1
SECURITIES AND EXCHANGE COMMISSION
FORM 8-K
EXHIBIT 99.8
SETTLEMENT AGREEMENT
This Settlement Agreement ("Agreement") is made and entered into this
12th day of November, 1998 by and between American Ecology Corporation, a
Delaware corporation ("Company") and each of its subsidiary companies as
identified herein (all of which are, where the context so requires, referred to
as "Subsidiaries") and Chase Bank of Texas, National Association ("Bank"), a
national banking association with its principal place of business in Houston,
Texas (f/k/a Texas Commerce Bank, National Association).
RECITALS:
WHEREAS, effective as of October 31, 1996, the Company, each of the
Subsidiaries as Guarantors, and the Bank entered into that certain agreement
known as the "Third Amended And Restated Credit Agreement" (hereinafter referred
to as the "Third Amended Credit Agreement");
WHEREAS, on August 21, 1998 the Company executed and delivered to the
Bank the Demand Promissory Note ("Demand Note") in the principal amount of
$160,000.00;
WHEREAS, on August 14, 1998 the Company, the Subsidiaries and the Bank
agreed to settle all existing obligations of the Company and the Subsidiaries to
the Bank, terminating the Third Amended Credit Agreement, in accordance with the
terms, covenants and conditions contained herein;
WHEREAS, the parties wish to execute this Agreement for the purpose of
evidencing the terms, covenants and conditions of this Agreement.
NOW THEREFORE, in consideration of the covenants, conditions and other
provisions hereof, the parties agree as follows:
1. DEFINITIONS
1.1 Definitions. Unless the context in which a defined term is used
clearly requires otherwise, as used in this Agreement, the following terms shall
have the following meanings:
"Assignment Agreement" means that certain Assignment entered into as of
August 21, 1998 by and between the Company and the Bank, a copy of which is
attached hereto as EXHIBIT 6.
"Agreement" has the meaning specified in the introduction to this
Agreement.
"Bank" shall mean Chase Bank of Texas, National Association, a
subsidiary of Chase Manhattan Corporation.
"Business Trading Day" means any day (other than a day which is a
Saturday, Sunday or legal holiday) on which the NASDAQ Stock Market, Inc. is
open for trading in securities listed thereon.
5
2
"Cash Management and Lock Box Agreement" means that certain Cash
Management and Lock Box Agreement between the Bank and the Company dated
December 22, 1992, governing the Company's account number 00100354902 at Chase.
"Company" means American Ecology Corporation, a Delaware corporation.
"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.
"Demand Note" has the meaning set forth in the Recitals of this
Agreement.
"Events of Default" has the meaning specified in Section 10.01 of the
Third Amended Credit Agreement.
"Fees" means all amounts payable pursuant to Section 4.01 of the Third
Amended Credit Agreement.
"Guaranteed Obligations" has the meaning specified in Section 9.01 of
the Third Amended Credit Agreement.
"Guarantors" means the Company's subsidiaries which guaranteed the
Company's Obligations under the Third Amended Credit Agreement.
"Guaranty" means the guaranty of the Guarantors contained in Article IX
of the Third Amended Credit Agreement and includes any additional Guaranty.
"Indebtedness" means, without duplication (a) all indebtedness of the
Company and its Subsidiaries to the Bank for borrowed money, accrued and unpaid
interest, and fees imposed by contract in respect of the borrowed money; (b) all
guaranties or other contingent obligations of any kind of the Company and its
Subsidiaries in respect of the Indebtedness referred to in clause (a), above;
and (c) all Indebtedness of the type referred to in clause (a) or (b) 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 the Company and its Subsidiaries, even though they have not assumed or
become liable for the payment of such Indebtedness
"Letter of Credit" has the meaning provided in Section 3.01 of the
Third Amended Credit Agreement.
"Letter of Credit Collateral" means cash, securities issued by or
directly and fully guaranteed by the United States, deposits in the Bank or
other securities, which secure the Company's obligation to the Bank in the event
a Letter of Credit is drawn upon by the beneficiary thereof.
"Letter of Credit Termination Date" means the date that a Letter of
Credit expires by its terms.
"Lien" means, when used with respect to the Company and its
Subsidiaries, 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,
6
3
for the purpose, or having the effect, of protecting the Bank against loss and
of securing the payment or performance of the Obligations under the Third
Amended Credit Agreement.
