 07631. Bedminster is a
Florida corporation. The principal office of Bedminster is located at 320 Grand
Avenue, Englewood, New Jersey 07631. Compost is the direct parent of Miami, owns
and controls 80.1% of all issued and outstanding capital stock of Miami, and
controls Miami. Miami is the direct parent of Bedminster, Bedminster is a direct
wholly-owned subsidiary of Miami, and Compost controls Bedminster (which is an
indirect controlled subsidiary of Compost).
3. Lionhart is a British Virgin Islands international business company.
The principal office of Lionhart, in the British Virgin Islands, is located at
c/o Citco B.V.I. Limited, Post Office Box 662, Road Town, Tortola, British
Virgin Islands.
4. LHI is a United Kingdom limited liability company. The principal
office of LHI, in the United Kingdom, is located at 19 Camp Road, Heston Court,
Wimbledon, London SW19 4 RH, England. As of the Effective Date of this
Agreement, LHI is engaged by Lionhart as its investment advisor.
5. GEP is an Indiana limited liability company. The principal office of
GEP in the United States is c/o John Thomas Drics, Esq., 111 Monument Circle,
Suite 312, Indianapolis, Indiana 46204. As of the Effective Date of this
Mortgage, Lionhart is the direct parent of GEP, and GEP is a direct wholly-owned
subsidiary of Lionhart.
6. On and effective as of October 30, 1998, Compost, Miami, Bedminster,
Lionhart, LHI and GEP entered into, executed, consummated and delivered an
agreement, entitled "Credit, Capitalization and Financing Agreement" ("CCF
Agreement"), which is hereby incorporated by reference. Except as otherwise
defined separately in this Agreement, and/or except as otherwise indicated by
the context in this Agreement, any terms that are capitalized in this Agreement
shall have the same definition and meaning as is ascribed to such terms in the
CCF Agreement (and/or in any Credit Document(s) or Supplemental Definitive
Document(s) (as those terms are defined under the CCF Agreement)). This
Agreement is the same instrument, agreement and document that is referred to,
and as is otherwise defined as, the Security Agreement, under and pursuant to
the CCF Agreement.
7. Pursuant to the terms and subject to the conditions set forth in the
CCF Agreement, the Credit Documents and the Definitive Supplemental Documents,
Compost, Miami and/or Bedminster have the affirmative duty and obligation, inter
alia, to and for the benefit of Lionhart, LHI and/or GEP, 1) to pay and
discharge timely punctually, completely and fully certain Indebtedness (as that
term is defined under Section 18.01.01 of the CCF Agreement) and 2) to perform
and discharge timely, punctually, completely and fully certain Obligations (as
that term is defined under Section 18.01.02 of the CCF Agreement). For purposes
of this Agreement, the terms "Indebtedness" and "Obligations" shall have the
same meanings and definitions as ascribed respectively to such terms under
Section 18.01.01 and Section 18.01.02 of the CCF Agreement.
8. Compost, Miami and Bedminster, 1) for and in consideration of (i)
the delivery by Lionhart, LHI and GEP to Compost, Miami and Bedminster of the
Credit (as defined under Section 2.1 of the CCF Agreement) and (ii) the
execution, delivery or consummation of the agreements, promises, covenants and
other undertakings by Lionhart, LHI and/or GEP as otherwise provided under the
CCF Agreement, the Credit Documents and/or the Supplemental Definitive Documents
("Consideration"), and 2) as an inducement to Lionhart, LHI and GEP to enter
into, agree, execute and deliver, and otherwise
Page 1 of 13 Pages
<PAGE>
consummate the transactions contemplated under, the CCF Agreement, the Credit
Documents and the Supplemental Definitive Documents, and, 3) to additionally
secure (to and for the benefit of Lionhart, LHI and GEP) the timely and complete
payment of the Indebtedness and the performance and discharge of the
Obligations, by and on the part of Compost, Miami and Bedminster, under and
pursuant the CCF Agreement, the Credit Documents and/or the Definitive
Supplemental Documents, Compost, Miami and Bedminster have agreed to execute or
deliver (at the Term Loan Closing on the Closing Date), or cause to be executed
and delivered (on the Term Loan Closing on the Closing Date), to and for the
benefit of Lionhart, LHI and GEP, this Agreement, without the delivery of which
Lionhart, LHI and GEP would not exchange, execute or otherwise deliver the
Consideration to or for the benefit of Compost, Miami and/or Bedminster.
NOW, THEREFORE, for good and valuable consideration, the receipt and
legal adequacy of which are hereby acknowledged, and as part of the
consideration of Compost and Miami for the Consideration of Lionhart, LHI and
GEP, as otherwise provided under the CCF Agreement, the Credit Documents and the
Definitive Supplemental Documents, Compost, Miami and Bedminster hereby promise,
covenant, and represent and warrant to Lionhart, LHI and GEP, and hereby agree
with Lionhart, LHI and GEP, as follows:
Agreement:
Section 1. Security Interest/Collateral. Compost, Miami and Bedminster,
jointly and severally, and in consideration of and as an inducement for the
Consideration specified in this Agreement, and to secure the timely, punctual,
complete and full payment and discharge of the Indebtedness and the timely,
punctual, complete and full performance and discharge of the Obligations, by and
on the part of Compost, Miami and Bedminster, under and pursuant to this
Agreement, the CCF Agreement, the Credit Documents and the Definitive
Supplemental Documents, hereby grant, bargain, release, convey, warrant, sell,
assign, transfer, set over, pledge, confirm and deliver unto Lionhart, LHI and
GEP, and all of their respective successors and assigns, a security interest in
all of the following property of Compost, Miami and/or Bedminster, now owned or
hereafter acquired or arising, including all cash and non-cash proceeds of the
foregoing ("Collateral"), as follows:
1.01. Exhibit A. All personal property (including licenses,
permits and agreements), that is owned by all or any of Compost, Miami
and/or Bedminster, that is set forth or otherwise identified in Exhibit
A that is attached to this Agreement; and,
1.02. Miami Project Collateral. The "Miami Project Collateral," as
defined under Section 1.1.92 of the CCF Agreement (and to the extent
that any such "Miami Project Collateral" is classified as personal
property and is otherwise subject to Article 9 of the Uniform
Commercial Code of and as adopted by the State of New Jersey), and
which includes the following:
(a) Miami Project Permits. Any and all Miami Project Permits,
as that term is defined under Section 11.26.01 of the CCF
Agreement, including the Current Permits and the Supplemental
Prospective Permits, as those terms are defined respectively under
Section 11.26.01(b)(1) and Section 11.26.01(b((2) of the CCF
Agreement; and,
(b) Miami Claim. Any all claims of Compost, Miami and/or
Bedminster against the Miami, Dade County, Florida ("City of
Miami"), that relate to or arise from the Put or Pay Contract
and/or the Miami Project (as those terms are defined respectively
under Section 11.26.01(a) and Section 11.26.01(e) of the CCF
Agreement, and as otherwise contemplated under Section 11.26.01(j)
of the CCF Agreement), whether or not asserted in, but including,
without limitation, all such claims that are set forth in the
Miami Complaint (as that term is defined under Section 11.26.01(j)
of the CCF Agreement; and,
(c) Put or Pay Contract. All right, title and interest,
including claims, of Compost, Miami and/or Bedminster that relate
to or arise from (i) The "Solid Waste Service Agreement," dated as
of October 29, 1993, by and between the City of Miami, Florida,
and Bedminster Seacor Services Miami Corporation ("Solid Waste
Service Agreement"), a copy of which is set forth in Appendix
II-Item 4 of the CCF Agreement, and which is hereby incorporated
by reference, (ii) "Amendment One to the Solid Waste Service
Agreement," dated October 20, 1994, by and between the City of
Miami, Florida, and Bedminster Seacor Services Miami Corporation
("First Amendment"), a copy of which is set forth in Appendix
II-Item 5 of the
Page 2 of 13 Pages
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CCF Agreement, and which is hereby incorporated by reference, (ii)
the "Restated Compost Recycling Agreement," dated as of November
30, 1995, by and between the City of Miami, Florida, and
Bedminster Seacor Services Miami Corporation ("Restated Compost
Recycling Agreement"), a copy of which is set forth in Appendix
II-Item 6 of the CCF Agreement, and which is hereby incorporated
by reference, (iv) the "Amendment to the Restated Compost
Recycling Agreement," dated and executed as of April 17, 1998, by
and between the City of Miami, Florida, and Bedminster Seacor
Services Miami Corporation ("Second Amendment"), a copy of which
is set forth in Appendix II-Item 7 of the CCF Agreement, and which
is hereby incorporated by reference, and (v) all amendments,
additions, modifications, substitutions, replacements, extensions
and additions thereof, including, without limitation, all cash and
non-cash proceeds thereof; and,
(d) Miami/Bedminster Balance Sheet Properties. All
Properties, and all other assets that are owned by Miami and/or
Bedminster, that are set forth in the Miami Balance Sheet and/or
the Bedminster Balance Sheet, as those terms are defined under
Section 11.26.07 of the CCF Agreement, and as is otherwise
disclosed under Schedule 11.26.07-1 and Schedule 11.26.07-2 of the
Disclosure Schedule to the CCF Agreement, and all other Permits
and Material Contracts of Miami and/or Bedminster; and,
(e) Mortgaged Miami Site. Any and all parts of the Mortgaged
Miami Site, as that term is defined under Section 1.01 of the
Mortgage, including, without limitation, any and all Premises,
Improvements, Intangibles, Property Income, Leases, Awards and
Additional Rights (as those terms are defined under Section 1.01
of the GEP Mortgage, including any and all fixtures, and that
constitute personal property and not real property for purposes of
and under the Florida or New Jersey Uniform Commercial Code; and,
(f) Miami Project Financing. Any and all proceeds of the
Miami Project Financing, both cash and non-cash, as that term is
defined under Section 11.26.22 of the CCF Agreement, and as is
otherwise disclosed under Schedule 11.26.22 of the Disclosure
Schedule of the CCF Agreement, and any and all other financings,
whether procured by or for Compost, Miami and/or Bedminster, and
that are intended to be used for the development, construction
and/or permanent financing of the Miami Project (as that term is
defined under Section 11.26.01 of the CCF Agreement), including,
without limitation, all amendments, additions, modifications,
substitutions, replacements, extensions and additions thereof,
including, without limitation, all cash and non-cash proceeds
thereof.
1.03. Miscellaneous. Any and all other current or subsequently or
after-acquired assets and properties of Miami and Bedminster, to the
extent such items are classified as personal property and are of the
type that are subject to a security interest under Article 9 of the
Uniform Commercial Code of and as adopted by the State of New Jersey,
and that are acquired after the Effective Date of this Agreement,
including, without limitation, 1) all machinery and equipment, 2) all
inventory, including without limitation, goods, merchandise and other
personal property held for sale or lease, furnished or to be furnished
under a contract of service, raw materials, work in progress, and
materials used or consumed or to be used or consumed in the business of
Miami and/or Bedminster; 3) all other personal property, including all
goods, documents, instruments, chattel paper and all general
intangibles, intellectual property rights and rights to payment from
every and any source; 4) all contract rights derived from or pertaining
to any of the foregoing Collateral, or otherwise; 5) all accounts
resulting from the sale of any of the foregoing Collateral, or
otherwise; 6) all additions, accessions, accessories, substitutions or
replacements to or of any of the foregoing-described Collateral; 7) all
products and proceeds of any of the foregoing Collateral, including
without limitation, insurance proceeds and proceeds of all warranty and
tort claims, all accounts, contract rights, documents and instruments
arising from the sale or disposition of any such Collateral; 8) all
business records, books and other records relating to or kept by or on
behalf of Miami and/or Bedminster with respect to any of the
foregoing-described Collateral, and the respective business of Miami
and Bedminster; and, 9) all cash and non-cash proceeds relating to or
arising from any of the above-enumerated Collateral, or any disposition
of or that relates to arises from any such Collateral.
Section 2. Inter-Secured Party Agent. The Secured Parties, pursuant to
the terms and subject to the conditions set forth in an agreement, entitled
"Inter-Creditor Agreement," that is dated and was executed by and among the
Secured Parties, on or about October 30, 1998, and that is intended to be
recorded promptly hereafter in the Official Records Book or other Public Records
Page 3 of 13 Pages
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of Miami-Dade County, Florida, and any other appropriate public records as may
determined by the Secured Parties, each duly appointed GEP, as the their
exclusive agent and power of attorney ("Agent"), which power is coupled with an
interest, for all Secured Parties, with respect to this Agreement, the CCF
Agreement, the Credit Agreement and the Definitive Supplemental Documents, and
the exercise of the rights and remedies of each Secured Party with respect
thereto. Pursuant to and as provided under the Inter-Creditor Agreement, 1) GEP,
as Agent for all Secured Parties, is authorized and empowered, in their
respective name, place and stead, with full power of substitution, to exercise
and perform from time to time, and without joinder of or by any Secured Party,
any act, power, duty, right or obligation whatsoever that any Secured Party or
the Secured Parties (under this Agreement, the CCF Agreement, the Credit
Documents and/or the Definitive Supplemental Documents) may now or hereafter
exercise or perform, and to deal in all respects with Compost, Miami and
Bedminster with respect to the transactions evidenced under this Agreement, the
CCF Agreement, the Credit Documents and/or the Definitive Supplemental
Documents; and, 2) Compost, Miami and Bedminster, and any third party dealing
with the Agent, under this Agreement, the CCF Agreement, the Credit Documents
and/or the Definitive Supplemental Documents, shall have the right to rely upon
the power and authority of the Agent to bind each Secured Party with respect to
the exercise of remedies or the giving of notices or consents under and pursuant
to this Agreement, the CCF Agreement, the Credit Documents and/or the Definitive
Supplemental Documents.
Section 3. Agreement Purpose and Security. This Agreement is executed
and delivered by Compost, Miami and Bedminster, to Lionhart, LHI and GEP,
pursuant to the terms and subject to the conditions of the CCF Agreement. The
pledge of or security interest in and to the Collateral, as otherwise granted or
pledged under this Agreement, is hereby given by Compost, Miami and Bedminster,
to Lionhart, LHI and GEP, to secure the timely, punctual, complete and full
payment and discharge of the Indebtedness and the timely, punctual, complete and
full performance and discharge of the Obligations, by and on the part of
Compost, Miami and/or Bedminster, under and pursuant to this Agreement, the CCF
Agreement, the Credit Documents and the Definitive Supplemental Documents,
including, without limitation, all such Indebtedness and Obligations that relate
to or arise from the Mortgage Note, and any and all modifications, amendments,
restatements, extensions, renewals, supplements and replacements thereof, as any
of the foregoing may be amended and/or restated form time to time and at any
time, and all costs and expenses incurred or paid or incurred by Lionhart, LHI
and/or GEP to preserve and protect the Collateral and to enforce the security
interests of Lionhart, LHI and/or GEP therein, all of which Compost, Miami and
Bedminster promise and covenant to pay and discharge all such Indebtedness when
due and to perform and discharge all Obligations when due or required to be
performed, without relief from valuation and appraisement laws and with
attorneys' fees. The security interest in the Collateral shall remain, and shall
not be released, unless and until all Indebtedness is paid in full and all
Obligations are performed and discharged in full. Upon the payment in full of
the Indebtedness and the performance in full of all of the Obligations,
Lionhart, LHI and GEP shall take any such commercially reasonable action as may
be requested reasonably by Compost, Miami and/or Bedminster to evidence any such
termination.
Section 4. Release/Waiver. Compost, Miami and Bedminster each hereby
and expressly releases and waives each and every of the following: 1) all
rights, privileges and/or claims under and/or by virtue of any homestead, stay,
appraisement or exemption laws that may now exist or hereinafter be enacted; 2)
all rights, privileges and/or claims to acquire or retain possession, custody or
control of the Collateral, or any part thereof, after any Event of Default (as
otherwise defined under Section 8 of this Agreement) by Compost, Miami and/or
Bedminster, of or with respect to any Indebtedness and/or Obligation, under or
pursuant to this Agreement, the CCF Agreement, the Credit Documents and any
Definitive Supplemental Documents; and, 3) all rights of redemption from the
sale of the Collateral, or any part thereof, under any order or decree of
foreclosure or private sale of and with respect to the Collateral, or any part
thereof.
Section 5. Recital Paragraphs/Incorporation. The Recital Paragraphs
that are set forth on Pages 1-2 of this Agreement, are hereby made part of this
Agreement, as if set forth in their complete terms under this Section 5.
Section 6. General Representations and Warranties. Compost, Miami and
Bedminster, jointly and severally, hereby represent and warrant to Lionhart, LHI
and GEP, and hereby promise and covenant, as follows:
6.01. Collateral.
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(a) Title. Compost, Miami and/or Bedminster, either
individually or aggregately, have or will acquire, and will
maintain full and absolute title in either Compost, Miami and/or
Bedminster to the Collateral, free of all security interests,
liens, pledges and encumbrances other than the pledge or security
interest herein granted to Lionhart, LHI and GEP under this
Agreement, and have good right to pledge and subject the
Collateral to the security interest and pledge granted by and
under this Agreement. Compost, Miami and Bedminster shall have and
will maintain full possession of the Collateral and shall defend
the Collateral against all adverse claims. The Collateral is not
and will not be the subject of any financing statement (other than
any filed by Lionhart, LHI and/or GEP) on file in any public
office or subject to the interest of any person except under this
Agreement or as otherwise set forth on Exhibit B that is attached
hereto and made a part hereof for all purposes.
(b) Condition/Access. Compost, Miami and Bedminster shall
maintain the Collateral in good condition, repair and operating
order (normal wear and tear excepted), and shall not permit it in
any respect to be wasted, destroyed, or used in violation of law.
Upon providing Compost, Miami and/or Bedminster with reasonable
and advance notice, Lionhart, LHI and/or GEP may enter upon any of
Compost's, Miami's and/or Bedminster's property to examine and
inspect the Collateral at any reasonable time or times.
(c) Taxes and Assessments. Compost, Miami and Bedminster
shall promptly pay, as they become due and payable, all taxes and
assessments imposed upon the Collateral or for its use or
operation or upon this Agreement.
(d) Insurance. Compost, Miami and Bedminster shall keep the
Collateral at all times insured against risk of loss or damage by
fire, theft and such other casualties as Lionhart, LHI and/or GEP
may reasonably require, all in such amounts, under such forms of
policies, upon such terms, for such periods and written by such
companies as Lionhart, LHI and/or GEP may reasonably approve. All
such policies of insurance shall be delivered to Lionhart, LHI and
GEP and shall provide that losses will be payable to Lionhart, LHI
and GEP, and Compost, Miami and Bedminster, as their interest may
appear, and that Lionhart, LHI and GEP shall receive at least
thirty (30) days' prior written notice of cancellation. Compost,
Miami and Bedminster shall furnish to Lionhart, LHI and GEP, as
received, the originals of all insurance policies providing such
coverage, including all certificates and endorsements thereof.
(e) Protection of Collateral. Compost, Miami and Bedminster
each shall not, without the prior and advance written consent and
approval of and by Lionhart, LHI and GEP (pursuant to which any
such consent and approval may be granted or withheld in the sole
and exclusive discretion of Lionhart, LHI and GEP), sell, assign,
transfer, or otherwise dispose of any of the Collateral or any of
their respective right, title or interest therein, and shall not
otherwise do or permit anything to be done or occur that may
impair the Collateral as security hereunder.
6.02. Financing Statements, Certificates, Etc. Compost, Miami and
Bedminster shall do such acts as Lionhart, LHI and/or GEP may deem
necessary or appropriate to establish and maintain in Lionhart, LHI
and/or GEP a valid security interest in the Collateral, free of all
other liens and claims not permitted under this Agreement, to secure
full and prompt payment and discharge of the Indebtedness and the full
and prompt performance and discharge of the Obligations. Compost, Miami
and Bedminster each authorizes Lionhart, LHI and/or GEP, at the sole
expense of Compost, Miami and Bedminster, to sign and file, without the
signatures of any Compost, Miami and/or Bedminster, such financing and
continuation statements, amendments and supplements thereto, and other
documents which Lionhart, LHI and/or GEP may from time to time deem
necessary to perfect, preserve and protect their respective security
interests in the Collateral. Compost, Miami and Bedminster each agrees
to execute and deliver to Lionhart, LHI and/or GEP any such financing
statements and documents and to furnish and endorse such other
instruments which Lionhart, LHI and/or GEP may from time to time
request in order to evidence, perfect, preserve and protect their
respective security interest in the Collateral. Compost, Miami and
Bedminster shall from time to time, upon any request by Lionhart, LHI
and/or GEP, deliver to Lionhart, LHI and/or GEP, certified schedules,
in such form as may be specified by Lionhart, LHI and/or GEP,
identifying the Collateral, or such part thereof as may be specified by
Lionhart, LHI and/or GEP, together with such supporting documents and
information as Lionhart, LHI and/or GEP reasonably may request.
6.03. Taxes, Assessments and Expenses.
(a) Taxes and Assessments. Compost, Miami and Bedminster each
agrees to pay promptly when due all
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<PAGE>
taxes, assessments and governmental charges upon or against
Compost, Miami and Bedminster, for the property or operations of
Compost, Miami and Bedminster, or otherwise, in each case before
the same become delinquent and before penalties accrue thereon,
unless and to the extent that the same are being contested in good
faith by appropriate proceedings and for which Compost, Miami and
Bedminster have established adequate reserves.
(c) Material Events/Notices. Compost, Miami and Bedminster
shall give written notice to Lionhart, LHI and GEP of all material
occurrences and events adversely affecting the Collateral or the
value or amount thereof.
(b) Secured Party Expenses. In the event that Compost, Miami
and Bedminster fail to pay taxes, assessments, costs and expenses
which Compost, Miami and/or Bedminster is required to pay, or in
the event that Compost, Miami and/or Bedminster fail to keep the
Collateral free from other security interests, liens, pledges, or
encumbrances not permitted under the terms of this Agreement,
Lionhart, LHI and/or GEP may make expenditures for any and all
such purposes. All costs and expenses of Lionhart, LHI and/or GEP
in retaking, holding, preparing for sale and selling or otherwise
realizing upon any Collateral or enforcing any provisions hereof
upon the occurrence of any Event of Default (as defined under
Section 8 of this Agreement) by Compost, Miami and/or Bedminster,
including reasonable attorneys' fees, shall constitute part of the
Indebtedness and Obligations that are otherwise secured under this
Agreement by the Collateral, and Compost, Miami and Bedminster
shall forthwith reimburse Lionhart, LHI and GEP for any such
payments made or any such expenses incurred by Lionhart, LHI
and/or GEP.
Section 7. Performance by Secured Party of Debtor's Agreements.
Lionhart, LHI and/or GEP may, but shall have no duty to, perform any agreement,
promise or covenant of Compost, Miami and/or Bedminster hereunder, which
Compost, Miami and/or Bedminster shall have failed to perform or discharge, and
Compost, Miami and Bedminster shall forthwith reimburse Lionhart, LHI and GEP
for any such payments made or any such expenses incurred by Lionhart, LHI and/or
GEP, including reasonable attorneys' fees, and all such payments, costs and
expenses, including reasonable attorneys' fees, shall constitute part of the
Indebtedness and Obligations that are otherwise secured under this Agreement by
the Collateral.
Section 8. Event of Default. An "Event of Default," under this
Agreement, is and shall be defined as, and shall mean and include, any "Event of
Default" as that term is defined under Section 18.02 (and as otherwise qualified
under Section 18.02.02) of the CCF Agreement, including, without limitation, any
default, breach, violation, failure and/or omission, by or on the part of
Compost, Miami and/or Bedminster, to pay and discharge, on a timely, punctual,
complete and full basis, the Principal and Interest when the Principal and
Interest are or become due and payable under the Mortgage Note.
