REVOLVING CREDIT AGREEMENT between WELLS FARGO BANK, NATIONAL ASSOCIATION and AMERICAN ECOLOGY CORPORATION dated June 30, 2008
Exhibit
10.50
between
XXXXX
FARGO BANK, NATIONAL ASSOCIATION
and
AMERICAN
ECOLOGY CORPORATION
dated
June
30, 2008
TABLE
OF CONTENTS
ARTICLE
1 - DEFINITIONS AND ACCOUNTING TERMS
|
1
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||
1.1
|
Defined Terms |
1
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1.2
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Accounting Terms |
6
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|
6
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|||
2.1
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Revolving Line of Credit |
6
|
|
2.1.1
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Manner
of Requesting.
|
6
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2.1.2
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Revolving
Note
|
7
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2.1.3
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Repayment
|
7
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2.1.4
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Commitment
Fee
|
7
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2.1.5
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Origination
Fee
|
8
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2.1.6
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Use
of Proceeds
|
8
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2.2
|
Letters of Credit |
8
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2.2.1
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Applications
|
8
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2.2.2
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Facility
Termination
|
8
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2.2.3
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Fees
|
8
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2.2.4
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Form
|
8
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2.2.5
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Reimbursement
|
9
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2.2.6
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Reimbursement
Obligations Absolute
|
9
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2.2.7
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Collateralization
of Letters of Credit
|
9
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2.2.8
|
Trade
Bank
|
9
|
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2.3
|
Interest |
10
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2.3.1
|
Prime
Rate Loan
|
10
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2.3.2
|
Base
Rate Loan
|
10
|
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2.3.3
|
LIBOR
Loan
|
10
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2.3.4
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Margins
|
10
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2.4
|
Method of Payment |
11
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2.5
|
Prepayments |
11
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2.6
|
Late Charges and Default Interest |
12
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2.7
|
Additional Interest Rate Provisions. |
12
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|
2.7.1
|
Unavailable
LIBOR Loans
|
12
|
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2.7.2
|
Unlawful
LIBOR Loans
|
13
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2.7.3
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Increased
Cost
|
13
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2.7.4
|
Computation
of Interest
|
13
|
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2.8
|
LIBOR Loan Extensions and Conversions |
14
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2.9
|
Minimum LIBOR Loan Requirements |
14
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2.10
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Taxes on Payments |
14
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2.11
|
Guaranties |
14
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|
ARTICLE
3 - CONDITIONS PRECEDENT
|
14
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3.1
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Initial Advance |
14
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3.1.1
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Revolving
Note
|
14
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3.1.2
|
Guaranties
|
15
|
i
3.1.3
|
15
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||
3.1.4
|
Opinion
of Counsel for Borrower and Guarantor
|
15
|
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3.1.5
|
Evidence
of all Corporate Action by Borrower
|
15
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|
3.1.6
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Certificates
of Existence for Borrower
|
15
|
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3.1.7
|
Articles
of Incorporation and Bylaws of Borrower
|
15
|
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3.1.8
|
Evidence
of all Corporate Action by Guarantors
|
15
|
|
3.1.9
|
Certificates
of Existence for Guarantors
|
15
|
|
3.1.10
|
Articles
of Incorporation and Bylaws of Guarantors
|
15
|
|
3.1.11
|
Certificates
of Assumed Business Name
|
15
|
|
3.1.12
|
Letter
to Accountants
|
15
|
|
3.1.13
|
Public
Record Searches
|
16
|
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3.1.14
|
Payment
of Origination Fee
|
16
|
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3.1.15
|
Additional
Documents
|
16
|
|
3.2
|
All Advances |
16
|
|
3.2.1
|
Take-Down
Certification
|
16
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|
3.2.2
|
Other
Documents
|
16
|
|
ARTICLE
4 - REPRESENTATIONS AND WARRANTIES
|
16
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4.1
|
Organization, Good Standing, and Due Qualification |
16
|
|
4.2
|
Power and Authority |
17
|
|
4.3
|
Legally Enforceable Agreement |
17
|
|
4.4
|
Financial Statements |
17
|
|
4.5
|
Labor Disputes and Casualties |
18
|
|
4.6
|
Other Agreements |
18
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|
4.7
|
No Litigation |
18
|
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4.8
|
No Defaults on Outstanding Judgments or Orders |
18
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|
4.9
|
Ownership and Liens |
18
|
|
4.10
|
Employee Benefits |
18
|
|
4.11
|
Operation of Business |
19
|
|
4.12
|
Taxes |
19
|
|
4.13
|
Debt |
19
|
|
4.14
|
Environmental Matters |
19
|
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4.15
|
Investment Company Act |
20
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4.16
|
Subsidiaries and Ownership of Stock |
20
|
|
ARTICLE
5 - AFFIRMATIVE COVENANTS
|
20
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5.1
|
Maintenance of Existence |
20
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5.2
|
Maintenance of Records |
20
|
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5.3
|
Maintenance of Properties |
20
|
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5.4
|
Conduct of Business |
21
|
|
5.5
|
Maintenance of Insurance |
21
|
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5.6
|
Compliance with Laws |
21
|
|
5.7
|
Right of Inspection |
21
|
|
5.8
|
Reporting Requirements. |
21
|
|
|
5.8.1
|
Annual
Financial Statements
|
21
|
5.8.2
|
Management
Letters
|
21
|
|
5.8.3
|
Notice
of Litigation
|
22
|
ii
5.8.4
|
Notice
of Defaults and Events of Default
|
22
|
|
5.8.5
|
ERISA
Reports
|
22
|
|
5.8.6
|
Reports
to Other Creditors
|
22
|
|
5.8.7
|
SEC
Reports
|
22
|
|
5.8.8
|
Compliance
Certificate
|
22
|
|
5.8.9
|
General
Information
|
23
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|
5.8.10
|
XXXXX
Filings
|
23
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|
5.9
|
Environment |
23
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|
5.10
|
Reimbursement of Lender Expenses |
23
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5.11
|
Bank Accounts |
23
|
|
ARTICLE
6 - NEGATIVE COVENANTS
|
24
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6.1
|
Liens |
24
|
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6.2
|
Debt |
25
|
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6.3
|
Mergers or Reorganization |
