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EXHIBIT 10.41
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SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
$8,000,000.00 REVOLVING CREDIT LOAN
$27,000,000.00 TERM LOAN
$5,000,000.00 LETTER OF CREDIT FACILITY
AMONG
AMERICAN ECOLOGY CORPORATION,
AS THE COMPANY
THE SUBSIDIARIES OF THE COMPANY
LISTED AS GUARANTORS HEREIN
AND
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
Dated as of June 30, 1996
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS; ACCOUNTING TERMS; INTERPRETATION
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II ACCOUNTING TERMS; INTERPRETATION
Section 2.01. The Revolving Credit Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.02. Advances Under the Revolving Credit Loan . . . . . . . . . . . . . . . . . . . 13
Section 2.03. The Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.04. Minimum Amount of Each Loan . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.05. Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.06. Payment of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.07. Required Payments of Principal . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.08. Voluntary Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.09. Method and Place of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.10. Increased Taxes or Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE III LETTERS OF CREDIT
Section 3.01. Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 3.02. Letter of Credit Requests . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 3.03. Repayment of Letter of Credit Drawings . . . . . . . . . . . . . . . . . . . . 18
Section 3.04. Rights of Bank Regarding Letters of Credit . . . . . . . . . . . . . . . . . . 19
Section 3.05. Increased Letter of Credit Costs . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.06. Letter of Credit Collateral and Fees . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE IV FEE AND COMMITMENTS
Section 4.01. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.02. Voluntary Reduction of Commitment . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.03. Mandatory Reduction of Commitment . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE V CONDITIONS PRECEDENT
Section 5.01. Conditions Precedent to the Initial Credit Event . . . . . . . . . . . . . . . 21
Section 5.02. Conditions Precedent to All Credit Events . . . . . . . . . . . . . . . . . . . 23
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ARTICLE VI REPRESENTATIONS AND WARRANTIES
Section 6.01. Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 6.02. Authorization and Validity . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 6.03. Governmental Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 6.04. Conflicting or Adverse Agreements or Restrictions . . . . . . . . . . . . . . . 25
Section 6.05. Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.06. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.07. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.08. Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.09. Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 6.10. Public Utility Holding Company Act . . . . . . . . . . . . . . . . . . . . . . 26
Section 6.11. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 6.12. Tax Returns and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 6.13. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 6.14. Purpose of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.15. Franchises and Other Operating Rights . . . . . . . . . . . . . . . . . . . . . 27
Section 6.16. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VII AFFIRMATIVE COVENANTS
Section 7.01. Information Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 7.02. Books, Records and Inspections . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 7.03. Insurance and Maintenance of Properties . . . . . . . . . . . . . . . . . . . . 30
Section 7.04. Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.05. Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.06. Compliance with Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.07. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.08. Additional Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VIII NEGATIVE COVENANTS
Section 8.01. Change in Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.02. Consolidation, Merger or Sale Assets . . . . . . . . . . . . . . . . . . . . . 32
Section 8.03. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.04. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 8.05. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 8.06. Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.07. Change in Accounting; Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.08. Minimum EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.09. Minimum Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.10. Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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Section 8.11. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 8.12. Change of Certain Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE IX GUARANTY
Section 9.01. Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 9.02. Continuing Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 9.03. Effect of Debtor Relief Laws . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 9.04. Complete Waiver of Subrogation . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 9.05. Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 9.06. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 9.07. Full Force and Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE X EVENTS OF DEFAULT AND REMEDIES
Section 10.01. Events of Default and Remedies . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 10.02. Primary Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 10.03. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE XI MISCELLANEOUS
Section 11.01. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 11.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 11.03. No Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 11.04. Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 11.05. Indemnity and Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 11.06. Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 11.07. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 11.08. Maximum Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 11.09. Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . 46
Section 11.10. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 11.11. Successors and Assigns; Participations . . . . . . . . . . . . . . . . . . . . 47
Section 11.12. Types of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 11.13. Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 11.14. Independence of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 11.15. Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 11.16. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 11.17. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 11.18. Submission to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 11.19. Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 11.20. Final Agreement of the Parties . . . . . . . . . . . . . . . . . . . . . . . . 50
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List of Exhibits and Schedules:
Exhibit 2.05A Form of Revolving Credit Note
Exhibit 2.05B Form of Term Note
Exhibit 2.05C Form of Fee Capitalization Note
Exhibit 7.01(c) American Ecology Corporation Borrowing Base Certificate
Exhibit 7.01(e) Certificate Regarding No Default (and Status of Subsidiaries)
Schedule 6.06 Pending Litigation
Schedule 6.13 Environmental Compliance
Schedule 8.03 Permitted Liens
Schedule 8.04 Indebtedness
Schedule 8.05 Permitted Investments
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SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated
effective as of June 30, 1995 (this "Agreement") is among AMERICAN ECOLOGY
CORPORATION, a Delaware corporation (the "Company"), the subsidiaries of the
Company listed on the signature pages hereof under the caption "Guarantors"
(together with each other Person (as hereinafter defined) who becomes a
Guarantor pursuant to Section 7.08, collectively, the "Guarantors") and TEXAS
COMMERCE BANK NATIONAL ASSOCIATION, a national banking association having its
principal place of business in Houston, Texas (the "Bank").
WHEREAS, the Company and the Bank, as agent and as a Bank,
entered into that one certain Amended and Restated Credit Agreement dated as of
December 1, 1994 (the "Original Agreement"), which Original Agreement was a
restatement of a prior agreement between the Company and the Bank, dated April
22, 1994 (the Original Agreement and the earlier agreement hereinafter
collectively referred to as the "Prior Agreements"); and
WHEREAS, the Company has requested the Bank to renew, extend
and modify the Original Agreement and make certain changes to the terms and
provisions thereof; and
WHEREAS, the Bank has agreed to do so upon certain terms and
conditions; and
WHEREAS, the parties wish to execute this document for the
purpose of evidencing this agreement and these terms and conditions.
NOW THEREFORE, in consideration of the mutual covenants herein
contained, the below signed parties do hereby agree to restate and replace the
Original Agreement with this Agreement as follows:
ARTICLE I
DEFINITIONS; ACCOUNTING TERMS; INTERPRETATION
SECTION 1.01. Definitions. As used in this Agreement, the
following terms shall have the following meanings:
"Additional Guaranties" has the meaning specified in
Section 7.08.
"Adjusted Net Worth" shall mean, with respect to a Guarantor,
as of any date of determination thereof, the excess of (a) the amount of the
present fair saleable value of the assets of
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such Guarantor as of the date of such determination, over (b) the amount of all
liabilities of such Guarantor, contingent or otherwise, as of the date of such
determination, as such terms are determined in accordance with applicable
federal and state laws governing determinations of the insolvency of debtors.
"Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling (including all directors and officers
of such Person), controlled by, or under direct or indirect common control with
such Person, and any other Person in which such Person's direct or indirect
equity interest is 10% or more of the total outstanding equity interests of
such Person.
"Agreement" has the meaning specified in the introduction to
this Agreement.
"Alternate Base Rate" means, for any date, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of
(a) the Prime Rate in effect on such day and (b) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1%. For purposes hereof, the term
"Prime Rate" shall mean, as of a particular date, the prime rate most recently
determined by the Bank and thereafter entered in the minutes of the Bank's Loan
and Discount Committee, automatically fluctuating upward and downward with and
at the time specified in each such announcement without notice to the Company
or any other Person, which prime rate may not necessarily represent the lowest
or best rate actually charged to a customer. "Federal Funds Effective Rate"
means, for any day, the weighted average of the rates on overnight federal
funds transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by the Bank from three federal funds brokers of recognized standing
selected by it. If for any reason the Bank shall have determined (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Federal Funds Effective Rate for any reason, including the
inability or failure of the Bank to obtain sufficient quotations in accordance
with the terms hereof, the Alternate Base Rate shall be determined without
regard to clause (b) of the first sentence of this definition until the
circumstances giving rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective on the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.
"Application For Letter of Credit" has the meaning specified
in Section 3.02.
"Bank" has the meaning specified in the introduction to this
Agreement.
"Bankruptcy Code" has the meaning specified in Section
10.01(e).
"Board" means the Board of Governors of the Federal Reserve
System of the United States (or any successor).
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"Borrowing Base" means an amount equal to eighty percent (80%)
of the Eligible Receivables.
"Borrowing Base Certificate" means, as of any date, a
certificate as to the Borrowing Base as of such date in the form of Exhibit
7.01(c).
"Business Day" means any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of Texas) on which the Bank is
open for business in Houston, Texas.
"Capital Lease" means, as to any Person, any lease in respect
of which the rental obligations of such Person constitute Capitalized Lease
Obligations.
"Capitalized Expenditures" has the meaning specified in
Section 8.10.
"Capitalized Lease Obligations" means, as to any Person, all
rental obligations of such Person which, in accordance with GAAP, are or will
be required to be capitalized on the books of such Person.
"Cash Management and Lock Box Agreement" has the meaning
specified in Section 2.09(b).
"Cell Development Expenditure" means all costs incurred in
connection with the preparation of new sites for the purpose of storing
hazardous wastes, including, without limitation, all costs for legal,
engineering and construction work, direct costs of Company personnel dedicated
to such purposes and other similar costs.
"Code" means Internal Revenue Code of 1986, and the
regulations promulgated thereunder.
"Collateral" means all the collateral pledged to the Bank (i)
pursuant to the Pledge Agreements and the Security Agreements and (ii) to
secure the issuance of any Letters of Credit.
"Commercial Letter of Credit" means a letter of credit issued
to finance the purchase or shipment of goods and payable upon presentation of
appropriate documents of title and receipt in regard to said goods.
"Company" has the meaning specified in the introduction to
this Agreement.
"Consolidated EBITDA" means, for any period, Consolidated Net
Income for such period, plus Consolidated Interest Expense actually deducted in
arriving at Consolidated Net Income, Deferred Site Maintenance Expense,
depreciation, depletion, amortization and provision for taxes, without giving
effect to any extraordinary gains or gains from sales of assets or write downs
in the value of assets owned by any of the Loan Parties.
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"Consolidated Interest Expense" means, as to the Company and
its Subsidiaries and for any period, the total consolidated gross interest
expense, including all amortization of debt discount and imputed interest for
such period.
"Consolidated Net Income" means, for any period, the net
income (or loss) of the Company and its Subsidiaries for such period,
determined on a consolidated basis.
"Consolidated Net Worth" means the sum of the par value or
stated value of the capital stock (excluding treasury stock), capital in excess
of par or stated value of shares of capital stock, retained earnings (or minus
accumulated deficit) and any other account which, in accordance with GAAP,
constitutes stockholders' equity, of the Company and its Subsidiaries,
determined on a consolidated basis.
"Credit Event" means the making of any Loan or the issuance or
the extension of any Letter of Credit.
"Default" means the occurrence of any event which with the
giving of notice or the passage of time or both could become an Event of
Default.
"Deferred Site Maintenance Expense" means the amount of money
allocated on the Company's consolidated statement of income to the Deferred
Site Maintenance Reserve.
"Deferred Site Maintenance Reserve" means the amount shown on
the Company's consolidated balance sheet as a reserve to be utilized in
connection with closing, preparing to close and maintaining closed disposal
sites.
"Designated Payment Date" means the last day of each month
during the term hereof; provided, if in any such month a Designated Payment
Date shall be a day which is not a Business Day, such Designated Payment Date
shall be the next succeeding Business Day, and such extension of time shall be
included in determining the amount to be paid on such date.
"Drawing" has the meaning specified in Section 3.03(b).
"Effective Date" means the date on which all conditions to
borrowing set forth in Section 5.01 are first met or waived in accordance with
Section 11.01.
"Eligible Receivable" means all (i) billed Receivables of the
Company and (ii) all unbilled Receivables of the Company as to which the work
therefor has been completed, each of which meets all of the following criteria
on the date of any determination of Eligible Receivables:
(a) the Receivable arose in the ordinary course of
business from the sale of goods or the providing of services by the
Company;
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(b) the Receivable is owned by the Company free and clear
of any and all Liens and or rights of others, other than Permitted
Liens;
(c) the Receivable is not more than ninety (90) days past
due;
(d) not more than thirty (30) days have elapsed since (A)
the date the service was provided and (B) the date of the invoice for
such goods (this provision shall not apply to any unbilled
Receivables);
(e) the Receivable is not evidenced by a promissory note,
chattel paper or other instrument;
(f) the account debtor has made no claim that the
Receivable is subject to set-off, counterclaim, defense, allowance or
adjustment and there has been no dispute, objection or complaint by
the account debtor concerning its liability on the Receivable,
provided that if any such claim has been made in regard to a portion
of a receivable, the remainder may still be considered to be an
Eligible Receivable;
(g) no notice of bankruptcy, insolvency or financial
distress of the account debtor has been received by the Company;
(h) the Bank has a valid and perfected Lien in the
Receivable;
(I) the account debtor is domiciled in the United States
of America or any of its possessions and the Receivable is denominated
in dollars; and
(j) with respect to any Receivable, the Company shall not
have received notification from the Bank that, in the reasonable
discretion of the Bank, such Receivable is not acceptable to the Bank.
"Environmental Laws" means federal, state or local laws, rules
or regulations, and any judicial, arbitral or administrative interpretations
thereof, including any judicial, arbitral or administrative order, judgment,
permit, approval, decision or determination pertaining to conservation or
protection of the environment in effect at the time in question, including the
Clean Air Act, the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), the Federal Water Pollution Control Act, the
Occupational Safety and Health Act, the Resource Conservation and Recovery Act,
the Safe Drinking Water Act, the Toxic Substances Control Act, the Superfund
Amendment and Reauthorization Act of 1986, the Hazardous Materials
Transportation Act, and comparable state and local laws, and other
environmental conservation and protection laws.
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"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the regulations promulgated thereunder.
"ERISA Affiliate" means (a) any trade or business (whether or
not incorporated) which is either a member of the same "controlled group" or
under "common control," within the meaning of Section 414 of the Code and the
regulations thereunder, with a Loan Party and (b) any Subsidiary.
"Events of Default" has the meaning specified in Section 10.01.
"Execution Date" means November 14, 1995.
"Extension Fee" has the meaning specified in Section 4.01(a).
"FDIC" means the Federal Deposit Insurance Corporation (or
any successor).
"Federal Funds Effective Rate" has the meaning specified in
the definition of the term "Alternate Base Rate."
"Fee Capitalization Note" has the meaning specified in Section
2.05(c).
"Fees" means all amounts payable pursuant to Section 4.01.
"Financial Statement Delivery Date" means the date on which
the monthly, quarterly or annual financial statements of the Company are
delivered pursuant to Section 7.01(a) or Section 7.01(b), as the case may be.
"Financials" has the meaning specified in Section 6.07.
"GAAP" means generally accepted accounting principles as in
effect from time to time as set forth in the opinions, statements and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants, the Financial Accounting Standards Board and such
other Persons who shall be approved by a significant segment of the accounting
profession and concurred in by the independent certified public accountants
certifying any audited financial statements of the Company.
"Guaranteed Obligations" has the meaning specified in Section
9.01.
"Guarantors" has the meaning specified in the introduction to
this Agreement.
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"Guaranty" means the guaranty of the Guarantors contained in
Article IX and shall include any Additional Guaranty.
"Hazardous Materials" means (a) hazardous waste as defined in
the Resource Conservation and Recovery Act of 1976, or in any applicable
federal, state or local law or regulation, (b) hazardous substances, as defined
in CERCLA, or in any applicable state or local law or regulation, (c) gasoline,
or any other petroleum product or by-product, (d) toxic substances, as defined
in the Toxic Substances Control Act of 1976, or in any applicable federal,
state or local law or regulation or (e) insecticides, fungicides, or
rodenticides, as defined in the Federal Insecticide, Fungicide, and Rodenticide
Act of 1975, or in any applicable federal, state or local law or regulation, as
each such Act, statute or regulation may be amended from time to time.