"Loans" has the meaning provided in Section 2.03 of the Third Amended
Credit Agreement.
"Loan Documents" means the Third Amended Credit Agreement (including
the Guaranty), the Notes, the Letter of Credit, the Security Agreements, the
Pledge Agreements, the Mortgage and all other security documents granting Liens
in the Company's property, equipment, fixtures, cash and intangible assets,
including, without limitation, the Letter of Credit Collateral and all
amendments, waivers, agreements and other documents modifying, amending or
supplementing the Loan Documents and, to the extent the context requires, the
Original Agreement, the Prior Agreements and related documents.
"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 perform its obligations 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.
"Mortgage" means any Mortgage or Deed of Trust executed in connection
with the Third Amended Credit Agreement, or supplement to a prior Mortgage and
deed of trust executed by the Company or any of its Subsidiaries and granting a
Lien by the Company for the benefit of the Bank on certain real property owned
by the Company or any of its Subsidiaries as security for the Obligations.
"Notes" means the Revolving Credit Note, the Term Note and the Demand
Note.
"Obligations" means all the obligations of the Company and its
Subsidiaries under the Loan Documents, the Original Agreement, or the Prior
Agreements or any documents executed in connection therewith, whether for
principal, unpaid drawings on Letters of Credit, interest, fees, expenses,
indemnification or otherwise.
"Original Agreement" has the meaning set forth in the Recitals of the
Third Amended Credit Agreement.
"Pledge Agreements" mean those certain Amended and Restated Pledge
Agreements dated October 31, 1996 executed by the Company, American Ecology
Services Corporation and US Ecology, Inc., respectively, as security for the
Obligations, pledging to the Bank the stock owned by each of the three
above-referenced corporations, issued by their respective Subsidiaries
(including ALEX).
"Prior Agreements" has the meaning set forth in the Recitals of the
Third Amended Credit Agreement.
"Release Agreement" means the respective Release Agreements attached
hereto as EXHIBIT 3a AND 3b.
"Revolving Credit Note" has the meaning set forth in Section 2.05(a) of
the Third Amended Credit Agreement.
7
4
"Security Agreements" mean those certain supplemental 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.
"Subrogation Agreement" means that certain Subrogation and Contribution
Agreement among the Company and the Guarantors entered into in connection with
the Third Amended Credit Agreement.
"Subsidiary" means and includes, the following corporations, more than
50% of whose stock voting control of which is owned directly or indirectly by
the Company: American Ecology Environmental Services Corporation; American
Ecology International, Inc.; American Ecology Management Corporation; American
Ecology Recycle Center, Inc.; American Ecology Services Corporation; American
Liability and Excess Insurance Company ("ALEX"); Texas Ecologists, Inc.;
Transtec Environmental, Inc.; US Ecology, Inc.; WPI Transportation, Inc.; and
WPI Waste Carriers, Inc.; Collectively in this Agreement, the Company's
subsidiaries are referred to as "Subsidiaries".
"Term Note" has the meaning set forth in Section 2.05(b) of the Third
Amended Credit Agreement.
"Third Amended Credit Agreement" means that certain Third Amended and
Restated Credit Agreement executed December 31, 1996, but dated effective as of
October 31, 1996, by, between and among American Ecology Corporation and its
Subsidiaries and Texas Commerce Bank National Association, now known as Chase
Bank of Texas, National Association, and includes the Schedules and Exhibits
thereto, and any and all subsequent written amendments, modifications, waivers,
releases, agreements and other documents modifying, amending or supplementing
the Third Amended Credit Agreement.
"Ward Valley Interest Agreement" means the Ward Valley Interest
Agreement attached hereto as EXHIBIT 2.
"Ward Valley Project" means the low-level radioactive waste disposal
facility to be constructed and operated by US Ecology, Inc., a Subsidiary of the
Company, in accordance with the license issued by the California Department of
Health Services and the leasehold interest of US Ecology which becomes effective
when the transfer to California from the U.S. Department of Interior of the land
located in Ward Valley, California takes place and includes, without limitation,
the Ward Valley Facility and the Ward Valley Site, as each are defined in the
Ward Valley Interest Agreement, and the interests conveyed to the Bank
thereunder.
"Warrant Agreement" means the Warrant Agreement attached hereto as
EXHIBIT 1.