25
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|
6.4
|
Leases |
25
|
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6.5
|
Sale and Leaseback |
25
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|
6.6
|
Dividends |
25
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|
6.7
|
Sale of Assets |
26
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|
6.8
|
Investments |
26
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|
6.9
|
Guaranties |
26
|
|
6.10
|
ERISA Plans |
26
|
|
6.11
|
Transactions With Affiliates |
27
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|
6.12
|
Change of Name |
27
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|
6.13
|
Change in Management |
27
|
|
6.14
|
Accounting |
27
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|
6.15
|
Location of Chief Executive Office |
27
|
|
ARTICLE
7 - FINANCIAL COVENANTS
|
27
|
||
7.1
|
Funded Debt Ratio |
27
|
|
7.2
|
Minimum Tangible Net Worth |
27
|
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7.3
|
Leverage Ratio |
28
|
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ARTICLE 8 - EVENTS OF DEFAULT 28 | |||
8.1
|
Events of Default |
28
|
|
8.1.1
|
Payment
Failure
|
28
|
|
8.1.2
|
Misrepresentation
|
28
|
|
8.1.3
|
Performance
Failure
|
28
|
|
8.1.4
|
Failure
to Pay Debts
|
28
|
|
8.1.5
|
Insolvency
|
28
|
|
8.1.6
|
Judgments
|
29
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|
8.1.7
|
Guaranty
|
29
|
|
8.1.8
|
ERISA
|
29
|
|
8.1.9
|
Environmental
Lien
|
29
|
|
8.1.10
|
Material
Misrepresentation
|
30
|
|
8.1.11
|
Agreement
Unenforceable
|
30
|
|
8.2
|
Cure of Event of Default |
30
|
iii
ARTICLE
9 - BANK’S RIGHTS AND REMEDIES
|
30
|
||
9.1
|
Specific Remedies |
30
|
|
9.1.1
|
Terminate
Loans
|
30
|
|
9.1.2
|
Acceleration
|
30
|
|
9.1.3
|
Terminate
Agreement
|
30
|
|
9.1.4
|
Lender
Expenses
|
30
|
|
9.1.5
|
Attorney-in-Fact
|
30
|
|
9.1.6
|
Other
Remedies
|
30
|
|
9.2
|
Set Off |
31
|
|
9.3
|
Cumulative Remedies |
31
|
|
9.4
|
Arbitration. |
31
|
|
9.4.1
|
Arbitration
|
31
|
|
9.4.2
|
Governing
Rules
|
31
|
|
9.4.3
|
No
Waiver of Provisional Remedies, Self-Help and Foreclosure
|
32
|
|
9.4.4
|
Arbitrator
Qualifications and Powers
|
32
|
|
9.4.5
|
Discovery
|
32
|
|
9.4.6
|
Class
Proceedings and Consolidations
|
33
|
|
9.4.7
|
Payment
Of Arbitration Costs And Fees
|
33
|
|
9.4.8
|
Real
Property Collateral
|
33
|
|
9.4.9
|
Miscellaneous
|
33
|
|
ARTICLE
10 - MISCELLANEOUS
|
33
|
||
10.1
|
Amendments, Etc |
33
|
|
10.2
|
Notices, Etc |
33
|
|
10.3
|
No Waiver |
34
|
|
10.4
|
Successors and Assigns |
34
|
|
10.5
|
Integration |
34
|
|
10.6
|
Application of Payments |
35
|
|
10.7
|
Continuing Warranties, Representations and Covenants |
35
|
|
10.8
|
Indemnity |
35
|
|
10.9
|
Choice of Law and Venue |
35
|
|
10.10
|
Severability of Provisions |
35
|
|
10.11
|
Headings |
36
|
|
10.12
|
Jury Trial Waiver |
36
|
|
10.13
|
Destruction of Borrower’s Documents |
36
|
|
10.14
|
Participations |
36
|
|
10.14.1
|
Consent
|
36
|
|
10.14.2
|
Lead
Lender
|
36
|
|
10.15
|
Effective Date |
36
|
|
10.16
|
Counterparts |
37
|
EXHIBITS
TO CREDIT AGREEMENT
Exhibit
No.
|
|
2.1.1.1
|
Authorized
Persons
|
2.1.1.2
|
LIBOR
Loan Request Form
|
2.1.2
|
Form
of Revolving Note
|
3.1.4
|
Form
of Opinion of Counsel for Borrower and Guarantors
|
3.1.12
|
Form
of Letter to Accountants
|
4.13
|
Debt
|
4.16
|
Subsidiaries
|
6.1
|
Permitted
Liens
|
6.8
|
Borrower’s
Investment Policy
|
6.10
|
ERISA
Plans
|
iv
THIS
REVOLVING CREDIT AGREEMENT is entered into effective as of June 30, 2008,
between XXXXX FARGO BANK,
NATIONAL ASSOCIATION (“Bank”) and AMERICAN ECOLOGY CORPORATION,
a Delaware corporation (“Borrower”).
The
parties agree as follows:
ARTICLE
1 - DEFINITIONS
AND ACCOUNTING TERMS
1.1
Defined Terms. As
used in this Agreement, the following capitalized terms shall have the meanings
defined below. Terms defined in the singular shall have the same
meaning when used in the plural and vice versa. Certain other
capitalized terms used only in specific sections of this Agreement are defined
in such sections.
“Adjusted LIBOR Interest Rate”
means the rate per annum equal to the quotient of (i) Fixed Period LIBOR
divided by (ii) one (1) minus the LIBOR Reserve Percentage for the
applicable Interest Period, rounded upward, if necessary, to the nearest
one-sixteenth of one percent.
“Affiliate” means any Person
(1) who directly or indirectly controls, or is controlled by, or is under
common control with the Borrower; (2) who directly or indirectly
beneficially owns or holds five percent (5%) or more of any class of voting
stock of the Borrower; or (3) five percent (5%) or more of the voting stock
of which is directly or indirectly beneficially owned or held by the
Borrower. The term “control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise.
“Agreement” means this Credit
Agreement, as amended, supplemented, or modified from time to time.
“Bank” means Xxxxx Fargo Bank,
National Association, its successors and assigns.
“Base Rate” means the rate per
annum equal to the quotient of (i) the Daily LIBOR divided by (ii) one
(1) minus the LIBOR Reserve Percentage.
“Base Rate Loan” means any
loan under this Agreement bearing interest at a rate based upon the Base
Rate.
“Borrower” means American
Ecology Corporation, a Delaware corporation.
“Business Day” means a day
other than Saturday or Sunday and a day on which commercial banks are required
to be open for business in Boise, Idaho, under the laws of the state of Idaho,
and, if the applicable day relates to a LIBOR Loan, Interest Period, or notice
with respect to a LIBOR Loan, a day on which dealings in Dollar deposits are
also carried on in the Inter-Bank Market.
“CEO” means Commercial
Electronic Office, an electronic banking services platform Bank makes available
to certain banking customers.
“Code” means the Internal
Revenue Code of 1986, as amended from time to time, and the regulations and
published interpretations thereof.
“Commitment Amount” means
Fifteen Million and 00/100 Dollars ($15,000,000.00), less the sum of
(i) the aggregate stated amount of all Letters of Credit then outstanding
and available for drawing, and (ii) the aggregate amount of unreimbursed
drawings on Letters of Credit.
“Commonly Controlled Entity”
means an entity, whether or not incorporated, that is under common
control with a Borrower within the meaning of Section 414(b) or 414(c) of
the Code.
“Daily LIBOR” means the rate
of interest per annum for United States Dollar deposits quoted by Bank as the
Inter-Bank Market Offered Rate in effect from time to time for overnight
delivery of funds in amounts approximately equal to the principal amount of the
applicable Loan. Bank may base its quotation on the Inter-Bank Market
Offered Rate upon such offers or other market indicators of the Inter-Bank
Market as Bank in its discretion deems appropriate including, but not limited
to, the rate offered for U.S. dollar deposits on the London Interbank
Market.
“Environmental Laws” shall
mean and include, without limitation, the Resource Conversation and Recovery Act
of 1976 (RCRA), 42 USC §§ 6901 et. seq., the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (CERCLA) 42 USC
§§ 9601-9657, as amended by the Superfund Amendments and Reauthorization
Act of 1986 (XXXX), the Hazardous Materials Transportation Authorization Act of
1994, 49 USC §§ 5101 et. seq., the Federal Water Pollution Control Act, 33
USC §§ 1251 et. seq., the Clean Air Act, 42 USC §§ 741 et. seq., the
Clean Water Act, 33 USC § 7401, the Toxic Substances Control Act, 15 USC
§§ 2601–2629, the Safe Drinking Water Act, 42 USC §§ 300f–300j, and
all amendments thereto, and legally enforceable rules, regulations, orders, and
decrees promulgated thereunder, and any other local, state and/or federal laws,
rules, regulations and ordinances, whether currently in existence or hereafter
enacted, that govern, to the extent applicable to Borrower’s businesses,
properties and assets: (a) the existence, cleanup and/or remedy
of contamination on property; (b) the protection of the environment from
soil, air or water pollution, or from spilled, deposited or otherwise emplaced
contamination; (c) the emission or discharge of Hazardous Substances into
the environment; (d) the control of Hazardous Substances; or (e) the
use, generation, transport, treatment, removal or recovery of Hazardous
Substances.
