EXHIBIT 10.35
NINTH AMENDMENT
TO CREDIT AGREEMENT
THIS NINTH AMENDMENT TO CREDIT AGREEMENT (this "Ninth Amendment") dated as of
December 22, 1998, is made and entered into by and between EMCON, a California
Corporation ("Borrower"), and UNION BANK OF CALIFORNIA, N.A. ("Bank"), successor
in interest to the Bank of California, N.A.
RECITALS:
A. Borrower and Bank are parties to that certain Credit Agreement dated
February 29, 1996 as amended from time to time (the "Agreement"),
pursuant to which Bank agreed to extend credit to Borrower.
B. Borrower is currently indebted to Bank under the Agreement in the
aggregate commitment amount of $13,785,713 and Borrower has no defense,
offset or counterclaim against Bank or any other person or entity that
diminishes such indebtedness.
Now, therefore, in consideration of the above recitals and of the mutual
covenants and conditions contained herein, Borrower and Bank agree as follows:
AGREEMENT:
1. Defined Terms. Initially capitalized terms used herein which are not
otherwise defined shall have the meanings assigned thereto in the
Agreement.
2. Amendments to the Agreement.
(a) In ARTICLE 1 - DEFINITIONS, "Termination Date" is amended in its
entirety to read as follows:
""Termination Date" means the earlier of (a) the date Bank may
terminate making Advances or extending credit pursuant to the rights of Bank
under Article 7; or (b) February 1, 1999, for the Line of Credit; or (c) June
30, 2001 for the Term Loan."
3. Effectiveness of the Ninth amendment. This Ninth Amendment shall become
effective as of the date hereof when, and only when, Bank shall have
received all of the following, in form and substance satisfactory to
Bank:
(a) The counterpart of this Ninth Amendment, duly executed by
Borrower;
(b) Such other documents, instruments or agreements as Bank may
reasonably deem necessary.
4. Ratification. Except as specifically amended hereinabove, the Agreement
shall remain in full force and effect and is hereby ratified and
confirmed.
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5. Representations and Warranties. Borrower represents and warrants as follows:
(a) Each of the representations and warranties contained in the
Agreement, as may be amended hereby, is hereby reaffirmed as of the
date hereof, each as if set forth herein:
(b) The executive, delivery and performance of the Ninth Amendment and
any other instruments or documents in connection herewith are within
Borrower's power, have been duly authorized, are legal, valid and
binding obligations of Borrower, and are not in conflict with the terms
of any charter, bylaw, or other organization papers of Borrower or with
any law, indenture, agreement or undertaking to which Borrower is a
party or by which Borrower is bound or affected;
(c) No event has occurred and is continuing or would result from this
Ninth Amendment which constitutes or would constitute an Event of
Default under the Agreement.
6. Governing Law. This Ninth Amendment and all other instruments or
documents in connection herewith shall be governed by and construed
according to the laws of the State of California.
7. Counterparts. This Ninth Amendment may be executed in two or more
counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same instrument.
WITNESS the due execution hereof as of the date first above written.
UNION BANK OF CALIFORNIA, N.A. EMCON
By: /s/ David Jackson By: /s/ Eugene M. Herson
- - ------------------------- ----------------------------
Title: Vice President Title: CFO & President
By: /s/ R. Mike Momboisse
----------------------------
Title: CFO and VP Legal
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PROMISSORY NOTE
(BASE RATE)
Borrower Name: EMCON
Borrower Address: Office 70061
400 SOUTH EL CAMINO REAL, STE 1200 Loan Number 259-668-7520 0081-00-000
SAN MATEO, CA 94402 Maturity Date FEBRUARY 1, 1999
Amount $10,000,000.00
$10,000,000.00 Date DECEMBER 31, 1998
- - -------------- -----------------------
FOR VALUE RECEIVED, on FEBRUARY 1, 1999, the undersigned ("Debtor") promises to
pay to the order of UNION BANK OF CALIFORNIA, N.A. ("Bank"), as indicated below,
the principal sum of TEN MILLION AND NO/100 Dollars ($10,000,000.00), or so much
thereof as is disbursed, together with interest on the balance of such principal
from time to time outstanding, at the per annum rate or rates and at the times
set forth below.