"Highest Lawful Rate" means the maximum nonusurious rate of
interest that, under applicable law, may be contracted for, taken, reserved,
charged or received by the Bank on the Loans or under the Loan Documents at any
time or from time to time. If the maximum rate of interest which, under
applicable law, the Bank is permitted to charge the Company on the Loans shall
change after the date hereof, to the extent permitted by applicable law, the
Highest Lawful Rate shall be automatically increased or decreased, as the case
may be, as of the effective time of such change without notice to the Company
or any other Person.
"Indebtedness" means, when used with respect to any Person,
without duplication (a) all indebtedness of such Person for borrowed money
(whether by loan or the issuance and sale of debt securities) or for the
deferred purchase price of property or services (excluding, however, accounts
payable and other accrued liabilities arising in the ordinary course of such
Person's business that are a current liability under GAAP and payments or
benefits in the nature of compensation for services of employees, officers and
directors), (b) all indebtedness created or arising under any conditional sale
or other title retention agreement with respect to property acquired by such
Person, (c) all Capitalized Lease Obligations of such Person, (d) all
guaranties or other contingent obligations of any kind of such Person in
respect of the Indebtedness of any other Person of the type referred to in
clause (a), (b) or (c) above and (e) all Indebtedness of the type referred to
in clause (a), (b) or (c) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise to be secured by)
any Lien upon or interest in property owned by such Person, even though such
Person has not assumed or become liable for the payment of such indebtedness,
to the extent any of the foregoing described in clauses (a) through (e) above
constitute a liability on such Person's balance sheet prepared in accordance
with GAAP.
"Investment" means, as applied to any Person, any direct or
indirect purchase or other acquisition by such Person of the assets, stock or
other securities of any other Person, or any direct or indirect loan, advance
or capital contribution by such Person to any other Person, and any other item
which would be classified as an "investment" on a balance sheet of such Person,
including any
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direct or indirect contribution by such Person of property or assets to a joint
venture, partnership or other business entity in which such Person retains an
interest.
"Letter of Credit Collateral" means cash, securities issued or
directly and fully guaranteed or issued by the United States, deposits in the
Bank or other securities, which other securities are, in the Bank's sole
discretion, satisfactory collateral.
"Letter of Credit Commitment" means the Bank's obligation to
issue Letters of Credit hereunder.
"Letter of Credit Fee" has the meaning specified in Section
4.01(c).
"Letter of Credit Termination Date" means the date that is (a)
one year subsequent to the Maturity Date or (b) the earlier acceleration of the
Obligations pursuant hereto.
"Letters of Credit" has the meaning provided in Section 3.01.
"Lien" means, when used with respect to any Person, any
mortgage, lien, charge, pledge, security interest or encumbrance of any kind
(whether voluntary or involuntary and whether imposed or created by operation
of law or otherwise) upon, or pledge of, any of its property or assets, whether
now owned or hereafter acquired, or any lease intended as security, any Capital
Lease in the nature of the foregoing, any conditional sale agreement or other
title retention agreement, in each case, for the purpose, or having the effect,
of protecting a creditor against loss of securing the payment or performance of
an obligation.
"Loans" has the meaning provided in Section 2.03
"Loan Date" means, with respect to each Loan, the Business Day
upon which the proceeds of such Loan are to be made available to the Company.
"Loan Documents" means this Agreement (including the
Guaranty), the Notes, the Letter of Credit Requests, the Application for Letter
of Credit, the Security Agreements, the Pledge Agreements, the Mortgage and all
other security documents granting liens in the Letter of Credit Collateral and,
to the extent the context requires, the Prior Agreements and related documents.
"Loan Party" means the Company or any Guarantor and "Loan
Parties" means the Company and the Guarantors.
"Margin" means, with respect to the Term Loan and the
Revolving Credit Loan, 1%; provided, the Margin on the Term Loan will increase
by .25% each calendar quarter during the term
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hereof, commencing on September 30, 1995, and provided further, the Margin on
the Term Loan will reduce to (a) 1% upon an aggregate principal repayment of
$10,000,000.00 on the Term Loan, and, thereafter, the Margin will again
increase by .25% each calendar quarter during the term hereof, (b) 0% upon an
aggregate principal repayment of $15,000,000.00 on the Term Loan, and,
thereafter, the Margin will again increase by .25% each calendar quarter during
the term hereof and (c) 0% upon an aggregate principal repayment of
$20,000,000.00 on the Term Loan, and, thereafter, the Margin shall remain at 0%
during the term hereof; unless a Default shall have occurred hereunder.
"Material Adverse Effect" means, relative to any occurrence of
whatever nature (including any adverse determination in any litigation,
arbitration or governmental investigation or proceeding), (a) a material
adverse effect on the financial condition, business or operations of the
Company and its Subsidiaries taken as a whole or (b) an event which materially
impairs the ability of the Company to make payment hereunder or under the Notes
or the right of the Bank to enforce any of its remedies to collect any amounts
owing under the Loan Documents.
"Maturity Date" means December 31, 1998 or the earlier date of
the acceleration of the Notes pursuant to Section 10.01.
"Maximum Guaranteed Amount" for each Guarantor shall mean the
greater of (a) ninety-five percent (95%) of the Adjusted Net Worth of such
Guarantor as of the date hereof and (b) ninety-five percent (95%) of the
Adjusted Net Worth of such Guarantor at the earlier of (i) the date of the
commencement of a case under Title 11 of the United States Code in which such
Guarantor is a debtor and (ii) the date enforcement of the Guaranty is sought.
"Mortgage" means that certain Mortgage or Deed of Trust of
even date herewith, executed by the Company and granting a lien by the Company
for the benefit of the Bank on certain real property in Phoenix, Maricopa
County, Arizona, as security for the Obligations.
"Multiemployer Plan" means any plan which is a "multiemployer
plan" (as such term is defined in Section 4001(a)(3) of ERISA).
"Notes" means the Revolving Credit Note and the Term Note.
"Notice of Default" has the meaning specified in Section
10.01.
"Obligations" means all the obligations of the Company and the
other Loan Parties now or hereafter existing under the Loan Documents or any of
the Prior Agreements or any documents executed in connection therewith, whether
for principal, Unpaid Drawings, interest, Fees, expenses, indemnification or
otherwise.
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"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to all or any of its functions under ERISA.
"Permitted Investments" means, as to any Person,
(a) securities issued or directly and fully guaranteed or
insured by the United States or any agency or instrumentality thereof
(provided that the full faith and credit of the United States is
pledged in support thereof) having maturities of not more than twelve
months from the date of acquisition thereof,
(b) time deposits and certificates of deposit with
maturities of not more than twelve months from the date of acquisition
by such Person in the Bank or other commercial bank incorporated in
the United States or any U.S. branch of any other commercial bank, in
each case having capital, surplus and undivided profits aggregating
$100,000,000 or more with a long-term unsecured debt rating of at
least A- from Standard & Poor's Ratings Group or A3 from Moody's
Investors Service, Inc.,
(c) commercial paper issued by any Person incorporated in
the United States rated at least A-1 or the equivalent thereof by
Standard & Poor's Ratings Group or at least P-1 or the equivalent
thereof by Moody's Investors Services, Inc. and, in each case,
maturing not more than 270 days after the date of issuance,
(d) investments in money market mutual funds having
assets in excess of $2,000,000,000 substantially all of whose assets
are comprised of securities of the types described in clauses (a)
through (c) above,
(e) repurchase or reverse purchase agreements respecting
obligations with a term of not more than seven days for underlying
securities of the types described in clause (a) above entered into
with any bank listed in or meeting the qualifications specified in
clause (b) above, and
(f) banker's acceptances maturing within one year from
the date of origin issued by a bank or trust company organized under
the law of the United States having capital, surplus and undivided
profits aggregating at least $100,000,000 and a long-term deposit
rating of A- or higher by Standard & Poor's Ratings Group.
"Person" means an individual, partnership, corporation
(including a business trust), limited liability company, joint stock company,
trust, unincorporated association, joint venture or other entity, or a foreign
or domestic state or political subdivision thereof or any agency of such state
or subdivision.
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"Plan" means any employee pension benefit plan (as defined in
Section 3(2) of ERISA), subject to Title IV of ERISA or Section 412 of the
Code, other than a Multiemployer Plan, with respect to which a Loan Party or an
ERISA Affiliate contributes or has an obligation or liability to contribute,
including any such plan that may have been terminated.
"Pledge Agreements" mean those three (3) certain Amended and
Restated Pledge Agreements of even date herewith executed by the Company,
American Ecology Services Corporation and US Ecology, Inc., respectively,
pledging to the Bank the stock of each of the above-referenced entities'
Subsidiaries, except for the stock of American Liability and Excess Insurance
Company, and all stock of Permafix Corporation owned by the Company, as
security for the Obligations.
"Prior Agreements" has the meaning set forth in the Recitals.
"Regulation U" means Regulation U of the Board (respecting
margin credit extended by banks), as the same is from time to time in effect,
and all official rulings and interpretations thereunder or thereof.
"Regulation X" means Regulation X of the Board (respecting
borrowers who obtain margin credit), as the same is from time to time in
effect, and all official rulings and interpretations thereunder or thereof.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing into the environment (including the abandonment or discarding of
barrels, containers and other closed receptacles).
"Reportable Event" means an event described in Section 4043(b)
of ERISA with respect to a Plan as to which the 30-day notice requirement has
not been waived by the PBGC.
"Requirements of Environmental Laws" means, as to any Person,
the requirements of any applicable Environmental Law relating to or affecting
such Person or the condition or operation of such Person's business or its
properties, both real and personal.
"Responsible Officer" means, with respect to any Loan Party,
the president, chief executive officer, treasurer or chief financial officer of
such Loan Party.
"Restricted Payment" means (a) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
stock of the Company now or hereafter outstanding, except a dividend payable
solely in shares of stock or warrants, rights or options to acquire shares of
stock of the Company and (b) any redemption, retirement, purchase or other
acquisition, direct or indirect,
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of any shares of any class of stock of the Company, now or hereafter
outstanding, or of any warrants, rights or options to acquire any such shares,
except to the extent that the consideration therefor consists of shares of
stock (including warrants, rights or options relating thereto) of the Company.
"Revolving Credit Commitment" means the Bank's obligation to
make Revolving Credit Loans hereunder.
"Revolving Credit Loan" has the meaning specified in Section
2.01.
"Revolving Credit Note" has the meaning specified in Section
2.05(a).
"Security Agreements" mean those two (2) certain Security
Agreements dated as of the date hereof, executed by the Company and the
Guarantors, respectively, in favor of the Bank, pledging to the Bank a security
interest in all of the personal property and assets of each of the Loan Parties
as described therein and all proceeds thereof as security for the Obligations.
"Standby Letter of Credit" means a letter of credit that is
issued to secure the payment or performance of an obligation and payable upon
notice of a failure or default in regard thereto and that is not a Commercial
Letter of Credit.
"Subsidiary" means and includes, with respect to any Person,
(a) any corporation more than 50% of whose stock of any class or classes having
by the terms thereof ordinary voting power to elect a majority of the directors
of such corporation (irrespective of whether or not at the time stock of any
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time owned by such
Person, directly or indirectly and (b) any partnership, association, joint
venture or other entity in which such Person, directly or indirectly, has
greater than 50% of (i) the directors (or Persons performing similar functions)
thereof or (ii) equity interest.
"Term Loan" has the meaning specified in Section 2.03.
"Term Note" has the meaning specified in Section 2.05(b).
"Unfunded Current Liability" means, with respect to any Plan,
the amount, if any, by which the present value of the accrued benefits under
the Plan as of the close of its most recent Plan year exceeds the fair market
value of the assets allocable thereto, determined in accordance with Section
412 of the Code.
"Unpaid Drawing" has the meaning specified in Section 3.03(a).
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ARTICLE II
MAKING AND REPAYING THE LOANS
SECTION 2.01. The Revolving Credit Loan. Subject to the
terms and conditions herein set forth, the Bank agrees at any time and from
time to time on and after the Effective Date and prior to the Maturity Date, to
make and maintain a loan or loans up to a maximum of $8,000,000.00 (each a
"Revolving Credit Loan" and collectively, the "Revolving Credit Loans") to the
Company. Revolving Credit Loans may be repaid and reborrowed in accordance
with the provisions hereof and shall, in the aggregate, not exceed the lesser
of (i) $8,000,000.00 or (ii) the Borrowing Base. There shall be no further
advances of any Revolving Credit Loans after the Maturity Date.
SECTION 2.02. Advances Under the Revolving Credit Loan.
The Bank shall, from time to time, make Revolving Credit Loans to the Company
in the form of advances to the Company or third parties for the sole purpose of
paying any drafts, checks, wire transfer requests or clearinghouse debits which
name the Company as maker or drawer thereon and are presented to the Bank by
the Company or such third parties. The Bank shall not make any other Revolving
Credit Loans except pursuant to Section 2.09(a).
SECTION 2.03. The Term Loan. Subject to the terms and
conditions herein set forth, the Bank agrees to lend to the Company a term loan
of up to $27,000,000.00 (the "Term Loan" and, together with the Revolving
Credit Loan, any advances under a Letter of Credit described in Article III
hereof and any amounts owing under the Fee Capitalization Note, the "Loans").
The Term Loan evidences amounts owed to the Bank under the Prior Agreements.
SECTION 2.04. [Intentionally Omitted]
SECTION 2.05. Notes. (a) The Company's obligation to pay
the Revolving Credit Loans made by the Bank shall be evidenced by a single
revolving promissory note in the original principal sum of $8,000,000.00 (the
"Revolving Credit Note") duly executed and delivered by the Company
substantially in the form of Exhibit 2.05A hereto.
(b) The Company's obligation to repay the Term Loan shall
be evidenced by a single term promissory note in the original principal sum of
$27,000,000.00 (the "Term Note"), duly executed and delivered by the Company
substantially in the form of Exhibit 2.05B hereto.
(c) The Company's obligation to pay the Fee described in
Section 4.01(a) and (b) shall be evidenced by the Fee Capitalization Note (the
"Fee Capitalization Note"), duly executed and delivered by the Company
substantially in the form of Exhibit 2.05C hereto.
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SECTION 2.06. Payment of Interest. (a) Prior to a Default
hereunder, the Company agrees that interest shall accrue in respect of the
unpaid principal amount of the Revolving Credit Loan and the Term Loan from the
date of the making of each such Loan to maturity (whether by acceleration or
otherwise) at a rate per annum which shall at all times be equal to the lesser
of (i) the Highest Lawful Rate and (ii) the applicable Margin plus the
Alternate Base Rate in effect from time to time; provided, the Company agrees
that it shall only be required to pay interest at a rate per annum equal to the
lesser of (x) the Highest Lawful Rate and (y) the Alternate Base Rate; and
provided further, the Company agrees that any accrued interest which is not
required to be paid hereunder shall be capitalized and added to the principal
balance of the Fee Capitalization Note. If the Alternate Base Rate is based on
the Prime Rate, interest shall be computed on the basis of the actual number of
days elapsed over a year of 365 or 366 days, as the case may be. If the
Alternate Base Rate is based on the Federal Funds Effective Rate, interest
shall be computed on the basis of the actual number of days elapsed over a year
of 360 days. Prior to a Default hereunder, the Company agrees that interest
shall accrue in respect of the unpaid principal amount outstanding under the
Fee Capitalization Note as provided therein. Upon the occurrence of a Default
hereunder, all outstanding principal under any Loan shall accrue at the Highest
Lawful Rate.