2
“ERISA” means the Employment
Retirement Income Security Act of 1974, as the same may be amended or
supplemented from time to time, including any regulations issued in connection
therewith.
“Event of Default” means the
occurrence of any of the events set forth in Section 8.1 of this
Agreement.
“Fixed Period LIBOR” means the
rate per annum for United States Dollar deposits quoted by Bank as the
Inter-Bank Market Offered Rate, with the understanding that such rate is quoted
by Bank for the purpose of calculating effective rates of interest for the loans
making reference thereto, on the first day of an Interest Period for delivery of
funds on said date for a period approximately equal to the number of calendar
days in the Interest Period and in an amount approximately equal to the
principal amount to which such Interest Period applies. Bank may base
its quotation on the Inter-Bank Market Offered Rate upon such offers or other
market indicators of the Inter-Bank Market as Bank in its discretion deems
appropriate including, but not limited to, the rate offered for U.S. dollar
deposits on the London Interbank Market.
“GAAP” means the generally
accepted accounting principles set forth in the opinions and pronouncements of
the Accounting Principles Board and the American Institute of Certified Public
Accountants and the statements and pronouncements of the Financial Accounting
Standards Board that are applicable to the circumstances as of the date of
determination consistently applied.
“Guarantor” means, jointly and
severally, each of Borrower’s Subsidiaries, including, without limitation, US
Ecology, Inc., a California corporation, US Ecology Texas, Inc., a Delaware
corporation, American Ecology Recycle Center, Inc., a Delaware corporation,
American Ecology Environmental Services Corporation, a Texas corporation, US
Ecology Idaho, Inc., a Delaware corporation, US Ecology Nevada, Inc., a Delaware
corporation, and US Ecology Washington, Inc., a Delaware
corporation.
“Guaranty” means any guaranty
of the Obligations executed by a Guarantor.
“Hazardous Substance” means
(a) any oil, petroleum products, flammable substance, explosives,
radioactive materials, hazardous wastes or substances, toxic wastes or
substances or any other wastes, materials or pollutants that (i) pose a
hazard to Borrower’s owned or leased real property or to persons on or about
such real property or (ii) cause Borrower’s owned or leased real property
to be in violation of any Environmental Laws; (b) asbestos in any form that
is or could become friable, urea formaldehyde foam insulation, transformers or
other equipment that contain dielectric fluid containing regulated levels of
polychlorinated biphenyls, or radon gas; (c) any chemical, material or
substance defined as or included in the definition of “toxic waste,” “hazardous
substances,” “hazardous wastes,” “hazardous materials,” “extremely hazardous
waste,” “restricted hazardous waste,” or “toxic substances” or words of similar
import under any Environmental Laws; (d) any other chemical, material or
substance, exposure to which is prohibited, limited or regulated by any
governmental authority or agency or may or could pose a hazard to the health and
safety of the occupants of Borrower’s owned or leased real property or the
owners and/or occupants of property adjacent to or surrounding such real
property or any other person coming upon such real property or adjacent
property; and (e) any other chemical, materials or substance that may or
could pose a hazard to the environment and are or become subject to regulation
by any Environmental Laws.
3
“Interest Period” means with
respect to any LIBOR Loan, the period commencing on the date such loan is made
and ending, as the Borrower may select, pursuant to this Agreement, on the
numerically corresponding day in the first, second, third, sixth, or twelfth
calendar month thereafter, except that each such Interest Period that commences
on the last Business Day of a calendar month (or on any day for which there is
no numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar month;
provided that if an Interest Period would end on a day that is not a Business
Day, such Interest Period shall be extended to the next Business Day unless such
Business Day would fall in the next calendar month, in which event such Interest
Period shall end on the immediately preceding Business Day.
“Lender Expenses” means all
costs and expenses reasonably incurred by Bank in connection with the
preparation, negotiation, execution, delivery, filing, and administration of the
Loan Documents, and of any amendment, modification, extension, renewal or
supplement to the Loan Documents, including, without limitation, the fees and
out-of-pocket expenses of counsel for Bank, incurred in connection with advising
Bank as to its rights and responsibilities hereunder and structuring, drafting,
reviewing, amending, or otherwise involving the Loan Documents, and all costs
and expenses, including court costs, incurred in connection with enforcement of
the Loan Documents, or any amendment, modification, or supplement thereto,
whether by negotiation, legal proceedings, or otherwise.
“Letter of Credit” has the
meaning set forth in Section 2.2.
“Letter of Credit Commitment”
means Bank’s commitment to issue letters of credit from time to time in
accordance with Section 2.2 of this Agreement.
“Letter of Credit Commitment
Amount” means Fifteen Million Dollars ($15,000,000), less the amount, if
any, of the outstanding principal balance of the Revolving Loans.
“LIBOR Loan” means any loan
under this Agreement bearing interest at a rate based upon Adjusted LIBOR
Interest Rate.
“LIBOR Reserve Percentage”
means the reserve percentage (expressed as a decimal) prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for "Eurocurrency
Liabilities" (as defined in Regulation D of the Federal Reserve Board, as
amended), adjusted by Bank for expected changes in such reserve percentage
during the applicable Fixed Rate Term or any other applicable period
hereunder.
“Lien” means any mortgage,
deed of trust, pledge, security interest, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), or preference, priority, or
other security agreement and/or interest or preferential arrangement, charge, or
encumbrance of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of any financing statement under the Uniform Commercial Code or comparable law
of any jurisdiction to evidence any of the foregoing).
4
“Loan” means a Revolving
Loan.
“Loan Documents” means
collectively this Agreement, any note executed by Borrower to the order of Bank
and any other agreements or documents, whether now or hereafter existing,
executed or delivered in connection with this Agreement or any amendment
thereto, and any amendments, supplements, modifications, renewals, or extensions
of any of the foregoing documents.
“Maturity Date” means June 15,
2010, or such other date as Bank and Borrower may agree upon in writing from
time to time.
“Multiemployer Plan” means a
Plan described in Section 4001(a)(3) of ERISA.
“Obligations” means any and
all loans, lines of credit, advances, letter of credit obligations, debts,
overdrafts, liabilities, indebtedness, lease payments, guaranties, covenants,
and duties owing by Borrower to Bank of any kind and description (whether
advanced pursuant to or evidenced by the Loan Documents or any other instrument
or agreement between Bank and Borrower), any debt, liability, or obligation
owing by Borrower to others that Bank may have obtained by assignment or
otherwise, any interest not paid when due, all Lender Expenses, and all
renewals, extensions, and modifications of the foregoing, or any part thereof,
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising.
“PBGC” means the Pension
Benefit Guaranty Corporation or any entity succeeding to any or all of its
functions under ERISA.
“Permitted Liens” shall have
the meaning assigned to such term in Section 6.1 of this
Agreement.
“Person” means an individual,
partnership, limited liability company, corporation, business trust, joint stock
company, trust, unincorporated association, joint venture, governmental
authority, or other entity of whatever nature.
“Plan” means any pension plan
that is covered by Title IV of ERISA and in respect of which any Borrower
or a Commonly Controlled Entity is an “employer” as defined in Section 3(5)
of ERISA.
“Prime Rate Loan” means any
loan under this Agreement bearing interest at a rate based upon the Prime
Rate.