1. INTEREST PAYMENTS. Debtor shall pay interest at maturity. Should interest not
be paid when due, it shall become a part of the principal and bear interest as
herein provided. All computations of interest under this note shall be made on
the basis of a year of 360 days, for actual days elapsed.
a. BASE INTEREST RATE. At Debtor's option, amounts outstanding
hereunder in minimum amounts of at least $100,000.00 shall bear
interest at a rate, based on an index selected by Debtor, which is
1.50% per annum in excess of Bank's LIBOR-Rate for the Interest Period
selected by Debtor, acceptable to Bank.
No Base Interest Rate may be changed, altered or otherwise modified
until the expiration of the Interest Period selected by Debtor. The
exercise of interest rate options by Debtor shall be as recorded in
Bank's records, which records shall be prima facie evidence of the
amount borrowed under either interest option and the interest rate;
provided, however, that failure of Bank to make any such notation in
its records shall not discharge Debtor from it obligations to repay in
full with interest all amounts borrowed. In no event shall any Interest
Period extend beyond the maturity date of this note.
To exercise this option, Debtor may, from time to time with respect to
principal outstanding on which a Base Interest Rate is not accruing,
and on the expiration of any Interest Period with respect to principal
outstanding on which a Base Interest Rate has been accruing select an
index offered by Bank for a Base Interest Rate Loan and an Interest
Period by telephoning an authorized lending officer of Bank located at
the banking office identified below prior to 10:00 a.m., Pacific time,
on any Business Day and advising that officer of the selected index,
the Interest Period and the Origination Date selected (which
Origination Date, for a Base Interest Rate Loan based on the
LIBOR-Rate, shall follow the date of such selection by no more than two
(2) Business Days).
Bank will mail a written confirmation of the terms of the selection to
Debtor promptly after the selection is made. Failure to send such
confirmation shall not affect Bank's rights to collect interest at at
the rate selected. If, on the date of the selection, the index selected
is unavailable for any reason, the selection shall be void. Bank
reserves the right to fund the principal from any source of funds
notwithstanding any Base Interest Rate selected by Debtor.
b. VARIABLE INTEREST RATE. All principal outstanding hereunder which is
not bearing interest at a Base Interest Rate shall bear interest at a
rate per annum of equal to the Reference Rate, which rate shall vary as
and when the Reference Rate changes.
At any time prior to the maturity of this note, subject to the
provisions of paragraph 4, below, of this note, Debtor may borrow,
repay and reborrow hereon so long as the total outstanding at any one
time does not exceed the principal amount of this note. Debtor shall
pay any amounts due under this note in lawful money of the United
States at Bank's NORTHERN CALIFORNIA COMMERCIAL BANKING Office, or such
other office as may be designated by Bank, from time to time.
2. LATE PAYMENTS. If any payment required by the terms of this note
shall remain unpaid ten days after same is due, at the option of Bank, Debtor
shall pay a fee of $100 to Bank.
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3. INTEREST RATE FOLLOWING DEFAULT. In the event of default, at the
option of Bank, and, to the extend permitted by law, interest shall be payable
on the outstanding principal under this note at a per annum rate equal to five
percent (5%) in excess of the interest rate specified in paragraph 1.b., above,
calculated from the date of default until all amounts payable under this note
are paid in full.