9. Remedies Upon Default. Upon the occurrence of an Event of Default
(as defined under Section 8 of this Agreement), Lionhart, LHI and GEP shall have
the right, in their sole discretion and option, to exercise all rights and
remedies that are set forth and described under Section 18.04 of the CCF
Agreement, or that Lionhart, LHI and/or GEP may be entitled to assert and/or
claim, at law or in equity, and as follows:
9.01. Acceleration-Indebtedness. Upon the occurrence of any such
Event of Default, Lionhart, LHI and GEP may, from time to time and at
any time(s), declare the entire unpaid amount or portion of any, some
or all of the Indebtedness (including, without limitation, the unpaid
amount or portion of all Principal and Interest under the Mortgage
Note), immediately due and payable, without further notice or demand,
or presentment, protest, notice of protest or notice of dishonor (of
which Compost, Miami and Bedminster hereby expressly waive any such
notice, demand, presentment, protest, notice of protest or notice of
dishonor), whereupon all such Indebtedness, as accelerated under this
Section 9.01, shall become immediately due and payable in full, and
Lionhart, LHI and GEP shall the right immediately to foreclose upon the
lien created by the Mortgage against the Mortgaged Miami Site (as
otherwise defined under the Mortgage); to enforce the security
interests granted under this Agreement, and to use self-help and to
recover, possess, repossess and otherwise dispose of the Collateral,
and to otherwise exercise any and all rights or remedies that a secured
party is or may be entitled to exercise and assert under Article 9 of
the Uniform Commercial Code of and as adopted by the State of New
Jersey; to enforce and otherwise foreclose upon every other security
interest in any and all Collateral as otherwise created or confirmed
under this Agreement, or any part thereof; to enforce and otherwise use
self-help and to recover, possess or foreclose upon every security
interest in any of the pledged Collateral under the Compost Stock
Pledge Agreement (Compost Common Stock), the Compost Stock Pledge
Agreement (Miami Common Stock) and/or the Compost Stock Pledge
Agreement (Bedminster Common Stock), or any part thereof; and/or, to
commence or institute any action, suit or other proceeding which
Lionhart, LHI and/or
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GEP may deem necessary or proper to protect their respective interests.
9.02. Acceleration-Obligations. Lionhart, LHI and GEP may, from
time to time at any time(s), declare any and all Obligations, that have
not been theretofore performed and discharged, immediately due and
required to be performed and discharged immediately, without further
notice or demand, or presentment, protest, notice of protest or notice
of dishonor (of which Compost, Miami and Bedminster hereby expressly
waive any such notice, demand, presentment, protest, notice of protest
or notice of dishonor), whereupon all such Obligations, as accelerated
under this Section 9.02, shall become immediately due and payable in
full, and Lionhart, LHI and GEP shall the right immediately to
foreclose upon the lien created by the Mortgage against the Mortgaged
Miami Site (as otherwise defined under the Mortgage); to enforce the
security interests granted under this Agreement, and to use self-help
and to recover, possess, repossess and otherwise dispose of the
Collateral, and to otherwise exercise any and all rights or remedies
that a secured party is or may be entitled to exercise and assert under
Article 9 of the Uniform Commercial Code of and as adopted by the State
of New Jersey; to enforce and otherwise foreclose upon every other
security interest in any and all Collateral as otherwise created or
confirmed under this Agreement, or any part thereof; to enforce and
otherwise use self-help and to recover, possess or foreclose upon every
security interest in any of the pledged Collateral under the Compost
Stock Pledge Agreement (Compost Common Stock), the Compost Stock Pledge
Agreement (Miami Common Stock) and/or the Compost Stock Pledge
Agreement (Bedminster Common Stock), or any part thereof; and/or, to
commence or institute any action, suit or other proceeding which
Lionhart, LHI and/or GEP may deem necessary or proper to protect their
respective interests.
9.03. Other Recourse and Remedies. Lionhart, LHI and GEP each
shall have all the remedies of a creditor and a secured party and
creditor under the Uniform Commercial Code of the State of New Jersey,
and as otherwise provided by applicable law, including but not limited
to the following:
(1) Possession/Sale. Lionhart, LHI and GEP may use
self-help with respect to the Collateral, may take possession
of the Collateral, or any part of it, and may use it, or sell
it, or any part of it, at any public or private sale, after
having taken possession of the Collateral, or any part of it.
For purposes of taking possession, Lionhart, LHI and GEP may
enter upon any premises on which the Collateral may be
situated without legal process and remove the Collateral.
Compost, Miami and Bedminster each hereby releases Lionhart,
LHI and GEP from any claims arising from such removal and
shall hold Lionhart, LHI and GEP harmless from any liability
resulting therefrom. Lionhart, LHI and GEP may require
Compost, Miami and/or Bedminster to assemble the Collateral
and make it available at a place to be designated by
Lionhart, LHI and GEP which is reasonably convenient to all
parties. Unless the Collateral threatens to decline speedily
in value or is of a type customarily sold on a recognized
market, Lionhart, LHI and/or GEP shall give Compost, Miami
and/or Bedminster at least thirty (30) days' prior written
notice of the time and place of any public sale thereof or of
the time after which any private sale or any other intended
disposition thereof is to be made. The reasonable expenses of
retaking, holding, preparing for sale, selling and the like,
and reasonable attorneys' fees and expenses incurred by
Lionhart, LHI and/or GEP shall be paid from the proceeds of
the disposition.
(2) Receivership/Replevin. Lionhart, LHI and/or GEP may
obtain the appointment of a receiver, custodian, conservator,
trustee or liquidator respecting the Collateral upon such
notice as may be required by applicable law and without
notice if permitted by such law, and may obtain immediate
possession thereof in replevin.
(3) Miscellaneous. Insofar as any Collateral shall
consist of accounts receivable, insurance policies,
instruments, chattel paper, intangibles, choses in action or
the like, Lionhart, LHI and/or GEP may demand, collect,
receipt for, settle, compromise, adjust, sue for, foreclose
or realize upon Collateral as Lionhart, LHI and/or GEP may
determine, whether or not the Indebtedness or Obligations or
Collateral are then due, and for the purpose of realizing
Lionhart's, LHI's and GEP's rights and interests therein,
Lionhart, LHI and GEP may receive, open and dispose of mail
addressed to Compost, Miami and/or Bedminster and endorse
notes, checks, drafts, money orders, documents of title or
other evidences of payment, shipment or storage or any form
of Collateral on behalf of and in the name of Compost, Miami
and Bedminster as its special and limited attorney-in-fact,
which shall be deemed to be coupled with an interest.
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(4) Cumulative Remedies. All remedies of Lionhart, LHI
and/or GEP, under this Agreement, the CCF Agreement, the
Credit Documents and/or the Definitive Supplemental
Documents, or under applicable law, shall be cumulative to
the full extent provided by law. Any pursuance by Lionhart,
LHI and/or GEP of any single judicial or other remedies shall
not abate nor bar resort to other remedies with respect to
the Collateral, and pursuit of certain remedies with respect
to all or some of the Collateral shall not bar other remedies
with respect to the Indebtedness, the Obligations, or other
portions of the Collateral, or as may otherwise be provided
under the CCF Agreement, the Credit Documents (including the
Mortgage and the Mortgage Note) and/or the Definitive
Supplemental Documents, and/or under any applicable law.
Lionhart, LHI and GEP may exercise its rights to the
Collateral without resorting or regard to other collateral or
sources of security or reimbursement for the Indebtedness
and/or Obligations (whether under the CCF Agreement, the
Credit Documents the Definitive Supplemental Documents, or
otherwise).
Section 10. Nonwaiver-Expenses, Proceeds of Collateral. No waiver (or
forbearance or other accomodation) by Lionhart, LHI and/or GEP of any of its or
their respective rights, and no waiver or inaction by Lionhart, LHI and/or GEP
of or upon the occurrence of any Event of Default, shall be effective unless in
writing, and in no event shall it operate as a waiver (or forbearance or other
accomodation) of any of its or their respective rights, or as a waiver of any
other Event of Default nor of the same rights or default on any future occasion.
Compost, Miami and Bedminster, jointly and severally, shall pay to Lionhart, LHI
and GEP, on demand by Lionhart, LHI and/or GEP, any and all expenses, including
reasonable attorneys' fees, incurred or paid by Lionhart, LHI and/or GEP in
protecting or enforcing its rights upon or under the Indebtedness, the
Obligations, the Collateral or this Agreement. After deducting all such
expenses, the residue of any proceeds of collection or sale of Collateral shall
be applied to the payment of Principal or Interest under the Note, and on the
principal and interest attributable to any other of the Indebtedness and/or
Obligations, in such order of preference as Lionhart, LHI and/or GEP may
determine, and Compost, Miami and Bedminster shall remain liable to Lionhart,
LHI and/or GEP for any deficiency thereof.
Section 11. Legal Authority/Compliance/Miscellaneous. Compost, Miami
and Bedminster, jointly and severally, each hereby represent and warrant, and
hereby promise, agree and covenant, as follows:
11.01. General Board Authorization. Compost, Miami and Bedminster
each has all necessary corporate power and authority, pursuant to the
approval by and the duly adopted resolutions of their respective Board
of Directors, and otherwise, to execute and deliver this Agreement, and
to perform their respective duties and obligations contemplated and as
otherwise provided under this Agreement.
11.02. No Violations. The execution and delivery of (and the
performance and consummation transactions contemplated under) this
Agreement, will not (i) conflict with or violate the Certificate of
Incorporation or By-Laws of Compost, Miami or Bedminster, (ii) conflict
with or violate any law, rule, regulation, order, judgment or decree
applicable to Compost, Miami or Bedminster, or by which its or any of
their respective Properties are bound or affected, or (iii) result in
any breach of or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of,
or result in the creation of a lien or encumbrance on any of the
Properties or assets of any of the Compost, Miami and Bedminster
pursuant to any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, insurance policy or other instrument or
obligation to which either Compost, Miami and/or Bedminster is a party,
or by which either Compost, Miami and/or Bedminster or its or any of
their respective Properties are bound or affected.
11.03. No Required Governmental Consents. The execution and
delivery of (and the performance and consummation transactions
contemplated under) this Agreement by each of Compost, Miami and
Bedminster does not and will not, require any consent, approval,
authorization or permit from any Governmental Authority which has not
been obtained.
11.04. Authority of Officers. Compost, Miami and Bedminster each
have good right and lawful authority, through their designated and
respective officers and representatives who have signed and delivered
this Agreement, for and on behalf respectively of Compost, Miami and
Bedminster, to execute, deliver and consummate the transactions
contemplated under this Agreement.
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11.05. Enforceability. This Agreement is a legal, valid and
binding obligation of Compost, Miami and Bedminster, enforceable
against Compost, Miami and Bedminster in accordance with the terms of
this Agreement, and there is no action or proceeding at law or in
equity, or by or before any court or Governmental Authority now pending
or to the knowledge of Compost, Miami and/or Bedminster threatened or
affecting Compost, Miami and/or Bedminster, that may materially and
adversely affect Compost, Miami and/or Bedminster.
11.06. Execution by Parties. Any person or party executing this
Agreement in a representative capacity, acknowledges, warrants and
represents 1) that he or she is an official representative of the firm
or corporation in whose name he or she is executing this Agreement, 2)
that he or she possesses full and complete authority to bind said firm
or corporation to the full and faithful performance of all conditions,
terms, provisions, covenants, warranties and representations as
contained in this Agreement, and 3) that all other parties are relying
on these representations and warranties as a material inducement to
accept delivery of this Agreement, in consideration of and in exchange
for the delivery and/or execution by Lionhart, LHI and GEP of 1) the
Credit, 2) the CCF Agreement, 3) the Credit Documents and 4) the
Definitive Supplemental Documents, and the acceptance by Lionhart, LHI
and GEP from Compost, Miami and Bedminster of 1) the CCF Agreement, 2)
the Credit Documents and 3) the Definitive Supplemental Documents.
Section 12. Applicable Law, Jurisdiction and Venue. Compost, Miami and
Bedminster, jointly and severally, each hereby represent and warrant, and hereby
promise, agree (with Lionhart, LHI and GEP) and covenant, as follows:
12.01. This Mortgage Note shall be governed by, construed in
accordance with, and shall be enforced under, the laws of the State of
New Jersey, exclusive of its rules relating to conflict of laws.
12.02. Subject to applicable conflict of laws principles, Compost
shall accept venue with respect to all claims, actions or lawsuits that
relate to or arise from this Agreement, in any state court or U.S.
Court of competent jurisdiction that sits in Newark, New Jersey.
Compost hereby, and irrevocably and unconditionally, for itself and its
Properties, submits to the jurisdiction of any such New Jersey court or
U.S. Court sitting in Newark, New Jersey, and any appellate court with
jurisdiction thereover, in any action or proceeding relating to or
arising from this Agreement, the CCF Agreement (exclusive of the
Mortgage), the Credit Documents and/or the Definitive Supplemental
Documents, or for the recognition or enforcement of any judgment, and
Compost hereby, and irrevocably and unconditionally, agrees, promises
and covenants that all such claims in respect of any such action or
proceeding shall be heard, determined and adjudicated in by any such
New Jersey court or, to the extent permitted by applicable law, by any
such U.S. Court. Compost hereby agrees, promises and covenants that a
final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in
any other manner provided by law.
12.03. Compost hereby, and irrevocably and unconditionally,
waives, to the fullest extent under applicable law, any defense or
objection that it may now or hereafter have 1) to the laying of venue
of any suit, action or proceeding relating to or arising from this
Mortgage Note, the CCF Agreement, the Credit Documents (exclusive of
the Mortgage) and/or the Definitive Supplemental Documents, in any such
New Jersey court or U.S. Court sitting in Newark, New Jersey, or 2) to
the personal jurisdiction and/or preferred and proper venue of any such
New Jersey court or any such U.S. Court in Newark, New Jersey.
Section 13. Captions/Headings. The captions and headings that are set
forth in this Agreement are for the purpose of convenience only and are not
intended to be a part of this Agreement and shall not be deemed to modify,
explain, enlarge or restrict any of the provisions hereof.
Section 14. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any applicable jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provisions in any other
jurisdiction.
Section 15. Binding Obligations. The terms and provisions, and
promises, covenants and undertakings of this Agreement, shall bind and be
enforceable against and upon Compost, Miami and Bedminster, jointly and
severally, and their respective successors and assigns and other legal agents
and representatives, and shall inure to the benefit of Lionhart, LHI and GEP,
and their respective successors and assigns, transferees, credit participants,
guarantors and endorsees. If, at any time or
Page 9 of 13 Pages
<PAGE>
times, by assignment or otherwise, Lionhart, LHI and/or GEP transfer any of the
Indebtedness or Obligations, any such transfer shall carry with it Lionhart's,
LHI's and GEP's rights, interests and powers under this Agreement, including all
such rights, interests and powers that relate to or arise from this Agreement.
Lionhart, LHI and GEP, in their sole discretion and at their sole option, shall
have the right to assign this Agreement, as well as the CCF Agreement, the other
Credit Documents and the Definitive Supplemental Documents, to any successor(s)
or assign(s) of Lionhart, LHI and/or GEP.
Section 16. Time of the Essence. Time is hereby declared to be of the
essence of this Agreement, and of every part hereof.
SECTION 17. JURY WAIVER. COMPOST, MIAMI AND BEDMINSTER EACH DO HEREBY
KNOWINGLY, VOLUNTARILY, IRREVOCABLE, UNCONDITIONALLY AND INTENTIONALLY WAIVE THE
RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE CCF AGREEMENT, THE
CREDIT DOCUMENTS AND/OR THE DEFINITIVE SUPPLEMENTAL DOCUMENTS, OR ANY COURSE OF
CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF ANY PERSON. THIS IRREVOCABLE WAIVER OF THE RIGHT TO A JURY TRIAL IS A
MATERIAL INDUCEMENT FOR LIONHART, LHI AND/OR GEP TO DELIVER THE CREDIT, AND TO
EXECUTE AND DELIVER, AND OTHERWISE CONSUMMATE THE TRANSACTIONS CONTEMPLATED
UNDER, THE CCF AGREEMENT, THE CREDIT DOCUMENTS AND THE DEFINITIVE SUPPLEMENTAL
DOCUMENTS.
Section 18. Counterparts/Facsimile. This Agreement may be executed in
any number of counterparts, and each by fax, e-mail or other digital or
telephonic transmission, and each of which shall be an original, but all of
which together will constitute one and the same instrument.
Section 19. Notices. Any notices by or to Compost, Miami and/or
Bedminster, or by or to Lionhart, LHI and/or GEP, under this Agreement, shall be
given as provided under Section 20.04 of the CCF Agreement.
Section 20. Written Instrument Requirement. This Agreement cannot be
altered, amended, modified or discharged orally and no executory agreement shall
be effective to modify or discharge this Agreement, in whole or in part, unless
it is in writing and signed by the party against whom enforcement of the
modification, alteration, amendment or discharge is sought.
Section 21. Assignment. This Agreement, and any rights hereunder, may
be assigned by Lionhart, LHI and/or GEP, or any of their respective successors
and assigns, at their sole discretion and option. This Agreement may not be
assigned by Compost, Miami and/or Bedminster, and Compost, Miami and Bedminster
each shall not delegate any of their duties under this Agreement, in whole or in
part, without the advance written consent of Lionhart, LHI and GEP (pursuant to
which any such consent may be granted or withheld in the sole discretion of
Lionhart, LHI and/or GEP).
Section 22. Definitions. All capitalized terms that are set forth in
this Agreement, and that are not expressly defined under this Agreement, shall
have the meanings and definitions that are assigned or ascribed to such terms in
the CCF Agreement, the Credit Documents and/or the Definitive Supplemental
Documents.
Section 24. Incorporation of Documents. The CCF Agreement, the Credit
Documents (including the Mortgage, the Mortgage Note, the Compost-Miami
Guaranty, the Compost Stock Pledge Agreement (Compost Common Stock), the Compost
Stock Pledge Agreement (Miami Common Stock) and the Compost Stock Pledge
Agreement (Bedminster Common Stock)) and the Definitive Supplemental Documents,
and all other agreements, instruments or other documents that are referred to in
this Agreement, and/or Exhibit A or Exhibit B hereto, are hereby incorporated by
reference and form a part of this Agreement.
IN WITNESS WHEREOF, Compost, Miami and Bedminster, and Lionhart, LHI
and GEP, have executed and delivered this Agreement on and as of this 30th day
of October, 1998.
Debtor: COMPOST AMERICA HOLDING COMPANY, INC.
--------------------------------------
Page 10 of 13 Pages
<PAGE>
Roger E. Tuttle
President and Chief Executive Officer
MIAMI RECYCLING AND COMPOSTING COMPANY, INC.
--------------------------------------
Roger E. Tuttle
President and Chief Executive Officer
BEDMINSTER SEACOR SERVICES MIAMI CORPORATION
--------------------------------------
Roger E. Tuttle
President and Chief Executive Officer
Secured Parties: LIONHART GLOBAL APPRECIATION FUND, LTD.
--------------------------------------
Terrence P. Duffy, Director
LIONHART INVESTMENTS, LTD.
--------------------------------------
Terrence P. Duffy, Director
GLOBAL EARTHFUND PARTNERS, L.L.C.
--------------------------------------
Jay A. Duffy
President
Page 11 of 13 Pages
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Exhibit A
Schedule of Other Collateral
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Exhibit B
Permitted Encumbrances
Page 13 of 13 Pages
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Page 14 of 13 Pages
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Exhibit 99.7
GUARANTY AGREEMENT
Compost-Miami Guaranty Pursuant to CCF Agreement
October 30, 1998
---------------------------------------------------------
THIS GUARANTY AGREEMENT ("Guaranty") is made, executed and consummated
effectively this 30th day of October, 1998 ("Effective Date"), by COMPOST
AMERICA HOLDING COMPANY, INC. ("Compost") and MIAMI RECYCLING AND COMPOSTING
CO., INC. ("Miami"), and is hereby delivered by Compost and Miami, on the
Effective Date, to and for the benefit of LIONHART GLOBAL APPRECIATION FUND,
LTD. ("Lionhart"), LIONHART INVESTMENTS, LTD. ("LHI") and GLOBAL EARTHFUND
PARTNERS, L.L.C. ("GEP") (Lionhart, LHI and GEP, for purposes of this Guaranty,
are sometimes referred to collectively in this Guaranty as the "Lender(s)").
Recitals:
1. Compost is a New Jersey corporation. The principal office of Compost
is located at 320 Grand Avenue, Englewood, New Jersey 07631.
2. Miami is a Delaware corporation. The principal office of Miami is
located at 320 Grand Avenue, Englewood, New Jersey 07631. Bedminster Seacor
Services Miami Corporation ("Bedminster") is a Florida corporation. The
principal office of Bedminster is located at 320 Grand Avenue, Englewood, New
Jersey 07631. Compost is the direct parent of Miami, owns and controls 80.1% of
all issued and outstanding capital stock of Miami, and controls Miami. Miami is
the direct parent of Bedminster, Bedminster is a direct wholly-owned subsidiary
of Miami, and Compost controls Bedminster (which is an indirect controlled
subsidiary of Compost).
3. Lionhart is a British Virgin Islands international business company.
The principal office of Lionhart, in the British Virgin Islands, is located at
c/o Citco B.V.I. Limited, Post Office Box 662, Road Town, Tortola, British
Virgin Islands.
4. LHI is a United Kingdom limited liability company. The principal
office of LHI, in the United Kingdom, is located at 19 Camp Road, Heston Court,
Wimbledon, London SW19 4 RH, England.
5. GEP is an Indiana limited liability company. The principal office of
GEP in the United States is c/o John Thomas Drics, Esq., 111 Monument Circle,
Suite 312, Indianapolis, Indiana 46204.
6. On and effective as of October 30, 1998, Compost, Miami, Bedminster,
Lionhart, LHI and GEP entered into, executed, consummated and delivered an
agreement, entitled "Credit, Capitalization and Financing Agreement" ("CCF
Agreement"), which is hereby incorporated by reference. Except as otherwise
defined separately in this Guaranty, and/or except as otherwise indicated by the
context in this Guaranty, any terms that are capitalized in this Guaranty shall
have the same definition and meaning as is ascribed to such terms in the CCF
Agreement (and/or in any Credit Document(s) or Supplemental Definitive
Document(s) (as those terms are defined under the CCF Agreement)). This Guaranty
is the same instrument, agreement and document that is referred to, and as is
otherwise defined as, the Compost-Miami Guaranty, under and pursuant to Section
1.29 of the CCF Agreement the CCF Agreement.
7. Pursuant to the terms and subject to the conditions set forth in the
CCF Agreement, the Credit Documents and the Definitive Supplemental Documents,
Compost, Miami and/or Bedminster have the affirmative duty and obligation, inter
alia, to and for the benefit of Lionhart, LHI and/or GEP, 1) to pay and
discharge timely punctually, completely and fully certain Indebtedness (as that
term is defined under Section 18.01.01 of the CCF Agreement) and 2) to perform
and discharge timely, punctually, completely and fully certain Obligations (as
that term is defined under Section 18.01.02 of the CCF Agreement). For purposes
of this Guaranty, the terms "Indebtedness" and "Obligations" shall have the same
meanings and definitions as ascribed respectively to such terms under Section
18.01.01 and Section 18.01.02 of the CCF Agreement.
8. Compost and Miami, 1) for and in consideration of (i) the delivery
by Lionhart, LHI and GEP to Compost, Miami and Bedminster of the Credit (as
defined under Section 2.1 of the CCF Agreement) and (ii) the execution, delivery
or consummation of the agreements, promises, covenants and other undertakings by
Lionhart, LHI and/or GEP as otherwise provided under the CCF Agreement, the
Credit Documents and/or the Supplemental Definitive Documents ("Consideration"),
Page 1 of 11 Pages
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and 2) as an inducement to Lionhart, LHI and GEP to enter into, agree, execute
and deliver, and otherwise consummate the transactions contemplated under, the
CCF Agreement, the Credit Documents and the Supplemental Definitive Documents,
and, 3) to additionally secure (to and for the benefit of Lionhart, LHI and GEP)
the timely and complete payment of the Indebtedness and the performance and
discharge of the Obligations, by and on the part of Compost, Miami and
Bedminster, under and pursuant the CCF Agreement, the Credit Documents and/or
the Definitive Supplemental Documents, Compost, Miami and Bedminster have agreed
to procure, and to execute or deliver (at the Term Loan Closing on the Closing
Date), or cause to be executed and delivered (on the Term Loan Closing on the
Closing Date), to and for the benefit of Lionhart, LHI and GEP, this Guaranty,
without the delivery of which Lionhart, LHI and/or GEP would not exchange,
execute or otherwise deliver the Consideration (including the Credit) to or for
the benefit of Compost, Miami and/or Bedminster.
