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Exhibit 10.2

 

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FOURTH AMENDMENT AND RATIFICATION OF

TERM LOAN AND SECURITY AGREEMENT

 

THIS FOURTH AMENDMENT AND RATIFICATION OF TERM LOAN AND SECURITY AGREEMENT (this “Amendment”) is made and entered into as of this 19th day of April, 2006, by and among EASY GARDENER PRODUCTS, LTD., a Texas limited partnership (the “Borrower”), EYAS INTERNATIONAL, INC., a Texas corporation (“EYAS”), EG, L.L.C., a Nevada limited liability company (“EG”), E G PRODUCT MANAGEMENT, L.L.C., a Texas limited liability company (“E G
Product Management”), WEATHERLY CONSUMER PRODUCTS GROUP, INC., a Delaware corporation (“Weatherly Group”), WEATHERLY CONSUMER PRODUCTS, INC., a Delaware corporation (“Weatherly Products”), and NBU GROUP, LLC, a Texas limited liability company (“NBU”) (EYAS, EG, E G Product Management, Weatherly Group, Weatherly Products and NBU, each a “Guarantor” and collectively the “Guarantors” and collectively with the Borrower, the “Credit Parties”), the Lenders (as defined in the Loan
Agreement defined below) and CAPITALSOURCE FINANCE LLC, a Delaware limited liability company (the “Agent”), as agent for itself and on behalf of the Lenders.

 

W I T N E S S E T H:

 

WHEREAS, the Borrower, the Guarantors, the Lenders and the Agent are parties to that certain Term Loan and Security Agreement, dated as of October 29, 2003, as amended by that certain First Amendment to Term Loan and Security Agreement dated as of April 27, 2004, that certain Second Amendment to Term Loan and Security Agreement and Waiver dated as of October 12, 2004 and that certain Third Amendment to Term Loan and Security Agreement and Waiver dated as of October 20, 2005 (and as the same may be further amended, amended and restated, modified and supplemented, the “Loan Agreement”), pursuant to which the Lenders made Loans and extended certain financial accommodations to the Borrower under the terms and conditions stated therein; 

 

WHEREAS, on April 19, 2006 (the “Petition Date”), the Credit Parties (other than EYAS and EG), as debtors and debtors-in-possession, will file a voluntary petition in a case (the “Chapter 11 Case”) for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”); and

 

WHEREAS, the Credit Parties have moved for an Interim Financing Order (defined below) and a Final Financing Order (defined below) to be entered by the Bankruptcy Court permitting, among other things, use of Cash Collateral (defined below) pursuant to the Loan Agreement, as amended hereby.

 

NOW, THEREFORE, for and in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is acknowledged, the parties hereto agree that all capitalized terms used herein which are not otherwise defined herein shall have the meanings ascribed thereto in the Loan Agreement, and further agree as follows:

 

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SECTION 1. Acknowledgement of Obligations.

 

(a)           Credit Parties hereby acknowledge and agree that they are unconditionally liable to the Agent and Lenders for the full payment of all of the Obligations including, without limitation, those Obligations set forth on Schedule A attached hereto and incorporated herein by reference, plus all interest, charges, fees, costs, and expenses that may arise under the Loan Agreement and other Loan Documents plus all attorneys’ fees, disbursements and costs of collection incurred in connection with such Obligations by Agent and Lenders and that Credit Parties have no defenses, counterclaims or set-offs with respect to the full payment and performance of any and all Obligations under the Loan Agreement and the
other Loan Documents.

(b)          Credit Parties acknowledge, confirm and agree that the Agent and Lenders have and have had a valid, enforceable and perfected security interest and Lien upon all of the Collateral granted by Credit Parties to Agent and/or Lenders pursuant to the Loan Documents (other than that certain  motor vehicle, Make: Ford , Model: F-150, Year: 1996, as to which Agent has not been named on the title) to secure all of the Obligations, subject only to Permitted Liens. In furtherance and not in limitation of any Financing Order, the Credit Parties grant or reaffirm their grant, as the case may be, pledge and assign to Agent and Lenders a continuing security interest and Lien upon, and rights of set off against the Collateral to secure the Obligations.

SECTION 2. Amendments to Loan Agreement. 

 

(a)          Budget. A new Section 6.15 is hereby added to the Loan Agreement as follows:

“6.15  Budget; Capital Expenditures. 

(a)           In addition to the Budget attached to the Interim Financing Order, beginning on the fifth week after the Petition Date and continuing weekly thereafter, the Credit Parties shall deliver to Agent, not later than Wednesday of each week, a Budget of the Credit Parties in form and substance satisfactory to Agent reflecting the Projected Cash Disbursements, Projected Cash Receipts and Projected Invoiced Sales of the Credit Parties for the ensuing 13-week period. 

(b)         No Credit Party shall allow a variance (“Variance”) of the Budget which would have an adverse financial effect (in the sole discretion of the Agent) of greater than ten percent (10%) (on a cumulative basis as reported weekly) to be incurred with respect to Projected Cash Disbursements (other than Projected Cash Disbursements relating to the purchase of inventory and freight expenses). With respect to purchases of inventory and the incurrence of freight expenses by the Credit Parties, no Credit Party shall make any extraordinary purchases of inventory or incur extraordinary freight expenses as compared to the anticipated requirements of purchases of inventory and freight expenses set forth in the Budget. No Credit Party shall make any Capital Expenditure in excess
of $100,000 of the amount set forth in the Budget; provided, however, that the Credit Parties shall in any event be permitted to make 

 

 

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Capital Expenditures of an emergency nature required to maintain the properties of the Credit Parties, including necessary repairs to equipment required to operate such equipment in the ordinary course. 

 

(c)           Beginning with the fourth week after Petition Date and for each week thereafter, the Borrower shall deliver to the Agent, not later than Wednesday of such week and at such other times as the Agent may request, a compliance certificate of the chief financial officer in form and substance satisfactory to the Agent certifying that the Credit Parties are in compliance with this Section 6.15 and that no Default or Event of Default has occurred and is continuing or, if a Default or Event of Default has occurred and is continuing, a statement as to the nature thereof.”

 

(b)          Sale of Business. A new Section 6.16 is hereby added to the Loan Agreement as follows:

“6.16  Sale of Business. The Borrower shall consummate a Repayment Event (as defined in the Third Amendment) as promptly as possible, and in any event prior to the Maturity Date, and shall remit immediately and/or directly proceeds from such Repayment Event to Agent and Lenders, in an amount sufficient to indefeasibly repay the Obligations in full in cash.  The Repayment Event shall be closed pursuant to the H.I.G. Asset Purchase Documents attached hereto as Exhibit 6.16 or pursuant to other asset purchase agreement(s), pleadings or documents acceptable to Agent, in form and substance, in its sole discretion.”

(c)           Bankruptcy Court Reports and Related Items. A new Section 6.17 is hereby added to the Loan Agreement as follows:

“6.17  Bankruptcy Court Reports and Related Items. In addition to the reporting requirements set forth in this Agreement and the Third Amendment, until the Obligations have been indefeasibly repaid in full in cash, the Borrower shall promptly provide Agent and Lenders with copies of all financial reports, schedules and other materials or information related to the Collateral at any time furnished by Borrower, or on behalf of Borrower, to the Bankruptcy Court, the United States Trustee, LaSalle (including, without limitation, the reports and other information that are provided to LaSalle pursuant to Section 9 of the LaSalle Loan Agreement), any creditors’ committee or any of the Borrower’s shareholders in their capacity as shareholders, in each case, concurrently with the delivery thereof.
Borrower shall also keep Agent and Lenders fully informed with respect to their efforts to consummate a Repayment Event, and upon Agent’s request, shall promptly provide Agent and Lenders with copies of all material documents, schedules or materials provided to any purchaser of the Borrower’s business operations or assets. In addition to and not in lieu of the foregoing, Borrower shall provide Agent and Lenders with copies of any and all notices of default or other material events under the H.I.G. Asset Purchase Documents simultaneously with the issuance or receipt thereof, as applicable.”

 

 

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(d)          The following definitions set forth in Appendix A to the Loan Agreement (Definitions) are hereby deleted in the entirety and replaced with the following:

“Collateral” shall mean, collectively and each individually, all collateral and/or security granted and/or securities pledged to Agent, for the benefit of itself and Lenders, by the Credit Parties, if any, pursuant to the Loan Documents and/or any Financing Order including, without limitation, the items set forth in Section 2.9 of this Agreement; provided that the term “Collateral” does not include any property of EGUK.