4. PREPAYMENT.
a. Amounts outstanding under this note bearing interest at a rate based
on the Reference Rate may be prepaid in whole or in part at any time,
without penalty or premium. Debtor may prepay amounts outstanding under
this note bearing interest at a Base Interest Rate in whole or in part
provided Debtor has given Bank not less than five (5) Business Days
prior written notice of Debtor's intention to make such prepayment and
pays to Bank the liquidated damages due as a result. Liquidated Damages
shall also be paid, if Bank, for any other reason, including
acceleration or foreclosure, receives all or any portion of principal
bearing interest at a Base Interest Rate prior to its scheduled payment
date. Liquidated Damages shall be an amount equal to the present value
of the product of: (i) the difference (but not less than zero) between
(a) the Base Interest Rate applicable to the principal amount which is
being prepaid, and (b) the return which Bank could obtain if it used
the amount of such prepayment of principal to purchase at bid price
regularly quoted securities issued by the United State having a
maturity date most closely coinciding with the relevant Base Rate
Maturity Date and such securities were held by Bank until the relevant
Base Rate Maturity Date ("Yield Rate"); (ii) a fraction, the numerator
of which is the number of days in the period between the date of
prepayment and the relevant Base Rate Maturity Date and the denominator
of which is 360; and (iii) the amount of the principal so prepaid
(except in the event that principal payments are scheduled under the
terms of the Base Interest Rate Loan being prepaid, then an amount
equal to the lesser of (A) the amount prepaid or (B) 50% of the sum of
(1) the amount prepaid and (2) the amount of principal scheduled under
the terms of the Base Interest Rate Loan being prepaid to be
outstanding at the relevant Base Rate Maturity Date). Present value
under this note is determined by discounting the above product to
present value using the Yield Rate as the annual discount factor.
b. In no event shall Bank be obligated to make any payment or refund to
Debtor, nor shall Debtor be entitled to any setoff or other claim
against bank, should the return which Bank could obtain under this
prepayment formula exceed the interest that Bank would have received if
no prepayment had occurred. All prepayments shall include payment of
accrued interest on the principal amount so prepaid and shall be
applied to payment of interest before application to principal. A
determination by Bank as to the prepayment fee amount, if any, shall be
conclusive.
c. Bank shall provide Debtor a statement of the amount payable on
account of prepayment. Debtor acknowledges that (i) Bank establishes a
Base Interest Rate upon the understanding that it apply to the Base
Interest Rate Loan for the entire Interest Period, and (ii) any
prepayment may result in Bank incurring additional costs, expenses or
liabilities; and Debtor agrees to pay these liquidated damages as a
reasonable estimate of the costs, expenses and liabilities of Bank
associated with such prepayment.
5. DEFAULT AND ACCELERATION OF TIME FOR PAYMENT. Default shall include,
but not be limited to, any of the following: (a) the failure of Debtor to make
any payment required under this note when due; (b) any breach, misrepresentation
or other default by Debtor, any guarantor, co-maker endorser, or any person or
entity other than Debtor providing security for this note (hereinafter
individually and collectively referred to as the "Obligor") under any security
agreement, guaranty or other agreement between Bank and any obligor; (c) the
insolvency of any Obligor or the failure of any Obligor generally to pay such
Obligor's debts as such debts become due; (d) the commencement as to any Obligor
of any voluntary or involuntary proceeding under any laws relating to
bankruptcy, insolvency, reorganization, arrangement, debt adjustment or debtor
relief; (e) the assignment by any Obligor for the benefit of such Obligor's
creditors; (f) the appointment, or commencement of any proceeding for the
appointment of a receiver, trustee, custodian or similar official for all or
substantially all of any Obligor's property; (g) the commencement of any
proceeding for the dissolution or liquidation of any Obligor; (h) the
termination of existence or death of any Obligor; (i) the revocation of any
guaranty or subordination agreement given in connection with this note; (j) the
failure of any Obligor to comply with any order, judgment, injunction, decree,
writ or demand of any court or other public authority; (k) the filing or
recording against any Obligor, or the property of any Obligor, of any notice or
levy, notice to withhold, or other legal process for taxes other than property
taxes; (l) the default by any obligor personally liable for amounts owed
hereunder on any obligation concerning the borrowing of money; (m) the issuance
against any Obligor, or the property of any Obligor, of any writ of attachment,
execution, or other judicial lien; or (n) the deterioration of the financial
condition of any Obligor which results in Bank deeming itself in good faith,
insecure. Upon the occurrence of any such default, Bank, in its discretion, may
cease to advance funds hereunder and may declare
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all obligations under this note immediately due and payable; however, upon the
occurrence of an event of default under d, e, f, or g, all principal and
interest shall automatically become immediately due and payable.