NOW, THEREFORE, for good and valuable consideration, the receipt and
legal adequacy of which are hereby acknowledged, and as part of the
consideration of Compost and Miami for the Consideration of Lionhart, LHI and
GEP, as otherwise provided under the CCF Agreement, the Credit Documents and the
Definitive Supplemental Documents, Compost and Miami hereby promise, covenant,
and represent and warrant to Lionhart, LHI and GEP, and hereby agree with
Lionhart, LHI and GEP, as follows:
Guaranty:
Section 1. Compost Guaranty. Compost, on an absolute, unconditional and
continuing basis, hereby guarantees to Lionhart, LHI and GEP, and their
respective successors and assigns, and participants and guarantors, that:
1.01. Indebtedness. Miami and Bedminster shall timely, punctually,
fully and completely pay and discharge all Indebtedness (whether any
such Indebtedness is direct, indirect, fixed, contingent, liquidated,
unliquidated, joint, several, joint and several, now existing or
hereafter arising), for which Miami and/or Bedminster have any duty,
obligation, responsibility, liability or other undertaking (either
directly or indirectly, individually, independently, jointly, or
jointly and severally), to pay and discharge, under and pursuant to the
CCF Agreement, the Credit Documents and/or the Definitive Supplemental
Documents, including, without limitation, 1) all Indebtedness and other
amounts due and owing or that become due and owing under and pursuant
to the Mortgage and the Mortgage Note, 2) all costs, reasonable
attorneys' fees and other expenses paid or incurred by Lionhart, LHI
and/or GEP to enforce the terms of or collect any sums under this
Guaranty and/or the CCF Agreement, the Credit Documents (including,
without limitation the Mortgage and the Mortgage Note) and/or the
Definitive Supplemental Documents, and/or 3) all renewals and
extensions thereof.
1.02. Obligations. Miami and Bedminster shall timely, punctually,
fully and completely perform and discharge all Obligations (whether any
such Obligation is direct, indirect, fixed, contingent, liquidated,
unliquidated, joint, several, joint and several, now existing or
hereafter arising), for which Miami and/or Bedminster have any duty,
obligation, responsibility, liability or other undertaking (either
directly or indirectly, individually, independently, jointly, or
jointly and severally), to perform and discharge, under and pursuant to
the CCF Agreement, the Credit Documents and/or the Definitive
Supplemental Documents, including, without limitation, 1) all
Obligations due and owing or that become due and owing under and
pursuant to the Mortgage and the Mortgage Note, 2) all costs,
reasonable attorneys' fees and other expenses paid or incurred by
Lionhart, LHI and/or GEP to enforce the terms of or collect any sums
under this Guaranty and/or the CCF Agreement, the Credit Documents
(including, without limitation the Mortgage and the Mortgage Note)
and/or the Definitive Supplemental Documents, and/or 3) all renewals
and extensions thereof.
1.03. Warranties and Representations. All representations and
warranties by, or on the part of Miami and/or Bedminster, and all
statements set forth or otherwise disclosed, under and pursuant to the
CCF Agreement, the Credit Documents and/or the Definitive Supplemental
Documents, and/or in any Disclosure Documents, the Disclosure
Documents, the Compost Disclosures, the Financial Statements, the
Interim Financial Statements, the Miami Balance Sheet, the Bedminster
Balance Sheet, the Miami Project Disclosures, Appendix I, II and III of
the CCF Agreement, and all exhibits, attachments or accompanying
documents, instruments or schedules of or to the CCF Agreement, the
Credit Documents and/or the Definitive Supplemental Documents, are
correct, accurate and complete, and do not contain any untrue statement
of material fact or omit to state a material fact necessary to make any
such statements not misleading.
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Section 2. Miami Guaranty. Miami, on an absolute, unconditional and
continuing basis, hereby guarantees to Lionhart, LHI and GEP, and their
respective successors and assigns, and participants and guarantors, that:
2.01. Indebtedness. Compost and Bedminster shall timely,
punctually, fully and completely pay and discharge all Indebtedness
(whether any such Indebtedness is direct, indirect, fixed, contingent,
liquidated, unliquidated, joint, several, joint and several, now
existing or hereafter arising), for which Compost and/or Bedminster
have any duty, obligation, responsibility, liability or other
undertaking (either directly or indirectly, individually,
independently, jointly, or jointly and severally), to pay and
discharge, under and pursuant to the CCF Agreement, the Credit
Documents and/or the Definitive Supplemental Documents, including,
without limitation, 1) all Indebtedness and other amounts due and owing
or that become due and owing under and pursuant to the Mortgage and the
Mortgage Note, 2) all costs, reasonable attorneys' fees and other
expenses paid or incurred by Lionhart, LHI and/or GEP to enforce the
terms of or collect any sums under this Guaranty and/or the CCF
Agreement, the Credit Documents (including, without limitation the
Mortgage and the Mortgage Note) and/or the Definitive Supplemental
Documents, and/or 3) all renewals and extensions thereof.
2.02. Obligations. Compost and Bedminster shall timely,
punctually, fully and completely perform and discharge all Obligations
(whether any such Obligation is direct, indirect, fixed, contingent,
liquidated, unliquidated, joint, several, joint and several, now
existing or hereafter arising), for which Compost and/or Bedminster
have any duty, obligation, responsibility, liability or other
undertaking (either directly or indirectly, individually,
independently, jointly, or jointly and severally), to perform and
discharge, under and pursuant to the CCF Agreement, the Credit
Documents and/or the Definitive Supplemental Documents, including,
without limitation, 1) all Obligations due and owing or that become due
and owing under and pursuant to the Mortgage and the Mortgage Note, 2)
all costs, reasonable attorneys' fees and other expenses paid or
incurred by Lionhart, LHI and/or GEP to enforce the terms of or collect
any sums under this Guaranty and/or the CCF Agreement, the Credit
Documents (including, without limitation the Mortgage and the Mortgage
Note) and/or the Definitive Supplemental Documents, and/or 3) all
renewals and extensions thereof.
2.03. Warranties and Representations. All representations and
warranties by, or on the part of Compost and/or Bedminster, and all
statements set forth or otherwise disclosed, under and pursuant to the
CCF Agreement, the Credit Documents and/or the Definitive Supplemental
Documents, and/or in any Disclosure Documents, the Disclosure
Documents, the Compost Disclosures, the Financial Statements, the
Interim Financial Statements, the Miami Balance Sheet, the Bedminster
Balance Sheet, the Miami Project Disclosures, Appendix I, II and III of
the CCF Agreement, and all exhibits, attachments or accompanying
documents, instruments or schedules of or to the CCF Agreement, the
Credit Documents and/or the Definitive Supplemental Documents, are
correct, accurate and complete, and do not contain any untrue statement
of material fact or omit to state a material fact necessary to make any
such statements not misleading.
Section 3. Defaults, Demands and Discharges. Compost and Miami, in
conjunction respectively with Section 1 and Section 2 of this Guaranty, hereby
agree, promise and covenant respectively, as follows:
3.01. Default-Definition. An "Event of Default," under this
Guaranty, is and shall be defined as, and shall mean and include, any
"Event of Default" as that term is defined under Section 18.02 (and as
otherwise qualified under Section 18.02.02) of the CCF Agreement,
including any such "Event of Default," with respect to any such
Indebtedness or Obligations, that relate to or arise from any of the
Credit Documents and/or Definitive Supplemental Documents.
3.02. Compost. Compost absolutely, unconditionally and
continuously agrees, promises and covenants that, (i) in the event that
Miami and/or Bedminster engage, by act or omission, in any Event of
Default, with respect to any such Indebtedness or Obligations, in whole
or in part, for any reason, either when any such Indebtedness is or
becomes due and owing, or when any such Obligation is or becomes due or
required to be performed, either by its terms or as a result of the
exercise of any right, power or authority to accelerate, or (ii) upon
the occurrence of any other Event of Default, by or on the part of, or
that is attributable or imputable (under the CCF Agreement, the Credit
Documents and/or the Definitive Supplemental Documents) to Miami and/or
Bedminster, Compost, upon demand (by Lionhart,
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LHI and/or GEP, or their respective successors and assigns) and without
further notice of dishonor and without any notice with respect to any
matter or occurrence having been given to Compost (and/or Miami and/or
Bedminster) previous to any such demand, shall immediately pay and
discharge completely and fully any and all such Indebtedness and shall
immediately perform and discharge completely and fully any and all such
Obligations.
3.03. Miami. Miami absolutely, unconditionally and continuously
agrees, promises and covenants that, (i) in the event that Compost
and/or Bedminster engage, by act or omission, in any Event of Default,
with respect to any such Indebtedness or Obligations, in whole or in
part, for any reason, either when any such Indebtedness is or becomes
due and owing or when any such Obligation is or becomes due or required
to be performed, either by its terms or as a result of the exercise of
any right, power or authority to accelerate, or (ii) upon the
occurrence of any other Event of Default, by or on the part of, or that
is attributable or imputable (under the CCF Agreement, the Credit
Documents and/or the Definitive Supplemental Documents) to Compost
and/or Bedminster, Miami, upon demand (by Lionhart, LHI and/or GEP, or
their respective successors and assigns) and without further notice of
dishonor and without any notice with respect to any matter or
occurrence having been given to Miami (and/or Compost and/or
Bedminster) previous to any such demand, shall immediately pay and
discharge completely and fully any and all such Indebtedness and shall
immediately perform and discharge completely and fully any and all such
Obligations.
Section 4. Collateral Agreements. The CCF Agreement, all Credit
Documents (including, without limitation, the Mortgage, the Mortgage Note, the
Compost Stock Pledge Agreement (Compost Common Stock), the Compost Stock Pledge
Agreement (Miami Common Stock), the Compost Stock Pledge Agreement (Bedminster
Common Stock) and the Security Agreement)) and all Definitive Supplemental
Documents, are hereby incorporated by reference, and are made a part of this
Guaranty with the same force and effect as though set forth completely in the
terms of this Guaranty.
Section 5. Consents, Defenses and Miscellaneous. Compost and Miami
(sometimes collectively referred to hereinafter in this Guaranty as the
("Guarantor(s)"), each hereby consents, and hereby promises, covenants and
agrees, that:
5.1. Permissive Modification. The Indebtedness and/or the
Obligations, or any respective part thereof, and the terms, provisions,
covenants, conditions, promises, agreements, debts, liabilities, duties
and responsibilities, and all other undertakings under the CCF
Agreement, the Credit Documents and/or the Definitive Supplemental
Documents, 1) may be changed, altered, amended, supplemented or
otherwise modified from time to time (pursuant to the terms and subject
to the conditions of and as set forth in the CCF Agreement, any or all
of the Credit Documents and/or any or all of the Definitive
Supplemental Documents) and/or 2) may be altered, amended,
supplemented, modified, or waived, postponed or released from time to
time by (or for) Compost, Miami and/or Bedminster with the advance and
prior written approval and consent of Lionhart, LHI and/or GEP
(pursuant to the terms and subject to the conditions of and as are set
forth in the CCF Agreement, any or all of the Credit Documents and/or
any or all of the Definitive Supplemental Documents, or otherwise);
and,
5.2. No Effect on Guaranty. This Guaranty, without any further or
later consent or approval by Compost and/or Miami, shall remain in full
force and effect, pursuant to all terms and provisions hereof, and the
Guarantors shall not be released of or from any duty, obligation or
undertaking under this Guaranty whatsoever, notwithstanding any such
alteration, amendment, supplement, modification, waiver, postponement
or release, as otherwise contemplated under Section 5.1 of this
Guaranty.
5.3. Miscellaneous. The duties and obligations of each of the
Guarantors, under this Guaranty, are continuing, absolute and
unconditional, irrespective of any circumstances whatsoever which might
otherwise constitute a legal or equitable discharge or defense of a
guarantor or surety. Without limiting the generality of the foregoing,
the duties and obligations of each of the Guarantors hereunder shall
remain in full force and effect without regard to, and shall not be
released, discharged or in any way affected by, 1) any amendment,
modification or supplement to the Mortgage Note, the Mortgage, the CCF
Agreement, the Credit Documents or the Definitive Supplemental
Documents, 2) any exercise or nonexercise of or delay in exercising any
right, remedy, power or privilege under or in respect of this Guaranty,
the CCF Agreement, the Credit Documents and/or the Definitive
Supplemental Documents (even if any such right, remedy, power or
privilege shall be lost thereby), or any waiver, consent, indulgence or
other action or inaction in respect thereof; 3) any bankruptcy,
insolvency, arrangement, composition, assignment for the benefit of
creditors or similar proceeding commenced by or against Compost, Miami
and/or Bedminster; 4) any failure to perfect
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or continue perfection of, or any release or waiver of, any rights
given in any property as security for the payment of any Indebtedness
or the performance of any Obligations under the CCF Agreement, the
Credit Documents and/or the Definitive Supplemental Documents; 5) any
extension of time for payment of any Indebtedness or the performance of
any Obligations under the CCF Agreement, the Credit Documents and/or
the Definitive Supplemental Documents; 6) the genuiness, validity or
enforceability of any of the Credit Documents (including, without
limitation, the Mortgage, the Mortgage Note, the Compost Stock Pledge
Agreement (Compost Common Stock), the Compost Stock Pledge Agreement
(Miami Common Stock), the Compost Stock Pledge Agreement (Bedminster
Common Stock) and/or the Security Agreement); 7) any defense that may
arise by reason of the failure of any trustee to file or enforce a
claim against the estate of Compost, Miami and/or Bedminster in any
bankruptcy or any other proceeding; 8) any voluntary or involuntary
liquidation, dissolution, sale of all or substantially all of the
Properties or assets of Compost, Miami and/or Bedminster, or any
marshaling of assets and liabilities, or other similar proceeding
affecting Compost, Miami and/or Bedminster, or any of their respective
assets; 9) the release of Compost, Miami and/or Bedminster from
performance or observance of any of the agreements, promises,
covenants, terms, conditions or other undertakings as set forth in the
CCF Agreement, the Credit Documents and/or the Definitive Supplemental
Documents, or by operation of law; 10) the failure of any Person to
keep the Guarantors advised of the financial condition of Compost,
Miami and/or Bedminster, regardless of the existence of any duty to do
so; 11) any sale or other transfer of the Miami Project and/or the
Miami Site or any other material assets of Compost, Miami and/or
Bedminster, or any foreclosure thereof by any Person; or, 12) any other
circumstances that might otherwise constitute a legal or equitable
discharge of a guarantor or surety. Without limiting any rights or the
terms or provisions of this Section 5.3, Lionhart, LHI and GEP, without
authorization from or notice to the Guarantors, and without impairing
or affecting the liability of the Guarantors hereunder, may from time
to time and at their respective discretion, and with or without
valuable consideration, 1) take and surrender security, exchange
collateral or security by way of substitution, or in any way they deem
necessary take, accept, withdraw, subordinate, alter, amend, modify or
eliminate collateral, 2) add or release or discharge endorsers,
guarantors, sureties, co-debtors or other obligors (including, without
limitation, Miami, Compost and/or Bedminster), or 3) settle or
compromise with Compost, Miami and/or Bedminster and/or any other
Person liable on any of the Indebtedness or any of the Obligations, on
such terms as they may determine in their respective sole discretion.
5.4. The Guarantors shall not be entitled to any set-off, claim,
reduction or diminution of any Indebtedness or Obligation, or any
defense of any kind or nature to which Compost, Miami and/or Bedminster
now has or hereafter may have against Lionhart, LHI and/or GEP, with
respect to the payment of their Indebtedness and the performance of
their Obligations under this Guaranty.
Section 6. No Duty to Safeguard Collateral. The Guarantors hereby
agree, promise and covenant that Lionhart, LHI and GEP (subject to their
respective duties to act in a commercially reasonable manner and to deal fairly,
as and to the extent required under applicable law) are not required to retain,
hold, protect, exercise due care with respect thereto, or perfect security
interests in or otherwise assure or safeguard any collateral or security that is
pledged by or the part of the Guarantors (and/or of Compost, Miami and/or
Bedminster) as collateral or security for the payment of the Indebtedness and/or
the performance of the Obligations. No exercise or nonexercise by Lionhart, LHI
and/or GEP of any of their respective rights or remedies shall in way affect any
duties or obligations of the Guarantors under this Guaranty, or any security
furnished or pledged by any Guarantor (and/or Compost, Miami and/or Bedminster)
to secure the payment of the Indebtedness or the performance of the Obligations,
or otherwise give the Guarantors any recourse whatsoever against Lionhart, LHI
and/or GEP.
Section 7. Lawsuits, Cumulative Remedies and No Waiver. The Guarantors,
jointly and severally, hereby agree, promise and covenant, and hereby represent
and warrant, as follows:
7.1. Lawsuit Sequence. The Guarantors each waives any and all
legal requirements that Lionhart, LHI and/or GEP, and/or their
respective successors and assigns, shall or must commence or institute
any action, lawsuit or proceedings (at law or in equity) against
Compost, Miami and/or Bedminster, or any other Person, with respect to
the CCF Agreement, the Credit Documents and/or the Definitive
Supplemental Documents, or any part thereof, or with respect to any
security or collateral pledged to or held by Lionhart, LHI and/or GEP
under the CCF Agreement, the Credit Documents and/or the Definitive
Supplemental Documents, as a condition precedent to commencing or
instituting any action, lawsuit or other proceeding against the
Guarantor(s) under or pursuant to this Guaranty. Lionhart, LHI and/or
GEP shall have the right, in their respective sole and exclusive
discretion, upon any Event of
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Default as otherwise provided under this Guaranty, to immediately (or
at any time thereafter) commence and otherwise institute any such
action, lawsuit or proceedings (at law or in equity) against the
Guarantors (or any Guarantor), notwithstanding whether or not any such
action, lawsuit or other such proceeding is also commenced against
Compost, Miami and/or Bedminster.
7.2. Cumulative Remedies. All remedies, that are otherwise
available to Lionhart, LHI and/or GEP (and their respective successors
and assigns) under the CCF Agreement, this Guaranty, the Credit
Documents and/or the Definitive Supplemental Documents, or under
applicable law, or by reason of this Guaranty, are separate and
cumulative remedies, and no one of such remedies, whether or not
exercised by Lionhart, LHI and/or GEP, or their respective successors
and assigns, shall be deemed to be an exclusion of any one of the other
remedies available to Lionhart, LHI and/or GEP, or their respective
successors and assigns, and shall in no way limit or prejudice any
other legal or equitable remedies that Lionhart, LHI and/or GEP, or
their successors and assigns, or participants, may have, either under
this Guaranty, or under the CCF Agreement, the Credit Documents and/or
the Definitive Supplemental Documents, or otherwise.
7.3. No Exhaustion. The rights of Lionhart, LHI and GEP, under
this Guaranty, are cumulative, and shall not be exhausted by their
respective exercise of any of their respective rights under this
Guaranty or otherwise against the Guarantors, or by any number of
successive actions until and unless each and all of the Indebtedness
and Obligations have been punctually, timely, completely and fully
paid, performed, satisfied and discharged.
7.4. No Waiver. No failure or delay (or any forbearance or other
accomodation) on the part of the Lionhart, LHI and/or GEP (or any of
their respective successors and assigns), or in exercising any right,
power, or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, power, or remedy
preclude any other or further exercise thereof or the exercise of any
other right, power, or remedy hereunder. Any waiver by Lionhart, LHI
and/or GEP(or any successor or assign), of a default or breach of any
provision of this Guaranty (and/or of any breach or default under the
CCF Agreement, the Credit Documents and/or the Definitive Supplemental
Documents) shall not operate as or be construed to be a waiver of any
other default or breach of that provision or of any default or breach
of any other provision of this Guaranty (and/or of CCF Agreement, the
Credit Documents and/or the Definitive Supplemental Documents). The
failure of Lionhart, LHI and/or GEP (or any successor or assign) to
insist upon strict adherence to any terms of this Guaranty (and/or of
the CCF Agreement, the Credit Documents and/or the Definitive
Supplemental Documents) on one or more occasions will not be considered
a waiver or deprive Lionhart, LHI and/or GEP (or any successor or
assign) of the right thereafter to insist upon strict adherence to that
term or any other term of this Guaranty (and/or of the CCF Agreement,
the Credit Documents and/or the Definitive Supplemental Documents).
7.5. Miscellaneous. Lionhart, LHI and GEP shall not be required to
pursue any other remedies before invoking the bargain and benefits of
this Guaranty, and specifically Lionhart, LHI and GEP shall not be
required to exhaust their respective remedies against the Guarantors,
or Compost, Miami or Bedminster, or any other co-debtors, or any surety
or other guarantor, or to proceed against any security now or hereafter
existing for the payment of any such Indebtedness or the performance of
any such Obligations. For purposes of exercising any remedies under
this Guaranty, the parties hereto recognize that Lionhart shall act for
itself and as the exclusive agent of LHI and GEP, unless otherwise
directed or instructed in writing by all Lenders (pursuant to the sole
discretion of and unanimous decision by all such Lenders) to the
Guarantors.
Section 8. Continuing/Unconditional Guaranty. This Guaranty is an
absolute, unconditional and continuing Guaranty of the payment of the
Indebtedness and the performance of the Obligations, as contemplated and
otherwise provided under this Guaranty, and shall remain in full force and
effect until all such Indebtedness and all such Obligations, as otherwise
contemplated and provided under this Guaranty, are paid or performed and
discharged timely, punctually, completely and fully, whereupon, this Guaranty
shall automatically terminate and the Lenders shall have no further rights
hereunder. Until each and all of the terms, conditions and covenants of this
Guaranty are performed, and until all Indebtedness and all Obligations are paid,
performed, satisfied and discharged, as otherwise contemplated under this
Guaranty (and the CCF Agreement, the Credit Documents and the Definitive
Supplemental Documents), the Guarantors shall not be released 1) by any act or
thing that might, but for this Section 8, be deemed as a legal or equitable
discharge of a surety or 2) by reason of any waiver, extension, modification,
forbearance, or delay of Lionhart, LHI and/or GEP (or their respective
successors and assigns), of any of their
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respective failure to proceed promptly or otherwise, or 3) by reason of any
further obligation, agreement or undertaking, and the Guarantors hereby
expressly waive and surrender any defense to their liabilities and duties under
this Guaranty based upon any of the foregoing, acts, things, agreements or
waivers. This Guaranty is and shall become effective immediately upon execution
and delivery of this Guaranty by the Guarantors to Lionhart, LHI and GEP, at the
Term Loan Closing on the Closing Date (as contemplated under the CCF Agreement).
Section 9. Waiver of Demand/Protest/Defenses. The Guarantors each
hereby waive presentment for payment, demand, protest, notice of demand or
protest and/or of dishonor, notice of acceptance hereof, notices of default, and
all other notices now or hereafter provided by law, and/or diligence in
collecting and in bringing or commencing any lawsuit, action or other proceeding
(under this Guaranty, or the CCF Agreement, the Credit Documents and/or the
Definitive Supplemental Documents, or under applicable law, or otherwise).
Lionhart, LHI and GEP shall not have any duty or obligation to notify the
Guarantors of their respective acceptance of this Guaranty or of any advances
made or credit extended on the faith hereof, or the failure of any Guarantor or
of Compost, Miami and/or Bedminster to pay of the Indebtedness or to perform any
of the Obligations as any such Indebtedness and Obligations mature, or
otherwise, or to use diligence in preserving the liability of any Person
(including, without limitation, Compost, Miami and/or Bedminster, or any
Guarantor) on the Indebtedness or under the Obligation. To the fullest extent
permitted by applicable law, the Guarantors waive all defenses given to sureties
and guarantors at law or in equity other than the actual payment of the
Indebtedness and the actual performance of the Obligations, and waive, to the
fullest extent permitted by applicable law, all defenses based upon questions of
validity, legality or enforceability of 1) this Guaranty, 2) the CCF Agreement,
3) the Credit Documents, 4) the Definitive Supplemental Documents, or 5) any and
all of the Indebtedness and Obligations.
