LEASE REINSTATEMENT, SETTLEMENT AND WAIVER AGREEMENT
This Lease Reinstatement, Settlement and Waiver Agreement (the “Agreement”) is made and entered into March ___, 2011 (the “Effective Date”), by and among BANC OF AMERICA LEASING & CAPITAL, LLC as successor-in-interest to LASALLE NATIONAL LEASING CORPORATION , a Delaware limited liability company having its principal office at 2059 Northlake Parkway, 4 South, Tucker, GA 30084 (the “Lessor”), and ADVANCED ENVIRONMENTAL RECYCLING TECHNOLOGIES, INC. , a Delaware corporation having its principal office at 914 N. Jefferson, Springdale, AR 72764 (the “Lessee”).
RECITALS OF FACT
A. Lessor and Lessee entered into that certain Master Lease Agreement dated January 31, 2006 (“Master Lease”) setting forth the terms and conditions for Lessor’s leasing certain equipment and other property to Lessee.
B. Subsequent to entering into the Master Lease, Lessor and Lesee executed that certain Equipment Schedule Series A No. 1 with attached riders on December 27, 2007 and Equipment Schedule Series A No. 2 with attached riders on March 26, 2008 (collectively, the “Schedules”) (together with the Master Lease, the “Lease”).
C. Lessee has failed to make monthly rent payments due under the Lease since October 1, 2010 which constitutes an Event of Default, as defined by the Lease (the “Payment Default”).
D. A transfer of a majority of Lessee’s capital stock to H.I.G. AERT, LLC to occur on or about March 15, 2011 has been proposed which would constitute a material change in the ownership of Lessee’s capital stock and an Event of Default, as defined by the Lease (the “Ownership Default” and, collectively with the Payment Default, the “Defaults”).
E. Lessee has requested and Lessor has agreed to standstill in the exercise of the remedies available to Lessor with respect to the Payment Default, including but not limited to a standstill in prosecuting the action against Lessee commenced by that certain Complaint filed by Lessor against Lessee as Case No. CV 11-424-4 in the Circuit Court of Washington County, Arkansas, 4 th Division (the “Action”) and, subject to Lessee’s making the Payment, as defined in Paragraph 2 of this Agreement, and depositing the Security Deposit provided for by Paragraph 5 of this Agreement, Lessor has agreed to reinstate the Lease and to voluntarily file a non-suit to dismiss the Action without prejudice within ten (10) business days after receiving the Payment (the “Settlement”).
F. Lessee has further requested and Lessor has agreed to waive the Ownership Default.
G. As a condition to Lessor standing still with respect to the Payment Default and waiving the Ownership Default, and as a condition precedent to the Settlement contemplated hereby, Lessor has requested and Lessee has agreed to the following, among other conditions: (i) Lessee will bring all rent payments current by paying to Lessor all payments due under the Lease but unpaid to Lessor through the Effective Date in the total aggregate amount of Three Hundred Seventy Five Thousand Thirteen and 56/100s Dollars ($375,013.56) (the “Unpaid Rent”); (ii) Lessee will pay to Lessor all late fees due under the Lease in the total aggregate amount of Seven Thousand Five Hundred and 30/100s Dollars ($7,500.30) (the “Late Fees”); (iii) Lessee will reimburse Lessor for Lessor’s legal expenses incurred in attempting to enforce the Lease in the amount of Nine Thousand Two Hundred and NO/100s Dollars ($9,200.00) (the “Legal Fees”); (iv) Lessee will remit to Lessor a non-refundable security deposit in the amount of One Hundred Fifty Seven Five Hundred Six and 78/100s Dollars ($157,506.78) (the “Security Deposit”); and (v) Lessee will standstill in defending the Action.
NOW, THEREFORE, in consideration of the recitals above and the mutual agreements and covenants contained herein, the receipt and sufficiency of which are hereby acknowledged, each of the parties, intending to be legally bound by the provisions hereof, agree as follows:
1. Recitals . All recitals set forth herein are contractual in nature, not merely recitals of fact and are incorporated herein by reference as if fully set forth word for word.
2. Payments to Lessor . Within two (2) business days after execution of this Agreement, Lessee shall remit to Lessor, in the manner directed by Lessor, the Unpaid Rent, the Late Fees, the Legal Fees and the Security Deposit in the aggregate payment amount of Five Hundred Forty Nine Thousand Two Hundred Twenty and 64/100s Dollars ($549,220.64) (the “Payment”).
3. Standstill, Lease Reinstatement and Settlement . Subject to the receipt of an executed copy of this Agreement, Lessor hereby agrees to standstill in the exercise of its remedies with respect to the Payment Default, including refraining from continued prosecution of the Action; provided, however, that the Payment must be received by Lessor not later than the close of business, 5:00 p.m. CDT, March 18, 2011 or this Agreement shall terminate and be of no further force or effect. Subject to receipt of an executed copy of this Agreement, Lessee hereby agrees to standstill in defending the Action so long as this Agreement continues in force and effect as provided above. Upon receipt of the Payment by Lessor, Lessor and Lessee agree that the Lease shall be reinstated and performable on a going-forward basis by both parties in accordance with its terms and Lessor hereby agrees to voluntarily file a non-suit to dismiss the Action without prejudice within ten (10) business days of receiving the Payment.
4. Waiver . Subject to receipt of the Payment from Lessee and receipt of an executed copy of this Agreement, Lessor hereby agrees to waive the Ownership Default.
5. Security Deposit . The Security Deposit shall be retained by Lessor as security for Lessee’s faithful performance of all terms and conditions contained in this Agreement and the Lease. In the event that Lessee breaches this Agreement or fails to make any payment due under this Lease within thirty days after any such payment is due, Lessor may, at it sole option,