(b) Overdue principal and, to the extent permitted by
law, overdue interest in respect of each Loan and all other overdue amounts
owing hereunder shall bear interest for each day that such amounts are overdue
at a rate per annum equal to the Highest Lawful Rate.
(c) Interest on each Loan shall accrue from the date of
such Loan to the date of any repayment thereof and shall be payable in
accordance with the above provisions (i) on each Designated Payment Date and
(ii) on the date of any voluntary or mandatory prepayment and (iii) at
maturity.
SECTION 2.07. Required Payments of Principal. (a) All
outstanding principal (and any accrued, unpaid interest) on the Revolving
Credit Note shall be due and payable on the Maturity Date.
(b) Outstanding principal on the Term Note shall be due
and payable as follows:
(i) a principal payment of $1,000,000.00 shall be
due and payable (A) on the date one hundred eighty (180) days
after the start of operations at that particular facility
operated in the State of California and commonly referred to
as "Ward Valley" and (B) every quarterly date following such
initial payment; provided, however, if any such payment date
shall be a day which is not a Business Day, such payment date
shall be the next succeeding Business Day; and
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(ii) all remaining outstanding principal and any
accrued, unpaid interest shall be due on the Maturity Date.
(c) In addition to the amounts required under (b) above,
the following principal payments shall be due on the Term Note:
(i) (A) one hundred percent (100%) of the net
proceeds of the sale of any of the Collateral (other than (y)
inventory sold in the ordinary course of business and (z)
Permafix Stock, which is provided for in the Pledge
Agreements), (B) one hundred percent (100%) of the net
proceeds of the sale of any assets of any Loan Parties that
are not Collateral (to the extent such sales exceed
$500,000.00 in the aggregate) and (C) fifty percent (50%) of
the net proceeds of the sale of any assets of any Loan Parties
that are not Collateral (to the extent such sales do not
exceed $500,000.00 in the aggregate), shall be due and payable
on the Term Note immediately upon receipt, which amounts shall
not reduce the required payments described above;
(ii) any funds received as insurance proceeds in
connection with damage to American Ecology Recycle Center,
Inc., a subsidiary of the Company, which are in excess of the
cost to rebuild and refurbish the damaged facility which
amounts will not reduce the required payments described above;
(iii) any funds received as business interruption
insurance proceeds up to an amount equal to one hundred
percent (100%) of the proceeds received in connection with the
liquidation of WPI Transportation, Inc., a subsidiary of the
Company, which amounts will not reduce the required payments
described above;
(iv) one hundred percent (100%) of the net
proceeds of any industrial development bond financing for
American Ecology Recycle Center, Inc., a subsidiary of the
Company (and only if the gross proceeds from such industrial
revenue bond financing are equal to or greater than
$10,000,000.00 and one hundred percent (100%) of the net
proceeds therefrom are applied to the Term Loan as required
hereby, the Agent shall release, on behalf of the Banks, all
of the pledged assets of American Ecology Recycle Center,
Inc., a subsidiary of the Company);
(v) any funds received from any entity as
reimbursement for permit costs incurred in the State of
Nebraska; and
(vi) within 10 days after the Bank receives the
financial statements required to be delivered by the Company
pursuant to Section 7.01(b) beginning
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effective December 31, 1996, the Company will pay to the Bank,
as a reduction on the Term Loan, an amount equal to 75% of a
sum obtained by subtracting from Consolidated EBITDA (A) the
amounts paid hereunder from the liquidation of WPI
Transportation, Inc., a subsidiary of the Company, (B) the
amount of all interest payments required hereunder
(including capitalized interest added to the Fee Capitalization
Note), (C) the amount of taxes actually paid or payable, (D)
the amount of all cash dividends paid or payable at the rate of
up to 8 3/8% per annum on all preferred stock, (E) the amount
of all principal payments required hereunder, (F) the amount of
all Capitalized Expenditures for the prior year (including,
without limitation, all such expenditures at the sites of the
Company or any Subsidiary located in the States of California
or Nebraska), (G) the amount of all charges to the Deferred
Site Maintenance Reserve for the prior year, (H) the amount of
all costs relating to the burial or other disposal of
radioactive material at the Oak Ridge, Tennessee facility owned
by a Subsidiary of the Company and (I) any increase (from the
Effective Date) in the amount of marketable securities pledged
by the Company as security for its obligations, and adding
thereto (Y) the proceeds obtained from any equity or debt
offerings (exclusive of the sale of the Company's preferred
stock) and (Z) the net proceeds of the sale of any assets of
the Loan Parties which are not required to be paid under clause
(i) above.
(d) In addition to all other payments required by this
Section 2.07, the Company shall repay the outstanding principal amount of the
Revolving Credit Note on any day to the extent that the aggregate outstanding
principal amount of the Revolving Credit Loan exceeds the lesser of the (i)
Borrowing Base or (ii) $8,000,000.00.
(e) Each repayment pursuant to this Section which is not
specifically characterized as a repayment of principal shall be applied first,
to the payment of accrued and unpaid interest, and then to the outstanding
principal of the Loans.
SECTION 2.08. Voluntary Prepayments. The Company shall
have the right to voluntarily prepay the Loans (other than the Fee
Capitalization Note which may not be prepaid without the consent of the Bank)
in whole or in part from time to time.
SECTION 2.09. Method and Place of Payment. (a) The Company
shall enter into a Cash Management and Lock Box Agreement (the "Cash Management
and Lock Box Agreement") with the Bank whereby all of the Company's accounts
receivable will be deposited by the Company's third party account debtors into
account number 00100354902 maintained at the Bank. The Bank shall have the
right, but not the obligation, and the Company hereby grants the Bank the
right, to deduct and set-off any amounts owing to the Bank under this Agreement
from the collections made pursuant to the above-referenced Cash Management and
Lock Box Agreement. All collected funds
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in account number 00100354902 will be swept daily by the Bank and applied
first, against any accrued interest which is due and payable, second, against
any principal amounts which are due and payable under the Term Loan, the
Revolving Credit Loan or any Letter of Credit and third, against the
outstanding principal balance of the Revolving Credit Loan. If at any time any
payments are owing by the Company to the Bank and funds in the above referenced
account are insufficient to satisfy the same, the Company shall make such
payment to the Bank immediately upon demand therefor by the Bank. Any
chargebacks or other debits subsequently affecting said funds or account shall
adjust the subsequent balance of the account, or if same is insufficient, will
allow the Bank to make an advance, at its sole option, to allow payment of such
items.
(b) The Company irrevocably authorizes the Bank to make,
and irrevocably appoints the Bank as its attorney-in-fact (which power shall be
coupled with an interest), to make transfers of funds to and from the Cash
Management and Lockbox Account, any other (except special trust, pension and
tax accounts) account of the Company, or any of them, necessary to accomplish
the purposes of the Loan Documents.
SECTION 2.10. Increased Taxes or Costs. (a) If the Bank
shall have determined in good faith that any law, rule, regulation or guideline
regarding required reserves or reserve percentages, capital adequacy, or any
change therein, or any change in the interpretation or administration thereof
or compliance by the Bank with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency has or would have the effect of reducing the
rate of return on the capital of the Bank as a consequence of its obligations
hereunder to a level below that which it could have achieved but for such
adoption, change or compliance by an amount deemed to be material, then, from
time to time, the Company shall pay to the Bank such additional amount or
amounts as will reasonably compensate the Bank for such reduction.
(b) The Bank will notify the Company of any event which
will entitle it to compensation pursuant to this Section, promptly provided,
the Company shall not be obligated hereunder for any such amounts in respect of
changes occurring more than ninety (90) days prior to the date of such notice.
A certificate of a Bank setting forth in reasonable detail (i) such amount or
amounts as shall be necessary to compensate the Bank as specified in paragraph
(a) above, as the case may be, and (ii) the calculation of such amount or
amounts, shall be delivered to the Company and shall be conclusive absent
manifest error. The Company shall pay to the Bank the amount shown as due on
any such certificate as will reasonably compensate the Bank for such matters
within thirty (30) days after its receipt of the same.
(c) Failure on the part of the Bank to demand
compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital shall not constitute a waiver of
the Bank's rights to demand compensation for any increased costs or reduction
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in amounts received or receivable or reduction in return on capital, provided,
the Bank shall be entitled to collect such costs or expenses only in regard to
change in circumstances occurring after the Effective Date.
ARTICLE III
LETTERS OF CREDIT
SECTION 3.01. Letters of Credit. (a) Subject to and upon
the terms and conditions herein set forth, the Bank agrees that it will, at any
time and from time to time on or after the Effective Date and prior to the
Maturity Date, following its receipt of a Letter of Credit Request, and
satisfaction of the conditions described in Section 3.02 below, issue for the
account of the Company and in support of the obligations of the Company, one or
more irrevocable standby, but not commercial, letters of credit (all such
letters of credit together with any existing letters of credit previously
issued by the Bank, collectively, the "Letters of Credit"), up to a maximum
total outstanding and/or drawn upon at any one time of $5,000,000.00. All
Letters of Credit shall be Standby Letters of Credit and have a maturity date
not later than the Letter of Credit Termination Date.
(b) The Bank shall not issue, renew or permit the renewal
of any Letter of Credit if (i) any of the conditions precedent to such issuance
or renewal set forth in Section 5.02 are not satisfied, (ii) the expiry date is
a date that is later than one (1) year after the date of issuance or renewal,
as the case may be, (iii) the expiry date is a date that is later than the
Maturity Date, unless such Letter of Credit is secured by Letter of Credit
Collateral, (iv) after giving effect to such renewal, the expiry date of such
Letter of Credit would be a date that is later than the Letter of Credit
Termination Date or (v) if the Letter of Credit Collateral for such Letter of
Credit is not received by and pledged to the Bank in a manner satisfactory to
the Bank in its sole discretion.
SECTION 3.02. Letter of Credit Requests. Whenever the
Company desires that a Letter of Credit be issued for its account or that the
existing expiry date of a Letter of Credit shall be extended, it shall give the
Bank at least two Business Days' prior written request therefor. Each such
request shall be in the form of an Application for Letter of Credit on the
Bank's standard form therefor, completed to the satisfaction of the Bank,
shall be accompanied by the Letter of Credit Collateral, pledged to the Bank in
a manner satisfactory to the Bank in its sole discretion, and such other
certificates, documents and other papers and information as the Bank may
reasonably request. Each Letter of Credit shall be in such form as may be
reasonably approved from time to time by the Bank and the Company.
SECTION 3.03. Repayment of Letter of Credit Drawings. (a)
The Company hereby agrees to reimburse the Bank by making payment to the Bank
in immediately available funds, for
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any payment made by the Bank under any Letter of Credit issued by it (each such
amount so paid until reimbursed, an "Unpaid Drawing") immediately after, and in
any event on the date of, such payment prior to 2:00 p.m. (Houston, Texas time)
on the date of such payment, from and including the date paid to but excluding
the date reimbursement is made as provided above, at a rate per annum equal to
the Highest Lawful Rate, such interest to be payable on demand. Failure to
make such payment shall (i) constitute a Default hereunder and (ii) allow the
Bank, in its sole discretion, to make a Revolving Credit Loan under the
Revolving Credit Note to effect such repayment.
(b) The Company's obligations under this Section 3.03 to
reimburse the Bank with respect to Unpaid Drawings (including, in each case,
interest thereon) shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to
payment which the Company may have or have had against the Bank, including any
defense based upon the failure of any drawing under a Letter of Credit (each a
"Drawing") to conform to the terms of the Letter of Credit or any
non-application or misapplication by the beneficiary of the proceeds of such
Drawing. The issuance of a Letter of Credit shall reduce the amount available
for future Letters of Credit by the face amount of the Letter of Credit issued.
Additionally, all Letters of Credit outstanding under either of the Prior
Agreements shall be considered Letters of Credit hereunder and shall reduce the
amount of Letters of Credit available to be issued by the face amount thereof.
SECTION 304. Rights of Bank Regarding Letters of Credit.
The Bank shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions caused by the Bank's willful misconduct. IT IS THE EXPRESS INTENTION
OF THE PARTIES HERETO THAT THE BANK, ITS OFFICERS, DIRECTORS, EMPLOYEES AND
AGENTS SHALL BE INDEMNIFIED AND HELD HARMLESS FROM ANY ACTION TAKEN OR OMITTED
BY SUCH PERSON UNDER OR IN CONNECTION WITH ANY LETTER OF CREDIT OR ANY RELATED
DRAFT OR DOCUMENT ARISING OUT OF OR RESULTING FROM SUCH PERSON'S SOLE OR
CONTRIBUTORY NEGLIGENCE. The Company agrees that any action taken or omitted
by the Bank under or in connection with any Letter of Credit or the related
drafts or documents, if done in accordance with the standards of care specified
in the Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce, Publication No. 500 (and any subsequent
revisions thereof approved by a Congress of the International Chamber of
Commerce and adhered to by the Bank) and, to the extent not inconsistent
therewith, the Uniform Commercial Code of the State of Texas, shall not result
in any liability of the Bank to the Company or any other Loan Party.
SECTION 3.05. Increased Letter of Credit Costs.
Notwithstanding any other provision herein, but subject to Section 11.08, if
the Bank shall determine in good faith that any change in any law, rule,
regulation or guideline (whether or not having the force of law) either (i)
shall impose, modify or make applicable any reserve, deposit, capital adequacy
or similar requirement against letters of credit issued, or participated in, by
the Bank or (ii) shall impose on the
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Bank any other conditions affecting this Agreement or any Letter of Credit; and
the result of any of the foregoing is to increase the cost to the Bank of
issuing, maintaining or participating in any Letter of Credit, or reduce the
amount received or receivable by the Bank hereunder with respect to Letters of
Credit, by an amount deemed to be material, then, from time to time, the
Company shall pay to the Bank such additional amount or amounts as will
reasonably compensate such Bank for such increased cost, provided, the Bank
shall notify the Company of such change promptly and the Company shall not be
obligated hereunder for any such amounts in respect of changes occurring more
than ninety (90) days prior to the date of any such notice.
SECTION 3.06. Letter of Credit Collateral and Fees. The Fees
and collateral granted or paid by the Company in respect of Letters of Credit
are described in Section 4.01(c). Notwithstanding the terms of Section
4.01(c), any Letter of Credit Collateral pledged by the Company which is not
used to repay the Bank for any draws under any Letter of Credit shall, if an
Event of Default under Section 10.01(f) occurs, be available to secure and
satisfy any of the Obligations.
ARTICLE IV
FEE AND COMMITMENTS
SECTION 4.01. Fees. (a) The Company, in consideration of
the Bank's agreement to extend and modify the Loans, agrees to pay the Bank an
extension fee (the "Extension Fee") equal to $840,000.00, said fee to be paid
on or before the Effective Date, provided, such fee may be evidenced by the Fee
Capitalization Note, at the option of the Bank.
(b) The Company agrees to pay to the Bank the fee
previously owing to the Bank as of March 31, 1995, payment of which has been
deferred, of $160,000.00, provided, such fee may be evidenced by the Fee
Capitalization Note, at the option of the Bank.
(c) Upon the date of issuance of any Letter of Credit and
on each annual anniversary thereof, the Company agrees to pay the Bank a fee in
respect of each Letter of Credit issued for the account of the Company (the
"Letter of Credit Fee"), for the period from the date of issuance of such
Letter of Credit to the expiry date of such Letter of Credit, computed at the
rate of (i) one-half of one percent (0.5%) per annum of the face amount of any
Letter of Credit secured by Letter of Credit Collateral and (ii) at the rate of
one percent (1%) per annum of the face amount of any Letter of Credit secured
by collateral other than Letter of Credit Collateral. The Letter of Credit
Fees (i) will be in lieu of all commissions and fees for the Letters of Credit
other than customary administrative, issuance, amendment, payment and
negotiation charges, (ii) shall be paid in immediately available funds, (iii)
shall be calculated on the basis of the actual number of days
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elapsed over a year of 365 or 366 days, as the case may be, and (iv) shall be
deemed earned when paid and are non- refundable.