Section 10. Subrogation. The Guarantors hereby agree, promise and
covenant, jointly and severally with respect to Section 10.01 of this Guaranty,
and Compost and Miami hereby agree, promise and covenant respectively with
respect to Section 10.02 and Section 10.03, as follows:
10.01. Guarantors' Joint Subrogation. If, and in the event, that
the Guarantor(s) shall advance or become obligated to pay any sums
toward any Indebtedness or Obligations under this Guaranty, or, if in
the event and for any reason Compost, Miami and/or Bedminster hereafter
become indebted to the Guarantors, the amount of each such sum and of
such indebtedness shall at all times be subordinate as to lien, time of
payment, and in all other respects, to the amounts owed or owing to
Lionhart, LHI and/or GEP under the CCF Agreement, the Credit Documents
and/or the Definitive Supplemental Documents, or any right to
participate in any way therein, or in the right, title or interest of
Lionhart, LHI and/or GEP in and to any security or collateral under any
of the Credit Documents (including, without limitation, in and to the
Mortgaged Miami Site under the Mortgage and/or in and to any Collateral
under the Security Agreement, the Compost Stock Pledge Agreement
(Compost Common Stock), the Compost Stock Pledge Agreement (Miami
Common Stock) and/or the Compost Stock Pledge Agreement (Bedminster
Common Stock)), notwithstanding any payments made by the Guarantor(s)
toward the satisfaction of any Indebtedness or Obligations guaranteed
under this Guaranty, or any payments made by the Guarantor(s) under
this Guaranty, all rights of subrogation and participation being hereby
expressly waived and released.
10.02. Compost's Independent Subrogation. The payment by Compost
of any Indebtedness or the performance of any Obligation under and as
provided under this Guaranty, shall not in any way entitle Compost to
any right, title or interest (whether by way of subrogation or
otherwise) in and to any of the Indebtedness or the Obligations, or any
proceeds thereof, or any security therefor. Compost hereby and
absolutely and unconditionally waives 1) any claim or other right, now
existing or hereafter arising, against Miami and/or Bedminster or any
other Person primarily or contingently liable for all or any part of
any such Indebtedness or Obligations, that relates to or arises from or
by virtue of the existence or performance of this Guaranty, including,
without limitation, (i) any right of subrogation, reimbursement,
exoneration, contribution, indemnification, or other right to payment,
whether or not such right is reduced to judgement, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured, or (ii) any right
to an equitable remedy for breach of performance if such breach gives
rise to a right to payment, whether or not such right to an equitable
remedy is reduced to a judgment, fixed, contingent, matured, unmatured,
disputed, undisputed, secured or unsecured, and 2) any right to
participate or share in any right, remedy or claim of creditor against
any of Miami's and/or Bedminster's income, Properties or assets or with
respect to any collateral or other security for all or any part of the
Indebtedness or Obligations, or any other right or claim of a creditor
to any recourse to and with respect to any assets, income or
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Properties of Miami and/or Bedminster.
10.03. Miami's Independent Subrogation. The payment by Miami of
any Indebtedness or the performance of any Obligation under and as
provided under this Guaranty, shall not in any way entitle Miami to any
right, title or interest (whether by way of subrogation or otherwise)
in and to any of the Indebtedness or the Obligations, or any proceeds
thereof, or any security therefor. Miami hereby and absolutely and
unconditionally waives 1) any claim or other right, now existing or
hereafter arising, against Compost and/or Bedminster or any other
Person primarily or contingently liable for all or any part of any such
Indebtedness or Obligations, that relates to or arises from or by
virtue of the existence or performance of this Guaranty, including,
without limitation, (i) any right of subrogation, reimbursement,
exoneration, contribution, indemnification, or other right to payment,
whether or not such right is reduced to judgement, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured, or (ii) any right
to an equitable remedy for breach of performance if such breach gives
rise to a right to payment, whether or not such right to an equitable
remedy is reduced to a judgment, fixed, contingent, matured, unmatured,
disputed, undisputed, secured or unsecured, and 2) any right to
participate or share in any right, remedy or claim of creditor against
any of Compost's and/or Bedminster's income, Properties or assets or
with respect to any collateral or other security for all or any part of
the Indebtedness or Obligations, or any other right or claim of a
creditor to any recourse to and with respect to any assets, income or
Properties of Compost and/or Bedminster.
Section 11. General Waiver of Defenses. The Guarantors, jointly and
severally, waive any all defenses to any action, lawsuit or proceeding that is
commenced or instituted to enforce this Guaranty, or any part of this Guaranty,
either at law or in equity, except for the sole defense that any such
Indebtedness has paid and discharged or that any such Obligation has been
performed and discharged, pursuant to the terms thereof. Without limiting the
foregoing, and only for purposes of illustration, the Guarantors specifically
waive any and all technical, dilatory or nonmeritorious defenses, and any
defense predicated upon 1) the legal capacity or authority of any Guarantor, or
of any of their respective officers, to sign, execute, deliver or otherwise
perform their respective obligations under this Guaranty, 2) any change or
modification in the terms of any Indebtedness or any Obligation, or in the terms
of the CCF Agreement, the Credit Documents and/or the Definitive Supplemental
Documents, 3) indulgence or forbearance in the enforcement of any term of the
CCF Agreement, the Credit Documents (including, without limitation, the Mortgage
Note and/or the Mortgage) and/or the Definitive Supplemental Documents, or any
other instrument (including, without limitation, the Mortgage) securing,
affecting or modifying the Mortgage Note or any other term of the Indebtedness
or Obligations, 4) change in the ownership of the Miami Site (or the Mortgaged
Miami Site) or in any other collateral or other security that is or was pledged
by the Guarantors (or Compost, Miami and/or Bedminster) to secure any
Indebtedness or Obligations, 5) a release of all or any part of any security or
collateral, whether or not for valuable consideration or otherwise, that is or
was pledged by the Guarantors (or Compost, Miami and/or Bedminster) to secure
any Indebtedness or Obligations, 6) the acquisition of additional security or
collateral, 7) the substitution of different security in exchange or exchanges
for part or parts of the original security, 8) the fact or alleged fact that
there may be Persons other than the Guarantors, solvent and responsible for the
payment of any Indebtedness or the performance of any Obligations, 9) that any
applicable statute of limitations bars any such action, lawsuit or proceeding to
enforce this Guaranty, or any part of it, or 10) other usual and customary
equitable defenses that are asserted generally as a technical defense to any
such action, lawsuit or proceeding to enforce this Guaranty, or any part of it,
such as laches, lack of clean hands or otherwise.
Section 12. Bankruptcy/Preferences. The Guarantors hereby agree,
promise and covenant, and hereby agree with Lionhart, LHI and GEP, as follows:
12.01. Bankruptcy/Insolvency Proceedings. Except as otherwise
provided by applicable law, 1) any duty or liability of Compost, under
and pursuant to this Guaranty, shall not be affected by the
liquidation, readjustment, reorganization, receivership, bankruptcy,
other insolvency proceeding, or otherwise, of Miami and/or Bedminster,
or the acceptance of any settlement or composition offered or paid by
Miami or Bedminster pursuant to any such liquidation, readjustment,
reorganization, receivership, bankruptcy, other insolvency proceeding,
or otherwise, and 2) any duty or liability of Miami, under and pursuant
to this Guaranty, shall not be affected by the liquidation,
readjustment, reorganization, receivership, bankruptcy, other
insolvency proceeding, or otherwise, of Compost and/or Bedminster, or
the acceptance of any settlement or composition offered or paid by
Compost or Bedminster, pursuant to any such liquidation, readjustment,
reorganization, receivership, bankruptcy, other insolvency proceeding,
or otherwise.
Page 8 of 11 Pages
<PAGE>
12.02. No Proof of Claim/Effect. The failure by Lionhart, LHI
and/or GEP to file or enforce a claim against the estate (either in
administration, bankruptcy, reorganization, receivership, liquidation,
readjustment or other insolvency proceeding) of Compost, Miami and/or
Bedminster, shall not, to the fullest extent permissible under
applicable law, affect the duties or liabilities of the Guarantors
under this Guaranty. The failure by Lionhart, LHI and/or GEP to file or
enforce a claim against the estate (either in administration,
bankruptcy, reorganization, receivership, liquidation, readjustment or
other insolvency proceeding) of a Guarantor, shall not, to the fullest
extent permissible under applicable law, affect the duties or
liabilities of the other Guarantor under this Guaranty.
12.03. Preferences. In the event any payment by Compost, Miami
and/or Bedminster to Lionhart, LHI and/or GEP is held to constitute a
preference under Title 11 of the United States Bankruptcy Code, or if
for any reason Lionhart, LHI and/or GEP is or are required to refund
any such payment or pay the amount thereof to any other Person
(including, without limitation, any trustee, receiver, liquidator,
conservator, or otherwise), then any such payment by Compost, Miami
and/or Bedminster shall not constitute a payment of any such
Indebtedness or the performance of any such Obligation, and this
Guaranty shall continue to be effective or shall be reinstated, as the
case may be, to the extent of any such payment or payments.
Section 13. Legal Authority/Compliance/Miscellaneous. The Guarantors,
jointly and severally, each hereby represent and warrant, and hereby promise,
agree and covenant, as follows:
13.01. General Board Authorization. Each of the Guarantors has all
necessary corporate power and authority, pursuant to the approval by
and the duly adopted resolutions of their respective Board of
Directors, and otherwise, to execute and deliver this Guaranty, and to
perform their respective duties and obligations contemplated and as
otherwise provided under this Guaranty.
13.02. No Violations. The execution and delivery of (and the
performance and consummation transactions contemplated under) this
Guaranty, will not (i) conflict with or violate the Certificate of
Incorporation or By-Laws of any Guarantor, (ii) conflict with or
violate any law, rule, regulation, order, judgment or decree applicable
to any Guarantor or by which its or any of their respective Properties
are bound or affected, or (iii) result in any breach of or constitute a
default (or an event which with notice or lapse of time or both would
become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation
of a lien or encumbrance on any of the Properties or assets of any of
the Guarantors pursuant to any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, insurance policy or other
instrument or obligation to which any such Guarantor is a party, or by
which any such Guarantor or its or any of their respective Properties
are bound or affected.
13.03. No Required Governmental Consents. The execution and
delivery of (and the performance and consummation transactions
contemplated under) this Guaranty by each of the Guarantors does not
and will not, require any consent, approval, authorization or permit
from any Governmental Authority which has not been obtained.
13.04. Authority of Officers. The Guarantors each have good right
and lawful authority, through their designated and respective officers
and representatives who have signed and delivered this Guaranty, for
and on behalf of the respective Guarantors, to execute, deliver and
consummate the transactions contemplated under this Guaranty.
13.05. Enforceability. This Guaranty is a legal, valid and binding
obligation of Compost and Miami, enforceable against Compost and Miami
in accordance with the terms of this Guaranty, and there is no action
or proceeding at law or in equity, or by or before any court or
Governmental Authority now pending or to the knowledge of Compost and
Miami threatened or affecting Compost or Miami, that may materially and
adversely affect Compost or Miami.
13.06. Execution by Parties. Any person or party executing this
Guaranty in a representative capacity, acknowledges, warrants and
represents 1) that he or she is an official representative of the firm
or corporation in whose name he or she is executing this Guaranty, 2)
that he or she possesses full and complete authority to bind said firm
or corporation to the full and faithful performance of all conditions,
terms, provisions, covenants, warranties and representations as
contained in this Guaranty, and 3) that all other parties are relying
on these representations and
Page 9 of 11 Pages
<PAGE>
warranties as a material inducement to accept delivery of this
Guaranty, in consideration of and in exchange for the delivery and/or
execution by Lionhart, LHI and GEP of 1) the Credit, 2) the CCF
Agreement, 3) the Credit Documents and 4) the Definitive Supplemental
Documents, and the acceptance by Lionhart, LHI and GEP from Compost,
Miami and Bedminster of 1) the CCF Agreement, 2) the Credit Documents
and 3) the Definitive Supplemental Documents.
Section 14. Applicable Law, Jurisdiction and Venue. The Guarantors,
jointly and severally, each hereby represent and warrant, and hereby promise,
agree and covenant, as follows:
14.01. This Guaranty shall be governed by, construed in accordance
with, and shall be enforced under, the laws of the State of New Jersey,
exclusive of its rules relating to conflict of laws.
14.02. Subject to applicable conflict of laws principles, Compost
and Miami each shall accept venue with respect to all claims, actions
or lawsuits that relate to or arise from this Guaranty, in any state
court or U.S. Court of competent jurisdiction that sits in Newark, New
Jersey. Compost and Miami, under this Guaranty, each hereby, and
irrevocably and unconditionally, for itself and its Properties, submits
to the jurisdiction of any such New Jersey court or U.S. Court sitting
in Newark, New Jersey, and any appellate court with jurisdiction
thereover, in any action or proceeding relating to or arising from this
Guaranty, the CCF Agreement (exclusive of the Mortgage), the Credit
Documents and/or the Definitive Supplemental Documents, or for the
recognition or enforcement of any judgment, and each of the Guarantors
under this Guaranty hereby, and irrevocably and unconditionally,
agrees, promises and covenants that all such claims in respect of any
such action or proceeding shall be heard, determined and adjudicated in
by any such New Jersey court or, to the extent permitted by applicable
law, by any such U.S. Court. Each of the Guarantors under this Guaranty
agrees, promises and covenants that a final judgment in any such action
or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided
by law.
14.03. Each of the Guarantors under this Guaranty hereby, and
irrevocably and unconditionally, waives, to the fullest extent under
applicable law, any defense or objection that it may now or hereafter
have 1) to the laying of venue of any suit, action or proceeding
relating to or arising from this Guaranty, the CCF Agreement, the
Credit Documents (exclusive of the Mortgage) and/or the Definitive
Supplemental Documents, in any such New Jersey court or U.S. Court
sitting in Newark, New Jersey, or 2) to the personal jurisdiction
and/or preferred and proper venue of any such New Jersey court or any
such U.S. Court in Newark, New Jersey.
Section 15. Captions/Headings. The captions and headings that are set
forth in this Guaranty are for the purpose of convenience only and are not
intended to be a part of this Guaranty and shall not be deemed to modify,
explain, enlarge or restrict any of the provisions hereof.
Section 16. Severability. Any provision of this Guaranty which is
prohibited or unenforceable in any applicable jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provisions in any other
jurisdiction.
Section 17. Binding Obligations. The terms and provisions, and
promises, covenants and undertakings of this Guaranty, shall bind and be
enforceable against and upon each Guarantor, jointly and severally, and their
respective successors and assigns and other legal agents and representatives,
and shall inure to the benefit of Lionhart, LHI and GEP, and their respective
successors and assigns, transferees, credit participants, guarantors and
endorsees. The failure of any Person to execute or be bound by this Guaranty
shall not release or affect the liability of the other Guarantor or any other
such Person, and the liability of any Guarantor under this Guaranty is not
conditioned or contingent upon, or otherwise subject to obtaining or retaining
the primary or secondary liability of any Person (including, any other
Guarantor, or Compost, Miami and/or Bedminster) with respect to all or part of
the Indebtedness and/or the Obligations.
Section 18. Time of the Essence. Time is hereby declared to be of the
essence of this Guaranty, and of every part hereof.
SECTION 19. JURY WAIVER. THE GUARANTORS EACH DO HEREBY KNOWINGLY,
Page 10 of 11 Pages
<PAGE>
VOLUNTARILY, IRREVOCABLE, UNCONDITIONALLY AND INTENTIONALLY WAIVE THE RIGHT TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS GUARANTY, THE CCF AGREEMENT, THE CREDIT
DOCUMENTS (EXCLUSIVE OF THE MORTGAGE) AND/OR THE DEFINITIVE SUPPLEMENTAL
DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PERSON. THIS IRREVOCABLE WAIVER OF THE
RIGHT TO A JURY TRIAL IS A MATERIAL INDUCEMENT FOR LIONHART, LHI AND/OR GEP TO
DELIVER THE CREDIT, AND TO EXECUTE AND DELIVER, AND OTHERWISE CONSUMMATE THE
TRANSACTIONS CONTEMPLATED UNDER, THE CCF AGREEMENT, THE CREDIT DOCUMENTS AND THE
DEFINITIVE SUPPLEMENTAL DOCUMENTS.
Section 20. Assignment. This Guaranty, and any rights hereunder, may be
assigned by the Lenders, or any of their respective participants and/or
successors and assigns, at their sole discretion and option. This Guaranty may
not be assigned by any Guarantor or the Guarantors, and the Guarantors shall not
delegate any of their duties under this Guaranty, in whole or in part, without
the advance written consent of the Lenders (pursuant to which any such consent
may be granted or withheld in the sole discretion of the Lenders).
Section 21. Counterparts/Facsimile. This Guaranty may be executed in
any number of counterparts, and each by fax, e-mail or other digital or
telephonic transmission, each of which shall be an original, but all of which
together will constitute one and the same instrument.
Section 22. Notices. Any notices, if any, by or to the Guarantors, or
by or to Lionhart, LHI and/or GEP, under this Guaranty, may be given as provided
under Section 20.04 of the CCF Agreement.
Section 23. Written Instrument Requirement. This Guaranty cannot be
altered, amended, modified or discharged orally and no executory agreement shall
be effective to modify or discharge this Guaranty, in whole or in part, unless
it is in writing and signed by the party against whom enforcement of the
modification, alteration, amendment or discharge is sought.
Section 24. Definitions. All capitalized terms that are set forth in
this Guaranty, and that are not expressly defined under this Guaranty, shall
have the meanings and definitions that are assigned or ascribed to such terms in
the CCF Agreement, the Credit Documents and/or the Definitive Supplemental
Documents.
Section 25. Incorporation of Documents. The CCF Agreement, the Credit
Documents (including the Mortgage, the Mortgage Note, the Security Agreement,
the Compost Stock Pledge Agreement (Compost Common Stock), the Compost Stock
Pledge Agreement (Miami Common Stock) and the Compost Stock Pledge Agreement
(Bedminster Common Stock)) and the Definitive Supplemental Documents, and all
other agreements, instruments or other documents that are referred to in this
Agreement, are hereby incorporated by reference and form a part of this
Guaranty.
Section 26. Recital Paragraphs/Incorporation. The Recital Paragraphs
that are set forth on Pages 1-2 of this Guaranty, are hereby made part of this
Guaranty, as if set forth in their complete terms under this Section 26.
Section 27. Default-Construction. The terms "default," "breach" or
"violation," or other such or similar references, when used in this Guaranty in
conjunction with or in reference to any "default," "breach" or "violation" of
the terms of any Indebtedness and/or Obligations, shall be construed and
interpreted, and shall mean and include, any "Event of Default" as those terms
are defined under the CCF Agreement, the Credit Documents and the Definitive
Supplemental Documents.
IN WITNESS WHEREOF, Compost and Miami, as Guarantors under this
Guaranty, and Lionhart, LHI and GEP, have executed and delivered this Guaranty
on and as of this 30th day of October, 1998.
Guarantors: COMPOST AMERICA HOLDING COMPANY, INC.
-----------------------------------------
Roger E. Tuttle
Page 11 of 11 Pages
<PAGE>
President and Chief Executive Officer
MIAMI RECYCLING AND COMPOSTING CO., INC.
-----------------------------------------
Roger E. Tuttle
President and Chief Executive Officer
Page 12 of 11 Pages
<PAGE>
Exhibit 99.8
REGISTRATION RIGHTS AGREEMENT
dated as of
October 30, 1998
between
COMPOST AMERICA HOLDING COMPANY, INC.
and
LIONHART GLOBAL APPRECIATION FUND, LTD.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE 1.......................................................................1
DEFINITIONS............................................................1
1.1 Definitions...............................................1
ARTICLE 2.......................................................................3
REGISTRATION RIGHTS....................................................3
2.1 Securities Subject to this Agreement......................3
2.2 Demand Registration.......................................3
2.3 Piggyback Registration....................................5
2.4 Registration Procedures...................................8
2.5 Preparation; Reasonable Investigation....................12
2.6 Certain Rights of the Holder.............................12
2.7 Registration Expenses....................................12
2.8 Indemnification; Contribution............................13
2.9 Participation in Underwritten Registrations..............15
2.10 Selection of Underwriters...............................15
ARTICLE 3......................................................................15
RULE 144..............................................................15
3.1 Rule 144 Reporting.......................................15
ARTICLE 4......................................................................16
MISCELLANEOUS.........................................................16
4.1 Entire Agreement.........................................16
4.2 Successors and Assigns...................................16
4.3. Notices.................................................16
4.4 Headings.................................................17
4.5 Counterparts.............................................17
4.6 Applicable Law...........................................17
4.7 Specific Enforcement.....................................17
4.8 Amendment and Waivers....................................18
</TABLE>
<PAGE>
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of October 30, 1998 (the
"Agreement"), between COMPOST AMERICA HOLDING COMPANY, INC., a New Jersey
corporation (the "Company"), and LIONHART GLOBAL APPRECIATION FUND, LTD., a
British Virgin Islands limited liability company (the "Holder").
RECITALS
WHEREAS, the Company, Miami Recycling and Composting Co., Inc. and
Bedminster Seacor Services Miami Corporation, and the Holder, and Lionhart
Investments, Inc., and Lionhart EarthFund Partners, L.L.C., made, executed and
consummated a certain Credit, Capitalization and Financing Agreement, dated as
of the date hereof (the "Credit Agreement"), which is hereby incorporated by
reference; and,
WHEREAS, it is a condition precedent to the obligations of the Holder
under the Credit Agreement that the Company grant certain registration rights to
the Holder for and with respect to certain Restricted Securities (as defined
herein), comprised of certain shares of Common Stock (as defined herein) and
certain shares of Series B Preferred Stock (as defined herein); and,
WHEREAS, the Company and the Holder desire to evidence such
registration rights by entering into this Agreement.
AGREEMENT
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. The following terms, as used herein, have the following
meanings.
"Board" means the Board of Directors of the Company.
"Business Day" means any day except a Saturday, Sunday or other day on
which banks in New York are authorized by law to close.
"Closing Date" means the Closing Date as defined in the Credit
Agreement, provided that the Ancillary Transactions Closing, as also defined in
the Credit Agreement, has occurred.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the common stock, no par value, of the Company.
1
<PAGE>
"Company Registration Statement" means the Registration Statement of
the Company relating to the registration for sale of shares of the Company's
Common Stock contemplated by Section 2.3, including the Prospectus included
therein, all amendments and supplements thereto (including post-effective
amendments) and all exhibits and material incorporated by reference therein.
"Credit Agreement" has the meaning given to it in the recitals to this
Agreement.
"Effective Time" means the date of effectiveness of any Registration
Statement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"NASD" means the National Association of Securities Dealers, Inc.
"Person" means an individual, corporation, partnership, association,
trust or other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Series B Preferred Stock" means the Series B Preferred Stock, no par
value, of the Company.
"Prospectus" means the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement and by all
other amendments thereto, including post-effective amendments, and all material
incorporated by reference into such Prospectus.
The term "register" means to register under the Securities Act and
applicable state securities laws for the purpose of effecting a public sale of
securities.
"Registration Statement" means the Company Registration Statement
and/or the Shelf Registration Statement.
"Restricted Securities" means any Securities until (i) a registration
statement covering such Securities has been declared effective by the Commission
and such Securities have been disposed of pursuant to such effective
registration statement, (ii) such Securities are sold under circumstances in
which all the applicable conditions of Rule 144 (or any similar provisions then
in force) under the Securities Act are met, or such Securities may be sold
pursuant to Rule 144(k) (or any similar provision then in force) under the
Securities Act, and are freely tradable after such sale by the transferee, (iii)
such Securities are otherwise transferred, the Company has delivered a new
certificate or other evidence of ownership for such Securities not bearing a
legend restricting further transfer and such Securities may be resold without
registration under the Securities Act, or (iv) such Securities shall have ceased
to be outstanding.
"Securities" means (i) the Post-Closing Common Shares (as defined and
listed in Section 10.1 of the Credit Agreement) of the Corporation plus (ii) any
Common Stock issuable by the Company to the Holder as of result of the warrants
issued by the Corporation pursuant to Section
2
<PAGE>
8.1 of the Credit Agreement and, (iii) to the extent applicable pursuant to
Section 2.3(e) hereof, the shares of Preferred Stock granted piggyback
registration rights.
"Securities Act" means the Securities Act of 1933, as amended.
"Shelf Registration Statement" means the Registration Statement of the
Company relating to the shelf registration for resale of Restricted Securities
contemplated by Section 2.2 herein, including the Prospectus included therein,
all amendments and supplements thereto (including post-effective amendments) and
all exhibits and material incorporated by reference therein.
As used in this Agreement, words in the singular include the plural,
and in the plural include the singular.
ARTICLE 2
REGISTRATION RIGHTS
2.1 Securities Subject to this Agreement.
(a) The Securities entitled to the benefits of this Agreement are the
Restricted Securities, but only for so long as they remain Restricted
Securities.