“Term” shall mean the period commencing on the Closing Date and ending on the earlier of (i) 150 days after the Petition Date, (ii) the effective date of a plan of reorganization under chapter 11 of the Bankruptcy Code, or (iii) the effective date of a sale of all or substantially all of the assets of the Borrower or some or all of the Credit Parties (including, without limitation, any sale effected pursuant to the H.I.G. Asset Purchase Documents or otherwise).

(e)           The following new definitions are hereby added to Appendix A to the Loan Agreement (Definitions) in the appropriate alphabetical order as follows:

“Bankruptcy Court” shall mean the United States Bankruptcy Court for the District of Delaware or any other court having jurisdiction over the Chapter 11 Case.

“Budget” shall mean a 13-week budget of the Credit Parties in form and substance satisfactory to the Agent in its sole discretion and listing, among other things, the Projected Cash Disbursements, Projected Cash Receipts and Projected Invoiced Sales of the Credit Parties for such 13-week period.

“Cash Collateral” shall have the meaning given such term in Section 363(a) of the Bankruptcy Code.

“Chapter 11 Case” shall have the meaning given such term in the recitals to the Fourth Amendment.

“Final Financing Order” shall mean that certain Order (acceptable in form and substance to the Agent and Lenders) entered or to be entered by the Bankruptcy Court authorizing, among other things, the Borrower’s use of Agent’s and Lenders’ Cash Collateral on final basis pursuant to Section 363 of the Bankruptcy Code.

“Financing Order” shall mean, collectively, the Interim Financing Order, Final Financing Order and such other orders relating thereto or authorizing, among other things, the Borrower’s use of Agent’s and Lenders’ Cash Collateral on an emergency, interim or permanent basis, pursuant to Section 363 of the Bankruptcy Code as may be issued or entered by the Bankruptcy Court in the Chapter 11 Case.

“Fourth Amendment” shall mean the Fourth Amendment and Ratification Of Term Loan and Security Agreement dated as of April 19, 2006, by and among Borrower, 

 

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Guarantors, Agent and Lenders.

“H.I.G. Asset Purchase Documents” shall mean that certain Asset Purchase Agreement dated April __, 2006, among Borrower, Weatherly Group and Weatherly Products, as Sellers, and Green Thumb Acquisition Corporation, as Buyer, and all related agreements, documents, instruments and sideletters, in each case without regard to any amendments thereto.

 “Interim Financing Order” shall mean that certain Interim Financing Order (acceptable in form and substance to the Agent and Lenders) entered by the Bankruptcy Court authorizing, among other things, the Borrower’s use of Agent’s and Lenders’ Cash Collateral on an emergency or interim basis pursuant to Section 363 of the Bankruptcy Code. 

“LaSalle Fourth Amendment” shall mean, the Waiver and Amendment No. 4 to Loan and Security Agreement by and among LaSalle and the Credit Parties to be entered into pursuant to the commitment letter dated April 19, 2006, without regard to any amendments thereto.

“LaSalle Loan Agreement” shall mean, the Loan and Security Agreement dated as of April 27, 2004, as amended by Waiver and Amendment No. 1 to Loan and Security Agreement dated as of October 13, 2004, Waiver and Amendment No. 2 to Loan and Security Agreement dated as of May 11, 2005, Waiver and Amendment No. 3 to Loan and Security Agreement dated as of October 20, 2005 and Amendment No. 4 to Loan and Security Agreement dated as of the date hereof among Borrower, certain Guarantors, LaSalle, LaSalle Bank National Association, a national banking association and the Lenders party thereto.

“Petition Date” shall have the meaning given such term in the recitals to the Fourth Amendment.

 

“Projected Cash Disbursements” shall mean, as set forth on the Budget, any category of expenses itemized therein as cash disbursement.

 

“Projected Cash Receipts” shall mean, as set forth on the Budget, any category of collections itemized therein as cash receipts.

 

“Projected Invoiced Sales” shall mean, as set forth on the Budget, any category itemized therein as invoiced sales.

 

“Variance” shall have the meaning given such term in Section 6.15(a) of this Agreement.

 

 

 

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SECTION 3. Amendments to Third Amendment. 

(a)           Investment Banker. Section 3 (Investment Banker) of the Third Amendment is hereby deleted in the entirety and replaced with the following:

“3. Investment Banker. The Credit Parties hereby acknowledge and agree to continue to employ and maintain in place, at all times prior to the indefeasible repayment of the Obligations in full in cash and at its sole expense, Houlihan Lokey or another nationally-recognized investment banker acceptable to the Agent and Lenders in their sole discretion on terms satisfactory to the Agent and Lenders in their sole discretion (“Investment Banker”). The Credit Parties agree that the Investment Banker shall assist the Credit Parties with respect to one or more sales of the Credit Parties’ assets, stock or other ownership interests and business operations or a refinancing which simultaneously results in the indefeasible
repayment of the Obligations in full in cash on or before the Maturity Date, on terms and conditions satisfactory to Agent and Lenders in their sole discretion (collectively, the “Repayment Event”). The Credit Parties hereby consent to the Agent contacting the Investment Banker directly with respect to the status of the prospects and the Credit Parties’ marketing and sales efforts with respect to a Repayment Event, and hereby agrees that such communications shall not be restricted or denied in any way provided that the Agent shall not have the right to direct the actions of the Investment Banker or to otherwise exercise any control over the Investment Banker. In connection with the foregoing, the Investment Banker and/or Borrower shall copy Agent and Lenders on all drafts of Investment Banker’s work product simultaneously with Investment Banker’s delivery thereof to Borrower or Borrower’s receipt thereof, as
applicable, and Investment Banker and/or Borrower shall deliver to the Agent and Lenders copies of all final work product prepared by the Investment Banker simultaneously with Investment Banker’s delivery thereof to Borrower or Borrower’s receipt thereof, as applicable, and Investment Banker shall provide Agent and Lenders with any other work product of the Investment Banker that the Agent and Lenders may reasonably request.”  

(b)          Business Consultant. Section 4 (Business Consultant) of the Third Amendment is hereby deleted in the entirety and replaced with the following:

“4. Business Consultant. The Credit Parties shall continue to employ and maintain in place, at all times prior to the indefeasible payment of the Obligations in full in cash and at its sole expense, Trimmingham or another business consultant satisfactory to the Agent and Lenders in their sole discretion (“Business Consultant”). The Credit Parties shall cooperate with the Business Consultant. The Credit Parties agree that the Business Consultant shall continue to provide advice and assistance to Credit Parties’ management with respect to all aspects of the business and operations of the Credit Parties, including, without limitation, assisting with developing strategic initiatives, identifying operational inefficiencies,
developing and assisting to implement strategies to eliminate such operational inefficiencies, reviewing the Credit Parties’ Budget(s) and providing suggested changes, if any, and assisting the

 

 

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Credit Parties with respect to marketing and selling the Credit Parties’ assets and consummating a Repayment Event. The Business Consultant shall have complete and full access at all times to management of the Credit Parties and to the books and records of the Credit Parties in order to provide information and advice to the Credit Parties regarding all aspects of the business, financial condition, operations, and prospects of the Credit Parties and with respect to marketing and selling the Credit Parties’ assets and consummating a Repayment Event. The Credit Parties hereby consent to the Agent contacting the Business Consultant directly with respect to the status of the Credit Parties’ business operations, the Credit Parties’ prospects and financial condition and the Credit Parties’ marketing and sales efforts (with respect to the sale of the Credit Parties’
assets and the consummation of a Repayment Event), and hereby agrees that such communications shall not be restricted or denied in any way provided that the Agent and Lenders shall not have the right to direct the actions of the Business Consultant or to otherwise exercise any control over the Business Consultant. The Credit Parties further agree that the Business Consultant and/or Borrower shall deliver to the Agent copies of any written reports, work product, information, document or item received by any Credit Party from the Business Consultant, simultaneously with the delivery or receipt of the same, and any other written reports and work product of the Business Consultant that the Agent and Lenders may reasonably request in their Permitted Discretion.”

(c)           Performance Fee. Effective upon the entry of the Final Financing Order, Section 6 (Performance Fee) of the Third Amendment shall be deleted and replaced with the following: 

“Performance Fee. The Credit Parties acknowledge and agree that, as partial consideration for the Agent’s and Lenders’ agreements and commitments under the Loan Documents, the Lenders have earned a performance fee of Two Million Dollars ($2,000,000) (the “Performance Fee”), which shall be paid by the Credit Parties to Agent, for the benefit of the Lenders, in cash on the respective dates set forth below: 

	
            Payment Date:
 	
            Amount:
 
	
            Upon entry of the Final Financing Order and, in any event, no later than forty-five (45) days after the Petition Date
 	
            $100,000
 
	
            June 30, 2006
 	
            $200,000
 
	
            July 31, 2006
 	
            $1,700,000
 

 

The Performance Fee shall constitute part of the Obligations and shall be secured by all of the Collateral. Notwithstanding the above, Borrower’s obligation to pay the $2,000,000 Performance Fee shall be forgiven or partially forgiven if Borrower indefeasibly repays in cash and fully satisfies its Obligations to Agent and Lender on or before the respective dates set forth below:

 

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            If the Obligations are indefeasibly repaid in full in cash and satisfied on or before:
 	
            Portion of the Performance Fee Forgiven by Agent and Lenders:
 
	
            July 1, 2006
 	
            If the $100,000 partial payment of the $2,000,000 Performance Fee was timely paid upon entry of the Final Financing Order and, in any event, no later than forty-five (45) days after the Petition Date, then the $1,900,000 remainder of the $2,000,000 Performance Fee shall be forgiven.
 