"Warrant" has the meaning specified in the Warrant Agreement.
8
5
2. PAYMENT OF LOANS
The Bank and the Company agreed on August 14, 1998 to the general terms
upon which the Company will settle its existing Obligations to the Bank, subject
to the Bank's acceptance of a business plan prepared by the Company and
detailing how it will survive for the next two (2) years. More specifically, the
Bank and the Company have agreed to the following:
2.1 Payment. At the closing, as provided in Section 5 hereof, the
Company shall pay, in readily available U.S. funds, the sum of $4,000,000.00 to
the Bank, or as directed in writing by the Bank. As of August 21, 1998 the
Demand Note has been funded by the Bank and the amount of such proceeds,
together with interest thereon, for the period of time they are outstanding,
shall be added to the $4,000,000.00 payment due at closing. The payment provided
for in this Section shall reduce the cumulative outstanding balance of the Notes
2.2 Ward Valley Project Interest. The Company's Subsidiary, US Ecology,
Inc., shall sell, assign and convey to the Bank an interest in and to the Ward
Valley Project to the maximum value of $29,600,000.00, which sum shall further
reduce the collective outstanding balance of the Notes. The $29,600,000.00 shall
be reduced by a maximum amount of $1,000,000.00 (50% of $2.0 million) of legal
fees and costs incurred by the Company and US Ecology in pursuing litigation
involving the Ward Valley Project, after November 13, 1998. The interest in the
Ward Valley Project shall be governed solely by the Ward Valley Interest
Agreement, attached hereto as EXHIBIT 2.
2.3 Warrants. In satisfaction of the remaining collective outstanding
balance of the Notes, the Company shall grant to the Bank a Warrant to purchase
up to 1,349,843 shares of the Company's common stock at any time beginning on
the date of closing up to and including June 30, 2010 at a price of $1.50 per
share provided that the Warrant shall expire and thereafter be of no force or
effect thirty (30) days from the date the Bank has received $35.0 million
resulting from the payments provided for herein and any partial exercise or sale
of the Warrant. The Warrant provided for in this Agreement replaces the October
31, 1996 Warrant, which is canceled. The Warrant shall be subject to the
anti-dilution provisions contained therein.
2.4 Mutual Releases. The Company and the Bank shall enter into release
agreements for the purpose of releasing each other and their respective
Subsidiaries and affiliates, officers, directors, employees and attorneys, from
all liability of any kind, whether existing, accrued or which might arise from
or be incurred in respect of the Third Amended Credit Agreement, the Loan
Documents, the Indebtedness of the Company to the Bank, and any action or
inaction taken by either party in regard to such documents and the underlying
transactions prior to the closing. The releases shall not extend to or operate
to excuse performance of any obligations undertaken in accordance with this
Agreement, the Warrant Agreement, the Ward Valley Interest Agreement, the
Assignment Agreement and Section 11.05(a) of the Third Amended Credit Agreement.
9
6
2.5 Business Plan. The Company shall prepare and provide the Bank with
a 2-year forward looking business plan based on reasonable assumptions and
future projections of the Company's operating results and periodic capital
structure. The assumptions used and basis for financial projections shall be
described with sufficient clarity to enable the Bank to reach a reasonable
conclusion that the Company has a reasonable plan and chance to survive for the
period covered by the business plan and to accept the plan. The Bank agrees it
will not arbitrarily or capriciously reject the plan and that it will specify in
writing the part or parts of the plan which caused the Bank to conclude the
Company cannot survive for the period covered by the plan. Thereafter, the
Company may submit additional or clarifying information to the Bank in order for
the Bank to reconsider its decision and accept the plan. If the Bank, upon
reconsideration, fails or refuses to accept the plan, then all of the
obligations of the Company and the Bank undertaken by this Agreement, and all
exhibits hereto, including, without limitation, the Release Agreement, shall no
longer be binding .
2.6 Release of Liens. The Bank shall, at the Company's expense, prepare
such documentation as may be necessary or convenient to release all Liens and
encumbrances held by the Bank with regard to the Company's property, equipment,
fixtures, cash, furnishings and intangible property; it being the intent of the
parties that upon consummation of the transactions provided for herein, the Bank
shall have no Lien, encumbrance or other interest of any kind in any of the
property of the Company or its Subsidiaries, except as is provided in EXHIBITS 1
AND 2 and Section 2.12 of this Agreement.