(b) A Person is deemed to be a holder of Restricted Securities (each, a
"Holder") whenever such Person is the registered holder of such Restricted
Securities on the books and records of the Company or its transfer agent.
2.2 Demand Registration.
(a) Subject to the limitations set forth in this Agreement, at any time
after the date which is 90 days after the Closing Date, the Holder may request
the Company to register under the Securities Act, all or any portion (but not
less than US $250,000 (based upon the offering price) of the Holder's Restricted
Securities) of its Restricted Securities for sale on terms and conditions
comparable to those normally applicable to offerings of equity securities in
similar circumstances as determined by the Company on Form S-3 or such other
form as the Company deems appropriate; provided, however, that the request for
registration must be for a Shelf Registration Statement pursuant to Rule 415
under the Securities Act. The Company shall be obligated to register Restricted
Securities pursuant to this Section 2.2(a) on two occasions only, provided,
however, that such registrations shall be counted only if (A) the corresponding
Registration Statements have become effective under the Securities Act, and (B)
the public offerings have been consummated on the terms and conditions specified
therein or if not consummated, such failure was not attributable to an action
taken by the Company. The Company shall be entitled to include in any Shelf
Registration Statement filed pursuant to this Section 2.2(a) securities of the
Company held by any other shareholder of the Company and, in an underwritten
public offering, Common Stock of the Company to be sold by the Company for its
own account so long as the inclusion of such additional securities will not
result in a decrease of the amount of Restricted Securities to be registered
pursuant to this Section 2.2(a).
3
<PAGE>
(b) In connection with the Shelf Registration Statement, the Company
shall comply with all the provisions of Section 2.4 below and shall use its
reasonable efforts to effect such registration to permit the sale of the
Restricted Securities being sold in accordance with the intended method or
methods of distribution thereof (as indicated in the information furnished to
the Company pursuant to Section 2.2(c)). Subject to Section 2.2(d), the Company
shall use its best efforts to keep each such Shelf Registration Statement
continuously effective, supplemented and amended as required by the provisions
of Section 2.2(d) to the extent necessary to ensure that it is available for
resales of Restricted Securities by the Holder, and to ensure that it conforms
with the requirements of this Agreement, the Securities Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period of 18 months from the Effective Time or such longer period as required by
Section 2.2(d) or such shorter period that will terminate when all the
securities covered by the Shelf Registration Statement have been sold pursuant
to the Shelf Registration Statement or otherwise cease to be Restricted
Securities (the "Effective Period"). Upon the occurrence of any event that would
cause any Shelf Registration Statement or the Prospectus contained therein (i)
to contain a material misstatement or omission or (ii) not to be effective and
usable for sale or resale of Restricted Securities during the period required by
this Agreement, the Company shall file promptly an appropriate amendment to such
Shelf Registration Statement or the related Prospectus or any document
incorporated therein by reference, in the case of clause (i), correcting any
such misstatement or omission, and, in the case of either clause (i) or (ii),
use its reasonable efforts to cause such amendment to be declared effective and
such Registration Statement and the related Prospectus to become usable for its
intended purpose(s) as soon as practicable thereafter.
(c) The Holder may not include any of its Restricted Securities in a
Shelf Registration Statement pursuant to this Agreement unless and until such
Holder furnishes to the Company in writing, within 30 Business Days after
receipt of a written request therefor, such information specified in Item 507 of
Regulation S-K under the Securities Act and such other information as the
Company may reasonably request for use in connection with a Shelf Registration
Statement or Prospectus or preliminary Prospectus included therein and in any
application to the NASD. The Holder agrees to furnish promptly to the Company
all information required to be disclosed in order to make the information
previously furnished to the Company by such Holder not materially misleading.
(d) Notwithstanding anything to the contrary contained herein, if (x)
the Board determines in good faith that the registration and distribution of
Restricted Securities (or the use of any such Shelf Registration Statement or
the Prospectus contained therein) would interfere with any proposed or pending
material corporate transaction involving the Company or any of its subsidiaries
or would require premature disclosure thereof or would require the Company to
disclose information that the Company has not otherwise made public and that the
Company reasonably determines is in the best interests of the Company not to
disclose at such time, and (y) the Company notifies the Holder in writing not
later than three days following such determination (such notice a "Blackout
Notice"), the Company may (A) postpone the filing of such Shelf Registration
Statement or (B) allow such Shelf Registration Statement to fail to be effective
and usable or elect that such Shelf Registration Statement not be usable for a
reasonable period of time, but not in excess of 30 days (a "Blackout Period");
provided, however, that the aggregate number
4
<PAGE>
of days included in all Blackout Periods shall not exceed 90 during any
consecutive 12 months and shall not exceed 150 during the period specified in
Section 2.2(b) of this Agreement; and provided, further, that the Effective
Period referred to in Section 2.2(b) during which a Shelf Registration Statement
is required to be effective and usable shall be extended by the aggregate number
of days during which such Shelf Registration Statement was not effective or
usable pursuant to the foregoing provisions.
(e) Notwithstanding anything to the contrary contained herein, the
Company shall not be obligated to file a Shelf Registration Statement in respect
of Restricted Securities pursuant to this Section 2.2 if: (i) the Company has
previously filed a Shelf Registration Statement with respect to Restricted
Securities, and a period of at least 180 days has not elapsed from the date on
which the Effective Period of such Shelf Registration Statement has expired; and
(ii) the Company has previously filed a Company Registration Statement pursuant
to which Restricted Securities have been registered under Section 2.3 hereof,
and a period of at least 120 days has not elapsed from the Effective Time of
such Company Registration Statement.
2.3 Piggyback Registration.
(a) At any time that the Company proposes to file a Company
Registration Statement, either for its own account or for the account of a
stockholder or stockholders, the Company shall give the Holder written notice of
its intention to do so and of the intended method of sale (the "Registration
Notice") within a reasonable time prior to the anticipated filing date of the
Company Registration Statement effecting such registration (but in no event less
than 30 days before the anticipated filing date). The Holder may request
inclusion of any Restricted Securities in such Company Registration Statement by
delivering to the Company, within 10 Business Days after receipt of the
Registration Notice, a written notice (the "Piggyback Notice") stating the
number of Restricted Securities proposed to be included and that such shares are
to be included in any underwriting only on the same terms and conditions as the
shares of Common Stock otherwise being sold through underwriters under such
Company Registration Statement. The Company shall use its best efforts to cause
all Restricted Securities specified in the Piggyback Notice to be included in
the Company Registration Statement and any related offering, all to the extent
requisite to permit the sale by the Holder of such Restricted Securities in
accordance with the method of sale applicable to the other shares of Common
Stock included in such Company Registration Statement; provided, however, that
if, at any time after giving Registration Notice and prior to the Effective Time
of the Company Registration Statement filed in connection with such
registration, the Company shall determine for any reason not to register or to
delay registration of such securities, the Company may, at its election, give
written notice of such determination to the Holder and, thereupon:
(i) in the case of a determination not to register, shall be
relieved of its obligation to register any Restricted Securities in
connection with such registration (but not from its obligation to pay
the Registration Expenses in connection therewith), and
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(ii) in the case of a delay in registering, shall be permitted
to delay registering any Restricted Securities for the same period as
the delay in registering such other securities.
(b) The Company's obligation to include Restricted Securities in a
Company Registration Statement pursuant to Section 2.3(a) shall be subject to
the following limitations:
(i) The Company shall not be obligated to include any
Restricted Securities in a registration statement filed on Form S-4,
Form S-8 or such other similar successor forms then in effect under the
Securities Act.
(ii) If a Company Registration Statement involves an
underwritten offering and the managing underwriter advises the Company
in writing that, in its opinion, the number of securities requested to
be included in such Registration Statement exceeds the number which can
be sold in such offering without adversely affecting the offering, the
Company will include in such Registration Statement the number of such
Securities which the Company is so advised can be sold in such offering
without adversely affecting the offering, determined as follows:
(A) first, the securities proposed by the Company to be
sold for its own account, and
(B) second, any Restricted Securities requested to be
included in such registration and any other securities of the
Company pro rata among the holders thereof requesting such
registration on the basis of the number of shares of such
securities requested to be included by such holders.
(iii) The Company shall not be obligated to effect any
registration for the account of the Holder on a Company Registration
Statement with respect to less than US $250,000 of the Holder's
Restricted Securities, subject to the provisions of Subsection (ii) of
this Section 2.3(b).
(iv) The Company shall not be obligated to effect any
registration for the account of the Holder on a Company Registration
Statement if, prior to the filing date of such Company Registration
Statement, (A) the Holder has requested registration of its Restricted
Securities on a Shelf Registration Statement pursuant to Section 2.2
hereof, (B) the corresponding Shelf Registration Statement has become
effective under the Securities Act, and (C) the public offering has
been consummated on the terms and conditions specified therein or if
not consummated, such failure was not attributable to an action taken
by the Company.
(c) The Holder may not include any of its Restricted Securities in a
Company Registration Statement pursuant to this Agreement unless and until such
Holder furnishes to the Company in writing, within 10 Business Days after
receipt of a written request therefor, such information specified in Item 507 of
Regulation S-K under the Securities Act and such other information as the
Company may reasonably request for use in connection with the Registration
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Statement or Prospectus or preliminary Prospectus included therein and in any
application to the NASD. The Holder agrees to furnish promptly to the Company
all information required to be disclosed in order to make all information
previously furnished to the Company by such Holder not materially misleading.
(d) The Company covenants not to grant any piggyback registration
rights which would permit any holder of Common Stock to have piggyback
registration rights prior to those of the Holder.
(e) This subsection (e) shall apply solely to piggyback rights for
holders of the Series B Preferred Stock. Except as specified in this subjection,
holders of the Series B Preferred Stock shall have no registration rights
pursuant to this Agreement.
If, in the case, of any offering of Series B Preferred Stock or any
offering of the Company's outstanding Preferred Stock Series A, Preferred Stock
Series C or Preferred Stock Series D (together, with the Series B Preferred
Stock, referred to hereinafter as the "Preferred Stock"), or securities
convertible into Preferred Stock, within ten days after the Holder has been made
aware by the Company of its intention to effect a registration of any of the
Preferred Stock (otherwise than pursuant to an employee benefit plan or filing
on Form S-8), the Holder may request and the Company shall honor the Holder's
request that any Preferred Stock in the Company owned by the Holder be included
in the registration statement.
Notwithstanding the foregoing, if an underwriter consents to the
inclusion in the registration statement of less than all Preferred Stock
proposed to be offered by selling shareholders, including the Holder, then the
amount of shares to be sold for the account of each selling shareholder shall be
reduced proportionately in the ratio by which the amount each selling
shareholder proposes to sell bears to the total amount of shares which the
underwriter will permit to be sold for the account of all selling shareholders.
In connection with any offering of Preferred Stock registered pursuant
to this subsection, the Company (i) shall furnish to the Holder such number of
copies of any prospectus (including any preliminary prospectus, or supplement)
as it may reasonably request in order to effect the offering and sale of the
Preferred Stock to be offered and sold, but only while the Company shall be
required under the provisions hereof to cause the registration statement to
remain current, which shall be for not more than six months, and (ii) shall take
such action as shall be necessary to qualify the shares covered by such
registration statement under such blue sky or other state securities laws for
offer and sale as the Holder shall reasonably request; provided, however, that
the Company shall not be obligated to qualify as a foreign corporation to do
business under the laws of any jurisdiction in which it shall not be then
qualified or to file any general consent to service of process in any
jurisdiction in which such a consent has not been previously filed. If requested
by the Company, in connection with a piggyback sale of the Preferred Stock
covered hereunder, the Holder shall enter into an underwriting agreement with a
managing underwriting or underwriters selected by the Company and shall enter
into an agreement with the Company containing representations, warranties,
indemnities and agreements then customarily included by an issuer or selling
shareholder in underwriting agreements with respect to secondary distributions.
In connection with any offering of Preferred Stock registered pursuant to this
subsection, the Company shall (y)
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furnish to the underwriters, at the Company's expense, unlegended certificates
representing ownership of the shares being sold in such denominations as
requested and (z) instruct any transfer agent and registrar of the shares to
release any stop transfer order with respect to shares included in any
registration becoming effective pursuant to hereto. The Company shall use its
best efforts to keep such registration statement current for a period of six
months. The Company shall in all events pay all expenses, fees and disbursements
of any counsel, accountants and other consultants representing the Company in
connection therewith, as well as all underwriting discounts and commissions in
connection with the sales of the Preferred Stock of the Holder. The Holder shall
pay all expenses, fees and disbursements of any counsel, accountants and other
consultants representing the Holder in connection with said sale.
2.4 Registration Procedures. In connection with any Registration Statement
and any Prospectus required by this Agreement to permit the sale or resale of
Restricted Securities, the Company shall:
(a) prepare and file with the Commission such amendments and
post-effective amendments to such Registration Statement as may be necessary to
keep such Registration Statement effective (i) if such Registration Statement is
a Company Registration Statement, until the earlier of such time as all of such
securities have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such Company
Registration Statement or (ii) if such Registration Statement is a Shelf
Registration Statement, for the applicable period set forth in Section 2.2(b)
herein; cause the Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 under the
Securities Act, and to comply fully with the applicable provisions of Rules 424
and 430A, as applicable, under the Securities Act in a timely manner; and comply
with the provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement during the applicable period
in accordance with the intended method or methods of distribution by the sellers
thereof set forth in such Registration Statement or supplement or the
Prospectus;
(b) promptly (and in respect of events covered by clause (i) hereof, on
the same day as the Company shall receive notice of effectiveness) advise the
Holder and, if requested by such Persons, to confirm such advice in writing, (i)
when the Prospectus or any Prospectus supplement or post-effective amendment has
been filed, and when the same has become effective, (ii) of any request by the
Commission for post-effective amendments to such Registration Statement or
post-effective amendments to such Registration Statement or post-effective
amendments or supplements to the Prospectus or for additional information
relating thereto, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of any such Registration Statement under the
Securities Act or of the suspension by any state securities commission of the
qualification of the Restricted Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for any of the preceding
purposes, and (iv) of the existence of any fact or the happening of any event
that makes any statement of a material fact made in any such Registration
Statement, the related Prospectus, any amendment or supplement thereto, or any
document incorporated by reference therein untrue, or that requires the making
of any additions to or changes in any such Registration Statement or the related
Prospectus in order to make the statements therein not misleading. If at any
time the Commission shall issue any stop order suspending the effectiveness of
such Registration Statement, or any state securities commission or other
regulatory authority
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shall issue an order suspending the qualification or exemption from
qualification of the Restricted Securities under state securities or Blue Sky
laws, the Company shall use its reasonable efforts to obtain the withdrawal or
lifting of such order at the earliest possible time;
(c) promptly furnish to the Holder, and each underwriter, if any,
without charge, at least one conformed copy of any Registration Statement, as
first filed with the Commission, and of each amendment thereto, including all
documents incorporated by reference therein and all exhibits (including exhibits
incorporated therein by reference) and such other documents as such Holder may
reasonably request;
(d) deliver to the Holder, and each underwriter, if any, without
charge, as many copies of the Prospectus (including each preliminary prospectus)
and any amendment or supplement thereto as such person reasonably may request.
(e) enter into such customary agreements and take all such other
reasonable action in connection therewith (including those reasonably requested
by the Holder or the underwriter(s), if any) required in order to expedite or
facilitate the disposition of such Restricted Securities pursuant to such
Registration Statement, including, but not limited to, dispositions pursuant to
an underwritten registration, and in such connection:
(i) make such representations and warranties to the Holder and
underwriter(s), if any, in form, substance and scope as are customarily
made by issuers to underwriters in underwritten offerings (whether or
not sales of securities pursuant to such Registration Statement are to
be to an underwriter(s)) and confirm the same if and when requested;
(ii) obtain opinions of counsel to the Company addressed to
the Holder and underwriter(s), if any, covering the matters customarily
covered in opinions requested in underwritten offerings (whether or not
sales of securities pursuant to such Registration Statement are to be
made to an underwriter(s)) and dated the Effective Time of any
Registration Statement (and, in the case of any underwritten sale of
securities pursuant to such Registration Statement, each closing date
of sales to the underwriter(s) pursuant thereto);
(iii) use reasonable efforts to obtain comfort letters dated
the Effective Time of any Registration Statement (and, in the case of
any underwritten sale of securities pursuant to such Registration
Statement, each closing date of sales to the underwriter(s) pursuant
thereto) from the independent certified public accountants of the
Company addressed to the Holder and underwriter, if any, such letters
to be in customary form and covering matters of the type customarily
covered in comfort letters in connection with underwritten offerings
(whether or not sales of securities pursuant to such Registration
Statement are to be made to an underwriter(s));
(iv) provide for the indemnification provisions and procedures
of Section 2.6 hereof with respect to the Holder and the
underwriter(s), if any, and;
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(v) deliver such documents and certificates as may be
reasonably requested by the Holder or the underwriter(s), if any, and
which are customarily delivered in underwritten offerings (whether or
not sales of securities pursuant to such Registration Statement are to
be made to an underwriter(s), with such documents and certificates to
be dated the Effective Time of any Registration Statement.
The actions required by clauses (i) through (v) above shall be done at
each closing under such underwriting or similar agreement, as and to the extent
required thereunder, and if at any time the representations and warranties of
the Company contemplated in clause (i) above cease to be true and correct, the
Company shall so advise the underwriter(s), if any, and the Holder promptly,
and, if requested by such Person, shall confirm such advice in writing;
(f) prior to any public offering of Restricted Securities, cooperate
with the Holder, the underwriter(s), if any, and their respective counsel in
connection with the registration and qualification of the Restricted Securities
under the securities or Blue Sky laws of such U.S. jurisdictions as the Holder
or underwriter(s), if any, may reasonably request in writing by the time any
Registration Statement is declared effective by the Commission, and do any and
all other acts or filings necessary or advisable to enable disposition in such
U.S. jurisdictions of the Restricted Securities covered by any Registration
Statement and to file such consents to service of process or other documents as
may be necessary in order to effect such registration or qualification;
provided, however, that the Company shall not be required to register or qualify
as a foreign corporation in any jurisdiction where it is not then so qualified
or as a dealer in securities in any jurisdiction where it would not otherwise be
required to register or qualify but for this Section 2.4, or to take any action
that would subject it to the service of process in suits or to taxation, in any
jurisdiction where it is not then so subject;
(g) in connection with any sale of Restricted Securities that will
result in such securities no longer being Restricted Securities, cooperate with
the Holder and the underwriter(s), if any, to facilitate the timely preparation
and delivery of certificates representing Restricted Securities to be sold and
not bearing any restrictive legends; and enable such Restricted Securities to be
in such denominations and registered in such names as the Holder or the
underwriter(s), if any, may request at least two (2) Business Days prior to any
sale of Restricted Securities made by such underwriters;
(h) use its reasonable efforts to cause the disposition of the
Restricted Securities covered by any Registration Statement to be registered
with or approved by such other U.S. governmental agencies or authorities as may
be necessary to enable the seller or sellers thereof or the underwriter(s), if
any, to consummate the disposition of such Restricted Securities, subject to the
proviso contained in Section 2.4(f);
(i) if any fact or event contemplated by Section 2.4(b) shall exist or
have occurred, prepare a supplement or post-effective amendment to any
Registration Statement or related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of Restricted Securities, the Prospectus will not
contain an untrue statement of a material fact or omit to state any material
fact necessary to make the statement therein not misleading;
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<PAGE>
(j) cooperate and assist in the performance of any due diligence
investigation by any underwriter (including any "qualified independent
underwriter") that is required to be retained in accordance with the rules and
regulations of the NASD, and use its reasonable efforts to cause any
Registration Statement to become effective and approved by such U.S.
governmental agencies or authorities as may be necessary to enable the Holder to
consummate the disposition of such Restricted Securities;
(k) otherwise use its reasonable efforts to comply with all applicable
rules and regulations of the Commission, and make generally available to its
security holders with regard to such Registration Statement, as soon as
practicable, a consolidated earnings statement meeting the requirements of Rule
158 (which need not be audited) for the twelve-month period (i) commencing at
the end of any fiscal quarter in which Restricted Securities are sold to the
underwriter in a firm or best efforts underwritten offering or (ii) if not sold
to an underwriter in such an offering, beginning with the first month of the
Company's first fiscal quarter commencing after the effective date of any
Registration Statement;
(l) provide a CUSIP number for all Restricted Securities not later than
the Effective Time of any Registration Statement;
(m) use its best efforts to qualify for inclusion, not later than the
Effective Time of such Registration Statement, all Restricted Securities covered
by such Registration Statement on the OTC Bulletin Board of the NASD, or any
other trading market on which the Common Stock of the Company is then admitted
for trading, and
(n) provide promptly to Holder upon request each document filed with
the Commission pursuant to the requirements of Section 12 and Section 14 of the
Exchange Act.
The Holder agrees by acquisition of a Restricted Security that, upon
receipt of any notice from the Company of the existence of any fact of the kind
described in Section 2.4(b)(iv) or the commencement of a Blackout Period, such
Holder will forthwith discontinue disposition of Restricted Securities pursuant
to any Registration Statement until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 2.4(i), or until it
is advised in writing, in accordance with the notice provisions of Section 4.3
herein (the "Advice"), by the Company that the use of the Prospectus may be
resumed, and has received copies of any additional or supplemental filings that
are incorporated by reference in the Prospectus. If so directed by the Company,
the Holder will deliver to the Company all copies, other than permanent file
copies, then in such Holder's possession, of the Prospectus covering such
Restricted Securities that was current at the time of receipt of such notice. In
the event the Company shall give any such notice, the time period regarding the
effectiveness of the Shelf Registration Statement set forth in Section 2.2(b)
shall be extended by the number of days during the period from and including the
date of the giving of such notice pursuant to Section 2.4(b)(iv) or the
commencement of a Blackout Period to and including the date when the Holder
shall have received the copies of the supplemented or amended Prospectus
contemplated by Section 2.4(i) or shall have received (in accordance with the
notice provisions of Section 4.3) the Advice.
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2.5 Preparation; Reasonable Investigation. In connection with preparation
and filing of each Registration Statement under the Securities Act, the Company
will give the Holder, its underwriter, if any, and their respective counsel and
accountants, the opportunity to participate in the preparation of such
Registration Statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will give each
to them access to its books and records and such opportunities to discuss the
business, finances and accounts of the Company and its subsidiaries with its
officers, directors and the independent public accountants who have certified
its financial statements as shall be necessary, in the reasonable opinion of the
Holder and such underwriters' respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act.
2.6 Certain Rights of the Holder. The Company will not file any
registration statement under the Securities Act which refers to the Holder by
name or otherwise without the prior approval of such Holder, which consent shall
not be unreasonably withheld or delayed.
2.7 Registration Expenses.
(a) All expenses incident to the Company's performance of or compliance
with this Agreement will be borne by the Company, regardless of whether a
Registration Statement becomes effective, including without limitation: (i) all
registration and filing fees and expenses (including filings made with the NASD
and reasonable counsel fees in connection therewith); (ii) all reasonable fees
and expenses of compliance with federal securities and state Blue Sky or
securities laws (including all reasonable fees and expenses of one counsel to
the underwriter(s) in any underwriting) in connection with compliance with state
Blue Sky or securities laws for up to 10 states; (iii) all expenses of printing,
messenger and delivery services and telephone calls; (iv) all fees and
disbursements of counsel for the Company; and (v) all fees and disbursements of
independent certified public accountants of the Company (including the expenses
of any special audit and comfort letters required by or incident to such
performance), but excluding from this paragraph, fees and expenses of counsel to
the underwriter(s), if any, unless otherwise set forth herein.
(b) Notwithstanding the foregoing, the Company will not be responsible
for any underwriting discounts, commissions or fees attributable to the sale of
Restricted Securities or any legal fees or disbursements (other than any such
fees or disbursements relating to Blue Sky compliance or otherwise as set forth
under Section 2.7(a)) incurred by any underwriter(s) in any underwritten
offering if the underwriter(s) participates in such underwritten offering at the
request of the Holder, or any transfer taxes that may be imposed in connection
with a sale or transfer of Restricted Securities.
(c) The Company shall, in any event, bear its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expenses of any annual
audit and the fees and expenses of any Person, including special experts,
retained by the Company.
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2.8 Indemnification; Contribution.
