EXHIBIT 10.56
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of January 27, 1997 (this "Agreement"), is
between TRANSAMERICAN WASTE OF HOUSTON, INC., a Texas corporation ("Borrower"),
and SOUTHWEST BANK OF TEXAS, N.A., a national banking association ("Lender").
R E C I T A L S :
Borrower has requested that Lender extend credit to Borrower in the form
of (a) revolving credit advances which shall not exceed an aggregate principal
amount of $1,000,000 at any time outstanding and (b) a term loan in the original
principal amount of $7,500,000. Lender is willing to make such extensions of
credit to Borrower upon the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I.
Definitions
Section 1.01. Definitions. As used in this Agreement, the following terms
have the following meanings:
"Accountants" means Xxxxxx Xxxxxxxx, L.L.P. or other independent
certified public accountants of recognized standing acceptable to Lender.
"Advance" means an advance of funds by Lender to Borrower pursuant
to Article II.
"Advance Request Forms" means a certificate, in substantially the
form of Exhibit "K" hereto, properly completed and signed by Borrower
requesting an Advance.
"Arbitration Agreement" means the Arbitration Agreement executed
by Borrower, the Subsidiaries and Guarantors in substantially the form of
Exhibit "M" hereto, as the same may be amended, supplemented, or
modified.
"Agreement Regarding Purchase of Notes" means the Agreement
Regarding Purchase of Notes executed by RKM, TJF and Lender in
substantially the form of Exhibit "S" hereto, as the name may be amended,
supplemented or modified from time to time.
"Ben-Singer" means Ben-Singer, Inc., a Texas corporation, and its
successors and assigns.
"Business Day" means any day on which commercial banks are not
authorized or required to close in Houston, Texas.
"Cash Flow Coverage Ratio" means, for the period for which such
calculation is being made, EBITDA for such period divided by the sum of
(a) the scheduled principal maturities of Long Term Debt for such period,
plus (b) interest expense of Borrower and the Subsidiaries for such
period.
"Closing Date" means the date on which this Agreement has been
executed and delivered by the parties hereto and the conditions set forth
in Section 6.01 have been satisfied.
"Collateral" has the meaning specified in Section 5.01.
"Commitment" means the obligation of Lender to make Advances
hereunder in an aggregate principal amount at any time outstanding up to
but not exceeding $1,000,000.00, as such amount may be reduced as
provided hereby.
"Current Assets" means, at any particular time, all amounts which,
in conformity with GAAP, would be included as current assets on a
consolidated balance sheet of Borrower and its Subsidiaries.
"Current Liabilities" means, at any particular time, all amounts
which, in conformity with GAAP, would be included as current liabilities
on a consolidated balance sheet of Borrower and its Subsidiaries;
provided that for purposes of calculating the Current Ratio (i) the Debt
evidenced by Note-A and Note-B shall not constitute Current Liabilities
and (ii) the Debt of Borrower to WSTE in the original principal amount of
$1,250,000, the payment of which has been subordinated to the payment of
the Obligations in the Guaranty-WSTE, shall not constitute Current
Liabilities.
"Current Ratio" means the ratio of Current Assets to Current
Liabilities.
"Debt" means for any Person (a) all indebtedness, whether or not
represented by bonds, debentures, notes, securities, or other evidences
of indebtedness, for the repayment of money borrowed, (b) all
indebtedness representing deferred payment of the purchase price of
property or assets, (c) all indebtedness under any lease which, in
conformity with GAAP, is required to be capitalized for balance sheet
purposes, (d) all indebtedness under guaranties, endorsements,
assumptions, or other contingent obligations, in respect of, or to
purchase or otherwise acquire, indebtedness of others, (e) all
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indebtedness secured by a Lien existing on property owned, subject to
such Lien, whether or not the indebtedness secured thereby shall have
been assumed by the owner thereof, and (f) any obligation to redeem or
repurchase any of such Person's capital stock, warrants, or stock
equivalents.
"Deed Of Trust-Galveston" means the Deed of Trust, Security
Agreement, Assignment of Rents and Financing Statement executed by
Borrower in favor of Lender, in substantially the form of Exhibit "I"
hereto, as the same may be amended, supplemented, or modified from to
time.
"Deed Of Trust-Xxxxxx" means the Deed of Trust, Security
Agreement, Assignment of Rents and Financing Statement executed by
Borrower in favor of Lender, in substantially the form of Exhibit "J"
hereto, as the same may be amended, supplemented, or modified from to
time.
"Default Rate" means the lesser of (a) the sum of the Prime Rate
in effect from day to day plus three percent (3%) or (b) the Maximum
Rate.
"EBITDA" means for Borrower and its Subsidiaries, on a
consolidated basis, the sum of (a) income before taxes, (b) depreciation
and amortization, plus (c) interest expense.
"Environmental Laws" means any and all federal, state and local
laws, regulations, and requirements pertaining to health, safety, or the
environment, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
ss. 9601 et seq.,the Resource Conservation and Recovery Act of 1976, 42
U.S.C. ss. 6901 et seq., the Occupational Safety and Health Act, 29
U.S.C. ss. 651 et seq., the Clean Water Act, 33 U.S.C. ss. 1251 et seq.,
the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et seq., and all
similar laws, regulations, and requirements of any governmental authority
or agency having jurisdiction over Borrower, any Subsidiary or WSTE or
any of their respective properties or assets, as such laws, regulations,
and requirements may be amended or supplemented from time to time.
"ERISA" means the Employee Retirement Income Security Act of 1974,
an amended from time to time, and the regulations and published
interpretations thereunder.
"Event of Default" has the meaning specified in Section 11.01.
"GAAP" means generally accepted accounting principles, applied on
a consistent basis, as set forth in Opinions of the Accounting Principles
Board of the American Institute of Certified Public Accountants or in
statements of the Financial
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Accounting Standards Board or their respective successors and which are
applicable in the circumstances as of the date in question. Accounting
principles are applied on a "consistent basis" when the accounting
principles observed in a current period are comparable in all material
respects to those accounting principles applied in a preceding period.
"Guaranties" means the Guaranty-Ben-Singer, the Guaranty-RKM, the
Guaranty-Sanifill Hauling, the Guaranty-TJF and the Guaranty-WSTE.
"Guaranty-Ben-Singer" means the Guaranty Agreement executed by
Ben-Singer in favor of Lender in substantially the form of Exhibit "Q"
hereto, as the same may be amended, supplemented or modified from time to
time.
"Guaranty-RKM" means the Guaranty Agreement executed by RKM in
favor of Lender in substantially the form of Exhibit "D" hereto, as the
same may be amended, supplemented or modified from time to time.
"Guaranty-Sanifill Hauling" means the Guaranty Agreement executed
by Sanifill Hauling in favor of Lender in substantially the form of
Exhibit "P" hereto, as the same may be amended, supplemented or modified
from time to time.
"Guaranty-TJF" means the Guaranty Agreement executed by TJF in
favor of Lender in substantially the form of Exhibit "E" hereto, as the
same may be amended, supplemented or modified from time to time.
"Guaranty-WSTE" means the Guaranty Agreement executed by WSTE in
favor of Lender in substantially the form of Exhibit "F" hereto, as the
same may be amended, supplemented or modified from time to time.
"Guarantors" means RKM, TJF and WSTE.
"Hazardous Substances" means (a) any "hazardous waste" as defined
by the Resource Conservation and Recovery Act of 1976 (42 U.S.C. Section
6901 et seq), as amended from time to time, and regulations promulgated
thereunder, (b) any "hazardous substance". as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of
1980 (42 U.S.C. Section 9601 et seq.) ("CERCLA"), as amended from time to
time, and regulations promulgated thereunder, (c) asbestos, (d)
polychlorinated biphenyls, (e) any substance the presence of which on the
Real Property or any other property owned or leased by Borrower, any
Subsidiary or WSTE is prohibited by any Governmental Requirements (as
defined below), (f) any petroleum-based products which are deemed
hazardous by any Governmental Requirements, (g) underground
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storage tanks which are deemed hazardous by any Governmental
Requirements, and (h) any other substance which by any Governmental
Requirements requires special handling or notification of any
federal, state or local governmental entity in its collection,
storage, treatment, or disposal. For purposes herein "Governmental
Requirements" shall mean all laws, ordinances, statutes, codes,
rules, regulations, orders and decrees of the United States, the
state, the county, the city, or any other political subdivision in
which the Real Property or any other property owned or leased by
Borrower, any Subsidiary or WSTE is located, and any other political
subdivision, agency or instrumentality exercising jurisdiction over
Borrower, the Real Property or any other property owned or leased
by Borrower, any Subsidiary or WSTE.
"Landfill" means the construction and demolition landfill located
in Galveston County, Texas and constituting part of the Real Property.
