U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended February 28, 1998 Commission File Number1-13776
GreenMan Technologies, Inc.
(Exact name of small business issuer as specified in its charter)
Delaware 71-0724248
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
7 Kimball Lane, Building A, Lynnfield, MA
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (781) 224-2411
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No___
Number of shares outstanding as of March 23, 1998
Common Stock, $.01 par value, 3,045,258 shares
<PAGE>
GreenMan Technologies, Inc.
Form 10-QSB
Quarterly Report
February 28, 1998
Table of Contents
Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (*)
Unaudited Condensed Consolidated Balance Sheets
as of May 31, 1997 and February 28, 1998 3
Unaudited Condensed Consolidated Statements
of Loss for the three and nine months ended
February 28, 1997 and 1998 4
Unaudited Condensed Consolidated Statement of
Changes in Stockholder's Equity for nine months
ended February 28, 1998 5
Unaudited Condensed Consolidated Statements of
Cash Flows for the nine months ended
February 28, 1997 and 1998 6-7
Notes to Unaudited Condensed Consolidated Financial Statements 8-14
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 15-20
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 21
Item 2. Changes in Securities 21
Item 3. Defaults Upon Senior Securities 21
Item 4. Submission of Matters to a Vote of Security Holders
21
Item 5. Other Information 21
Item 6. Exhibits and Reports on Form 8-K 21
Signatures 22
* The financial information at May 31, 1997 has been taken from audited
financial statements at that date and should be read in conjunction therewith.
All other financial statements are unaudited.
** All share and per share data in this Form 10-QSB have been adjusted to give
retroactive effect to a reverse split of the Company's common stock pursuant to
which each five shares of common stock then outstanding were converted into one
share. The reverse split became effective on March 23, 1998.
<PAGE>
<TABLE>
<CAPTION>
GreenMan Technologies, Inc.
Unaudited Condensed Consolidated Balance Sheet
May 31, February 28,
1997 1998
------------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 104,193 $ 365,736
Accounts receivable, trade, less allowance for doubtful accounts of $23,772 and
$72,004 as of May 31, 1997 and February 28, 1998 550,644 973,561
Inventory 553,688 407,017
Other current assets 204,155 918,008
------------ ------------
Total current assets 1,412,680 2,664,322
Property,plant and equipment, at cost (Note 5): ------------ ------------
Land 223,785 857,482
Buildings 91,400 2,482,571
Machinery and equipment 3,545,573 7,275,051
Furniture and fixtures 89,792 81,262
Motor vehicles 64,822 1,734,377
Leasehold improvements 975,116 52,626
------------ ------------
5,809,488 12,483,369
Less accumulated depreciation and amortization (888,445) (712,838)
------------ ------------
4,921,043 11,770,531
Other assets: ------------ ------------
Equipment deposits (Note 6) 862,711 2,711
Acquisition deposit (Note 4) 650,000 --
Deferred financing costs (Notes 7 and 9) 1,198,899 775,975
Deferred loan costs (Note 8) 313,055
Goodwill, net 415,398 475,513
Non-competition agreement, net 155,557 68,056
Licensing fee 91,667 84,170
Investment in joint venture (Note 6) -- 400,000
Other 77,575 136,586
------------ ------------
3,451,807 2,256,066
------------ ------------
$ 9,785,530 $ 16,690,919
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Convertible note payable,related party (Note 9) $ 1,200,000 $ --
Notes payable, related parties 58,829 38,516
Notes payable, bank, current portion 37,910 69,361
Notes payable, current portion (Note 8) -- 731,576
Line of credit (Note 8) -- 204,678
Accounts payable 815,631 1,035,663
Accrued expenses, other 1,270,682 1,913,314
Obligations under capital leases, current (Notes 4, 5 and 10) 1,045,726 1,981,593
------------ ------------
Total current liabilities 4,428,778 5,974,701
Convertible notes payable (Note 7) 2,200,000 1,922,966
Convertible notes payable, related parties, non-current portion (Note 9) 640,000 1,026,000
Notes payable, related parties, non-current portion 24,371 --
Notes payable, bank, non-current portion 474,678 417,627
Notes payable, non-current portion (Note 8) -- 2,782,246
Obligations under capital leases (Notes 4,5 and 10) 894,238 2,901,999
------------ ------------
Total liabilities 8,662,065 15,025,539
Stockholders' equity (Note 7): ------------ ------------
Preferred stock, $1.00 par value, 1,000,000 shares authorized, no shares issued
and outstanding -- --
Common stock, $.01 par value, 20,000,000 shares authorized; 1,374,659 and
2,783,272 shares issued and outstanding at May 31, 1997 and February 28, 1998 13,747 27,833
Additional paid-in capital 11,814,651 16,867,612
Accumulated deficit (10,704,933) (15,230,065)
------------ ------------
Total stockholders' equity 1,123,465 1,665,380
------------ ------------
$ 9,785,530 $ 16,690,919
============ ============
See accompanying notes to unaudited condensed consolidated financial statements.
</TABLE>
3
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<TABLE>
<CAPTION>
GreenMan Technologies, Inc.
Unaudited Condensed Consolidated Statements of Loss
Three Months Ended Nine Months Ended
February 28, February 28,
-------------------------- --------------------------
1997 1998 1997 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 385,522 $ 2,737,929 $ 1,422,607 $ 7,946,766
Cost of sales 296,643 1,984,737 972,741 5,468,992
----------- ----------- ----------- -----------
Gross profit 88,879 753,192 449,866 2,477,774
----------- ----------- ----------- -----------
Operating expenses:
Research and development 33,000 51,735 137,202 183,535
Selling, general and administrative 1,092,833 1,061,734 2,898,030 2,831,674
----------- ----------- ----------- -----------
Total operating expenses 1,125,833 1,113,469 3,035,232 3,015,209
----------- ----------- ----------- -----------
Operating loss (1,036,954) (360,277) (2,585,366) (537,435)
----------- ----------- ----------- -----------
Other income (expense):
Interest and financing costs (Notes 7, 8 and 9) (222,760) (765,764) (388,598) (2,225,325)
Other, net 2,507 (164) (1,501) (1,418)
----------- ----------- ----------- -----------
Other income (expense), net (220,253) (765,928) (390,099) (2,226,743)
----------- ----------- ----------- -----------
Loss from continuing operations (1,257,207) (1,126,205) (2,975,465) (2,764,178)
----------- ----------- ----------- -----------
Discontinued Operations (Note 5)
Loss from discontinued operations (84,002) (216,384) (523,085) (660,954)
Loss on disposal of discontinued operations -- (1,100,000) -- (1,100,000)
----------- ----------- ----------- -----------
(84,002) (1,316,384) (523,085) (1,760,954)
----------- ----------- ----------- -----------
Net loss $(1,341,209) $(2,442,589) $(3,498,550) $(4,525,132)
=========== =========== =========== ===========
Net loss from continuing operations per share - basic $ (1.12) $ (.50) $ (2.76) $ (1.52)
=========== =========== =========== ===========
Net loss from discontinued operations per share - basic $ (.07) $ (.59) $ (.49) $ (.97)
=========== =========== =========== ===========
Net loss per share - basic $ (1.19) $ (1.09) $ (3.25) $ (2.49)
=========== =========== =========== ===========
Shares used in calculation of net loss per share - basic (Note 3) 1,124,697 2,236,756 1,077,742 1,814,098
=========== =========== =========== ===========
See accompanying notes to unaudited condensed consolidated financial statements.
</TABLE>
4
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<TABLE>
<CAPTION>
GreenMan Technologies, Inc.
Unaudited Condensed Consolidated Statements of Changes In Stockholders' Equity
February 28, 1998
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit Total
--------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance, May 31, 1997 1,374,659 $ 13,747 $ 11,814,651 $(10,704,933) $ 1,123,465
Shares issued on conversionof
notes payable and accrued
interest 1,202,500 12,025 3,279,657 -- 3,291,682
Fair value of warrants issued in June
and July 1997 convertible debt
offering under SFAS 123 -- -- 7,800 -- 7,800
Fair value of conversion discount on
convertible notes payable issued
in June and July 1997 -- -- 166,001 -- 166,001
Shares issued on exercise of stock
warrants 36,000 360 224,640 -- 225,000
Shares issued for purchase of
Cryopolymers, Inc. 153,402 1,534 742,466 -- 744,000
Fair value of warrants issued for the
purchase of Cryopolymers, Inc.
under SFAS 123 -- -- 31,000 -- 31,000
Fair value of warrants issued in
December 1997 convertible debt
offering under SFAS 123 -- -- 32,000 -- 32,000
Fair value of conversion discount on
convertible notes payable issued
in December 1997 -- -- 533,000 -- 533,000
Shares issued pursuant to settlement
agreement 16,711 167 36,397 -- 36,564
Net loss for the nine months ended
February 28, 1998 -- -- -- (4,525,132) (4,525,132)
------------ ------------ ------------ ------------ ------------
Balance, February 28, 1998 2,783,278 $ 27,833 $ 16,867,612 $(15,230,065) $ 1,665,380
============ ============ ============ ============ ============
See accompanying notes to unaudited condensed consolidated financial statements.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
GreenMan Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
Nine Months Ended February 28,
------------------------------
1997 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss $(3,498,550) $(4,525,132)
Adjustments to reconcile net loss to net cash used for
operating activities:
Loss on disposal of discontinued operations -- 1,100,000
Amortization of deferred financing and loan costs 139,400 1,440,931
Depreciation and amortization 298,950 908,105
Common stock warrants and options issued for services
rendered 646,203 --
Common stock issued for accrued interest -- 214,615
Decrease (increase) in assets:
Accounts receivable 76,114 664,408
Inventory 67,572 183,941
Other current assets 48,983 (161,020)
Deferred offering costs (214,000) (208,000)
Deferred loan costs -- (50,000)
Increase (decrease) in liabilities:
Accounts payable 132,659 241,846
Accrued expenses 343,331 454,547
----------- -----------
Net cash (used for) provided by operating activities (1,859,338) 264,241
----------- -----------
Cash flows from investing activities:
Increase in notes receivable (100,000) --
Repayment of loan receivable 500,000 --
Purchase of property and equipment (462,608) (1,039,528)
Deposit on equipment 20,689 3,000
Cash acquired upon purchase of Cryopolymers, Inc. -- 117,064
Decrease (increase) in other assets 2,581 (59,011)
----------- -----------
Net cash (used for)provided by investing activities (39,338) (978,475)
----------- -----------
Cash flows from financing activities:
Proceeds from notes payable 1,571,550 5,043,380
Repayment of notes payable (132,261) (4,724,882)
Proceeds from notes payable related parties 750,000 386,000
Net proceeds from line of credit -- 204,678
Repayment of notes payable related parties (782,824) (44,684)
Principal payments on obligations under capital leases (240,296) (113,715)
Net proceeds on exercise of common stock warrants 337 225,000
Net proceeds on sale of common stock 713,229 --
----------- -----------
Net cash provided by financing activities 1,879,735 975,777
----------- -----------
Net (decrease) increase in cash (18,941) 261,543
Cash and cash equivalents at beginning of period 153,172 104,193
----------- -----------
Cash and cash equivalents at end of period $ 134,231 $ 365,736
=========== ===========
Supplemental cash flow information:
Machinery and equipment acquired under capital leases $ 124,500 $ 3,055,791
Common stock issued upon conversion of notes payable and
accrued interest -- 3,291,682
Interest paid 195,397 368,908
See accompanying notes to unaudited condensed consolidated financial statements.
</TABLE>
6
<PAGE>
GreenMan Technologies, Inc.
Consolidated Statements of Cash Flow
(Concluded)
Supplemental Schedule of Non-cash Investing and Financing Activities
On June 30, 1997, the Company purchased all of the capital stock of BFI Tire
Recyclers of Minnesota, Inc. and BFI Tire Recyclers of Georgia, Inc. as follows:
Fair value of assets acquired $ 5,472,910
Fair value of liabilities assumed 141,394
-----------
Fair value of net assets acquired 5,331,516
Acquisition deposit (650,000)
-----------
Note payable issued $ 4,681,516
===========
On November 19, 1997, Company purchased all of the capital stock of
Cryopolymers, Inc. as follows:
Fair value of assets acquired $ 1,016,597
Fair value of liabilities assumed 341,597
-----------
Fair value of net assets acquired 675,000
Common stock Issued (744,000)
Value ascribed to warrants issued under SFAS 123 (31,000)
-----------
Excess of cost over fair value of net assets $ 100,000
===========
In addition, during the nine months ended February 28, 1998, $160,000
of equipment deposits was reclassified to property, plant and equipment,
$200,000 of equipment deposits to other current assets and $400,000 to
investment in joint venture.
See accompanying notes to unaudited condensed consolidated financial statements.
7
<PAGE>
GreenMan Technologies, Inc.
Notes To Unaudited Condensed Consolidated Financial Statements
February 28, 1998
1. Business
The Company was formed primarily to develop, manufacture and sell
"environmentally friendly" plastic and thermoplastic rubber feedstocks, rubber
parts and products that are manufactured using recycled materials and/or are
themselves partially or wholly recyclable. The Company currently operates two
business segments, the recycling operations located in Jackson, Georgia, Savage,
Minnesota and St. Francisville, Louisiana and the industrial material operations
located in Birmingham, Alabama. Until January 1998, the Company also operated an
injection molding operation located in Malvern, Arkansas (See Note 5)
The Company's wholly-owned subsidiary, DuraWear Corporation
("DuraWear"), located in Birmingham, Alabama manufactures, installs and markets
a diverse range of high quality ceramic, polymer composite, and alloy steel
materials engineered to resist severe abrasive and corrosive conditions
typically encountered in bulk material handling systems.
On June 30, 1997, the Company acquired all of the capital stock of BFI
Tire Recyclers of Minnesota, Inc. ("BTM") and BFI Tire Recyclers of Georgia,
Inc. ("BTG"), both of which were wholly-owned subsidiaries of Browning-Ferris
Industries, Inc. and are in the scrap tire collection and processing business.
BTM and BTG have been renamed GreenMan Technologies of Minnesota, Inc. ("GMTM")
and GreenMan Technologies of Georgia, Inc. ("GMTG"), respectively.
On November 19, 1997, the Company acquired all of the capital stock of
Cryopolymers, Inc., ("Cryopolymers") a processor of scrap tire chips into crumb
rubber located in St. Francisville, Louisiana. The Company intends to rename
Cryopolymers as GreenMan Technologies of Louisiana, Inc. and together with the
Company's existing rubber recycling operations will constitute the Company's
tire recycling operations. (See Note 4).
2. Basis of Presentation
The consolidated financial statements include the results of the
Company, DuraWear and GreenMan Acquisition Corporation ("GAC") for the nine
months ended February 28, 1998, GMTM and GMTG since July 1, 1997 and
Cryopolymers since November 19, 1997. All significant intercompany accounts and
transactions are eliminated in consolidation.
The Company discontinued operations at the Malvern, Arkansas molding
operation effective January 1998. Management adopted a formal plan to dispose of
the facility on January 31, 1998 ("Measurement Date") and as a result, the
consolidated financial statements of the Company have been restated to reflect
the net operating results of the facility as a separate line item ( the "Loss
from Discontinued Operations") for all periods presented prior to the
Measurement Date.
The financial statements are unaudited and should be read in
conjunction with the financial statements and notes thereto for the fiscal year
ended May 31, 1997 included in the Company's Form 10-KSB/A1. Certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to the Securities and Exchange Commission ("SEC") rules and
regulations, although the Company believes the disclosures which have been made
are adequate to make the information presented not misleading.
The results of operations for the periods reported are not necessarily
indicative of those that may be expected for a full year. In the opinion of
management, all adjustments (consisting only of normal recurring adjustments)
which are necessary for a fair statement of operating results for the interim
periods presented have been made.
8
<PAGE>
GreenMan Technologies, Inc.
Notes To Unaudited Condensed Consolidated Financial Statements
February 28, 1998
3. Net Loss Per Share
In February 1997, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 128, "Earnings per Share" which requires that earnings per share
be calculated on a basic and dilutive basis. Basic earnings per share represents
income available to common stock divided by the weighted average number of
common shares outstanding during the period. Diluted earnings per share reflects
additional common shares that would be outstanding if potential dilutive common
shares had been issued, as well as any adjustment to income that would result
from the assumed conversion. Potential common shares that may be issued by the
Company relate solely to outstanding stock options and warrants, and are
determined using the treasury stock method. The assumed conversion of
outstanding dilutive stock options and warrants would increase the shares
outstanding but would not require an ajdustment to income as a result of the
conversion. The statement is effective for interim and annual periods ending
after December 15, 1997, and requires the restatement of all prior period
earnings per shaer data presented. Accordingly, the Comapny has restated all
earnings per share date presented herein.
All share and per share data in this Form 10-QSB have been adjusted to
give retroactive effect to a reverse split of the Company's Common Stock
pursuant to which each five shares of Common Stock then outstanding were
converted into one share. The reverse split became effective on March 23, 1998.
4. Acquisition of Subsidiaries
On June 30, 1997, GAC, a wholly-owned subsidiary of the Company
acquired all of the capital stock of BTM and of BTG, (renamed "GMTM" and "GMTG"
respectively), both of which were wholly-owned subsidiaries of Browning-Ferris
Industries, Inc. ("BFI") and whose business is scrap tire collection and
processing. The Company was also granted an exclusive option to purchase certain
assets and agreements of BFI's Ford Heights, Illinois tire recycling operation
which has the capacity to process between 12 and 15 million tires annually. As a
result of the acquisition, the Company's obligations under the December 14, 1995
Put-or-Pay/Take-or-Pay agreement for tire chips and facility lease were
eliminated.
The Company agreed to a pay $5,331,517 for all of the outstanding
capital stock of BTM and BTG of which $650,000 had been previously paid to BFI
as a deposit and the balance of $4,681,517 was financed by a short-term note, at
an interest rate of 10% from BFI to GAC, which loan was originally due and
payable on September 30, 1997. The Company also assumed $99,356 of long term
notes payable associated with real estate tax assessments on property owned by
BTM. Amounts are due in semi-annual principal installments of $15,353 plus
interest at 7.29% through the year 2002. In October 1997, the Company, GAC and
BFI entered into a forbearance agreement pursuant to which GAC agreed to pay
$2,000,000 on or before November 6, 1997 and to pay the balance under the note
on or before December 6, 1997. The Company paid $350,000 to BFI in November and
an additional $750,000 in December (See Note 7). In February 1998, the Company
secured a $5.0 million asset-based credit facility and used approximately $3.9
million to repay the balance due including interest to BFI. (See Note 8)
The acquisition has been accounted for by the purchase method of
accounting, and accordingly, the net assets and results of operations of GMTM
and GMTG are included in the consolidated financial statements since the date of
acquisition.
9
<PAGE>
GreenMan Technologies, Inc.
Notes To Unaudited Condensed Consolidated Financial Statements
February 28, 1998
4. Acquisition of Subsidiaries - (Continued)
The following unaudited proforma financial information summarizes the
consolidated results of operations of the Company and of BTM and BTG as if the
acquisition had occurred at the beginning of fiscal 1997. The unaudited proforma
information is not necessarily indicative of the results of operations that
would have occurred had the purchase been made at the beginning of the fiscal
year or of future results of operations of the combined companies.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
February 28, February 28,
------------------ -----------------
1997 1998 1997 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue $ 2,203,516 $ 2,737,929 $ 8,338,854 $ 8,697,299
Net Loss From Continuing Operations (1,405,990) (1,117,730 (2,343,455) (2,737,519)
Net Loss (1,489,992) (2,434,114) (2,866,540) (4,498,473)
Net Loss per Weighted Average Share ($1.32) ($1.09) ($2.66) ($2.48)
</TABLE>
On November 19, 1997, the Company acquired all of the outstanding
common stock of Cryopolymers, Inc., ("Cryopolymers") a privately-held crumb
rubber producer located in St. Francisville, Louisiana. The purchase price
consisted of (1) $550,000 in shares of common stock based upon the closing bid
price the day prior to closing; (2) 40,000 shares of common stock, valued at
$194,000 or $4.85 per share; (3) warrants to purchase 240,000 shares of common
stock exercisable commencing April 1, 1998 for period of five years at prices
ranging from $15.00 to $35.00 per share; and (4) additional warrants to purchase
20,000 shares of common stock exercisable at $4.85 per share for a period of
five years and vesting 25% immediately and 25% each successive six month period.
The Company has determined the total purchase price to be $775,000 based upon a
$4.85 closing price of the common stock prior to the closing and a $31,000 value
ascribed to the 260,000 warrants issued pursuant to SFAS No. 123, "Accounting
for Stock-Based Compensation" ("SFAS No. 123").
The acquisition has been accounted for as a purchase and accordingly,
the net assets of Cryopolymers are included in the consolidated financial
statements since November 19, 1997. Goodwill was recorded as the total
consideration paid by the Company exceeded the fair value of the net assets of
Cryopolymers by $100,000. Goodwill is being amortized over 10 years on a
straight line basis.
5. Shutdown of Injection Molding Operations
In January 1998, the Company discontinued operations at its Malvern,
Arkansas facility (the "Facility"). The Facility was previously engaged in
providing injection molding manufacturing services to customer specifications in
the production of plastic and thermoplastic rubber parts for such products as
stereo components and speakers, water filters and pumps, plumbing components and
automotive accessories. In the future, management may rely on third party
contract manufacturers to provide the Company with injection molding
capabilities which management believes it can obtain at equal or less cost.
During the year ended May 31, 1997, the Facility's revenues totaled
$1,936,450 and had net losses totaling $589,094. For the three and nine months
ended February 28, 1998, the Facility's revenues were $230,796 and $1,126,627,
respectively, and were $487,768 and $1,133,690, respectively, for the three and
nine months ended February 28, 1997. Management adopted a formal plan to dispose
of the Facility on January 31, 1998 (the "Measurement Date"). As a result, the
Company recorded an estimated loss on disposal of the Facility of $1,100,000 and
has written down the Facility's net assets to their estimated fair market value.
The Company has also reclassified all obligations of the Facility to short term
and is currently negotiating payment terms with the Facility's creditors. The
consolidated financial statements of the Company have been restated to reflect
the net operating results of the Facility
10
<PAGE>
GreenMan Technologies, Inc.
Notes To Unaudited Condensed Consolidated Financial Statements
February 28, 1998
5. Shutdown of Injection Molding Operations - (Continued)
as a separate line item ( "Loss from discontinued operations") for all periods
presented prior to the Measurement Date. The Company reported a Loss from
discontinued operations for the three and nine months ended February 28, 1998 of
$216,384 and $660,954, respectively and $84,002 and $523,085, respectively, for
the three and nine months ended February 28, 1997. At May 31, 1997 and February
28, 1998, the Facility's assets totaled $3,411,979 and $1,587,438, respectively,
and represented 45% and 10% of consolidated assets.
The Company is currently exploring several alternatives with respect to
the Facility: (1) the sale of the entire operation or (2) the relocation of a
portion of the Facility's assets to other Company locations and the sale of any
remaining assets. The Company is currently in discussions with several parties
regarding the following alternatives. and has reached a tentative agreement with
a third party to purchase a majority of the Facility's assets. The transaction
is predicated on the Company's ability to transfer clear title to all leased
assets. The Company is currently negotiating with the equipment lessors to
satisfy their lease payoff requirements in order for the Company to obtain clear
title to the assets. The Company is currently in discussions with creditors to
negotiate repayment terms of all amounts outstanding.
6. Joint Venture
On August 26, 1997, the Company finalized the formation of a joint
venture ("the joint venture") between the Company and Crumb Rubber Technologies,
Inc. of Jamaica, New York ("CRT"), to collect and process tires in the State of
New York and to market the crumb rubber derived from the tires. The joint
venture will address existing opportunities for larger mesh crumb rubber such as
in rubber mats, ground cover and as a filler in asphalt applications. The
Company has contributed its investment in the cryogenic crumb rubber equipment
($400,000) which was formerly located in Jackson, Georgia into the venture as
its capital contribution while CRT will contribute on its part certain
facilities, equipment, customer contracts, licenses and permits and provide
operational and technical expertise.