2.7 Extinguishment of Indebtedness. Upon the payment as provided for in
Section 2.1 hereof, the granting of an interest in the Ward Valley Project as
provided for in Section 2.2 hereof, and the granting of the Warrant as provided
for in Section 2.3 hereof, any and all Indebtedness of the Company and each of
its Subsidiaries shall be deemed to have been fully paid, discharged,
extinguished or forgiven, as the case may be, with the effect that the Bank
shall have no claim of any sort for money lent or interest thereon, against the
Company or any of its Subsidiaries, whether individually or collectively, except
as provided in Section 2.12 hereof.
2.8 Termination of Loan Documents. Upon the Company's performance of
its obligations under Sections 2.1, 2.2, 2.3, 2.4 and 2.5 hereof, the Loan
Documents, except the modified deed of trust provided for in Section 2.12 and
3.2 (d) hereof, shall be deemed fully performed and any and all Obligations of
the Company and its Subsidiaries, whether as Guarantors thereof or otherwise,
shall be fully performed and discharged. The Loan Documents shall be of no
further force or effect for any purpose whatever. At the closing, the Bank shall
return all collateral held by the Bank in securing the Indebtedness, including,
without limitation, all cash, securities (except as provided in Section 2.9
hereof), and the original stock certificates issued to the Company by the direct
and indirect Subsidiaries of the Company.
2.9 Letter of Credit. On or about October 31, 1998, the Bank issued for
the benefit of Zurich Insurance Company, its Letter of Credit No. I-474394 in
the face amount of $674,575.00 (the "Letter of Credit"). The Letter of Credit
expires October 31, 1999 and is secured by cash or other securities in the
10
7
approximate amount of the face amount of the Letter of Credit. The Bank agrees
that it shall immediately wire transfer, at the direction of the Company, or
otherwise deliver to the Company or its designee, the cash or securities held as
the Letter of Credit Collateral, together with any earnings or interest thereon
when the original Letter of Credit is returned (or certified lost) to the Bank
by the beneficiary, accompanied by a letter from the beneficiary requesting its
cancellation, regardless of whether the closing has yet occurred.
2.10 Transition to New Bank. The Company and the Bank understand and
agree that one of the purposes of this Agreement is to terminate all
relationships between the Company, its Subsidiaries and the Bank, except the
continuing relationship provided for in EXHIBITS 1 AND 2 and Section 2.9 hereof.
The Company and the Bank understand and agree that the Company shall close all
of its accounts identified on EXHIBIT 5 attached hereto and incorporated herein
by reference, in an orderly manner; provided, however that the Bank and the
Company agree to maintain its lock box account in accordance with the Cash
Management and Lock Box Agreement, for a reasonable transition period of time so
that the Company may direct its customers to forward invoice payments to its new
bank. Upon completion of the transition period, the Cash Management and Lock Box
Agreement shall be terminated by the parties thereto. The Company and the Bank
agree to cooperate with one another and the Company's new bank during the
transition from the Bank to the Company's new bank. Except in the event of its
gross negligence or willful misconduct, the Bank shall not be liable for
operation of the Cash Management and Lock Box Agreement or other Company
accounts during the transition period.
2.11 Tax Reporting. Although the Company believes the total
consideration paid in accordance with this Agreement exceeds the total
outstanding balance of the Notes, and the Bank is uncertain as to the total
value, accordingly, the Bank may, if it so chooses, file a Form 1099-C report
with the Internal Revenue Service with the following language inserted:
"The total principal owed as of November 13, 1998 is $31,494,330.97. In
exchange for a release of liability for this debt , Chase Bank received
$4,163,682.19 in cash, warrants equal to 10.0% of American Ecology
Corporation's (`AEC') outstanding common stock, and an interest in
certain rights to receive payments from the Ward Valley, California
low-level radioactive waste disposal facility being developed by an AEC
subsidiary. AEC values the total consideration as exceeding the
principal amount of the debt discharged. Chase Bank is unable to
determine the value of the non-cash payments."