"Lien" means any lien, mortgage, security interest, tax lien,
financing statement, pledge, charge, hypothecation, assignment,
preference, priority, or other encumbrance of any kind or nature
whatsoever (including, without limitation, any conditional sale or title
retention agreement), whether arising by contract, operation of law, or
otherwise.
"Loan Documents" means this Agreement and all promissory notes,
security agreements, assignments, guaranties and other instruments,
documents and agreements executed and delivered pursuant to or in
connection with this Agreement, as such instruments, documents, and
agreements may be amended, modified, renewed, extended, or supplemented
from time to time.
"Long Term Debt" means for Borrower and its Subsidiaries on a
consolidated basis, Debt of such Persons for borrowed money which has a
final maturity more than twelve months from the date of calculation.
"Maximum Rate" means the maximum rate of nonusurious interest
permitted from day to day by applicable law, including as to Article
52069-1.04, Vernon's Texas Civil Statutes (and as the same may be
incorporated by reference in other Texas statutes), but otherwise without
limitation, that rate based upon the "Indicated rate ceilings" and
calculated after taking into account any and all relevant fees, payments,
and other charges in respect of the Loan Documents which are deemed to be
interest under applicable law.
"No Default Certificate" means a certificate of Borrower
substantially in the form of Exhibit "L".
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"Note-A" means the promissory note executed by Borrower payable to
the order of Lender, in substantially the form of Exhibit "A" hereto, and
all extensions, renewals, and modifications thereof and all substitutions
therefor.
"Note-B" means the promissory note executed by Borrower payable to
the order of Lender, in substantially the form of Exhibit "B" hereto, and
all extensions, renewals, and modifications thereof and all substitutions
therefor.
"Notes" means Note-A and Note-B.
"Obligated Party" means each Guarantor, each Subsidiary and any
other Person who is or becomes party to any agreement pursuant to which
such Person guarantees or secures payment and performance of the
Obligations or any part thereof.
"Obligations" means all obligations, indebtedness, and liabilities
of Borrower to Lender, now existing or hereafter arising, whether direct,
indirect, related, unrelated, fixed, contingent, liquidated,
unliquidated, joint, several, or joint and several, including, without
limitation, the obligations, indebtedness, and liabilities of Borrower
under this Agreement and the other Loan Documents, and all interest
accruing thereon and all attorneys' fees and other expenses incurred in
the enforcement or collection thereof. ,
"Option Tract" means the real property described in Exhibit "R"
hereto.
"Parent Debt" shall have the meaning given to such term in
Section 9.01.
"Pledge Agreement-RKM" means the Pledge and Security Agreement
executed by RKM in favor of Lender in substantially the form of Exhibit
"G" hereto, as the same may be amended, supplemented, or modified.
"Pledge Agreement-WSTE" means the Pledge and Security Agreement
executed by WSTE in favor of Lender in substantially the form of Exhibit
"H" hereto, as the same may be amended, supplemented, or modified.
"Person" means any individual, corporation, business trust,
association, company, partnership, joint venture, governmental authority,
or other entity.
"Prime Rate" means that variable rate of interest per annum
established by Lender from time to time as its prime rate which shall
vary from time to time. Such rate is set by Lender as a general reference
rate of interest, taking into account such factors as Lender may deem
appropriate, it being
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understood that many of Lender's commercial or other loans are priced in
relation to such rate, that it is not necessarily the lowest or best rate
charged to any customer and that Lender may make various commercial or
other loans at rates of interest having no relationship to such rate.
"Real Property" means (a) the real property and interests in real
property described in the Deed of Trust-Galveston and the Deed of
Trust-Xxxxxx and all improvements and fixtures thereon and all
appurtenances thereto and (b) after the acquisition thereof by Borrower,
the Option Tract and all improvements and fixtures thereon and all
appurtenances thereto.
"RKM" means Xxxxxx X. Xxxxx, Xx. and his heirs, executors,
successors and assigns.
"Sanifill" means any one or more of Sanifill, Inc., Sanifill
Hauling, Sunray Services, Inc., S&J Landfill Limited Partnership and
Brazoria County Recycling Center, Inc.
"Sanifill Hauling" means Sanifill of Texas Hauling, Inc., a Texas
corporation, and its successors and assigns.
"Security Agreement-Ben-Singer" means the Security Agreement
executed by Ben-Singer in favor of Lender in substantially the form of
Exhibit "O" hereto, as the same may be amended, supplemented or modified.
"Security Agreement-Borrower" means the Security Agreement
executed by Borrower in favor of Lender in substantially the form of
Exhibit "C" hereto, as the same may be amended, supplemented or modified.
"Security Agreement-Sanifill Hauling" means the Security Agreement
executed by Sanifill Hauling in favor of Lender in substantially the form
of Exhibit "N" hereto, as the same may be amended, supplemented or
modified.
"Subsidiaries" means Sanifill-Hauling and Ben-Singer.
"Survey" shall mean a survey showing (a) a metes and bounds
description of the real property covered thereby, (b) all recorded or
visible boundary lines, building locations, locations of utilities,
easements, rights-of-way, rights of access, building or set-back lines,
dedications, and natural and manufactured objects affecting such real
property, (c) any encroachments upon or protrusions from such real
property, (d) any area federally designated as a flood hazard, and (e)
such other matters as Lender may require.
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"Term Loan" means the loan made by Lender to Borrower pursuant to
Article III.
"Termination Date" means 11:00 a.m., Houston, Texas time on
February 15, 1998, or such earlier date on which the Commitment
terminates as provided in this Agreement.
"TJF" means Xxxxxx X. Xxxxx, Xx. and his heirs, executors,
successors and assigns.
"WSTE" means TransAmerican Waste Industries, Inc., a Delaware
corporation, and its successors and assigns.
Section 1.02. Other Definitional Provisions. All definitions contained
in this Agreement are equally applicable to the singular and plural forms of the
terms defined. The words "hereof", "herein", and "hereunder" and words of
similar import referring to this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement. Unless otherwise
specified, all Article and Section references pertain to this Agreement. All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP. Terms used herein that are defined in the Uniform
Commercial Code as adopted by the State of Texas, unless otherwise defined
herein, shall have the meanings specified in the Uniform Commercial Code as
adopted by the State of Texas.
ARTICLE II.
Advances
Section 2.01. Advances. Subject to the terms and conditions of this
Agreement, Lender agrees to make one or more Advances to Borrower from time to
time from the date hereof to and including the Termination Date in an aggregate
principal amount at any time outstanding up to but not exceeding the Commitment.
Subject to the foregoing limitation, and the other terms and provisions of this
Agreement, Borrower may borrow, repay and reborrow hereunder.
Section 2.02. Note-A. The obligation of Borrower to repay the Advances
shall be evidenced by Note-A executed by Borrower, payable to the order of
Lender, in the principal amount of the Commitment.
Section 2.03. Repayment of Advances. Borrower shall repay the unpaid
principal amount of all Advances on the earlier of (a) the Termination Date or
(b) such other dates on which the Advances are required to be paid pursuant to
this Agreement.
Section 2.04. Interest. The unpaid principal amount of the Advances shall
bear interest prior to maturity at a varying rate
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per annum equal from day to day to the lesser of (a) the Maximum Rate or (b) the
Prime Rate in effect from day to day plus one percent (1.0%), and each change in
the rate of interest charged on the Advances shall become effective, without
notice to Borrower, on the effective date of each change in the Prime Rate or
the Maximum Rate, as the case may be; provided, however, if at any time the rate
of interest specified in clause (b) preceding shall exceed the Maximum Rate,
thereby causing the interest on the Advances to be limited to the Maximum Rate,
then any subsequent reduction in the Prime Rate shall not reduce the rate of
interest on the Advances below the Maximum Rate until the aggregate amount of
interest actually accrued on the Advances equals the amount of interest which
would have accrued on the Advances if the interest rate specified in clause (b)
preceding had at all times been in effect. Accrued and unpaid interest on the
Advances shall be payable on each March 31, June 30, September 30 and December
31, commencing on March 31, 1997, and on the earlier of the Termination Date or
any other date on which the principal amount of the Advances is paid (whether as
a result of optional or mandatory prepayment or acceleration). All past due
principal and interest shall bear interest at the Default Rate.
Section 2.05. Requests for Advances. Borrower shall give Lender notice
of each requested Advance at least one (1) Business Day prior to the requested
date of such Advance by delivery to Lender of an Advance Request Form properly
completed and containing the information required therein and any other
information which Lender may request pursuant to Section 6.02. Lender at its
option may accept telephonic requests for Advances, provided that any telephonic
request for an Advance by Borrower shall be promptly confirmed by submission of
a properly completed Advance Request Form to Lender. Each telephonic request for
an Advance shall constitute a representation by Borrower to Lender that no Event
of Default exists and that the amount of the outstanding Advances plus the
amount of the requested Advance will not exceed the Commitment.