5
“Prime Rate” means the Bank’s
announced rate of interest referred to as its prime rate used as a reference
point from which the cost of credit to customers may be
calculated. The Prime Rate is subject to change from time to
time. The Prime Rate is not intended to be the lowest rate of
interest charged by the Bank to its borrowers, and Bank may make loans to other
Persons bearing interest at, above, or below the Prime Rate.
“Prohibited Transaction” means
any transaction set forth in Section 406 of ERISA or Section 4975 of
the Code.
“Reportable Event” means
any of the events set forth in Section 4043 of ERISA.
“Revolving Loans” shall have
the meaning assigned to such term in Section 2.1 of this
Agreement.
“Revolving Note” means the
promissory note described in Subsection 2.1.2.
“Subsidiary” means, as to the
Borrower, a corporation, association, trust, or other business entity of which
shares of stock or other ownership interests having ordinary voting power (other
than stock or interest having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers of
such corporation or business entity are at the time owned, or the management of
which is otherwise controlled, directly, or indirectly through one or more
intermediaries, or both, by the Borrower.
1.2
Accounting Terms. All
accounting terms not specifically defined in this Agreement shall be construed
in accordance with United States GAAP consistent with those applied in the
preparation of the financial statements referred to in Section 4.4, and all
financial data submitted pursuant to this Agreement shall be prepared in
accordance with GAAP.
ARTICLE
2 - LOANS
AND TERMS OF PAYMENT
2.1
Revolving Line of Credit. Upon
the request of Borrower, made at any time and from time to time from the date
hereof until the Maturity Date, and so long as no Event of Default has occurred,
Bank shall make loans (the “Revolving Loans”) to Borrower in an aggregate
principal amount not to exceed at any time outstanding the Commitment
Amount. Subject to the terms of this Agreement, loans made by Bank
may be repaid and reborrowed, up to and including the Maturity
Date. If at any time and for any reason the amount of advances made
pursuant to this Section exceed the above dollar limitation, then Borrower,
upon Bank’s election and demand, shall immediately pay to Bank in cash the
amount of such excess.
2.1.1
Manner of Requesting.
2.1.1.1 Prime Rate and Base
Rate Loans. Except for Sweep Loans described below, Bank is
authorized to make a Prime Rate or Base Rate Revolving Loan upon written or, at
the discretion of Bank, telephonic instructions received from any person
purporting to be a person identified in the attached Exhibit 2.1.1.1
or such other persons as Borrower may from time to time designate in writing to
Bank. Upon receipt of such instructions and fulfillment of the
applicable conditions set forth in Article 3, Bank shall make the Revolving
Loan to Borrower by crediting the amount thereof to the Borrower’s account with
Bank. Subject to the terms hereof, Bank shall make Revolving Loans to
Borrower in an amount equal to the amount by which the amount of checks clearing
any designated disbursement bank account that Borrower may now or hereafter have
with Bank exceeds the amount of collected funds in the disbursement account’s
related depository bank account that Borrower may now or hereafter have with
Bank (“Sweep Loans”). The existence of such an excess of clearing
checks shall be deemed to be a request by Borrower for any such Revolving
Loan. Each Sweep Loan shall be a Prime Rate or Base Rate Revolving
Loan as Borrower may from time to time designate in writing to
Bank. Borrower initially designates that Sweep Loans shall be Base
Rate Revolving Loans. Each Sweep Loan must satisfy all requirements
for a Revolving Loan.
6
2.1.1.2 LIBOR
Loans. For any Revolving Loan that is to be a LIBOR Loan, the
Borrower shall request such a Loan by delivering a LIBOR Loan Request to Bank no
later than 11:00 a.m. (Boise, Idaho time) at least two (2) Business Days prior
to the requested date of the Loan. A LIBOR Loan Request shall specify
(a) the date of the requested Loan, (b) the amount of such Loan, and
(c) the requested duration of the Interest Period for the Loan, and shall
be in substantially the form of the attached Exhibit
2.1.1.2 executed by any person purporting to be a person identified in
Exhibit 2.1.1.1
or such other persons as Borrower may from time to time designate in writing to
Bank. If Bank determines that the requested Loan is available and
will comply with this Agreement, and if no Event of Default has occurred and is
continuing, Bank shall make the LIBOR Loan to Borrower by crediting the amount
thereof to the Borrower’s account with Bank.
2.1.1.3 Requests
Submitted Through CEO. As long as Bank makes CEO available to
Borrower, Borrower shall be entitled to request any Revolving Loan through CEO
pursuant to such procedures and standards as Bank shall from time to time
establish.
2.1.2
Revolving Note. All
Revolving Loans made by the Bank under this Agreement shall be evidenced by a
single promissory note of the Borrower in the stated principal amount of the
Commitment Amount executed by Borrower substantially in the form of Exhibit 2.1.2
(the “Revolving Note”).
2.1.3
Repayment. Interest
accrued on Prime Rate and Base Rate Revolving Loans shall be paid on or before
the 10th day of each month in an amount equal to the interest accrued as of the
last day of the immediately preceding month. Interest accrued on
LIBOR Revolving Loans shall be paid on the last day of the Interest Period with
respect thereto and, in the case of an Interest Period greater than three months
(if such an Interest Period is permitted under this Agreement), at three month
intervals after the first day of such Interest Period. All
outstanding principal and accrued interest of the Revolving Loans shall be paid
in full on the Maturity Date.
2.1.4
Commitment Fee. The
Borrower shall pay to the Bank a commitment fee on the average daily unused
portion of the Commitment Amount from the date of this Agreement until the
Maturity Date at the per annum rate of the Commitment Margin set forth in
paragraph 2.3.3, payable in arrears on the first Business Day of each
fiscal quarter during the term of the Bank’s commitment to make Revolving Loans
and on the Maturity Date.
7
2.1.5
Origination Fee. The
Borrower shall pay Bank an origination fee for the Revolving Loans in the amount
of Thirty Thousand Dollars ($30,000). The origination fee shall be
paid on the date of this Agreement. The origination fee shall
represent an unconditional payment to Bank in consideration of Bank’s agreement
to extend financial accommodations to Borrower pursuant to this
Agreement.
2.1.6
Use of Proceeds. The
proceeds of the Revolving Loans shall be used by the Borrower to provide
financing for Borrower’s working capital needs. The Borrower shall
not, directly or indirectly, use any part of such proceeds for the purpose of
purchasing or carrying any margin stock within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System or to extend credit to
any person for the purpose of purchasing or carrying any such margin stock, or
for any purpose that violates, or is inconsistent with, Regulation X of
such Board of Governors.
2.2
Letters of Credit. Subject
to the terms and conditions of this Agreement, as a subfeature of the Revolving
Loans, Bank shall issue for the account of Borrower from time to time until the
Maturity Date such standby or commercial letters of credit to be used by
Borrower for general corporate purposes (individually a “Letter of Credit” and
collectively the “Letters of Credit”) as Borrower may request under this
Section. Subject to the terms of this Agreement, Letters of Credit
may be drawn, reimbursed, or returned undrawn, as applicable, up to and
including the Maturity Date. At no time, however, shall the total
face amount of all Letters of Credit outstanding, less any partial draws under
such Letters of Credit exceed the Letter of Credit Commitment
Amount.
2.2.1
Applications. Prior
to issuance of each Letter of Credit, and in all events prior to any daily
cutoff time Bank may have established for purposes thereof, Borrower shall
deliver to Bank an executed standard Bank form of application for issuance of a
letter of credit with such other documents, instruments and agreements as Bank
may reasonably require.
2.2.2
Facility Termination. The
commitment by Bank to issue Letters of Credit shall, unless earlier terminated
in accordance with the terms of this Agreement, automatically terminate on the
Maturity Date. Without Bank’s prior written approval, no Letter of
Credit shall expire on a date that is more than 365 calendar days after the date
of issuance or after the Maturity Date.