Pursuant to the terms of the joint venture agreement, CRT is required
to return $300,000 of equipment deposits previously made by the Company towards
the purchase of additional cryogenic crumb rubber equipment. The Company
received the first $100,000 installment in September 1997. The remaining balance
is to be repaid over a nine month period.
7. Convertible Notes Payable
In January 1997, the Company concluded a $1,525,000 offering of 7%
convertible subordinated debentures ("Debentures") and warrants to purchase
152,500 shares of common stock (the "January Offering") at an exercise price of
$6.25 per share. The Debentures are convertible after a sixty day holding period
into shares of common stock at a conversion price equal to the lower of the
closing bid price on the date of the January Offering closing or 70% of the
closing bid price on the date prior to the conversion of such Debentures.
As of February 28, 1998, all Debentures had been converted into 498,640
shares of the Company's common stock and all deferred charges had been amortized
to expense. Investors from the January Offering have exercised 36,000 warrants
resulting in net proceeds to the Company of $225,000. The remaining warrants
have expired.
In April 1997, the Company concluded a $1,500,000 offering of
convertible notes (the "Notes"), due eighteen months after closing and warrants
to purchase 60,000 shares of common stock (the "April Offering") at exercise
prices ranging from $4.85 to $5.25. The Notes are convertible after a sixty day
holding period into shares of common stock at a conversion price equal to the
lower of the average closing bid prices on the five trading days preceding the
date of the April Offering closing or 70% of the average closing bid prices on
the
11
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GreenMan Technologies, Inc.
Notes To Unaudited Condensed Consolidated Financial Statements
February 28, 1998
7. Convertible Notes Payable -(Continued)
five trading days preceding the date of the conversion of the Notes. The note
holders receive 800 shares of the Company's common stock in lieu of interest for
each $100,000 invested. The Company also issued immediately exercisable two year
warrants to purchase 30,968 shares of common stock at an exercise price of $4.85
per share to the placement agents. As of February 28, 1998, $1,177,034 of the
notes had been converted into 657,768 shares of common stock including 9,416
shares associated with accrued interest. The remaining $322,966 was converted in
March 1998 into 1,163,138 shares of common stock including 2,584 shares
associated with accrued interest.
Pursuant to the terms of the Notes, the Company filed a Registration
Statement on Form S-3 in May 1997 to register the shares of common stock
issuable upon conversion of the Notes, payment of interest and upon exercise of
the warrants to purchase 454,839 shares of common stock. Commencing July 1997,
the Company was required to pay the investors 2.5% of their principal investment
per month as a penalty for each month or portion thereof prior to the date the
Form S-3 was declared effective. The Form S-3 was declared effective by the
Securities and Exchange Commission on November 12, 1997. At February 28, 1998,
the Company has recorded $162,500 of additional financing costs pursuant to
these terms.
In December 1997, the Company entered into securities purchase
agreements (the "Debenture Agreements") with two investors (the "Debenture
Holders") and pursuant thereto, the Company issued Debentures in the aggregate
principal amount of $1,600,000 (the "Initial Debentures") and immediately
exercisable two-year warrants to purchase 32,000 shares of common stock at an
exercise price of $3.45 per share. Each Initial Debenture bears interest at 8%
and is due December 15, 2000. The Initial Debentures are convertible at the
election of the holder at any time commencing upon the earlier to occur of (i)
the effective date of the registration statement covering the shares issuable
upon conversion of the Debentures, or (ii) 60 days following the date of
issuance at a conversion price equal to the lower of the average closing bid
prices on the five trading days preceding the date of the closing of the
December Offering or 75% of the average closing bid prices on the five trading
days preceding the date of the conversion of the Debentures. The Debentures
automatically convert into shares of common stock upon maturity. The Company
also issued immediately exercisable two year warrants to purchase 32,000 shares
of common stock at an exercise price of $3.45 per share to the placement agent.
Pursuant to the Debenture Agreements, the Debenture Holders have agreed
to purchase up to an additional $2,000,000 in the aggregate of Debentures
("Additional Debentures") in multiple tranches during 12 months following the
effective date of the registration statement covering the shares issuable upon
conversion of the Debentures. Each tranche shall be for the purchase of between
$75,000 and $175,000 in Additional Debentures and may be completed at the
election of the Company subject to certain conditions. Each Additional Debenture
shall bear similar terms to the Initial Debentures including the issuance of
warrants per Additional Debenture to both the Debenture Holders and the
placement agent. The Additional Debentures are convertible at the holders
option, within two days of issuance.
Pursuant to the terms of the Debenture Agreements, the Company is
obligated to borrow at least $1,000,000 in Additional Debentures or the Company
must provide the Debenture Holders and placement agents warrants to purchase an
additional 40,000 shares of common stock in the aggregate. The net proceeds from
the December Offering were approximately $1,350,000 after deducting commissions
and expenses of approximately $250,000. The Company paid $750,000 from the
proceeds to BFI towards the outstanding loan payable for the purchase of GMTM
and GMTG. The Company has recorded a deferred charge of approximately $533,000
associated with the impact of the 25% discount from market to be realized upon
conversion of the Debentures. The Company also recorded deferred financing costs
of $32,000 in connection with the issuance of warrants to purchase 64,000 shares
of common stock to the investors and placement agents in accordance with SFAS
No. 123. The deferred charges are being amortized over the estimated life of the
Debentures.
12
<PAGE>
GreenMan Technologies, Inc.
Notes To Unaudited Condensed Consolidated Financial Statements
February 28, 1998
8. Notes Payable, Line of Credit
On February 5, 1998, GMTM and GMTG collectively secured a $5.0 million
asset-based credit facility (the "Credit Facility") from Heller Financial Inc.
("Heller"). The Credit Facility consists of: (i) $1,400,000 of three year term
notes secured by the real estate of GMTM and GMTG, payable in monthly principal
installments of $23,333 plus interest at prime plus 1.75% (10.25% at February
28, 1998) with a balloon payment of $583,380 due in February 2001; (ii)
$1,900,000 of three year term notes secured by the machinery and equipment of
GMTM and GMTG, payable in monthly principal installments of $31,668 plus
interest at prime plus 1.75% (10.25% at February 28, 1998) with a balloon
payment of $791,620 due in February 2001 and (iii) a working capital line of
credit of up to $1,700,000 secured by the eligible accounts receivable, as
defined, of GMTM and GMTG. The line of credit bears interest at prime plus 1.5%
(10% at February 28, 1998). At February 28, 1998, the Company had $204,678
outstanding under the line of credit.
The Company has granted Heller a security interest in the capital stock
of GMTM and GMTG in addition to providing a Company guarantee and the personal
guarantee of three officers of the Company. The Credit Facility contains certain
minimum reporting requirements including minimum net worth and certain
restrictions on intercompany cash transactions. The Company is in compliance
with all requirements at February 28, 1998.
The Company used the proceeds from the Credit Facility, to repay the
balance of $3,906,071, including interest, due under the short-term note payable
to Browning Ferris Industries for the purchase of GMTM and GMTG. The Company
also incurred approximately $322,000 of deferred loan costs associated with
securing the Credit Facility. These deferred charges are being amortized over
the life of the term notes.
9. Notes Payable, Related Parties
During June and July 1997, the Company borrowed an additional $386,000
from four officers of the Company and issued warrants to purchase 15,440 shares
of common stock at exercise prices ranging from $3.60 $4.85 per share. The notes
are convertible after a one hundred and twenty day holding period into shares of
common stock at a conversion price equal to the lower of the average closing bid
price on the five trading days preceding the closing or 70% of the average
closing bid prices on the five trading days preceding the date of the conversion
of such notes. The Company recognized a deferred charge of $166,002 associated
with the impact of the 30% discount from market to be realized upon conversion
and $7,800 of non-cash deferred financing costs in connection with the issuance
of the warrants to the officers to purchase 15,440 shares of common stock in
accordance with SFAS No. 123
As of February 28, 1998, Palomar Medical Technologies, Inc. ("Palomar")
had converted its entire $1,200,000 note payable and $164,741 of accrued
interest into 297,342 shares of common stock pursuant to the terms of the
convertible note payable, as amended. The Company granted Palomar a one time $
.15 reduction in the conversion price as an inducement to convert the entire
note prior to February 28, 1998. Palomar converted $600,000 of principal and
$91,152 of interest under the reduced conversion rate.
10. Capital Leases
At February 28, 1998, the Company was past due on amounts due under its
injection molding equipment leases providing the lessors with the right to
demand the payment of all amounts due under the lease agreements. As a result of
the Company's decision to close its molding operations, the Company has
classified all payments due under the leases as current liabilities at February
28, 1998. As of April 16, 1998 the Company has not received notification of the
lessors' intent to exercise any of the default remedies available.
Effective October 1997, the Company entered into a fifteen-year
cryogenic equipment lease agreement with Cryopolymer's Leasing, Inc., a former
stockholder of Cryopolymers. Under the terms of the agreement, Cryopolymers will
pay $25,500 per month rental plus an additional rent of $100,000 per year for
the first six years of the agreement to be payable in the Company's common stock
with the number of shares determined using the closing bid price of the common
stock on each December 31. The lease has been classified as a capital lease at
February 28, 1998 and has a value of $3,063,000.
13
<PAGE>
GreenMan Technologies, Inc.
Notes To Unaudited Condensed Consolidated Financial Statements
February 28, 1998
11. Subsequent Events
Conversion of Notes Payable Related Parties
On March 24, 1998, four officers of the Company converted $1,026,000 of
principal and $75,511 of accrued interest into 1,258,769 shares of unregistered
common stock.
Amendment to the Company's Certificate of Incorporation to Effect a One-for-Five
Reverse Stock Split.
On February 27, 1998, the Company received notice from NASDAQ stating
that the Company's securities would be delisted from NASDAQ effective May 28,
1998, if the Company could not demonstrate compliance with the minimum $1.00 bid
price requirement for ten consecutive trading days prior to that time.
On March 23, 1998, the Company's Certificate of Incorporation was
amended to effect a reverse split (the "Reverse Split") of the Company's Common
Stock, pursuant to which each five shares of common stock then outstanding were
automatically converted into one share. Since March 24, 1998, the closing bid
price of the Company's Common Stock has exceeded $1.00 per share and as a
result, the Company is in compliance with the minimum bid requirement.
As of March 23, 1998, 15,226,288 shares of common stock and 2,565,123
publicly traded warrants (the "Warrants") to purchase shares of common stock
were outstanding prior to effecting the Reverse Split. As a result of the
Reverse Split, the number of shares of common stock outstanding became 3,045,258
and the number of Warrants outstanding were reduced to 513,024 and the stated
exercise price was increased to $25.00, as adjusted.
Private Offering of Comon Stock and Warrants
In March 1998, the Company commenced a private offering of common stock
and warrants in an effort to raise up to $1,500,000 in gross proceeds. As of
April 15, 1998, the Company sold 1,070,556 shares of common stock and warrants
to purchase 220,000 shares of common stock at prices ranging from $.90 to $2.17
to investors including officers and directors of the Company (the "Investors").
The warrants are immediately exercisable for a period of two years at prices
ranging from $1.75 to $ 3.88 per share. The net proceeds from the offering were
$1,050,000. The Company granted the investors piggy-back registration rights to
register the common stock and the common stock issuable upon exercise of the
warrants. The Investors have agreed not to sell or transfer the shares for a
period of at least twelve months after issuance.
14
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following information should be read in conjunction with the
unaudited condensed consolidated financial statements and the notes thereto
included in Item 1 of the Quarterly Report, and the audited consolidated
financial statements and notes thereto and Management's Discussion and Analysis
of Financial Condition and Results of Operations contained in the Company's Form
10-KSB filed for the fiscal year ended May 31, 1997.
All share and per share data in this Form 10-QSB have been adjusted to
give retroactive effect to a reverse split of the Company's Common Stock
pursuant to which each five shares of Common Stock then outstanding were
converted into one share. The reverse split became effective on March 23, 1998.
Information contained or incorporated by reference in this document
contains "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995, which statements can be identified by
the use of forward-looking terminology such as "may," "will," "would," "can,"
"could," "intend," "plan," "expect," "anticipate," "estimate" or "continue" or
the negative thereof or other variations thereon or comparable terminology. The
following matters constitute cautionary statements identifying important factors
with respect to such forward-looking statements, including certain risks and
uncertainties, that could cause actual results to differ materially from those
in such forward-looking statements.
Overview
GreenMan Technologies, Inc. (the "Company" or "GreenMan") was formed to
primarily develop, manufacture and sell "environmentally friendly" plastic and
thermoplastic rubber feedstocks, rubber parts and products that are manufactured
using recycled materials and/or are themselves partially or wholly recyclable.
The Company currently operates two business segments, the recycling operations
located in Jackson, Georgia, Savage, Minnesota and St. Francisville, Louisiana
and the industrial material operations located in Birmingham, Alabama.
On October 10, 1995, the Company acquired all of the outstanding common
stock of DuraWear Corporation ("DuraWear"). DuraWear which is located in
Birmingham, Alabama, manufactures, installs and markets a diverse range of high
quality ceramic, polymer composite, and alloy steel materials engineered to
resist severely abrasive and corrosive conditions typically encountered in bulk
material handling systems in such industries as paper and pulp, mining, coal
handling and grain storage and transportation..
On June 30, 1997, the Company acquired BFI Tire Recyclers of Minnesota,
Inc. and BFI Tire Recyclers of Georgia, Inc., (renamed GreenMan Technologies of
Minnesota, Inc. ("GMTM") and GreenMan Technologies of Georgia, Inc. ("GMTG"),
respectively) which provides the Company access to over 10 million tires
annually. The Company was also granted an exclusive option to purchase certain
assets and agreements of BFI's Ford Heights, Illinois tire recycling operation
which has the capacity to process between 12 and 15 million tires annually. The
acquired operations are in the scrap tire collection and processing business
whereby they charge a fee to dispose of customers' scrap tires and then process
the tires into two inch rubber chips which are then sold as alternative fuel
("TDF" - Tire Derived Fuel) to cement kilns, paper and pulp producers and
electric utilities; or utilized in civil engineering projects such as landfill
construction or road stabilization projects.
On November 19, 1997, the Company acquired all of the outstanding
common stock of Cryopolymers, Inc., ("Cryopolymers") a privately-held crumb
rubber producer located in St. Francisville, Louisiana.
The Company discontinued operations at the Malvern, Arkansas molding
operation (the "Facility") and adopted a formal plan to dispose of the facility
on January 31, 1998 (the "Measurement Date"). The Facility provided injection
molding manufacturing services to customers' specifications in the production of
plastic and thermoplastic rubber parts.As a result, the consolidated financial
statements of the Company have been restated to reflect the net operating
results of the facility as a separate line item ( "Loss from Discontinued
Operations") for all periods presented prior to the Measurement date.
15
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Three Months ended February 28, 1998 Compared to the Three Months ended
February 28, 1997
Net sales for the three months ended February 28, 1998 were $2,737,929
as compared to $385,522 for the three months ended February 28, 1997. The
increase of $2,352,407 or 610% was primarily due to the inclusion of revenues
from GMTM and GMTG which were acquired June 30, 1997and collectively totaled
$2,184,567 for the quarter ended February 28, 1998. The increase also includes
$86,499 of revenue from Cryopolymers which was acquired in November 1997.
Gross profit for the three months ended February 28, 1998 was $753,192
or 28% of net sales as compared to $88,879 or 23% of net sales for the three
months ended February 28, 1997. The improvement in gross profit was primarily
due to the inclusion of GMTM and GMTG operations whose gross profits averaged
33% of revenues and improved gross profits from DuraWear's operations which
totalled 54% of DuraWear's revenues. Also contributing to the improvement in
gross profit was the elimination of the Company's "take or pay" tire chip
obligation (as a result of the GMTG acquisition) which expense totaled $97,292
during the three months ended February 28, 1997. This improvement was offset by
a gross loss of $212,013 from Cryopolymers which operated under limited
operating conditions during the quarter as management evaluated and refined the
processing systems.
Research and development expenditures were $51,735 for the three months
ended February 28, 1998 as compared to $33,000 for the same period in 1997. The
increase is attributable to the Company's continued research and development
efforts in identifying applications for ultra-fine mesh crumb rubber.
Selling, general and administrative expenses were $1,061,734 for the
three months ended February 28, 1998, or 39% of sales as compared to $1,092,833,
or 283% of sales, for the same period in 1997. The three months ended February
28, 1998 include operating expenses of $334,720 associated the inclusion of
GMTM, GMTG and Cryopolymers, collectively and $36,564 associated with a
settlement agreement reached with a former employee. The three months ended
February 28, 1997 included $361,000 of non-cash expense in connection with the
issuance of common stock warrants and options and the repricing of certain
previously issued common stock warrants and options in accordance with SFAS No.
123, "Accounting for Stock-Based Compensation".
As a result of the foregoing, the operating loss for the three months
ended February 28, 1998 decreased by $676,677 to $360,277 or 13% of sales as
compared to an operating loss of $1,036,954, or 269% of sales for the comparable
period in 1997.
Interest and financing costs increased by $543,004 to $765,764 due to
increased borrowings related to the issuance of $3,665,000 in convertible
debentures during fiscal 1997 and an additional $1,986,000 in fiscal 1998 and
the inclusion of approximately $75,000 of interest owed on the note payable to
BFI. Approximately $498,000 of the increase is associated with the impact of
amortizing the discount from market to be realized upon conversion of various
convertible debentures and financing expense amortization associated with the
borrowings.
The Company experienced a loss from continuing operations of $1,126,205
for the three months ended February 28, 1998 as compared to a loss from
continuing operations of $1,257,218 for the three months ended February 28,
1997.
The Company reported a $216,384 loss from discontinued operations for
the three months ended February 28, 1998 as compared to a $84,002 loss from
discontinued operations for the same 1997 period. The Company also reported a
$1,100,000 estimated loss on the disposal of the discontinued operations.
The Company experienced a net loss of $2,442,589 , or $1.09 per share
for the three months ended February 28, 1998 as compared to a net loss of
$1,341,220, or $1.19 per share for the three months ended February 28, 1997.
16
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Nine Months ended February 28, 1998 Compared to the Nine Months ended February
28, 1997
Net sales for the nine months ended February 28, 1998 were $7,946,766
as compared to $1,422,607 for the nine months ended February 28, 1997. The
increase of $6,524,159 or 459% is primarily due to the inclusion of revenues
from GMTM and GMTG which collectively totaled $6,179,948. Also contributing to
the increase was the inclusion of Cryopolymers revenue of $86,499 and an
increase of $171,616 in revenues from DuraWear.
Gross profit for the nine months ended February 28, 1998 was $2,477,774
or 31% of net sales as compared to $449,866 or 32% of net sales for the nine
months ended February 28, 1997. This slight reduction was the result of a gross
loss of $212,013 reported by Cryopolymers which operated under limited operating
conditions during the quarter as management evaluated and refined the processing
systems. This reduction was offset by the inclusion of DuraWear's operations
which generated a 52% gross profit and the elimination of the Company's "take or
pay" tire chip obligation (as a result of the GMTG acquisition) which during the
nine months ended February 28, 1997 had resulted in a gross loss of $250,316 for
the Company's recycling operation.
Research and development expenditures were $183,535 for the nine months
ended February 28, 1998 as compared to $137,202 for the same period in 1997. The
increase is attributable to the Company's continued research and development
efforts in identifying applications for ultra-fine mesh crumb rubber.
Selling, general and administrative expenses decreased $66,356 to
$2,831,674 for the nine months ended February 28, 1998 as compared to $2,898,030
for the same 1997 period. The results for the nine months ended February 28,
1998 reflect $808,789 of expenses associated with the inclusion of GMTM and GMTG
since July 1, 1997, $48,652 associated with Cryopolymers since December 1997 and
increased headcount and professional expenses. This increase was offset by the
elimination of approximately $816,000 of one-time expenses incurred in the same
period in 1997 associated with a significant financial public relations campaign
and the non-cash expense in connection with the issuance of common stock
warrants and options in accordance with SFAS No. 123, "Accounting for
Stock-Based Compensation". The results for the nine months ended February 28,
1997 also reflected $405,641 of costs associated with the Company's recycling
operation which had been operating under limited conditions.
As a result of the foregoing, the operating loss for the nine months
ended February 28, 1998 decreased by 79% or $2,047,931 to $537,435 as compared
to an operating loss of $2,585,366 for the comparable period in 1997.
Interest and financing costs increased by $1,836,727 to $2,225,325 due
to increased borrowings related to the issuance of $3,665,000 in convertible
debentures during fiscal 1997 and an additional $386,000 in fiscal 1998 and the
inclusion of approximately $275,000 of interest owed on the note payable to BFI.
Approximately $1,431,971 of the increase is associated with the impact of
amortizing the discount from market to be realized upon conversion of the
debentures and financing expense amortization associated with the borrowings.
The Company also recognized $162,500 of additional financing costs pursuant to
the terms of the certain debentures as a result of the delay in registering
under the Securities Act of 1933 the common stock issuable upon conversion of
the debentures issued in the April 1997 offering.
The Company experienced a loss from continuing operations of $2,764,178
for the nine months ended February 28, 1998 as compared to $2,975,465 for the
nine months ended February 28, 1997.
The Company reported a $660,954 loss from discontinued operations for
the nine months ended February 28, 1998 as compared to a $523,085 loss from
discontinued operations for the same 1997 period. The Company also reported a
$1,100,000 estimated loss on the disposal of the discontinued operations.
The Company experienced a net loss of $4,525,132 , or $2.49 per share
for the nine months ended February 28, 1998 as compared to a net loss of
$3,498,550, or $3.25 per share for the nine months ended February 28, 1997.
17
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources
Since its inception, the Company has satisfied its capital requirements
through the sale of common and preferred stock and debt securities to investors,
loans from affiliated and unaffiliated lenders, the acquisition of machinery and
equipment through capital leases and notes payable, and the issuance of common
stock and common stock options and warrants in lieu of cash for services
rendered.
During June and July 1997, the Company borrowed an additional $386,000
from four officers of the Company and issued warrants to purchase 15,440 shares
of common stock at exercise prices ranging from $.3.60 to $4.85 per share. The
notes are convertible after a one hundred and twenty day holding period into
shares of common stock at a conversion prices equal to the lower of the average
of the closing bid prices on the five trading days preceding the closing or 70%
of the average of the closing bid prices on the five trading days preceding the
date of the conversion of such notes. On March 24, 1998, the officers converted
$1,026,000 of principal and $75,511 of accrued interest into 1,258,769 shares of
unregistered common stock.
During the nine months ended February 28, 1998, investors from the
January Offering exercised 36,000 warrants to purchase common stock at $6.25 per
share.
Pursuant to the terms of the joint venture agreement between the
Company and Crumb Rubber Technologies, Inc., in September 1997 the Company
received the first of three $100,000 installments towards the refund of
equipment deposits.
During the nine months ended February 28, 1998, Palomar Medical
Technologies, Inc. ("Palomar") converted its entire $1,200,000 note payable and
$164,741 of accrued interest into 297,342 shares of common stock pursuant to the
terms of the convertible note payable, as amended.
In April 1997, the Company concluded a $1,500,000 offering of
convertible notes (the "Notes") due eighteen months after closing and warrants
to purchase 60,000 shares of common stock (the "April Offering") at exercise
prices ranging from $4.85 to $5.25. As of February 28, 1998, $1,177,034 of the
Notes had been converted into 657,768 shares of common stock including 9,416
shares associated with accrued interest. The remaining $322,966 was converted in
March 1998 into 1,163,138 shares of common stock including 2,584 shares
associated with accrued interest.
On February 5, 1998, GMTM and GMTG collectively secured a $5.0 million
asset-based credit facility (the "Credit Facility") from Heller Financial Inc.