Section 2.06. Use of Proceeds. The proceeds of Advances shall be used for
general working capital purposes.
Section 2.07. Facility Fee. Borrower agrees to pay to Lender a facility
fee in the amount of one percent (1.0%) of the Commitment ($10,000.00) on the
Closing Date. Such facility fee shall be fully earned when paid.
ARTICLE III.
Term Loan
Section 3.01. Agreement for Term Loan. Subject to the terms and
conditions of this Agreement, Lender agrees to make the Term Loan to Borrower in
the amount of $7,500,000.00.
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Section 3.02. Note-B. The obligation of Borrower to repay the Term Loan
shall be evidenced by Note-B executed by Borrower, payable to the order of
Lender, in the principal amount of $7,500,000.00.
Section 3.03. Interest. The Term Loan shall bear interest prior to
maturity at a varying rate per annum equal from day to day to the lesser of (a)
the Maximum Rate or (b) the Prime Rate in effect from day to day plus one
percent (1.0%), and each change in the rate of interest charged on the Term Loan
shall become effective, without notice to Borrower, on the effective date of
each change in the Prime Rate or the Maximum Rate, as the case may be; provided,
however, if at any time the rate of interest specified in clause (b) preceding
shall exceed the Maximum Rate, thereby causing the interest on the Term Loan to
be limited to the Maximum Rate, then any subsequent reduction in the Prime Rate
shall not reduce the rate of interest on the Term Loan below the Maximum Rate
until the aggregate amount of interest actually accrued on the Advances equals
the amount of interest which would have accrued on the Term Loan if the interest
rate specified in clause (b) preceding had at all times been in effect.
Section 3.04. Payment of Principal and Interest. Principal of and
interest on the Term Loan shall be due and payable as provided in Note-B.
Section 3.05. Purpose. The purpose of the Term Loan shall be to finance
the purchase of assets from Sanifill, Inc.
Section 3.06. Facility Fee. Borrower agrees to pay to Lender a facility
fee in the amount of one percent (1.0%) of the Term Loan ($75,000.00) on the
Closing Date. Such facility fee shall be fully earned when paid.
ARTICLE IV.
Payments
Section 4.01. Method of Payment. All payments of principal, interest, and
other amounts to be made by Borrower under this Agreement, the Notes or any
other Loan Documents shall be made to Lender at its office at 0000 Xxxx Xxx
Xxxxxxx, Xxxxxxx, Xxxxx 00000, without setoff, deduction, or counterclaim in
immediately available funds. Whenever any payment under this Agreement, any Note
or any other Loan Document shall be stated to be due on a day that is not a
Business Day, such payment may be made on the next Business Day, and interest
shall continue to accrue during such extension.
Section 4.02. Voluntary Prepayment. Borrower may prepay either Note in
whole at any time or from time to time in part
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without premium or penalty but with accrued interest to the date of prepayment
on the amount so prepaid.
Section 4.03. Commutation of Interest. Interest on the indebtedness
evidenced by the Notes shall be computed on the basis of a year of 360 days and
the actual number of day elapsed (including the first day but excluding the last
day) unless such calculation would result in a usurious rate, in which case
interest shall be calculated on the basis of a year of 365 or 366 days, as the
case may be.
ARTICLE V.
Collateral
Section 5.01. Collateral. To secure full and complete payment and
performance of the Obligations, Borrower shall execute and deliver or cause to
be executed and delivered the documents described below covering the property
and collateral described therein and in this Section 5.01 (which, together with
any other property and collateral which may now or hereafter secure the
Obligations or any part thereof, is sometimes herein called the "Collateral")
(a) Borrower shall grant to Lender a first priority security
interest in all of its accounts, accounts receivable, inventory,
equipment, machinery, rolling stock, trade fixtures, chattel paper,
documents, instruments, and general intangibles, including the contracts
with Sanifill under which Borrower receives preferred pricing for waste
disposal, whether now owned or hereafter acquired, and all products and
proceeds thereof, pursuant to the Security Agreement.
(b) Borrower shall grant to Lender a first priority lien on the
Real Property pursuant to the Deed of Trust-Galveston and the Deed of
Trust-Xxxxxx.
(c) The Subsidiaries shall grant to Lender a first priority
security interest in all of their respective accounts, accounts
receivable, inventory, equipment, machinery, rolling stock, trade
fixtures, chattel paper, documents, instruments, and general intangibles,
including contracts for commercial and residential waste removal, whether
now owned or hereafter acquired, and all products and proceeds thereof,
pursuant to the Security Agreement-Sanifill Holding and the Security
Agreement-Ben-Singer.
(d) RKM will pledge to Lender shares of capital stock of
Xxxxxxxxxxx Enterra, Inc. which have a market value of at least
$4,000,000.00 pursuant to the Pledge Agreement-RKM.
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(e) WSTE will pledge to Lender all the outstanding capital stock
of Borrower pursuant to the Pledge Agreement-WSTE.
(f) Borrower, the Subsidiaries, RKM and WSTE shall execute and
cause to be executed such further documents and instruments, including
without limitation, Uniform Commercial Code financing statements, as
Lender, in its sole discretion, deems necessary or desirable to evidence
and perfect its liens and security interests in the Collateral.
Section 5.02. Setoff. After the occurrence and during the continuance of
an Event of Default, Lender shall have the right to set off and apply against
the Obligations in such a manner as Lender may determine, at any time and
without notice to Borrower, subject to the rights of customers of Borrower and
other contractual obligations of Borrower that are superior to the rights of
Lender, any and all deposits (general or special, time or demand, provisional or
final) or other sums at any time credited by or owing from Lender to Borrower or
any Subsidiary whether or not the Obligations are then due. In addition to
Lender's right of setoff and as further security for the Obligations, Borrower
hereby grants to lender a security interest in all deposits (general or special,
time or demand, provisional or final) and other accounts of Borrower now or
hereafter on deposit with or held by Lender and all other sums at any time
credited by or owing from Lender to Borrower. The rights and remedies of Lender
hereunder are in addition to other rights and remedies (including, without
limitation, to the rights of setoff) which Lender may have.
Section 5.03. Guaranties. Guarantors and the Subsidiaries shall
unconditionally and irrevocably guarantee payment and performance of the
Obligations by execution and delivery of the Guaranties.
ARTICLE VI.
Conditions Precedent
Section 6.01. Initial Extension of Credit. The obligation of Lender to
make the initial Advance or make the Term Loan is subject to the condition
precedent that Lender shall have received on or before the day of such Advance
or Term Loan all of the documents set forth below in form and substance
satisfactory to Lender.
(a) Resolutions - Borrower. Resolutions of the Board of Directors
of Borrower certified by its Secretary or an Assistant Secretary which
authorize the execution, delivery and performance by Borrower of this
Agreement and the other Loan Documents to which Borrower is or is to be a
party.
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(b) Incumbency Certificate - Borrower. A certificate of incumbency
certified by the Secretary or an Assistant Secretary of Borrower
certifying the names of the officers of Borrower authorized to sign this
Agreement and each of the other Loan Documents to which Borrower is or is
to be party together with specimen signatures of such officers.
(c) Certificate of Good Standing - Borrower. A certificate of good
standing of Borrower in the State of Texas certified by the Comptroller
of the State of Texas.
(d) Articles of Incorporation - Borrower. The articles of
incorporation of Borrower certified by the Secretary or an Assistant
Secretary of Borrower.
(e) Bylaws - Borrower. The bylaws of Borrower certified by the
Secretary or an Assistant Secretary of Borrower.
(f) Resolutions - WSTE and Subsidiaries. Resolutions of the Board
of Directors of WSTE and each Subsidiary certified by its Secretary or an
Assistant Secretary which authorize the execution, delivery and
performance by WSTE or such Subsidiary of its respective Guaranty and the
other Loan Documents to which WSTE or such Subsidiary is or is to be a
party.
(g) Incumbency Certificate - WSTE and Subsidiaries. A certificate
of incumbency certified by the Secretary or an Assistant Secretary of
WSTE and each Subsidiary certifying the names of the officers of WSTE or
such Subsidiary authorized to sign the respective Guaranty to be executed
by such Person and each of the other Loan Documents to which WSTE or such
Subsidiary is or is to be a party together with specimen signatures of
such officers.
(h) Certificate of Existence and Good Standing - WSTE. A
certificate of existence and good standing of WSTE certified by the
Secretary of State of Delaware.
(i) Certificate of Existence - Subsidiaries. A certificate of
existence of each Subsidiary certified by the Secretary of State of
Texas.
(j) Certificates of Existence and Good Standing - WSTE.