2.12 Assignment Agreement and Collateral. To provide reasonable
assurance to the Bank that it can honor its endorsement liability as provided in
the Assignment Agreement, the Company agrees to grant the Bank a security
interest in that certain real property of the Company located near Winona, Texas
and the Company shall repurchase twenty-five percent (25%) of the repurchase
obligation by paying the Bank $8,000 monthly for twenty-three months beginning
December 1, 1998 and ending October 1, 2000. Failure to make such payments shall
constitute a default hereunder and shall allow the Bank to take all
11
8
remedies available to it at law or in equity. With the Bank's consent, which
shall not be unreasonably withheld, the Company may from time to time substitute
other collateral for that at the Winona, Texas location. The Company shall have
the right at any time to repurchase at face value the entire balance of the
interest assigned under the Assignment Agreement and not already repurchased as
provided for in this Section 2.12. Interest paid by the Internal Revenue Service
with respect to the income tax refund claim previously assigned to the Bank
under the Assignment Agreement shall be distributed to the Bank and the Company
in accordance with their respective ownership of the income tax refund claim at
the time the interest accrued to the claim.
3. CONDITIONS PRECEDENT
3.1 Conditions to Company's Obligations. The obligations of the Company
and its Subsidiaries under this Agreement are subject to the following
conditions:
(a) Satisfaction of Covenants. Prior to the closing, the Bank shall
have fully performed, satisfied and fulfilled each of the obligations
imposed upon the Bank pursuant to the terms of this Agreement;
(b) Approval of the Company's Directors. The Company and each of its
subsidiaries shall have obtained the approval of a majority of its
directors to enter into and perform this Agreement;
(c) Financing. The Company shall have obtained satisfactory financing
to perform its obligations pursuant to this Agreement;
(d) Default Waiver. The Bank shall have waived any Default or Event of
Default occurring between August 14, 1998 and the closing date, if not
previously waived, provided that such Default or Event of Default has
not caused or resulted in a Material Adverse Effect on the Company and
its Subsidiaries when taken together as a whole.
(e) Letter of Credit Collateral. The Bank shall have transferred, as
the Company so directed, the Letter of Credit collateral securing the
Letter of Credit referred to in Section 2.9 hereof.
(f) Business Plan. The Bank shall have accepted the Company's future
business plan, as provided in Section 2.5 hereof.
3.2 Conditions to Bank's Obligations. The obligations of the Bank under
this Agreement are subject to the following conditions:
(a) Satisfaction of Covenants. The Company and its
Subsidiaries shall have satisfied and fulfilled each of the obligations
imposed upon them pursuant to the terms of this Agreement.
(b) Business Plan. The Company shall have prepared and
provided to the Bank its future business plan which shall have been
accepted by the Bank, as described in Section 2.5 hereof.
(c) Intentionally Left Blank.
12
9
(d) Deed of Trust Modification. The Company shall have
delivered to the Bank a modification of the deed of trust encumbering
the Company's Smith County, Texas real property, in accordance with
Section 2.12 hereof.
4. REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Company. In order to induce
the Bank to enter into this Agreement and to perform its Obligations hereunder,
the Company, and each of its Subsidiaries to the extent applicable and relevant,
make the following Representations and Warranties to the Bank:
(a) Organization and Qualification. The Company and each of
its Subsidiaries is a corporation duly organized, validly existing
under the laws of the state of its incorporation, has the corporate
power and authority to own its property and to carry on its business as
now conducted. Each of the Company's directly owned Subsidiaries are
wholly owned subsidiaries and each indirect Subsidiary is wholly owned
by a direct Subsidiary of the Company.
(b) US Ecology License. US Ecology, Inc., a direct Subsidiary
of the Company, is the licensee of the State of California which status
affords it the sole right to develop and operate a low-level
radioactive waste disposal site at Ward Valley, California in
accordance with the Low Level Radioactive Waste Policy Act, as amended.
(c) Ward Valley Litigation. US Ecology is a plaintiff in two
pending court cases concerning the Ward Valley Project. The cases are
styled as: (i) US Ecology, Inc. v United States of America, United
States Court of Federal Claims, Case No. 97-65C; and (ii) US Ecology,
Inc. v U.S. Department of the Interior, et al, U.S. District Court,
District of Columbia, Case No. 1:97CV00365, each of which is more
particularly described on EXHIBIT 4 attached hereto and incorporated
herein.