2.2.3
Fees. Borrower
shall pay Bank, on demand, Bank’s standard fees for issuing or administering a
commercial Letter of Credit. With respect to each standby Letter of
Credit, Borrower shall pay Bank a fee equal to the L/C Fee (set forth in
paragraph 2.3.3), per annum of the face amount of the Letter of Credit,
payable quarterly in advance.
2.2.4
Form. Each
Letter of Credit shall be subject to the terms and conditions of the application
and agreement submitted to Bank by Borrower and otherwise in form and substance
reasonably satisfactory to Bank and in favor of beneficiaries reasonably
satisfactory to Bank. Bank may, in its reasonable discretion, refuse
to issue a Letter of Credit due to the nature of the transaction or its terms or
in connection with any transaction where Bank, due to the beneficiary or the
nationality or residence of the beneficiary, would be prohibited by any
applicable law, regulation or order from issuing such Letter of
Credit. In all cases, however, the Bank shall use its best efforts to
issue a Letter of Credit reasonably acceptable to Bank and
Borrower.
8
2.2.5
Reimbursement. Immediately
after the payment by Bank of any drawing under any Letter of Credit (a “Drawing
Payment”) and not later than 12:00 noon (Boise, Idaho time) on the date of such
Drawing Payment, Borrower shall make or cause to be made a payment in the amount
of such Drawing Payment (a “Reimbursement Payment”) to Bank. Borrower
may, to the extent Revolving Loans then are available under this Agreement, make
any Reimbursement Payment with the proceeds of a Revolving Loan. Bank
may, if it so elects (but shall have no obligation to), treat any Drawing
Payment as a Prime Rate Loan. The right of Bank to treat a Drawing
Payment as a Prime Rate Loan shall not be affected by the occurrence or
existence of any Event of Default, the failure of Borrower to satisfy any
conditions precedent to a Loan, or any other circumstance or
condition.
2.2.6
Reimbursement Obligations Absolute. The
obligation of Borrower to reimburse Bank for Drawing Payments (such obligation
referred to as a “Reimbursement Obligation”) shall be absolute, unconditional
and irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement and any Letter of Credit agreement.
2.2.7
Collateralization of Letters of Credit. If
Bank approves issuance of a Letter of Credit that expires after the Maturity
Date, Borrower shall, upon Bank’s demand, deliver to Bank cash, or other
collateral acceptable to Bank in its sole and absolute discretion, having a
value, as determined by Bank, at least equal to 105% of the face amount of such
Letter of Credit. Any such collateral and/or any amounts received by
Bank shall be held by Bank in a separate account at Bank appropriately
designated as a cash collateral account in relation to this Agreement and the
Letters of Credit and retained by Bank as collateral security for the payment of
the Reimbursement Obligations, and Borrower grants a security interest to Bank
in such cash collateral account. Such amounts may be applied to
reimburse Lender for Reimbursement Obligations, or if no such reimbursement is
required to the payment of the Loans as Bank shall determine. Any
amounts remaining in any cash collateral account established pursuant hereto
after the payment in full of all of the Obligations and the expiration or
cancellation of all of the Letters of Credit shall be returned to Borrower
(after deduction of Lender’s expenses, if any).
2.2.8
Trade Bank. At
its option, Bank may arrange for Letters of Credit to be issued by Xxxxx Fargo
HSBC Trade Bank, NA, (“Trade Bank”) as agent for Bank. To the extent
that any Letters of Credit are issued by Trade Bank, (i) Trade Bank is
agent only to Bank and not to Borrower and has no obligations to Borrower,
(ii) the Letters of Credit issued by Trade Bank will be deemed Letters of
Credit for all purposes hereunder, and (iii) any of the obligations
performed or rights exercised pursuant to or in connection with the issuance of
any Letter of Credit by Trade Bank shall be deemed to be obligations performed
or rights exercised by Bank as the issuer.
9
2.3
Interest. Each
Loan shall be a Prime Rate Loan, a Base Rate Loan, or a LIBOR Loan, as selected
by Borrower in accordance with the terms of this Agreement.
2.3.1
Prime Rate Loan. Each
Loan that is a Prime Rate Loan shall bear interest at a fluctuating per annum
rate equal to the Prime Rate increased or decreased by the applicable Prime
Margin set forth below. Bank’s Prime Rate may change from time to
time, and the interest payable will continue to fluctuate at the rate as stated
herein. Any changes to the Prime Rate shall become effective without
prior notice to Borrower on the date on which the Prime Rate
changes.
2.3.2
Base Rate Loan. Each
Loan that is a Base Rate Loan shall bear interest at a fluctuating per annum
rate equal to the Base Rate increased by the applicable LIBOR Margin set forth
below. The Base Rate may change from time to time, and the interest
payable will continue to fluctuate at the rate as stated herein. Any
changes to the Base Rate shall become effective without prior notice to Borrower
on the date on which the Base Rate changes.
2.3.3
LIBOR Loan. Each
Loan that is a LIBOR Loan shall bear interest at a fluctuating per annum rate
equal to the Adjusted LIBOR Interest Rate for the applicable Interest Period, as
quotes are available, increased by the applicable LIBOR Margin set forth
below. Any changes to the LIBOR Margin shall not apply to LIBOR Loans
outstanding or requested on the date the LIBOR Margin is adjusted.
2.3.4
Margins. The
Prime Margins, the LIBOR Margins, the Commitment Margins, and the L/C fees are
as follows:
Funded
Debt Ratio
|
Prime
|
LIBOR
|
Commitment
|
L/C
Fee
|
less
than 1.00:1.00
|
0.0%
|
0.85%
|
0.125%
|
0.85%
|
less
than 1.50:1.00 but greater than or equal to 1.00:1.00
|
0.0%
|
1.00%
|
0.15%
|
1.00%
|
less
than 2.00:1.00 but greater than or equal to 1.50:1.00
|
0.0%
|
1.25%
|
0.20%
|
1.25%
|
less
than or equal to 2.50:1.00 but greater than or equal to
2.00:1.00
|
0.0%
|
1.50%
|
0.25%
|
1.50%
|
greater
than 2.50:1.00
|
0.0%*
|
1.50%*
|
0.25%
|
1.50%
|
*Plus
increase for an Event of Default pursuant to Section 2.6, if
applicable.
2.3.4.1 The Prime Margin, LIBOR
Margin, Commitment Margin, and L/C Fee shall be based upon the Borrower’s Funded
Debt Ratio (defined in paragraph 2.3.4.2) determined on a rolling four
quarter basis from the Borrower’s financial statements delivered to Bank and
adjusted, if necessary, on the first day of the second month after Bank’s
receipt of financial statements that show an adjustment is
necessary.
10
2.3.4.2 Borrower’s Funded Debt
Ratio shall be the ratio of Borrower’s Funded Debt to four quarter rolling
EBITDA. The term “Funded Debt” shall mean, as of the date of
determination as applied to Borrower and its Subsidiaries, the sum of
(i) all indebtedness of Borrower owing to third parties for money borrowed,
including capitalized leases of Borrower having a final maturity of one (1) year
or more from the date of creation (including that portion of the principal of
such indebtedness due within one (1) year from the date of such determination),
(ii) any indebtedness of the Borrower having a final maturity within one
(1) year from such date which may be renewed or extended at the option of the
Borrower for more than one (1) year from such date, (iii) the outstanding
balance of the Loans, (iv) all obligations for the deferred purchase price
of any property or assets, including, without limitation, capital leases for
such purpose (excluding trade payables), (v) all obligations for deferred
closure/post closure, and (vi) all obligations of Borrower created or
arising with respect to property or assets acquired under any conditional sales
contract or other title retention agreement or incurred as financing, less the
amount of Borrower’s short term investments as of the date of
determination. The term “EBITDA” shall mean, for any period, as
applied to Borrower and its Subsidiaries, the sum of (1) Borrower’s
Income from Operations (consistent with GAAP and as reported in the Company’s
filings with the Securities and Exchange Commission), plus (2) the
sum of the following items to the extent they were deducted to compute
Borrower’s Income from Operations: (a) non-cash
accretion of closure/post-closure obligations, plus (b) depreciation,
plus (c) amortization,
plus (d) other
non-cash charges.