("Heller"). The Credit Facility consisted of : (i) $1,400,000 of three year term
notes secured by the real estate of GMTM and GMTG, payable in monthly principal
installments of $23,333 plus interest at prime plus 1.75% (10.25% at February
28, 1998) with a balloon payment of $583,380 due in February 2001; (ii)
$1,900,000 of three year term notes secured by the machinery and equipment of
GMTM and GMTG, payable in monthly principal installments of $31,668 plus
interest at prime plus 1.75% (10.25% at February 28, 1998) with a balloon
payment of $791,620 due in February 2001 and (iii) a working capital line of
credit of up to $1,700,000 secured by the eligible accounts receivable, as
defined, of GMTM and GMTG. The line of credit bears interest at prime plus 1.5%
(10% at February 28, 1998). At February 28, 1998, the Company had $204,678
outstanding under the line of credit.
18
<PAGE>
In December 1997, the Company entered into securities purchase
agreements (the "Debenture Agreements") with two investors (the "Debenture
Holders") and pursuant thereto, the Company issued Debentures in the aggregate
principal amount of $1,600,000 (the "Initial Debentures") and immediately
exercisable two-year warrants to purchase 32,000 shares of common stock at an
exercise price of $3.45 per share. Each Initial Debenture bears interest at 8%
and is due December 15, 2000. The Initial Debentures are convertible at the
election of the holder at any time commencing upon the earlier to occur of (i)
the effective date of the registration statement covering the shares issuable
upon conversion of the Debentures, or (ii) 60 days following the date of
issuance at a conversion price equal to the lower of the average closing bid
prices on the five trading days preceding the date of the closing of the
December Offering or 75% of the average closing bid prices on the five trading
days preceding the date of the conversion of the Debentures. The Debentures
automatically convert into shares of common stock upon maturity. The Company
also issued immediately exercisable two year warrants to purchase 32,000 shares
of common stock at an exercise price of $3.45 per share to the placement agent.
Pursuant to the Debenture Agreements, the Debenture Holders have agreed
to purchase up to an additional $2,000,000 in the aggregate of Debentures
("Additional Debentures") in multiple tranches during 12 months following the
effective date of the registration statement covering the shares issuable upon
conversion of the Debentures. Each tranche shall be for the purchase of between
$75,000 and $175,000 in Additional Debentures and may be completed at the
election of the Company subject to certain conditions. Each Additional Debenture
shall bear similar terms to the Initial Debentures including the issuance of
warrants per Additional Debenture to both the Debenture Holders and the
placement agent. The Additional Debentures are convertible at the holders
option, within two days of issuance.
Pursuant to the terms of the Debenture Agreements, the Company is
obligated to borrow at least $1,000,000 in Additional Debentures or the Company
must provide the Debenture Holders and placement agents warrants to purchase an
additional 40,000 shares of common stock in the aggregate. The net proceeds from
the December Offering were approximately $1,350,000 after deducting commissions
and expenses of approximately $250,000. The Company paid $750,000 from the
proceeds to BFI towards the outstanding loan payable for the purchase of GMTM
and GMTG. The Company has recorded a deferred charge of approximately $533,000
associated with the impact of the 25% discount from market to be realized upon
conversion of the Debentures. The Company also recorded deferred financing costs
of $32,000 in connection with the issuance of warrants to purchase 64,000 shares
of common stock to the investors and placement agents in accordance with SFAS
No. 123. The deferred charges are being amortized over the estimated life of the
Debentures.
At February 28, 1998 the Company had cash of $365,736, a working
capital deficit of $3,310,379, capital of $1,665,380 and accumulated losses of
$15,230,065. The working capital deficit includes approximately $1,847,524 of
reclassified long term capital lease obligations and notes payable to current as
a result of the closure of the Company's molding operations. The Company has
reached a tentative agreement with a third party to purchase a majority of the
facility's assets. The transaction is predicated on the Company's ability to
transfer clear title to all leased assets. The Company is currently negotiating
with the creditors in order for the Company to obtain clear title to the assets
and payoff existing obligations.
Based on the Company's operating plans management believes that the
available working capital together with revenues from operations, the equity
financing commitment secured in December 1997, the sale of common stock in March
1998 and April 1998, the purchase of equipment through lease financing
arrangements and the remaining availability under of the Heller Credit Facility,
will be sufficient to meet the Company's cash requirements through the first
half of fiscal 1999. The Company expects that additional financing may be
required after this time in order to fund continued growth. If the Company is
unable to obtain additional financing, its ability to maintain its current level
of operations could be materially and adversely affected and the Company may be
required to adjust its operating plans accordingly.
19
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Factors Affecting Future Results
The Company's revenue and operating results may fluctuate from quarter
to quarter and from year to year due to a combination of factors, including (i)
the production of crumb rubber in commercial quantities at a price that will be
competitive in the market; (ii) the Company's ability to secure additional
customers for its products, thereby reducing its reliance on a few major
customers; (iii) the Company's ability to integrate and manage the operations of
Cryopolymers, Inc., its recently acquired subsidiary; (iv) the Company's ability
to reach satisfactory settlement with the creditors of its closed injection
molding operation; (v) ability to obtain raw materials from suppliers on terms
acceptable to the Company; and (vi) general economic conditions. The Company's
plans and objectives, are based on assumptions that it will be successful in
integrating the operations of Cryopolymers, Inc., that it will produce crumb
rubber at a price that will be competitive in the market, that the Company will
be successful in receiving additional financing to fund future growth and that
there will be no material adverse change in the Company's operations or
business.
Assumptions relating to the foregoing involve judgments with respect
to, among other things, future economic, competitive and market conditions, all
of which are difficult or impossible to predict accurately and many of which are
beyond the control of the Company. As a result, there can be no assurance that
the Company will be able to achieve or sustain profitability on a quarterly or
annual basis. In light of the significant uncertainties inherent in the
Company's business, forward-looking statements made in this report should not be
regarded as a representation by the Company or any other person that the
objectives and plans of the Company will be achieved.
20
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There has been no significant changes in legal proceedings
during the quarter ended February 28, 1998.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 3.6 -- Certificate of Amendment to the
Certificate of Incorporation of the
Company filed with the State of Delaware
on March 23, 1998
Exhibit 10.74 -- Loan and Security by and among GreenMan
Technologies of Minnesota, Inc.
("GMTM"), Greenman Technologies of
Georgia, Inc. ("GMTG") and Heller
Financial, Inc. ("Heller")
Exhibit 10.75 -- Promissory Note - Real Estate issued
by GMTM and GMTG in favor of Heller
Exhibit 10.76 -- Promissory Note - Equipment issued
by GMTM and GMTG in favor of Heller
Exhibit 10.77 -- Form of Stock Pledge and Security
Agreement delivered by the Company and
GreenMan Acquisition Corp. to Heller
Exhibit 10.78 -- Form of Guaranty delivered by the
Company and certain officers of the
Company in favor of Heller
Exhibit 11 -- Statement regarding net loss per share.
Exhibit 27 -- Financial Data Schedule.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter
ended February 28, 1998.
21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934 , the
Registrant certifies that it has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
By: GreenMan Technologies, Inc.
/s/ Robert H. Davis
Robert H. Davis
Chief Executive Officer
Signature Title(s) Date
--------- -------- ----
/s/ Robert H. Davis Chief Executive Officer April 17, 1998
Robert H. Davis (Principal Executive Officer)
/s/ Charles E. Coppa Acting Chief Financial Officer April 17, 1998
Charles E. Coppa Assistant Secretary (Principal
Financial Officer and Principal
Accounting Officer)
22
EXHIBIT 3.6
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
GREENMAN TECHNOLOGIES, INC.
GreenMan Technologies, Inc., a corporation organized and existing under
the laws of the State of Delaware (the "Corporation"), pursuant to the
provisions of the General Corporation Law of the State of Delaware (the "DGCL"),
DOES HEREBY CERTIFY as follows:
FIRST: The Certificate of Incorporation of the Corporation is hereby
amended by adding after paragraphs A and B of Article Fourth a new paragraph C
in the following form:
"C. At the same time as the filing of this Amendment to the Certificate
of Incorporation of the corporation with the Secretary of the State of Delaware
becomes effective, each five (5) shares of common stock $0.01 par value per
share of the corporation (the "Old Common Stock"), issued and outstanding or
held in the treasury of the Corporation immediately prior to the effectiveness
of such filing, shall be combined, reclassified and changed into one (1) fully
paid and nonassessable share of Common Stock.
Each holder of record of a certificate or certificates for one or more
shares of the Old Common Stock shall be entitled to receive as soon as
practicable, upon surrender of such certificate, a certificate or certificates
representing the largest whole number of shares of Common Stock to which such
holder shall be entitled pursuant to the provisions of the immediately preceding
paragraph. Any certificate for one or more shares of the Old Common Stock not so
surrendered shall be deemed to represent one share of the Common Stock for each
five (5) shares of the Old Common Stock previously represented by such
certificate.
No fractional share of Common Stock or scrip representing fractional
shares shall be issued upon such combination and reclassification of the Old
Common Stock into shares of Common Stock. Instead of there being issued any
fractional shares of Common Stock which would otherwise be issuable upon such
combination and reclassification, the corporation shall pay to the holders of
the shares of Old Common Stock which were thus combined and reclassified cash in
respect of such fraction in an amount equal to the same fraction of the market
price per share of the Common Stock (as determined in a manner prescribed by the
Board of Directors) at the close of business on the date such combination and
reclassification becomes effective."
SECOND: The amendment to the Certificate of Incorporation of the
Corporation set forth in this Certificate of Amendment has been duly adopted in
accordance with the provisions of Section 242 of the DGCL by (a) the Board of
Directors of the Corporation having duly adopted a resolution setting forth such
amendment and declaring its advisability and submitting it to the stockholders
of the Corporation for their approval, and (b) the stockholders of the
Corporation having duly adopted such amendment by vote of the holders of a
majority of the outstanding stock entitled to vote thereon at a special meeting
of stockholders called and held upon notice in accordance with Section 222 of
the DGCL.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
hereunto affixed and this Certificate of Amendment to be signed by Robert H.
Davis, its Chief Executive Officer, and attested to by Cynthia M. Barker, its
Secretary, this 20th day of March, 1998.
GREENMAN TECHNOLOGIES, INC.
By:_______________________________
Robert H. Davis
Chief Executive Officer
ATTEST:
- --------------------------------
Cynthia M. Barker
Secretary
-2-
EXHIBIT 10.74
LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT is dated as of January 29, 1998 and
entered into among GREENMAN TECHNOLOGIES OF MINNESOTA, INC. ("GTM"), a Minnesota
corporation with its principal place of business at 12498 Wyoming Ave., Savage,
Minnesota 55378, GREENMAN TECHNOLOGIES OF GEORGIA, INC. ("GTG"), a Georgia
corporation with its principal place of business at 138 Sherrel Ave., Jackson,
Georgia 30233 (collectively referred to herein as "Borrowers") and HELLER
FINANCIAL, INC. a Delaware corporation, with offices at 500 West Monroe Street,
Chicago, Illinois 60661 ("Lender"),.
The parties agree as follows:
SECTION 1. DEFINITIONS
1.1 Certain Defined Terms. The following terms used in this
Agreement shall have the following meanings:
"Accounts" means all "accounts" (as defined in the UCC), accounts
receivable, contract rights and general intangibles relating thereto, notes,
drafts and other forms of obligations owed to or owned by either or both of the
Borrowers arising or resulting from the sale of goods or the rendering of
services, whether or not earned by performance.
"Affiliate" means any Person directly or indirectly controlling,
controlled by, or under common control with either or both Borrowers or which
has an officer who is also an officer of either or both Borrowers.
"Agreement" means this Loan and Security Agreement as it may be
amended, restated, supplemented or otherwise modified from time to time.
"Base Rate" means a variable rate of interest per annum equal to the
higher of (a) the rate of interest from time to time published by the Board of
Governors of the Federal Reserve System as the "Bank Prime Loan" rate in Federal
Reserve Statistical Release H.15(519) entitled "Selected Interest Rates" or any
successor publication of the Federal Reserve System reporting the Bank Prime
Loan rate or its equivalent, or (b) the Federal Funds Effective Rate. In the
event the Board of Governors of the Federal Reserve System ceases to publish a
Bank Prime Loan rate or its equivalent, the term "Base Rate" shall mean a
variable rate of interest per annum equal to the highest of the "prime rate",
"reference rate", "base rate", or other similar rate announced from time to time
by any of the three largest banks located in New York City, New York (with the
understanding that any such rate may merely be a reference rate and may not
necessarily represent the lowest or best rate actually charged to any customer
by any such bank).
"Borrowers' Accountants" means the independent certified public
accountants selected by either or both Borrowers and reasonably acceptable to
Lender, which selection shall not be modified during the term of this Agreement
without Lender's prior written consent, which consent shall not be unreasonably
withheld.
<PAGE>
"Business Day" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the States of Minnesota, Illinois or
Pennsylvania, or is a day on which banking institutions located in any such
state are closed.
"Collateral" means, collectively, all of the property described in
Sections 2.9 and 2.10 hereof which is subject to the security interests granted
to Lender by either or both of Borrowers.
"Default" means a condition, act or event that, after notice or lapse
of time or both, would constitute an Event of Default if that condition, act or
event were not cured or removed within any applicable grace or cure period or
waived in writing by Lender.
"Employee Benefit Plan" means any employee benefit plan within the
meaning of Section 3(3) of ERISA which (a) is maintained for employees of any
Loan Party or any ERISA Affiliate or (b) has at any time within the preceding
six (6) years been maintained for the employees of any Loan Party or any current
or former ERISA Affiliate.
"Environmental Claims" means claims, liabilities, investigations,
litigation, administrative proceedings, judgments or orders relating to
Hazardous Materials.
"Environmental Laws" means any present or future federal, state or
local law, rule, regulation or order relating to pollution, waste, disposal or
the protection of human health or safety, plant life or animal life, natural
resources or the environment.
"Equipment" means all "equipment" (as defined in the UCC), including,
without limitation, all furniture, furnishings, fixtures, machinery, motor
vehicles, trucks, trailers, vessels, aircraft and rolling stock and all parts
thereof and all additions and accessions thereto and replacements therefor.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute and all rules and
regulations promulgated thereunder.
"ERISA Affiliate", as applied to any Loan Party, means any Person who
is a member of a group which is under common control with any Loan Party, who
together with any Loan Party is treated as a single employer within the meaning
of Section 414(b) and (c) of the IRC.
"Excess Cash Flow" means, for any period and for each Borrower, the
greater of (A) zero (0); or (B) without duplication, the total of the following
for each of the Borrowers and their Subsidiaries on a consolidated basis, each
calculated for such period: (l) EBITDA; plus (2) tax refunds actually received;
less (3) Capital Expenditures (to the extent actually made in cash and/or due to
be made in cash within such period but in no event more than the amount
permitted by subsection 6.5 hereof); less (4) income and franchise taxes paid or
accrued excluding any provision for deferred taxes included in the determination
of net income; less (5) decreases in deferred income taxes resulting from
payments of deferred taxes accrued in prior periods; less (6) Interest Expenses
paid or accrued; less (7) scheduled amortization of Indebtedness actually paid
in cash and/or due to be paid in cash within such period and permitted under
Section 7.5; less (8) voluntary prepayments and mandatory prepayments made under
subsection 2.6 (B), but only to the extent that the transaction that
precipitated the mandatory prepayment increased EBITDA. Excess Cash Flow is
calculated separately for GTM and GTG.
-2-
<PAGE>
"Federal Funds Effective Rate" means, for any day, the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the
immediately following Business Day by the Board of Governors of the Federal
Reserve System as the Federal Funds Rate in Federal Reserve Statistical Release
H.15(519) entitled "Selected Interest Rates" or any successor publication of the
Federal Reserve System reporting the Federal Funds Effective Rate or its
equivalent or, if such rate is not published for any Business Day, the average
of the quotations for the day of the requested Loan received by Lender from
three Federal funds brokers of recognized standing selected by Lender.
"Hazardous Material" means all or any of the following: (a) substances
that are defined or listed in, or otherwise classified pursuant to, any
Environmental Laws or regulations as "hazardous substances", "hazardous
materials", "hazardous wastes", "toxic substances" or any other formulation
intended to define, list or classify substances by reason of deleterious
properties such as ignitability, corrosivity, reactivity, carcinogenicity, or
toxicity; (b) oil, petroleum or petroleum derived substances, natural gas,
natural gas liquids or synthetic gas and drilling fluids, produced waters and
other wastes associated with the exploration, development or production of crude
oil, natural gas or geothermal resources; (c) any flammable substances or
explosives or any radioactive materials; and (d) asbestos in any form or
electrical equipment which contains any oil or dielectric fluid containing
polychlorinated biphenyls.
"Intellectual Property" means all present and future designs, patents,
patent rights and applications therefor, trademarks and registrations or
applications therefor, trade names, inventions, copyrights and all applications
and registrations therefor, software or computer programs, license rights, trade
secrets, methods, processes, know-how, drawings, specifications, descriptions,
and all memoranda, notes and records with respect to any research and
development, whether now owned or hereafter acquired, all goodwill associated
with any of the foregoing, and proceeds of all of the foregoing, including,
without limitation, proceeds of insurance policies thereon.
"IRC" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute and all rules and regulations promulgated
thereunder.
"Loan" or "Loans" means an advance or advances under the Revolving
Loan, the Term Loan or under any Note.
"Loan Documents" means this Agreement, all Notes, all guaranties, all
mortgages and deeds of trust, all subordination agreements or intercreditor
agreements, and all other instruments, documents, notes and agreements executed
by or on behalf of either or both Borrowers or any guarantor and delivered
concurrently herewith or at any time hereafter to or for Lender in connection
with the Loans and other transactions contemplated by this Agreement, all as
amended, restated, supplemented or modified from time to time.
"Loan Party" means Borrowers and any other Person, other than Lender,
which is or becomes a Party to any Loan Document.
-3-
<PAGE>
"Loan Year" means each period of twelve (12) consecutive months
commencing on the closing date and on each anniversary thereof.
"Material Adverse Effect" means a material adverse effect upon (a) the
business, operations, prospects, properties, assets or condition (financial or
otherwise) of any Loan Party or (b) the ability of any Loan Party to perform its
obligations under any Loan Document to which it is a party or of Lender to
enforce its security interests or collect any of the Obligations.
"Notes" mean all Promissory Notes made by either or both Borrowers to
the order of Lender concurrently herewith or at any time hereafter.
"Obligations" means all obligations, liabilities and indebtedness of
every nature of either or both Borrowers from time to time owed to Lender
whether under the Loan Documents or otherwise, whether primary, secondary,
direct, contingent, fixed or otherwise, heretofore, now and/or from time to time
hereafter owing, due or payable including, without limitation, all interest,
fees, cost and expenses accrued or incurred after the filing of any petition
under any bankruptcy or insolvency law.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments and agencies and
political subdivisions thereof.
"Real Property" means the parcels of real property identified in
Schedule l.1 to this Agreement.
"Revolving Loan" means the outstanding balance of all Revolving
Advances (defined in 2.1 hereof), and it includes any amounts added to the
principal balance of the Revolving Loan pursuant to this Agreement.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of stock (or equivalent ownership or controlling interest)
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by any Loan Party or Loan Parties or one or
more of the other Subsidiaries of any Loan Party or a combination thereof.
"Term Loan" means the aggregate, outstanding balance of the Term Loans
(defined in 2.2 hereof), and it includes any amounts added to the principal
balance of the Term Loan pursuant to this Agreement.
"UCC" means the Uniform Commercial Code as in effect on the date hereof
in the State of Illinois, as amended from time to time, and any successor
statute.
-4-
<PAGE>
1.2 Accounting Terms. For purposes of this Agreement, all accounting
terms (including, for example, "EBITDA", "Capital Expenditures" and "Interest
Expense") not otherwise defined herein shall have the meanings assigned to such
terms in conformity with generally accepted accounting principles ("GAAP"). When
used herein, the term "financial statements" shall include the notes and
schedules thereto. Financial statements furnished to Lender shall be prepared in
accordance with GAAP (as in effect at the time of such preparation) on a
consistent basis.
SECTION 2. LOANS AND COLLATERAL
2.1 Revolving Loan. Upon either or both Borrowers' request made at any
time during the term of this Agreement, Lender may, in its sole and absolute
discretion, make advances to Borrowers ("Revolving Advances") in an aggregate
amount up to the lesser of (A) 85% of the aggregate (for both Borrowers
combined), outstanding amount of Eligible Accounts; or (B) $1,700,000.00 (the
"Maximum Revolving Loan Amount").
(A) Eligible Collateral.
"Eligible Accounts" means, as at any date of determination, the
aggregate of all Accounts that Lender, in its sole judgment, deems to be
eligible for borrowing purposes. Without limiting the generality of the
foregoing, unless otherwise agreed by Lender, the following Accounts are not
Eligible Accounts:
(1) Accounts which remain unpaid for more than 60 days after
the due date specified in the original invoice or for more than 90 days after
invoice date if no due date was specified, provided, however, that until March
31, 1998, Accounts due to GTG from municipalities which remain unpaid for 90
days or less after the due date specified in the original invoice or 120 days or
less after invoice date if no due date was specified may be Eligible Accounts;
(2) Accounts due from any account debtor if more than 50% of
the aggregate amount of Accounts of such account debtor have at the time
remained unpaid for more than 60 days after due date or 90 days after invoice
date if no due date was specified, provided, however, that until March 31, 1998,
for Accounts due to GTG from municipalities, more than 50% of such Accounts may
remain unpaid for 90 days or less after the due date specified in the original
invoice or 120 days or less after invoice date if no due date was specified and
still be Eligible Accounts;
(3) Accounts with respect to which either Borrower is or may
become liable to the account debtor for goods sold or services rendered by the
account debtor to such Borrower and Accounts which are otherwise eligible with
respect to which the account debtor is owed a credit by such Borrower, but only
to the extent of such credit;
(4) Accounts due from an account debtor whose principal place
of business is located outside the United States of America, unless such Account
is backed by a letter of credit in form and substance and issued by a bank
acceptable to Lender;
-5-
<PAGE>
(5) Accounts due from an account debtor which Lender has
determined does not have a satisfactory credit standing;
(6) Accounts with respect to which the account debtor is the
United States of America, unless the affected Borrower has, with respect to such
accounts, complied with the Federal Assignment of Claims Act of 1940 as amended
(31 U.S.C. Section 3727 et seq.), any state or any municipality, or any
department, agency or instrumentality thereof;
(7) Accounts with respect to which the account debtor is an
Affiliate of either or both Borrowers or a director, officer, agent, stockholder
or employee of either or both Borrowers or any of their Affiliates;
(8) Accounts with respect to which there is any unresolved
dispute with the respective account debtor;
(9) Accounts with respect to which Lender does not have a
valid first priority and fully perfected security interest or Accounts that are
subject to any claim, lien, security interest or encumbrance, except those in
favor of Lender;
(10) Accounts with respect to which the account debtor is the
subject of any bankruptcy or other insolvency proceeding;
(11) Accounts due from an account debtor to the extent that
such Accounts exceed in the aggregate an amount equal to 20% of the aggregate of
all Accounts at said date for either or both Borrowers;
(12) Accounts with respect to which the account debtor's
obligation to pay is conditional or subject to a repurchase obligation or right
to return or with respect to which the goods or services giving rise to such
Account have not been delivered (or performed, as applicable) and accepted by
such account debtor, including progress billings, bill and hold sales,
guarantied sales, sale or return transactions, sales on approval or consignment
sales;
(13) Accounts with respect to which the account debtor is
located in New Jersey or Minnesota, or any other state denying creditors access
to its courts in the absence of a Notice of Business Activities Report or other
similar filing, unless the affected Borrower has either qualified as a foreign
corporation authorized to transact business in such state or has filed a Notice
of Business Activities Report or similar filing with the applicable state agency
for the then current year;
(B) Borrowing Mechanics. On any day when either or both Borrowers
desire a Revolving Advance, either Borrower shall give Lender telephonic notice
of the proposed borrowing by 11:00 a.m. Central time. While either Borrower may
give notice as set forth in this subsection, any notice received pursuant hereto
shall be automatically deemed to be notice given jointly by both Borrowers. Any
such telephonic notice shall be confirmed in writing on the same day. Lender
shall not incur any liability to Borrowers for acting upon any telephonic notice
Lender believes in good faith to have been
-6-
<PAGE>
given by a duly authorized officer or other person authorized to borrow on
behalf of Borrowers or for otherwise acting in good faith. Lender will not make
any Revolving Advance pursuant to any telephonic notice unless Lender has also
received the most recent Borrowing Base Certificate and all other documents
required pursuant to the Reporting Addendum by 11:00 a.m. Central time. Each
Revolving Advance shall be deposited by wire transfer in immediately available
funds in such account as Borrowers may from time to time designate to Lender in
writing, such deposits to be made on the same business day if the request is
received and the requirements are satisfied by 11:00 a.m. Central time. Requests
received after 11:00 a.m. Central time shall be funded the next business day.