6. ADDITIONAL AGREEMENTS OF DEBTOR. If any amounts owing under this
note are not paid when due, Debtor promises to pay all costs and expenses,
including reasonable attorneys' fees, incurred by Bank in the collection or
enforcement of this note. Debtor and any endorsers of this note for the maximum
period of time and the full extent permitted by law, (a) waive diligence,
presentment, demand, notice of nonpayment, protest, notice of protest, and
notice of every kind; (b) waive the right to assert the defense of any statute
of limitations to any debt or obligation hereunder; and (c) consent to renewals
and extensions of time for the payment of any amounts due under this note. If
this note is signed by more than one party, the term "Debtor" includes each of
the undersigned and any successors in interest thereof; all of whose liability
shall be joint and several. Any married person who signs this note agrees that
recourse may be had against the separate property of that person for any
obligations hereunder. The receipt of any check or other item of payment by
Bank, at its option, shall not be considered a payment on account until such
check or other item of payment is honored when presented for payment at the
drawee bank. Bank may delay the credit of such payment based upon Bank's
schedule of funds availability, and interest under this note shall accrue until
the funds are deemed collected. In any action brought under or arising out of
this note, Debtor and any Obligor, including their successors and assigns,
hereby consent to the jurisdiction of any competent court within the State of
California, as provided in any alternative dispute resolution agreement executed
between Debtor and Bank, and consent to service of process by any means
authorized by said state's law. The term "Bank" includes, without limitation,
any holder of this note. This note shall be construed in accordance with and
governed by the laws of the State of California. This note hereby incorporates
any alternative dispute resolution agreement previously, concurrently or
hereafter executed between Debtor and Bank.
7. DEFINITIONS. As used herein, the following terms shall have the
meanings respectively set forth below: "Base Interest Rate" means a rate of
interest based on the LIBOR-Rate. "Base Interest Rate Loan" means amounts
outstanding under this note that bear interest at a Base Interest Rate. "Base
Rate Maturity Date" means the last day of the Interest Period with respect to
principal outstanding under a Base Interest Rate Loan. "Business Day" means a
day on which Bank is open for business for the funding of corporate loans, and,
with respect to the rate of interest based on the LIBOR Rate, on which dealings
in U.S. dollar deposits outside of the United States may be carried on by Bank.
"Interest Period" means with respect to funds bearing interest at a rate based
on the LIBOR Rate, any calendar period of one, three, six, nine or twelve
months. In determining an Interest Period, a month means a period that starts on
one Business Day in a month and ends on and includes the day preceding the
numerically corresponding day in the next month. For any month in which there is
no such numerically corresponding day, then as to that month, such day shall be
deemed to be the last calendar day of such month. Any Interest Period which
would otherwise an on a non-Business Day shall end on the next succeeding
Business Day unless that is the first day of a month, in which event such
Interest Period shall end on the next preceding Business Day. "LIBOR Rate" means
a per annum rate of interest (rounded upward, if necessary, to the nearest 1/100
of 1%) at which dollar deposits, in immediately available funds and in lawful
money of the United Sates would be offered to Bank, outside of the United Sates,
for a term coinciding with the Interest Period selected by Debtor and for an
amount equal to the amount of principal covered by Debtors' interest rate
selection, plus Bank's costs, including the costs, if any, of reserve
requirements. "Origination Date" means the first day of the Interest Period.
"Reference Rate" means the rate announced by Bank from time to time at its
corporate headquarters as its Reference Rate. The Reference Rate is an index
rate determined by Bank from time to time as a means of pricing certain
extensions of credit and is neither directly tied to any external rate of
interest or index nor necessarily the lowest rate of interest or index nor
necessarily the lowest rate of interest charged by Bank at any given time.
EMCON
By: /s/ Eugene M. Herson
Title: CFO and President
By: /s/ R. Michael Momboisse
Title: CFO and VP Legal
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