(d) Authorization and Validity. The Company and each of its
Subsidiaries executing this Agreement have all requisite corporate
power and authority to execute, deliver this Agreement and to perform
their respective obligations hereunder, and under the Warrant, the Ward
Valley Interest Agreement, and the Release, and all such actions have
been duly authorized by all necessary proceedings. When it has been
duly executed and delivered by the Company and its Subsidiaries to the
Bank, this Agreement will constitute a valid and legally binding
agreement of the Company and its Subsidiaries enforceable in accordance
with its terms. The Warrant, the Ward Valley Interest Agreement, and
the Release will, upon the execution and delivery thereof, constitute
valid and legally binding obligations of the Company and its
Subsidiaries enforceable in accordance with the respective terms
thereof. The enforceability of this Agreement, the Warrant and the
Release may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws relating to or
affecting the enforcement of contract rights generally, and by general
principles of equity.
13
10
(e) 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 the Company or its Subsidiaries
of this Agreement, the Warrant, the Ward Valley Interest Agreement, and
the Release.
4.2 Representations and Warranties of the Bank. In order to induce the
Company to enter into this Agreement and to perform its Obligations hereunder,
the Bank makes the following representations and warranties to the Company and,
to the extent applicable and relevant, to the Company's Subsidiaries:
(a) Organization and Qualification. The Bank is a national
banking association duly organized, validly existing and in good
standing under the laws of the United States, has the corporate power
and authority to carry on its business as now conducted and is duly
qualified to enter into and perform the obligations undertaken by this
Agreement.
(b) Authorization and Validity. The Bank has all requisite
corporate power and authority to execute, deliver this Agreement and
perform its obligations under this Agreement, the Ward Valley Interest
Agreement and the Release, and all such action has been duly authorized
by all necessary proceedings on its part. When it has been duly
executed and delivered by the Bank to the Company, this Agreement will
constitute a valid and legally binding agreement of the Bank,
enforceable in accordance with its terms. The Ward Valley Interest
Agreement and the Release will, when duly executed and delivered,
constitute valid and legally binding agreements of the Bank,
enforceable in accordance with the respective terms thereof. The
enforceability of this Agreement and the Release may be limited by
insolvency, receivership, fraudulent transfer or other similar laws
relating to or affecting the enforcement of claims against a national
banking association.
(c) Governmental Consent. No authorization, consent, approval,
charter, memorandum of understanding or other agreement with any state
or federal bank regulatory authority or order of any court or
governmental agency or instrumentality is necessary for the valid
execution, delivery or performance by the Bank of this Agreement, the
Ward Valley Interest Agreement and the Release.
(d) Extinguishment of Debt. Upon the performance by the
Company and US Ecology of their respective obligations undertaken in
Section 2.1, 2.2, 2.3, 2.4 and 2.5 of this Agreement, (i) except as
provided in subsection (ii) below, all Indebtedness of the Company and
its Subsidiaries to the Bank under the Notes, the Third Amended Credit
Agreement, all Loan Documents, all Prior Agreements and any amendments,
modifications, restatements, waivers, extensions or other agreements
related thereto, shall be fully paid, performed and discharged; and
(ii) upon the full and complete performance of this Agreement by the
Bank and the Company and its Subsidiaries, no contractual obligations
exist between the Bank and the Company and its Subsidiaries, except
14
11
those undertaken in accordance with the Warrant, the Ward Valley
Interest Agreement, the Releases (including the indemnity provisions in
favor of the Bank retained and referenced therein), the Assignment
Agreement, the Letter of Credit and related collateral provided for in
Section 2.9 hereof, the collateral documents provided for in Section
2.12 hereof, and those identified in Section 6.1 of this Agreement.
5. CLOSING
5.1 Date and Location. On or about November 13, 1998 a closing shall be
held at the offices of the Bank in Houston, Texas at such time as is convenient
for the Bank and the Company.
5.2 Extension. One time only, AEC shall have the right to unilaterally
extend the closing for a period not to exceed ten (10) days from November 13,
1998 upon letter notification to the Bank. Thereafter, any extension of the
closing date may only be made with the consent of both parties to this
Agreement. Any extension of the closing shall not serve to enlarge, modify or
amend the obligations of the parties under this Agreement, unless otherwise
provided in writing.