	
            August 1, 2006
 	
            If the $100,000 partial payment of the $2,000,000 Performance Fee was timely paid upon entry of the Final Financing Order and, in any event, no later than forty-five (45) days after the Petition Date, and the $200,000 partial payment was timely paid on or before June 30, 2006, then the $1,700,000 remainder of the $2,000,000 Performance Fee shall be forgiven.
 
	
            Thereafter
 	
            No forgiveness.
 

 

Notwithstanding anything herein to the contrary, upon the occurrence of an Event of Default, the Performance Fee shall become immediately due and payable in full and not subject to any forgiveness.”

 

SECTION 4. Additional Events of Default. In addition to and without in any way limiting or substituting for the Events of Default set forth in the Loan Agreement and other Loan Documents, the following shall constitute automatic Events of Default under the Loan Agreement and the other Loan Documents (without notice, demand or grace of any kind) and shall entitle the Agent and the Lenders to exercise all of the rights and remedies granted thereunder and under any Financing Order:  

(a)          Default Under This Amendment. The failure to timely and fully meet any of the agreements, obligations, provisions or covenants set forth in this Amendment or in Sections of the Loan Agreement that are amended by this Amendment, in each case, on or before the applicable date.

(b)          Default Under Financing Orders or LaSalle Loan Agreement. The occurrence of any default, event of default or other condition or event that permits Agent, Lenders and/or LaSalle to exercise any of the remedies set forth in any Financing Order or the LaSalle Loan Agreement as in effect on the date hereof, including, without limitation, any event which causes the occurrence of any “Termination Event” or the “Termination Date” as such terms are defined in any Financing Order, in each case, regardless of whether LaSalle waives such default, event of default or other condition.

(c)          Grant of Other Liens. The grant of a Lien or other interest in the Borrower’s property or an administrative expense claim (other than any such administrative expense claim permitted by any Financing Order approved by Agent and Lenders or this Amendment) that is

 

 

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superior or pari passu to Agent’s or Lenders’ Liens upon the Collateral or administrative expense.

	
             
  	
            (d)
 	
            Other Defaults.
 

(i)           Failure of the Bankruptcy Court to enter a Final Financing Order approving the Borrower’s entry into this Amendment, substantially in the form of the Interim Financing Order or in such other form satisfactory to the Agent within 20 days after the date hereof; or

(ii)          Entry of an order, without the prior written consent of the Agent (a) converting the Chapter 11 Case to a case under chapter 7 of the Bankruptcy Code; (b) dismissing the Chapter 11 Case; (c) appointing a trustee under Section 1104 of the Bankruptcy Code or appointing an examiner with expanded powers (powers beyond those set forth in Sections 1106(a)(3) and (4) of the Bankruptcy Code; or (d) amending, supplementing, staying, vacating or otherwise modifying any of the Loan Documents, as amended hereby, or any of the Financing Orders approving the Loan Documents, as amended hereby; or

(iii)         Entry of an order of the Bankruptcy Court reversing, vacating or (without the written consent of the Agent) otherwise amending, supplementing or modifying any of the Financing Orders; or

(iv)         Entry of an order of the Bankruptcy Court terminating the use of Cash Collateral by the Borrower under the Interim Financing Order or Final Financing Order; or

(v)          Any attempt by any Credit Party or any other Person to invalidate, reduce, subordinate, impair or otherwise challenge the validity, extent and perfection of the Liens and/or claims of the Agent and Lenders; or

(vi)         The filing of any Plan with respect to any Credit Party that is not reasonably satisfactory to the Agent.

SECTION 5. Guarantor Acknowledgment.

(a)          Each Guarantor hereby acknowledges that it has reviewed the terms and provisions of the Loan Agreement and this Amendment. Each Guarantor hereby confirms that it will continue to guarantee to the fullest extent possible in accordance with the Loan Agreement, as amended hereby, the payment and performance of all “Obligations” under the Loan Agreement, as amended hereby, including without limitation the payment and performance of all such “Obligations” under the Loan Agreement, as amended hereby, in respect of the Obligations of the Borrower now or hereafter existing under or in respect of the Loan Agreement and the Notes defined therein, as amended hereby.

(b)          Each Guarantor acknowledges and agrees that the Loan Agreement and other Loan Documents, as amended hereby, shall continue in full force and effect and that all of its obligations thereunder shall be valid and enforceable and shall not be impaired or limited by the execution or effectiveness of this Amendment. Each Guarantor represents and warrants that all representations and warranties contained in the Loan Agreement and this Amendment are true, correct and complete in all respects on and as of the date hereof to the same extent as though made 

 

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on and as of the date hereof.

(c)           Each Guarantor acknowledges and agrees that: (i) notwithstanding the conditions to effectiveness set forth in this Amendment, such Guarantor is not required by the terms of the Loan Agreement or any other Loan Document to consent to the amendments of the Loan Agreement effected pursuant to this Amendment; and (ii) nothing in the Loan Agreement, this Amendment or any other Loan Document shall be deemed to require the consent of such Guarantor to any future amendments to the Loan Agreement.

SECTION 6. Conditions Precedent. This Amendment shall be effective upon the satisfaction of all of the following conditions, except that the amendment effected by Section 3(c) hereof (Amendment to Section 6 of Third Amendment) shall be effective only upon all of the following conditions, plus the entry of the Final Financing Order: 

(a)           Deliverables. The Credit Parties shall have delivered to the Agent: (i) an executed original of this Amendment and Agent shall have accepted the Credit Parties’ signatures thereto; (ii) payment of all outstanding fees and expenses owing to Agent by the Borrower pursuant to the Loan Documents; (iii) the Borrower shall be in compliance with the notice and other requirements of the Bankruptcy Code and the applicable Bankruptcy Rules (as defined in the Interim Financing Order or Final Financing Order, as applicable) with respect to any relevant Financing Order; (iv) the Interim Financing Order shall have been entered by the Bankruptcy Court, in the form attached hereto as Exhibit 6, authorizing, among other things, the
Borrower’s use of Agent’s and Lenders’ Cash Collateral on an emergency or interim basis pursuant to Section 363 of the Bankruptcy Code under the Loan Documents and the same is not subject to any other order that impairs its effectiveness; (v) any and all consents, licenses, permits, approvals or authorizations of, or registrations, filings or declarations with any Governmental Authority or other Person if required in connection with the execution, delivery, performance, validity or enforceability of this Amendment by or against the Credit Parties; (vi) an executed copy of the LaSalle Fourth Amendment, in form and substance satisfactory to the Agent in its Permitted Discretion; and (vii) true, accurate and complete copies of all of the schedules and exhibits to this Amendment.

(b)        Accuracy of Representations and Warranties. All representations and warranties made by the Credit Parties under this Amendment are true and correct as of the date hereof, except to the extent such representations and warranties have been breached solely as a result of the commencement of the Chapter 11 Case and except for the representation as to solvency Section forth in Section 5.13 (No Default; Solvency) of the Loan Agreement

(c)          No Defaults or Events of Default. The Borrower is not in default under any Loan Document and no Event of Default exists and is continuing or would result from the execution, delivery or performance of this Amendment.

SECTION 7. Loan Agreement and Other Loan Documents in Full Force and Effect as Amended. Except as specifically amended hereby, the Loan Agreement and other Loan Documents, including, without limitation, the Third Amendment, shall remain in full force and effect and hereby are ratified and confirmed as so amended. This Amendment shall not constitute a novation, satisfaction and accord, cure, release or satisfaction of the Loan Agreement or other Loan 

 

 

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Documents, but shall constitute an amendment thereof. The parties hereto agree to be bound by the terns and conditions of the Loan Agreement and other Loan Documents as amended by this Amendment, as though such terms and conditions were set forth herein in full. Each reference in the Loan Agreement and the other Loan Documents to “this Agreement,” “hereunder,” “hereof,” “herein” or words of similar import shall mean and be a reference to the Loan Agreement or applicable Loan Document, as amended by this Amendment, and each reference herein or in any other Loan Document to the “Agreement”, the “Loan Agreement” or the “CapitalSource Loan Agreement” shall mean and be a reference to the Loan Agreement as amended and modified by this Amendment.