(a) The Company agrees to indemnify and hold harmless (i) the Holder,
(ii) each other Person who participates as an underwriter in the offering or
sale of such securities, (iii) each person, if any, who controls (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
the Holder or underwriter (any of the persons referred to in this clause (iii)
being hereinafter referred to as a "controlling person") and (iv) the respective
officers, directors, partners, employees, representatives and agents of the
Holder or underwriter or any controlling person (any person referred to in
clause (i), (ii), (iii) or (iv) may hereinafter be referred to as an
"indemnified Person"), to the fullest extent lawful, from and against any and
all losses, claims, damages, liabilities, judgments or expenses, joint or
several (or actions or proceedings, whether commenced or threatened, in respect
thereof) (collectively, "Claims"), to which such indemnified Person may become
subject under either Section 15 of the Securities Act or Section 20 of the
Exchange Act or otherwise, insofar as such Claims arise out of or are based
upon, or are caused by any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement or Prospectus (or any
amendment or supplement thereto), or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, or a violation by the Company of the
Securities Act or any state securities law, or any rule or regulation
promulgated under the Securities Act or any state securities law, or any other
law applicable to the Company relating to any such registration or
qualification, except insofar as such losses, claims, damages, liabilities,
judgments or expenses of any such indemnified Person; (x) are caused by any such
untrue statement or omission or alleged untrue statement or omission that is
based upon information relating to such indemnified Person furnished in writing
to the Company by or on behalf of any of such indemnified Person expressly for
use therein; (y) with respect to the preliminary Prospectus, result from the
fact that the Holder sold Securities to a person to whom there was not sent or
given, at or prior to the written confirmation of such sale, a copy of the
Prospectus, as amended or supplemented, if the Company shall have previously
furnished copies thereof to the Holder in accordance with this Agreement and
said Prospectus, as amended or supplemented, would have corrected such untrue
statement or omission; or (z) as a result of the use by an indemnified Person of
any Prospectus when, upon receipt of a Blackout Notice or a notice from the
Company of the existence of any fact of the kind described in Section
2.4(b)(iv), the indemnified Person or the Holder was not permitted to do so.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of any indemnified Person and shall survive
the transfer of such securities by such Holder.
In case any action shall be brought or asserted against any of the
indemnified Persons with respect to which indemnity may be sought against the
Company, such indemnified Person shall promptly notify the Company and the
Company shall assume the defense thereof. Such indemnified Person shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of the indemnified Person unless (i) the employment of such counsel
shall have been specifically authorized in writing by the Company, (ii) the
Company shall have failed to assume the defense and employ counsel or (iii) the
named parties to any such action (including any implied parties) include both
the indemnified Person and the Company and the indemnified Person shall have
been advised in writing by its counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the Company (in which case the Company
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shall not have the right to assume the defense of such action on behalf of the
indemnified Person), it being understood, however, that the Company shall not,
in connection with such action or similar or related actions or proceedings
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) at any time for all the indemnified Persons,
which firm shall be (x) designated by such indemnified Persons and (y)
reasonably satisfactory to the Company. The Company shall not be liable for any
settlement of any such action or proceeding effected without the Company's prior
written consent, which consent shall not be withheld unreasonably, and the
Company agrees to indemnify and hold harmless any indemnified Person from and
against any loss, claim, damage, liability, judgment or expense by reason of any
settlement of any action effected with the written consent of the Company. The
Company shall not, without the prior written consent of each indemnified Person,
settle or compromise or consent to the entry of judgment on or otherwise seek to
terminate any pending or threatened action, claim, litigation or proceeding in
respect of which indemnification or contribution may be sought hereunder
(whether or not any indemnified Person is a party thereto), unless such
settlement, compromise, consent or termination includes an unconditional release
of each indemnified Person from all liability arising out of such action, claim
litigation or proceeding.
(b) The Holder agrees to indemnify and hold harmless the Company and
its directors, officers and any person controlling (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) the Company,
and the respective officers, directors, partners, employees, representatives and
agents of each person, to the same extent as the foregoing indemnity from the
Company to each of the indemnified Persons, but only (i) with respect to actions
based on information relating to the Holder furnished in writing by or on behalf
of such Holder expressly for use in any Registration Statement or Prospectus,
and (ii) to the extent of the gross proceeds, if any, received by such Holder
from the sale or other disposition of its Restricted Securities covered by such
Registration Statement. In case any action or proceeding shall be brought
against the Company or its directors or officers or any such controlling person
in respect of which indemnity may be sought against the Holder, such Holder
shall have the rights and duties given the Company in Section 2.8(a) (except
that the Holder may but shall not be required to assume the defense thereof),
and the Company or its directors or officers or such controlling person shall
have the rights and duties given to the Holder by Section 2.8(a).
(c) If the indemnification provided for in this Section 2.8 is
unavailable to an indemnified party under Section 2.7(a) or (b) (other than by
reason of exceptions provided in those Sections) in respect of any losses,
claims, damages, liabilities, judgments or expenses referred to therein, then
each applicable indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims damages, liabilities, judgments or expenses
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Holder on the other hand from
sale of Restricted Securities or (ii) if such allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company and the Holder in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities, judgments or expenses, as well as any other relevant equitable
considerations. The relative fault of the Company on the one hand and of the
Holder on the other shall be determined by
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reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or by the Holder and the parties
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid to a party as a result of
the losses, claims, damages, liabilities judgments and expenses referred to
above shall be deemed to include, subject to the limitations set forth in the
second paragraph of Section 2.8(a), any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim.
The Company and the Holder agree that it would not be just and
equitable if contribution pursuant to this Section 2.8(c) were determined by pro
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 2.8(c) the Holder (and
its related indemnified Persons) shall not be required to contribute, in the
aggregate, any amount in excess of the amount by which the dollar amount of
proceeds received by such Holder upon the sale of the Restricted Securities
exceeds the amount of any damages which such Holder has otherwise been required
to pay by reason of such untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentations (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
The indemnity, and contribution provisions contained in this Section
2.8 are in addition to any liability which the indemnifying person may otherwise
have to the indemnified persons referred to above.
2.9 Participation in Underwritten Registrations. The Holder may not
participate in any underwritten registration hereunder unless such Holder (a)
agrees to sell such Holder's Restricted Securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all reasonable questionnaires,
powers of attorney, indemnities, underwriting agreements, lock-up letters and
other documents required under the terms of such underwriting arrangements.
2.10 Selection of Underwriters. The Holder may sell its Restricted
Securities in an underwritten offering. In any such underwritten offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holder if such registration is
pursuant to the Shelf Registration Statement, and by the Company if such
registration is pursuant to a Company Registration Statement; provided, however,
that such investment bankers and managers must be reasonably satisfactory to the
Company or the Holder, respectively. Such investment bankers and managers are
referred to herein as the "underwriters".
ARTICLE 3
RULE 144
3.1 With a view to making available the benefits of certain rules and
regulations of the Commission which may permit the sale of restricted securities
(as that term is
15
<PAGE>
used in Rule 144 under the Securities Act) to the public without registration,
the Company agrees to use its best efforts to:
(a) make and keep public information available as those terms are
understood and defined in Rule 144 under the Securities Act, at all times;
(b) file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(c) so long as the Holder owns any Restricted Securities, furnish to
the Holder forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of Rule 144 and of the Securities Act
and Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed as the Holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing the Holder to sell any such Restricted Securities without
registration.
ARTICLE 4
MISCELLANEOUS
4.1 Entire Agreement. This Agreement, together with the Credit Agreement,
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior agreement and understandings, both oral
and written, between the parties with respect to the subject matter hereof.
4.2 Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
holders of Restricted Securities; provided, however, that this Agreement shall
not inure to the benefit of or be binding upon a successor or assign of the
Holder unless and to the extent such successor or assign acquired Restricted
Securities from the Holder at a time when the Holder could not transfer such
Restricted Securities pursuant to any Registration Statement or pursuant to Rule
144 under the Securities Act as contemplated by clause (ii) of the definition of
Restricted Securities.
4.3. Notices. All notices and other communications given or made pursuant
hereto or pursuant to any other agreement among the parties, unless otherwise
specified, shall be in writing and shall be deemed to have been duly given or
made if sent by telecopy (with confirmation in writing), delivered personally or
by overnight courier or sent by registered or certified mail (postage prepaid,
return receipt requested) to the parties at the telecopy number, if any, or
address set forth below or at such other addresses as shall be furnished by the
parties by like notice. Notices sent by telecopier shall be effective when
receipt is acknowledged, notices delivered personally or by overnight courier
shall be effective upon receipt and notices sent by registered or certified mail
shall be effective three days after mailing:
16
<PAGE>
if to the Holder: Lionhart Global Appreciation Fund, Ltd.
c/o John Thomas Drics, Esq.
111 Monument Circle
Suite 312
Indianapolis, Indiana
Fax: (317) 972-1118
Telephone: (317) 972-1112
with copies to: O'Bryan, Brazill & Drics, L.L.P.
111 Monument Circle
Suite 312
Indianapolis, Indiana 46204
Attention: Timothy P. Brazill, Esq.
Fax: (317) 972-1118
Telephone: (317) 972-1112
if to the Company: Compost America Holding Company, Inc.
320 Grand Avenue
Englewood, New Jersey 07631
Fax: (201) 541-1303
Telephone: (201) 541-9393
with copies to: Greenberg Traurig
2005 Market Street, Suite 2050
Philadelphia, PA 19103
Attention: Theodore W. Mason, Esq.
Fax: (215) 988-7801
Telephone: (215) 988-7805
4.4 Headings The headings contained in this Agreement are for convenience
only and shall not affect the meaning or interpretation of this Agreement.
4.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
4.6 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the state of New York, without giving effect to
choice law provisions.
4.7 Specific Enforcement. Each party hereto acknowledges that the remedies
at law of the other parties for a breach or threatened breach of this Agreement
would be inadequate, and, in recognition of this fact, any party to this
Agreement, without posting any bond, and in addition to all other remedies which
may be available, shall be entitled to obtain equitable relief in the form of
specific performance, a temporary restraining order, a temporary to permanent
injunction or any other equitable remedy which may then be available.
17
<PAGE>
4.8 Amendment and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless the Company has obtained the
unanimous written consent of the Holders of the Restricted Securities.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
COMPOST AMERICA HOLDING COMPANY, INC.
By:
-----------------------------------
Name: Roger E. Tuttle
Title: President
LIONHART GLOBAL APPRECIATION FUND, LTD.
By:
-----------------------------------
Name: Terrence P. Duffy
Title: Director
18
<PAGE>
Exhibit 99.9
DIRECTOR APPOINTMENT AGREEMENT
October 30, 1998
THIS DIRECTOR APPOINTMENT AGREEMENT ("Agreement") is made, entered
into, executed and consummated effectively this 30th day of October, 1998
("Effective Date"), by and among Compost America Holding Company, Inc., a New
Jersey corporation (the "Company"); Lionhart Global Appreciation Fund, Ltd., an
international business company organized under the laws of the British Virgin
Islands ("Lionhart"); and, the Compost Stockholders (as that term is defined
under Recital Paragraph 3 of this Agreement).
Recitals:
1. On or about October 30, 1998, the Company, Miami Recycling and
Composting Co., Inc. ("Miami") and Bedminster Seacor Services Miami Corporation
("Bedminster"), and Lionhart, together with Lionhart Investments, Ltd. ("LHI")
and Lionhart EarthFund Partners, L.L.C. ("LEP"), entered into, executed and
consummated a "Credit, Capitalization and Financing Agreement" ("CCF
Agreement"), which is hereby incorporated by reference.
2. On or about November 3, 1997, the Company, Wasteco Ventures Limited
("Wasteco"), Robert J. Longo ("Longo"), Roger E. Tuttle ("Tuttle"), John B.
Fetter ("Fetter"), Robert E. Wortmann ("R. Wortmann"), Victor D. Wortmann ("V.
Wortmann"), VRH Construction Company ("VRH"), Select Acquisitions, Inc.
("Select") and Alfred A. Rattie ("Rattie"), entered into, executed and
consummated a "Stockholders' Agreement" ("Stockholders' Agreement"), which is
hereby incorporated by reference. On or about December 12, 1997, the Company,
Wasteco, Long, Tuttle, Fetter, R. Wortmann, V. Wortmann, VRH, Select and Rattie
entered into, executed and consummated a "First Amendment to Stockholders'
Agreement" ("First Amendment"), and thereby amended the Stockholders' Agreement.
3. The term "Compost Stockholders," for purposes of this Agreement,
unless otherwise defined or indicated by the context thereof, shall mean and
include AW Compost Partners, L.L.C., and Wasteco, Long, Tuttle, Fetter,
R. Wortmann, V. Wortmann, VRH, Select and Rattie.
4. Pursuant to the CCF Agreement, and as a material part of the
consideration in providing or arranging for, or otherwise underwriting or
participating in the underwriting of, the credit, capitalization and financing
arrangements for the Company, Miami and Bedminster, the Credit Agreement
provides that Lionhart is to be granted the right by Compost to designate one
(1) qualified director to sit as a standing member on and for the Company's
Board of Directors and Finance Committee.
5. The Company's By-laws provide currently for a nine (9) member Board
of Directors, of which there is presently one (1) vacancy on the Company's Board
of Directors ("Vacancy").
NOW, THEREFORE, in consideration of the mutual and dependent promises
set forth in this Agreement, the Company, Lionhart and the Compost Shareholders
hereby agree as follows:
Agreement:
Section 1. Board/Committee Appointment. The Company and the Compost
Stockholders hereby promise and covenant, and hereby agree with Lionhart, and
hereby represent and warrant to Lionhart, that, during the Term of this
Agreement:
1.01. Subject to the terms and conditions set forth in Section 2
hereof, Lionhart shall have exclusive right and duty, subject to and as
specifically provided under Section 1.03, to designate, elect, qualify,
appoint, remove, substitute, replace and otherwise control one (1)
person, including all successors thereto (by the death, disability,
retirement, resignation, removal or subsequent election of any
predecessor thereto) ("Lionhart Appointee"), who is, shall be and shall
remain as 1) a director of and on the Board of Directors of the Company
("Board") and 2) a standing member of and on the Finance Committee of
the Company ("Finance Committee"), until any such Lionhart Appointee is
removed or until Lionhart designates, elects and otherwise appoints any
successor Lionhart Appointee thereof (pursuant to the terms and subject
to the conditions of this Agreement).
Page 1 of 5 Pages
<PAGE>
1.02. Lionhart hereby nominates, designates, elects and appoints
Paul K. Abrahamsen as the initial Lionhart Appointee, and the Company
and the Compost Stockholders hereby confirm that, on and effective as
of October 30, 1998, the Board has voted to approve and confirm the
election of Paul K. Abrahamsen as the initial Lionhart Appointee, who
shall initially fill the above-referenced Vacancy on the Board, and who
shall serve on the Board and the Finance Committee until his successor
is designated, elected, qualified or otherwise appointed by Lionhart as
provided and otherwise contemplated under this Agreement.
1.03. The Company, vis-a-vis the Board, shall have the right, upon
a commercially reasonable notice to Lionhart and the Lionhart
Appointee, and upon at least a majority vote of the Board at a special
meeting of the Board lawfully called and convened for the purpose of so
removing for cause the Lionhart Appointee from the Board and the
Finance Committee, to remove a Lionhart Appointee in good faith and for
cause from the Board and the Finance Committee, whereupon Lionhart
shall have the right and duty to promptly appoint a successor Lionhart
Appointee to serve on the Board and the Finance Committee.
1.04. Lionhart shall have the right, upon a commercially
reasonable notice to the Company, the Board and the Finance Committee,
to remove any Lionhart Appointee from the Board and the Finance
Committee, with or without cause, whereupon Lionhart shall have the
right and duty to promptly appoint a successor Lionhart Appointee to
serve on the Board and the Finance Committee.
1.05. The Company (vis-a-vis its Board) and the Compost
Stockholders shall have the duty 1) to confirm, elect and otherwise
appoint each Lionhart Appointee, including the initial Lionhart
Appointee and all successor Lionhart Appointees, as a director of and
on the Board and as a member of and on the Finance Committee,
immediately upon the designation, election and appointment by Lionhart
of each such Lionhart Appointee as otherwise provided under this
Agreement, and 2) to confirm and remove each Lionhart Appointee, as a
director from the Board and as a member of the Finance Committee,
immediately upon the removal by Lionhart of any such Lionhart Appointee
as otherwise provided under this Agreement.
1.06. The Company and the Compost Stockholders are authorized to
execute, deliver and be bound by this Agreement, and so long as this
Agreement remains in effect, and notwithstanding any term, provision,
right or authority that is set forth under the Stockholders' Agreement
and/or the First Amendment, 1) neither the Company nor any of the
Compost Stockholders shall take any action, or refuse to take any
action, that is inconsistent with or otherwise frustrates any term of
this Agreement, 2) each Compost Stockholder shall vote all of their
respective shares of any securities of the Company, that are otherwise
entitled to vote, to cause the election of each Lionhart Appointee to
the Board, 3) the Company and the Compost Stockholders shall not cause
or suffer the existence of any empowerment of any committee or group of
directors to act in the place and stead of the Board and/or the Finance
Committee, and 4) the Company vis-a-vis its Board shall take all
actions and shall not refuse to take such actions, and the Compost
Stockholders shall vote their respective shares of any securities
entitled to vote and shall not refuse to vote any such securities, to
ensure that the Articles of Incorporation and By-laws of the Company
facilitate and do not at any time conflict with or otherwise frustrate
the terms and provisions of this Agreement.
Section 2. Term. The Term of this Agreement shall commence on October
30, 1998, and shall continue until and shall expire and terminate automatically
on the earliest date ("Termination") to occur of the following events: 1) a
written notice of repudiation or termination by Lionhart of this Agreement, with
or without cause, which is delivered by Lionhart to the Company; 2) the payment
in full and discharge by the Company, and Miami and Bedminster, of the Mortgage
Note, in the principal amount of US $10,500,000.00, that was executed by the
Company and delivered to Lionhart, LHI and LEP (pursuant to the terms of the CCF
Agreement), on or about October 30, 1998, which is hereby incorporated by
reference; or, 3) a mutual written agreement between the Company and Lionhart to
terminate this Agreement. Upon Termination of this Agreement, the Lionhart
Appointee shall be deemed automatically, and without further action, to have
resigned immediately from the Board and the Finance Committee, and the Board
shall be deemed automatically, and without further action, to have accepted and
approved immediately the resignation of such Lionhart Appointee from the Board
and the Finance Committee.
Section 3. Director Indemnification. The Company hereby represents and
warrants, and hereby agrees, promises and covenants that, upon the Effective
Date of this Agreement, and thereafter:
Page 2 of 5 Pages
<PAGE>
3.01. The Company, to the maximum extent permissible under the
applicable laws of the State of New Jersey and the United States, and
the Articles and By-laws of the Company, and in manner that is
consistent with the written uniform policies and procedures of the
Company (including, without limitation, Board resolutions) with respect
to any and all directors, officers and/or other management of the
Company, shall defend and indemnify each Lionhart Appointee from and
against all liability relating to or arising from the performance and
discharge of his or her duties as a director on Board and as a member
of the Finance Committee.
3.02. The Company shall purchase and maintain director and officer
liability insurance, including any applicable excess liability
insurance ("D&O Policy"), and shall include and maintain each such
Lionhart Appointee as an insured under each such D&O Policy, and shall
thereby (through such D&O Policy) cause each such Lionhart Appointee to
be insured and otherwise indemnified from and against liability
relating to or arising from the performance and discharge of his or her
duties as a director on the Board and as a member of the Finance
Committee, to the maximum extent permissible under the applicable laws
of the State of New Jersey and the United States, and the Articles and
By-laws of the Company, and in a manner that is consistent with the
written uniform policies and procedures of the Company (including,
without limitation, Board resolutions) with respect to the purchase and
maintenance by the Company of any such D&O Policy for its directors,
officers and/or management.
3.03. Upon any reasonable or periodic request of Lionhart and/or
any Lionhart Appointee, the Company shall promptly make full and frank
disclosure and provide to Lionhart and each such Lionhart Appointee, 1)
written copies of its Articles and By-laws, and all other written
policies and procedures of the Company (including, without limitation,
Board resolutions) that relate to or arise from, or otherwise regulate,
the duty of the Company to indemnify any and all directors, officers
and/or management of the Company, from and against (and to purchase and
maintain a D&O Policy with respect to) liability relating to or arising
from the performance and discharge of his or her duties as a director,
officer or manager of the Company, and 2) written copies of any D&O
Policy, including certificates of insurance and/or endorsements, with
respect to any such D&O Insurance, thereby evidencing compliance by the
Company of its duties and obligations to each such Lionhart Appointee
as provided under Section 3.02 of this Agreement.
Section 4. Miscellaneous. The Company, the Compost Stockholders and
Lionhart hereby agree, promise and covenant as follows:
4.01. The parties hereto agree that irreparable damage would occur
in the event any provision of this Agreement is or was not performed in
accordance with the terms hereof and that the parties shall be entitled
to specific performance of their terms hereof, in addition to any other
remedy available at law or in equity.
4.02. Any term of this Agreement may be amended and the observance
of any such term may be waived (either generally or in a particular
instance and either retroactively or prospectively) only with the
written consent of both the Company, the Compost Stockholders and
Lionhart.
4.03. All notices and other communications provided for herein
shall be in writing and shall be delivered by hand, telecopied or sent
by certified or registered mail, return receipt requested, postage
prepaid, addressed in the manner set forth in Section 20.04 of the
Credit Agreement (or in such other manner for a party as shall be
specified in a notice given in accordance with this Section). All such
notices shall be conclusively deemed to be received and shall be
effective, if sent by hand delivery or telecopies, upon receipt, or if
sent by registered or certified mail, on the fifth day after the day on
which such notice is mailed.
4.04. This Agreement shall be binding upon and shall inure to the
benefit of the Company, the Compost Stockholders and Lionhart, and
shall inure to the benefit of each Lionhart Appointee (pursuant to
which each such Lionhart Appointee shall be deemed to be a third party
beneficiary with respect only to Section 3 of this Agreement).
4.05. This Agreement sets forth the entire agreement and
understanding among the parties hereto, and supersedes all prior
agreements and understandings, relating to the subject matter hereof.
If any term or other provision of this Agreement is held invalid, all
other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect, unless the term or provision held
invalid shall substantially impair the benefits of the remaining
Page 3 of 5 Pages
<PAGE>
portions of this Agreement and shall not limit or otherwise affect the
meaning hereof. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New Jersey, except that if
the Company shall hereafter become a corporation governed by the laws
of another jurisdiction, the laws of that jurisdiction shall govern.
This Agreement may be executed in any number of counterparts, and/or by
fax, e-mail or other digital, telephonic or electronic transmission,
each of which shall be deemed to be an original, but all of which
together shall constitute one instrument. Delivery of an executed
counterpart of a signature page to this Agreement by telecopier shall
be effective as delivery of a manually executed counterpart of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement in their individual capacity or caused it to be duly executed by their
respective authorized signatories thereunto duly authorized as of the day and
year first above written.
COMPOST AMERICA HOLDING COMPANY, INC.
By:
-----------------------------------
Name: Roger E. Tuttle
Title: President
LIONHART GLOBAL APPRECIATION FUND, LTD.
By:
-----------------------------------
Name: Terrence P. Duffy
Title: Director
AW COMPOST PARTNERS, L.L.C.
By:
-----------------------------------
Name:
Title:
WASTECO VENTURES LIMITED
By:
-----------------------------------
Name:
Title:
VRH CONSTRUCTION COMPANY
By:
-----------------------------------
Name:
Title:
Page 4 of 5 Pages
<PAGE>
SELECT ACQUISITIONS, INC.
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
John B. Fetter
By:
-----------------------------------
Robert J. Longo
By:
-----------------------------------
Roger E. Tuttle
By:
-----------------------------------
Robert E. Wortmann
By:
-----------------------------------
Victor D. Wortmann, Sr.
By:
-----------------------------------
Alfred A. Rattie
Page 5 of 5 Pages
<PAGE>
Exhibit 99.10
NEITHER THE WARRANTS REPRESENTED BY THIS CERTIFICATE NOR THE
SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. NEITHER THE WARRANTS NOR
SUCH SHARES MAY BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT, OR AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT.
COMPOST AMERICA HOLDING COMPANY, INC.