(d) In no event shall the Fees payable under this Section
(to the extent, if any, constituting interest under applicable laws) together
with all amounts constituting interest under applicable laws and payable in
connection with this Agreement, the Notes and the other Loan Documents exceed
the Highest Lawful Rate.
SECTION 4.02. Voluntary Reduction of Commitment. Upon at
least five (5) Business Days' prior telephonic notice confirmed in writing to
the Bank, the Company shall have the right, without premium or penalty, to
terminate any portion of the Revolving Credit Commitment or the Letter of
Credit Commitment. Any reduction of either of said commitments shall be in the
amount of $500,000.00 or, if greater, an integral multiple of $100,000.00.
SECTION 4.03. Mandatory Reduction of Commitment. Unless
sooner terminated pursuant to Article X hereof, the Revolving Credit Commitment
and the Letter of Credit Commitment shall terminate on the Maturity Date.
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.01. Conditions Precedent to the Initial Credit
Event. The obligation of the Bank to make its initial Loan or issue a Letter of
Credit to the Company is subject to receipt by the Bank of the following, each
in form satisfactory to the Bank, executed by the appropriate party:
(a) this Agreement;
(b) the Revolving Credit Note;
(c) the Term Note;
(d) the Fee Capitalization Note;
(e) the most recent management letter delivered to the
Company by the Company's independent certified public accountants
dealing with management or operational issues of the Company or its
Subsidiaries;
(f) the Security Agreements;
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(g) the Pledge Agreements;
(h) the Financing Statements;
(i) the Mortgage;
(j) the Guaranties;
(k) if the Credit Event is the issuance of a Letter of
Credit, and the Company exercises its option to pledge Letter of
Credit Collateral as described in Section 4.01(c), the Bank shall have
received the Letter of Credit Collateral pledged to it in a manner
satisfactory to the Bank in its sole discretion;
(l) a certificate of an officer and of the secretary or
an assistant secretary of each Loan Party certifying, inter alia, (A)
true and correct copies of the articles or certificate of
incorporation, as amended and in effect, of such Person and, the
bylaws, as amended and in effect, of each Loan Party, as well as
resolutions adopted by the Board of Directors of such Person (1)
authorizing the execution, delivery and performance by such Person of
this Agreement and the other Loan Documents to which it is or will be
a party and, in the case of the Company, the Loans to be made
hereunder, (2) approving the forms of the Loan Documents to which it
is a party and which will be delivered at or prior to the initial
Borrowing Date and (3) authorizing officers of such Person to execute
and deliver the Loan Documents to which it is or will be a party and
any related documents, and (B) the incumbency and specimen signatures
of the officers of such Person executing any documents on its behalf;
(m) favorable, signed opinions dated the Effective Date
and addressed to the Bank from David Crow, counsel to the Loan
Parties, in form and substance satisfactory to the Bank and its
counsel;
(n) the payment to the Bank, as applicable, of all Fees
and all expenses incurred (including the fees and disbursements of
Andrews & Kurth L.L.P.) and agreed upon by such parties to be paid on
or prior to the date this Agreement is actually executed;
(o) certificates of appropriate public officials as to
the existence, good standing and qualification to do business as a
foreign corporation, as applicable, of each Loan Party in each
jurisdiction in which the ownership of its properties or the conduct
of its business requires such qualifications and where the failure to
so qualify would have a Material Adverse Effect;
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(p) a certificate from the Company's insurance broker
describing in detail all insurance by the Company and its Subsidiaries
on its property and its business as of the Effective Date in form and
amounts satisfactory to the Bank and naming the Bank as an additional
insured of liability insurance maintained by the Company and its
Subsidiaries;
(q) a certificate of an officer of the Company listing
all jurisdictions in which the Company owns and/or maintains
Collateral, including, without limitation, all licenses and permits;
and
(r) evidence satisfactory to the Bank that the Company
has received an equity infusion on terms satisfactory to the Bank, of
at least $4,000,000.00 and that all documentation related thereto has
been satisfactorily completed.
SECTION 5.02. Conditions Precedent to All Credit Events.
The obligation of the Bank to make any Loan or to issue or extend any Letter of
Credit is subject to the further conditions precedent that on the date of such
Credit Event:
(a) The conditions precedent set forth in Section 5.01
shall have theretofore been satisfied or waived.
(b) The representations and warranties set forth in
Article VI shall be true and correct in all material respects as of, and as if
such representations and warranties were made on, the date of the proposed Loan
or Letter of Credit, as the case may be (unless such representation and
warranty expressly relates to an earlier date or are no longer true and correct
solely as a result of transactions permitted by the Loan Documents), and the
Company shall be deemed to have certified to the Bank that such representations
and warranties are true and correct in all material respects by submitting a
Notice of Loan Request or a Letter of Credit Request, as the case may be.
(c) The Company shall have appropriately requested the
Loan or issuance of Letters of Credit.
(d) No Default or Event of Default shall have occurred
and be continuing or would result from such Credit Event.
(e) No Material Adverse Effect shall have occurred since
the delivery of the Financials.
(f) If the Credit Event is the issuance of a Letter of
Credit, and the Company exercises its option to pledge Letter of Credit
Collateral as described in Section 4.01(c), the Bank
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shall have received the Letter of Credit Collateral pledged to it in a manner
satisfactory to the Bank in its sole discretion.
(g) The Bank shall have received such other approvals,
opinions or documents as the Bank may reasonably request.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to enter into this Agreement and
to make the Loans provided for herein and issue Letters of Credit, each Loan
Party makes to the extent applicable and relevant, the following
representations and warranties to the Bank.
SECTION 6.01. Organization and Qualification. Each Loan
Party (a) is a corporation or partnership duly organized, validly existing and
in good standing under the laws of the state of its incorporation or
organization, (b) has the corporate or partnership power to own its property
and to carry on its business as now conducted and (c) is duly qualified as a
foreign corporation or foreign partnership to do business and is in good
standing in every jurisdiction in which the failure to be so qualified would
have a Material Adverse Effect.
SECTION 6.02. Authorization and Validity. Each Loan Party
has the corporate power and authority to execute, deliver and perform its
obligations hereunder and under the other Loan Documents, and all such action
has been duly authorized by all necessary proceedings on its part. This
Agreement has been duly and validly executed and delivered by each Loan Party
and constitutes a valid and legally binding agreement of such Loan Party
enforceable in accordance with its terms, and the Notes and the other Loan
Documents to which such Loan Party is a party, when duly executed and delivered
by such Loan Party, will constitute valid and legally binding obligations of
such Loan Party enforceable in accordance with the respective terms thereof and
of this Agreement, except, in each case, as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or
other similar laws relating to or affecting the enforcement of creditors'
rights generally, and by general principles of equity.
SECTION 6.03. Governmental Consents. No authorization,
consent, approval, license or exemption of or filing or registration with, any
court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, is necessary for the valid execution,
delivery or performance by any Loan Party of any Loan Document.
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SECTION 6.04. Conflicting or Adverse Agreements or
Restrictions. No Loan Party is a party to any contract or agreement or subject
to any restriction which would reasonably be expected to have a Material
Adverse Effect. Neither the execution nor delivery of the Loan Documents nor
compliance with the terms and provisions hereof or thereof will be contrary to
the provisions of, or constitute a default under (a) the charter or bylaws of
such Loan Party or (b) any applicable law (including Regulation U) or any
applicable regulation, order, writ, injunction or decree of any court or
governmental instrumentality or (c) any material agreement to which such Loan
Party is a party or by which it is bound or to which it is subject.
SECTION 6.05. Title to Assets. Each Loan Party has good
and indefeasible title to all of its assets, subject to no Liens, except those
permitted hereunder. All of such assets have been and are being maintained by
the appropriate Person in good working condition in accordance with industry
standards.
SECTION 6.06. Litigation. Except as disclosed on Schedule
6.06, no proceedings against or affecting any Loan Party are pending or, to the
knowledge of any Loan Party, threatened before any court or governmental agency
or department which involve a risk of having a Material Adverse Effect.
SECTION 6.07. Financial Statements. The Company has
furnished to the Bank its audited consolidated balance sheet, income statement
and statement of cash flow for itself and its consolidated Subsidiaries as of
December 31, 1994 and as of June 30, 1995 (the "Financials"). The Financials
have been prepared in conformity with GAAP consistently applied (except as
otherwise disclosed in such financial statements) throughout the periods
involved and present fairly, in all material respects, the consolidated
financial position of the Company and its consolidated Subsidiaries as of
December 31, 1994 and the results of their operations for the period then
ended. As of the Effective Date, no Material Adverse Effect has occurred in
the consolidated financial condition of the Company and its consolidated
Subsidiaries since the date of said Financials.
SECTION 6.08. Default. Upon the execution hereof, no Loan
Party is in default under the provisions of any instrument evidencing any
Indebtedness or of any agreement relating thereto, or in default in any respect
under any order, writ, injunction or decree of any court, or in default in any
respect under or in violation of any order, injunction or decree of any
governmental instrumentality, which defaults or violations would reasonably be
expected to have a Material Adverse Effect. No Loan Party is a party to any
material agreement evidencing any Indebtedness of such Person with an
outstanding principal amount in excess of $250,000.00 on the date of the
execution of this Agreement.
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SECTION 6.09. Investment Company Act. No Loan Party is, or
is directly or indirectly controlled by or acting on behalf of any Person which
is, an "investment company," as such term is defined in the Investment Company
Act of 1940, as amended.
SECTION 6.10. Public Utility Holding Company Act. No Loan
Party is a non-exempt "holding company," or subject to regulation as such, or,
to the knowledge of any Loan Party's officers, an "affiliate" of a "holding
company" or a "subsidiary company" of a "holding company," within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
SECTION 6.11. ERISA. No accumulated funding deficiency (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived, exists or is expected to be incurred with respect to any Plan(s). No
liability to the PBGC (other than required premium payments) has been or is
expected by the Loan Parties to be incurred with respect to any Plan(s) by the
Loan Parties or any ERISA Affiliate which would reasonably be expected to have
a Material Adverse Effect. Neither the Company nor any ERISA Affiliate has
incurred any withdrawal liability under Title IV of ERISA with respect to any
Multi-Employer Plans which would reasonably be expected to have a Material
Adverse Effect.
SECTION 6.12. Tax Returns and Payments. Each Loan Party
has filed all federal income tax returns and other material tax returns,
statements and reports (or obtained extensions with respect thereto) which, are
required to be filed and have paid or deposited or made adequate provision in
accordance with GAAP for the payment of all taxes (including estimated taxes
shown on such returns, statements and reports) which are shown to be due
pursuant to such returns, except for such taxes as are being contested in good
faith and by appropriate proceedings.
SECTION 6.13. Environmental Matters. Each Loan Party and
each of its Subsidiaries (a) possesses all environmental, health and safety
licenses, permits, authorizations, registrations, approvals and similar rights
necessary under law or otherwise for such Loan Party or such Subsidiary to
conduct its operations as now being conducted (other than those with respect to
which the failure to possess or maintain would not, individually or in the
aggregate for all Loan Parties and such Subsidiaries, have a Material Adverse
Effect) and (b) each of such licenses, permits, authorizations, registrations,
approvals and similar rights is valid and subsisting, in full force and effect
and enforceable by such Loan Party or such Subsidiary, and each Loan Party and
each of its Subsidiaries is in compliance with all terms, conditions or other
provisions of such permits, authorizations, registrations, approvals and
similar rights except for such failure or noncompliance that, individually or
in the aggregate for all Loan Parties and such Subsidiaries, would not have a
Material Adverse Effect. Except as disclosed on Schedule 6.13, no Loan Party
nor any of its Subsidiaries has received any notices of any violation of,
noncompliance with, or remedial obligation under, Requirements of Environmental
Laws (which violation or non-compliance has not been cured, and there are no
writs, injunctions, decrees, orders or judgments outstanding, or lawsuits,
claims,
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proceedings, investigations or inquiries pending or, to the knowledge of such
Loan Party, threatened, relating to the ownership, use, condition, maintenance
or operation of, or conduct of business related to, any property owned, leased
or operated by such Loan Party or such Subsidiary or other assets of such Loan
Party or such Subsidiary, other than those violations, instances of
noncompliance, obligations, writs, injunctions, decrees, orders, judgments,
lawsuits, claims, proceedings, investigations or inquiries that, individually
or in the aggregate for all Loan Parties and such Subsidiaries, would not have
a Material Adverse Effect. Except as disclosed on Schedule 6.13, there are no
material obligations, undertakings or liabilities arising out of or relating to
Environmental Laws to which any Loan Party or any of its Subsidiaries has
agreed, assumed or retained, or by which any Loan Party or any of its
Subsidiaries is adversely affected, by contract or otherwise, which would have
a Material Adverse Effect. Except as disclosed on Schedule 6.13, no Loan Party
or any of its Subsidiaries has received a written notice or claim to the effect
that such Person is or may be liable to any other Person as the result of a
Release or threatened Release of a Hazardous Material, which liability would
have a Material Adverse Effect.
SECTION 6.14. Purpose of Loans. None of the proceeds of
the Loans will be used directly or indirectly for the purpose of purchasing or
carrying any "margin stock" within the meaning of Regulation U (herein called
"margin stock") or for the purpose of reducing or retiring any indebtedness
which was originally incurred to purchase or carry a margin stock, or for any
other purpose which might constitute this transaction a "purpose" credit within
the meaning of Regulation U. Neither any Loan Party nor any agent acting on
its behalf has taken or will take any action which might cause this Agreement
or any other Loan Document to violate Regulation U, Regulation X, or any other
regulation of the Board or to violate the Securities Exchange Act of 1934.
SECTION 6.15. Franchises and Other Operating Rights. Each
Loan Party and each of its Subsidiaries have all franchises, permits, licenses
and other authority as are necessary to enable them to carry on their
respective businesses as now being conducted.
SECTION 6.16. Subsidiaries. The Subsidiaries executing this
Agreement are all the Subsidiaries owned by the Company as of the Effective
Date, except for American Liability and Excess Insurance Company.
ARTICLE VII
AFFIRMATIVE COVENANTS
Each Loan Party covenants and agrees for itself, that on and
after the date hereof and for so long as this Agreement is in effect and until
all Loans have been paid in full and each Letter of Credit shall have
terminated:
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SECTION 7.01. Information Covenants. The Company will
furnish or cause to be furnished to the Bank:
(a) (i) As soon as available, and in any event within
fifteen (15) Business Days following the end of each month and twenty (20)
Business Days after the close of each of the first three quarterly accounting
periods in each fiscal year of the Company, the consolidated and consolidating
balance sheet of the Company and its consolidated Subsidiaries as of the end of
such monthly or quarterly period, as applicable, and the related consolidated
and consolidating statements of income, retained earnings and cash flows for
such period, setting forth, in each case, comparative consolidated figures for
the related periods in the prior fiscal year, and with the quarterly reports
all proposed budgets for the next succeeding quarter or year, all of which
shall be certified by the chief financial officer or chief executive officer of
the Company as fairly presenting in all material respects, the financial
position of the Company and its consolidated Subsidiaries as of the end of such
period and the results of their operation for the period then ended in
accordance with GAAP, subject to changes resulting from normal year-end audit
adjustments and the inclusion of abbreviated footnotes.