(C) Notes. Borrowers shall execute and deliver to Lender such
Notes as Lender may request in its sole discretion to evidence the Obligations
relating to the Revolving Loan.
(D) Principal Payments. Borrowers shall make principal payments
consistent with the terms and conditions of this Agreement.
2.2 Term Loan. Subject to the terms and conditions of this Agreement
and in reliance on the representations and warranties of Borrowers, Lender
agrees to lend to Borrowers an amount equal to no more than $3,300,000.00 in the
aggregate (the "Term Loans") as follows:
(A) Equipment Term Loan. Lender agrees to lend to Borrowers a Term
Loan in an amount equal to the lesser of (I) 80% of the aggregate (for both
Borrowers combined), forced liquidation value of Borrowers' Equipment; or (2)
$1,900,000.00; and
(B) Real Property Term Loan. Lender agrees to lend to Borrowers a
Term Loan in an amount equal to the lesser of (1) 50% of the aggregate fair
market value of the either or both Borrowers' interest in the Real Property; or
(2) $1,400,000.00.
(C) Borrowing Mechanics. The Term Loans shall be funded in one or
two drawings as soon as practicable after the execution and delivery of the Loan
Documents. Amounts borrowed under this Section 2.2 and repaid may not be
reborrowed.
(D) Notes. Borrowers shall execute and deliver to Lender such
Notes as Lender may request in its sole discretion to evidence the Obligations
relating to the Term Loan.
(E) Principal Payments. Borrowers shall make principal payments
over a thirty-six month term based on a sixty month amortization schedule, with
all outstanding amounts due on the Term Loan due and payable as the thirty-sixth
installment. The first installment is due on the 1st day of March, 1998, and
each subsequent payment is due on that day of each subsequent month.
2.3 Interest.
(A) Rate of Interest. Except where specified to the contrary in
any Note or in any other Loan Document, the Loans and all other Obligations
shall bear interest from the date such Loans are made or such other
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<PAGE>
Obligations become due to the date paid at a rate per annum equal to the Base
Rate plus 1.5% for the Revolving Loan and Base Rate plus 1.75% for the Term Loan
(the "Interest Rate"). After the occurrence and during the continuance of an
Event of Default, the Loans and all other Obligations shall, at the option of
Lender, bear interest at a rate per annum equal to 3.0% plus the Interest Rate
(the "Default Rate").
(B) Computation and Payment of Interest. Interest on the Loans and
all other Obligations shall be computed on the daily principal balance on the
basis of a 360 day year for the actual number of days elapsed in the period
during which it accrues and shall be payable to Lender monthly in arrears on the
first day of each month, on the date of any prepayment of Loans, and at
maturity, whether by acceleration or otherwise.
(C) Interest Laws. Notwithstanding any provision to the contrary
contained in this Agreement or any other Loan Document, Borrowers shall not be
required to pay, and Lender shall not be permitted to collect, any amount of
interest in excess of the maximum amount of interest permitted by applicable law
("Excess Interest"). If any Excess Interest is provided for or determined by a
court of competent jurisdiction to have been provided for in this Agreement or
in any other Loan Document, then in such event: (I) the provisions of this
subsection shall govern and control; (2) neither Borrowers nor any other Loan
Party shall be obligated to pay any Excess Interest; (3) any Excess Interest
that Lender may have received hereunder shall be, at Lender's option, (a)
applied as a credit against the outstanding principal balance of the Obligations
or accrued and unpaid interest (not to exceed the maximum amount permitted by
law), (b) refunded to the payor thereof, or (c) any combination of the
foregoing; (4) the interest rate(s) provided for herein shall be automatically
reduced to the maximum lawful rate allowed from time to time under applicable
law (the "Maximum Rate"), and this Agreement and the other Loan Documents shall
be deemed to have been and shall be, reformed and modified to reflect such
reduction; and (5) neither Borrowers nor any Loan Party shall have any action
against Lender for any damages arising out of the payment or collection of any
Excess Interest. Notwithstanding the foregoing, if for any period of time
interest on any Obligations is calculated at the Maximum Rate rather than the
applicable rate under this Agreement, and thereafter such applicable rate
becomes less than the Maximum Rate, the rate of interest payable on such
Obligations shall remain at the Maximum Rate until Lender shall have received
the amount of interest which Lender would have received during such period on
such Obligations had the rate of interest not been limited to the Maximum Rate
during such period.
2.4 Fees.
(A) Closing Fee. Borrowers shall pay to Lender on the closing
date, a closing fee in the amount of $50,000.00, which fee shall be fully
earned, due and payable upon the execution and delivery of this Agreement.
(B) Unused Line Fee. Borrowers shall pay to Lender, a fee in an
amount equal to 0.50% per annum multiplied by the amount equal to $1,700,000.00
less the sum of the average daily balance of the Revolving Loan during the
preceding month, such fee to be calculated on the basis of a 360 day year for
the actual number of days elapsed and to be payable monthly in arrears on the
first day of each month following the closing date during the term of this
Agreement, including all Renewal Terms.
-8-
<PAGE>
(C) Examination Fee. Borrowers shall pay to Lender an examination
fee for each examination equal to $650.00 per examiner per day or any portion
thereof together with out-of-pocket expenses.
(D) Collateral Management Fee. Borrowers shall pay to Lender a
collateral management fee in the amount of $2,000 per month for each month
during the Term of this Agreement.
(E) Other Fees and Expenses. Borrowers shall pay to Lender, all
charges for returned items and all other bank charges incurred by Lender, as
well as Lender's standard wire transfer charges for each wire transfer made
under this Agreement.
2.5 Borrowers' Joint and Several Liability. Borrowers are jointly
and severally liable to Lender for each and every Obligation, including,
but not limited to payment of the Revolving Loan, Term Loan, interest and
all fees due hereunder.
2.6 Payments and Prepayments.
(A) Manner and Time of Payment. Borrowers hereby authorizes
Lender, in its sole discretion, to charge interest and other amounts payable
hereunder to the Revolving Loan, all as set forth on Lender's books and records.
If Lender elects to bill either or both Borrowers for any amount due hereunder,
such amount shall be immediately due and payable with interest thereon as
provided herein. All payments made by either or both Borrowers with respect to
the Obligations shall be made without deduction, defense, setoff or
counterclaim. All payments to Lender hereunder shall, unless otherwise directed
by Lender, be made by wire transfer to Lender's account, ABA No. 0710-0001-3,
Account No. 5590116 at The First National Bank of Chicago, One First National
Plaza, Chicago, IL 60670, Reference: Heller Commercial Funding for the joint
benefit of Greenman Technologies of Minnesota, Inc. and Greenman Technologies of
Georgia, Inc. Proceeds remitted to Lender shall be credited to the Obligations
on the same Business Day such proceeds were received; provided however, for the
purpose of calculating interest on the Obligations, such funds shall be deemed
received on the first Business Day thereafter.
(B) Mandatory Prepayments. At any time that the Revolving Loan
exceeds the Maximum Revolving Loan Amount, Borrowers shall, immediately repay
the Revolving Loan to the extent necessary to reduce the principal balance to an
amount equal to or less than the Maximum Revolving Loan Amount.
(C) Voluntary Prepayments and Repayments. The Obligations may only
be prepaid or repaid in full and not in part (other than prepayments of the
Revolving Loan which do not terminate this Agreement or prepayments permitted
under any Note). Borrowers may, at any time upon not less than three Business
Days' prior notice to Lender, prepay the Obligations and terminate this
Agreement. If Borrowers voluntarily prepay the Obligations in full or in part
(other than prepayments of the Revolving Loan which do not terminate this
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Agreement), Borrowers, at the time of prepayment, shall pay to Lender, as
compensation for the costs of being prepared to make funds available to
Borrowers under this Agreement, and not as a penalty, an amount determined by
multiplying the applicable percentage set forth below by $5,000,000.00, 3.0%
upon a prepayment during the first Loan Year; 2.0% upon a prepayment during the
second Loan Year; and 1.0% upon a prepayment during the third Loan Year, and
during any Renewal Term (as defined below).
(D) Payments on Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day, the
payment may be made on the next succeeding Business Day and such extension of
time shall be included in the computation of the amount of interest or fees due
hereunder.
2.7 Term of this Agreement. This Agreement shall be effective until
January 28, 2001 (the "Original Term") and shall automatically renew from year
to year thereafter (each such year a "Renewal Term") unless terminated by
Borrowers giving to Lender or Lender giving to either of Borrowers not less than
60 days prior written notice of its intention to terminate at the end of the
Original Term or at the end of any Renewal Term (the "Termination Date"). Upon
termination (whether on the Termination Date or otherwise) all Obligations shall
become immediately due and payable without notice or demand. Notwithstanding any
termination, until all Obligations have been fully paid and satisfied, Lender
shall be entitled to retain security interests in and liens upon all Collateral,
and even after payment of all Obligations hereunder, certain of Lender's and
Borrower's agreements and obligations shall survive such terminations as set
forth in subsection 8.6. Notwithstanding anything to the contrary contained in
this subsection, renewal pursuant hereto is only effective as to the Revolving
Loan.
2.8 Statements. Lender shall render a monthly statement of account to
each of the Borrowers within twenty (20) days after the end of each month with a
copy to Greenman Technologies, Inc., 7 Kimball Lane, Building A, Lynnfield, MA
01940, Attention Charles E. Coppa. Such statement of account shall constitute an
account stated and Borrowers shall have fully and irrevocably waived all
objections to such statements and the contents thereof unless both Borrowers
make written objection thereto within thirty (30) days from the date such
statement is mailed to either of the Borrowers.
2.9 Grant of Security Interest-GTM. To secure the payment and
performance of the Obligations, GTM hereby grants to Lender a continuing
security interest, lien and mortgage in and to all right, title and interest of
GTM in all personal and real property of GTM whether now owned or existing or
hereafter acquired or arising and regardless of where located including, without
limitation: (A) Accounts, and all guaranties and security therefor, and all
goods and rights represented thereby or arising therefrom including the rights
of stoppage in transit, replevin and reclamation; (B) general intangibles (as
defined in the UCC); (C) documents (as defined in the UCC) or other receipts
covering, evidencing or representing goods; (D) instruments (as defined in the
UCC); (E) chattel paper (as defined in the UCC); (F) Equipment; (G) investment
property (as defined in the UCC) including, without limitation, all securities
(certificated and uncertificated), security accounts, securities entitlements,
commodity contracts and commodity accounts; (H) Intellectual Property; (I) all
deposit accounts of GTM maintained with any bank or financial institution; (J)
all cash and other monies
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and property of GTM in the possession or under the control of Lender or any
lender participant in any of the Loans; (K) all books, records, ledger cards,
files, correspondence, computer programs, tapes, disks and related data
processing software that at any time evidence or contain information relating to
any of the property described above or are otherwise necessary or helpful in the
collection thereof or realization thereon; (L) the Real Property; and (M)
proceeds, rents, profits, products and offspring of all or any of the property
described above, including, without limitation, the proceeds of any insurance
policies covering any of the above described property.
2.10 Grant of Security Interest-GTG. To secure the payment and
performance of the Obligations, GTG hereby grants to Lender a continuing
security interest, lien and mortgage in and to all right, title and interest of
GTG in all personal and real property of GTG whether now owned or existing or
hereafter acquired or arising and regardless of where located including, without
limitation: (A) Accounts, and all guaranties and security therefor, and all
goods and rights represented thereby or arising therefrom including the rights
of stoppage in transit, replevin and reclamation; (B) general intangibles (as
defined in the UCC); (C) documents (as defined in the UCC) or other receipts
covering, evidencing or representing goods; (D) instruments (as defined in the
UCC); (E) chattel paper (as defined in the UCC); (F) Equipment; (G) investment
property (as defined in the UCC) including, without limitation, all securities
(certificated and uncertificated), security accounts, securities entitlements,
commodity contracts and commodity accounts; (H) Intellectual Property; (I) all
deposit accounts of GTG maintained with any bank or financial institution; (J)
all cash and other monies and property of GTG in the possession or under the
control of Lender or any lender participant in any of the Loans; (K) all books,
records, ledger cards, files, correspondence, computer programs, tapes, disks
and related data processing software that at any time evidence or contain
information relating to any of the property described above or are otherwise
necessary or helpful in the collection thereof or realization thereon; (L) the
Real Property; and (M) proceeds, rents, profits, products and offspring of all
or any of the property described above, including, without limitation, the
proceeds of any insurance policies covering any of the above described property.
SECTION 3. CONDITIONS TO LOANS
The making of Loans by Lender on the closing date and on each funding
date of a Revolving Advance are each subject to satisfaction of all of the
conditions, agreements and covenants set forth in this Agreement and all of the
conditions set forth in the Conditions Rider, attached hereto.
SECTION 4. BORROWERS' REPRESENTATIONS, WARRANTIES
AND CERTAIN COVENANTS
To induce Lender to enter into the Loan Documents, and to make and to
continue to make Loans and/or provide other financial accommodations to or on
behalf of Borrowers, Borrowers both individually and jointly represent, warrant
and covenant (as applicable) to Lender that the following statements are and
will be true, correct and complete and shall remain so for so long as this
Agreement shall be in effect and until payment in full of all Obligations.
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4.1 Due Incorporation, Oualification and Authorization. Borrowers are
both duly organized and existing and in good standing under the laws of their
respective states of incorporation and are qualified and licensed to conduct
business in all States where such qualifications or licensing is required; the
execution, delivery and performance of this Agreement and the Loan Documents
have been duly authorized and are not in contravention of any applicable law,
Borrowers' corporate charters or by-laws or any other formation documents or any
agreements or orders by which Borrowers are bound; neither of Borrowers are, to
the best of Borrowers' knowledge, in violation of any law, ordinance, rule,
regulation, order or other requirement of any government or any instrumentality
or agency thereof.
4.2 Financial Condition. All financial statements concerning Borrowers
and all Subsidiaries which have been or may hereafter be furnished by Borrowers
and such Subsidiaries to Lender have been or will be prepared in accordance with
GAAP consistently applied throughout the periods involved and do or will present
fairly both financial condition of Borrowers and such Subsidiaries as at the
dates thereof and the results of its operations for the periods then ended.
4.3 Account Warranties and Covenants. As to each Account that, at the
time of its creation, the Account is a valid, bona fide account, representing an
undisputed indebtedness incurred by the named account debtor for goods actually
sold and delivered or for services completely rendered; there are no rights of
cancellation, setoffs, offsets or counterclaims, genuine or otherwise, against
the Account; the Account does not represent a sale to an Affiliate or a
consignment, sale or return or a bill and hold transaction; no agreement exists
permitting any return, deduction or discount (other than the discount stated on
the invoice); either GTM or GTG are the lawful owner of the Account and has the
right to assign the same to Lender; the Account is free of all security
interests, liens, claims and encumbrances other than those in favor of Lender,
and the Account is due and payable in accordance with its terms. No credits or
allowances will be issued, granted or allowed by either Borrower to account
debtors and no returns will be accepted without Lender's prior written consent;
provided however, until the earlier of (i) the occurrence of a Default or Event
of Default or (ii) such time as Lender notifies Borrowers to the contrary,
Borrowers may presume consent. Borrowers will immediately notify Lender in the
event that an account debtor alleges any dispute or claim with respect to an
Account or of any other circumstances known to either or both Borrowers that may
impair the validity or collectibility of an Account. Lender shall have the
right, at any time or times hereafter, to verify the validity, amount or any
other matter relating to an Account, by mail, telephone or in person. After the
occurrence of a Default or an Event of Default, neither Borrower may, without
the prior consent of Lender, adjust, settle or compromise the amount or payment
of any Account, or release wholly or partly any account debtor or obligor
thereof, or allow any credit or discount thereon.
4.4 Names and Locations. Borrowers currently conduct business or during
the past five years conducted business under the following names, trade names,
fictitious names and business names. The location of Borrowers' principal places
of business, the locations of Borrowers' books and records, the locations of all
other offices of Borrowers and all Collateral locations are as set forth below:
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Locations
Principal Place of Business: Greenman Technologies, Inc.
7 Kimball Lane, Building A
Lynnfield, MA 01940
Books and Records: Same as principal place of business
Other: Greenman Technologies of Minnesota, Inc.
12498 Wyoming Ave.
Savage, MN 55378
Greenman Technologies of Georgia, Inc.
138 Sherrel Ave.
Jackson, GA 30233
Tradenames
Previous Names: BFI Tire Recyclers of Minnesota, Inc.
BFI Tire Recyclers of Georgia, Inc.
Such locations are Borrowers' sole locations for their business and the
Collateral. Borrowers and each Subsidiary will give Lender at least 30 days
advance written notice of: (a) any change of name or of any new trade name or
fictitious business name, (b) any change of principal place of business, (c) any
change in the location of such party's books and records or the Collateral, or
(d) any new location for such Person's books and records or the Collateral.
4.5 Title; Liens; Operation of Business. Borrowers have and will
continue to have good, marketable and legal title to the Collateral, free and
clear of all liens, claims, security interests or encumbrances, except for the
security interests granted to Lender by Borrowers, those disclosed in writing by
either or both Borrowers to Lender as of the closing date (including the
security interest granted by Borrowers to affiliates of Browning-Ferris
Industries which security interests will be discharged with the proceeds of the
Loans) and any security interest which either or both Borrowers have disclosed
in writing to Lender and to which Lender has given its written consent prior to
being granted by either or both Borrowers. Borrowers maintain and shall continue
to maintain complete and accurate records with respect to all of their assets.
Borrowers maintain and shall continue to maintain all licenses, permits,
franchises, approvals and consents as are required in the conduct of their
business and the ownership and operation of their properties.
4.6 Litigation; Adverse Facts. There are no judgments outstanding
against or affecting Borrowers, their officers, directors or Affiliates or any
of either or both Borrowers' property and there are no actions, charges, claims,
demands, suits, proceedings, or governmental investigations now pending or
threatened against either or both Borrowers or any of either or both Borrowers'
property.
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4.7 Payment of Taxes. All material tax returns and reports of Borrowers
and each Subsidiary required to be filed by any of them have been timely filed
and are complete and accurate in all material respects. All taxes, assessments,
fees and other governmental charges which are due and payable by Borrowers and
each Subsidiary have been paid when due. Borrowers will make timely payment or
deposit of all F.I.C.A. payments and withholding taxes and will, upon request,
furnish Lender with proof satisfactory to Lender that Borrowers have made such
required payments or deposits. As of the closing date, none of the income tax
returns of Borrowers or any Subsidiaries are under audit. No tax liens have been
filed against Borrowers or any Subsidiaries. The charges, accruals and reserves
on the books of Borrowers and each Subsidiary in respect of any taxes or other
governmental charges are in accordance with GAAP. GTM's federal tax
identification number is 47-18779940. GTG's federal tax identification number is
58-2324483.
4.8 Employee Benefit Plans. Borrowers, each Subsidiary and each ERISA
Affiliate is in compliance, and will continue to remain in compliance, in all
material respects with all applicable provisions of ERISA, the IRC and all other
applicable laws and the regulations and interpretations thereof with respect to
all Employee Benefit Plans. No material liability has been incurred by either
Borrower, any Subsidiaries or any ERISA Affiliates which remains unsatisfied for
any funding obligation, taxes or penalties with respect to any Employee Benefit
Plan. Neither Borrower nor any Subsidiaries shall establish any new Employee
Benefit Plan or amend any existing Employee Benefit Plan if the liability or
increased liability resulting from such establishment or amendment shall have a
Material Adverse Effect.
4.9 Environmental Compliance. Each Loan Party has been, is currently,
and will continue to remain in compliance with all applicable Environmental
Laws. There are no claims, liabilities, liens, investigations, litigation,
administrative proceedings, whether pending or threatened, or judgments or
orders relating to any Hazardous Materials asserted or threatened against any
Loan Party or relating to any real property currently or formerly owned, leased
or operated by any Loan Party.
4.10 Ability to Pay Debts. Borrowers are now and shall be at all times
hereafter able to pay each of their joint and individual debts as they become
due and shall have sufficient capital to enable them to operate their
businesses.
4.11 Disclosure. There is no event that has occurred nor any fact known
by either or both Borrowers but not furnished to Lender, which will have or
reasonably be expected to have a Material Adverse Effect.
4.12 Insurance. Borrowers maintain, and will continue to maintain
adequate insurance policies for public liability, property damage for their
business and properties, product liability, and business interruption with
respect to their business and properties against loss or damage of the kinds
customarily carried or maintained by corporations of established reputation
engaged in similar businesses and in amounts acceptable to Lender. Borrowers
shall cause Lender to be named as loss payee on all insurance policies relating
to any Collateral and shall cause Lender to be named as additional insured under
all liability policies, in each case pursuant to appropriate endorsements in
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form and substance satisfactory to Lender and shall collaterally assign to
Lender as security for the payment of the Obligations all business interruption
insurance of Borrowers. No notice of cancellation has been received with respect
to such policies and Borrowers are in compliance with all conditions contained
in such policies. Borrowers shall apply any proceeds received from any policies
of insurance relating to any Collateral to the Obligations. In the event either
Borrower fails to provide Lender with evidence of the insurance coverage
required by or this Agreement, Lender may, but is not required to, purchase
insurance at Borrowers' expense to protect Lender's interests in the Collateral.
This insurance may, but need not, protect Borrowers' interests. The coverage
purchased by Lender may not pay any claim made by Borrowers or any claim that is
made against Borrowers in connection with the Collateral. Borrowers may later
cancel any insurance purchased by Lender, but only after providing Lender with
evidence that Borrowers have obtained insurance as required by this Agreement.
If Lender purchases insurance for the Collateral, Borrowers will be responsible
for the costs of that insurance, including interest and other charges imposed by
Lender in connection with the placement of the insurance, until the effective
date of the cancellation or expiration of the insurance. The costs of the
insurance may be added to the Obligations. The costs of the insurance may be
more than the cost of insurance that Borrowers are able to obtain on their own.
4.13 Accounting Methods; Access to Accountants. Subject to the
Conditions Rider attached hereto, Borrowers shall maintain their current methods
of accounting, as of the closing date, without modification. Borrowers authorize
Lender to discuss the financial condition and financial statements of Borrowers
with the affected Borrower's Accountants, and authorize such Accountants to
respond to all of Lender's inquiries, and Borrowers hereby waives the right to
assert a confidential relationship, if any, that either of them may have with
such Accountants in connection with any information requested by Lender pursuant
to or in accordance with this Agreement.
4.14 Inspection. Lender shall have the right at any time during normal
business hours to visit and inspect any of the properties of Borrowers or any
Subsidiaries, and, in conjunction with such inspection, to make copies and take
extracts from any of their books and records therefrom.
4.15 Collection of Accounts. Upon the occurrence of a Default or an
Event of Default, Lender may, at any time, with or without notice to either
Borrower, notify all account debtors of both Borrowers that the Accounts have
been assigned to Lender, and that Lender has a security interest in same;
collect the Accounts directly, and add the collection costs and expenses to
Borrowers' loan account. Unless and until Lender collects the Accounts directly
or gives either or both Borrowers written instructions, Borrowers shall collect
all Accounts for Lender, receive, as the sole and exclusive property of Lender
all payments thereon as Lender's trustee and immediately deliver said payments
to Lender in their original form as received from the account debtor.