WARRANT FOR THE PURCHASE OF 500,000 SHARES OF COMMON STOCK OF
COMPOST AMERICA HOLDING COMPANY, INC.
No. 1 October 30, 1998 500,000 Shares
THIS CERTIFIES that, for value received, Lionhart Global Appreciation
Fund, Ltd. (the "Holder"), or registered assignees and successor holders thereof
(the Holder, and all such registered assignees and successor holders of which
are collectively referred to in this Warrant as the "Holder"), is entitled to
subscribe for and purchase from Compost America Holding Company, Inc., a New
Jersey corporation (the "Company"), upon the terms and conditions set forth
herein, at any time or from time to time after the date hereof, and before 5:00
P.M. on December 31, 2004, New York time (the "Exercise Period"), Five Hundred
Thousand (500,000) shares of common stock, no par value, of the Company ("Common
Stock"), at an exercise price of $1.00 per share (the "Exercise Price"). This
Warrant is being issued in consideration, among other consideration, of the
Holder's (or its affiliate's) extension of credit to the Company and its
affiliates, Miami Recycling and Composting Co., Inc. ("Miami") and Bedminster
Seacor Services Miami Corporation ("Bedminster"), pursuant to a Credit,
Capitalization and Financing Agreement, dated as of October 30, 1998 ("Credit
Agreement"), by and among Compost, Miami and Bedminster, and the Holder,
Lionhart Investments, Ltd., and Global EarthFund Partners, L.L.C., which is
hereby incorporated by reference. This Warrant is Warrant # 1 of six (6)
warrants (i.e., Warrant # 1-Warrant # 6) issued originally by the Company to
Lionhart, pursuant to the terms of the Credit Agreement. As used in this
Warrant, the term "this Warrant" shall mean and include this Warrant and any
Warrant or Warrants hereafter issued as a consequence of the exercise or
transfer of this Warrant in whole or in part.
This Warrant, including (without limitation) the number of shares of
Common Stock issuable upon exercise of this Warrant (the "Warrant Shares") and
the Exercise Price (including any adjustments thereof as otherwise provided
under this Warrant), is subject to the following terms, provisions and
conditions:
Section 1. Warrant Exercise; Payment of Exercise Price. This Warrant
may be exercised during the Exercise Period, as to the whole or any lesser
number of the respective whole Warrant Shares, by the surrender of this Warrant
(with the form of election at the end hereof duly executed) to the Company at
its office as set forth in the form of election attached hereto, or at such
other place as the Company may designate in writing to the Holder (at the
address of the Holder on the books of the Company), together with a certified or
bank cashier's check payable to the order of the Company in an amount equal to
the Exercise Price multiplied by the number of respective Warrant Shares for
which this Warrant is being exercised.
Section 2. Warrant Shares; Issuance of Certificates. Upon each exercise
of the Holder's rights to purchase Warrant Shares, pursuant to Section 1 of this
Warrant, the Holder shall be deemed (as of the close of business on the date
upon the such exercise thereof) to be the Holder of record of the Warrant Shares
issuable upon such exercise, notwithstanding that the transfer books of the
Company shall then be closed or certificates representing such Warrant Shares
shall not then have been actually delivered to the Holder. As soon as
practicable after each such exercise of this Warrant and the corresponding
payment by the Holder, as provided pursuant to Section 1 of this Warrant, but,
in any event, no later than ten (10) days thereafter, the Company shall issue
and deliver to the Holder a certificate or certificates for the Warrant Shares
issuable upon such exercise, registered in the name of the Holder or its
designee. If this Warrant should be exercised in part only, the Company shall,
upon surrender of this Warrant for cancellation, promptly execute and deliver to
the Holder a new Warrant evidencing the right of the Holder to purchase the
balance of the Warrant Shares (or portions thereof) subject to purchase
hereunder.
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<PAGE>
Section 3. Warrant Register; Registered Owner; Transferability. Any
Warrants issued upon the transfer or exercise in part of this Warrant shall be
numbered and shall be registered by the Company in a Warrant Register as such
Warrants are issued. The Company shall be entitled to treat the registered
Holder of any Warrant on the Warrant Register as the Owner in fact thereof for
all purposes and shall not be bound to recognize any equitable or other claim to
or interest in such Warrant on the part of any other person, and shall not be
liable for any registration or transfer of Warrants which are registered or to
be registered in the name of a fiduciary or the nominee of a fiduciary unless
made with the actual knowledge that a fiduciary or nominee is committing a
breach of trust in requesting such registration or transfer, or with the
knowledge of such facts that its participation therein amounts to bad faith.
This Warrant shall be transferable only on the books of the Company upon
delivery thereof duly endorsed by the Holder or by its duly authorized attorney
or representative, or accompanied by proper evidence of succession, assignment,
or authority to transfer. In all cases or transfer by an attorney, executor,
administrator, guardian, or other legal representative, duly authenticated
evidence of his or its authority shall be produced. Upon any registration of
transfer, the Company shall deliver a new Warrant or Warrants to the person
entitled thereto. This Warrant may be exchanged, at the option of the Holder (or
any successor holder) thereof, for another Warrant, or other Warrants of
different denominations, of like tenor and representing in the aggregate the
right to purchase a like number of Warrant Shares (or portions thereof), upon
surrender to the Company or its duly authorized agent. Notwithstanding the
foregoing, the Company shall have no obligation to cause Warrants to be
transferred on its books to any person if, in the opinion of counsel to the
Company, such transfer does not comply with the provisions of the Securities Act
of 1933, as amended ("Act"), and the rules and regulations thereunder.
Section 4. Representations, Warranties and Covenants. The Company
hereby represents and warrants to the Holder hereof, and hereby promises,
covenants and agrees, that:
(a) The Company shall at all times reserve and keep available
out of its authorized and unissued Common Stock, solely for the purpose
of providing for the exercise of the rights to purchase all Warrant
Shares granted pursuant to this Warrant, such number of shares of
Common Stock as shall, from time to time, be sufficient therefor.
(b) All shares of Common Stock issuable upon exercise of this
Warrant, upon receipt by the Company of the full Exercise Price
therefor, shall be validly issued, fully paid and nonassessable, shall
not be subject to any preemptive rights, and shall be free from all
taxes, liens, encumbrances and charges whatsoever.
(c) The Company shall take all such action, at all times, as
may be necessary to assure that the Common Stock issuable upon the
exercise of this Warrant, shall be so issued without violation of the
Act, or of any applicable law or regulation, or of any requirements of
any US domestic securities exchange upon which any capital stock of the
Company may then be listed.
(d) The Company is a corporation duly organized and validly
existing under the laws of the State of New Jersey and the United
States. The Company has the full right, power and authority to execute
and deliver this Warrant to the Holder hereof, to comply with the terms
of this Warrant, to issue the Warrant Shares upon each exercise of this
Warrant, and to otherwise do and perform all acts and actions and to
consummate all transactions as are contemplated under this Warrant.
(e) All representations and warranties of the Company
(including all representations of Miami Recycling and Composting Co.,
Inc., and Bedminster Seacor Services Miami Corporation), that are
otherwise set forth in the Credit Agreement (and the Credit Documents
and Definitive Supplemental Documents, as those terms are defined
respectively under the Credit Agreement), are true, correct, accurate
and complete, as of October 30, 1998.
(f) The Credit Agreement (including the above-referenced
Credit Documents and Definitive Supplemental Documents), and all
schedules, exhibits, attachments, appendices, addenda and all other
documents that are attached to, or that relate to or arise from, the
Credit Document (including such Credit Documents and Definitive
Supplemental Documents), as of October 30, 1998, do not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein or herein not misleading.
(g) The execution and delivery of (and the performance and
consummation transactions contemplated under) this Warrant, will not
(i) conflict with or violate the Certificate of Incorporation or
By-Laws of the Company, (ii)
2
<PAGE>
conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to the Company or by which its or any of its
Properties are bound or affected, or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in
the creation of a lien or encumbrance on any of the Properties or
assets of the Company pursuant to any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, insurance policy or other
instrument or obligation to which the Company is a party, or by which
the Company or its Properties are bound or affected.
Section 5. Adjustments: Warrants, Warrant Shares and Exercise Price.
The Company hereby agrees, promises and covenants, as follows:
(a) If, and in the event, that the Company shall, at any time
after this Warrant is issued by the Company to the Holder, and during
the period that this Warrant, or any portion thereof, is outstanding
and unexpired and is held by any Holder, (i) declare a dividend on the
outstanding Common Stock payable in shares of its capital stock, (ii)
change, divide, subdivide or otherwise reclassify the outstanding
Common Stock, (iii) combine the outstanding Common Stock (including,
without limitation, any reverse dividend) into a smaller number of
shares, or (iv) issue any shares of its capital stock by
reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing corporation), then, in each case, the
Exercise Price, and the number of Warrant Shares issuable upon exercise
of this Warrant, in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination, or
reclassification, shall be proportionately adjusted so that the Holder
after such time shall be entitled to receive the aggregate number and
kind of shares which, if such Warrant had been exercised immediately
prior to such time, such Holder would have owned upon such exercise and
been entitled to receive by virtue of such dividend, subdivision,
combination, or reclassification. Such adjustment shall be made
successively whenever any event listed above shall occur.
(b) If, and in the event, that the Company shall, at any time
after this Warrant is issued by the Company to the Holder, and during
the period that this Warrant, or any portion thereof, is outstanding
and unexpired and is held by any Holder, issue or fix a record date for
the issuance to all holders of Common Stock of rights, options, or
warrants to subscribe for or purchase Common Stock (or securities
convertible into or exchangeable for Common Stock) at a price per share
(or having a conversion or exchange price per share, if a security
convertible into or exchangeable for Common Stock) less than the
Exercise Price per share of Common Stock on such record date, then, in
each case, the Exercise Price shall be adjusted by multiplying the
Exercise Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of shares of
Common Stock outstanding on such record date plus the number of shares
of Common Stock which the aggregate offering price of the total number
of shares of Common Stock so to be offered (or the aggregate initial
conversion or exchange price of the convertible or exchangeable
securities so to be offered) would purchase at such current Exercise
Price and the denominator of which shall be the number of shares of
Common Stock outstanding on such record date plus the number of
additional shares of Common Stock to be offered for subscription or
purchase (or into which the convertible or exchangeable securities so
to be offered are initially convertible or exchangeable). Such
adjustment shall become effective at the close of business on such
record date; provided, however, that, to the extent the shares of
Common Stock (or securities convertible into or exchangeable for shares
of Common Stock) are not delivered, the Exercise Price shall be
readjusted after the expiration of such rights, options, or warrants
(but only with respect to Warrants exercised after such expiration), to
the Exercise Price which would then be in effect had the adjustments
made upon the issuance of such rights, options, or warrants been made
upon the basis of delivery of only the number of shares of Common Stock
(or securities convertible into or exchangeable for shares of Common
Stock) actually issued. In case any subscription price may be paid in a
consideration part or all of which shall be in a form other than cash,
the value of such consideration shall be as determined in good faith by
the Board of Directors of the Company in the exercise of its business
judgment. Shares of Common Stock owned by or held for the account of
the Company, or any of its direct or indirect majority-owned or
controlled subsidiaries, shall not be deemed outstanding for purposes
of any such computation; provided, however, that any disposition of any
such shares of Common Stock shall be considered an issue, sale or other
applicable disposition for purposes of Section 5 of this Warrant.
(c) If, and in the event, that the Company shall, at any time
after this Warrant is issued by the Company to
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the Holder, and during the period that this Warrant, or any portion
thereof, is outstanding and unexpired and is held by any Holder,
distribute to all holders of Common Stock (including any such
distribution made to the stockholders of the Company in connection with
a consolidation or merger in which the Company is the continuing
corporation) evidences of its indebtedness or assets (other than cash
dividends or distributions and dividends payable in shares of Common
Stock), or rights, options, or warrants to subscribe for or purchase
Common Stock, or securities convertible into or exchangeable for shares
of Common Stock (excluding those with respect to the issuance of which
an adjustment of the Exercise Price is provided pursuant to Section
5(b) hereof), then, in each case, the Exercise Price shall be adjusted
by multiplying the Exercise Price in effect immediately prior to the
record date for the determination of stockholders entitled to receive
such distribution by a fraction, the numerator of which shall be the
Exercise Price per share of Common Stock on such record date, less the
fair market value (as determined in good faith by the Board of
Directors of the Company in the exercise of its business judgment) of
the portion of the evidences of indebtedness or assets so to be
distributed, or of such rights, options, or warrants or convertible or
exchangeable securities, applicable to one share, and the denominator
of which shall be such current Exercise Price per share of Common
Stock. Such adjustment shall be made whenever any such distribution is
made, and shall become effective on the record date for the
determination of shareholders entitled to receive such distribution.
(d) If, and in the event, that the Company shall, at any time
after this Warrant is issued by the Company to the Holder, and during
the period that this Warrant, or any portion thereof, is outstanding
and unexpired and is held by any Holder, issue shares of Common Stock
or rights, options, or warrants to subscribe for or purchase Common
Stock, or securities convertible into or exchangeable for Common Stock
(excluding shares, rights, options, warrants, or convertible or
exchangeable securities issued or issuable (i) in any of the
transactions with respect to which an adjustment of the Exercise Price
is provided pursuant to Sections 5(a), 5(b) or 5(c) above, (ii) upon
exercise of this Warrant or (iii) to management, employees or
independent consultants of the Company up to a maximum amount of five
hundred thousand (500,000) shares of Common Stock), at a price per
share (determined, in the case of such rights, options, warrants, or
convertible or exchangeable securities, by dividing (x) the total
amount received or receivable by the Company in consideration of the
sale and issuance of such rights, options, warrants, or convertible or
exchangeable securities, plus the minimum aggregate consideration
payable to the Company upon exercise, conversion, or exchange thereof,
by (y) the maximum number of shares covered by such rights, options,
warrants, or convertible or exchangeable securities) lower than the
Exercise Price per share of Common Stock in effect immediately prior to
such issuance, then the Exercise Price shall be reduced on the date of
such issuance to a price (calculated to the nearest cent) determined by
multiplying the Exercise Price in effect immediately prior to such
issuance by a fraction, (iii) the numerator of which shall be an amount
equal to the sum of (A) the number of shares of Common Stock
outstanding immediately prior to such issuance plus (B) the quotient
obtained by dividing the consideration received by the Company upon
such issuance by such current Exercise Price, and (iv) the denominator
of which shall be the total number of shares of Common Stock
outstanding immediately after such issuance. For the purposes of such
adjustments, the maximum number of shares which the holders of any such
rights, options, warrants, or convertible or exchangeable securities
shall be entitled to initially subscribe for or purchase or convert or
exchange such securities into shall be deemed to be issued and
outstanding as of the date of such issuance, and the consideration
received by the Company therefor shall be deemed to be the
consideration received by the Company for such rights, options,
warrants, or convertible or exchangeable securities, plus the minimum
aggregate consideration or premiums stated in such rights, options,
warrants, or convertible or exchangeable securities to be paid for the
shares covered thereby. No further adjustment of the Exercise Price
shall be made as a result of the actual issuance of shares of Common
Stock on exercise of such rights, options, or warrants or on conversion
or exchange of such convertible or exchangeable securities. On the
expiration or the termination of such rights, options, or warrants, or
the termination of such right to convert or exchange, the Exercise
Price shall be readjusted (but only with respect to Warrants exercised
after such expiration or termination) to such Exercise Price as would
have obtained had the adjustments made upon the issuance of such
rights, options, warrants, or convertible or exchangeable securities
been made upon the basis of the delivery of only the number of shares
of Common Stock actually delivered upon the exercise of such rights,
options, or warrants or upon the conversion or exchange of any such
securities; and on any change of the number of shares of Common Stock
deliverable upon the exercise of any such rights, options, or warrants
or conversion or exchange of such convertible or exchangeable
securities or any change in the consideration to be received by the
Company upon such exercise, conversion, or exchange, including, but not
limited to, a change resulting from the antidilution provisions
thereof, the Exercise Price, as then in effect, shall forthwith be
readjusted
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(but only with respect to Warrants exercised after such change) to such
Exercise Price as would have been obtained had an adjustment been made
upon the issuance of such rights, options, or warrants not exercised
prior to such change, or securities not converted or exchanged prior to
such change, on the basis of such change. In case the Company shall
issue shares of Common Stock or any such rights, options, warrants, or
convertible or exchangeable securities for a consideration consisting,
in whole or in part, of property other than cash or its equivalent,
then the "price per share" and the "consideration received by the
Company" for purposes of the first sentence of this Section 5(d) shall
be the "price per share" an the "consideration received by the Company"
as determined reasonably in good faith by the Board of Directors of the
Company in the exercise of its business judgment. Shares of Common
Stock owned by or held for the account of the Company, or any of its
direct or indirect majority-owned or controlled subsidiaries, shall not
be deemed outstanding for purposes of any such computation; provided,
however, that any disposition of any such shares of Common Stock shall
be considered an issue, sale or other applicable disposition for
purposes of Section 5 of this Warrant.
(e) All calculations under this Section 5 shall be made to the
nearest cent or to the nearest one-thousandth of a share, as the case
may be.
(f) In any case in which this Section 5 shall require that an
adjustment in the Exercise Price be made effective as of a record date
for a specified event, the Company may elect to defer, until the
occurrence of such event, issuing to the Holder, if the Holder
exercised this Warrant after such record date, the shares of Common
Stock, if any, issuable upon such exercise over and above the shares of
Common Stock, if any, issuable upon such exercise on the basis of the
Exercise Price in effect prior to such adjustment; provided, however,
that the Company shall deliver to the Holder a due bill or other
appropriate instrument, in a form that is approved by and reasonably
satisfactory to the Holder's counsel, evidencing the Holder's right to
receive such additional shares upon the occurrence of the event
requiring such adjustment.
(g) Upon each adjustment of the Exercise Price as a result of
the calculations made in Sections 5(b), 5(c) or 5(d) hereof, this
Warrant shall thereafter evidence the right to purchase, at the
adjusted Exercise Price, that number of shares (calculated to the
nearest thousandth) obtained by dividing (A) the product obtained by
multiplying the number of shares purchasable upon exercise of this
Warrant prior to adjustment of the number of shares by the Exercise
Price in effect prior to adjustment of the Exercise Price by (B) the
Exercise Price in effect after such adjustment of the Exercise Price.
(h) Whenever there shall be an adjustment as provided in this
Section 5, the Company shall promptly cause written notice thereof to
be sent by registered mail, postage prepaid, to the Holder, at its
address as it shall appear in the Warrant Register, which notice shall
be accompanied by an officer's certificate setting forth the number of
Warrant Shares purchasable upon the exercise of this Warrant and the
Exercise Price after such adjustment and setting forth a reasonably
detailed statement of the facts requiring such adjustment and the
computation thereof.
(i) If, and in the event, at any time after this Warrant is
issued by the Company to the Holder, and during the period that this
Warrant, or any portion thereof, is outstanding and unexpired and is
held by any Holder, that any event, circumstance, transaction or
disposition occurs or transpires (or is reasonably likely or to occur
or otherwise transpire) as to which, in the reasonable and fair opinion
and determination of the Board of Directors of the Company, as so
determined in the exercise of its business judgment, the other
provisions of this Section 5 are not strictly applicable or, if
strictly applicable, would not fairly and adequately protect the
interests and rights of the Holder hereof in this Warrant (and/or any
Warrant Shares upon the exercise of this Warrant), in accordance with
the essential intent and principles of this Warrant, then the Board of
Directors of the Company shall nevertheless have the affirmative duty
and obligation under this Warrant to make any such adjustment in the
application of this Section 5, in accordance with such essential intent
and principles, so as to protect such rights and interests of the
Holder hereof, but in no event shall any such adjustment have the
effect of increasing the Exercise Price as otherwise determined,
computed or adjusted under this Section 5.
Section 6. .Adjustments: Merger, Consolidation and Sale. The Company
hereby agrees, promises and covenants, as follows:
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<PAGE>
(a) If, at any time after this Warrant is issued by the
Company to the Holder, and during the period that this Warrant, or any
portion thereof, is outstanding and unexpired and is held by any
Holder, the Company consolidates with or merges with or into another
corporation or entity (other than a merger or consolidation in which
the Company is the surviving or continuing corporation), or the Company
sells, leases or conveys to another corporation or entity its property
and assets of any nature, as an entirety or substantially as an
entirety, then, as a condition of any such consolidation, merger, sale,
lease or conveyance, lawful and adequate provisions (in a form that is
reasonably satisfactory to and approved by the Holders of at least
two-thirds of the Warrants under this Warrant) shall be made in
applicable definitive transaction documents and instruments, or
otherwise, pursuant to which any such successor, leasing, or purchasing
corporation or other entity, as the case may be, shall (i) execute with
the Holder an agreement providing that the Holder shall have the right
thereafter to receive upon exercise of this Warrant solely the kind and
amount of shares of stock and other securities, property, cash, or any
combination thereof receivable upon such consolidation, merger, sale,
lease, or conveyance by a holder of the number of shares of Common
Stock for which this Warrant might have been exercised immediately
prior to such consolidation, merger, sale, lease, or conveyance and
(ii) make effective provision in its certificate of incorporation,
organization or otherwise, if necessary, to effect such agreement. Such
agreement shall provide for adjustments which shall be as nearly
equivalent as practicable to the adjustments in Section 5 of this
Warrant.
(b) In case of any reclassification or change of the shares of
Common Stock issuable upon exercise of this Warrant (other than a
change in par value or from no par value to a specified par value, or
as a result of a subdivision or combination, but including any change
in the shares into two or more classes or series of shares), or in case
of any consolidation or merger of another corporation into the Company
in which the Company is the continuing corporation and in which there
is a reclassification or change (including a change to the right to
receive cash or other property) of the shares of Common Stock (other
than a change in par value, or from no par value to a specified par
value, or as a result of a subdivision or combination, but including
any change in the shares into two or more classes or series of shares),
the Holder shall have the right thereafter to receive upon exercise of
this Warrant solely the kind and amount of shares of stock and other
securities, property, cash, or any combination thereof receivable upon
such reclassification, change, consolidation, or merger by a holder of
the number of shares of Common Stock for which this Warrant might have
been exercised immediately prior to such reclassification, change,
consolidation, or merger. Thereafter, appropriate provision shall be
made for adjustments which shall be as nearly equivalent as practicable
to the adjustments in Section 5 of this Warrant.
(c) The above provisions of this Section 6 shall similarly
apply to successive reclassifications and changes of shares of Common
Stock and to successive consolidations, mergers, sales, leases, or
conveyances.
Section 7. Advance Written Notices. If, and in the event, at any time
after this Warrant is issued by the Company to the Holder, and during the period
that this Warrant, or any portion thereof, is outstanding and unexpired and is
held by any Holder, that the Company shall propose,
(a) to pay any dividend or make any distribution on shares of
Common Stock in shares of Common Stock or make any other distribution
(other than regularly scheduled cash dividends which are not in a
greater amount per share than the most recent such cash dividend) to
all holders of Common Stock, or
(b) to issue any rights, warrants, or other securities to all
holders of Common Stock entitling them to purchase any additional
shares of Common Stock or any other rights, warrants, or other
securities, or
(c) to effect any reclassification or change of outstanding
shares of Common Stock, or any consolidation, merger, sale, lease, or
conveyance of property, as described in or otherwise contemplated under
Section 6 of this Warrant, or,
(d) to effect any liquidation, dissolution, or winding-up of
the Company, or
(e) to take any other action which would or could reasonably
cause an adjustment to the Exercise Price under this Warrant,
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<PAGE>
then, and in any one or more of such cases, the Company shall give written
notice thereof, by registered mail, postage prepaid, to the Holder at the
Holder's address as it shall appear in the Warrant Register, mailed (and, in the
case of and provided that Lionhart Global Appreciation Fund, Ltd., or any
affiliate thereof, is a registered Holder of this Warrant, or any part
hereunder, the Company shall give written notice thereof, by fax, e-mail or
other electronic facsimile or transmission to John Thomas Drics, Esq., O'Bryan,
Brazill & Drics, L.L.P., at 111 Monument Circle, Suite 312, Indianapolis,
Indiana 46204, pursuant to particulars as may be furnished periodically to the
Company), at least thirty (30) days prior to (i) the date as of which the
holders of record of shares of Common Stock to be entitled to receive any such
dividend, distribution, rights, warrants, or other securities are to be
determined, (ii) the date on which any such reclassification, change of
outstanding shares of Common Stock, consolidation, merger, sale, lease,
conveyance of property, liquidation, dissolution, or winding-up is expected to
become effective, and the date as of which it is expected that holders of record
of shares of Common Stock shall be entitled to exchange their shares for
securities or other property, if any, deliverable upon such reclassification,
change of outstanding shares, consolidation, merger, sale, lease, conveyance of
property, liquidation, dissolution, or winding-up, or (iii) the date of such
action which would or could reasonably require an adjustment to the Exercise
Price.