(ii) As soon as available, and in any event within
forty-five (45) days following the close of each of the first three quarterly
accounting periods in each fiscal year of the Company (or such additional
period as the Securities and Exchange Commission may extend to the Company),
all Form 10-Q filings and any other reports filed with the Securities and
Exchange Commission (provided, if the Securities and Exchange Commission
extends the 45-day filing deadline, the Company shall furnish or cause to be
furnished to the Bank, within forty-five (45) days following the close of each
of the first three quarterly accounting periods in each fiscal year of the
Company, drafts of the Form 10- Q filings and drafts of any other reports to be
filed with the Securities and Exchange Commission), all of which shall be
certified by the chief financial officer or chief executive officer of the
Company as fairly presenting in all material respects, the financial position
of the Company and its consolidated Subsidiaries as of the end of such period
and the results of their operation for the period then ended in accordance with
GAAP, subject to changes resulting from normal year-end audit adjustments and
the inclusion of abbreviated footnotes.
(b) As soon as available, and in any event within ninety
(90) days (or such additional period as the Securities and Exchange Commission
may extend to the Company), after the close of each fiscal year of the Company,
the consolidated and consolidating balance sheet of the Company and its
consolidated Subsidiaries as at the end of such fiscal year and the related
consolidated and consolidating statements of income, retained earnings and cash
flows for such fiscal year, setting forth, in each case, comparative figures
for the preceding fiscal year and certified by Arthur Andersen & Co. or other
independent certified public accountants of recognized national standing
reasonably acceptable to the Bank, whose report shall be without limitation as
to the scope of the audit and reasonably satisfactory in substance to the Bank
along with the Annual Report on
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Form 10-K of the Company for such year filed with the Securities and Exchange
Commission (provided, if the Securities and Exchange Commission extends the
90-day filing deadline, the Company shall furnish or cause to be furnished to
the Bank, within ninety (90) days following the close of each fiscal year of
the Company, drafts of the Form 10-Q filings and drafts of any other reports to
be filed with the Securities and Exchange Commission).
(c) Simultaneously with the delivery of the financial
statements described in paragraph (a) above and in any event within fifteen
(15) days after the end of each month, (i) a Borrowing Base Certificate
substantially in the form of Exhibit 7.01(c) and (ii) a summary report of all
Receivables and payables of the Company and its Subsidiaries, in form and
substance satisfactory to the Bank.
(d) Immediately after any Responsible Officer of any Loan
Party obtains knowledge thereof, notice of
(i) any material violation of, noncompliance
with, or remedial obligations under, Requirements of Environmental
Laws,
(ii) any material Release or threatened material
Release of Hazardous Materials affecting any property owned, leased or
operated by such Loan Party or any of its Subsidiaries,
(iii) any event or condition which constitutes a
Default or an Event of Default,
(iv) any condition or event which, in the opinion
of management of the Company, would be expected to have a Material
Adverse Effect,
(v) any Person having given any written notice to
any Loan Party or taken any other action with respect to a claimed
material default or event under any material instrument or material
agreement,
(vi) the institution of any litigation which might
reasonably be expected either to have a Material Adverse Effect or
result in a final, non-appealable judgment or award in excess of (A)
$1,000,000.00 with respect to any single cause of action or (B)
$5,000,000.00 with respect to all causes of action in the aggregate,
or
(vii) any condition or event which, in the opinion
of management of the Company, could be expected to jeopardize the
existence or good standing of any license or permit held by the
Company.
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A notice of such event or condition will be delivered to the
Bank specifying the nature and period of existence thereof and specifying the
notice given or action taken by such Person and the nature of any such claimed
default, event or condition and, in the case of an Event of Default or Default,
what action has been taken, is being taken or is proposed to be taken with
respect thereto.
(e) At the time of the delivery of the financial
statements provided for in paragraphs (a) and (b), a certificate of the chief
financial officer, treasurer or the controller of the Company, substantially
in the form of Exhibit 7.01(e) hereto, to the effect that no Default or Event of
Default exists or, if any Default or Event of Default does exist, specifying the
nature and extent thereof and the action that is being taken or that is proposed
to be taken with respect thereto, which certificate shall set forth among other
matters, the calculations required to establish whether the Company was in
compliance with the provisions of Section 8.08 through Section 8.12 as at the
end of such fiscal period or year, as the case may be.
(f) Upon request by the Bank, but not more often than
semi-annually, such environmental reports, studies and audits (all of which
shall be reasonable in scope) of any Loan Party's procedures and policies,
assets and operations in respect of Environmental Laws as the Bank may request.
(g) Promptly upon transmission thereof, copies of any
filings and registrations with, and reports to, the SEC, and copies of all
financial statements, proxy statements, notices and reports as the Company
shall send to its public shareholder.
(h) From time to time and with reasonable promptness,
such other information or documents as the Bank may reasonably request.
SECTION 7.02. Books, Records and Inspections. The Company
will maintain, and will permit, or cause to be permitted, any Person designated
by the Bank in writing upon one (1) Business Day's notice and without
materially disrupting the operations of any Loan Party to visit and inspect any
of the properties of such Loan Party, to examine the corporate books and
financial records of such Loan Party and make copies thereof or extracts
therefrom and to discuss the affairs, finances and accounts of any such
corporations with the officers, employees and agents of such Loan Parties and
with their independent public accountants, all at such reasonable times and as
often as the Bank may reasonably request.
SECTION 7.03. Insurance and Maintenance of Properties. (a)
Each Loan Party will keep adequately insured by financially sound and
reputable insurers all of its property of a character, and in amounts and
against such risks, usually insured by similar Persons engaged in the same or
similar businesses, including insurance against fire, casualty and any other
hazards normally insured against. Each Loan Party will at all times maintain
insurance against its liability for injury to Persons
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or property, which insurance shall be by financially sound and reputable
insurers (which shall, for purposes of this Agreement, include American
Liability and Excess Insurance Company) and in such amounts and form as are
customary for corporations of established reputation engaged in the same or
similar businesses and owning and operating similar properties.
(b) Each Loan Party will cause all of its material
properties used or useful in the conduct of its business to be maintained and
kept in good condition, repair and working order and supplied with all
necessary equipment and will cause to be made all necessary repairs, renewals
and replacements thereof, all as in the judgment of such Person may be
reasonably necessary so that the business carried on in connection therewith
may be properly conducted at all times.
SECTION 7.04. Payment of Taxes. Each Loan Party will pay
and discharge all taxes, assessments and governmental charges or levies imposed
upon it or upon its income or profits, or upon any properties belonging to it,
prior to the date on which penalties attach thereto, except for such amounts
that are being contested in good faith and by appropriate proceedings.
SECTION 7.05. Corporate Existence. Each Loan Party will do
all things necessary to preserve and keep in full force and effect the
corporate or partnership existence of such Person, and the rights and
franchises of such Loan Party.
SECTION 7.06. Compliance with Statutes. Each Loan Party
will comply with all material applicable statutes, regulations and orders of,
and all applicable restrictions imposed by, all governmental bodies, domestic
or foreign, in respect of the conduct of its business and the ownership of its
property.
SECTION 7.07. ERISA. As soon as possible and, in any event,
within ten days after any Responsible Officer of any Loan Party knows or has
reason to know any of the following items are true, such Loan Party will
deliver or cause to be delivered to the Bank a certificate of the chief
financial officer of the Company setting forth details as to such occurrence
and such action, if any, which the Loan Party or its ERISA Affiliate is
required or proposes to take, together with any notices required or proposed to
be given to or filed with or by such Loan Party or ERISA Affiliate with respect
thereto: that a Reportable Event has occurred or that an application may be or
has been made to the Secretary of the Treasury for a waiver or modification of
the minimum funding standard; that a Multiemployer Plan has been or may be
terminated, reorganized, partitioned or declared insolvent under Title IV of
ERISA; that any required contribution to a Plan or Multiemployer Plan has not
been or may not be timely made; that proceedings may be or have been instituted
under Section 4069(a) of ERISA to impose liability on a Loan Party or an ERISA
Affiliate or under Section 4042 of ERISA to terminate a Plan or appoint a
trustee to administer a Plan;
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that a Loan Party or any ERISA Affiliate has incurred or may incur any
liability (including any contingent or secondary liability) on account of the
termination of or withdrawal from a Plan or a Multiemployer Plan; and that a
Loan Party or an ERISA Affiliate may be required to provide security to a Plan
under Section 401(a)(29) of the Code; or any other condition(s) exist(s) or may
occur with respect to one or more Plans and/or Multiemployer Plans.
SECTION 7.08. Additional Guaranties. Whenever the Company
acquires any new Subsidiary, the Company shall, within ten (10) Business Days,
cause such Subsidiary to deliver to the Bank (A) a guaranty agreement in form
and substance reasonably satisfactory to the Bank (an "Additional Guaranty")
and (B) a certificate of an officer and of the secretary or an assistant
secretary of such Subsidiary certifying a true and correct copy of the
resolutions adopted by the Board of Directors of such Subsidiary authorizing
the execution, delivery and performance of the Additional Guaranty.
ARTICLE VIII
NEGATIVE COVENANTS
Each Loan Party covenants and agrees for itself, that on and
after the date hereof and for so long as this Agreement is in effect and until
all of the Loans and each Letter of Credit shall have terminated, and the
Obligations are paid in full:
SECTION 8.01. Change in Business. No Loan Party will
engage in any business not of the same general type as that conducted by it on
the date of this Agreement.
SECTION 8.02. Consolidation, Merger or Sale Assets. No
Loan Party will wind up, liquidate or dissolve its affairs, or enter into any
transaction of merger or consolidation, unless a Loan Party is the surviving
entity, or sell or otherwise dispose of all or any part of its property or
assets (other than sales of inventory or surplus or obsolete assets in the
ordinary course of business).
SECTION 8.03. Liens. No Loan Party, except for American
Liability and Excess Insurance Company, will create, incur, assume or suffer to
exist any Lien upon or with respect to any of its property or assets of any
kind whether now owned or hereafter acquired, except:
(a) Liens for taxes or assessments or other governmental
charges or levies, either not yet due and payable or being contested in good
faith and by appropriate proceedings for which adequate reserves have been
established;
(b) minor defects, irregularities and deficiencies in
title to, and easements, rights-of-way, zoning restrictions and other similar
restrictions, charges or encumbrances on, real
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property of such Person which do not interfere with the ordinary conduct of the
business of such Person and which do not materially detract from the value of
the real property which they affect;
(c) Liens existing on the Effective Date, which are
described in the Financials or listed on Schedule 8.03 and approved by the
Bank; and
(d) any renewal, extension or replacement of any Lien
referred to in the foregoing clauses; provided that no Lien arising as a result
of such extension or renewal shall cover any property not theretofore subject
to the Lien being extended or secure any increased Indebtedness.
SECTION 8.04. Indebtedness. No Loan Party will create,
incur, assume or permit to exist any Indebtedness other than Indebtedness
created hereby, including renewals and extensions thereof (in the same amounts
or less), except:
(a) Indebtedness existing on the Effective Date and
described in the Financials or, if not so shown, listed on Schedule 8.04;
(b) current accounts payable incurred in the ordinary
course of business, which accounts payable have not remained unpaid for a
period of one hundred twenty (120) days after the same became due;
(c) Indebtedness arising as a result of the endorsement
in the ordinary course of business of negotiable instruments in the course of
collection;
(d) liabilities for taxes, assessments, governmental
charges or liens; and
(e) renewals and extensions (in the same or lesser
principal amount on similar terms and conditions) of any Indebtedness listed in
the foregoing clauses.
SECTION 8.05. Investments. No Loan Party will, directly or
indirectly, make or own any Investment in any Person, except:
(a) Permitted Investments owned on the date hereof as set
forth on Schedule 8.05; and
(b) Endorsements of negotiable instruments for collection
in the ordinary course of business.
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SECTION 8.06. Restricted Payments. The Company will not
make or declare any Restricted Payment; provided, that prior to the occurrence
of any Event of Default, the Company may declare and pay dividends at the rate
of up to 8 3/8% per annum on all of its preferred stock.
SECTION 8.07. Change in Accounting; Fiscal Year. No Loan
Party will change its method of accounting except for immaterial changes in
methods, changes permitted by GAAP in which such Loan Party's auditors concur
and changes required by GAAP. The Company shall advise the Bank in writing
promptly upon making any such change to the extent same is not disclosed in the
financial statements required hereunder.
SECTION 8.08. Minimum EBITDA. The Company will not permit
Consolidated EBITDA, as of the last day of each calendar month and each
calendar quarter, to be less than the amounts shown on the following table:
Minimum Minimum
Year Monthly EBITDA Quarterly EBITDA
---- -------------- ----------------
1996 $250,000.00 $1,000,000.00
1997 and 1998 500,000.00 2,000,000.00
; provided, that one hundred eighty (180) days after operations have commenced
at that particular facility operated in the State of California and commonly
referred to as "Ward Valley", the Company will not permit Consolidated EBITDA
(i) as of the last day of each calendar month during 1998 to be less than
$750,000.00 and (ii) as of the last day of each calendar quarter during 1998 to
be less than $3,000,000.00.
(c) Such calculations shall be based on the financial
information provided by the Company to the Bank as required in Section 7.01.
SECTION 8.09. Minimum Net Worth. The Company will not
permit Consolidated Net Worth (a) prior to June 30, 1996 to be less than
$25,000,000.00, (b) during the last two (2) calendar quarter of 1996, to be
less than the Consolidated Net Worth on June 30, 1996 and (c) quarterly
thereafter during the term hereof, to be less than the Consolidated Net Worth
on December 31, 1996 plus (i) $200,000.00 per calendar quarter commencing on
March 31, 1997 and (ii) $250,000.00 per calendar quarter commencing on March
31, 1998.
SECTION 8.10. Capital Expenditures. The Company will not
permit total consolidated capital expenditures (including Cell Development
Expenditures but not including any interest capitalized pursuant to the terms
hereof, the "Capitalized Expenditures") to be greater than (i) $6,000,000.00
per calendar year prior to December 31, 1997 and (ii) $6,125,000.00 during all
of calendar year 1998.
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SECTION 8.11. Transactions with Affiliates. No Loan Party
will, directly or indirectly, engage in any transaction with any Affiliate of
such Loan Party, including the purchase, sale or exchange of assets or the
rendering of any service, except in the ordinary course of business or pursuant
to the reasonable requirements of such Loan Party's business and, in each case,
upon terms that are no less favorable to such Loan Party than those which might
be obtained in an arm's-length transaction at the time from non-Affiliates.
Specifically, no Loan Party will transfer any of its assets to any Subsidiary
of the Company that is not a Guarantor, provided that Loan Parties may pay to
American Liability and Excess Insurance Company annual premiums for closing
and/or post closure obligations and for performance bonds (including, without
limitation, payments of premiums to Steadfast Insurance Company which are
thereafter delivered to American Liability and Excess Insurance Company for
reinsurance) up to a maximum of $500,000.00, per year.
SECTION 8.12. Change of Certain Indebtedness. No Loan Party
will, after the occurrence and during the continuance of any Event of Default,
(i) make any voluntary prepayments of principal of or interest on any
Consolidated Funded Indebtedness (whether or not subordinated) or (ii) alter,
amend, modify or otherwise change the terms, conditions and provisions of any
Consolidated Funded Indebtedness to accelerate the scheduled payments of
principal of such Indebtedness.