Certificates of existence and good standing of WSTE as a foreign
corporation in the State of Texas certified by the appropriate officials
of the State of Texas.
(k) Articles of Incorporation - WSTE and Subsidiaries. The
articles of incorporation of WSTE and each Subsidiary certified by the
Secretary or an Assistant Secretary of WSTE or such Subsidiary.
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(1) Bylaws - WSTE and Subsidiaries. The bylaws of WSTE and each
Subsidiary certified by the Secretary or an Assistant Secretary of WSTE
or such Subsidiary.
(m) Notes. Note-A and Note-B executed by Borrower.
(n) Security Agreements. The Security Agreement-Borrower executed
by Borrower, the Security Agreement -Sanifill Hauling executed by
Sanifill Hauling, and the Security Agreement-Ben-Singer executed by
Ben-Singer.
(o) Deeds of Trust. The Deed of Trust-Galveston and the Deed of
Trust-Xxxxxx executed by Borrower.
(p) Guaranties. The Guaranty-RKM executed by RKM, the Guaranty-TJF
executed by TJF, the Guaranty-WSTE executed by WSTE, the
Guaranty-Sanifill Hauling executed by Sanifill Hauling and the
Guaranty-Ben-Singer executed by Ben-Singer.
(q) Pledge Agreements: Stock and Stock Powers. The Pledge
Agreement-RKM executed by RKM, and the Pledge Agreement-WSTE executed by
WSTE, together with certificates evidencing the stock pledged under such
Pledge Agreements and powers of attorney with respect thereto.
(r) Financing Statements. Uniform Commercial Code financing
statements executed by Borrower, RKM, the Subsidiaries and WSTE.
(s) Agreement Regarding Purchase of Notes. The Agreement Regarding
Purchase of Notes executed by the parties thereto.
(t) Mortgagee Title Insurance Policies. Paid mortgagee policies of
title insurance in the amount of the owner's title insurance policies
obtained by Borrower with respect to the Real Property, but not less than
$4,000,000.00, insuring that the Deeds of Trust create in favor of Lender
first priority liens on the Real Property. The mortgagee policies of
title insurance shall have been issued at Borrower's expense by a title
insurance company acceptable to Lender, shall show a state of title and
exceptions thereto, if any, acceptable to Lender, and shall contain such
endorsements as may be required by Lender.
(u) Easements, etc. Copies of all recorded easements, rights-of
way, restrictive covenants, leases, encumbrances, and other documents and
instruments filed of record that affect the Real Property.
(v) Insurance Policies. Copies of all insurance policies required
by Section 8.05, together with lender 1oss
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payable endorsements in favor of Lender with respect to all insurance
policies covering Collateral.
(w) UCC Search. A Uniform Commercial Code search showing all
financing statements and other documents or instruments on file against
Borrower, each Subsidiary and WSTE in Xxxxxx County, Texas and the office
of the Secretary of State of Texas.
(x) Facility Fees. The facility fees referred to in Section 2.07
and 3.06.
(y) Appraisal. A preliminary indication of value of the assets of
Borrower and the Subsidiaries, performed by an appraiser acceptable to
Lender, to the effect that (i) the tangible assets of Borrower and the
Subsidiaries (including trucks, containers and landfills) have a
liquidation value of not less than $5,000,000.00 and (ii) all assets of
Borrower and the Subsidiaries (excluding stock of the Subsidiaries held
by Borrower) have a liquidation value of not less than $10,000.000.00.
(z) Environmental Updates. An updated assessment of the
environmental condition of the Landfill.
(aa) Attorneys' Fees and Expenses. Evidence that the costs and
expenses (including reasonable attorneys' fees) referred to in Section
12.01, to the extent incurred, have been paid in full by Borrower.
(bb) Additional Documentation. Such additional approvals, opinions
or documents as Lender may reasonably request.
Section 6.02. All Advances. The obligation of Lender to make any Advance
(including the initial Advance) shall be subject to the additional conditions
precedent that Lender shall have received (a) an Advance Request Form or
telephonic request for an Advance in accordance with Section 2.05 and (b) such
additional approvals, opinions or documents as Lender may reasonably request.
ARTICLE VII.
Representations and Warranties
To induce Lender to enter into this Agreement, Borrower represents and
warrants to Lender that, as of the Closing Date and at all times thereafter:
Section 7.01. Corporate Existence. Each of Borrower, each Subsidiary and
WSTE (a) it a corporation duly organized, validly
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existing, and in good standing under the laws of the state of its incorporation,
and if it is not organized under the laws of the State of Texas, is existing and
in good standing as a foreign corporation under the laws of the State of Texas,
(b) has all requisite corporate power and authority to own its assets and carry
on its business as now being or as proposed to be conducted and (c) is qualified
to do business in all jurisdictions necessary and where failure to so qualify
would have a material adverse effect on its business, condition (financial or
otherwise), operations, prospects, or properties. Borrower has the corporate
power and authority to execute, deliver and perform its obligations under this
Agreement and the other Loan Documents to which it is or may become a party.
Section 7.02. Financial Statements. Borrower has delivered to Lender
audited financial statements of WSTE as at and for the four month transition
period ended December 31, 1995, and financial statements of WSTE for the nine
month period ended September 30, 1996. Such financial statements are true and
correct, have been prepared in accordance with GAAP, and fairly and accurately
present the financial condition of WSTE as of the respective dates indicated
therein and the results of operations for the respective periods indicated
therein. WSTE has no material contingent liabilities, liabilities for taxes,
material forward or long-term commitments, or unrealized or anticipated losses
from any unfavorable commitments not reflected in such financial statements.
There has been no material adverse change in the business, condition (financial
or otherwise), operations, prospects, or properties of WSTE since the effective
date of the most recent financial statements referred to in this Section.
Section 7.03. Corporate Action: No Breach. The execution, delivery, and
performance by Borrower of this Agreement and the other Loan Documents to which
Borrower is or may become a party have been duly authorized by all requisite
action on the part of Borrower and do not and will not violate or conflict with
the articles of incorporation or bylaws of Borrower or any law, rule or
regulation or any order, writ, injunction, or decree of any court, governmental
authority, or arbitrator, and do not and will not conflict with, result in a
breach of, or constitute a default under, or result in the imposition of any
Lien (except as provided in this Agreement) upon any of the revenues or assets
of Borrower pursuant to the provisions of any indenture, mortgage, deed of
trust, security agreement, franchise, permit, license, or other instrument or
agreement by which Borrower or any of its properties is bound.
Section 7.04. Operation of Business. Borrower, the Subsidiaries and WSTE
possess all material licenses, permits, franchises, patents, copyrights,
trademarks, and tradenames, or rights thereto, to conduct their business
substantially as now
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conducted and as presently proposed to be conducted except for a permit for
expansion of the Landfill.
Section 7.05. Litigation and Judgments. Except as disclosed in the
reports delivered by WSTE to the Securities & Exchange Commission, there is no
action, suit, investigation, or proceeding before or by any court, governmental
authority, or arbitrator pending, or to the knowledge of Borrower, threatened
against or affecting Borrower, any Subsidiary or any Guarantor that would, if
adversely determined, have a material adverse effect on the business, condition
(financial or otherwise), operations, prospects or properties of Borrower, any
Subsidiary or any Guarantor or the ability of Borrower to pay and perform the
Obligations. There are no outstanding judgments against Borrower, any Subsidiary
or any Guarantor.
Section 7.06. Rights in Properties; Liens. Borrower, the Subsidiaries and
WSTE have good and indefeasible title to or valid leasehold interests in their
respective properties and assets, real and personal, including the properties,
assets and leasehold interests reflected in the financial statements described
in Section 7.02, and none of the properties, assets or leasehold interests of
Borrower or any Subsidiary is subject to any Lien, except as permitted by this
Agreement.
Section 7.07. Enforceability. This Agreement constitutes, and the other
Loan Documents to which Borrower is party, when delivered, shall constitute the
legal, valid, and binding obligations of Borrower, enforceable against Borrower
in accordance with their respective terms, except as enforceability thereof may
be limited by bankruptcy, insolvency, or other laws of general application
relating to the enforcement of creditor's rights.
Section 7.08. Approvals. No authorization, approval, or consent of, and
no filing or registration with, any court, governmental authority, or third
party is or will be necessary for the execution, delivery, or performance (a) by
Borrower of this Agreement and the other Loan Documents to which Borrower is or
may become a party or the validity or enforceability thereof or (b) by any
Subsidiary or any Guarantor of the Loan Documents to which such Person is or may
become a party or the validity or enforceability thereof.
Section 7.09. Debt. Borrower and the Subsidiaries have no Debt except (a)
Debt to Lender and (b) Debt to WSTB in the original principal amount of
$1,250,000.00.