Section 8. Registrable Securities, Eligible Holders and Registration
Statement. The Company hereby agrees, promises and covenants as follows:
(a) If at any time prior to the expiration of the Exercise
Period, the Company shall file a registration statement (other than a
registration statement on Form S-4, Form S-8, or any successor form)
with the Securities and Exchange Commission (the "Commission") while
any Registrable Securities (as hereinafter defined) are outstanding,
the Company shall give all the then holders of any Registrable
Securities (the "Eligible Holders") at least 30 days prior written
notice of the filing of such registration statement. If requested by
any Eligible Holder in writing within 20 days after receipt of any such
notice, the Company shall, at the Company's sole expense (other than
the fees and disbursements of counsel for the Eligible Holders and the
underwriting discounts, if any, payable in respect of the Registrable
Securities sold by any Eligible Holder), register or qualify all or, at
each Eligible Holder's option, any portion of the Registrable
Securities of any Eligible Holders who shall have made such request,
concurrently with the registration of such other securities, all to the
extent requisite to permit the public offering, and sale of the
Registrable Securities through the facilities of all appropriate
securities exchanges and the over-the-counter market, and will use its
best efforts through its officers, directors, auditors, and counsel to
cause such registration statement to become effective as promptly as
practicable. Notwithstanding the foregoing, if the managing underwriter
of any such offering shall advise the Company in writing that, in its
opinion, the distribution of all or a portion of the Registrable
Securities requested to be included in the registration concurrently
with the securities being registered by the Company would materially
adversely affect the distribution of such securities by the Company for
its own account, then any Eligible Holder who shall have requested
registration of his or its Registrable Securities shall delay the
offering and sale of such Registrable Securities (or the portions
thereof so designated by such managing underwriter) for such period,
not to exceed 90 days (the "Delay Period"), as the managing underwriter
shall request, provided that no such delay shall be required as to any
Registrable Securities if any securities of the Company are included in
such registration statement and eligible for sale during the Delay
Period for the account of any person other than the Company and any
Eligible Holder unless the securities included in such registration
statement and eligible for sale during the Delay Period for such other
person shall have been reduced pro rata to the reduction of the
Registrable Securities which were requested to be included and eligible
for sale during the Delay Period in such registration. As used herein
"Registrable Securities" shall mean the Warrants and the Warrant Shares
which, in each case, have not been previously sold pursuant to a
registration statement or Rule 144 promulgated under the Securities Act
of 1933, as amended (the "Act").
( b) If, at any time prior to the expiration of the Exercise
Period, the Company shall receive a written request, from Eligible
Holders who in the aggregate own (or upon exercise of all Warrants
under this Warrant then outstanding or issuable would own) 50% of the
total number of shares of Warrant Shares then included (or upon such
exercises would be included) in the Registrable Securities (the
"Majority Holders"), to register the sale of all or part of such
Registrable Securities, the Company shall, as promptly as practicable,
prepare and file with the Commission a registration statement
sufficient to permit the public offering and sale of the Registrable
Securities through the facilities of all appropriate securities
exchanges and the over-the-counter market, and will use its best
efforts through its officers, directors, auditors, and counsel to cause
such registration statement to become effective as promptly as
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<PAGE>
practicable; provided, however, that the Company shall only be
obligated to file one such registration statement for which all
expenses incurred in connection with such registration (other than the
fees and disbursements of counsel for the Eligible Holders and
underwriting discounts, if any, payable in respect of the Registrable
Securities sold by the Eligible Holders) shall be borne by the Company.
The Company shall not be obligated to effect any registration of its
securities pursuant to this Section 8(b) within six months after the
effective date of a previous registration statement prepared and filed
in accordance with Sections 8(a) or 8(b). Within three business days
after receiving any request contemplated by this Section 8(b), the
Company shall give written notice to all the other Eligible Holders,
advising each of them that the Company is proceeding with such
registration and offering to include therein all or any portion of any
such other Eligible Holder's Registrable Securities, provided that the
Company receives a written request to do so from such Eligible Holder
within 30 days after receipt by him or it of the Company's notice.
(c) In the event of a registration pursuant to the provisions
of this Section 8, the Company shall use its best efforts to cause the
Registrable Securities so registered to be registered or qualified for
sale under the securities or blue sky laws of such jurisdictions as the
Eligible Holder or such holders may reasonably request (including,
without limitation, and subject to any such request, the States of
Delaware and New York); provided, however, that the Company shall not
be required to qualify to do business in any state by reason of this
Section 8(c) in which it is not otherwise required to qualify to do
business (other than the States of Delaware and New York).
(d) The Company shall keep effective any registration or
qualification contemplated by this Section 8 and shall from time to
time amend or supplement each applicable registration statement,
preliminary prospectus, final prospectus, application, document, and
communication for such period of time as shall be required to permit
the Eligible Holders to complete the offer and sale of the Registrable
Securities covered thereby. The Company shall in no event be required
to keep any such registration or qualification in effect for a period
in excess of nine months from the date on which the Eligible Holders
are first free to sell such Registrable Securities; provided, however,
that, if the Company is required to keep any such registration or
qualification in effect with respect to securities other than the
Registrable Securities beyond such period, the Company shall keep such
registration or qualification in effect as it relates to the
Registrable Securities for so long as such registration or
qualification remains or is required to remain in effect in respect of
such other securities.
(e) In the event of a registration pursuant to the provisions
of this Section 8, the Company shall furnish to each Eligible Holder
such number of copies of the registration statement and of each
amendment and supplement thereto (in each case, including all
exhibits), such reasonable number of copies of each prospectus
contained in such registration statement and each supplement or
amendment thereto (including each preliminary prospectus), all of which
shall conform to the requirements of the Act and the rules and
regulations thereunder, and such other documents, as any Eligible
Holder may reasonably request to facilitate the disposition of the
Registrable Securities included in such registration.
(f) In the event of a registration pursuant to the provisions
of this Section 8, the Company shall furnish each Eligible Holder of
any Registrable Securities so registered with an opinion of its counsel
(reasonably acceptable to the Eligible Holders) to the effect that (i)
the registration statement has become effective under the Act and no
order suspending the effectiveness of the registration statement,
preventing or suspending the use of the registration statement, any
preliminary prospectus, any final prospectus, or any amendment or
supplement thereto has been issued, nor has the Commission or any
securities or blue sky authority of any jurisdiction instituted or
threatened to institute any proceedings with respect to such an order,
(ii) the registration statement and each prospectus forming a part
thereof (including each preliminary prospectus), and any amendment or
supplement thereto, complies as to form with the Act and the rules and
regulations thereunder, and (iii) such counsel has no knowledge of any
material misstatement or omission in such registration statement or any
prospectus, as amended or supplemented. Such opinion shall also state
the jurisdictions in which the Registrable Securities have been
registered or qualified for sale pursuant to the provisions of Section
8(c).
(g) In the event of a registration pursuant to the provision
of this Section 8, the Company shall enter into a cross-indemnity
agreement and a contribution agreement, each in customary form, with
each underwriter, if any, and, if requested, enter into an underwriting
agreement containing conventional representations, warranties,
allocation of
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<PAGE>
expenses, and customary closing conditions, including, but not limited
to, opinions of counsel and accountants' cold comfort letters, with any
underwriter who acquires any Registrable Securities.
(h) In the event of a registration pursuant to the provisions
of this Section 8:
(1) Each Eligible Holder shall furnish to the Company in
writing such appropriate information (relating to such Eligible Holder
and the intention of such Eligible Holder as to proposed methods of
sale or other disposition of their shares of Common Stock) and the
identity of and compensation to be paid to any proposed underwriters to
be employed in connection therewith as the Company, any underwriter, or
the Commission or any other regulatory authority may request;
(2) The Eligible Holders shall enter into the usual and
customary form of underwriting agreement agreed to by the Company and
any underwriter with respect to any such offering, if required, and
such underwriting agreement shall contain the customary rights of
indemnity between the Company, the underwriters, and such Eligible
Holders;
(3) Each Eligible Holder shall agree that he, she or it shall
execute, deliver and/or file with or supply the Company, any
underwriters, the Commission and/or any state or other regulatory
authority such information, documents, representations, undertakings
and/or agreements necessary to carry out the provisions of the
registration covenants contained in this Section 8 and/or to effect the
registration or qualification of his, her or its Registrable Securities
under the Act and/or any of the laws and regulations of any state of
governmental instrumentality;
(4) The Company's obligation to include any Registrable
Securities in a registration statement shall be subject to the written
agreement of each holder thereof to offer such securities in the same
manner and on the same terms and conditions as the other securities of
the same class are being offered pursuant to the registration
statement, if such shares are being underwritten;
(5) In the event that all the Registrable Securities have not
been sold on or prior to the expiration of the period specified in
Section 8(d) above, the Company may de-register by post-effective
amendment any Registrable Securities covered by the registration
statement, but not sold on or prior to such date; the Company agrees
that it will notify each holder of Registrable Securities of the filing
and effective date of such post-effective amendment; and
(6) Each Eligible Holder agrees that upon notification by the
Company that the prospectus in respect to any public offering covered
by the provisions hereof is in need of revision, such Eligible Holder
shall immediately upon receipt of such notification (x) cease to offer
or sell any securities of the Company which must be accompanied by such
prospectus, (y) return all such prospectuses in such Eligible Holder's
hands to the Company, and (z) not offer or sell any securities of the
Company until such Holder has been provided with a current prospectus
and the Company has given such Eligible Holder notification permitting
such Eligible Holder to resume offers and sales.
(i) The Company agrees that until all the Registrable
Securities have been sold under a registration statement or pursuant to
Rule 144 under the Act, it shall keep current in filing all reports,
statements and other materials required to be filed with the Commission
to permit holders of the Registrable Securities to sell such securities
under Rule 144.
(j) Except for rights granted to holders of the Warrants, the
Company will not, without the written consent of the Majority Holders,
grant to any persons the right to request the Company to register any
securities of the Company, provided that the Company may grant such
registration rights to other persons so long as such rights are
subordinate or pari passu to the rights of the Eligible Holders.
(k) The rights of a Holder of this Warrant, as set forth under
this Section 8, are in addition to, and do not replace or supersede,
any rights that a Holder may be entitled to assert under, and pursuant
to the terms and subject to the conditions set forth in, a Registration
Rights Agreement, dated on and as of October 30, 1998, by and between
the Company and Lionhart Global Appreciation Fund, Ltd., which is
hereby incorporated by reference.
Section 9. Indemnification. The Company hereby promises and covenants,
and hereby agrees with the Holder hereof,
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as follows:
(a) (i) Subject to the conditions set forth below, the Company
agrees to indemnify and hold harmless each Eligible Holder, its
officers, directors, partners, employees, agents and counsel, and each
person, if any, who controls any such person within the meaning of
Section 15 of the Act or Section 20(a) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), from and against any and all
loss, liability, charge, claim, damage, and expense whatsoever (which
shall include, for all purposes of this Section 9, but not be limited
to, attorneys' fees and any and all reasonable expense whatsoever
incurred in investigating, preparing, or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any
and all amounts paid in settlement of any claim or litigation), as and
when incurred, arising out of, based upon, or in connection with: (i)
any untrue statement or alleged untrue statement of a material fact
contained (A) in any registration statement, preliminary prospectus, or
final prospectus (as from time to time amended and supplemented), or
any amendment or supplement thereto, relating to the sale of any of the
Registrable Securities, or (B) in any application or other document or
communication (in this Section 9 collectively called an "application")
executed by or on behalf of the Company or based upon written
information furnished by or on behalf of the Company filed in any
jurisdiction in order to register or qualify any of the Registrable
Securities under the securities or blue sky laws thereof or filed with
the Commission or any securities exchange; or (ii) any omission or
alleged omission to state a material fact required to be stated in any
document referenced in clause (A) or (B) above or necessary to make the
statements therein not misleading, unless such statement or omission
was made in reliance upon and in conformity with written information
furnished to the Company with respect to such Eligible Holder by or on
behalf of such person expressly for inclusion in any registration
statement, preliminary prospectus, or final prospectus, or any
amendment or supplement thereto, or in any application, as the case may
be; or (iii) any breach of any representation, warranty, covenant, or
agreement of the Company contained in this Warrant. The foregoing
agreement to indemnify shall be in addition to any liability the
Company may otherwise have, including liabilities arising under this
Warrant.
(ii) If any action is brought against any Eligible Holder or
any of its officers, directors, partners, employees, agents, or
counsel, or any controlling persons of such person (an "indemnified
party") in respect of which indemnity may be sought against the Company
pursuant to the foregoing paragraph, such indemnified party or parties
shall promptly notify the Company in writing of the institution of such
action (but the failure so to notify shall not relieve the Company from
any liability other than pursuant to this Section 9(a), except to the
extent it may have been prejudiced in any material respect by such
failure) and the Company shall promptly assume the defense of such
action, including the employment of counsel (reasonably satisfactory to
such indemnified party or parties) and payment of expenses. Such
indemnified party or parties shall have the right to employ its or
their own counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of such indemnified party or parties
unless the employment of such counsel shall have been authorized in
writing by the Company in connection with the defense of such action or
the Company shall not have promptly employed counsel reasonably
satisfactory to such indemnified party or parties to have charge of the
defense of such action or such indemnified party or parties shall have
reasonably concluded that there may be one or more legal defenses
available to it or them or to other indemnified parties which are
different from or additional to those available to the Company, in any
of which events such fees and expenses shall be borne by the Company
and the Company shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties. Anything in this
Section 9 to the contrary notwithstanding, the Company shall not be
liable for any settlement of any such claim or action effected without
its written consent, which shall not be unreasonably withheld. The
Company shall not, without the prior written consent of each
indemnified party that is not released as described in this sentence,
settle or compromise any action, or permit a default or consent to the
entry of judgment in or otherwise seek to terminate any pending or
threatened action, in respect of which indemnity may be sought
hereunder (whether or not any indemnified party is a party thereto),
unless such settlement, compromise, consent, or termination includes an
unconditional release of each indemnified party from all liability in
respect of such action. The Company agrees promptly to notify the
Eligible Holders of any threatened, or the commencement of any,
litigation or proceedings against the Company or any of its officers or
directors in connection with the sale of any Registrable Securities or
any preliminary prospectus, prospectus, registration statement, or
amendment or supplement thereto, or any application relating to any
sale of any Registrable Securities.
(b) The Holder agrees to indemnify and hold harmless the
Company, each director of the Company, each
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officer of the Company who shall have signed any registration statement
covering Registrable Securities held by the Holder, each other person,
if any, who controls the Company within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act, and its or their
respective counsel, to the same extent as the foregoing indemnity from
the Company to the Holder in Section 9(a), but only with respect to
statements or omissions, if any, made in any registration statement,
preliminary prospectus, or final prospectus (as from time to time
amended and supplemented), or any amendment or supplement thereto, or
in any application, in reliance upon and in conformity with written
information furnished to the Company with respect to the Holder by or
on behalf of the Holder expressly for inclusion in any such
registration statement, preliminary prospectus, or final prospectus, or
any amendment or supplement thereto, or in any application, as the case
may be. If any action shall be brought against the Company or any other
person so indemnified based on any such registration statement,
preliminary prospectus, or final prospectus, or any amendment or
supplement thereto, or in any application, and in respect of which
indemnity may be sought against the Holder pursuant to this Section
9(b), the Holder shall have the rights and duties given to the Company,
and the Company and each other person so indemnified shall have the
rights and duties given to the indemnified parties, by the provisions
of Section 9(a).
(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section
9(a) or 9(b) (subject to the limitations thereof) but it is found in a
final judicial determination, not subject to further appeal, that such
indemnification may not be enforced in such case, even though this
Agreement expressly provides for indemnification in such case, or (ii)
any indemnified or indemnifying party seeks contribution under the Act,
the Exchange Act or otherwise, then the Company (including for this
purpose any contribution made by or on behalf of any director of the
Company, any officer of the Company who signed any such registration
statement, any controlling person of the Company, and its or their
respective counsel), as one entity, and the Eligible Holders of the
Registrable Securities included in such registration in the aggregate
(including for this purpose any contribution by or on behalf of an
indemnified party), as a second entity, shall contribute to the losses,
liabilities, claims, damages, and expenses whatsoever to which any of
them may be subject, on the basis of relevant equitable considerations
such as the relative fault of the Company and such Eligible Holders in
connection with the facts which resulted in such losses, liabilities,
claims, damages, and expenses. The relative fault, in the case of an
untrue statement, alleged untrue statement, omission, or alleged
omission, shall be determined by, among other things, whether such
statement, alleged statement, omission, or alleged omission relates to
information supplied by the Company or by such Eligible Holders, and
the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement, alleged statement,
omission, or alleged omission. The Company and the Holder agree that it
would be unjust and inequitable if the respective obligations of the
Company and the Eligible Holders for contribution were determined by
pro rata or per capita allocation of the aggregate losses, liabilities,
claims, damages, and expenses (even if the Holder and the other
indemnified parties were treated as one entity for such purpose) or by
any other method of allocation that does not reflect the equitable
considerations referred to in this Section 9(c). In no case shall any
Eligible Holder be responsible for a portion of the contribution
obligation imposed on all Eligible Holders in excess of its pro rata
share based on the number of shares of Common Stock owned (or which
would be owned upon exercise of the Registrable Securities) by it and
included in such registration as compared to the number of shares of
Common Stock owned (or which would be owned upon exercise of the
Registrable Securities) by all Eligible Holders and included in such
registration. No person guilty of a fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation. For purposes of this Section 9(c), each person, if
any, who controls any Eligible Holder within the meaning of Section 15
of the Act or Section 20(a) of the Exchange Act and each officer,
director, partner, employee, agent, and counsel of each such Eligible
Holder or control person shall have the same rights to contribution as
such Eligible Holder or control person and each person, if any, who
controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, each officer of the Company who
shall have signed any such registration statement, each director of the
Company, and its or their respective counsel shall have the same rights
to contribution as the Company, subject in each case to the provisions
of this Section 9(c). Anything in this Section 9(c) to the contrary
notwithstanding, no party shall be liable for contribution with respect
to the settlement of any claim or action effected without its written
consent. This Section 9(c) is intended to supersede any right to
contribution under the Act, the Exchange Act or otherwise.
Section 10. Issuance Costs. The issuance of any shares (including, the
Warrant Shares) or other securities upon the
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exercise of this Warrant, and the delivery of certificates or other instruments
representing such shares or other securities, shall be made without charge to
the Holder for any tax or other charge in respect of such issuance. The Company
shall not, however, be required to pay any tax which may be payable in respect
of any transfer involved in the issue and delivery of any certificate in a name
other than that of the Holder and the Company shall not be required to issue or
deliver any such certificate unless and until the person or persons requesting
the issue thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
Section 11. Certificate Legend. Subject to Section 8 of this Warrant,
certificates evidencing the Warrant Shares issued upon exercise of the Warrants
shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SHARES MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT, OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT."
Section 12. Replacement Warrants. Upon receipt of evidence satisfactory
to the Company of the loss, theft, destruction, or mutilation of any Warrant
(and upon surrender of any Warrant if mutilated), and upon reimbursement of the
Company's reasonable incidental expenses, the Company shall execute and deliver
to the Holder thereof a new Warrant of like date, tenor, and denomination.
Section 13. No Rights as Stockholder. The Holder of any Warrant shall
not have, solely on account of such status, any rights of a stockholder of the
Company, either at law or in equity, or to any notice of meetings of
stockholders or of any other proceedings of the Company, except as provided in
this Warrant.
Section 14. Transferability. This Warrant, and all rights hereunder,
are negotiable and transferable, in whole or in part, without charge to the
Holder hereof, at the executive offices of the Company, at 320 Grand Avenue,
Englewood, New Jersey 07631, by the Holder or by duly authorized attorney, upon
surrender of this Warrant properly endorsed. Each Holder of this Warrant, by
taking and holding this Warrant, consents and agrees that this Warrant, when
endorsed in blank, shall be deemed negotiable, and that, subject to Section 3 of
this Warrant, the Holder hereof, when this warrant shall have been so endorsed,
may be treated by the Company and all persons dealing with this Warrant as the
absolute owner hereof for any purpose and as the person entitled to exercise the
rights represented b this Warrant, or to the transfer hereof on the books of the
Company.
Section 15. Notice. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be mailed by
certified mail, return receipt requested or sent by Federal Express, Express
Mail, or similar overnight delivery or courier service or delivered (in person
or by telecopy, telex, or similar telecommunications equipment) against receipt
to the party to whom it is to be given, if sent to the Company, at: 320 Grand
Avenue, Englewood, N.J. 07631, Attention: The President; or if sent to the
Holder, at the Holder's address as it shall appear on the Warrant Register; or
to such other address as the party shall have furnished in writing in accordance
with the provisions of this Section 14. Any notice or other communication given
by certified mail shall be deemed given at the time of certification thereof,
except for a notice changing a party's address which will be deemed given at the
time of receipt thereof. Any notice given by other means permitted by this
Section 14 shall be deemed given at the time of receipt thereof.
Section 16. Survival of Rights and Representations. The rights, duties
and obligations of the Company, the Holder of this Warrant and the holder of the
Warrant Shares issued upon any exercise of this Warrant, shall survive any such
exercise of this Warrant.
Section 17. Successors and Assigns. This Warrant shall be binding upon
the Company and its successors and assigns and shall inure to the benefit of the
Holder and its successors and assigns.
Section 18. Governing Law; Construction. This Warrant shall be
construed in accordance with the laws of the State of New Jersey applicable to
contracts made and performed within such State, without regard to principles of
conflicts of law.
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Section 19. Jurisdiction. The Company irrevocably consents to the
jurisdiction of the courts of the State of New Jersey and of any federal court
located in such State in connection with any action or proceeding arising out of
or relating to this Warrant, any document or instrument delivered pursuant to,
in connection with or simultaneously with this Warrant, or a breach of this
Warrant or any such document or instrument. In any such action or proceeding,
the Company waives personal service of any summons, complaint or other process.
Section 20. Descriptive Headings. The descriptive headings of the
sections of this Warrant are inserted for convenience only and do not constitute
part of this Warrant.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed,
executed and delivered by its duly authorized officer and agent, this 30th day
of October, 1998.
Dated: As of October 30, 1998 COMPOST AMERICA HOLDING COMPANY, INC.
By:
-------------------------------
Name: Roger E. Tuttle
Title: President
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FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
attached Warrant.)
FOR VALUE RECEIVED, ______________________________ hereby sells,
assigns, and transfers unto _____________________ a Warrant to purchase Shares,
no par value, of Compost America Holding Company, Inc. (the "Company"), together
with all right, title, and interest therein, and does hereby irrevocably
constitute and appoint ___________________ attorney to transfer such Warrant on
the books of the Company, with full power of substitution.
Dated:
--------------------
Signature:
------------------------------
NOTICE
The signature on the foregoing Assignment must correspond to the name
as written upon the face of this Warrant in every particular, without alteration
or enlargement or any change whatsoever.
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To: Compost America Holding Company, Inc.
320 Grand Avenue
Englewood, N.J. 07631
ELECTION TO EXERCISE
The undersigned hereby exercises its rights to purchase ______________
Warrant Shares covered by the within warrant and tenders payment herewith in the
amount of $ _____________ in accordance with the terms thereof, and requests
that certificates for such securities be issued in the name of, and delivered
to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print Name, Address and Social Security Number
or Tax Identification Number)
and, if such number of Warrant Shares shall not be all the Warrant Shares
covered by the within Warrant, that a new Warrant for the balance of the Warrant
Shares covered by the within Warrant be registered in the name of, and delivered
to, the undersigned at the address stated below.
Dated: Name:
-------------------------------- ------------------------------
(Printed)
Address:
----------------------------------------------------------------------
Name:
------------------------------
(Signature)
15