ARTICLE IX
GUARANTY
SECTION 9.01. Guaranty. In consideration of, and in order
to induce the Bank to make the Loans and to issue Letters of Credit hereunder,
each Guarantor hereby absolutely, unconditionally and irrevocably, jointly and
severally guarantees the punctual payment and performance when due, whether at
stated maturity, by acceleration or otherwise, of the Obligations, and all
other obligations and covenants of the Company now or hereafter existing under
this Agreement, the Notes and the other Loan Documents whether for principal,
interest (including interest accruing or becoming owing both prior to and
subsequent to the commencement of any proceeding against or with respect to the
Company under any chapter of the Bankruptcy Code), fees, commissions, expenses
(including reasonable attorneys' fees and expenses) or otherwise, and all
reasonable costs and expenses, if any, incurred by the Bank in connection with
enforcing any rights under this Guaranty (all such obligations being the
"Guaranteed Obligations"), and agrees to pay any and all reasonable expenses
incurred by the Bank in enforcing this Guaranty; provided that anything herein
or in any other Loan Document to the contrary notwithstanding, the maximum
liability of each Guarantor hereunder and under the other Loan Documents shall
in no event exceed such Guarantor's Maximum Guaranteed Amount as determined at
the earlier of the date of the commencement of a case under Title 11 of the
United States Code in which the said Guarantor is a debtor and the date
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enforcement hereunder is sought. This Guaranty is an absolute, unconditional,
present and continuing guaranty of payment and not of collectibility and is in
no way conditioned upon any attempt to collect from the Company or any other
action, occurrence or circumstance whatsoever. Each Guarantor agrees that the
Guaranteed Obligations may at any time and from time to time exceed the Maximum
Guaranteed Amount of such Guarantor without impairing this Guaranty or
affecting the rights and remedies of the Bank hereunder.
SECTION 9.02. Continuing Guaranty. Each Guarantor
guarantees that the Guaranteed Obligations will be paid strictly in accordance
with the terms of this Agreement, the Notes and the other Loan Documents. Each
Guarantor agrees that the Guaranteed Obligations and Loan Documents may be
extended or renewed, and Loans repaid and reborrowed in whole or in part,
without notice to or assent by such Guarantor, and that it will remain bound
upon this Guaranty notwithstanding any extension, renewal or other alteration
of any Guaranteed Obligations or Loan Documents, or any repayment and
reborrowing of Loans. To the maximum extent permitted by applicable law, the
obligations of each Guarantor under this Guaranty shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms hereof under any circumstances whatsoever, including:
(a) any extension, renewal, modification, settlement,
compromise, waiver or release in respect of any Guaranteed
Obligations;
(b) any extension, renewal, amendment, modification,
rescission, waiver or release in respect of any Loan Documents;
(c) any release, exchange, substitution, non-perfection
or invalidity of, or failure to exercise rights or remedies with
respect to, any direct or indirect security for any Guaranteed
Obligations, including the release of any Guarantor or other Person
liable on any Guaranteed Obligations;
(d) any change in the corporate existence, structure or
ownership of the Company, any Guarantor, or any insolvency,
bankruptcy, reorganization or other similar proceeding affecting the
Company, such Guarantor, any other Guarantor or any of their
respective assets;
(e) the existence of any claim, defense, set-off or other
rights or remedies which such Guarantor at any time may have against
the Company, or the Company or such Guarantor may have at any time
against the Bank, any other Guarantor or any other Person, whether in
connection with this Guaranty, the Loan Documents, the transactions
contemplated thereby or any other transaction other than by the
payment in full by the Company of the Guaranteed Obligations after the
termination of the commitments of the Bank and the expiration or
termination of all Letters of Credit;
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(f) any invalidity or unenforceability for any reason of
this Agreement or other Loan Documents, or any provision of law
purporting to prohibit the payment or performance by the Company, such
Guarantor or any other Guarantor of the Guaranteed Obligations or Loan
Documents, or of any other obligation to the Bank; or
(g) any other circumstances or happening whatsoever,
whether or not similar to any of the foregoing.
SECTION 9.03. Effect of Debtor Relief Laws. If after
receipt of any payment of, or proceeds of any security applied (or intended to
be applied) to the payment of all or any part of the Guaranteed Obligations,
the Bank is for any reason compelled to surrender or voluntarilysurrenders,
such payment or proceeds to any Person (a) because such payment or application
of proceeds is or may be avoided, invalidated, declared fraudulent, set aside,
determined to be void or voidable as a preference, fraudulent conveyance,
fraudulent transfer, impermissible set-off or a diversion of trust funds or (b)
for any other reason, including (i) any judgment, decree or order of any court
or administrative body having jurisdiction over the Bank, or any of its
properties or (ii) any settlement or compromise of any such claim effected by
the Bank with any such claimant (including the Company), then the Guaranteed
Obligations or part thereof intended to be satisfied shall be reinstated and
continue, and this Guaranty shall continue in full force as if such payment or
proceeds have not been received, notwithstanding any revocation thereof or the
cancellation of any Note or any other instrument evidencing any Guaranteed
Obligations or otherwise; and each Guarantor, jointly and severally, shall be
liable to pay the Bank, and hereby does indemnify the Bank and hold it harmless
for the amount of such payment or proceeds so surrendered and all expenses
(including reasonable attorneys' fees, court costs and expenses attributable
thereto) incurred by the Bank in the defense of any claim made against it that
any payment or proceeds received by the Bank in respect of all or part of the
Guaranteed Obligations must be surrendered. The provisions of this paragraph
shall survive the termination of this Guaranty, and any satisfaction and
discharge of the Company by virtue of any payment, court order or any federal
or state law.
SECTION 9.04. Complete Waiver of Subrogation.
Notwithstanding any payment or payments made by any Guarantor hereunder, or any
set-off or application by the Bank of any security or of any credits or claims,
no Guarantor will assert or exercise any rights of the Bank or of such
Guarantor against the Company to recover the amount of any payment made by such
Guarantor to the Bank hereunder by way of any claim, remedy or subrogation,
reimbursement, exoneration, contribution, indemnity, participation or otherwise
arising by contract, by statute, under common law or otherwise, and such
Guarantor shall not have any right of recourse to or any claim against assets
or property of the Company, whether or not the obligations of the Company
guaranteed hereby have been satisfied. Each Guarantor hereby expressly waives
any right to exercise any claim, right or remedy which such Guarantor may now
have or hereafter acquire against the Company or any other Guarantor that
arises under this Agreement or any other Loan Document or from the performance
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by any Guarantor of the Guaranty hereunder including any claim, remedy or right
of subrogation, reimbursement, exoneration, contribution, indemnification or
participation in any claim, right or remedy of the Bank against the Company or
any Guarantor, or any security that the Bank now has or hereafter acquires,
whether or not such claim, right or remedy arises in equity, under contract, by
statute, under common law or otherwise. Each Guarantor agrees not to seek
contribution or indemnity or other recourse from any other Guarantor or other
Person. If any amount shall nevertheless be paid to a Guarantor by the Company
or another Guarantor prior to payment in full of the Guaranteed Obligations,
such amount shall be held in trust for the benefit of the Bank and shall
forthwith be paid to the Bank to be credited and applied to the Guaranteed
Obligations, whether matured or unmatured. The provisions of this paragraph
shall survive the termination of this Guaranty, and any satisfaction and
discharge of the Company by virtue of any payment, court order or any federal
or state law.
SECTION 9.05. Subordination. If any Guarantor becomes the
holder of any indebtedness payable by the Company or another Guarantor, each
Guarantor hereby subordinates all indebtedness owing to it from the Company to
all indebtedness of the Company to the Bank, and agrees that during the
continuance of any Default or Event of Default it shall not accept any payment
on the same until payment in full of the Obligations of the Company under this
Agreement and the other Loan Documents after the termination of the commitments
of the Bank and the termination or expiration of the Letters of Credit, the
Notes and all other Loan Documents, and shall in no circumstance whatsoever
attempt to set-off or reduce any obligations hereunder because of such
indebtedness. If any amount shall nevertheless be paid to a Guarantor by the
Company or another Guarantor prior to payment in full of the Guaranteed
Obligations, such amount shall be held in trust for the benefit of the Bank and
shall forthwith be paid to the Bank to be credited and applied to the
Guaranteed Obligations, whether matured or unmatured.
SECTION 9.06. Waiver. Each Guarantor hereby waives
promptness, diligence, notice of acceptance and any other notice with respect
to any of the Guaranteed Obligations and this Guaranty and waives presentment,
demand of payment, notice of intent to accelerate or of acceleration, notice of
dishonor or nonpayment and any requirement that the Bank institute suit,
collection proceedings or take any other action to collect the Guaranteed
Obligations, including any requirement that the Bank protect, secure, perfect
or insure any Lien against any property subject thereto or exhaust any right or
take any action against the Company or any other Person or any Collateral (it
being the intention of the Bank and each Guarantor that this Guaranty is to be
a guaranty of payment and not of collection). It shall not be necessary for
the Bank, in order to enforce any payment by any Guarantor hereunder, to
institute suit or exhaust its rights and remedies against the Company, any
other Guarantor or any other Person, including others liable to pay any
Guaranteed Obligations, or to enforce its rights against any security ever
given to secure payment thereof. Each Guarantor hereby expressly waives to the
maximum extent permitted by applicable law each and every right to which it may
be entitled by virtue of the suretyship laws of the State of Texas,
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including any and all rights it may have pursuant to Rule 31, Texas Rules of
Civil Procedure, Section 17.001 of the Texas Civil Practice and Remedies Code
and Chapter 34 of the Texas Business and Commerce Code. Each Guarantor hereby
waives marshaling of assets and liabilities, notice by the Bank of any
indebtedness or liability to which the Bank applies or may apply any amounts
received, and of the creation, advancement, increase, existence, extension,
renewal, rearrangement or modification of the Guaranteed Obligations. Each
Guarantor expressly waives, to the extent permitted by applicable law, the
benefit of any and all laws providing for exemption of property from execution
or for valuation and appraisal upon foreclosure.
SECTION 9.07. Full Force and Effect. This Guaranty is a
continuing guaranty and shall remain in full force and effect until all of the
Obligations of the Company under this Agreement and the other Loan Documents
and all other amounts payable under this Guaranty have been paid in full (after
the termination of the commitments of the Bank and the termination or
expiration of the Letters of Credit). All rights, remedies and powers provided
in this Guaranty may be exercised, and all waivers contained in this Guaranty
may be enforced, only to the extent that the exercise or enforcement thereof
does not violate any provisions of applicable law which may not be waived.
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
SECTION 10.01. Events of Default and Remedies. The
following events=shall constitute Events of Default hereunder:
(a) any installment of principal or payment of interest
on any Note, any Fee or any Unpaid Drawing shall not be paid on the date on
which such payment is due as required under this Agreement; or
(b) any representation or warranty made or, for purposes
of Article V, deemed made by or on behalf of any Loan Party herein or in any of
the Loan Documents or other document, certificate or financial statement
delivered in connection with this Agreement or any other Loan Document shall
prove to have been incorrect in any material respect when made or deemed made
or reaffirmed, as the case may be; or
(c) the Company shall fail to perform or observe or cause
any Subsidiary to fail to perform or observe any duty or covenant contained in
this Agreement including the Exhibits and Schedules hereto; or
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(d) any Loan Party fails to make (whether as primary
obligor or as guarantor or other surety) any principal payment of or interest
or premium, if any, on any Indebtedness (other than the Notes or the Guaranty)
with an aggregate principal amount in excess of $250,000.00 outstanding beyond
any period of grace provided with respect thereto or fails to duly observe,
perform or comply with any agreement with any Person or any term or condition
of any such instrument, if such failure is to cause, or to permit the holder or
holders to cause, such obligations to become due prior to any stated maturity;
or
(e) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction
seeking (i) relief in respect of any Loan Party, or of a substantial part of
the property or assets of such Loan Party, under Title 11 of the United States
Code, as now or hereafter in effect, or any successor thereto (the "Bankruptcy
Code"), or any other federal or state bankruptcy, insolvency, receivership or
similar law, (ii) the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for any Loan Party or for a
substantial part of the property or assets of such Loan Party or (iii) the
winding-up or liquidation of any Loan Party; and such proceeding or petition
shall continue undismissed for 60 days or an order or decree approving or
ordering any of the foregoing shall be entered; or
(f) any Loan Party shall (i) voluntarily commence any
proceeding or file any petition seeking relief under the Bankruptcy Code or any
other federal or state bankruptcy, insolvency, receivership or similar law,
(ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or the filing of any petition described in
clause (e) above, (iii) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for any Loan
Party or for a substantial part of the property or assets of such Loan Party,
(iv) file an answer admitting the material allegations of a petition filed
against it in any such proceeding, (v) make a general assignment for the
benefit of creditors, (vi) become unable, admit in writing its inability or
fail generally to pay its debts as they become due or (vii) take any action for
the purpose of effecting any of the foregoing; or
(g) any Plan shall incur an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived, or a waiver of the minimum funding standard or extension
of any amortization period is sought or granted under Section 412 of the Code
with respect to a Plan; any proceeding shall have occurred or is reasonably
likely to occur by the PBGC under Section 4069(a) of ERISA to impose liability
on the Company, any Subsidiary or an ERISA Affiliate; any Plan shall have an
Unfunded Current Liability; any required contribution to a Plan or
Multiemployer Plan shall not have been timely made; or the Company, any
Subsidiary or any ERISA Affiliate has incurred or is reasonably likely to incur
a liability to or on account of a Plan or Multiemployer Plan under Section 515,
4062, 4063, 4064, 4201 or 4204 of ERISA, and there shall result (individually
or collectively) from any such event or events a material risk of either (i)
the imposition of a Lien(s) upon, or the granting of a security interest(s)
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in, the assets of the Company, any Subsidiary and/or an ERISA Affiliate in an
amount(s) equal to or exceeding $1,000,000.00 or (ii) the Company, any
Subsidiary and/or an ERISA Affiliate incurring a liability(ies) or
obligation(s) with respect thereto equal to or exceeding $1,000,000.00; or
(h) a judgment or order, which with other outstanding
judgments and orders against any Loan Party equals or exceeds $250,000.00 in
the aggregate (to the extent not covered by insurance as to which the
respective insurer has acknowledged coverage), shall be entered against any
Loan Party and (i) within 30 days after entry thereof such judgment shall not
have been discharged or execution thereof stayed pending appeal or, within 30
days after the expiration of any such stay, such judgment shall not have been
discharged or (ii) any enforcement proceeding shall have been commenced (and
not stayed) by any creditor or upon such judgment; or
(i) the Company shall fail to receive at least
$1,000,000.00 on or before January 6, 1996 from the sale of preferred stock of
the Company.
SECTION 10.02. Primary Remedies. At any time any Event of
Default has occurred and is continuing, the Bank may, by written notice to the
Company (a "Notice of Default") take any or all of the following actions,
without prejudice to the rights of the Bank or other holder of any of the
Obligations to enforce its claims against any Loan Party (provided that, if an
Event of Default specified in Section 10.01(e) or Section 10.01(f) shall occur
with respect to any Loan Party, the following shall occur automatically without
the giving of any Notice of Default): (i) declare the Bank's Revolving Credit
Commitment and the Letter of Credit Commitment terminated; (ii) declare the
principal of and any accrued and unpaid interest in respect of all Loans, and
all obligations owing hereunder, to be, whereupon the same shall become,
forthwith due and payable without presentment, demand, notice of demand or of
dishonor and non-payment, protest, notice of protest, notice of intent to
accelerate, declaration or notice of acceleration or any other notice of any
kind, all of which are hereby waived by each Loan Party; (iii) exercise any
rights or remedies under any document securing or guaranteeing any of the
obligations; (iv) terminate any Letter of Credit which may be terminated in
accordance with its terms (whether by the giving of written notice to the
beneficiary or otherwise); and (v) direct the Company to pay, and the Company
agrees that upon receipt of such notice (or upon the occurrence of an Event of
Default specified in Section 10.01(e) or Section 10.01(f)), it will pay to the
Bank, to the extent permitted by law, such additional amount of cash as is
equal to the aggregate stated amount of all Letters of Credit then outstanding
to be held in an interest bearing account with the Bank as security for the
Obligations and the other obligations of the Loan Parties hereunder and under
the Notes and the other Loan Documents.