Section 7.10. Use of Proceeds; Xxxxxx Securities. None of Borrower, any
Subsidiary or WSTE is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulations G, T, U, or X of the
Board of Governors of
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the Federal Reserve System), and no part of the proceeds of any extension of
credit under this Agreement will be used to purchase or carry any such margin
stock or to extend credit to others for the purpose of purchasing or carrying
margin stock.
Section 7.11. ERISA. Borrower, the Subsidiaries and WSTE have complied
with all applicable minimum funding requirements and all other applicable and
material requirements of ERISA, and there are no existing conditions that would
give rise to liability thereunder. No Reportable Event (as defined in Section
4043 of ERISA) has occurred in connection with any employee benefit plan that
might constitute grounds for the termination thereof by the Pension Benefit
Guaranty Corporation or for the appointment by the appropriate United States
District Court of a trustee to administer such plan.
Section 7.12. Taxes. To the best of Borrower's knowledge, Borrower, each
Subsidiary and each Guarantor have filed all tax returns (federal, state, and
local) required to be filed, including all income, franchise, employment,
property, and sales taxes, and has paid all of their respective liabilities for
taxes, assessments, governmental charges, and other levies that are due and
payable, and Borrower knows of no pending investigation of Borrower, any
Subsidiary or any Guarantor by any taxing authority or of any pending but
unassessed tax liability of Borrower, any Subsidiary or any Guarantor. ,
Section 7.13. Disclosure. Except as disclosed in the reports delivered by
WSTE to the Securities & Exchange Commission, there is no fact known to Borrower
which has a material adverse effect, or which might in the future have a
material adverse effect, on the business, condition (financial or otherwise),
operations, prospects, or properties of Borrower, any Subsidiary or any
Guarantor that has not been disclosed in writing to Lender.
Section 7.14. Subsidiaries. Borrower has no subsidiaries other than the
Sanifill Hauling. Sanifill Hauling has no subsidiaries other than Ben-Singer.
Section 7.15. Compliance with Laws. To the best of Borrower's knowledge,
none of Borrower, any Subsidiary or WSTE is in violation in any material
respect of any law, rule, regulation, order, or decree of any court,
governmental authority, or arbitrator, which violation could result in a
material adverse effect on the business or operations of such Person or the
ability of Borrower to pay the Obligations or WSTE to perform under the
Guaranty-WSTE.
Section 7.16. Solvency. None of Borrower, any Subsidiary or WSTE is
insolvent or will be rendered insolvent by the transactions contemplated by this
Agreement and no bankruptcy or insolvency
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proceedings are pending against or contemplated by any of such Persons.
Section 7.17. Environmental Matters. Borrower, each Subsidiary and WSTE
and their respective properties are in compliance with all applicable
Environmental Laws and none of Borrower, any Subsidiary or WSTE is subject to
any liability or obligation for remedial action thereunder. There is no pending
or threatened investigation or inquiry by any governmental authority of
Borrower, any Subsidiary, WSTE or any of their respective properties pertaining
to any Hazardous Substance. Except in the ordinary course of business and in
accordance with law, there are no Hazardous Substances located on or under any
of the properties of Borrower, any Subsidiary or WSTE. Except in the ordinary
course of business and in accordance with law, none of Borrower, any Subsidiary
or WSTE has caused or permitted any Hazardous Substance to be disposed of on or
under or released from any of its properties. To the best of Borrower's
knowledge, Borrower, the Subsidiaries and WSTE have obtained all permits,
licenses, and authorizations which are required under and by all Environmental
Laws, the failure of which to obtain could result in a material adverse effect
on the business or operations of such Person or the ability of Borrower to pay
the Obligations or WSTE to perform under the Guaranty-WSTE.
ARTICLE VIII.
Positive Covenants
Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or Lender has any Commitment hereunder, Borrower
will perform and observe the covenants set forth below, unless Lender shall
otherwise consent in writing.
Section 8.01. Reporting Requirements. Borrower will deliver to Lender:
(a) Annual Financial Statements - Borrower. As soon as available,
and in any event within one hundred twenty (120) days after the end of
each fiscal year of Borrower, beginning with the fiscal year ending
December 31, 1997, (i) a copy of the annual financial statements of
Borrower and the Subsidiaries for such fiscal year, and (ii) the
consolidating financial statements of WSTE (which shall include Borrower)
reviewed by the Accountants in preparing the audited financial statements
of WSTE on Form 10-K for such year, and (iii) a certificate of the
Accountants confirming compliance by Borrower with the covenants
contained in Article X. The Borrower's financial statements shall
include, on a consolidated basis, balance sheets, statements of income,
statements of stockholders equity and statements of cash flows
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as at the end of such fiscal year and for the 12-month period then ended,
in each case setting forth in comparative form the figures for the
preceding fiscal year, all in reasonable detail and prepared in
accordance with GAAP.
(b) Annual Financial Statements - WSTE. As soon as available, and
in any event within one hundred twenty (120) days after the end of each
fiscal year of WSTE, beginning with the fiscal year ending December 31,
1996, a copy of the annual audited financial statements of WSTE and its
subsidiaries for such fiscal year on Form 10-K, containing, on a
consolidated basis, balance sheets, statements of income, statements of
stockholders equity and statements of cash flows as at the end of such
fiscal year and for the 12-month period then ended, in each case setting
forth in comparative form the figures for the preceding fiscal year, all
in reasonable detail and audited and certified by the Accountants.
(c) Quarterly Financial Statements - Borrower. As soon as
available, and in any event within sixty (60) days after the end of each
of the first three fiscal quarters of each fiscal year of Borrower, (i) a
copy of the unaudited financial statements of Borrower and the
Subsidiaries as of the end of such quarter and for the portion of the
fiscal year then ended, and (ii) the consolidating financial statements
of WSTE (which shall include Borrower) reviewed by the Accountants in
preparing the financial statements of WSTE on Form 10-Q for such quarter.
The Borrower's financial statements shall include, on a consolidated
basis, balance sheets, statements of income and statements of cash flows,
all in reasonable detail and certified by the financial vice president of
Borrower to have been prepared in accordance with GAAP and to fairly and
accurately present (subject to year-end audit related adjustments) the
financial condition and results of operations of Borrower and the
Subsidiaries, on a consolidated basis, at the dates and for the periods
indicated therein. The unaudited fourth quarter consolidated financial
statements of Borrower shall be included along with the annual financial
statements as required in Section 8.01(a).
(d) Quarterly Financial Statements - WSTE. As soon as available,
and in any event within sixty (60) days after the end of each of the
first three fiscal quarters of each fiscal year of WSTE, a copy of the
unaudited financial statements of WSTE on Form 10-Q as of the end of such
quarter and for the portion of the fiscal year then ended, containing, on
a consolidated basis, balance sheets, statements of income and statements
of cash flows, all in reasonable detail and certified by the president or
the chief financial officer of WSTE to have been prepared in accordance
with GAAP and to fairly and accurately present (subject to year-end audit
adjustments) the financial condition and results of operations
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of WSTE and its subsidiaries, on a consolidated basis, at the date and
for the period indicated therein. The unaudited fourth quarter
consolidated financial statements of WSTE shall be included along with
the annual financial statements as required in Section 8.01(b).
(e) Semi-Annual Financial Statements - REM and TJF. AS soon as
available, and in any event on or before each February 28 and August 31,
a copy of the financial statement of each of REM and TJF as of the
preceding December 31 and June 30, respectively, consisting of a balance
sheet, a statement of income and expenses, a list of liabilities,
including contingent liabilities (and stating the holder of such
liabilities, the repayment terms thereof and any collateral therefor),
and a statement of cash flows.
(f) No Default Certificate. Simultaneously with the delivery of
financial statements of Borrower under Section 8.01 (a) and (c), a No
Default Certificate as of the last day of such quarter, executed by the
financial vice president of Borrower.
(g) Quartely Accounts Receivable Reports. Simultaneously with the
delivery of financial statements of Borrower under Section 8.01 (a) and
(c), aged accounts receivable reports for Borrower and each Subsidiary as
of the last day of such quarter certified by the financial vice president
of Borrower.
(h) Notice of Litigation. Promptly after the commencement thereof,
notice of all actions, suits and proceedings before any court or
governmental department, affecting Borrower, any Subsidiary or any
Guarantor which, if determined adversely to Borrower, such Subsidiary or
such Guarantor, could have a material adverse effect on the business,
condition (financial or otherwise), operations, prospects, or properties
of Borrower, such Subsidiary or such Guarantor.
(i) Notice of Default. As soon as possible and in any event within
five (5) days after the occurrence of each Event of Default and each
event which, with the giving of notice or lapse of time or both, would
constitute an Event of Default, a written notice setting forth the
details of such Event of Default or event and the action which Borrower
has taken and proposes to take with respect thereto.