SECTION 8. Representations. The Credit Parties hereby represent and warrant to the Agent and Lenders as follows: (i) each of the Credit Parties is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, (ii) subject to the entry of the Interim Financing Order, the execution, delivery and performance by each of the Credit Parties of this Amendment are within its powers, have been duly authorized, and do not contravene: (A) its articles of incorporation, certificate of formation, shareholders agreement, operating agreement, limited liability company agreement, voting rights agreement or other organizational documents (collectively, the “Organizational Documents”); or (B) any applicable law, (iii)
except as delivered to Agent pursuant to this Amendment and subject to the entry of the Interim Financing Order, no consent, license, permit, approval or authorization of, or registration, filing or declaration with any Governmental Authority or other Person is required in connection with the execution, delivery, performance, validity or enforceability of this Amendment by or against the Credit Parties, (iv) subject to the entry of the Interim Financing Order, this Amendment has been duly executed and delivered by each of the Credit Parties, and the execution, delivery and performance of this Amendment have been duly authorized by all requisite corporate or partnership action on the part of each of the Credit Parties, (v) subject to the entry of the Interim Financing Order, this Amendment constitutes the Credit Parties’, legal, valid and binding obligations enforceable against it in accordance with its terns, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally or by general principles of equity, (vi) after giving effect to this Amendment, no Credit Party is in default under any Loan Document, (vii) notwithstanding anything to the contrary set forth in the Loan Agreement, Loan Documents or any document governing the Subordinated Debt or Subordinated Debentures, the Credit Parties shall not make any payments (in cash, in kind by set off or otherwise) on or with respect to the Subordinated Debt or the Subordinated Debentures at any time prior to the indefeasible repayment in full in cash of the Obligations that are owed to the Agent and Lenders absent a Bankruptcy Court Order, after notice and an opportunity to be heard by Agent and Lenders, directing payment, (viii)  (A) nothing contained or provided in any Organizational Documents of any Credit Party: (1) restricts or limits or requires any consent, vote or action of any of
the shareholders, members or owners to any of the Pledge Agreements or the transactions contemplated thereby or to any action taken by Agent and/or Lenders under the Pledge Agreements including, without limitation, any enforcement action or any foreclosure, sale or transfer of all or a portion of the Pledged Collateral (as such term is defined in the Pledge Agreements); or (2) otherwise affects or restricts in any manner the exercise by Agent of any rights and remedies under the Pledge Agreements, the Loan Agreement or the other Loan Documents, (ix) all representations and warranties and disclosures made by the Credit Parties under the Loan Documents are true and correct as of the date hereof and are made as to this Amendment, except to the extent such representations

 

 

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and warranties have been breached solely as a result of the commencement of the Chapter 11 Case and except for the representation as to solvency Section forth in Section 5.13 (No Default; Solvency) of the Loan Agreement and (x) except as set forth in the disclosure schedule attached hereto as Schedule B (the “Disclosure Schedule”), all disclosures made by Borrower pursuant to the Amended and Restated Disclosure Schedules delivered by Borrower under the Third Amendment remain true and correct in all respects. All representations and warranties made in this Amendment shall survive the execution and delivery of this Amendment and no investigation by the Agent and Lenders shall affect such representations or warranties or the right of the Agent and Lenders to rely upon them.

SECTION 9. Release. In consideration of Agent and Lenders entering into this Amendment, each of the Credit Parties hereby releases and forever discharges Agent and Lenders, and their successors, assigns, agents, shareholders, members, directors, officers, employees, agents, attorneys, parent corporations, subsidiary corporations, affiliated corporations, affiliates, and each of them, from any and all claims, debts, Obligations, demands, obligations, costs, expenses, actions and causes of action, of every nature and description, known and unknown, whether or not related to the subject matter of this Amendment, which such Credit Party or any Credit Party now has or at any time may hold, by reason of any matter, cause or thing occurred, done, omitted or suffered to be done prior to the date of this
Amendment. Each of the Credit Parties waives the benefits of any law, which may provide in substance: “A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.” Each of the Credit Parties understands that the facts which it believes to be true at the time of making the release provided for herein may later turn out to be different than it now believes, and that information which is not know known or suspected may later be discovered. Each of the Credit Parties accepts this possibility, and each of the Credit Parties assumes the risk of the facts turning out to be different and new information being discovered; and each of the Credit Parties further agrees that the release provided for herein shall in all respects continue to be effective and not subject to termination or rescission because of any
difference in such facts or any new information. This release is fully effective on the date hereof. Agent and Lenders are not releasing any Credit Parties from any claims, debts, Obligations, demands, obligations, costs, expenses, actions or causes of action.

SECTION 10. Miscellaneous.

(a)          The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, be deemed to be an amendment or modification of, or operate as a waiver of, any provision of any Loan Document or any right, power or remedy of the Agent and Lenders, nor constitute a waiver of any provision of any Loan Document, or any other document, instrument and/or agreement executed or delivered in connection therewith or of any Default or Event of Default under any of the foregoing, in each case whether arising before or after the date hereof or as a result of performance thereunder. This Amendment shall not preclude the future exercise of any right, remedy, power or privilege available to the Agent and Lenders whether under the Loan Documents, at law or otherwise.

(b)          This Amendment may be executed in any number of counterparts (including by facsimile), and by the different parties hereto or thereto on the same or separate counterparts, each of which shall be deemed to be an original instrument but all of which, as applicable, together shall 

 

12

 

EXECUTION COPY

 

constitute one and the same agreement. The descriptive headings of the various sections of this Amendment are inserted for convenience of reference only and shall not be deemed to affect the meaning or construction of any of the provisions thereof. Whenever the context and construction so require, all words in this Amendment in the singular number herein shall be deemed to have been used in the plural, and vice versa, and the masculine gender shall include the feminine and neuter and the neuter shall include the masculine and feminine.

(c)           This Amendment may not be changed, amended, restated, waived, supplemented, discharged, canceled, terminated or otherwise modified orally or by any course of dealing or in any manner other than as provided in the Loan Agreement. This Amendment shall be considered part of the Loan Agreement and shall be a Loan Document for all purposes.

(d)          The Loan Agreement as amended by this Amendment constitutes the final, entire agreement and understanding between the parties with respect to the subject matter thereof and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements between the parties, and shall be binding upon and inure to the benefit of the successors and assigns of the parties thereto and supersede all other prior agreements and understandings, if any, relating to the subject matter thereof. There are no unwritten oral agreements between the parties with respect to the subject matter thereof.

(e)           THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE CHOICE OF LAW PROVISIONS SET FORTH IN, AND SHALL BE SUBJECT TO THE WAIVER OF JURY TRIAL AND NOTICE PROVISIONS OF, THE LOAN AGREEMENT.

(f)           The Borrower may not assign, delegate or transfer this Amendment or any of its rights or obligations hereunder without the prior consent of the Agent and Lenders and any delegation, transfer or assignment in violation hereof shall be null and void. No rights are intended to be created hereunder for the benefit of any third party donee, creditor or incidental beneficiary of the Borrower or any other Person other than the Agent and Lenders. Nothing contained in this Amendment shall be construed as a delegation to the Agent and Lenders of the Borrower’s duty of performance, including, without limitation, any duties under any account or contract in which the Agent and Lenders have a security interest or Lien. This Amendment shall be binding upon the Borrower and its respective successors and permitted
assigns. The Agent and Lender’s ability to assign, sell or transfer all or any part of this Amendment shall be governed by the Loan Agreement.

(g)          Except as specifically amended hereby, (i) this Amendment shall not limit or diminish the obligations of the parties under the Loan Agreement, and (ii) each Credit Party reaffirms its obligations under the Loan Documents to which it is a party and agrees that the Loan Documents remain in full force and effect and are hereby ratified and confirmed.

(h)          The Credit Parties  shall execute and deliver such other documents, certificates and/or instruments and take such other actions or cause such other actions to be taken as the Agent and Lenders may request in order more effectively to consummate the transactions contemplated hereby.

 

 

13

 

EXECUTION COPY

 

 

(i)           Each Credit Party hereby acknowledges and agrees that it has no defense, counterclaim, offset, cross-complaint, claim or demand of any kind or nature whatsoever that can be asserted to reduce or eliminate all or any part of such Credit Party’s liability to repay the Obligations or to seek affirmative relief or damages of any kind or nature from Agent and/or the Lenders.