SECTION 10.03. Other Remedies. Upon the occurrence and
during the continuance of any Event of Default, the Bank, may proceed to
protect and enforce its rights, either by suit in equity or by action at law or
both, whether for the specific performance of any covenant or agreement
contained in this Agreement or in any other Loan Document or in aid of the
exercise of
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any power granted in this Agreement or in any other Loan Document; or may
proceed to realize on any collateral securing the Loans or to enforce the
payment of all amounts owing to the Bank under the Loan Documents and any
accrued and unpaid interest thereon in the manner set forth herein or therein;
it being intended that no remedy conferred herein or in any of the other Loan
Documents is to be exclusive of any other remedy, and each and every remedy
contained herein or in any other Loan Document shall be cumulative and shall be
in addition to every other remedy given hereunder and under the other Loan
Documents now or hereafter existing or provided it at law or in equity or by
statute or otherwise.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Amendments. No amendment or waiver of any
provision of this Agreement, any Note or any other Loan Document, nor consent
to any departure by any Loan Party herefrom or therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Company, as to
amendments, and by the Bank in all cases, and then, in any case, such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given
SECTION 11.02. Notices. All notices, consents, requests,
approvals, demands and other communications provided for herein shall be in
writing (including telecopy communications) and mailed, telecopied, sent by
overnight courier or delivered:
(a) If to the Loan Parties, to them at:
5333 Westheimer, Suite 1000
Houston, Texas 77056-5407
Telecopy No: (713) 624-1909
Attention: __________________
(b) If to the Bank, to it at:
712 Main Street, 24 TCB E-74
Houston, Texas 77002
Telecopy No.: (713) 216-2092
Attention: Mr. Bruce A. Shilcutt
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With a copy to:
Andrews & Kurth L.L.P.
4200 Texas Commerce Tower
Houston, Texas 77002
Telecopy No.: (713) 220-4285
Attention: Mr. Thomas J. Perich
All communications shall, when mailed, telecopied or
delivered, be effective when mailed by certified mail, return receipt requested
to any party at its address specified herein (or other address designated by
such party in a communication to the other parties hereto), or telecopied to
any party to the telecopy number set forth herein, or delivered personally to
any party at its address herein specified; provided, that communications to the
Bank pursuant to Article II and Article III shall not be effective until
received.
SECTION 11.03. No Waiver; Remedies. No failure on the part
of the Bank to exercise, and no delay in exercising, any right hereunder, under
any Note or under any other Loan Document shall operate as a waiver thereof;
nor shall any single or partial exercise of any such right, or any abandonment
or discontinuance of any steps to enforce such right, preclude any other or
further exercise thereof or the exercise of any other right. No notice to or
demand on the Company in any case shall entitle the Company to any other or
further notice or demand in similar or other circumstances. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
SECTION 11.04. Costs, Expenses and Taxes. The Company
agrees to pay on demand: (a) all reasonable out-of-pocket costs and expenses
of the Bank in connection with the preparation, execution, delivery,
interpretation or enforcement of the Loan Documents and the other documents to
be delivered hereunder, including the reasonable fees and out-of-pocket
expenses of counsel for the Bank with respect thereto, (b) all reasonable
out-of-pocket costs and expenses of the Bank in connection with the syndication
of the credit evidenced by this Agreement and the other Loan Documents, and (c)
reasonable costs and expenses incurred in connection with other third party
professional services required by the Bank. In addition, the Company shall pay
any and all stamp and similar taxes payable or determined to be payable in
connection with the execution and delivery of the Loan Documents and the other
documents to be delivered hereunder, and agrees to save the Bank harmless from
and against any and all liabilities with respect to or resulting from any delay
in paying or omission to pay such taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery of this
Agreement, any Note or any other Loan Document. Without prejudice to the
survival of any other obligations of the Company hereunder and under the Notes,
the obligations of the Company under this Section shall survive the termination
of this Agreement and the payment of the Obligations or the assignment of the
Notes.
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SECTION 11.05. Indemnity and Release. (a) The Loan Parties
jointly and severally indemnify the Bank and each Affiliate thereof and their
respective directors, officers, employees and agents from, and hold each of
them harmless against, any and all losses, liabilities, claims or damages
(including reasonable legal fees and expenses) to which any of them may become
subject, insofar as such losses, liabilities, claims or damages arise out of or
result from (i) any actual or proposed use by the Company of the proceeds of
any extension of credit by any Bank hereunder or (ii) any investigation,
litigation or other proceeding (including any threatened investigation or
proceeding) relating to the foregoing or any of the other Loan Documents, and
the Loan Parties jointly and severally shall reimburse the Bank and each
Affiliate thereof and their respective directors, officers, employees and
agents, upon demand for any expenses (including legal fees) reasonably incurred
in connection with any such investigation or proceeding; but excluding any such
losses, liabilities, claims, damages or expenses incurred by reason of the
gross negligence or willful misconduct of the Person to be indemnified.
(b) WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT, IT
IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO BE
INDEMNIFIED HEREUNDER OR THEREUNDER SHALL BE INDEMNIFIED AND HELD HARMLESS
AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS OR DAMAGES ARISING OUT OF OR
RESULTING FROM THE ORDINARY SOLE OR CONTRIBUTORY NEGLIGENCE OF SUCH PERSON.
Without prejudice to the survival of any other obligations of the Loan Parties
hereunder and under the other Loan Documents, the obligations of the Loan
Parties under this Section shall survive the termination of this Agreement and
the other Loan Documents and the payment of the Obligations or the assignment
of the Notes.
(c) The Loan Parties do hereby release and forever
discharge the Bank and each Affiliate thereof and their respective employees,
officers, directors, trustees, agents, successors, assigns or other
representatives from any and all claims (civil or criminal), demands, damages,
actions, cross-actions, causes of action, costs and expenses (including legal
expenses), of any kind or nature whatsoever, which any Loan Party has held or
may now or in the future own or hold, whether known or unknown, for or because
of any matter or thing done, omitted or suffered to be done on or before the
Execution Date hereof by any of such parties (i) arising directly or indirectly
out of the Loan Documents or any other documents, instruments or any other
transactions relating thereto and/or (ii) relating directly or indirectly to
all transactions by and between the Loan Parties and the Bank. Such release,
waiver, acquittal and discharge shall and does include, without limitation, any
claims of usury which may or could be asserted by the Loan Parties. This
release shall not include a release of the Bank from any claim by the Loan
Parties for breach by the Bank of this Agreement.
SECTION 11.06. Right of Setoff. If any Event of Default
shall have occurred and be continuing, the Bank is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (time or demand, provisional or final) at
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any time held and other indebtedness at any time owing by the Bank, or any
branch, subsidiary or Affiliate, to or for the credit or the account of any
Loan Party against any and all the Obligations of the Loan Parties now or
hereafter existing under this Agreement and the other Loan Documents and other
obligations of the Loan Parties held by the Bank, irrespective of whether or
not the Bank shall have made any demand under this Agreement, such Note, the
Obligations or such other obligations and although the Obligations or such
other obligations may be unmatured. The Bank agrees promptly to notify the
Company after any such setoff and application, but the failure to give such
notice shall not affect the validity of such setoff and application. The
rights of the Bank under this Section are in addition to other rights and
remedies (including other rights of setoff) which such Bank may have.
SECTION 11.07. Governing Law. This Agreement, all Notes,
the other Loan Documents and all other documents executed in connection
herewith and therewith, shall be deemed to be contracts and agreements executed
by the Loan Parties, the Bank under the laws of the State of Texas and of the
United States of America and for all purposes shall be construed in accordance
with, and governed by, the laws of said state and of the United States of
America. Without limitation of the foregoing, nothing in this Agreement, or in
the Notes or in any other Loan Document shall be deemed to constitute a waiver
of any rights which any Bank may have under applicable federal legislation
relating to the amount of interest which such Bank may contract for, take,
receive or charge in respect of any Loans or other Obligations to such Bank
hereunder and under the other Loan Documents, including any right to take,
receive, reserve and charge interest at the rate allowed by the law of the
state where such Bank is located. The Bank and the Loan Parties further agree
that insofar as the provisions of Article 1.04, Subtitle 1, Title 79, of the
Revised Civil Statutes of Texas, 1925, as amended, are applicable to the
determination of the Highest Lawful Rate with respect to the Notes and the
Obligations hereunder and under the other Loan Documents, the indicated rate
ceiling computed from time to time pursuant to Section (a)(1) and Section (b)
of such Article shall be applicable; provided, however, that to the extent
permitted by such Article, the Bank may from time to time by notice from the
Bank to the Company revise the election of such interest rate ceiling as such
ceiling affects the then current or future balances of the Loans outstanding
under the Notes and the Obligations hereunder and under the other Loan
Documents. The provisions of Chapter 15 of Subtitle 3 of the said Title 79 do
not apply to this Agreement, any Note issued hereunder or the Obligations
hereunder and under the other Loan Documents.
SECTION 11.08. Maximum Interest. Each provision in this
Agreement and each other Loan Document is expressly limited so that in no event
whatsoever shall the amount paid, or otherwise agreed to be paid, to the Bank,
or charged, contracted for, reserved, taken or received by the Bank, for the
use, forbearance or detention of the money to be loaned under this Agreement or
any Loan Document or otherwise (including any sums paid as required by any
covenant or obligation contained herein or in any other Loan Document which is
for the use, forbearance or detention of such money), exceed that amount of
money which would cause the effective rate of interest to exceed
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the Highest Lawful Rate, and all amounts owed under this Agreement and each
other Loan Document shall be held to be subject to reduction to the effect that
such amounts so paid or agreed to be paid, charged, contracted for, reserved,
taken or received which are for the use, forbearance or detention of money under
this Agreement or such Loan Document shall in no event exceed that amount of
money which would cause the effective rate of interest to exceed the Highest
Lawful Rate. Anything in any Note or any other Loan Document to the contrary
notwithstanding, the Company shall not be required to pay unearned interest on
any Note and no Loan Party shall be required to pay interest on its Obligations
hereunder and under the Loan Documents to which it is a party at a rate in
excess of the Highest Lawful Rate, and if the effective rate of interest which
would otherwise be payable under such Note, such Obligations and such Loan
Documents would exceed the Highest Lawful Rate, or if the holder of such Note or
such Obligations shall receive any unearned interest or shall receive monies
that are deemed to constitute interest which would increase the effective rate
of interest payable by the Company under such Note and the Loan Parties under
such Obligations and the Loan Documents to which it is a party to a rate in
excess of the Highest Lawful Rate, then (a) the amount of interest which would
otherwise be payable by such Loan Party under such Obligations and such Loan
Documents shall be reduced to the amount allowed under applicable law and (b)
any unearned interest paid by such Loan Party or any interest paid by such
Loan Party in excess of the Highest Lawful Rate shall in the first instance be
credited on the principal of the Obligations of such Loan Party (or if all such
Obligations shall have been paid in full, refunded to the Loan Party paying such
unearned interest). It is further agreed that, without limitation of the
foregoing, all calculations of the rate of interest contracted for, charged or
received by the Bank in respect of the Obligations shall be made, to the extent
permitted by law by amortizing, prorating and spreading in equal parts during
the period of the full stated term of all of the Loans and the other
Obligations, all interest at any time contracted for, charged or received by the
Bank.
SECTION 11.09. Survival of Representations and Warranties.
All representations, warranties and covenants contained herein or made in
writing by the Loan Parties in connection herewith and the other Loan Documents
shall survive the execution and delivery of this Agreement, the Notes and the
other Loan Documents until two years and one day after payment in full of the
Obligations, the termination of the commitments of the Bank and the termination
or expiration of the Letters of Credit, and will bind and inure to the benefit
of the respective successors and assigns of the parties hereto, whether so
expressed or not, provided, that the Revolving Credit Commitment and the Letter
of Credit Commitment of the Bank shall not inure to the benefit of any
successor or assign of the Company.
SECTION 11.10. Binding Effect. This Agreement shall become
effective when it shall have been executed by the Loan Parties and the Bank and
shall inure to the benefit of the Loan Parties, Bank and their respective
permitted successors and assigns.
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SECTION 11.11. Successors and Assigns; Participations. The
Loan Parties may not assign or transfer any of their rights or obligations
hereunder without the written consent of the Bank. The Bank may, without the
consent of any Loan Party, assign to or sell participations to one or more
banks in all or a portion of its rights and obligations under this Agreement
and the other Loan Documents.
SECTION 11.12. Types of Loans. Loans hereunder are
distinguished by "Type" and by "Purpose". The Type of a Loan refers to whether
such Loan is a Eurodollar Rate Loan or an Alternate Base Rate Loan, the Purpose
of a Loan refers to whether it is a Revolving Credit Loan, Term Loan or Letter
of Credit Loan.
SECTION 11.13. Accounting Terms. All accounting terms not
otherwise defined herein shall be construed in accordance with GAAP.
SECTION 11.14. Independence of Covenants. All covenants
contained in this Agreement and in the other Loan Documents shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that such action or condition would be
permitted by an exception to, or otherwise be within the limitations of,
another covenant, shall not avoid the occurrence of a Default or an Event of
Default if such action is taken or condition exists.
SECTION 11.15. Separability. Should any clause, sentence,
paragraph or Section of this Agreement be judicially declared to be invalid,
unenforceable or void, such decision will not have the effect of invalidating
or voiding the remainder of this Agreement, and the parties hereto agree that
the part or parts of this Agreement so held to be invalid, unenforceable or
void will be deemed to have been stricken herefrom and the remainder will have
the same force and effectiveness as if such part or parts had never been
included herein.
SECTION 11.16. Execution in Counterparts. This Agreement
may be executed in any number of counterparts and by different parties hereto
in separate counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same
agreement.
SECTION 11.17. Interpretation. (a) In this Agreement,
unless a clear contrary intention appears:
(i) the singular number includes the plural number
and vice versa;
(ii) reference to any gender includes each other
gender;
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(iii) the words "herein," "hereof" and "hereunder"
and other words of similar import refer to this Agreement as a whole
and not to any particular Article, Section or other subdivision;
(iv) reference to any Person includes such
Person's successors and assigns but, if applicable, only if such
successors and assigns are permitted by this Agreement, and reference
to a Person in a particular capacity excludes such Person in any other
capacity or individually, provided that nothing in this clause is
intended to authorize any assignment not otherwise permitted by this
Agreement;
(v) except as expressly provided to the contrary
herein, reference to any agreement, document or instrument (including
this Agreement) means such agreement, document or instrument as
amended, supplemented or modified and in effect from time to time in
accordance with the terms thereof and, if applicable, the terms
hereof, and reference to any Note or other note includes any note
issued pursuant hereto in extension or renewal thereof and in
substitution or replacement therefor;
(vi) unless the context indicates otherwise,
reference to any Article, Section, Schedule or Exhibit means such
Article or Section hereof or such Schedule or Exhibit hereto;
(vii) the words "including" (and with correlative
meaning "include") means including, without limiting the generality of
any description preceding such term;
(viii) with respect to the determination of any
period of time, except as expressly provided to the contrary, the word
"from" means "from and including" and the word "to" means "to but
excluding"; and
(ix) reference to any law, rule or regulation
means such as amended, modified, codified or reenacted, in whole or in
part, and in effect from time to time.
(b) The Article and Section headings herein and the Table
of Contents are for convenience only and shall not affect the construction
hereof.