(j) Proxy Statements, Etc. As soon as available, one copy of each
financial statement, report, notice or proxy statement sent by Borrower,
any Subsidiary or WSTE to its stockholders generally and one copy of each
regular, periodic or special report, registration statement, or
prospectus filed
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by Borrower, any Subsidiary or WSTE with any securities exchange or the
Securities and Exchange Commission or any successor agency.
(k) General Information. Promptly, such other information
concerning Borrower, any Subsidiary or any Guarantor as Lender may from
time to time reasonably request.
Section 8.02. Maintenance of Existence: Conduct of Business. Borrower
will preserve and maintain, and will cause each Subsidiary and WSTE to preserve
and maintain, its corporate existence and all of its leases, privileges,
licenses, permits, franchises, qualifications and rights that are necessary or
desirable in the ordinary conduct of its business.
Section 8.03. Maintenance of Properties. Borrower will maintain, and will
cause each Subsidiary and WSTE to maintain, its assets and properties in good
condition and repair.
Section 8.04. Taxes and Claims. Borrower will pay or discharge, and will
cause each Subsidiary and WSTE to pay or discharge, at or before maturity or
before becoming delinquent (a) all taxes, levies, assessments, and governmental
charges imposed on it or its income or profits or any of its property, and (b)
all lawful claims for labor, material, and supplies, which, if unpaid, might
become a Lien upon any of its property; provided, however, that none of
Borrower, any Subsidiary or WSTE shall be required to pay or discharge any tax,
levy, assessment, or governmental charge which is being contested in good faith
by appropriate proceedings diligently pursued, and for which adequate reserves
have been established,
Section 8.05. Insurance. Borrower will maintain, and will cause each
Subsidiary and WSTE to maintain, with financially sound and reputable insurance
companies workmen's compensation insurance, liability insurance, and insurance
on its property, assets and business at least in such amounts and against such
risks as are usually insured against by Persons engaged in similar businesses.
Each insurance policy covering Collateral shall name Lender as lender 1oss payee
and shall provide that such policy will not be canceled without ten (10) days
prior written notice to Lender.
Section 8.06. Inspections. At any reasonable time and from time to time,
Borrower will permit, and cause the Subsidiaries and WSTE to permit,
representatives of Lender to examine and make copies of the books and records
of, and visit and inspect the properties or assets of Borrower, the Subsidiaries
and WSTE and to discuss the business, operations, and financial condition of any
such Persons with their respective officers and employees with their independent
certified public accountants.
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Section 8.07. Keeping Books and Records. Borrower will maintain, and will
cause each Subsidiary and WSTE to maintain, proper books of record and account
in which full, true, and correct entries in conformity with GAAP shall be made
of all dealings and transactions in relation to its business and activities.
Section 8.08. Compliance with Laws. Borrower will comply, and will cause
each Subsidiary and WSTE to comply, in all material respects with all applicable
laws, rules, regulations, and orders of any court, governmental authority, or
arbitrator.
Section 8.09. Compliance with Agreements. Borrower will comply, and will
cause each Subsidiary and WSTE to comply, in all material respects with all
agreements, contracts, and instruments binding on it or affecting its properties
or business.
Section 8.10. Further Assurances. Borrower will execute and deliver, and
will cause each Subsidiary and WSTE to execute and deliver, such further
instruments as may be requested by Lender to carry out the provisions and
purposes of this Agreement and the other Loan Documents and to preserve and
perfect the Liens of Lender in the Collateral.
Section 8.11. ERISA. Borrower will comply, and will cause each Subsidiary
and WSTE to comply, with all minimum funding requirements, and all other
material requirements, of ERISA, if applicable, so as not to give rise to any
liability thereunder.
Section 8.12. Post Closing Matters. (a) Not later than thirty (30) days
following the Closing Date, Borrower will deliver to Lender an appraisal of the
value of the assets of Borrower and the Subsidiaries, performed by an appraiser
acceptable to Lender, to the effect that (i) the tangible assets of Borrower and
the Subsidiaries (including trucks, containers and landfills) have a liquidation
value of not less than $5,000,000.00 and (ii) all assets of Borrower and the
Subsidiaries (excluding stock of the Subsidiaries held by Borrower) have a
liquidation value of not leas than $10,000.000.00.
(b) Not later than thirty (30) days following the Closing Date, Borrower
will deliver to Lender titles endorsed to Lender to all vehicles owned by
Borrower or either Subsidiary.
(c) Not later than thirty days following the Closing Date, Borrower shall
deliver to Lender (i) Surveys of the Real Property which shall be acceptable to
Lender and (ii) endorsements to the mortgagee title insurance policies deleting
the survey exception.
(d) Not later than thirty (30) days following the Closing Date, Borrower
will deliver to Lender studies of the environmental condition of the Real
Property other than the Landfill, which shall be acceptable to Lender in form
and substance.
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(e) Prior to obtaining title to the Option Tract, Borrower will deliver
to Lender (i) a title commitment with respect thereto together with copies of an
documents creating encumbrances on the Option Tract, and (ii) a Survey of the
Option Tract, both in form and substance satisfactory to Lender.
(f) Simultaneously with obtaining title to the Option Tract, Borrower
will deliver to Lender (i) an executed deed of trust substantially in the form
of the Deeds of Trust covering the Option Tract and (ii) a mortgagee's policy in
the amount of Borrower's owner's policy insuring that such deed of trust creates
a first lien in favor of Lender.
(g) Not later than thirty (30) days following the Closing Date Borrower
will file a Stormwater Pollution Prevention Plan for the Landfill
ARTICLE IX.
Negative Covenants
Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or Lender has any Commitment hereunder, Borrower
will perform and observe the covenants set forth below, unless Lender shall
otherwise consent in writing.
Section 9.01. Debt. Borrower will not incur, create, assume or permit to
exist, and will not permit any Subsidiary to incur, create, assume or permit to
exist, any Debt, except (a) Debt to Lender, (b) accounts payable in the ordinary
course of business, (c) Debt which does not exceed a principal amount of
$400,000.00 outstanding at any time, (d) Debt arising from the endorsement of
instruments for collection in the ordinary course of business, (e) Debt to WSTE
in the principal amount of $1,250,000 the payment of which has been subordinated
to the payment of the Obligations as provided in the Guaranty-WSTE, (f) landfill
closure and post closure costs, including financial assurances related thereto,
and (g) Parent Debt (hereinafter defined), provided that (i) the aggregate
principal amount of Parent Debt which may be incurred by Borrower shall not
exceed $750,000.00, (ii) no Parent Debt may be incurred after January 31, 1998,
(iii) no Event of Default shall exist at the time Borrower incurs any Parent
Debt and no Event of Default shall arise as a result of the incurrence by
Borrower of any Parent Debt. As used herein the term "Parent Debt" means Debt of
Borrower incurred in connection with working capital advances made by WSTE to
Borrower.
Section 9.02. Limitation on Liens. Borrower will not incur, create,
assume, or permit to exist, any Lien upon any of its property, assets or
revenues, whether now owned or hereafter acquired, except (a) Liens in favor of
Lender, (b) Liens securing
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Debt permitted by Section 9.01(c), (c) encumbrances consisting of minor
easements, zoning restrictions, or other restrictions on the use of real
property that do not (individually or in the aggregate) materially affect the
value of the assets encumbered thereby or materially impair the ability of
Borrower or such Subsidiary to use such assets in its business, and none of
which is violated in any material aspect by existing or proposed structures or
land use, (d) Liens for taxes, assessments, or other governmental charges which
are not delinquent or which are being contested in good faith and for which
adequate reserves have been established, and (e) Liens of mechanics,
materialmen, warehousemen, carriers or other similar statutory Liens securing
obligations that are not yet due and are incurred in the ordinary course of
business.
Section 9.03. Mergers, Acquisitions, Dissolutions and Disposition of
Assets. Borrower will not, and will not permit any Subsidiary to, (a) become a
party to a merger, consolidation, partnership or joint venture or purchase or
otherwise acquire all or a substantial part of the assets of any Person or any
shares or other evidence of beneficial ownership of any Person, (b) dissolve or
liquidate, (c) create a new subsidiary or (d) sell, lease, assign, transfer or
otherwise dispose of any of its assets, except (i) dispositions of assets in the
ordinary course of business which have a fair market value which does not exceed
an aggregate amount of $250,000.00 during any fiscal year for Borrower and the
Subsidiaries, and (ii) dispositions of assets in the ordinary course of
business, provided that Borrower or such Subsidiary has replaced such assets
with replacement items having a value equal to or greater than the value of the
items of which Borrower or such Subsidiary disposed.