5.3 Company's Closing Obligations. At the closing, as provided for
above, the Company and its relevant Subsidiaries shall:
(a) pay to the Bank in U.S. Dollars the exact amount calculated in
accordance with Section 2.1 hereof;
(b) execute and deliver to the Bank the Warrant, attached hereto as
EXHIBIT 1;
(c) execute and deliver to the Bank the Ward Valley Interest Agreement,
attached hereto as EXHIBIT 2;
(d) execute and deliver to the Bank the Release Agreement, attached
hereto as EXHIBIT 3A; and
(e) provide the Bank with two (2) copies of its business plan.
5.4 Bank's Closing Obligations. At the closing, as provided for above,
the Bank shall:
(a) deliver each of the original signed Notes to the Company;
(b) execute and deliver releases suitable for recording or filing, as
the case may be, of (i) Deeds of Trust; (ii) security interests; (iii)
the Guaranty Agreements; (iv) the Pledge Agreements; and (v) all other
Liens of the Bank;
(c) deliver to the Company all original stock certificates held by the
Bank of the Company's Subsidiaries;
(d) deliver to the Company the original unexercised Warrant dated
October 31, 1996;
(e) execute and deliver to the Company the Ward Valley Interest
Agreement attached hereto as EXHIBIT 2;
(f) execute and deliver to the Company the Release Agreement attached
hereto as EXHIBIT 3b;
15
12
(g) execute and deliver to the Company a release from the Subrogation
Agreement; and
(h) wire transfer, as directed by the Company and its subsidiary,
American Liability and Excess Insurance Company, the $1,000,000.00 held
by the Bank in account number 295259, which serves as security for the
performance bond underwritten by American Liability and Excess
Insurance Company in favor of the Central Interstate Compact
Commission.
6. MISCELLANEOUS
The following provisions are an integral part of this Agreement:
6.1 Survival of Terms. Sections 2.6, 2.7, 2.8, 2.9, 2.10, 2.11, 2.12,
4.1(d), 4.1(e), 4.2(b) and 4.2(d) hereof, and all documents executed in
accordance with this Agreement, including without limitation, the Warrant, the
Ward Valley Interest Agreement and the Releases, shall survive the execution and
delivery hereof or thereof and the closing, and shall remain in full force and
effect thereafter.
6.2 Assignment. This Agreement may be assigned by a party only with the
prior written approval of the other party, which approval may not be
unreasonably withheld. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors or assigns, if any.
6.3 Entire Agreement. This Agreement together with the exhibits
attached hereto, constitutes the entire agreement of the parties. There are no
binding promises, terms or conditions other than those contained herein. This
Agreement shall supersede all previous communications, representations or
agreements, whether oral or written, between the parties.
6.4 Titles. Section titles or captions to this Agreement are for
convenience only and do not define, limit, augment, extend or describe the
content or scope of intent of this Agreement and shall not be deemed to be a
part hereof.
6.5 Gender. Whenever the context hereof shall so require, the singular
shall include the plural, the male gender shall include the female and neuter
genders, and vice versa.
6.6 Notices. Any notice required or permitted by this Agreement to be
given by a party to the other shall be deemed served, given and received when
personally delivered to an officer of such party, or in lieu of such personal
service or delivery, when deposited in the U.S. mail, registered or certified
mail, postage pre-paid, return receipt requested, and received, or three days
from the date of such mailing, whichever is earlier, addressed as follows:
Chase: Chase Bank of Texas, N.A. Telephone: (713) 216-5162
712 Main Street, 24TCB E-74 Facsimile: (713) 216-2092
Houston, Texas 77002
Attn.: Mr. Bruce A. Shilcutt
with a copy to: Thomas J. Perich, Esq. Telephone: (713) 220-4200
Andrews & Kurth L.L.P. Facsimile: (713) 220-4285
4200 Texas Commerce Tower
Houston, Texas 77002
16
13
The Company American Ecology Corporation Telephone: (208) 331-8400
or any 805 West Idaho Street, Suite 200 Facsimile: (208) 331-7900
Subsidiary: Boise, Idaho 83702
Attn.: Joseph J. Nagel, President
with a copy to: Legal Department Telephone: (208) 331-8400
805 West Idaho Street, Suite 200 Facsimile: (208) 331-7990
Boise, Idaho 83702
6.7 Counterparts. This Agreement may be executed in any number of
counterparts, and once so executed by all parties hereto each such counterpart
hereof shall be deemed to be an original instrument, but all such counterparts
together shall constitute but one Agreement.