(c) No provision of this Agreement shall be interpreted
or construed against any Person solely because that Person or its legal
representative drafted such provision.
SECTION 11.18. SUBMISSION TO JURISDICTION. (A) ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS
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OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF TEXAS AND, BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, EACH LOAN PARTY HEREBY IRREVOCABLY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS WITH RESPECT TO ANY SUCH ACTION OR PROCEEDING. EACH LOAN
PARTY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT ITS ADDRESS
PROVIDED IN SECTION 11.02, SUCH SERVICE TO BECOME EFFECTIVE THIRTY DAYS AFTER
SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT OR ANY BANK
TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY LOAN PARTY IN ANY OTHER
JURISDICTION.
(B) EACH OF THE LOAN PARTIES HEREBY IRREVOCABLY WAIVES
ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (A) ABOVE AND HEREBY
FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT
THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM.
SECTION 11.19. Waiver of Jury Trial. THE COMPANY HEREBY
WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO A TRIAL BY JURY
IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS
AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED
OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM
OR RELATING TO ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS
AGREEMENT, AND AGREES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
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SECTION 11.20. Final Agreement of the Parties. THIS
AGREEMENT (INCLUDING THE SCHEDULES AND EXHIBITS HERETO), THE NOTES AND THE
OTHER LOAN DOCUMENTS CONSTITUTE A "LOAN AGREEMENT" AS DEFINED IN SECTION
26.02(A) OF THE TEXAS BUSINESS AND COMMERCE CODE, AND REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date first above written.
Borrower:
AMERICAN ECOLOGY CORPORATION
By: /s/ EDMUND J. GORMAN
------------------------------
Edmund J. Gorman
President and Chief Operating Officer
Bank:
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
By: /s/ F. HALL WEBB
------------------------------
F. Hall Webb
Senior Vice President
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Guarantors:
AMERICAN ECOLOGY ENVIRONMENTAL
SERVICES CORPORATION
AMERICAN ECOLOGY INTERNATIONAL, INC.
AMERICAN ECOLOGY MANAGEMENT
CORPORATION
AMERICAN ECOLOGY RECYCLE CENTER, INC.
AMERICAN ECOLOGY SERVICES
TEXAS ECOLOGISTS, INC.
TRANSTEC ENVIRONMENTAL, INC.
US ECOLOGY, INC.
WPI TRANSPORTATION, INC.
WPI WASTE CARRIERS, INC.
By: /s/ EDMUND J. GORMAN
-----------------------------
Edmund J. Gorman
Executive Vice President
AMERICAN ECOLOGY SERVICES
CORPORATION
By: /s/ EDMUND J. GORMAN
-----------------------------
Edmund J. Gorman
Senior Vice President
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EXHIBIT 2.05A
FORM OF REVOLVING CREDIT NOTE
$8,000,000.00 June 30, 1995
FOR VALUE RECEIVED, the undersigned, AMERICAN ECOLOGY
CORPORATION, a Delaware corporation (the "Company"), HEREBY PROMISES TO PAY to
the order of TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national banking
association (the "Bank"), EIGHT MILLION and No/100 DOLLARS ($8,000,000.00) or
so much thereof as may be advanced and outstanding on the Revolving Credit Note
Maturity Date as defined in that certain Second Amended and Restated Credit
Agreement dated effective as of even date herewith between the Company, certain
of its subsidiaries and the Bank (the "Credit Agreement"). The terms defined
therein and not otherwise defined herein being used herein as therein defined.
The Company promises to pay interest on the unpaid principal
amount of this Note from the date hereof until such principal amount is paid in
full, at such interest rates as are specified in the Credit Agreement. Both
principal and interest are payable in same day funds in lawful money of the
United States of America to the Bank at 712 Main Street, Houston, Texas, or at
such other place as the Bank shall designate in writing to the Company.
This Note is the Revolving Credit Note referred to in, and is
entitled to the benefits of, the Credit Agreement. The obligations of the
Company hereunder are guaranteed by the the Guaranty and are secured by the
Security Agreement. The Credit Agreement, among other things, (a) provides for
the making of the Revolving Credit Loan by the Bank to the Company from time to
time, and (b) contains provisions for acceleration of the maturity hereof upon
the happening of certain stated events, for prepayments on account of principal
hereof prior to the maturity hereof upon the terms and conditions therein
specified, and for limitations on the amount of interest paid such that no
provision of the Credit Agreement or this Note shall require the payment or
permit the collection of interest in excess of the Highest Lawful Rate.
The Company and any and all endorsers, guarantors and sureties
severally waive grace, demand, presentment for payment, notice of dishonor or
default, acceleration or or intent to accelerate, protest and notice of protest
and diligence in collecting and bringing of suit against any party hereto, and
agree to all renewals, extensions or partial payments hereon and to any release
or substitution of security herefor, in whole or in part, with or without
notice, before or after maturity.
59
This Note is executed in partial renewal and rearrangement, but
not in extinguishment, of the indebtedness owing by the Company to the Bank
under that certain Revolving Credit Note of the Borrower dated December 1, 1994
in the principal amount of $5,000,000.00 payable to the order of the Bank and
that certain Term Note of the Borrower dated December 1, 1994 in the principal
amount of $30,000,000.00 payable to the order of the Bank.
THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
AMERICAN ECOLOGY CORPORATION
By:
-------------------------------------
Edmund J. Gorman
President and Chief Operating Officer
60
EXHIBIT 2.05B
FORM OF TERM NOTE
$27,000,000.00 June 30, 1995
FOR VALUE RECEIVED, the undersigned, AMERICAN ECOLOGY
CORPORATION, a Delaware corporation (the "Company"), HEREBY PROMISES TO PAY to
the order of TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national banking
association (the "Bank"), TWENTY-SEVEN MILLION and No/100 DOLLARS
($27,000,000.00) at the times and in the amounts set forth in that certain
Second Amended and Restated Credit Agreement dated effective as of even date
herewith between the Company, certain of its subsidiaries and the Bank (the
"Credit Agreement"). The terms defined therein and not otherwise defined
herein being used herein as therein defined. Any accrued unpaid interest and
all unpaid principal shall be due and payable on the Term Note Maturity Date.
The Company promises to pay interest on the unpaid principal
amount of this Note from the date hereof until such principal amount is paid in
full, at such interest rates as are specified in the Credit Agreement. Both
principal and interest are payable in same day funds in lawful money of the
United States of America to the Bank at 712 Main Street, Houston, Texas, or at
such other place as the Bank shall designate in writing to the Company.
This Note is the Term Note referred to in, and is entitled to
the benefits of, the Credit Agreement. The obligations of the Company
hereunder are guaranteed by the the Guaranty and are secured by the Security
Agreement. The Credit Agreement, among other things, (a) provides for the
making of the Term Loan by the Bank to the Company from time to time, and (b)
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events, for prepayments on account of principal hereof prior
to the maturity hereof upon the terms and conditions therein specified, and for
limitations on the amount of interest paid such that no provision of the Credit
Agreement or this Note shall require the payment or permit the collection of
interest in excess of the Highest Lawful Rate.
The Company and any and all endorsers, guarantors and sureties
severally waive grace, demand, presentment for payment, notice of dishonor or
default, acceleration or or intent to accelerate, protest and notice of protest
and diligence in collecting and bringing of suit against any party hereto, and
agree to all renewals, extensions or partial payments hereon and to any release
or substitution of security herefor, in whole or in part, with or without
notice, before or after maturity.
This Note is executed in partial renewal and rearrangement, but
not in extinguishment, of the indebtedness owing by the Company to the Bank
under that certain Term Note of the Borrower
61
dated December 1, 1994 in the principal amount of $30,000,000.00 payable to the
orderof the Bank and that certain Revolving Credit Note of the Borrower dated
December 1, 1994 in the principal amount of $5,000,000.00 payable to the order
of the Bank.
THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
AMERICAN ECOLOGY CORPORATION
By:
-------------------------------------
Edmund J. Gorman
President and Chief Operating Officer
62
EXHIBIT 2.05C
FORM OF FEE CAPITALIZATION NOTE
$2,000,000.00 June 30, 1995
FOR VALUE RECEIVED, the undersigned, AMERICAN ECOLOGY
CORPORATION, a Delaware corporation ("Maker"), promises to pay to the order
of TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national banking association
("Payee"), at 712 Main Street, Houston, Texas 77002, or such other place as the
Payee may designate from time to time in writing, in lawful money of the United
States of America, the principal sum of TWO MILLION AND NO/100 DOLLARS
($2,000,000.00), together with interest on said principal, or so much thereof
as may be from time to time outstanding, at a rate per annum equal to the
lesser of: (i) the Prime Rate plus one percent per annum and (ii) the maximum,
non-usurious rate of interest (the "Highest Lawful Rate") permitted by the
applicable laws of the State of Texas or the United States of America,
whichever shall permit the higher lawful rate and as to which Maker could not
successfully assert a claim or defense of usury, and to the extent that the
Highest Lawful Rate is determined by reference to the laws of the State of
Texas, the Highest Lawful Rate shall be the indicated (weekly) rate ceiling (as
defined and described in Texas Revised Civil Statutes, Article 5069-1.04, as
amended) at the applicable time in effect. Upon the occurrence of a Default
under the Credit Agreement (hereinafter defined), interest on the outstanding
principal balance of this Note shall accure at the Highest Lawful Rate. The
"Prime Rate" means, for any day, a fluctuating rate per annum as shall be in
effect from time to time, which rate per annum shall at all times be equal to
the prime rate most recently determined by Payee and thereafter entered in the
minutes of Payee's Loan and Discount Committee, automatically fluctuating
upward and downward with and at the times specified in each such determination
without notice to Makers or any other person, which prime rate may not
necessarily represent the lowest or best rate actually charged to a customer.
As of the date hereof, the outstanding principal balance owing under this Note
is ONE MILLION AND NO/100 DOLLARS ($1,000,000.00); provided, such outstanding
principal balance is subject to increase pursuant to the terms of the Credit
Agreement (hereinafter defined).
This Note shall be payable as follows: Interest due hereunder
shall be payable monthly as it accrues on the 1st day of each month. All
principal due hereunder shall be due and payable on the Maturity Date, as
defined in that one certain Credit Agreement of even date herewith between
Maker, as borrower, and the Payee, as Bank, concerning the extension of certain
loans by Payee to Maker (the "Credit Agreement"); provided, the Payee may, at
any time in its sole and absolute discretion, in lieu of accepting payment in
cash, require a principal payment or prepayment hereunder to be made in the
common stock of the Company (the "Common Stock") currently trading
Initial for ID
------
63
on the Nasdaq National Market, in the amount of the number of shares of Common
Stock equal to the quotient of the outstanding principal balance to be paid or
prepaid under this Note on the such payment date divided by $4.75. In the
event Maker recapitalizes, reclassified its capital stock, merges with or into
or consolidates with any other corporation, sells or transfers substantially
all of its assets or otherwise changes its capital structure in such a way that
the Common Stock is converted into the right to receive stock, securities or
other property, then Payee may, in its sole and absolute discretion, require
payment hereof to be made in such stock, securities or other property that
Payee would have been entitled to receive had Payee owned the number of shares
of Common Stock equal to the quotient of the outstanding principal balance
owing under this Note immediately prior to such recapitalization,
reclassification, merger, consolidation, sale, transfer or other change in
capital structure divided by $4.75. Notwithstanding anything contained in the
Credit Agreement, this Note may not be prepaid without the express written
consent of Payee.
This Note is the Fee Capitalization Note referred to in, and is
entitled to the benefits of, the Credit Agreement. This Note evidences the
obligations of the Company in respect of: (i) the unpaid fees due and owing
under Sections 4.01(a) and (c) of the Credit Agreement; (ii) the option
exercised by the Company to reduce the interest rate owing on the Term Loan,
which amount is also unpaid; and (iii) any accrued, unpaid interest due under
the terms of the Credit Agreement but capitalized as provided therein and
included as principal hereunder. The obligations of the Company hereunder are
guaranteed by the guaranty agreements contained in the Credit Agreement. The
Credit Agreement, among other things (i) provides for the making of Loans by
the Bank to the Company, certain of the Indebtedness of the Company to the Bank
being evidenced by this Note, (ii) contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events, (iii) describes
the collateral securing the Obligations thereunder and (iv) contains provisions
for the limitation on the amount of interest to be paid such that no term of
the Credit Agreement or this Note shall require the payment or permit the
collection of interest in excess of the Highest Lawful Rate.
Maker and Payee agree that: (i) this is not a separate lending
transaction, but rather that this Note evidences obligations of the Company as
described in the Credit Agreement and constitutes consideration for the waiver
by Payee of the requirements contained therein and (ii) no funds have been
advanced by Payee under this Fee Capitalization Note but that it is an element
of the Obligations of the Company under the Credit Agreement and documentary
evidence of the Company's duty to make payment in respect of its Obligations
thereunder.
The Company and any and all endorsers, guarantors and sureties
severally waive grace, demand, presentment for payment, notice of dishonor or
default or intent to accelerate, protest and notice of protest and diligence in
collecting and bringing of suit against any party hereto, and agree to all
renewals, extensions or partial payments hereon and to any release or
substitution of security herefor, in whole or in part, with or without notice,
before or after maturity.
Initial for ID
------
64
This Note shall be governed by, and construed and interpreted in
accordance with, the laws of the State of Texas and any applicable laws of the
United States of America.
EXECUTED to be effective as of the day and year written above.
AMERICAN ECOLOGY CORPORATION
By:
-------------------------------------
Edmund J. Gorman
President and Chief Operating Officer
Initial for ID
------
65
EXHIBIT 7.01(c)
AMERICAN ECOLOGY CORPORATION
BORROWING BASE CERTIFICATE
As of the end of , 199 :
--------------------------- -----
(1) (a) Total Receivables $
---------------
(b) Total Eligible Receivables $
---------------
(2) Borrowing Base $
(Line (1)(b) multiplied by .80 - ---------------
Never to exceed $8,000,000.00)
(3) Total Loans Outstanding $
---------------
(4) Amount Available $
(Line 2 minus Line 4 ---------------
never to exceed $8,000,000.00)
The undersigned has prepared this Borrowing Base Certificate,
responsive to the Second Amended and Restated Credit Agreement dated effective
as of June 30, 1995 between the above named company and Texas Commerce Bank
National Association and certain other parties, from the books and records of
the company as of the date set forth above.
AMERICAN ECOLOGY CORPORATION
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
66
EXHIBIT 7.01(e)
FORM OF
NO DEFAULT CERTIFICATE
The undersigned, on behalf of the Company, hereby certifies and
represents to the Bank that no Default or Event of Default has occurred under
the Second Amended and Restated Credit Agreement (the "Credit Agreement") since
the effective date thereof or the date of the delivery of the most recent of
these Certificates, whichever is later, except as follows:
The undersigned further certifies and represents to the Bank
that the Company has no Subsidiaries that are not Guarantors of the
Indebtedness of the Company to the Bank described in the Credit Agreement
except for those Guarantors listed in Section 6.16 thereof and
.
- -----------------
This certificate is delivered to you pursuant to Section 7.01(e)
of the Credit Agreement with the understanding that you are relying hereon in
making Loans thereunder.
Very truly yours,
AMERICAN ECOLOGY CORPORATION
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
67
Schedule 6.06
None except as disclosed in the Company's Form 10-Q filed with the
Securities and Exchange Commission for the quarterly period ended September 30,
1995.
68
Schedule 6.13
None except as disclosed in the Company's Form 10-Q filed with the
Securities and Exchange Commission for the quarterly period ended September 30,
1995.
69
Schedule 8.03
None.
70
Schedule 8.04
None.