Section 9.04. Restricted Payments. Borrower will not declare or pay any
dividends or make any other payment or distribution (in cash, property, or
obligations) on account of its capital stock, or redeem, purchase, retire, or
otherwise acquire any of its capital stock, or grant or issue any capital stock
or any warrant, right, or option pertaining to its capital stock, or issue any
security convertible into capital stock.
Section 9.05. Loans and Investments. Borrower will not, and will not
permit any Subsidiary to, make any advance, loan, extension of credit, or
capital contribution to or investment in, or purchase any stock, bonds, notes,
debentures, or other securities of any Person, except (a) readily marketable
direct obligations of the United States of America, (b) fully insured
certificates of deposit with maturities of one year or less from the date of
acquisition of Lender or any other commercial bank operating in the United
States having capital and surplus in excess of $50,000,000.00, (c) commercial
paper of a domestic issuer if at the time of purchase such paper is rated in one
of the two highest rating categories of Standard and Poor's Corporation or Xxxxx
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Investors Service, Inc. and (d) investments made pursuant to other agreements,
arrangements or contracts between Borrower and Lender.
Section 9.06. Compliance with Environmental Laws. Except in the ordinary
course of business and in accordance with law, Borrower will not knowingly, and
will not permit any Subsidiary or WSTE knowingly to, (a) use (or permit any
tenant to use) any of their respective properties or assets for the handling,
processing, storage, transportation, or disposal of any Hazardous Substance, (b)
generate any Hazardous Substance, (c) conduct any activity which is likely to
cause a release or threatened release of any Hazardous Substance, or (d)
otherwise conduct any activity or use any of their respective properties or
assets in any manner that is likely to violate any Environmental Law, which
violation could result in a material adverse effect on the business or
operations of such Person or the ability of Borrower to pay the Obligations or
WSTE to perform under the Guaranty-WSTE.
Section 9.07. Accounting. Borrower will not, and will not permit any
Subsidiary or WSTE to, make any change in accounting treatment or reporting
practices, except as required by GAAP.
ARTICLE X.
Financial Covenants
Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or Lender has any Commitment hereunder, Borrower
will observe and perform the following financial covenants set forth below,
unless Lender shall otherwise consent in writing. The covenants set forth below
shall be calculated in accordance with GAAP.
Section 10.01. Current Ratio. Borrower will at all times maintain a
Current Ratio of not less than 1.0 to 1.0.
Section 10.02. EBITDA. By June 30, 1997, Borrower will generate
accumulated EBITDA of at least $800,000.00 for the five (5) months then ended.
Section 10.03. Cash Flow Coverage Ratio. Borrower will have a Cash Flow
Coverage Ratio of not less than 1.1 to 1.0 (a) for the quarter ended September
30, 1997 and for the first three fiscal quarters of each fiscal year thereafter,
and (b) for the fiscal year ended December 31, 1997 and for each fiscal year
thereafter.
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ARTICLE XII.
Default
Section 11.01. Events of Default. Each of the following shall be deemed
an "Event of Default":
(a) Borrower shall fail to pay the Obligations or any part thereof
within seven (7) days of the date when due.
(b) Any representation or warranty made or deemed made by Borrower
or any Obligated Party (or any of their respective officers) in any Loan
Document or in any certificate, report, notice, or financial statement
furnished at any time in connection with this Agreement shall be false,
misleading, or erroneous in any material respect when made or deemed to
have been made.
(c) Borrower or any Obligated Party shall fail to perform,
observe, or comply with any covenant, agreement, or term contained in
this Agreement or any other Loan Document for a period of fifteen (15)
days following the date on which Lender gives notice of such failure to
Borrower or such Obligated Party.
(d) Borrower or any Obligated Party shall commence a voluntary
proceeding seeking liquidation, reorganization, or other relief with
respect to itself or its debts under any bankruptcy, insolvency, or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian, or other similar official of it
or a substantial part of its property or shall consent to any such relief
or to the appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it or shall make a
general assignment for the benefit of creditors or shall generally fail
to pay its debts as they become due or shall take any corporate action to
authorize any of the foregoing.
(e) An involuntary proceeding shall be commenced against Borrower
or any Obligated Party seeking liquidation, reorganization, or other
relief with respect to it or its debts under any bankruptcy, insolvency,
or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other
similar official for it or a substantial part of its property, and such
involuntary proceeding shall remain undismissed and unstayed for a period
of ninety (90) days.
(f) Borrower, any Subsidiary or WSTE shall fail to discharge
within a period of ninety (90) days after the commencement thereof any
attachment, sequestration, or similar
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proceeding or proceedings involving an aggregate amount in excess of
$50,000.00 against any of its assets or properties.
(g) Borrower, any Subsidiary or WSTE shall fail to satisfy and
discharge promptly any final, non-appealable judgement or judgements
against it for the payment of money in an aggregate amount in excess of
$50,000.00.
(h) Borrower, any Subsidiary or WSTE shall fail to pay when due
(including any applicable grace periods) any principal of or interest on
any Debt, or the maturity of any such Debt shall have been accelerated,
or any such Debt for Borrowed money shall have been required to be
prepaid prior to the stated maturity thereof, or any event shall have
occurred that permits (or, with the giving of notice or lapse of time or
both, would permit) any holder or holders of such Debt or any Person
acting on behalf of such holder or holders to accelerate the maturity
thereof or require any such prepayment.
(i) This Agreement or any other Loan Document shall cease to be in
full force and effect or shall be declared null and void or the validity
or enforceability thereof shall be contested or challenged by Borrower or
any Obligated Party, or Borrower or any Obligated Party shall deny that
it has any further liability or obligation under any of the Loan
Documents, or any lien or security interest created by the Loan Documents
shall for any reason cease to be a valid security interest in and lien
upon any of the Collateral purported to be covered thereby having the
priority described in this Agreement.
(j) The financial statements of Borrower delivered pursuant to
Section 8.01(a) or (c) shall evidence that Borrower has failed to achieve
positive income from operations for (i) two consecutive fiscal quarters
or (ii) any fiscal year.
Section 11.02. Remedies Upon Default. If any Event of Default shall
occur, Lender may do any one or more of the following: (a) declare the
outstanding principal of and accrued and unpaid interest on the Notes and the
Obligations or any part thereof to be immediately due and payable, and the same
shall thereupon become immediately due and payable, without notice, demand,
presentment, notice of dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, protest, or other formalities of any
kind, all of which are hereby expressly waived by Borrower, (b) terminate the
Commitment without notice to Borrower or any Obligated Party, (c) foreclose or
otherwise enforce any Lien granted to the Lender to secure payment and
performance of the Obligations, and (d) exercise any and all rights and remedies
afforded by the laws of the State of Texas or
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any other jurisdiction by any of the Loan Documents, by equity or otherwise;
provided, however, that upon the occurrence of an Event of Default under Section
ll.0l(d) or Section ll.0l(e), the Commitment shall automatically terminate, and
the outstanding principal of and accrued and unpaid interest on the Notes and
the other Obligations shall become immediately due and payable without notice,
demand, presentment, notice of dishonor, notice of acceleration, notice of
intent to accelerate, notice of intent to demand, protest, or other formalities
of any kind, all of which are hereby expressly waived by Borrower.
Section 11.03. Performance by Lender. If Borrower shall fail to perform
any covenant, duty or agreement contained in any of the Loan Documents, Lender
may perform or attempt to perform such covenant, duty, or agreement on behalf of
Borrower. In such event, Borrower shall, at the request of Lender, promptly pay
any amount expended by Lender in such performance or attempted performance to
Lender, together with interest thereon at the Default Rate from the date of such
expenditure until paid. Notwithstanding the foregoing, it is expressly agreed
that Lender shall not have any liability or responsibility for the performance
of any obligation of Borrower under this Agreement or any other Loan Document.
ARTICLE XII.
Miscellaneous
Section 12.01. Expenses of Lender. Borrower hereby agrees to pay Lender
on demand (a) all reasonable costs and expenses incurred by Lender in connection
with the preparation, negotiation, and execution of this Agreement and the other
Loan Documents and any and all amendments, modifications, renewals, extensions,
and supplements thereof and thereto, including, without limitation, the fees and
expenses of Lender's legal counsel, (b) all reasonable costs and expenses
incurred by Lender in connection with the enforcement of this Agreement or any
other Loan Document, including, without limitation, the fees and expenses of
Lender's legal counsel, and (c) all other reasonable costs and expenses incurred
by Lender in connection with this Agreement or any other Loan Document,
including, without limitation, all costs, expenses, filing fees, and other
charges levied by an governmental authority or otherwise payable in respect of
this Agreement or any other Loan Document or in obtaining any insurance policy,
audit or appraisal in respect of the Collateral, provided that if no Event of
Default exists, prior to obtaining any insurance policy, audit or appraisal for
which Lender would seek reimbursement from Borrower under this Agreement, Lender
shall obtain the consent of Borrower, which consent will not be unreasonably
withheld.