SECTION 5. REPORTING AND OTHER AFFIRMATIVE COVENANTS
Borrowers covenant and agree that, during the term of this Agreement
and until payment in full of all Obligations, Borrowers shall perform all of the
following:
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5.1 Financial Statements and Other Reports. Borrowers will deliver to
Lender the financial statements and other reports listed on the Reporting
Addendum attached hereto on the dates and in the manner set forth in such
Reporting Addendum.
5.2 Appraisals. From time to time, upon the request of Lender,
Borrowers will obtain and deliver to Lender, at Borrowers' expense, appraisal
reports in form and substance and from appraisers satisfactory to Lender,
stating the then current fair market and forced liquidation values of all or any
portion of the Collateral; provided however, so long as no Default or Event of
Default is continuing, Lender shall not request an appraisal as to any
particular category of Collateral to be performed more than once every Loan Year
at Borrowers' expense.
5.3 Government Notices. Borrowers will deliver to Lender promptly after
receipt copies of all notices, requests, subpoenas, inquiries or other writings
received from any governmental agency concerning any Employee Benefit Plan, the
violation or alleged violation of any Environmental Laws, the storage, use or
disposal of any Hazardous Material, the violation or alleged violation of the
Fair Labor Standards Act or Borrowers' payment or non-payment of any taxes
including any tax audit.
5.4 Maintenance of Properties. Borrowers will maintain or cause to be
maintained in good repair, working order and condition all material properties
used in the business of Borrowers and Subsidiaries and will make or cause to be
made all appropriate repairs, renewals and replacements thereof.
5.5 Compliance with Laws. Borrowers will, and will cause each
Subsidiary to, comply with the requirements of all applicable laws, rules,
regulations and orders of any governmental authority as now in effect and which
may be imposed in the future in all jurisdictions in which Borrowers or any
Subsidiaries are now doing business or may hereafter be doing business.
5.6 Further Assurances. Borrowers shall, and shall cause each
Subsidiary to, from time to time, execute such guaranties, financing or
continuation statements, documents, security agreements, reports and other
documents or deliver to Lender such instruments, certificates of title,
mortgages, deeds of trust, or other documents as Lender at any time may
reasonably request to evidence, perfect or otherwise implement the guaranties
and security for repayment of the Obligations provided for in the Loan
Documents.
5.7 Use of Proceeds and Margin Security. Borrowers shall use the
proceeds of all Loans for proper business purposes consistent with all
applicable laws, statutes, rules and regulations. No portion of the proceeds of
any Loan shall be used by Borrowers or any Subsidiaries for the purpose of
purchasing or carrying margin stock within the meaning of Regulation G or
Regulation U, or in any manner that might cause the borrowing or the application
of such proceeds to violate Regulation T or Regulation X or any other regulation
of the Board of Governors of the Federal Reserve System or to violate the
Exchange Act.
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SECTION 6. NEGATIVE COVENANTS
Borrowers covenant and agree that, during the term of this Agreement
and until payment in full of all Obligations, Borrowers shall not:
6.1 Book Net Worth. Permit Borrowers' combined book net worth, at any
time, to be less than $650,000.00.
6.2 Capital Expenditure Limits. Except as provided in the Conditions
Rider, make or incur any plant or fixed capital expenditure, or any commitment
therefor, or purchase or lease any real or personal property or replacement
equipment in excess of $300,000.00 per Borrower in the aggregate for any fiscal
year.
6.3 Compensation. Pay total compensation, including salaries,
withdrawals, fees, bonuses, commissions, drawing accounts, management fees or
other payments, whether directly or indirectly, in money or otherwise, during
any fiscal year to all of either or both Borrowers' executives, officers,
shareholders, affiliates, and directors (or any relatives of each of the
foregoing) in an aggregate amount in excess of l 20% of those paid in the prior
fiscal year.
6.4 Indebtedness and Liabilities. Directly or indirectly create, incur,
assume, guaranty, or otherwise become or remain directly or indirectly liable,
on a fixed or contingent basis, with respect to any indebtedness outside of the
ordinary course of Borrower's business as presently conducted, except for
renewals or extension of existing indebtedness (previously disclosed to Lender);
provided however, in no event shall Borrowers prepay any indebtedness owing to
any third party, other than the Obligations pursuant to subsection 2.6(C).
6.5 Transfers, Negative Pledges and Related Matters.
(A) Transfers. Sell, lease, consign, assign or otherwise dispose
of, or grant any option with respect to any of the assets of Borrowers, except
that Borrowers may sell inventory in the ordinary course of business as
presently conducted and Borrowers may, with Lender's prior written consent and
in the ordinary course of business, sell or trade any item of Equipment so long
as Borrower replaces such Equipment with Equipment of equal or greater value.
(B) No Negative Pledges. Enter into or assume any agreement (other
than the Loan Documents) prohibiting the creation or assumption of any lien,
claim, security interest or encumbrance upon their properties or assets, whether
now owned or hereafter acquired.
6.6 Investments and Loans. Make or permit to exist investments in or
loans to any other Person, except loans to employees for moving, entertainment,
travel and other similar expenses in the ordinary course of business in an
aggregate outstanding amount not in excess of $ l 0,000.00 per Borrower at any
time.
6.7 Distributions. Make any distribution or declare or pay any
dividends (in cash or in stock) on, or purchase, acquire, redeem or retire any
of Borrowers' capital stock, of any class, whether now or hereafter outstanding;
provided however, that one year from the date hereof, Borrowers
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may pay dividends of Excess Cash Flow after reserving a minimum of twelve loan
payments of the Term Loan.
6.8 Restriction on Fundamental Changes. (a) Enter into any transaction
of merger or consolidation; (b) liquidate, wind-up, dissolve either Borrowers,
or cease or suspend either Borrowers' businesses; (c) make any change in either
Borrowers' financial structure or in any of its business operations; (d) acquire
by purchase or otherwise all or any substantial part of the business or assets
of, or stock or other beneficial ownership of, any Person; (e) establish, create
or acquire any new Subsidiary; or (f) change Borrowers' fiscal year or change
their tax entity designation under the IRC.
6.9 Transactions with Affiliates. Directly or indirectly, enter into or
permit to exist any transaction (including the purchase, sale or exchange of
property or the rendering of any service) with any Affiliate or with any
officer, director or employee of any Loan Party, except for transactions in the
ordinary course of either Borrower's business, as presently conducted, and upon
fair and reasonable terms which are fully disclosed to Lender and which are no
less favorable to Borrowers than they would obtain in a comparable arm's length
transaction with an unaffiliated Person.
6.10 Bank Accounts. Establish any new bank accounts, or amend or
terminate any blocked account or lockbox agreement without Lender's prior
written consent.
SECTION 7. DEFAULT, RIGHTS AND REMEDIES
7.1 Events of Default. The occurrence or existence of any one or more
of the following events (each, an "Event of Default"):
(A) Payment. Failure to make payment of any of the Obligations
when due or declared due; or
(B) Failure to Perform. Failure of Borrowers or any Loan Party to
perform or comply with any term, condition, provision, covenant or agreement
contained in the Loan Documents; or
(C) Default in Other Agreements. The existence of a default in any
material agreement to which either Borrower is a party or by which either
Borrower or either Borrower's property or assets are bound; or
(D) Breach of Warranty. Any representation, warranty,
certification, report or other statement made by any Loan Party in any Loan
Document or in any statement, certificate or report at any time given by such
Person in writing pursuant or in connection with any Loan Document is false in
any material respect on the date made; or
(E) Change in Control. Any change, direct or indirect in
Borrowers' capital ownership in excess of 10%; or
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(F) Material Adverse Effect. Any event which creates a Material
Adverse Effect; or
(G) Involuntary Bankruptcy; Appointment of Receiver, etc. (l) A
court enters a decree or order for relief with respect to any guarantor of the
Obligations, Borrowers or any Subsidiaries in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect; or (2) a receiver, liquidator, sequestrator, trustee, custodian or other
fiduciary having similar powers over any guarantor of the Obligations, Borrowers
or any Subsidiaries, or over all or a substantial part of their respective
property, is appointed; or
(H) Voluntary Bankruptcy; Appointment of Receiver, etc. Borrowers
or any Subsidiaries, or any guarantor of the Obligations, commences a voluntary
case under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect; consents to the appointment of or taking possession by a
receiver, trustee or other custodian for all or a substantial part of their
property; or makes any assignment for the benefit of creditors; or
(I) Levy. Any lien, levy or assessment is filed or recorded with
respect to or otherwise imposed upon all or any part of Borrowers' assets by the
United States or any department or instrumentality thereof or by any state,
county, municipality or other governmental agency; or
(J) Judgment and Attachments. Any money judgment, writ or warrant
of attachment, levy, or similar process is entered or filed against either or
both Borrowers or any of their assets in an amount in any individual case in
excess of $10,000 or an amount in the aggregate at any time in excess of
$50,000; or
(K) Dissolution; Injunction. Any order, judgment or decree is
entered against either Borrower decreeing the dissolution or split up of such
Borrower, or enjoining, restraining or in any way preventing such Borrower from
conducting all or any material part of its business; or
(L) Loss of Guarantor. Any guarantor of the Obligations dies or
terminates its guaranty or gives notice of termination of its guaranty and a new
guarantor acceptable to Lender, in Lender's sole discretion, is not substituted
within thirty (30) days; or
(M) Failure of Security. Lender does not have or ceases to have a
valid and perfected first priority security interest in the Collateral, or any
of the Loan Documents ceases to be in full force and effect or is declared to be
null and void; or
(N) Subordinated Debt Payments. Borrowers make any payment on
account of indebtedness which has been subordinated to the Obligations, except
to the extent such payment is allowed under any subordination agreement entered
into with Lender.
Notwithstanding anything contained in this Section 7 to the contrary,
Lender shall refrain from exercising its rights and remedies and an Event of
Default shall not be deemed to have occurred by reason of the occurrence of any
of the events set forth in subsections 7.1 (G), 7. l (I), and 7.1(J) of this
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Agreement if, within 30 days from the date thereof, the same is released,
discharged, dismissed, bonded against or satisfied.
7.2 Suspension of Loans. Upon the occurrence of any Default or Event of
Default, notwithstanding any grace period or right to cure, Lender without
notice or demand, may immediately cease making additional Loans or advances
under this Agreement or any other agreement between Borrowers and Lender. The
foregoing shall in no way affect, limit, or waive Lender's sole and absolute
discretion to make advances under this Agreement.
7.3 Acceleration. Upon the occurrence of any Event of Default described
in the foregoing subsections 7.1(G) or 7.1(H), all Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by Borrowers, and this Agreement shall thereupon terminate; provided
however, such termination shall not affect Lender's rights and security interest
in the Collateral or the Obligations. Upon the occurrence and during the
continuance of any other Event of Default, Lender may, by written notice to
either or both Borrowers, declare all or any portion of the Obligations to be,
and the same shall forthwith become, immediately due and payable and Lender may
terminate this Agreement; provided however, such termination shall not affect
Lender's rights and security interest in the Collateral or the Obligations.
7.4 Remedies. Upon the occurrence of an Event of Default, in addition
to and not in limitation of any other rights or remedies available to Lender at
law or in equity, Lender may exercise in respect of the Collateral, all the
rights and remedies of a secured party on default under the UCC and may also (a)
require Borrowers to, and Borrowers hereby agrees that they will, at their
expense and upon request of Lender forthwith, assemble all or part of the
Collateral as directed by Lender and make it available to Lender at a place to
be designated by Lender; (b) require Borrowers to hold all returned Inventory in
trust for Lender, segregate all returned Inventory from all other Inventory of
Borrowers or in Borrowers' possession and conspicuously label said returned
Inventory as Lender's property; (c) withdraw all cash in any blocked account and
apply such monies in payment of the Obligations; and (d) without notice or
demand or legal process, enter upon any premises of Borrowers and take
possession of the Collateral. Borrowers agree that, to the extent notice of sale
of the Collateral or any part thereof shall be required by law, ten days notice
to Borrowers of the time and place of any public sale or the time after which
any private sale is to be made shall constitute reasonable notification. At any
sale of the Collateral (whether public or private), if permitted by law, Lender
may bid (which bid may be, in whole or in part, in the form of cancellation of
indebtedness) for the purchase of the Collateral or any portion thereof for the
account of Lender. Lender shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. Borrowers shall remain liable
for any deficiency. Lender may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. To the extent permitted by law, Borrowers hereby specifically waive
all rights of redemption, stay or appraisal which it has or may have under any
law now existing or hereafter enacted. Lender shall not be required to proceed
against any Collateral but may proceed against Borrowers and/or any Loan Party
directly.
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7.5 Appointment of Attorney-in-Fact. Borrowers hereby constitute and
appoint Lender as Borrowers' attorney-in-fact with full authority in the place
and stead of Borrowers and in the name of either or both Borrowers, Lender or
otherwise, from time to time in Lender's discretion to take any action and to
execute any instrument that Lender may deem necessary or advisable to accomplish
the purposes of this Agreement, including: (a) to ask, demand, collect, sue for,
recover, compound, receive and give acquittance and receipts for moneys due and
to become due under or in respect of any of the Collateral; (b) upon the
occurrence of a Default or an Event of Default, to adjust, settle or compromise
the amount or payment of any Account, or release wholly or partly any account
debtor or obligor thereunder or allow any credit or discount thereon; (c) to
receive, endorse, and collect any drafts or other instruments, documents and
chattel paper, in connection with clause (a) above; (d) to file any claims or
take any action or institute any proceedings that Lender may deem necessary or
desirable for the collection of or to preserve the value of any of the
Collateral or otherwise to enforce the rights of Lender with respect to any of
the Collateral; (e) to sign and endorse any invoices, freight or express bills,
bills of lading, storage or warehouse receipts, assignments, verifications and
notices in connection with Accounts and other documents relating to the
Collateral; (f) to notify the postal authorities to change the address for
delivery of Borrowers' mail to an address designated by Lender to receive and
open all mail addressed to either Borrower and to retain all mail relating to
the Collateral and forward all other mail to either Borrower; (g) to make,
settle and adjust all claims and make all determinations and decisions with
respect to Borrowers' insurance policies. The appointment of Lender as
Borrowers' attorney-in-fact and Lender's rights and powers are coupled with an
interest and are irrevocable until indefeasible payment in full and complete
performance of all of the Obligations.
7.6 Limitation on Duty of Lender with Respect to Collateral. Beyond the
safe custody thereof, Lender shall have no duty with respect to any Collateral
in its possession or control (or in the possession or control of any agent or
bailee) or with respect to any income thereon or the preservation of rights
against prior parties or any other rights pertaining thereto. Lender shall be
deemed to have exercised reasonable care in the custody and preservation of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which Lender accords its own property. Lender shall
not be liable or responsible for any loss or damage to any of the Collateral, or
for any diminution in the value thereof, by reason of the act or omission of any
warehouseman, carrier, forwarding agency, consignee, broker or other agent or
bailee selected by Borrowers or selected by Lender in good faith.
7.7 License of Intellectual Property. Borrowers hereby assign, transfer
and convey to Lender, effective upon the occurrence of any Event of Default
hereunder, the non-exclusive right and license to use all Intellectual Property
owned or used by Borrowers together with any goodwill associated therewith, all
to the extent necessary to enable Lender to realize on the Collateral and any
successor or assign to enjoy the benefits of the Collateral. This right and
license shall inure to the benefit of all successors, assigns and transferees of
Lender and its successors, assigns and transferees, whether by voluntary
conveyance, operation of law, assignment, transfer, foreclosure, deed in lieu of
foreclosure or otherwise. Such right and license is granted free of charge,
without requirement that any monetary payment whatsoever be made to Borrowers by
Lender.
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7.8 Waivers, Non-Exclusive Remedies. No failure on the part of Lender
to exercise, and no delay in exercising and no course of dealing with respect
to, any right under this Agreement or the other Loan Documents shall operate as
a waiver thereof; nor shall any single or partial exercise by Lender of any
right under this Agreement or any other Loan Document preclude any other or
further exercise thereof or the exercise of any other right. The rights in this
Agreement and the other Loan Documents are cumulative and shall in no way limit
any other remedies provided by law.
7.9 Demand; Protest. Borrowers waive demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment, notice
of any default, and notice of nonpayment at maturity, and agrees that Lender may
compromise, settle or release without notice to Borrowers any accounts,
documents, instruments, chattel paper and/or guaranties at any time held by
Lender on which either or both Borrowers may in any way be liable. Borrowers
agree to any extensions of time of payment or partial payment at, before or
after termination of this Agreement.
7.10 Marshaling; Payments Set Aside. Lender shall not be under any
obligation to marshal any assets in favor of any Loan Party or any other party
or against or in payment of any or all of the Obligations. To the extent that
any Loan Party makes a payment or payments to Lender or Lender enforces its
security interests or exercise its rights of setoff, and such payment or
payments or the proceeds of such enforcement or setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then to the
extent of such recovery, the Obligations or part thereof originally intended to
be satisfied, and all liens, security interests, rights and remedies therefor,
shall be revived and continued in full force and effect as if such payment had
not been made or such enforcement or setoff had not occurred.
SECTION 8 MISCELLANEOUS
8.1 Set Off. In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence of any Event of Default, Lender, each assignee of Lender's interest,
and each participant is hereby authorized by Borrowers at any time or from time
to time, without notice to Borrowers or to any other Person, any such notice
being hereby expressly waived, to set off and to appropriate and to apply any
and all balances held by it at any of its offices for the account of Borrowers
or any Subsidiaries (regardless of whether such balances are then due to
Borrowers or Subsidiaries) and any other property at any time held or owing by
that Lender or assignee to or for the credit or for the account of Borrowers
against and on account of any of the Obligations then outstanding; provided
however, no participant shall exercise such right without the prior written
consent of Lender.
8.2 Expenses and Attorneys' Fees. Borrowers shall promptly pay all
fees, costs and expenses incurred by Lender in connection with any matters
contemplated by or arising out of this Agreement or the other Loan Documents
including the following, and all such fees, costs and expenses shall be part of
the Obligations, payable on demand and secured by the Collateral: (a) fees,
costs and expenses (including attorneys' fees, allocated costs of internal
counsel and fees of environmental consultants, accountants and other
professionals retained by Lender) incurred in connection with (i)
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the examination, review, due diligence investigation, documentation and closing
of the financing arrangements evidenced by the Loan Documents, and (ii) the
review, negotiation, preparation, documentation, execution and administration of
the Loan Documents, the Loans, and any amendments, waivers, consents,
forbearances and other modifications relating thereto or any subordination or
intercreditor agreements; (b) fees, costs and expenses incurred in creating,
perfecting and maintaining perfection of Lender's rights in and to the
Collateral; (c) fees, costs and expenses incurred in connection with forwarding
to Borrowers the proceeds of Loans including Lender's standard wire transfer
fee; (d) fees, costs, expenses and bank charges, including bank charges for
returned checks, incurred by Lender in establishing, maintaining and handling
lock box accounts, blocked accounts or other accounts for collection of the
Collateral; (e) fees, costs, expenses (including attorneys' fees and allocated
costs of internal counsel) and costs of settlement incurred in collecting upon
or enforcing rights against the Collateral or incurred in any action to enforce
this Agreement or the other Loan Documents or to collect any payments due from
Borrowers or any other Loan Party under this Agreement or any other Loan
Document or incurred in connection with any refinancing or restructuring of the
credit arrangements provided under this Agreement, whether in the nature of a
"workout" or in connection with any insolvency or bankruptcy proceedings or
otherwise.
8.3 Indemnity. In addition to the payment of expenses pursuant to
subsection 8.2, Borrowers shall indemnify, pay and hold Lender and the officers,
directors, employees, agents, consultants, auditors, persons engaged by Lender
to evaluate or monitor the Collateral, affiliates and attorneys of Lender and
such holders (collectively called the "Indemnitees") harmless from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of any kind or
nature whatsoever (including the fees and disbursements of counsel for such
Indemnitees in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not such Indemnitee shall be
designated a party thereto) that may be imposed on, incurred by, or asserted
against that Indemnitee, in any manner relating to or arising out of this
Agreement or the other Loan Documents, the consummation of the transactions
contemplated by this Agreement, the statements contained in the commitment
letters, if any, delivered by Lender, Lender's agreement to make the Loans
hereunder, the use or intended use of the proceeds of any of the Loans or the
exercise of any right or remedy hereunder or under the other Loan Documents (the
"Indemnified Liabilities"); provided however, Borrowers shall have no obligation
to an Indemnitee hereunder with respect to Indemnified Liabilities arising from
the gross negligence or willful misconduct of that Indemnitee as determined by a
court of competent jurisdiction.
8.4 Amendments and Waivers. No amendment, modification, termination or
waiver of any provision of this Agreement or of the other Loan Documents, or
consent to any departure by Borrowers or any Loan Party therefrom, shall be
effective unless the same shall be in writing and signed by Lender. Each
amendment, modification, termination or waiver shall be effective only in the
specific instance and for the specific purpose for which it was given.
8.5 Notices. Unless otherwise specifically provided herein, all notices
shall be in writing addressed to the respective party as set forth below and may
be personally served, telecopied or sent by overnight courier service or United
States mail and shall be deemed to have been given: (a) if delivered
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in person, when delivered; (b) if delivered by telecopy, on the date of
transmission if transmitted on a Business Day before 4:00 p.m. Central time or,
if not, on the next succeeding Business Day; (c) if delivered by overnight
courier, two (2) days after delivery to such courier properly addressed; or (d)
if by U.S. Mail, four (4) Business Days after depositing in the United States
mail, with postage prepaid and properly addressed.
If to Borrower: GREENMAN TECHNOLOGIES OF MINNESOTA, INC.
12498 Wyoming Ave.
Savage, Minnesota 55378
Telephone No.: (612) 894-5280
Telecopy No.: (612) 894-5061
GREENMAN TECHNOLOGIES OF GEORGIA, INC.
138 Sherrel Ave.
Jackson, GA 30233
Telephone No.: (770) 775-6107
Telecopy No.: (770) 775-4304
If to Lender: HELLER FINANCIAL, INC.
Attn: Portfolio Manager,
Heller Commercial Funding
500 W. Monroe Street
Chicago, Illinois 60661
Telephone No.: (312) 441 -7000
Telecopy No.: (312) 928-8761
or to such other address as the party addressed shall have previously designated
by written notice to the serving party, given in accordance with this subsection
8.5.
8.6 Survival of Representations and Warranties and Certain Agreements.
All agreements, representations and warranties made herein shall survive the
execution and delivery of this Agreement and the making of the Loans hereunder.
Notwithstanding anything in this Agreement or implied by law to the Contrary,
the agreements of Borrowers and Lender set forth in subsections 8.2. 8.3 8.11,
8.14 and 8.15 (including, without limitation, Borrowers' agreement to pay fees,
agreement to indemnify Lender, agreement as to choice of law and jurisdiction
and Borrowers' and Lender's waiver of a jury trial) shall survive the payment of
the Loans and the termination of this Agreement.
8.7 Indulgence Not Waiver. No failure or delay on the part of Lender in
the exercise of any power, right or privilege shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or
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privilege preclude other or further exercise thereof or of any other right,
power or privilege.
8.8 Entire Agreement. This Agreement and the other Loan Documents
embody the entire agreement among the parties hereto and supersede all prior
commitments, agreements, representations, and understandings, whether written or
oral, relating to the subject matter hereof, and may not be contradicted or
varied by evidence of prior, contemporaneous, or subsequent oral agreements or
discussions of the parties hereto.
8.9 Severability of Provisions. Each provision of this Agreement shall
be severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
8.10 Headings. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
8.11 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
8.12 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, except that Borrowers may not assign their rights or obligations
hereunder without the prior written consent of Lender. Lender may assign its
rights and delegate its obligations under this Agreement and further may assign,
or sell participations in, all or any part of the Loans, or any other interest
herein to an affiliate or to another Person. Lender shall be relieved of its
obligations hereunder with respect to the assigned portion thereof. Borrowers
hereby acknowledge and agree that any assignment will give rise to a direct
obligation of Borrowers to the assignee and that the assignee shall be
considered to be a "Lender". Lender may furnish any information concerning
Borrowers and Subsidiaries in its possession from time to time to assignees and
participants (including prospective assignees and participants).