[Remainder of page intentionally left blank]

 

14

 

EXECUTION COPY

 

 

                IN WITNESS WHEREOF, the parties hereto have executed this Fourth Amendment and Ratification Of Term Loan And Security Agreement under seal as of the day and year first above written.

 

	
            BORROWER:
 	
            EASY GARDENER PRODUCTS, LTD., a Texas limited partnership
 
	
             
 	
             
 
	
             
 	
            By:      E G Product Management, L.L.C., its General Partner
 
	
             
 	
             
 
	
             
 	
            By:     /s/ Richard M. Kurz            

                                               Name: Richard M. Kurz

                                               Title:  Chief Financial Officer
 
	
             
 	
             
 
	
            GUARANTORS:
 	
            EYAS INTERNATIONAL, INC.
 
	
             
 	
             
 
	
             
 	
            By:      /s/ Richard M. Kurz        

Name:  Richard M. Kurz

Title:    Chief Financial Officer
 
	
             
 	
             
 
	
             
 	
            EG, L.L.C.
 
	
             
 	
             
 
	
             
 	
            By:       /s/ Richard M. Kurz      

Name:  Richard M. Grandy

Title:    Manager
 
	
             
 	
             
 
	
             
 	
            E G PRODUCT MANAGEMENT, L.L.C.
 
	
             
 	
             
 
	
             
 	
            By:       /s/ Richard M. Kurz      

Name:   Richard M. Kurz

Title:     Chief Financial Officer
 
	
             
 	
             
 
	
             
 	
            WEATHERLY CONSUMER PRODUCTS, INC.
 
	
             
 	
             
 
	
             
 	
            By:      /s/ Richard M. Kurz        

Name:  Richard M. Kurz 

Title:    Chief Financial Officer
 
	
             
 	
             
 
	
             
 	
            WEATHERLY CONSUMER PRODUCTS GROUP, INC.
 
	
             
 	
             
 
	
             
 	
            By:      /s/ Richard M. Kurz        

Name:  Richard M. Kurz 

Title:    Chief Financial Officer
 

 

[Remainder of page intentionally left blank]

 

 

15

 

EXECUTION COPY

 

 

	
             
 	
             
 
	
             
 	
            NBU GROUP, LLC
 
	
             
 	
             
 
	
             
 	
            By:       /s/ Richard M. Kurz      

Name:  Richard M. Kurz

Title:     Chief Financial Officer
 

 

[Remainder of page intentionally left blank]

 

16

 

EXECUTION COPY

 

 

	
            AGENT AND LENDER:
 	
            CAPITALSOURCE FINANCE LLC
 
	
             
 	
             
 
	
             
 	
            By:             /s/ Steven A. Museles                               

Name:         Steven A. Museles                                    

Title:          Executive Vice President                           
 

 

 

 

17

 

EXECUTION COPY

 

 

    Schedule A

 

    (Schedule of Obligations)

    (Unpaid principal as of April 13, 2006)*

 

 

	
            Term A Loan:
 	
            $7,316,844.13
 
	
            Term B Loan:
 	
            $9,500,000.00
 
	
            PIK:
 	
            $1,806,682.32
 

 

*plus accrued and accruing interest, costs, fees, attorneys’ fees and disbursements and other charges as well as adjustments, credits, and charges as provided as provided under the Loan Documents.

 

 

 

18Exhibit 10.59

                            LEASE - BUSINESS PROPERTY

      This lease agreement is effective the 1st day of March, 2005 by Maust
Asset Management Co., LLC, a Minnesota limited liability company ("Landlord")
whose address for the purpose of this lease is 5785 Starview Lane, Prior Lake,
MN 55372 and Greenman Technologies of Iowa, Inc., an Iowa corporation ("Tenant")
whose address for the purpose of this lease is 1914 E. Euclid Avenue, Unit "A",
Des Moines, IA 50313.

      1. PREMISES AND TERM. The Landlord, in consideration of the rents,
agreements and conditions herein contained, leases to Tenant and Tenant leases
from Landlord, according to the terms and provisions of this lease, the
following described "premises", situated in Polk County, Iowa:

1. Parcel "H"; see Exhibit A; and
2. Parcel "I"; see section highlighted and marked Parcel "I" on Exhibit "B" to
   be sublet.

with the improvements therein, and all rights, easements and appurtenances,
which, more particularly, includes the space and premises as may be shown on
Exhibit "A" and Exhibit "B", if attached, for a term of 8 (eight) years and 2
(two) months, commencing at midnight of the day previous to the first day of the
issue term, which shall be on the 1st day of March, 2005 and ending at midnight
on the last day of the lease term, which shall be on the 30th day of April,
2013, upon the condition that the Tenant pays rent thereof, and otherwise
performs as in this lease provided.

      2. RENTAL. Tenant agrees to pay to Landlord as rental for said term, as
follows: See paragraph 29(D) on Addendum attached.

      In addition to the above monthly rental Tenant shall also pay: a security
deposit of Three Thousand Five Hundred Dollars ($3,500).

      All sums shall be paid at the address of Landlord, as above designated, or
at such other place as the Landlord may, from time to time, designate in
writing.

      Delinquent payments shall draw interest at 12% per annum from the due date
until paid.

      2. (1). MULTIPLE TENANTS. If any other Tenants in adjoining premises share
responsibility with Landlord and Tenant for any expenses, the percentages
allocated to Landlord and Tenant in this lease shall represent only their
respective portions of the total shared expenses. Therefore, their percentages
may total less than 100%. Nothing shall prevent the Landlord from paying a
Tenant's share of an expense, and billing the Tenant for the amount so paid.
<PAGE>

      2. (2). "TRIPLE NET" PROVISION. (Optional). This provision shall be
applicable. Tenant agrees that all duties and obligations to repair, maintain
and provide utilities and services (paragraphs 6 and 7), to pay taxes and
special assessments (paragraph 10) and to pay for casualty and liability
insurance (paragraph 11) shall be borne solely by Tenant during the term of this
lease. (If the parties select this provision, all duties and obligations set
forth in paragraphs 6, 7, and 10 shall be performed by the Tenant).

      3. POSSESSION. Tenant shall be entitled to possession on the first day of
the term of this lease and shall yield possession to the Landlord at the end of
the lease term, except as herein otherwise expressly provided. Should Landlord
be unable to give possession on said date, Tenant's only damages shall be a
rebating of the pro rate rental.

      4. USE OF PREMISES. Tenant covenants and agrees during the term of this
lease to use and to occupy the leased premises only for tire recycling business
including storage and parking of materials and vehicles.

      5. QUIET ENJOYMENT. Landlord covenants that its estate is in fee simple
and that the Tenant, if not in default, shall peaceably have, hold and enjoy the
premises for the term of this lease. Landlord shall have the right to mortgage
all of its right, title, interest in said premises at any time without notice,
subject to the lease.

      6. EQUIPMENT, DECORATING REPLACEMENT, REPAIR AND MAINTENANCE

                                   DEFINITIONS

"Maintain" means to clean and keep in good condition.

"Repair" means to fix and restore to good condition after damage, deterioration
or partial destruction.

                              CONDITION OF PREMISES

      A. Tenant takes the premises in its present condition, except for such
repairs and alterations as may be expressly otherwise provided in this lease.

                             REPAIRS AND MAINTENANCE

      B. Tenant shall replace and repair the structural parts of the building.
For purposes of this lease, the structural parts of the building shall mean the
foundation, exterior walls, load bearing components of interior floors and
walls, the roof and all sewers, pipes, wiring and electrical fixtures outside of
the structure.

<PAGE>

      C. Repairs shall be performed and paid for by the parties as follows:

                                                 PERFORMANCE         PAYMENT
                                                 -----------         -------
                                                 L=Landlord
                                                 T=Tenant     %Landlord  %Tenant

Interior walls, floors and ceilings                   T           0        100
Sewer, plumbing fixtures, pipes, wiring
  electrical fixtures within the structure            T           0        100
Heating equipment                                     T           0        100
Air conditioning equipment                            T           0        100
Plate glass (replacement)                             T           0        100
Sidewalks                                             T           0        100
Parking areas                                         T           0        100
Other common areas                                    T           0        100

      D. Tenant shall be responsible for maintenance of all common areas.

      E. Any repair or maintenance not specifically provided for above shall be
performed and paid for by Tenant.

      F. Each party shall perform their responsibilities of repair and
maintenance to the end that the premises will be kept in a safe and serviceable
condition. Neither party will permit nor allow the premises to be damaged or
depreciated in value by any act, omission to act, or negligence of itself, its
agents or employees.