6.8 Further Agreements. The parties to this Agreement shall execute and
deliver all documents, provide all information which is not confidential, take
or forebear from all such action as my be necessary, convenient or appropriate
to fully perform the intent of the transactions expressed by this Agreement.
6.9 Choice of Law. This Agreement shall be construed in accordance with
the laws of the State of New York, provided, in applying the laws of New York,
its conflict of law rules shall not be employed to apply the substantive or
procedural laws or equitable principles of any other state. Venue for any action
brought hereunder by either party shall lie exclusively in the federal district
courts for the Southern District of New York, or only in the event the diversity
or jurisdictional limits thereof are not met, in the courts of the State of New
York in the borough of Manhattan, City of New York.
6.10 Time of Essence. All times provided for in this Agreement, or in
any other document executed in accordance herewith, requiring the performance of
any act will be strictly construed, time being of the essence.
6.11 Attorneys' Fees. In the event it becomes necessary for either
party to commence any action or suit to enforce its rights pursuant to this
Agreement, the prevailing party in such litigation shall be entitled to an award
of reasonable attorneys' fees, including without limitation, fees and costs
allocable to in-house counsel, incurred in relation thereto.
6.12 Fees and Commissions. Each party agrees to pay and hold the other
party harmless from any commissions or fees of any nature, including, but not
limited to, attorneys' fees incurred in negotiation and preparation of this
Agreement, by any person or entity employed or allegedly employed by such party.
6.13 Severability. In the event that any part, provision,
representation, covenant, condition or warranty contained in this Agreement is
prohibited by law or is held to be void or unenforceable, such provision shall
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof.
6.14 Construction. Both the Bank and the Company have been represented
by counsel in the course of the negotiations for and the preparation of this
Agreement; accordingly, in all cases, the language
17
14
of this Agreement will be construed simply, according to its fair meaning, and
not strictly for or against either party.
6.15 Modification and Waiver. The waiver, compromise, or cure of any
breach or default hereunder by either party hereto must be done in writing,
signed by the parties hereto, and shall not be considered a waiver of any other
similar or dissimilar breach or default. Any modification to any provision
herein contained or any amendment to this Agreement shall be effective only if
such modification or amendment is in writing and signed by each of the parties
hereto.
6.16 Laws and Regulations. This Agreement and all acts of the parties
conducted under or in connection with this Agreement, are subject to all valid
and applicable federal, state and local laws and ordinances and all applicable
rules, orders and regulations of any duly constituted federal, state or local
regulatory body or authority having jurisdiction, and all acts of the parties
shall be conducted in conformity therewith.
6.17 Authority. Each party executing this Agreement on behalf of his
respective association or corporation, as the case may be, represents and
warrants that he is duly authorized to execute and deliver this Agreement on
behalf of said association or corporation in accordance with a duly adopted
resolution of the board of directors of said association or corporation, or in
accordance with the authority granted him by the bylaws or governing documents
of said association or corporation, as the case may be, and that this Agreement
is binding upon such association or corporation and all its partners in
accordance with its terms.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the date first above
written.
COMPANY: AMERICAN ECOLOGY CORPORATION
By: /s/ Jack K. Lemley
----------------------------------------
Jack K. Lemley
Chief Executive Officer
SUBSIDIARIES: AMERICAN ECOLOGY ENVIRONMENTAL SERVICES
CORPORATION
AMERICAN ECOLOGY INTERNATIONAL, INC.
AMERICAN ECOLOGY MANAGEMENT CORPORATION
AMERICAN ECOLOGY RECYCLE CENTER, INC.
AMERICAN ECOLOGY SERVICES CORPORATION
AMERICAN LIABILITY AND EXCESS INSURANCE
COMPANY
18
15
TEXAS ECOLOGISTS, INC.
TRANSTEC ENVIRONMENTAL, INC.
US ECOLOGY, INC.
WPI TRANSPORTATION, INC.
WPI WASTE CARRIERS, INC.
By: /s/ Jack K. Lemley
----------------------------------------
Jack K. Lemley
Chief Executive Officer
BANK: CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
By: /s/ Bruce A. Shilcutt
----------------------------------------
Bruce A. Shilcutt
Vice President
19