2.4
Method of Payment. All
payments shall be made to Bank at its Regional Commercial Banking office in
Boise, Idaho in lawful money of the United States in immediately available funds
or as otherwise directed by Bank. Bank shall send Borrower a monthly
statement of the amount of interest accrued during the preceding
month. No checks, drafts, or other instruments received by Bank
purportedly in satisfaction of any of the Obligations shall constitute payment
thereof unless and until such instruments have actually been
collected. All payments received after 4:00 p.m. Boise, Idaho time
shall be considered to have been received the next Business Day, except for
payments by CEO (if CEO is made available to Borrower), which payments shall be
deemed to have been made on the same Business Day as receipt so long as the
payments are received by 9:00 p.m. Boise, Idaho time. The Borrower
authorizes the Bank, if and to the extent payment is not made when due under any
Loan Document, to charge from time to time against any account of the Borrower
with the Bank any amount so due. In case the due date of any payment
falls on a day that is not a Business Day, such payment shall, except as
otherwise provided herein, instead be due the next succeeding Business Day, and
interest shall continue to accrue. Bank may note the date, amount and
interest rate (and Interest Period with respect to LIBOR Loans) of each Loan and
each payment of principal and interest with respect hereto in Bank’s books and
records (either manually or by electronic entry), which notation shall be
conclusive evidence of the information noted, absent manifest
error. Unless otherwise agreed or required by applicable law,
payments will be applied first to any unpaid collection costs and any late
charges, then to any unpaid interest, and any remaining amount to
principal.
2.5
Prepayments. The
Borrower may prepay any or all Prime Rate and Base Rate Loans without penalty or
premium. Borrower may prepay principal on any portion of a LIBOR Loan
at any time and in the minimum amount of One Hundred Thousand Dollars
($100,000.00); provided however, that if the outstanding principal balance of
such LIBOR Loan is less than such amount, the minimum prepayment amount shall be
the entire outstanding principal balance of such LIBOR Loan. In
consideration of Bank providing this prepayment option to Borrower, or if any
such portion of a LIBOR Loan shall become due and payable at any time prior to
the last day of the Interest Period for such LIBOR Loan by acceleration or
otherwise, Borrower shall pay to Bank immediately upon demand a fee that is the
sum of the discounted monthly differences for each month from the month of
prepayment through the month in which such Interest Period ends, calculated as
follows for each such month:
11
(i) Determine
the amount of interest that would have accrued each month on the amount prepaid
at the interest rate applicable to such amount had it remained outstanding until
the last day of the Interest Period applicable thereto.
(ii) Subtract
from the amount determined in (i) above the amount of interest that would have
accrued for the same month on the amount prepaid for the remaining term of such
Interest Period at Adjusted LIBOR Interest Rate in effect on the date of
prepayment for new loans made for such term and in a principal amount equal to
the amount prepaid.
(iii) If
the result obtained in (ii) above for any month is greater than zero, discount
that difference by Adjusted LIBOR Interest Rate used in (ii) above.
Borrower
acknowledges that prepayment of such amount may result in Bank incurring
additional costs, expenses and/or liabilities, and that it is difficult to
ascertain the full extent of such costs, expenses and/or
liabilities. Borrower, therefore, agrees to pay the above-described
prepayment fee and agrees that such amount represents a reasonable estimate of
the prepayment costs, expenses and/or liabilities of Bank. If
Borrower fails to pay any prepayment fee when due, the amount of such prepayment
fee shall bear interest until paid at a rate per annum two percent (2.00%) above
the Prime Rate in effect from time to time (computed on the basis of a 360-day
year, actual days elapsed).
2.6
Late Charges and Default Interest. If
Bank has not received the full amount of any payment by the end of fifteen (15)
calendar days after the date due, including the balance due at maturity,
Borrower shall pay a late charge to Bank in the amount of five percent (5%) of
the overdue payment of principal and/or interest. Borrower shall pay
the late charge promptly, but only once on each late payment. In
addition to any late charges that may be assessed as herein provided, the
outstanding balance of the Loans after the occurrence of an Event of Default
shall accrue interest from the date of the Event of Default at the rate equal to
four (4) percentage points per annum in excess of the interest rate that would
otherwise be charged if no Event of Default existed. If Bank shall
waive in writing or Borrower shall cure such Event of Default, the interest rate
shall revert to the non-default rate from and after such waiver or completion of
such cure, until another such Event of Default.
2.7.1
Unavailable LIBOR Loans. If
Bank shall have determined (which determination shall be conclusive and binding)
that for any reason adequate and reasonable means do not exist for ascertaining
the Adjusted LIBOR Interest Rate for any or all Interest Periods, Bank shall
give notice of such determination to the Borrower. If such notice is
given, and until such notice has been withdrawn by Bank, no additional LIBOR
Loans for such Interest Periods shall be made and no additional conversions of
Loans to LIBOR Loans for such Interest Periods shall be permitted, and at the
end of the Interest Period relating to any outstanding LIBOR Loans such Loans
shall become Prime Rate or Base Rate Loans.
12
2.7.2
Unlawful LIBOR Loans. Notwithstanding
any other provisions herein, if any law, treaty, rule or regulation, or
determination of a court or other governmental authority, or any change therein
or in the interpretation or application thereof, shall make it unlawful for Bank
to make or maintain LIBOR Loans or Base Rate Loans as contemplated by this
Agreement, the obligation of Bank hereunder to make LIBOR Loans and Base Rate
Loans shall forthwith be canceled, and, if required, each LIBOR Loan and Base
Rate Loan then outstanding shall immediately become a Prime Rate
Loan.
2.7.3
Increased Cost. In
the event that any adoption or modification of any law, treaty, rule, or
regulation, or determination of a court or other governmental authority, or that
any change in the interpretation or application thereof, which adoption,
modification or change becomes effective after the date hereof, or in the event
that compliance by Bank with and request or directive issued after the date
hereof (whether or not having the force of law) from any governmental
authority:
(A) does
or shall subject Bank or any of its foreign offices to any tax of any kind
whatsoever with respect to the Loan Documents, or changes the basis of taxation
of payments to Bank of principal, interest, fees, or any other amount payable
hereunder (except for changes in the rate of tax on the overall net income of
Bank); or
(B) does
or shall impose, modify, or hold applicable any reserve, special deposit,
compulsory loan, FDIC insurance, or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances or loans by,
other credit extended by or any other acquisition of funds by any office of Bank
(other than to the extent previously taken into account in determining the Prime
Rate or statutory reserves); or
(C) does
or shall impose on Bank any other condition; and the result of any of the
foregoing is to increase the cost to Bank of making, renewing, or maintaining
the loans hereunder, or to reduce any amount receivable thereunder or under any
of the Loan Documents; then, in any such case, the Borrower shall promptly pay
to Bank, upon demand, such amount or amounts as may be necessary to compensate
Bank for any additional cost or reduced amount received. Bank shall
deliver to the Borrower a written statement of the losses or expenses sustained
or incurred, and any reasonable allocation made by Bank of such losses and
expenses shall be conclusive, absent manifest error. Bank shall
promptly notify the Borrower of any event of which it has knowledge, occurring
after the Closing Date, which event will entitle Bank to compensation under this
Section.