                      EQUIPMENT, DECORATING AND ALTERATIONS

      G. The following items of equipment, furnishings and fixtures shall be
supplied and replaced by the parties as follows:

                                    SUPPLIED                REPLACED
                                    --------                --------
                                    L=Landlord              L=Landlord
                                    T=Tenant                T=Tenant

Heating equipment                  ___________             ____________
Air conditioning equipment         ___________             ____________
Carpeting/floor covering           ___________             ____________
Drapes, shades, blinds             ___________             ____________

      Any similar equipment, furnishings and fixtures not specifically provided
and paid for by Tenant.

Any equipment, furnishings or fixtures to be supplied by Tenant shall be subject
to the Landlord's prior written approval as to qualify and method of
installation. Tenant shall provide all trade equipment, furnishings and fixtures
used in connection with the operation of its business, such as telephones,
computers, desks, chairs, shelving and similar items.

<PAGE>

      H. Landlord shall provide and pay for the following items of interior
decorating:

Thereafter, Tenant shall be responsible for all interior decorating. Tenant
shall make no structural alterations or improvements without the prior written
consent of the Landlord, which shall not be unreasonably withheld.

                         AMERICANS WITH DISABILITIES ACT

      I. Tenant will make no unlawful use of said premises and agrees to comply
with all valid regulations of the Board of Health, City Ordinances or applicable
municipality, the laws of the State of Iowa and the Federal government, but this
provision shall not be construed as creating any duty by Tenant to members of
the general public; provided, however, responsibility for compliance with the
Americans with Disabilities Act shall be performed and paid for by the parties
as follows:

                                    %Landlord                %Tenant
                                    ---------                -------
Common areas                            0                       100
Tenants area:
     Initial compliance (specify)       0                       100
     Future compliance                  0                       100

      7. UTILITIES AND SERVICES. Utilities and services shall be furnished and
paid for by the parties as follows:

                                    FURNISHED          PAYMENT
                                    ---------          -------
                                    L=Landlord
                                    T=Tenant    %Landlord   %Tenant

Electricity                             T           0          100
Gas                                     T           0          100
Water and Sewer                         T           0          100
Garbage/Trash                           T           0          100
Janitor/Cleaning                        T           0          100
Common areas                            T           0          100
Other:
     Telecommunications                 T           0          100
     Snow and ice Removal               T           0          100

      8. TERMINATION, SURRENDER OF PREMISES AT END OF TERM - REMOVAL OF FIXTURES

            (a) TERMINATION. This lease shall terminate upon expiration of the
original term; or if this expressly provides for any option to renew, and if any
such option is exercised by the Tenant, then this lease will terminate at the
expiration of the option term or terms.

            (c) SURRENDER. Tenant agrees that upon the termination of this lease
it will surrender and deliver the premises in good and clean condition, except
the effects of ordinary wear and tear and depreciation arising from lapse of
time, or damage without fault or liability of Tenant.

<PAGE>

            (d) HOLDING OVER. Continued possession by Tenant, beyond the
expiration of its tenancy coupled with the receipt of the specified rental by
the Landlord (and absent a written agreement by both parties for an extension of
this lease, or for a new lease) shall constitute a month to month extension of
this lease.

            (e) REMOVAL OF FIXTURES. Tenant may, at the expiration of its
tenancy, if Tenant is not in default, remove any fixtures or equipment which
Tenant has installed in the premises, providing Tenant repairs any and all
damages caused by removal.

      9. ASSIGNMENT AND SUBLETTING. Any assignment of this lease or subletting
of the premises or any part thereof, without the Landlord's prior written
permission shall, at the option of the Landlord, make the rental for the balance
of the lease term due and payable at once. Such written permission shall not be
unreasonably withheld.

      10. REAL ESTATE TAXES.

            A. All installments of real estate taxes would become delinquent if
not paid during the term of this lease, shall be paid by the parties in the
following proportions:

            Landlord  0%                  Tenant   100%

            B. Any increase in such installments that exceeds the amount of the
installment that would be delinquent if not paid by 9/30/2005 shall be paid as
follows:

            Landlord   0%                          100%

            C. PERSONAL PROPERTY TAXES. Tenant agrees to timely pay all taxes,
assessments or other public charges levied or assessed by lawful authority
against the personal property on the premises during the term of the lease.

            D. SPECIAL ASSESSMENTS. Special assessments that would be delinquent
if not paid during the term of this lease shall be timely paid by the parties in
the following proportions:

            Landlord   0%                 Tenant   100%

            E. Each Party reserves its right of protest of any assessment of
taxes.

      11. INSURANCE.

            A. PROPERTY INSURANCE. Landlord and Tenant agree to insure their
respective real and personal property for the full insurable value. Such
insurance shall cover losses. Included in the Insurance Services Office Broad
Form Causes of Loss (formerly fire and extended coverage). To the extent
permitted by their policies the Landlord and Tenant waive all rights of recovery
against each other.

<PAGE>

See Paragraph 29(F) on Addendum attached.

            B. LIABILITY INSURANCE. Tenant shall obtain commercial general
liability insurance in the amounts of $1,000,000.00 each occurrence and
$10,000,000.00 annual aggregate per location. Such policy shall include
liability arising from premises operations, independent contractors, personal
injury, products and completed operations and liability assumed under an insured
contract. This policy shall be endorsed to include the Landlord as an additional
insured.

            C. CERTIFICATES OF INSURANCE. Prior to the time the lease takes
effect the Tenant will provide the Landlord with a certificate of insurance with
these property and liability insurance requirements, such certificate shall
include 30 days advance notice of cancellation to the Landlord. A renewal
certificate shall be provided prior to expiration of the current policies.
Landlord shall be named as an additional insured in each of such policies.

            D. ACTS BY TENANT. Tenant will not do or omit doing any act which
would invalidate any insurance, or increase the insurance rates in force on the
premises.

            E. RECOMMENDATIONS - IOWA INSURANCE SERVICES OFFICE. Tenant further
agrees to comply with recommendations of Iowa Insurance Services Office and to
be liable for and to promptly pay, as if current rental, any increase in
insurance rates on said premises and on the building of which said premises are
part, due to increased risks or hazards resulting from Tenant's use of the
premises otherwise than as herein contemplated and agreed.

            F. Landlord and Tenant shall each provide a copy of this lease to
their respective insurers.

      12. LIABILITY FOR DAMAGE. Each party shall be liable to the other for all
damage to the property of the other negligently, recklessly or intentionally
caused by that party (or their agents, employees or invitees), except to the
extent the loss is insured and subrogation is waived under the owner's policy.

      13. INDEMNITY. Except as provided in paragraph 21(A)(5) and except for the
negligence of Landlord, Tenant will protect, defend and indemnify Landlord from
and against any and all loss, costs, damage and expenses occasioned by or
arising out of, any accident or other occurrence, causing or inflicting injury
or damage to any person or property, happening or done in, upon or about the
premises, or due directly or indirectly to the tenancy use or occupancy thereof,
or any part thereof by Tenant or any person claiming through or under Tenant.

      14. FIRE AND CASUALTY. (a) PARTIAL DESTRUCTION OF PREMISES. In the event
of a partial destruction or damage of the premises, which is a business
interference which prevents the conducting of a normal business operation and
which damage is reasonably repairable within sixty (60) days after its
occurrence, this lease shall not terminate but the rent for the premises shall
abate during the time of such business interference. In the event of a partial
destruction, Landlord shall repair such damages within sixty (60) days of its
occurrence unless prevented from doing so by acts of God, government regulations
or other causes beyond Landlord's reasonable control..

<PAGE>

            (b) ZONING. Should the zoning ordinance of the municipality in which
this property is located make it impossible for Landlord to repair or rebuild so
that Tenant is not able to conduct its business on these premises, then such
partial destruction shall be treated as a total destruction as provided in the
next paragraph.

            (c) TOTAL DESTRUCTION OF BUSINESS USE. In the event of a destruction
or damage of the leased premises including the parking area (if parking area is
part of this lease) so that Tenant is not able to conduct its business on the
premises or the then current legal use for which the premises are being used and
which damages cannot be repaired within sixty (60) days this lease may be
terminated at the option of either the Landlord or Tenant. Such termination in
such event shall be affected by written notice of one party to the other, within
30 (thirty) days after such destruction. Tenant shall surrender possession
within ten (10) days after such notice issues and each party shall be released
from all future obligations, and Tenant shall pay rent pro rata only to the date
of such destruction. In the event of such termination of this lease, Landlord at
its option, may rebuild or not, at its discretion.

      15. CONDEMNATION.

            (a) DISPOSITION OF AWARDS. Should the whole or any part of the
premises be condemned or taken for any public or quasi-public purpose. each
party shall be entitled to retain, as its own property, any award payable to it.
Or in the event that a single entire award is made on account of the
condemnation, each party will then be entitled to take such proportion of said
award as may be fair and reasonable.