Section 12.02. Indemnification. Borrower hereby indemnifies Lender and
each affiliate thereof and their respective officers,
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directors, employees, attorneys, and agents from, and holds each of them
harmless against, any and all losses, liabilities, claims, damages, penalties,
judgments, disbursements, costs, and expenses (including attorneys' fees)
(collectively, "Claims") to which any of them may become subject which directly
or indirectly arise from or relate to (a) the negotiation, execution, delivery,
performance, administration, or enforcement of any of the Loan Documents, (b)
any of the transactions contemplated by the Loan Documents, (c) any breach by
Borrower of any representation, warranty, covenant, or other agreement contained
in any of the Loan Documents, or (d) the presence, release, threatened release,
disposal, removal, or cleanup of any Hazardous Substance located on, about,
within, or affecting any of the properties or assets of Borrower or any
Obligated Party; provided that the indemnification obligations contained in this
Section 12.02 shall not be applicable to the extent any Claims arise from the
gross negligence or willful misconduct of Lender
Section 12.03. Limitation of Liability. Neither Lender nor any
affiliate, officer, director, employee, attorney, or agent of Lender shall have
any liability with respect to, and Borrower hereby waives, releases, and agrees
not to xxx any of them upon, any claim for any special, indirect, incidental, or
consequential damages suffered or incurred by Borrower in connection with,
arising out of, or in any way related to, this Agreement or any of the other
Loan Documents, or any of the transactions contemplated by this Agreement or any
of the other Loan Documents. Borrower hereby waives, releases, and agrees not to
xxx Lender or any of Lender's affiliates, officers, directors, employees,
attorneys, or agents for punitive damages in respect of any claim in connection
with, arising out of, or in any way related to, this Agreement or any of the
other Loan Documents, or any of the transactions contemplated by this Agreement
or any of the other Loan Documents.
Section 12.04. No Waiver: Cumulative Remedies. No failure on the part of
Lender to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power, or privilege under this Agreement shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, power,
or privilege under this Agreement preclude any other or further exercise thereof
or the exercise of any other right, power, or privilege. The rights and remedies
provided for in this Agreement and the other Loan Documents are cumulative and
not exclusive of any rights and remedies provided by law.
Section 12.05. Succesors and Assigns. This Agreement is binding upon and
shall inure to the benefit of Lender and Borrower and their respective
successors and assigns, except that Borrower may not assign or transfer any of
its rights or obligations under this Agreement without prior written consent of
Lender.
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Section 12.06. Survival. All representations and warranties made in this
Agreement or any other Loan Document or in any document, statement, or
certificate furnished in connection with this Agreement shall survive the
execution and delivery of this Agreement and the other Loan Documents, and no
investigation by Lender or any closing shall affect the representations and
warranties or the right of Lender to rely upon them. Without prejudice to the
survival of any other obligation of Borrower hereunder, the obligations of
Borrower under Sections 12.01, 12.02 and 12.03 shall survive repayment of the
Notes and termination of the Commitment.
Section 12.07. Amendment. The provisions of this Agreement and the other
Loan Documents to which Borrower is a party may be amended or waived only by an
instrument in writing signed by the parties hereto or thereto.
Section 12.08. Maximum Interest Rate. No provision of this Agreement or
of any other Loan Documents shall require the payment or the collection of
interest in excess of the maximum permitted by applicable law. If any excess of
interest in such respect is hereby provided for, or shall be adjudicated to be
so provided, in any other Loan Documents or otherwise in connection with this
loan transaction, the provisions of this Section shall govern and prevail and
neither Borrower nor the sureties, guarantors, successors, or assigns of
Borrower shall be obligated to pay the excess amount of such interest or any
other excess sum paid for the use, forbearance, or detention of sums loaned
pursuant hereto. In the event Lender ever receives, collects, or applies as
interest any such sum, such amount which would be in excess of the maximum
amount permitted by applicable law shall be applied as a payment and reduction
of the principal of the indebtedness evidenced by the Notes; and, if the
principal of the Notes has been paid in full, any remaining excess shall
forthwith be paid to Borrower. In determining whether or not the interest paid
or payable exceeds the Maximum Rate, Borrower and Lender shall, to the extent
permitted by applicable law, (a) characterize any non-principal payment as an
expense, fee, or premium rather than as interest, (b) exclude voluntary
prepayments and the effects thereof, and (c) amortize, prorate, allocate, and
spread in equal or unequal parts the total amount of interest throughout the
entire contemplated term of the indebtedness evidenced by the Notes so that
interest for the entire term does not exceed the Maximum Rate.
Section 12.09. Notices. All notices and other communications provided
for in this Agreement and the other Loan Documents shall be in writing and may
be sent by facsimile with transmission confirmed, mailed by certified mail
return receipt requested, or delivered to the intended recipient at the
addresses specified below or at such other address as shall be designated by any
party listed below in a notice to the other parties listed below given in
accordance with this Section.
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If to Borrower: TransAmerican Waste of Houston, Inc.
000 X. Xxxx Xxx Xxxx
Xxxxxxx, Xxxxx 00000
Attention: Chief Financial Officer
Telephone No.: 000-000-0000
Fax: 000-000-0000
If to RKM: Xxxxxx X. Xxxxx, Xx.
0000 Xxxx Xxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Telephone No.: 000-000-0000
Fax: 000-000-0000
If to TJF: Xxxxxx X. Xxxxx, Xx.
000 X. Xxxx Xxx Xxxx
Xxxxxxx, Xxxxx 00000
Telephone No.: 000-000-0000
Fax: 000-000-0000
If to WSTE: TransAmerican Waste Industries, Inc.
000 X. Xxxx Xxx Xxxx
Xxxxxxx, Xxxxx 00000
Attention: Chief Financial Officer
Telephone No.: 000-000-0000
Fax: 000-000-0000
If to Lender: Southwest Bank of Texas, N.A.
0000 Xxxx Xxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxxxxx
Telephone No.: 713-235-8881 ext. 1234
Fax: 000-000-0000
Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by
facsimile subject to confirmation of Transmission, when personally delivered or,
in the case of a mailed notice, when duly deposited in the mails, in each case
given or addressed as aforesaid; provided, however, that notices to Lender
pursuant to Article II shall not be effective until received by Lender.
Section 12.10. Applicable Law; Venue; Service of Process. This Agreement
and the other Loan Documents shall be governed by and construed in accordance
with the laws of the State of Texas and the applicable laws of the United States
of America. This Agreement and the other Loan Documents have been entered into
in Xxxxxx County, Texas. Except as provided in the Arbitration Agreement, any
action or proceeding against Borrower or any Obligated Party under or in
connection with any of the Loan Documents may be brought in any state or federal
court in Xxxxxx County, Texas, and Borrower, for itself and on behalf of the
Obligated Parties, hereby irrevocably submits to the nonexclusive
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jurisdiction of such courts and waives any objection it may now or hereafter
have as to the venue of any such action or proceeding brought in any such court
or that any such court is an inconvenient forum. Except as provided in the
Arbitration Agreement, nothing herein or in any of the other Loan Documents
shall affect the right of Lender to serve process in any other manner permitted
by law or shall limit the right of Lender to bring any action or proceeding
against Borrower or any Obligated Party or with respect to any of its property
in courts in other jurisdictions. Except as provided in the Arbitration
Agreement, any action or proceeding by Borrower or any Obligated Party against
Lender shall be brought only in a court located in Xxxxxx County, Texas.
Section 12.11. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 12.12. Severability. Any provision of this Agreement held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Agreement and the effect thereof shall be
confined to the provision held to be invalid or illegal.
Section 12.13. Headings. The headings, captions, and arrangements used in
this Agreement are for convenience only and shall not affect the interpretation
of this Agreement.
Section 12.14. Non-application of Chanter 15 of Texas Credit Code. The
provisions of Chapter 15 of the Texas Credit Code (Vernon's Texas Civil
Statutes, Article 5069-15) are specifically declared by the parties hereto not
to be applicable to this Agreement or any of the other Loan Documents or to the
transactions contemplated hereby.
Section 12.15. ENTIRE AGREEMENT. THIS AGREEMENT, THE NOTES, AND THE OTHER
LOAN DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE
PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF AND
SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF
AND THEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES
HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
BORROWER:
TRANSAMERICAN WASTE OF HOUSTON, INC.
By: /s/ Xxxxx X. Xxxx
Xxxxx X. Xxxx
Vice President
LENDER:
SOUTHWEST BANK OF TEXAS, N . A.
By: /s/ Xxxx X. Xxxxxxxxx
Xxxx X. Xxxxxxxxx
Vice President
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