2.7.4
Computation of Interest. The
actual interest to be charged on the Loans shall be computed daily on the
outstanding balance for the actual number of calendar days elapsed on the basis
of a year consisting of 360 days. Should the rate of interest exceed
that allowed by law, the applicable rate of interest will be the maximum rate of
interest lawfully allowed. The principal amount outstanding on which
the interest rate(s) shall be charged shall be determined from the Bank’s
records, which shall at all times be conclusive, absent manifest
error.
13
2.8
LIBOR Loan Extensions and Conversions. So
long as no Event of Default has occurred and is continuing and subject to the
terms and conditions hereof, the Borrower may extend a LIBOR Loan beyond its
current Interest Period by giving Bank a LIBOR Loan Request for the
extension. The Borrower may also convert any Prime Rate Loan into a
LIBOR Loan by giving Bank a LIBOR Loan Request for the
conversion. Unless Bank receives notice of a proposed extension or
conversion as and when required hereunder, then at the end of an Interest Period
for a LIBOR Loan such Loan shall automatically convert to a Prime Rate
Loan.
2.9
Minimum LIBOR Loan Requirements. Each
LIBOR Loan shall be in a minimum amount of One Million Dollars ($1,000,000) and
in an integer multiple of One Hundred Thousand Dollars ($100,000). No
Revolving Loan shall be made as, extended as, or converted into, a LIBOR Loan
with an Interest Period that ends after the Maturity Date. No more
than eight (8) LIBOR Revolving Loans shall be outstanding at one
time.
2.10
Taxes on Payments. All
payments made by Borrower under this Agreement and the other Loan Documents
shall be made free and clear of, and without deduction or withholding for or on
account of, any present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings (“Taxes”), now or hereafter
imposed, levied, collected, withheld or assessed by any governmental authority
(except net income taxes and franchise taxes in lieu of net income taxes imposed
on Bank as a result of a present or former connection between the jurisdiction
of the governmental authority imposing such tax on Bank, excluding a connection
arising solely from Bank having executed, delivered, or performed its
obligations or received a payment under, or enforced, this Agreement or the
other Loan Documents). If any Taxes are required to be withheld from
any amounts payable to Bank under any Loan Document, the amounts so payable to
Bank shall be increased to the extent necessary to yield to Bank (after payment
of all Taxes) interest or any such other amounts payable hereunder at the rates
or in the amounts specified in this Agreement and the other Loan
Documents.
2.11
Guaranties. The
Obligations shall be guarantied by the Guarantors pursuant to the terms of a
guaranty agreement.
ARTICLE
3 - CONDITIONS
PRECEDENT
3.1
Initial Advance. The
obligation of Bank to make the initial Loan to the Borrower under this Agreement
is subject to the conditions precedent that Bank shall have received on or
before the day of such loan each of the following, in form and substance
satisfactory to Bank and its legal counsel:
3.1.1
Revolving Note. The Revolving
Note executed by the Borrower.
14
3.1.2
Guaranties. A
reaffirmation of an existing guaranty of the Obligations or a new guaranty of
the Obligations executed by each Guarantor.
3.1.3
Evidence of Insurance. Evidence
of the insurance Borrower must maintain in accordance with the Loan
Documents.
3.1.4
Opinion of Counsel for Borrower and Guarantor. A
favorable opinion of counsel for Borrower and Guarantor, in substantially the
form of Exhibit 3.1.4
and as to such other matters as Bank may reasonably request.
3.1.5
Evidence of all Corporate Action by Borrower. Certified
copies of all corporate action taken by Borrower authorizing its execution and
delivery of the Loan Documents and each other document to be delivered pursuant
to this Agreement and its performance of its agreements thereunder.
3.1.6
Certificates of Existence for Borrower. Certificates
of existence or good standing dated a reasonable date before the effective date
of this Agreement showing that the Borrower is in good standing under the laws
of the state of its incorporation and all other states in which it is doing
business.
3.1.7
Articles of Incorporation and Bylaws of Borrower. Copies
of the articles of incorporation and bylaws of Borrower certified by an officer
of Borrower to be true and correct.
3.1.8
Evidence of all Corporate Action by Guarantors. Certified
copies of all corporate action taken by each Guarantor authorizing its execution
and delivery of the Guaranty and the performance of its agreements
thereunder.
3.1.9
Certificates of Existence for Guarantors. Certificates
of existence or good standing dated a reasonable date before the effective date
of this Agreement showing that each Guarantor is in good standing under the laws
of the state of its incorporation and all other states in which it is doing
business.
3.1.10
Articles of Incorporation and Bylaws of Guarantors. Copies
of the articles of incorporation and bylaws of each Guarantor certified by an
officer of the Guarantor to be true and correct.
3.1.11
Certificates of Assumed Business Name. Copies
of all certificates of assumed business name, if any, filed by
Borrower.
3.1.12
Letter to Accountants. A
letter in the form of Exhibit 3.1.12
to Borrower’s outside auditors (which letter Borrower shall also deliver to any
subsequent outside auditors hired by Borrower, all of which shall be independent
certified public accountants acceptable to
Bank): (1) instructing such auditors to send to Bank notice of
all final financial statements and reports that are prepared as a result of any
audit or other review of Borrower’s operations, finances, or internal controls,
including any reports dealing with improper accounting practices, defalcations,
financial reporting errors, or misstatements or fraud; (2) authorizing such
auditors to, upon Bank’s request, meet with Bank to discuss said financial
statements and any questions regarding same; and (3) advising such auditors
that one of the principal purposes of the audited financial statements which
they may be asked to prepare is to provide Bank with information regarding
Borrower’s financial condition.
15
3.1.13
Public Record Searches. Uniform
Commercial Code financing statement searches, federal and state income tax lien
searches, judgment searches, or other similar searches on Borrower and any other
Persons that Bank may require and in such form as Bank may require.
3.1.14
Payment of Origination Fee. Payment
of the origination fee as required by Section 2.1.5 of this
Agreement.
3.1.15
Additional Documents. Such
additional approvals, opinions, or documents as Bank may reasonably
request.
3.2
All Advances. The
obligation of Bank to make each Loan under this Agreement shall be subject to
the following conditions precedent:
3.2.1
Take-Down Certification. The
following statements shall be true on the date of each loan, and, if requested
by Bank, Borrower shall have delivered to Bank a certificate signed by a duly
authorized officer of the Borrower, certifying to Bank the truth of the
following statements:
(a) The
representations and warranties contained in this Agreement and in the Loan
Documents are correct on and as of the date of such loan as though made on and
as of such date.
(b) No
Event of Default has occurred and is continuing, or would result from such
loan.
3.2.2
Other Documents. Bank
shall have received such other approvals, opinions, or documents as Bank may
reasonably request.
ARTICLE
4 - REPRESENTATIONS
AND WARRANTIES
In order
to induce the Bank to enter into this Agreement and to make the loans as
provided in this Agreement, the Borrower makes the following representations and
warranties to the Bank, which shall survive execution of this
Agreement:
4.1
Organization, Good Standing, and Due Qualification. Borrower
was organized under the Delaware General Corporation Law and exists in good
standing under the laws of the jurisdiction of its organization with power under
the Delaware General Corporation Law to own or lease its assets and to transact
the business in which it is now engaged or proposed to be
engaged. Borrower is qualified to transact business as a foreign
corporation in good standing under the laws of each other jurisdiction in which
such qualification is required. Each of Borrower’s Subsidiaries and
each Guarantor was organized under the general business corporation law of the
jurisdiction of its organization and exists in good standing under the laws of
the jurisdiction of its organization with power under the general business
corporation law of such jurisdiction to own or lease its assets and to transact
the business in which it is now engaged or proposed to be
engaged. Each of Borrower’s Subsidiaries and each Guarantor is
qualified to transact business as a foreign corporation in good standing under
the laws of each other jurisdiction in which such qualification is
required.