            (b) DATE OF LEASE TERMINATION. If the whole of the demised premises
shall be so condemned or taken, the Landlord shall not be liable to the Tenant
except and as its rights are preserved as in paragraph 14 (a)above.

      16. DEFAULT, NOTICE OF DEFAULT AND REMEDIES.

                                EVENTS OF DEFAULT

          A. Each of the following shall constitute and event of default by
Tenant:

                  1. Failure to pay rent when due.

                  2. Failure to observe or perform any duties, obligations,
agreements or conditions imposed on Tenant pursuant to the terms of the lease.

                  3. Abandonment of the premises. "Abandonment" means the Tenant
has failed to engage in its usual and customary business activities on the
premises for more than fifteen (15) consecutive business days.

<PAGE>

                  4. Institution of voluntary bankruptcy proceedings by Tenant;
institution of involuntary bankruptcy proceedings in which the Court orders
relief against the Tenant as a debtor; assignment for the benefit of creditors
of the interest of Tenant under this lease agreement; appointment of a receiver
for the property or affairs of Tenant where the receivership is not vacated
within ten (10) days after the appointment of the receiver.

                                NOTICE OF DEFAULT

            B. Landlord shall give Tenant a written notice specifying the
default and giving the Tenant ten (10) days in which to correct the default. If
there is a default (other than for nonpayment of a monetary obligation of
Tenant, including rent) that cannot be remedied in ten (10) days by diligent
efforts of the Tenant, Tenant shall propose an additional period of time in
which to remedy the default. Consent to additional time shall not be
unreasonably withheld by Landlord. Landlord shall not be required to give Tenant
any more than two notices for the same default within any 365 day period.

                                    REMEDIES

            C. In the event Tenant has not remedied a default in a timely manner
following a Notice of Default, Landlord may proceed with all available remedies
at law or in equity, including but not limited to the following:

                  1. Termination. Landlord may declare this lease to be
terminated and shall give Tenant a written notice of such termination. In the
event of termination of this lease, Landlord shall be entitled to prove claim
for and obtain judgment against Tenant for the balance of the rent agreed to be
paid for the term herein provided, plus all expenses of Landlord in regaining
possession of the premises and the reletting thereof, including attorney's fees
and court costs, crediting against such claim, however, any amount obtained by
reason of reletting.

                  2. Forfeiture. If a default is not remedied in a timely
manner, Landlord may then declare this lease to be forfeited and shall give
Tenant a written notice of such forfeiture, and may, at the time, give Tenant
the notice to quit provided for in Chapter 648 of the Code of Iowa.

      17. RIGHT OF EITHER PARTY TO MAKE GOOD ANY DEFAULT OF THE OTHER. If
default shall be made by either party in the performance of, or compliance with,
any of the terms or conditions of this lease, and such default shall have
continued for thirty (30) days after written notice thereof from one party to
the other, the person aggrieved, in addition to all other remedies provided by
law, may, but need not, perform such term or condition or make good such default
and any amount advanced shall be repaid forthwith on demand, together with the
interest rate of 12% per annum, from the date of advance.

      18. SIGNS. (a) Tenant shall have the right of attaching, painting or
exhibiting signs on the leased premises, provided only (1) that any sign shall
comply with the ordinances of municipality in which the property is located and
the laws of the State of Iowa; (2) such sign shall not change the structure of
the building; (3) such sign, if and when removed, hall not damage the building;
and (4) such sign shall be subject to the prior written approval of the
Landlord, which approval shall not be unreasonably withheld.

<PAGE>

            (b) Landlord during the last ninety (90) days of this lease, or
extension, shall have the right to maintain in the windows or on the building or
on premises either or both a "For Rent" or "For Sale" sign and Tenant will
permit, at such time, prospective tenants or buyers to enter and examine the
premises.

      19. MECHANIC'S LIENS. Neither the Tenant nor anyone claiming by, through,
or under the Tenant, shall have the right to file or place any mechanic's liens
or other lien of any kind or character whatsoever, upon the premises or upon any
building or improvement, or upon the leasehold interest of the Tenant, and
notice is hereby given that no contractor, sub-contractor, or anyone else who
may furnish any material service or labor for any building, improvements,
alteration, repairs or any part thereof, shall at any time be or become entitled
to any lien on the premises, and for the further security of the Landlord, the
Tenant covenants and agree to give actual notice thereof in advance, to an and
all contractors and sub-contractors who may furnish or agree to furnish any such
material service or labor.

      20. LANDLORD'S LIEN AND SECURITY INTEREST. (a) Landlord shall have, in
addition to any lien given by the law, a security interest as provided by the
Uniform Commercial Code of Iowa, upon all personal property and all
substitutions thereof, kept and used on said premises by Tenant. Landlord may
proceed at law or in equity with any remedy provided by law or by this lease for
the recovery of rent, or for termination of this lease because of Tenant's
default in its performance. See Paragraph 29(A) on Addendum attached.

      21. ENVIRONMENTAL.

            A. Landlord. To the best of the Landlord's knowledge to date:

                  1. Neither Landlord nor Landlord's former or present tenants
are subject to any investigation concerning the premises of any governmental
authority under any applicable federal, state or local codes, rules and
regulations pertaining to air and water quality, the handling, transportation,
storage, treatment, usage or disposal of toxic or hazardous substances, air
emissions, other environmental matters, and all zoning and other land use
matters.

                  2. Any handling, transportation, storage, treatment, or use of
toxic or hazardous substances that has occurred on the premises has been in
compliance with all applicable federal, state, and local codes, rules and
regulations.

                  3. No leak, spill release, discharge, emission or disposal of
toxic or hazardous substances has occurred on the premises.

                  4. The soil, groundwater, and soil vapor on or under the
premises is free of toxic or hazardous substances.

<PAGE>

                  5. Landlord shall assume liability and shall indemnify and
hold Tenant harmless against all liability or expense arising from any condition
which existed, whether known or unknown, at the time of execution of the lease
which condition is not a result of actions of the Tenant or which condition
arises after date of execution but which is not a result of actions of the
Tenant.

            B. Tenant. Tenant expressly represents and agrees:

                  1. During the lease term, Tenant's use of the property will
not include the use of any hazardous substances without Tenant first obtaining
the written consent of Landlord. Tenant understands and agrees that Landlord's
consent is at Landlord's sole option and complete discretion and that such
consent may be withheld or may be granted with any conditions or requirements
that Landlord deems appropriate.

                  2. During the lease term, Tenant shall be fully liable for all
costs and expenses related to the use, storage, removal and disposal of
hazardous substances used or kept on the property by Tenant and Tenant shall
give immediate notice to Landlord of any violation or any potential violation of
any environmental regulation, rule, statue or ordinance relating to the use,
storage or disposal of any hazardous substance.

                  3. Tenant, at its sole cost and expense, agrees to remediate,
correct or remove from the premises any contamination of the property caused by
any hazardous substances which have been used or permitted by Tenant on the
premises during any term of this lease. Remediation, correction or removal shall
be in a safe and reasonable manner, and in conformance with all applicable laws,
rules and regulations. Tenant reserves all rights allowed by law to seek
indemnity or contribution from any person, other than Landlord, who is or may be
liable for any such cost and expense.

                  4. Tenant agrees to indemnify and hold Landlord harmless from
and against all claims, causes of action, damages, loss, costs, expense,
penalties, fines, lawsuits, liabilities, attorney fees, engineering and
consulting fees, arising out of or in any manner connected with hazardous
substances, which are caused or created by Tenant on or after the date of this
lease and during any term of this lease, including but not limited to, injury or
death to persons or damage to property, and including any diminution of the
value of any leased premises which may result from the foregoing. This indemnity
shall survive the cessation, termination, abandonment or expiration of this
lease.

      22. SUBSTITUTION OF EQUIMENT, MERCHANDISE, ETC. (a) During its tenancy,
the Tenant shall have the right to sell or otherwise dispose of any personal
property of the Tenant situated on the premises, when in the judgment of the
Tenant it shall have become obsolete, outworn, or unnecessary in connection with
the operation of the business on the premises; provided, however, that the
Tenant shall, in such instances (unless no substituted article or item is
necessary) at its own expense, substitute for such items a new or other item in
substitution thereof, in like or greater value.

<PAGE>

            (b) Nothing herein contained shall be construed as denying to Tenant
the right to dispose of inventoried merchandise in the ordinary course of the
Tenant's trade or business.

      23. RIGHTS CUMULATIVE. The various rights, powers, options, elections and
remedies of either party, provided in this lease, shall be construed as
cumulative and no one of them as exclusive of the others, or exclusive of any
rights, remedies or priorities allowed either party by law, and shall in no way
affect or impair the right of either party to pursue any other equitable or
legal remedy to which either party may be entitled as long as any default
remains in any way unremedied, unsatisfied or undischarged.