8.13 No Fiduciary Relationship; Limitation of Liabilities.
(A) No provision in this Agreement or in any of the other Loan
Documents and no course of dealing between the parties shall be deemed to create
any fiduciary duty by Lender to Borrowers.
(B) Neither Lender, nor any affiliate, officer, director,
shareholder, employee, attorney, or agent of Lender shall have any liability
with respect to, and Borrowers hereby waive, release, and agree not to sue any
of them upon, any claim for any special, indirect, incidental, or consequential
damages suffered or incurred by Borrowers in connection with, arising out of, or
in any way related to, this Agreement or any of the other Loan Documents, or any
of the transactions
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contemplated by this Agreement or any of the other Loan Documents. Borrowers
hereby waive, release, and agree not to sue Lender or any of Lender's
affiliates, officers, directors, employees, attorneys, or agents for punitive
damages in respect of any claim in connection with, arising out of, or in any
way related to, this Agreement or any of the other Loan Documents, or any of the
transactions contemplated by this Agreement or any of the transactions
contemplated hereby.
8.14 CONSENT TO JURISDICTION AND WAIVER OF PERSONAL SERVICE. BORROWERS
HEREBY CONSENT TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN
THE COUNTY OF COOK, STATE OF ILLINOIS AND IRREVOCABLY AGREES THAT, SUBJECT TO
LENDER'S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS.
BORROWERS EXPRESSLY SUBMIT AND CONSENT TO THE JURISDICTION OF THE AFORESAID
COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. BORROWERS HEREBY WAIVE
PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF
PROCESS MAY BE MADE UPON BORROWER BY CERTIFIED OR REGISTERED MAIL, RETURN
RECEIPT REQUESTED, ADDRESSED TO BORROWER, AT THE ADDRESS SET FORTH IN THIS
AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS
BEEN POSTED.
8.15 WAIVER OF JURY TRIAL. BORROWERS AND LENDER HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. BORROWERS AND LENDER
ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THAT EACH WILL CONTINUE TO RELY ON
THE WAIVER IN THEIR RELATED FUTURE DEALINGS. BORROWERS AND LENDER FURTHER
WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH THEIR LEGAL
COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES THEIR JURY TRIAL RIGHTS.
8.16 Construction. Borrowers and Lender each acknowledge that they has
had the benefit of legal counsel of its own choice and has been afforded an
opportunity to review this Agreement and the other Loan Documents with their
legal counsel and that this Agreement and the other Loan Documents shall be
construed as if jointly drafted by Borrower and Lender.
8.17 Counterparts; Effectiveness. This Agreement and any amendments,
waivers, consents, or supplements may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all of which
counterparts together shall constitute but one and the same instrument. This
Agreement shall become effective upon the execution of a counterpart hereof by
each of the parties hereto. Delivery of an executed counterpart of a signature
page to this Agreement, any amendments,
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waivers, consents or supplements, or to any other Loan Document by telecopier
shall be as effective as delivery of a manually executed counterpart thereof.
8.18 Confidentiality. Lender shall hold all nonpublic information
obtained pursuant to the requirements hereof and identified as such by Borrowers
in accordance with such its customary procedures for handling confidential
information of this nature and in accordance with safe and sound business
practices and in any event may make disclosure to such of its respective
affiliates, officers, directors, employees, agents and representatives as need
to know such information in connection with the Loans. If Lender or any of its
affiliates is otherwise a creditor of Borrowers, Lender or such affiliate may
use the information in connection with its other credits. Lender may also make
disclosure reasonably required by a bona fide offeree or assignee (or
participation), or as required or requested by any Governmental Authority or
representative thereof, or pursuant to legal process, or to its accountants,
lawyers and other advisors, and shall require any such offeree or assignee (or
participant) to agree (and require any of its offerees, assignees or
participants to agree) to comply with this subsection 8.18. In no event shall
Lender be obligated or required to return any materials furnished by Borrowers.
Witness the due execution hereof by the respective duly authorized
officers of the undersigned as of the date first written above.
HELLER FINANCIAL, INC. GREENMAN TECHNOLOGIES OF
MINNESOTA, INC.
By: /s/ Michael L. DuBois By: /s/ Robert H. Davis
Name: Michael L. DuBois Name: Robert H. Davis
Title: Vice President Title: Executive Vice President
FEIN: 47-18779940
GREENMAN TECHNOLOGIES OF
GEORGIA, INC.
By: /s/ Robert H. Davis
Name: Robert H. Davis
Title: Executive Vice President
FEIN: 58-224483
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CONDITIONS RIDER
This Conditions Rider is attached to and made a part of that certain
Loan and Security Agreement dated as of January 29, 1998 and entered into among
Greenman Technologies of Minnesota, Inc., Greenman Technologies of Georgia, Inc.
and Heller Financial, Inc.
(A) Closing Deliveries. Lender shall have received, in form and
substance satisfactory to Lender, all documents, instruments and information and
all other agreements, notes, certificates, orders, authorizations, financing
statements, mortgages and other documents which Lender may at any time request,
including, but not limited to guarantees of Greenman Technologies, Inc., Maurice
Needham, Robert Davis and Joseph Levangie, a release of liens from Browning
Ferris Industries, and other agreements or documents referenced in this Rider.
(B) Security Interests. Lender shall have received satisfactory
evidence that all security interests and liens granted to Lender pursuant to
this Agreement or the other Loan Documents have been duly perfected and
constitute first priority liens on the Collateral, and that all security
interests, liens and other claims of Browning Ferris Industries have been
released or subordinated to Lender's satisfaction.
(C) Closing Date Availability. After giving effect to the consummation
of the transactions contemplated hereunder on the closing date and the payment
by Borrower of all costs, fees and expenses relating thereto, the Maximum
Revolving Loan Amount on the closing date shall exceed the requests for
Revolving Advances on such date by at least $170,000.00.
(D) Representations and Warranties. The representations and warranties
contained in this Conditions Rider and in the Loan Documents shall be true,
correct and complete in all material respects on and as of each funding date of
the Loans to the same extent as though made on and as of that date, except for
any representation or warranty limited by its terms to a specific date and
taking into account any disclosures made by Borrowers to Lender after the
closing date and approved by Lender.
(E) Fees. On the closing date or any funding date of a Revolving
Advance, Borrowers shall have paid to Lender all fees due on or prior to such
dates.
(F) No Default. No event shall have occurred and be continuing or would
result from the consummation of the requested borrowing that would constitute an
Event of Default or a Default.
(G) Performance of Agreements. Each Loan Party shall have performed in
all material respects all agreements and satisfied all conditions which any Loan
Document provides shall be performed by it on or before that funding date of any
Loan.
(H) No Prohibition. No order, judgment or decree of any court,
arbitrator or governmental authority shall purport to enjoin or restrain Lender
from making any Loans.
(I) No Litigation. There shall not be pending or, to the knowledge of
Borrowers, threatened, any action, charge, claim, demand, suit, proceeding,
petition, governmental investigation
<PAGE>
or arbitration by, against or affecting any Loan Party or any of its
Subsidiaries or any property of any Loan Party or any of its Subsidiaries that
has not been disclosed to Lender by Borrowers in writing, and there shall have
occurred no development in any such action, charge, claim, demand, suit,
proceeding, petition, governmental investigation or arbitration that, in the
opinion of Lender, would reasonably be expected to have a Material Adverse
Effect.
(J) Accounting Controls. Borrowers shall implement accounting controls
as are required by Lender, including, but not limited to (1) providing for
Lender's CAMG unit to account, process and collect Borrowers' Accounts during
the term of this Agreement, for which service Borrowers shall pay to Lender
one-half of one percent (0.5%) of the total volume of Borrowers' Accounts
processed, and (2) acquiring, implementing and/or hiring such accounting
programs, systems and personnel as Lender deems effective, reliable and
competent.
(K) Capital Contribution to Borrowers. Borrowers' parent company and/or
officers of such company shall have contributed a minimum of $1,000,000 to
Borrowers, which contribution shall take the form of an equity contribution or a
loan subordinated to the claims of Borrowers' creditors, including the claims of
Lender, but excluding only claims of Borrowers' Affiliates.
(L) Capital Contribution to Borrowers' Parent Company. A minimum of
$1,000,000 shall have been contributed to Borrowers' parent company, which
contribution shall take the form of an equity contribution or a loan
subordinated to the claims of such company's creditors, including the claims of
Lender, but excluding claims of its Affiliates. This contribution must be made
in addition to the capital contribution required under subsection (K) of this
Rider. Such contribution may not be withdrawn from such company during the term
of this Agreement without Lender's written consent. Such contribution shall only
be used to fund the ordinary business operations of such company, and may not be
used to any extraordinary expenditures (e.g. funding of a merger, acquisition,
winding down or insolvency proceeding) without Lender's written consent.
(M) Real Property Term Loan. The Real Property Term Loan referenced in
Section 2.2 of the Agreement is further conditioned upon (1) the receipt by
Lender of first priority mortgage liens on the Real Property insured by a title
insurance company acceptable to Lender with such coverages as are Lender
requires and subject only to such exceptions as Lender accepts, and (2) phase II
environmental studies for the Real Property which report results that are
acceptable to Lender or an environmental indemnity from and an escrow with
Browning-Ferris Industries and Borrowers, in form and substance satisfactory to
Lender.
(N) Equipment Term Loan. The Equipment Term Loan referred in Section
2.2 of the Agreement is further conditioned upon a satisfactory inspection
report of Lender's auditors.
REPORTING ADDENDUM
This Reporting Addendum is attached and made a part of that certain
Loan and Security Agreement, dated as of January 29, 1998 and entered into among
Greenman Technologies of Minnesota, Inc., Greenman Technologies of Georgia, Inc.
and Heller Financial, Inc.
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(A) Collateral Reports. Borrowers shall execute and deliver to Lender,
no later than the 15th day of each month, or more frequently if requested by
Lender, a detailed aging of the Accounts, a reconciliation statement and a
summary aging, by vendor, of all accounts payable and any book overdraft.
Borrowers shall deliver to Lender not less than twice per week, or more
frequently if requested by Lender, collection reports, sales journals and
invoices. Borrowers shall also deliver to Lender at Lender's request, original
delivery receipts, account debtors' purchase orders, shipping instructions,
bills of lading and other documentation respecting shipment arrangements. Absent
such a request by Lender, copies of all such documentation shall be held by
Borrowers as custodians for Lender.
(B) Returns. Returns and allowances, if any, as between Borrowers and
any of either of their account debtors, shall be permitted by Borrowers on the
same basis and in accordance with the usual customary practices of Borrowers as
they exist at the time of the execution and delivery of this Agreement. If at
any time prior to the occurrence of an Event of Default any account debtor
returns any inventory to either Borrower, such Borrower shall promptly determine
the reason for such return and, if such Borrower accepts such return, issue a
credit memorandum (with a copy to be sent to Lender) in the appropriate amount
to such account debtor. Borrowers shall promptly notify Lender of all returns
and recoveries and of all disputes and claims.
(C) Financial Statements, Reports Certificates. Borrowers agree to
deliver to Lender: (a) as soon as available, but in any event within 90 days
after the end of each month during each of Borrowers' fiscal years, a company
prepared balance sheet and profit and loss statement covering Borrowers'
operations during such period; and (b) as soon as available, but in any event
within 90 days after the end of each of Borrowers' fiscal years, financial
statements of both Borrower for each such fiscal period, reviewed by independent
certified public accountants acceptable to Lender. Such financial statements
shall include a balance sheet and profit and loss statement and the accountants'
letter to management. Together with the above, Borrowers shall also deliver
Borrowers' Form 10-Qs, 10-Ks or 8-Ks, if any, as soon as the same become
available, and any other report reasonably requested by Lender relating to the
Collateral and the financial condition of Borrowers and a certificate signed by
the chief financial officer of each Borrower to the effect that all reports,
statements or computer prepared information of any kind or nature delivered or
caused to be delivered to Lender fairly present the financial condition of
Borrowers and that there exists on the date of delivery of such certificate to
Lender no condition or event which constitutes an Event of Default.
(D) Tax Returns. Receipts. Borrowers agree to deliver to Lender copies
of each of Borrowers' future federal income tax returns, and any amendments
thereto, within 90 days of the filing thereof with the Internal Revenue Service.
Borrowers further agree to promptly deliver to Lender, upon request,
satisfactory evidence of Borrowers' payment of all federal withholding taxes
required to be paid by Borrowers.
(E) Guarantor Reports. Borrowers agree to cause any guarantor of any of
the Obligations to deliver its annual financial statements, Form 10-Qs, 10-Ks or
8-Ks, if any, and copies of all federal income tax returns as soon as the same
are available and in any event no later than 90 days after the same are required
to be filed by law.
-3-
<PAGE>
(F) Borrowing Base Certificates. Registers and Journals. On each
Business Day upon which Borrowers request a Revolving Advance, but in no event
less than twice during any week, Borrowers shall deliver to Lender for such
Business Day: (1) a Borrowing Base Certificate in the form prescribed by Lender;
(2) an invoice register or sales journal describing all sales of Borrowers, in
form and substance satisfactory to Lender, and, if Lender so requests, copies of
invoices evidencing such sales and proofs of delivery relating thereto; (3) a
cash receipts journal; (4) a credit memo journal; and (5) an adjustment journal,
setting forth all adjustments to Borrowers' accounts receivable.
(G) Appraisals. Appraisals as set forth in subsection 5.2.
(H) Projections. As soon as available and in any event no later than
the last day of Borrowers' fiscal year, Borrower will deliver consolidated and
consolidating projections of Borrowers and Subsidiaries for the forthcoming
fiscal year, month by month.
(I) Other Information. With reasonable promptness, Borrowers will
deliver such other information and data as Lender may reasonably request from
time to time.
-4-
EXHIBIT 10.75
PROMISSORY NOTE-REAL ESTATE
$1,400,000.00 January 29, 1998
Chicago, IL
FOR VALUE RECEIVED, the undersigned, GREENMAN TECHNOLOGIES OF
MINNESOTA, INC., a Minnesota corporation, and GREENMAN TECHNOLOGIES OF GEORGIA,
INC., a Georgia corporation (collectively, "Borrowers") promise to pay to the
order of HELLER FINANCIAL, INC. ("Lender") at its office, 500 West Monroe
Street, Chicago, IL 60661, or at such other place as the holder hereof may
appoint, the principal sum of (A) all costs and fees due under that certain Loan
And Security Agreement dated as of January 29, 1998 (the "Loan Agreement")
between Lender and Borrowers, and (B) $1,400,000.00. This sum is payable on the
earlier of (A) the acceleration of the obligations pursuant to the terms of this
Note or pursuant to subsection 7.3 of the Loan Agreement, or (B) the Termination
Date; provided, that prior to such time, the principal of this Note shall be
payable in thirty-six (36) consecutive monthly installments of principal plus
interest at a rate per annum equal to the Base Rate plus 1.75% (the "Interest
Rate") until due or declared due, commencing March 1, 1998, and continuing on
the same day of each consecutive calendar month thereafter until this Note is
fully paid, with the first such monthly installments each in the principal
amount of Twenty-Three Thousand Three Hundred Thirty-Three and 33/100 Dollars
($23,333.33), plus accrued interest, and the final monthly installment in the
amount of the entire then outstanding principal balance hereunder, plus all
accrued and unpaid interest charges and other fees or other amounts hereunder or
under the Loan Agreement. After the occurrence and during the continuance of an
Event of Default, the obligations under this Note shall, at the option of
Lender, bear interest at a rate per annum equal to 3.0% plus the Interest Rate
(the "Default Rate").
"Base Rate" means a variable rate of interest per annum equal to the
higher of (a) the rate of interest from time to time published by the Board of
Governors of the Federal Reserve System as the "Bank Prime Loan" rate in Federal
Reserve Statistical Release H.15(519) entitled "Selected Interest Rates" or any
successor publication of the Federal Reserve System reporting the Bank Prime
Loan rate or its equivalent, or (b) for any day, the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the
immediately following business day by the Board of Governors of the Federal
Reserve System as the Federal Funds Rate in Federal Reserve Statistical Release
H.15(519) entitled "Selected Interest Rates" or any successor publication of the
Federal Reserve System reporting the Federal Funds Effective Rate or its
equivalent or, if such rate is not published for any business day, the average
of the quotations for such business day from three Federal funds brokers of
recognized standing selected by payee or any holder of this Note. In the event
the Board of Governors of the Federal Reserve System ceases to publish a Bank
Prime Loan rate or its equivalent, the term "Base Rate" shall mean a variable
rate of interest per annum equal to the highest of the "prime rate", "reference
rate", "base rate", or other similar rate announced from time to time by any of
the three largest banks located in New York City, New York (with the
understanding that any such rate may merely be a reference rate and
<PAGE>
may not necessarily represent the lowest or best rate actually charged to any
customer by any such bank).
Interest will be computed on the basis of a 360 day year for the actual
number of days elapsed. All interest and other obligations of the undersigned
under this Note that are not paid when due shall be added to the principal
amount of this Note and thereafter shall bear interest at the applicable rate
specified in this Note.
To secure the payment of the principal and interest of this Note and
all renewals and extensions of the same or any part thereof and any and all
other sums, indebtedness and liabilities now or hereafter owing or to become
owing from the undersigned to the payee, or the holder hereof, howsoever
created, arising, evidenced or acquired by said payee or holder, whether direct
or contingent, the undersigned has granted and given to payee a general and
continuing lien and security interest in certain of its assets as listed and
described in the various financing agreements (collectively, the "Financing
Agreements") by and between the undersigned and payee, all as amended from time
to time, including, without limitation, the Loan Agreement (the "Loan
Agreement") and those certain Mortgage, Assignment of Rents and Security
Agreements of even date herewith (the "Mortgages") encumbering the Borrowers'
real property in Savage, Minnesota and Jackson, Georgia. Reference is hereby
made to the Loan Agreement and the Mortgages (the terms of which are
incorporated herein by reference) for a statement of the nature and extent of
the security and protection afforded, the rights of the payee or holder hereof
and the rights and obligations of the undersigned, together with all other and
sundry grants and pledges of security heretofore and hereafter given
(collectively called the "Collateral"), with full power and authority to the
payee or holder to transfer, assign, pledge or replace the same in whole or in
part.
Unless otherwise defined herein, capitalized terms used herein shall
have the meanings ascribed to such terms in the Loan Agreement.
If the undersigned voluntarily prepays all or any portion of the
outstanding principal balance of this Note, the undersigned, at the time of
prepayment, shall pay the payee, as compensation for the costs of being prepared
to make funds available to the undersigned under this Note, and not as a
penalty, an amount determined by multiplying the applicable percentage set forth
below by the principal amount being prepaid, three percent (3%) upon prepayment
during the first Loan Year; two percent (2%) upon prepayment during the second
Loan Year; and one percent (1 %) upon a prepayment during the third Loan Year.
In case of exchange of, or substitution for, or addition to the
Collateral, the provisions hereof shall extend to such exchanged, substituted,
or additional Collateral. Upon payment of this Note, the payee or holder may
nevertheless retain, the Collateral hereby pledged to secure the payment of any
other portion of the Obligations, if any for which the same is pledged. The
payee and every holder hereof are expressly released from any duty, obligation
or liability (in each case, if any): (a) to protect, collect, demand payment of,
protest or enforce the Collateral; (b) to take any action whatsoever in regard
to the Collateral or any part thereof; or (c) for any loss of or depreciation in
the value of the Collateral.
-2-
<PAGE>
If this Note or any renewal or extension thereof, or any other
indebtedness or obligations secured hereby, or any installment of principal or
interest upon any of the foregoing shall not be paid when due, or if the
undersigned defaults in the performance of any of the terms or provisions of
this Note, the Financing Agreements, any of the other Loan Documents, or any
other agreement with the payee or the holder of this Note, the payee or holder
may, without notice or demand, declare the entire amount of this Note and all
other indebtedness or liabilities of the undersigned to the payee or holder to
be immediately due and payable, proceed to collect and enforce the same at once
and proceed to enforce all rights and remedies provided under the Loan
Agreements or otherwise provided by law. Further, if the undersigned defaults on
any of its obligations hereunder or under the Loan Agreement, then Lender may
exercise any and all of its rights and remedies against the undersigned under
the Loan Agreement or applicable law.
The payee or holder shall not be required to look to the Collateral for
the payment of this Note, but may proceed against the undersigned in such manner
as it deems desirable. None of the rights or remedies of the payee or holder
hereunder or under any other Loan Document or under any other agreement are to
be deemed waived or affected by any failure or delay to exercise same. All
remedies conferred upon the payee or holder by this Note or any other remedies
may be exercised concurrently or consecutively at the option of the payee or
holder.
The undersigned and all endorsers and guarantors hereof hereby waive
presentment, demand for payment, notice of dishonor, notice of nonpayment,
protest and notice of protest, and all other notices and demands in connection
with the delivery, acceptance, performance, default or enforcement of this Note,
and agree that the liability of each of the undersigned shall be un conditional
without regard to the liability of any other party and shall not be affected by
any indulgence, extension of time, waiver, release of any party or collateral,
or other modification granted or consented to by payee or holder hereof.
This Note and the other Loan Documents embody the entire agreement
among the parties hereto and supersede any and all prior commitments,
agreements, representations, and understandings, whether written or oral,
relating to the subject matter hereof, and may not be contradicted or varied by
evidence of prior, contemporaneous, or subsequent oral agreements or discussions
of the undersigned and payee.
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS, WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES.
THE UNDERSIGNED HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED WITHIN THE COUNTY OF COOK STATE OF ILLINOIS AND
IRREVOCABLY AGREES THAT, SUBJECT TO PAYEE'S ELECTION, ALL ACTIONS OR PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS NOTE, OR THE OTHER LOAN DOCUMENTS SHALL BE
LITIGATED IN SUCH COURTS. THE UNDERSIGNED EXPRESSLY SUBMITS AND CONSENTS TO THE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS. THE UNDERSIGNED HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
-3-
<PAGE>
PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON THE
UNDERSIGNED BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED
TO THE UNDERSIGNED AT THE ADDRESS SET FORTH AS ITS PRINCIPAL PLACE OF BUSINESS
ADDRESS IN THE LOAN AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN (10)
DAYS AFTER THE SAME HAS BEEN POSTED.
THE UNDERSIGNED WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF THIS NOTE AND THE OTHER LOAN DOCUMENTS.
THE UNDERSIGNED ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR THE
UNDERSIGNED AND PAYEE TO ENTER INTO A BUSINESS RELATIONSHIP, THAT THE
UNDERSIGNED AND PAYEE HAVE RELIED ON THE WAIVER IN ENTERING INTO AND MAKING THE
LOANS EVIDENCED UNDER THIS NOTE AND IN ENTERING INTO THE OTHER LOAN DOCUMENTS,
AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE
DEALINGS. THE UNDERSIGNED FURTHER WARRANTS AND REPRESENTS THAT THE UNDERSIGNED
HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT THE UNDERSIGNED
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.
GREENMAN TECHNOLOGIES OF MINNESOTA, INC.,
a Minnesota corporation
By: /s/ Robert H. Davis
Its: Executive Vice President
GREENMAN TECHNOLOGIES OF GEORGIA, INC.,
a Georgia corporation
By: /s/ Robert H. Davis
Its: Executive Vice President
-4-
EXHIBIT 10.76
PROMISSORY NOTE-EQUIPMENT
$1,900,000.00 January 29, 1998
Chicago, IL
FOR VALUE RECEIVED, the undersigned, GREENMAN TECHNOLOGIES OF
MINNESOTA, INC., a Minnesota corporation, and GREENMAN TECHNOLOGIES OF GEORGIA,
INC., a Georgia corporation (collectively, "Borrowers") promise to pay to the
order of HELLER FINANCIAL, INC. ("Lender") at its office, 500 West Monroe
Street, Chicago, IL 60661, or at such other place as the holder hereof may
appoint, the principal sum of (A) all costs and fees due under that certain Loan
And Security Agreement dated as of January 29, 1998 (the "Loan Agreement")
between Lender and Borrowers, and (B) the lesser of (1) 80% of the aggregate
(for both Borrowers, combined), forced liquidation value of Borrowers' equipment
("equipment" being defined by the Uniform Commercial Code); or (2)
$1,900,000.00. This sum is payable on the earlier of (A) the acceleration of the
obligations pursuant to the terms of this Note or pursuant to subsection 7.3 of
the Loan Agreement, or (B) the Termination Date; provided, that prior to such
time, the principal of this Note shall be payable in thirty-six (36) consecutive
monthly installments of principal plus interest at a rate per annum equal to the
Base Rate plus 1.75% (the "Interest Rate") until due or declared due, commencing
March 1, 1998, and continuing on the same day of each consecutive calendar month
thereafter until this Note is fully paid, with the first such monthly
installments each in the principal amount of Thirty-One Thousand Six Hundred
Sixty-Six and 67/100 Dollars ($31,666.67), plus accrued interest, and the final
monthly installment in the amount of the entire then outstanding principal
balance hereunder, plus all accrued and unpaid interest charges and other fees
or other amounts hereunder or under the Loan Agreement. After the occurrence and
during the continuance of an Event of Default, the obligations under this Note
shall, at the option of Lender, bear interest at a rate per annum equal to 3.0%
plus the Interest Rate (the "Default Rate").
"Base Rate" means a variable rate of interest per annum equal to the
higher of (a) the rate of interest from time to time published by the Board of
Governors of the Federal Reserve System as the "Bank Prime Loan" rate in Federal
Reserve Statistical Release H.15(519) entitled "Selected Interest Rates" or any
successor publication of the Federal Reserve System reporting the Bank Prime
Loan rate or its equivalent, or (b) for any day, the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the
immediately following business day by the Board of Governors of the Federal
Reserve System as the Federal Funds Rate in Federal Reserve Statistical Release
H.15(519) entitled "Selected Interest Rates" or any successor publication of the
Federal Reserve System reporting the Federal Funds Effective Rate or its
equivalent or, if such rate is not published for any business day, the average
of the quotations for such business day from three Federal funds brokers of
recognized standing selected by payee or any holder of this Note. In the event
the Board of Governors of the Federal Reserve System ceases to publish a Bank
Prime Loan rate or its equivalent, the term "Base Rate" shall mean a variable
rate of interest per annum equal to the highest of the "prime rate", "reference
rate", "base rate", or other similar rate announced from time to time by any of
the three largest banks located in New York City, New York (with the
understanding that any such rate may merely be a reference rate and
<PAGE>
may not necessarily represent the lowest or best rate actually charged to any
customer by any such bank).
Interest will be computed on the basis of a 360 day year for the actual
number of days elapsed. All interest and other obligations of the undersigned
under this Note that are not paid when due shall be added to the principal
amount of this Note and thereafter shall bear interest at the applicable rate
specified in this Note.
To secure the payment of the principal and interest of this Note and
all renewals and extensions of the same or any part thereof and any and all
other sums, indebtedness and liabilities now or hereafter owing or to become
owing from the undersigned to the payee, or the holder hereof, howsoever
created, arising, evidenced or acquired by said payee or holder, whether direct
or contingent, the undersigned has granted and given to payee a general and
continuing lien and security interest in certain of its assets as listed and
described in the various financing agreements (collectively, the "Financing
Agreements") by and between the undersigned and payee, all as amended from time
to time, including, without limitation, the Loan Agreement (the "Loan
Agreement") to which reference is made for a statement of the nature and extent
of the security and protection afforded, the rights of the payee or holder
hereof and the rights and obligations of the undersigned, together with all
other and sundry grants and pledges of security heretofore and hereafter given
(collectively called the "Collateral"), with full power and authority to the
payee or holder to transfer, assign, pledge or replace the same in whole or in
part.
Unless otherwise defined herein, capitalized terms used herein shall
have the meanings ascribed to such terms in the Loan Agreement.
If the undersigned voluntarily prepays all or any portion of the
outstanding principal balance of this Note, the undersigned, at the time of
prepayment, shall pay the payee, as compensation for the costs of being prepared
to make funds available to the undersigned under this Note, and not as a
penalty, an amount determined by multiplying the applicable percentage set forth
below by the principal amount being prepaid, three percent (3%) upon prepayment
during the first Loan Year; two percent (2%) upon prepayment during the second
Loan Year; and one percent (1%) upon a prepayment during the third Loan Year.
In case of exchange of, or substitution for, or addition to the
Collateral, the provisions hereof shall extend to such exchanged, substituted,
or additional Collateral. Upon payment of this Note, the payee or holder may
nevertheless retain the Collateral hereby pledged to secure the payment of any
other portion of the Obligations, if any, for which the same is pledged. The
payee and every holder hereof are expressly released from any duty, obligation
or liability (in each case, if any): (a) to protect, collect, demand payment of,
protest or enforce the Collateral; (b) to take any action whatsoever in regard
to the Collateral or any part thereof; or (c) for any loss of or depreciation in
the value of the Collateral.
If this Note or any renewal or extension thereof, or any other
indebtedness or obligations secured hereby, or any installment of principal or
interest upon any of the foregoing shall not be paid when due, or if the
undersigned defaults in the performance of any of the terms or provisions of
this
-2-
<PAGE>
Note, the Financing Agreements, any of the other Loan Documents, or any other
agreement with the payee or the holder of this Note, the payee or holder may,
without notice or demand, declare the entire amount of this Note and all other
indebtedness or liabilities of the undersigned to the payee or holder to be
immediately due and payable, proceed to collect and enforce the same at once and
proceed to enforce all rights and remedies provided under the Loan Agreements or
otherwise provided by law. Further, if the undersigned defaults on any of its
obligations hereunder or under the Loan Agreement, then Lender may exercise any
and all of its rights and remedies against the undersigned under the Loan
Agreement or applicable law.
The payee or holder shall not be required to look to the Collateral for
the payment of this Note, but may proceed against the undersigned in such manner
as it deems desirable. None of the rights or remedies of the payee or holder
hereunder or under any other Loan Document or under any other agreement are to
be deemed waived or affected by any failure or delay to exercise same. All
remedies conferred upon the payee or holder by this Note or any other remedies
may be exercised concurrently or consecutively at the option of the payee or
holder.
The undersigned and all endorsers and guarantors hereof hereby waive
presentment, demand for payment, notice of dishonor, notice of nonpayment,
protest and notice of protest, and all other notices and demands in connection
with the delivery, acceptance, performance, default or enforcement of this Note,
and agree that the liability of each of the undersigned shall be un conditional
without regard to the liability of any other party and shall not be affected by
any indulgence, extension of time, waiver, release of any party or collateral,
or other modification granted or consented to by payee or holder hereof.
This Note and the other Loan Documents embody the entire agreement
among the parties hereto and supersede any and all prior commitments,
agreements, representations, and understandings, whether written or oral,
relating to the subject matter hereof, and may not be contradicted or varied by
evidence of prior, contemporaneous, or subsequent oral agreements or discussions
of the undersigned and payee.
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS, WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES.
THE UNDERSIGNED HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED WITHIN THE COUNTY OF COOK STATE OF ILLINOIS AND
IRREVOCABLY AGREES THAT, SUBJECT TO PAYEE'S ELECTION, ALL ACTIONS OR PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS NOTE, OR THE OTHER LOAN DOCUMENTS SHALL BE
LITIGATED IN SUCH COURTS. THE UNDERSIGNED EXPRESSLY SUBMITS AND CONSENTS TO THE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS. THE UNDERSIGNED HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON THE
UNDERSIGNED BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED
TO THE UNDERSIGNED AT THE ADDRESS SET
-3-
<PAGE>
FORTH AS ITS PRINCIPAL PLACE OF BUSINESS ADDRESS IN THE LOAN AGREEMENT AND
SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED.
THE UNDERSIGNED WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF THIS NOTE AND THE OTHER LOAN DOCUMENTS.
THE UNDERSIGNED ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR THE
UNDERSIGNED AND PAYEE TO ENTER INTO A BUSINESS RELATIONSHIP, THAT THE
UNDERSIGNED AND PAYEE HAVE RELIED ON THE WAIVER IN ENTERING INTO AND MAKING THE
LOANS EVIDENCED UNDER THIS NOTE AND IN ENTERING INTO THE OTHER LOAN DOCUMENTS,
AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE
DEALINGS. THE UNDERSIGNED FURTHER WARRANTS AND REPRESENTS THAT THE UNDERSIGNED
HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT THE UNDERSIGNED
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.
GREENMAN TECHNOLOGIES OF MINNESOTA, INC.,
a Minnesota corporation
By: /s/ Robert H. Davis
Its: Executive Vice President
GREENMAN TECHNOLOGIES OF GEORGIA, INC.,
a Georgia corporation
By: /s/ Robert H. Davis
Its: Executive Vice President
-4-
EXHIBIT 10.77
STOCK PLEDGE AND SECURITY AGREEMENT
This Agreement is made as of January 29, 1998, by and between GREENMAN
TECHNOLOGIES, INC., a Delaware corporation (the "Company") and HELLER FINANCIAL,
INC., a Delaware corporation, with offices at 500 West Monroe Street, Chicago,
Illinois 60661 ("Heller").
Whereas, Heller and GreenMan Technologies of Minnesota, Inc., a
Minnesota corporation ("GTIM") and GreenMan Technologies of Georgia, Inc., a
Georgia corporation ("GTIG") have entered into various financing arrangements
including, without limitation, that certain Loan and Security Agreement of even
date herewith and various related instruments, documents and agreements, all as
amended from time to time (collectively called the "Financing Arrangement"); and
Whereas, the Company, as the sole shareholder of GreenMan Acquisition
Corp., a Delaware corporation ("GAC"), which is the sole shareholder of GTIM and
GTIG has agreed to guaranty the obligations of GTIM and GTIG with respect to the
Financing Arrangement pursuant to the terms of that certain Guaranty of Payment
of even date herewith (the "Guaranty") and, in order to secure the payment and
performance of its obligations under the Guaranty of the Financing Arrangement,
has agreed to pledge and grant a lien and security interest in all of the
securities listed and described in Section 1 hereof and Exhibit "A" hereto;
Now, Therefore, in consideration of the foregoing, the covenants and
conditions herein contained and the mutual agreements of the parties hereto, the
Company and Heller hereby agree as follows:
1. Collateral. To secure the payment and performance of the Company's
obligations and liabilities under the Financing Arrangement, absolute
or contingent, due or to become due, direct or indirect, and whether
now existing or hereafter and howsoever arising, the Company hereby
pledges and assigns to Heller and grants unto Heller a security
interest in the following (hereinafter collectively called the
"Collateral"):
1.1 The securities described in the attached Exhibit "A", with stock
powers duly endorsed in blank, herewith delivered to Heller;
1.2 Any and all other or additional securities to which the Company
(without additional consideration) now is, or hereafter may be,
entitled by virtue of its ownership of any of the foregoing securities
as the result of any corporate reorganization, merger or consolidation,
stock split, stock dividend or otherwise; and
<PAGE>
1.3 All proceeds and products of the foregoing, including, without
limitation, any and all dividends, distributions and other amounts to
which Heller is entitled pursuant to the provisions of Section 4
hereof.
2. Representations and Warranties. The Company represents and warrants to Heller
that:
2.1 The execution, delivery and performance by the Company of this
Agreement will not violate any provision of law, any order of any court
or other agency of government, or any indenture agreement or other
instrument to which the Company is a party or by which the Company or
any of the Company's property is bound or be in conflict with, result
in a breach of or constitute (with due notice or lapse of time, or
both) a default under any such indenture, agreement or other
instrument, or result in the creation or imposition of any lien, charge
or encumbrance of any nature whatsoever upon any of the Company's
property or assets, except as contemplated by the provisions of this
Agreement;
2.2 This Agreement constitutes a legal, valid and binding obligation of
the Company in accordance with its terms;
2.3 As to the Collateral deposited with Heller on the date hereof, (i)
the Company is the legal and beneficial owner thereof; (ii) the same is
validly issued, fully paid and non assessable and is registered in the
Company's name; (iii) the stock transfer forms attached to the
certificates representing such Collateral have been duly executed and
delivered by the Company to Heller; and (iv) none of such Collateral is
subject to any security interest, pledge, lien or other encumbrance, or
adverse claim of any kind whatsoever, except in favor of Heller;
2.4 No consent of, or registration or filing with, any person or
entity, including under any state or federal securities law or
regulation, is required for the pledge of the Collateral hereunder; and
2.5 The Collateral deposited with Heller on the date hereof constitutes
all of the issued and outstanding stock of GreenMan Technologies of
Minnesota, Inc. and GreenMan Technologies of Georgia, Inc.
3. Stock Splits, Stock Dividends, Etc.
3.1 In the event that the Company, now is, or hereafter becomes,
entitled (without additional consideration) to other or additional
securities as the result of any corporate reorganization, merger or
consolidation, stock split, stock dividend or otherwise, the Company
shall:
3.1.1 Cause the issuer to deliver to Heller the certificates
evidencing the Company's ownership thereof, and if such
certificates are delivered to the Company, take possession in
trust for Heller and forthwith deliver the same to Heller;
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3.1.2 Deliver to Heller a stock transfer form with respect to
such securities, executed in blank by the Company;
3.1.3 Deliver to Heller such other certificates, forms and
other instruments as Heller may request in connection with
such pledge.
3.2 The Company agrees that such securities shall constitute a portion
of the Collateral and be subject to this Agreement in the same manner
and to the same extent as the securities pledged hereby to Heller on
the date hereof
3.3 The Company shall not permit the issuer of the Collateral to issue
any voting or non voting capital stock or any options, warrants or
other rights to purchase or subscribe for any voting or non-voting
capital stock, or any evidence of indebtedness that is at any time
convertible into capital stock or has, or will have, at any time voting
rights.
4. Voting Power, Dividends. Substitutions. Unless and until an Event of Default
hereunder shall have occurred, the Company shall be entitled to: (a) Exercise
all voting powers pertaining to the securities included in the Collateral for
any purpose not inconsistent with, or in violation of, the provisions of this
Agreement; and (b) Collect and receive all cash dividends with respect to the
Collateral provided, however, Heller shall be entitled to collect and receive
all other dividends and distributions on such securities (whether in stock, cash
or other property) including any such dividends or distributions received or
receivable in exchange or distributable upon the liquidation, whether voluntary
or involuntary, of any issuer thereof. Cash received by Heller pursuant to the
provisions of this Section 4 may be commingled by Heller with its other funds,
and shall be non-interest bearing. The Company agrees that if it receives any of
such dividends, distributions, securities and other amounts to which Heller is
entitled, it shall take possession thereof in trust for Heller and forthwith
deliver the same to Heller, and agrees that the same shall constitute a portion
of the Collateral and be subject to this Agreement in the same manner and to the
same extent as the Collateral pledged to Heller on the date hereof.
5. Default and Remedies.
5.1 The occurrence of any of the following shall constitute an Event of
Default hereunder:
5.1.1 Any representation or warranty made by the Company to
Heller hereunder, or in any certificate delivered to Heller
pursuant hereto, or under any other agreement between the
Company and Heller, shall prove to have been false or
misleading in any material respect as of the date on which the
same was made; or
5.1.2 The Company shall fail to duly observe or perform any
other covenant or agreement made by the Company hereunder or
under any other agreement made by the Company and Heller; or
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5.1.3 An Event of Default under the Financing Arrangement
shall occur and be continuing; or
5.1.4 Bankruptcy, reorganization, receivership, insolvency or
other similar proceedings shall be instituted by or against
the Company or all or any part of its property under the
Federal Bankruptcy Act or other law of the United States or of
any state or other competent jurisdiction and, if against the
Company, the Company shall consent thereto or shall fail to
cause the same to be discharged within thirty (30) days.
5.2 If an Event of Default shall occur and be continuing, Heller may,
at its option, subject to any applicable cure periods provided in the
Financing Arrangement:
5.2.1 Immediately upon giving notice to the Company, cause the
Collateral to be registered in its name or in the name of its
nominee;
5.2.2 Immediately upon giving notice to the Company, exercise
all voting powers pertaining to such securities and otherwise
exercise all ownership rights as though Heller were the
outright owner of the Collateral (the Company hereby
irrevocably constituting and appointing Heller its proxy and
attorney-in-fact with full power of substitution so to do);
5.2.3 Receive all dividends and all other distributions of any
kind whatsoever on all or any of the Collateral;
5.2.4 Exercise any and all rights of collection, conversion or
exchange, and any and all other rights, privileges, options or
powers of the Company pertaining or relating to the Collateral
(the Company hereby irrevocably constituting and appointing
Heller its proxy and attorney-in-fact with full power of
substitution so to do);
5.2.5 Sell, assign and deliver the whole, or from time to
time, any part of the Collateral at any broker's board or at
any private sale or at public auction, with or without demand
for performance, advertisement or notice of the time or place
of sale or adjournment thereof or otherwise, and free from any
right of redemption, stay and/or appraisal which the Company
may now or hereafter have under applicable laws (all of which
the Company hereby expressly waives) for cash, for credit or
for other property, for immediate or future delivery, and for
such price or prices and on such terms as Heller in its
discretion may determine; and
5.2.6 Exercise any other remedy specifically granted under
this Agreement or now or hereafter existing in equity, at law,
by virtue of statute or otherwise.
5.3 For the purposes of this Section 5, an agreement to sell all or any
part of the Collateral shall be treated as a sale thereof and Heller
shall be free to carry out such sale
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pursuant to such agreement, and the Company shall not be entitled to
the return of any of the same subject thereto, notwithstanding that
after Heller shall have entered into such an agreement, all Events of
Default hereunder may have been remedied or all obligations under the
Financing Arrangement may have been paid and performed in full.
5.4 At any sale made pursuant to Subsection 5.2, Heller may bid for and
purchase, free from any right or equity of redemption on the part of
the Company (the same being hereby waived and released), any part of or
all of the Collateral that is offered for sale and may make payment on
account thereof by using any claim then due and payable to Heller by
the Company as a credit against the purchase price, and Heller may,
upon compliance with the terms of sale, hold, retain and dispose of
such securities without further accountability therefore.
5.5 Heller shall apply the proceeds of any sale of the whole or any
part of the Collateral and any other monies at the time held by Heller
under the provisions of this Agreement, after deducting all costs and
expenses of collection, sale and delivery (including, without
limitation, reasonable attorneys' fees and other legal expenses)
incurred by Heller in connection with such sale, towards the payment of
the Company's obligations, accrued and executory, under the Financing
Arrangement and any other obligations of the Company to Heller. After
full and final payment to Heller of all such obligations, Heller shall
remit any surplus to the Company.
5.6 Heller shall not have any duty to exercise any of the rights,
privileges, options or powers or to sell or otherwise realize upon any
of such securities, as hereinbefore authorized, and Heller shall not be
responsible for any failure to do so or delay in so doing.
5.7 Any sale of, or the grant of options to purchase, or any other
realization upon, all or any portion of such securities, under
Subsection 5.2 shall operate to divest all right, title, interest,
claim and demand, either at law or in equity, of the Company in and to
such securities so sold, optioned or realized upon, or any part
thereof, from, through and under the Company.
5.8 The Company recognizes that Heller may be unable to effect a public
sale of all or a part of the Collateral by reason of certain
prohibitions contained in the Securities Act of 1933 as amended (the
"Act") or other applicable state or federal laws, or that it may be
able to do so only after delay which might adversely affect the value
that might be realized upon the sale of the Collateral. Accordingly,
the Company agrees that Heller may, without the necessity of attempting
to cause any registration of the Collateral to be effected under the
Act or other applicable state or federal laws, sell the Collateral or
any part thereof in one or more private sales to a restricted group of
purchasers who may be required to agree, among other things, that they
are acquiring the Collateral for their own account for investment and
not with a view to the distribution or resale thereof. The Company
agrees that any such private sale may be at prices or on terms less
favorable to the owner of the Collateral than would be the case if they
were sold at public sale, and that any such private sale shall be
deemed to have been made in a commercially reasonable manner.
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6. Heller's Obligations, Custodial Agreement.
6.1 Heller shall have no duty to protect, preserve or enforce rights
under the Collateral other than a duty of reasonable custodial care of
the Collateral in its possession. Heller shall have no liability for
the exercise or failure to exercise any puts, calls, conversion rights,
options, warrants, rights to vote or consent or any other rights with
respect to the Collateral.
6.2 The Company understands and agrees that Heller may deposit the
Collateral with a custodian and hereby agrees to pay reasonable fees of
any such custodian in connection with its acting as custodian.
7. Termination of Agreement. Upon termination of the Financing Arrangement
and the payment in full of all of the obligations secured hereby,
Heller shall cause to be transferred to the Company all of the
Collateral (less any portion of same sold, transferred or disposed of
pursuant to, and under the circumstances specified in, Section 5
hereof), and this Agreement shall thereupon be terminated.
8. Miscellaneous.
8.1 The Company further unconditionally agrees that if the Company is
in default under the Financing Arrangement, Heller may exercise its
rights and remedies hereunder prior to, concurrently with, or
subsequent to, the exercise by Heller of its rights and remedies under
the Financing Arrangement, or otherwise, or against any guarantor of
the Company's obligations.
8.2 Should Heller at any time assign any of its rights under the
Financing Arrangement, Heller may assign its rights under this
Agreement, and may deliver the Collateral or any portion thereof to the
assignee who shall thereupon, to the extent provided in the instrument
of assignment, have all of the rights of Heller hereunder with respect
to the Collateral and Heller shall, thereafter, be fully discharged
from any responsibility with respect to the Collateral so delivered to
such assignee. No such assignment, however, shall relieve such assignee
of those duties and obligations of Heller specified hereunder.
8.3 Each and every right, remedy and power granted to Heller hereunder
shall be cumulative and in addition to any other right, remedy or power
herein specifically granted or now or hereafter existing in equity, at
law, by virtue of statue or otherwise and may be exercised by Heller,
from time to time, concurrently or independently and as often and in
such order as Heller may deem expedient. Any failure or delay on the
part of Heller in exercising any such right, remedy or power, or
abandonment or discontinuance of steps to enforce the same, shall not
operate as a waiver thereof or affect Heller's right thereafter to
exercise the same, and any single or partial exercise of any such
right, remedy or power shall not preclude any other or further exercise
thereof or the exercise of any other right, remedy or power.
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8.4 Any modification or waiver of any provision of this Agreement, or
any consent to any departure by Heller therefrom, shall not be
effective unless the same is in writing and signed by Heller, and then
such modification, waiver or consent shall be effective only in the
specific instance and for the specific purpose given. Any notice to or
demand on the Company not specifically required of Heller hereunder
shall not entitle the Company to any other or further notice or demand
in the same, similar or other circumstances unless specifically
required hereunder.
8.5 The Company agrees that at any time, and from time to time, after
the execution and delivery of this Agreement, the Company will, upon
the request of Heller, execute and deliver such further documents and
do such further acts and things as Heller may reasonably request in
order to give effect to this Agreement.
8.6 Any notice, request, demand, consent, approval or other
communication provided or permitted hereunder shall be in writing and
be given by personal delivery or sent by United States first-class
mail, postage prepaid, addressed to the party for whom it is intended,
at its address stated in the first paragraph of this agreement or such
other address as either party requests by proper notice hereunder.
8.7 This Agreement shall be deemed to have been made under, and shall
be governed by, the laws of the State of Illinois in all respects,
including matters of construction, validity and performance.
8.8 If any provision of this Agreement is prohibited by, or is unlawful
or unenforceable under, any applicable law of any jurisdiction, such
provision shall, as to such jurisdiction, be ineffective to the extent
of such prohibition without invalidating the remaining provisions
hereof; provided, however, that any such prohibition in any
jurisdiction shall not invalidate such provision in any other
jurisdiction, and, provided further, that where the provisions of any
such applicable law may be waived, they hereby are waived by the
Company to the full extent permitted by law to the end that this
Agreement shall be deemed to be valid and binding in accordance with
its terms.