      24. NOTICES AND DEMANDS. Notices as provided for in this lease shall be
given to the respective parties hereto at the respective addresses designated on
page one of this lease unless either party notifies the other, in writing, of a
different address. Without prejudice to any other method of notifying a party in
writing or making a demand or other communication, such message shall be
considered given under the terms of this lease when sent, addressed as above
designated, postage prepaid, be certified mail deposited in a United States mail
box.

      25. PROVISIONS TO BIND AND BENEFIT SUCCESSORS, ASSIGNS, ETC. Each and
every covenant and agreement herein contained shall extend to and be binding
upon the respective successors, heirs, administrators, executors and assigns of
the parties; except that if any part of this lease is held in joint tenancy, the
successor in interest shall be the surviving joint tenant.

      26. CHANGES TO BE IN WRITING. None of the covenants, provisions, terms or
conditions of this lease shall be modified, waived or abandoned, except by a
written instrument duly signed by the parties. This lease contains the whole
agreement of the parties.

      28. CONSTRUCTION. Words and phrases herein, including acknowledgement
hereof, shall be construed as in the singular or plural number, and as
masculine, feminine or neutral gender according to the context.

      29. See Additional terms and conditions on Addendum attached hereto and by
this reference made a part hereof.

Greenman Technologies of Iowa, Inc.       Maust Asset Management Co., LLC

By   /s/ Robert H. Davis                  By  /s/ Mark Maust
     Robert Davis                             Mark Maust
Title: Vice President                     Title: Managing Member

<PAGE>

                                    Exhibit A

1.    Parcel "H" of Section 24, Township 79 North, Range 24 West of the 5th
      P.M., all being in and forming a part of the City of Des Moines, Polk
      County, Iowa, more particularly described as follows: Commencing at the
      Southeast Corner of said Section 24; THENCE North 90 degrees West, along
      the South line of said Section 24, a distance of 1094.31 feet, to the
      Southwest Corner of Parcel "G" of said Section 24, Recorded in Polk County
      Recorder's Book 9575, Page 711, filed January 16, 2003, said point also
      being on the East Right of Way (R.O.W.) line of Chicago Rock Island and
      Pacific Railroad (C.R.I.P.R.R.); THENCE North 0 degrees 10' 12" East,
      along the West line of said Parcel "G", a distance of 747.46 feet, to the
      Northwest Corner of said Parcel "G", said point also being the POINT OF
      BEGINNING; THENCE continuing North 0 degrees 10' 12" East, along said East
      R.O.W. line of C.R.I.P.R.R., a distance of 502.25 feet; THENCE South 90
      degrees East, a distance of 198.40 feet; THENCE South 11 degrees 01' 31"
      East, a distance of 295.43 feet; THENCE South 3 degrees 34' 48", a
      distance of 201.84 feet, to the Northeast Corner of said Parcel "G";
      THENCE South 87 degrees 41' 45" West, along the North line of said Parcel
      "G", a distance of 269.21 feet, to the Northwest Corner of said Parcel
      "G", said point also being the POINT OF BEGINNING, containing 2.758 acres,
      more or less.

<PAGE>

                                    Exhibit B

                               [Plot plan omitted]

<PAGE>

                           ADDENDUM TO LEASE AGREEMENT

      29. ADDITIONAL TERMS AND CONDITIONS:

      The Lease includes the following additional terms and conditions:

            A. For purposes of paragraph 20(a) of the Lease, Tenant creates,
provides for, grants, transfers and conveys to Landlord a lien and security
interest, as provided by the Uniform Commercial Code of Iowa, upon all personal
property of Tenant, and all accessions and additions thereto, and all
replacements, substitutions and proceeds thereof, kept and used on the premises
by Tenant at any time during the Lease, or any extension thereof. Tenant hereby
authorizes Landlord to file such financing statements and continuation
statements as Landlord may determine in order to perfect such security interest.
In the event this Lease is terminated by Tenant's default, Landlord may
immediately re-enter and resume possession of the premises and take possession
of all of the aforesaid personal property, as to which Landlord shall have all
of the rights and remedies of a secured party under the Uniform Commercial Code
in effect in Iowa. Tenant agrees that any required written notice sent by
Landlord at least ten (10) days in advance of any action shall be deemed to be
reasonable for all purposes. Furthermore, Tenant agrees to execute upon request
by Landlord a Memorandum of this Lease containing such information concerning
this Lease as Landlord may reasonably determine. Tenant authorizes Landlord to
file such Memorandum of Lease.

            B. Estoppel Certificates. Tenant, from time to time, upon written
request from Landlord, agrees to execute, acknowledge and deliver to Landlord
within ten (10) days from Landlord's request, in form and substance satisfactory
to Landlord but subject to such modifications as Landlord's mortgagee may
reasonably require, a written statement certifying that Tenant has accepted the
premises, that this Lease is unmodified and in full force and effect (or, if
there have been modifications, that this Lease is in full force and effect as
modified, setting forth the modifications), that Landlord is not in default
hereunder, the date to which the rent and other amounts payable by Tenant have
been paid in advance, if any, and such additional facts as may be required by
Landlord or Landlord's mortgagee. Tenant understands and agrees that Landlord
any prospective purchaser of the premises, any current or prospective mortgagee
of the premises and their respective successors and assigns, may rely upon any
such statement delivered pursuant to this paragraph.

            C. Subordination. This Lease Agreement and all rights of the tenant
under this Lease Agreement shall be subject and subordinate to the lien of any
and all mortgages that affect the property covered by this Lease Agreement or
any part of the leased property, and to any and all new mortgages, renewals,
modifications or extensions of any mortgages. Tenant shall, on demand, execute,
acknowledge and deliver to the Landlord any and all instruments that may be
necessary or proper to subordinate this Lease Agreement and all rights in this
Lease Agreement to the lien of any such mortgage or mortgages. The parties agree
that each shall cooperate with any lenders in obtaining non-disturbance
agreements.

<PAGE>

            D. Tenant agrees to pay to Landlord as Minimum Rent for the
premises, without notice, setoff, or demand, the monthly amounts set forth
below:

      Month of Term                            Monthly Minimum Rental
      -------------                            ----------------------
      March 1, 2005 to March 31, 2008                 $3,500.00
      April 1, 2008 to April 30, 2013                 $3,500.00

      Said monthly payments shall be due and payable by Tenant in advance on the
first day of each calendar month during the term of this Lease Agreement, or any
extension or renewal thereof, at the office of Landlord.

            E. REAL ESTATE TAXES. Tenant shall pay, as Additional Rent, all real
estate taxes and all assessments for special improvements and any taxes in lieu
thereof which may be levied or assessed upon the Real Property payable in any
year within the Lease Term and any extension thereof. Taxes and installments of
special assessments payable during any partial year of the Lease Term and any
extensions thereof shall be prorated on a calendar year basis. At the option of
the Landlord, this Additional Rent shall be due and payable with the Minimum
Rent in advance in equal monthly installments equal to one-twelfth (1/12th) of
such taxes and assessments due and payable during the then calendar year.

            F. Tenant shall purchase at Tenant's expense property insurance with
a minimum coverage amount of $1.5 million pursuant to Paragraph 11 of this
Lease. Tenant shall procure the insurance policies required under paragraph 11
of this Lease from insurance companies acceptable to Landlord.

            G. WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS LEASE WAIVES
THE RIGHT TO TRIAL BY A JURY OF ANY MATTERS ARISING OUT OF THIS LEASE. Each of
the parties to this Lease agrees that in the event any party to this Lease
commences an action to enforce the terms of this Lease or for breach of this
Lease, such action shall be venued in either the United States District Court
sitting in Polk County, Iowa or in the Iowa District Court in and for Polk
County, Iowa.

            H. Before commencement of any work by Lessee, all Plans and
Specifications shall be filed with and approved by all government departments or
authorities having jurisdiction over such matters, and all work shall be done in
accordance with the requirements of local regulations. The Plans and
Specifications for any alterations estimated to cost $5,000 or more, shall be
submitted to Lessor for prior written approval (which approval shall not be
unreasonably withheld or delayed) prior to commencing work. Alterations shall be
performed in a workmanlike manner and shall not weaken or impair the structural
strength or lessen the value of the building.

<PAGE>

Signed this 14th day of March, 2005       Signed this 25th day of March, 2005

MAUST ASSET MANAGEMENT CO., LLC           GREENMAN TECHNOLOGIES OF IOWA, INC.

By: /s/ Mark Maust                        By: /s/ Robert H. Davis
    Mark Maust                                Robert Davis
    Title: Managing Member                    Title: Vice President
LANDLORD                                  TENANT

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