8.9 This Agreement shall inure to the benefit of the successors and
assigns of Heller and shall be binding upon the heirs, executors,
administrators, legal representatives, successors and assigns of the
Company.
In Witness Whereof, the Company and Heller have caused this Agreement to be
executed as of the date first above written.
GREENMAN TECHNOLOGIES, INC.,
a Delaware corporation
By: /s/ Robert H. Davis
Name: Robert H. Davis
Title: President & CEO
HELLER FINANCIAL, INC.
By: /s/ Michael L. DuBois
Name: Michael L. DuBois
Title: Vice President
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EXHIBIT "A"
l. Capitalization and Stockholders of: GreenMan Acquisition Corp.
Authorized: 3,000 Shares
Par Value: $.001
Issued and Outstanding: l00 Shares
Shares Held by Pledgor: l00 Shares
Stock Certificate Number: l
EXHIBIT 10.78
GUARANTY OF PAYMENT
THIS GUARANTY OF PAYMENT (this "Guaranty") is made as of January 29,
1998 by GreenMan Technologies, Inc., a Delaware corporation ("Guarantor") in
favor of Heller Financial, Inc., a Delaware corporation ("Lender").
RECITALS
A. Financial Accommodations. Lender and GreenMan Technologies of
Minnesota, Inc., and GreenMan Technologies of Georgia, Inc. (collectively
referred to herein as "Borrower") are concurrently herewith entering into that
certain Loan and Security Agreement (the "Loan Agreement") of even date herewith
pursuant to which Lender shall extend financial accommodations to Borrower.
B. Inducement. To induce Lender to extend to Borrower the financial
accommodations set forth in the Loan Agreement, Guarantor is willing to execute
and deliver this Guaranty.
In consideration of the foregoing, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Guarantor hereby agrees as follows:
SECTION 1 DEFINED TERMS
All capitalized terms used herein shall have the meanings ascribed
thereto in the Loan Agreement unless otherwise defined herein.
SECTION 2 THE GUARANTY
2.1 Guaranty of Obligations. Guarantor jointly and severally (if more
than one), unconditionally and absolutely, if more than one, guarantees the full
and prompt payment and performance when due, whether at maturity or earlier, by
reason of acceleration or otherwise, and at all times thereafter, of the
indebtedness, liabilities and obligations of every kind and nature of Borrower
to Lender, including those arising under or in any way relating to the Loan
Agreement or any of the other Loan Documents, howsoever created, incurred or
evidenced, whether direct or indirect, absolute or contingent, now or hereafter
existing, due or to become due, and howsoever owned, held or acquired by Lender
(collectively, the "Obligations"). Without limitation to the foregoing, the
Obligations shall include (a) all reasonable attorneys' and paralegals' fees,
costs and expenses and all court costs and costs of appeal incurred by Lender in
collecting any amount due Lender under this Guaranty or in prosecuting any
action against Borrower, Guarantor or any other guarantor with respect to all or
any part of the Obligations, and (b) all interest, fees, costs and expenses due
Lender after the filing of a
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bankruptcy petition by or against Borrower regardless of whether such amounts
can be collected during the pendency of the bankruptcy proceedings.
2.2 Continuing Guaranty; Guaranty of Payment. This Guaranty is a
continuing guaranty of the Obligations, and Guarantor agrees that the
obligations of Guarantor to Lender hereunder shall be primary obligations, shall
not be subject to any counterclaim, set-off, abatement, deferment or defense
based upon any claim that Guarantor may have against Lender, Borrower or any
other person or entity, and shall remain in force and effect without regard to,
and shall not be released, discharged or affected in any way by any
circumstances or condition (whether or not Guarantor shall have any knowledge
thereof), including, without limitation: (a) the attempt or the absence of any
attempt by Lender to obtain payment or performance by Borrower or any other
guarantor (this being a guaranty of payment and performance and not of
collection); (b) Lender's delay in enforcing Guarantor's Obligations hereunder,
or any prior partial exercise by Lender of any right or remedy against Guarantor
hereunder; (c) the lack of validity or enforceability of, or Lender's waiver or
consent with respect to, any provision of any instrument evidencing, securing or
otherwise relating to the Obligations, or any part thereof; (d) the failure by
Lender to take any steps to perfect, maintain and enforce its security
interests, or to preserve its rights to any security or collateral, for the
Obligations; (e) any voluntary or involuntary bankruptcy, insolvency,
reorganization, arrangement, readjustment, assignment for the benefit of
creditors, composition, receivership, liquidation, marshaling of assets and
liabilities or similar events or proceedings with respect to Borrower or
Guarantor, as applicable, or any of their respective properties (each, an
"Insolvency Proceeding"), or any action taken by Lender, any trustee or receiver
or by any court in any such proceeding; (f) in any proceeding under Title 11 of
the United States Code (11 U.S.C. Section 101 et seq.), as amended (the
"Bankruptcy Code"), (i) any election by Lender under Section 111 l(b)(2) of the
Bankruptcy Code, (ii) any borrowing or grant of a security interest by Borrower
as debtor-in-possession under Section 364 of the Bankruptcy Code, (iii) the
inability of Lender to enforce the Obligations against Borrower by application
of the automatic stay provisions of Section 362 of the Bankruptcy Code, or (iv)
the disallowance, under Section 502 of the Bankruptcy Code, of all or any
portion of Lender's claim(s) against Borrower for repayment of the Obligations;
(g) the failure of Guarantor to receive notice of any intended disposition of
the collateral for the Obligations; (h) any merger or consolidation of Borrower
into or with any other entity, or any sale, lease or transfer of any of the
assets of Borrower or Guarantor to any other person or entity; (i) any change in
the ownership of Borrower or any change in the relationship between Borrower and
Guarantor, or any termination of any such relationship; (k) the death or
incapacity of Guarantor; and (l) any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of Borrower, Guarantor or
any other guarantor.
Guarantor hereby expressly waives and surrenders any defense to its
liability under this Guaranty based upon any of the foregoing acts, omissions,
agreements, waivers or matters. It is the purpose and intent of this Guaranty
that the obligations of Guarantor hereunder shall be absolute and unconditional
under any and all circumstances.
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2.3 Rights of Lender. Lender is hereby authorized, without notice to or
demand of Guarantor and without affecting the liability of Guarantor hereunder,
to take any of the following actions from time to time: (a) increase or decrease
the amount of, or renew, extend, accelerate or otherwise change the time for
payment of, or other terms relating to, the Obligations, or otherwise modify,
amend or change the terms of any promissory note or other agreement evidencing,
securing or otherwise relating to any of the Obligations, including, without
limitation, the making of additional advances thereunder; (b) accept and apply
any payments on or recoveries against the Obligations from any source, and any
proceeds of any security therefor, to the Obligations in such manner, order and
priority as Lender may elect; (c) take, hold, sell, release or otherwise dispose
of all or any security for the Obligations or the payment of this Guaranty; (d)
settle, release, compromise, collect or otherwise liquidate the Obligations or
any portion thereof; (e) accept, hold, substitute, add or release any other
guaranty or endorsements of the Obligations; and (f) at any time after maturity
of the Obligations, appropriate and apply toward payment of the Obligations (i)
any indebtedness due or to become due from Lender to Guarantor, and (ii) any
moneys, credits, or other property belonging to Guarantor at any time held by or
coming into the possession of Lender or any affiliates thereof, whether for
deposit or otherwise.
SECTION 3 GUARANTOR'S WAIVERS
3.1 Statutes of Limitation. Guarantor irrevocably waives all statutes
of limitation as a defense to any action or proceeding brought against Guarantor
by Lender, to the fullest extent permitted by law.
3.2 Election of Remedies. Guarantor irrevocably waives any defense
based upon an election of remedies made by Lender or any other election afforded
to Lender pursuant to applicable law, including, without limitation, (a) any
election to proceed by judicial or nonjudicial foreclosure or by deed in lieu
thereof, or any election of remedies which destroys or otherwise impairs the
subrogation rights of the Guarantor or the rights of the Guarantor to proceed
against Borrower for reimbursement, or both, (b) the waiver by Lender, either by
action or inaction of Lender or by operation of law, of a deficiency judgment
against Borrower, and (c) any election pursuant to an Insolvency Proceeding.
3.3 Rights of Subrogation and Other Rights. Guarantor irrevocably
waives (a) all rights at law or in equity to seek subrogation, contribution,
indemnification or any other form of reimbursement or repayment from Borrower or
any other person or entity now or hereafter primarily or secondarily liable for
any of the Obligations for any disbursements made by any Guarantor under or in
connection with this Guaranty, (b) all claims of any kind or type against
Borrower as a result of any payment made by Guarantor to Lender, and (c) any
right to participate in any security now or hereafter held by Lender. In
furtherance, and not in limitation, of the foregoing, Guarantor agrees that any
payment to Lender pursuant to this Guaranty shall be deemed a contribution to
the capital of Borrower
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or other obligated party and shall not constitute Guarantor a creditor of such
party. Guarantor further agrees that to the extent the waiver of its rights of
subrogation as set forth herein is found by a court of competent jurisdiction to
be void or voidable for any reason, any rights of subrogation Guarantor may have
against Borrower or against any collateral or security for any of the
Obligations shall be junior and subordinate to any rights Lender may have
against Borrower and to all right, title and interest Lender may have is such
collateral or security.
3.4 Demands and Notices. Guarantor irrevocably waives all presentments,
demands for performance, protests, notices of protest, notices of dishonor,
notices of acceptance of this Guaranty and of the existence, creation or
incurring of new or additional Obligations, and demands and notices of every
kind that may be required to be given by any statute or rule or law.
3.5 Borrower Information; Other Defenses. Guarantor irrevocably waives
(a) any duty of Lender to advise Guarantor of any information known to Lender
regarding the financial condition of Borrower (it being the obligation of
Guarantor to keep informed regarding such condition), and (b) any defense based
on any claim that Guarantor's obligations exceed or are more burdensome than
those of Borrower, and any and all other defenses now or at any time hereafter
available to Guarantor at law or in equity.
SECTION 4 REPRESENTATIONS AND WARRANTIES
Guarantor represents and warrants to Lender as follows:
4.1 Existence, Authority; Execution. To the extent Guarantor is a
corporation, limited liability company or limited partnership, Guarantor hereby
represents and warrants that: (a) it is duly organized, validly existing, and in
good standing under the laws of the state of its incorporation or formation; and
(b) this Guaranty has been duly and validly authorized, executed and delivered
and constitutes the binding obligation of Guarantor, enforceable in accordance
with its terms.
4.2 Financial Statements. All financial statements and other financial
information furnished or to be furnished to Lender (a) are or will be true and
correct and do or will fairly represent the financial condition of Guarantor
(including all contingent liabilities), and (b) were or will be prepared in
accordance with generally accepted accounting principles, or such other
accounting principles as may be acceptable to Lender at the time of their
preparation, consistently applied. There has been no material adverse change in
Guarantor's financial condition since the dates of the statements most recently
furnished Lender.
4.3 No Defaults. There is no existing event of default, and no event
has occurred which with the passage of time and/or the giving of notice or both
will constitute an event of default, under any agreement to which Guarantor is a
party, the effect of which
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event of default will impair performance by Guarantor of the Obligations
pursuant to and as contemplated by the terms of this Guaranty, and neither the
execution and delivery of this Guaranty nor compliance with the terms and
provisions hereof will violate any presently existing provision of law or any
presently existing regulation, order, writ, injunction or decree of any court or
governmental department, commission, board, bureau, agency or instrumentality,
or constitute a default under, any agreement to which Guarantor is a party or by
which Guarantor is bound.
4.4 No Litigation. There are no actions, suits or proceedings pending
or threatened against the Guarantor before any court or any governmental,
administrative, regulatory, adjudicatory or arbitrational body or agency of any
kind that will adversely affect performance by the Guarantor of his obligations
pursuant to and as contemplated by the terms and provisions of this Guaranty.
4.5 Accuracy. Neither this Guaranty nor any document, financial
statement, credit information, certificate or statement heretofore furnished or
required herein to be furnished to Lender by the Guarantor contains any untrue
statement of fact or omits to state a fact material to this Guaranty.
SECTION 5 EVENTS OF DEFAULT
Upon the occurrence of any of the following events, Lender may, without
notice to Borrower or Guarantor, declare any or all of the Obligations, whether
or not then due, immediately due and payable by Guarantor under the Guaranty,
and Lender shall be entitled to enforce the obligations of Guarantor hereunder:
5.1 Default by Borrower. Borrower shall default in the payment or
performance of any of the Obligations guarantied hereby, after giving effect to
any applicable notice and cure provisions.
5.2 Failure to Perform. Guarantor fails to perform any of its
obligations under this Guaranty or any agreement under which security is given
therefor, or this Guaranty is revoked or terminated by Guarantor, or any
representation or warranty made or given by Guarantor to Lender proves to be
false or misleading in any material respect.
5.3 Insolvency Proceeding. The making by Guarantor of any assignment
for the benefit of creditors, or a trustee or receiver being appointed for
Guarantor or for any property of Guarantor, or Guarantor becoming insolvent or
the subject of any Insolvency Proceeding and, in the case of such a proceeding
being commenced against Guarantor, such proceeding is not dismissed within
thirty (30) days following the commencement date thereof
5.4 Death or Dissolution. Guarantor dies, dissolves or liquidates, or
the business of Guarantor is suspended or terminated for any reason.
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SECTION 6 MISCELLANEOUS
6.1 Revival and Reinstatement. If at any time all or any part of any
payment theretofore applied by Lender to any of the Obligations is or must be
rescinded or returned by Lender for any reason whatsoever (including, without
limitation, the insolvency, bankruptcy or reorganization of Borrower), such
Obligations shall, for the purposes of this Guaranty, to the extent such payment
is or must be rescinded or returned, be deemed to have continued in existence,
notwithstanding such application by Lender, and this Guaranty shall continue to
be effective or be reinstated, as the case may be, as to such Obligations, all
as though such application by Lender had not been made.
6.2 No Marshaling. Lender has no obligation to marshal any assets in
favor of Guarantor, or against or in payment of (a) any of the Obligations, or
(b) any other obligation owed to Lender by Guarantor, Borrower, or any other
person.
6.3 No Modification, Waiver or Release Without Writing. Except as may
otherwise be expressly set forth herein, this Guaranty may not be modified,
amended, revised, revoked, terminated, changed or varied in any way whatsoever,
nor shall any waiver of any of the provisions of this Guaranty be binding upon
Lender, except as expressly set forth in a writing duly executed by Lender. No
waiver by Lender of any default shall operate as a waiver of any other default
or the same default on a future occasion, and no action by Lender permitted
hereunder shall in any way affect or impair Lender's rights or the obligations
of Guarantor under this Continuing Guaranty.
6.4 Assignment; Successors and Assigns. Guarantor may not assign
Guarantor's obligations or liabilities under this Guaranty. Subject to the
preceding sentence, this Guaranty shall be binding upon the parties hereto and
their respective heirs, executors, successors, representatives and assigns and
shall inure to the benefit of the parties hereto and their respective successors
and assigns. Lender may assign its rights under this Guaranty.
6.5 Integration. This Guaranty is the entire agreement of Guarantor
with respect to the subject matter of this Guaranty.
6.6 Rights Cumulative. All of Lender's rights under this Guaranty are
cumulative. The exercise of any one right does not exclude the exercise of any
other right given in this Guaranty or any other right of Lender not set forth in
this Guaranty.
6.7 Severability. Whenever possible each provision of this Guaranty
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.
6
<PAGE>
6.8 Material Inducement Consideration. Guarantor acknowledges and
agrees that Lender is specifically relying upon the representations, warranties,
agreements and waivers contained herein and that such representations,
warranties, agreements and waivers constitute a material inducement to Lender to
accept this Guaranty and to enter into the Loan Agreement and the transaction
contemplated therein. Guarantor further acknowledged that it expects to benefit
from Lender's extension of financing accommodations to Borrower because of its
relationship to Borrower, and that it is executing this Guaranty in
consideration of that anticipated benefit.
6.9 Indemnification. Guarantor agrees to indemnify, pay and hold Lender
and its officers, directors, employees, agents, and attorneys (collectively
called the "Indemnitees") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever (including
the reasonable fees and disbursements of counsel for such Indemnitees in
connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not such Indemnitee shall be designated a
party thereto) that may be imposed on, incurred by, or asserted against that
Indemnitee, in any manner relating to or arising out of this Guaranty or the
exercise of any right or remedy hereunder or under the other documents
pertaining to the Obligations (the "Indemnified Liabilities"); provided that
Guarantor shall have no obligation to an Indemnitee hereunder with respect to
Indemnified Liabilities arising from the gross negligence or willful misconduct
of that Indemnitee as determined by a court of competent jurisdiction. To the
extent that the undertaking to indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it is violative of any law or
public policy, Guarantor shall contribute the maximum portion that it is
permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by the Indemnitees or any
of them.
6.10 Counterparts. This Guaranty may be executed in counterparts, each
of which shall be deemed an original, but all of which, when taken together,
shall be deemed one and the same agreement.
6.11 Governing Law. This Guaranty shall be governed by and construed in
accordance with the internal laws of the State of Illinois, without regard to
conflicts of law provisions.
6.12 Venue. GUARANTOR, IN ORDER TO INDUCE LENDER TO ACCEPT THIS
GUARANTY, AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
SUFFICIENCY OF WHICH HEREBY IS ACKNOWLEDGED, AGREES THAT ALL ACTIONS OR
PROCEEDINGS ARISING DIRECTLY, INDIRECTLY OR OTHERWISE IN CONNECTION WITH, OUT
OF, RELATED TO OR FROM THIS GUARANTY SHALL BE LITIGATED, AT LENDER'S SOLE
DISCRETION AND ELECTION, ONLY IN COURTS HAVING A SITUS WITHIN THE COUNTY OF
COOK, STATE OF ILLINOIS. GUARANTOR HEREBY CONSENTS AND SUBMITS TO THE
7
<PAGE>
JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN SAID COUNTY AND
STATE. GUARANTOR HEREBY IRREVOCABLY APPOINTS AND DESIGNATES CT CORPORATION
SYSTEM, WHOSE ADDRESS IS GUARANTOR, C/O CT CORPORATION SYSTEM, 208 S. LASALLE
STREET, CHICAGO, ILLINOIS 60604, AS ITS DULY AUTHORIZED AGENT FOR SERVICE OF
LEGAL PROCESS AND AGREES THAT SERVICE OF SUCH PROCESS UPON SUCH PARTY SHALL
CONSTITUTE PERSONAL SERVICE OF PROCESS UPON SUCH PARTY. IN THE EVENT SERVICE IS
UNDELIVERABLE BECAUSE SUCH AGENT MOVES OR CEASES TO DO BUSINESS IN CHICAGO,
ILLINOIS, GUARANTOR SHALL, WITHIN TEN (10) DAYS AFTER LENDER'S REQUEST, APPOINT
A SUBSTITUTE AGENT (IN CHICAGO, ILLINOIS) ON ITS BEHALF AND WITHIN SUCH PERIOD
NOTIFY LENDER OF SUCH APPOINTMENT. IF SUCH SUBSTITUTE AGENT IS NOT TIMELY
APPOINTED, LENDER SHALL, IN ITS SOLE DISCRETION, HAVE THE RIGHT TO DESIGNATE A
SUBSTITUTE AGENT UPON FIVE (5) DAYS' NOTICE TO GUARANTOR. GUARANTOR HEREBY
CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT
LOCATED WITHIN SAID COUNTY AND STATE. GUARANTOR HEREBY WAIVES ANY RIGHT IT MAY
HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST IT BY
LENDER ON THIS GUARANTY IN ACCORDANCE WITH THIS PARAGRAPH.
6.13 Waiver of Jury Trial. GUARANTOR, AND BY ITS ACCEPTANCE OF THIS
GUARANTY, LENDER, HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS
GUARANTY AND THE BUSINESS RELATIONSHIP THAT IS BEING ESTABLISHED. THIS WAIVER IS
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY MADE BY GUARANTOR, AND BY ITS
ACCEPTANCE OF THIS GUARANTY, LENDER, AND GUARANTOR ACKNOWLEDGES THAT NEITHER
LENDER NOR ANY PERSON ACTING ON BEHALF OF LENDER HAS MADE ANY REPRESENTATIONS OF
FACT TO INCLUDE THIS WAIVER OF TRIAL BY JURY OR HAS TAKEN ANY ACTIONS WHICH IN
ANY WAY MODIFY OR NULLIFY ITS EFFECT.
6.14 Waivers. THE WAIVERS SET FORTH HEREIN (INCLUDING, WITHOUT
LIMITATION, SECTIONS 2.2 AND 3 ABOVE) ARE KNOWINGLY, INTENTIONALLY, AND
VOLUNTARILY MADE BY GUARANTOR, AND GUARANTOR ACKNOWLEDGES THAT NEITHER LENDER
NOR ANY PERSON ACTING ON BEHALF OF LENDER HAS MADE ANY REPRESENTATIONS OF FACT
TO INDUCE THESE WAIVERS OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. GUARANTOR
FURTHER ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED (OR HAS HAD THE OPPORTUNITY TO
BE REPRESENTED) IN THE SIGNING OF THIS GUARANTY AND IN THE MAKING OF THESE
WAIVERS BY INDEPENDENT LEGAL COUNSEL, SELECTED OF ITS OWN FREE WILL, AND THAT IT
HAS HAD THE OPPORTUNITY TO DISCUSS THESE WAIVERS WITH COUNSEL.
8
<PAGE>
Guarantor has duly executed this Guaranty as of the date and year first
above written.
---------------------------
Guarantor
9
Exhibit 11
<TABLE>
<CAPTION>
GreenMan Technologies, Inc.
Statement Regarding Net Loss per Share
February 28, 1998
Three Months Ended Nine Months Ended
February 28, February 28,
1997 1998 1997 1998
----- ---- ---- -----
<S> <C> <C> <C> <C>
Net loss from continuing operations $(1,257,207) $(1,126,205) $(2,975,465) $(2,764,178)
Net loss from discontinued operations $ (84,002) $(1,216,384) $ (523,085) $(1,760,954)
Net loss $(1,341,209) $(2,442,589) $(3,498,550) $(4,525,132)
=========== =========== =========== ===========
Net loss per share - basic:
Continuing operations $ (1.12) $ (.50) $ (2.76) $ (1.52)
Discontinued operations $ (.07) $ (.59) $ (.49) $ (.97)
Net loss $ ( 1.19) $ (1.09) $ (3.25) $ (2.49)
=========== =========== =========== ===========
Shares used in calculation of loss per share (1):
Weighted average common shares outstanding 1,124,697 2,236,756 1,077,742 1,814,098
=========== =========== =========== ===========
<FN>
(1) All share and per share data have been adjusted to give retroactive effect
to a reverse split of the Company's Common Stock pursuant to which each five
shares of Common Stock then outstanding were converted into one share. The
reverse split became effective on March 23, 1998.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-END> FEB-28-1998
<CASH> 365,736
<SECURITIES> 0
<RECEIVABLES> 973,561
<ALLOWANCES> 72,004
<INVENTORY> 407,017
<CURRENT-ASSETS> 2,664,322
<PP&E> 12,483,369
<DEPRECIATION> 712,838
<TOTAL-ASSETS> 16,690,919
<CURRENT-LIABILITIES> 5,974,701
<BONDS> 2,948,966
0
0
<COMMON> 27,833
<OTHER-SE> 16,867,612
<TOTAL-LIABILITY-AND-EQUITY> 16,690,919
<SALES> 7,946,766
<TOTAL-REVENUES> 7,946,766
<CGS> 5,468,992
<TOTAL-COSTS> 3,015,209
<OTHER-EXPENSES> 1,418
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,225,325
<INCOME-PRETAX> (2,764,178)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,764,178)
<DISCONTINUED> (1,760,954)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,525,132)
<EPS-PRIMARY> (2.49)
<EPS-DILUTED> (2.49)
</TABLE>