16
4.2
Power and Authority. Borrower
has authorized the execution and delivery of the Loan Documents to which it is a
party and the performance of its agreements thereunder by all necessary
corporate action under the Delaware General Corporation Law. Each
Guarantor has authorized the execution and delivery of the Loan Documents to
which it is a party and the performance of its agreements thereunder by all
necessary corporate action under the general business corporation law of the
jurisdiction of its organization. Borrower’s and each Guarantor’s
execution and delivery of the Loan Documents to which it is a party and the
performance of its respective obligations thereunder will not (1) require
any consent or approval of the shareholders of Borrower or the Guarantor that
has not been obtained; (2) violate Borrower’s or the Guarantor’s
certificate or articles of incorporation (however denominated); (3) violate
any provision of any law, rule, regulation, order, writ, judgment, injunction,
decree, determination, or award presently in effect having applicability to
Borrower or the Guarantor; (4) result in a breach of or constitute a
default under any indenture or loan or credit agreement or any other agreement,
lease, or instrument to which Borrower or a Guarantor is a party or by which it
or its properties may be bound or affected; or (5) cause Borrower or a
Guarantor to violate any such law, rule, regulation, order, writ, judgment,
injunction, decree, determination, or award or be in default under any such
indenture, agreement, lease, or instrument.
4.3
Legally Enforceable Agreement. This
Agreement is, and each of the other Loan Documents to which Borrower is a party
when delivered under this Agreement will be, legal, valid, and binding
obligations of the Borrower, enforceable against the Borrower, in accordance
with their respective terms, except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency, and other similar laws affecting
creditors’ rights generally. Each Guaranty and other Loan Document to
which a Guarantor is a party when delivered under this Agreement will be the
legal, valid, and binding obligation of the applicable Guarantor, enforceable
against the Guarantor in accordance with their terms, except to the extent that
such enforcement may be limited by applicable bankruptcy, insolvency, and other
similar laws affecting creditors’ rights generally.
4.4
Financial Statements. All
financial statements and information relating to Borrower, any Subsidiary, any
Affiliate of Borrower, and any Guarantor that have been delivered by Borrower or
a Guarantor to Bank are complete and correctly and fairly present the financial
condition of the Borrower, the Subsidiary, the Affiliate of Borrower, or the
Guarantor, as applicable, as of the date of such statements and information and
the results of the operations of the Borrower and the affiliates of Borrower for
the periods covered by such statements, all in accordance with GAAP (subject to
year-end adjustments in the case of the interim financial
statements). There has been no material adverse change in the
financial condition of Borrower, an Affiliate of Borrower, or a Guarantor since
the date of the most recent of such applicable financial statements submitted to
Bank. There are no liabilities of Borrower, a Subsidiary, or a
Guarantor, fixed or contingent, that are material but are not reflected in the
financial statements or in the notes thereto, other than liabilities arising in
the ordinary course of business since the date of the most recent of such
applicable financial statements submitted to Bank. No information,
exhibit, or report furnished by the Borrower to the Bank in connection with the
negotiation of this Agreement contained any material misstatement of fact or
omitted to state a material fact or any fact necessary to make the statement
contained therein not materially misleading.
17
4.5
Labor Disputes and Casualties. Except
as disclosed in Borrower’s Forms 10K and 10Q filed with the Securities and
Exchange Commission and copies of which have been delivered to Bank, neither the
businesses nor the properties of the Borrower or any Subsidiary or any Guarantor
are affected by any fire, explosion, accident, strike, lockout, or other labor
dispute, drought, storm, hail, earthquake, embargo, act of God, or other
casualty (whether or not covered by insurance), materially and adversely
affecting such businesses or properties or the operation of the Borrower or the
Subsidiary or the Guarantor.
4.6
Other Agreements. No
event has occurred and is continuing that constitutes or that, with the giving
of notice or the lapse of time or both, could constitute, an event of default or
a default under any agreement or guaranty to which the Borrower or any
Subsidiary or any Guarantor is a party, and no such event will occur upon the
making of the loans hereunder.
4.7
No Litigation. Except
as disclosed in Borrower’s Forms 10K and 10Q filed with the Securities and
Exchange Commission and copies of which have been delivered to Bank, there is no
pending action or proceeding against or affecting the Borrower or any Subsidiary
or any Guarantor before any court, governmental agency, or arbitrator, that
would have a reasonable possibility to, in any one case or in the aggregate,
materially adversely affect the financial condition, operations, properties, or
business of the Borrower or the ability of the Borrower or any Subsidiary or any
Guarantor to perform its obligations under the Loan Documents to which it is a
party.
4.8
No Defaults on Outstanding Judgments or Orders. Except
as disclosed in Borrower’s Forms 10K and 10Q filed with the Securities and
Exchange Commission, copies of which have been delivered to Bank, the Borrower,
each Subsidiary, and each Guarantor have satisfied all judgments against it, and
neither the Borrower nor any Subsidiary nor any Guarantor is in default with
respect to any judgment, writ, injunction, decree, rule, or regulation of any
court, arbitrator, or federal, state, municipal, or other governmental
authority, commission, board, bureau, agency, or instrumentality, domestic or
foreign.
4.9
Ownership and Liens. The
Borrower and each Subsidiary has title to, or valid leasehold interests in, all
of its properties and assets, real and personal, and none of such properties and
assets owned by the Borrower or a Subsidiary and none of their leasehold
interests are subject to any Lien, except Permitted Liens.
4.10
Employee Benefits. The
Borrower and each Subsidiary is in compliance in all material respects with all
applicable provisions of ERISA. Neither a Reportable Event nor a
Prohibited Transaction has occurred and is continuing with respect to any Plan;
no notice of intent to terminate a Plan has been filed nor has any Plan been
terminated; no circumstances exist that constitute grounds entitling the PBGC to
institute proceedings to terminate, or appoint a trustee to administer, a Plan,
nor has the PBGC instituted any such proceedings; neither Borrower nor any
Commonly Controlled Entity has completely or partially withdrawn from a
Multiemployer Plan; the Borrower and each Commonly Controlled Entity have met
their minimum funding requirements under ERISA with respect to all of their
Plans and the present value of all vested benefits under each Plan does not
exceed the fair market value of all Plan assets allocable to such benefits, as
determined on the most recent valuation date of the Plan and in accordance with
the provisions of ERISA; and neither the Borrower nor any Commonly Controlled
Entity has incurred any liability to the PBGC under ERISA.
18
4.11
Operation of Business. To
the best of Borrower’s knowledge, Borrower, each Subsidiary, and each Guarantor
possesses all licenses, permits, franchises, patents, copyrights, trademarks,
and trade names, or rights thereto, to conduct its businesses substantially as
now conducted and as presently proposed to be conducted, and the Borrower, each
Subsidiary, and each Guarantor is not in violation of any valid rights of others
with respect to any of the foregoing. Borrower, each Subsidiary, and
each Guarantor has filed, and will file in the future, with the appropriate
governmental entities all assumed business name certificates necessary or
required to conduct its businesses.
4.12
Taxes. The
Borrower, each Subsidiary, and each Guarantor have filed all tax returns
(federal, state, and local) required to be filed and have paid all taxes,
assessments, and governmental charges and levies thereon to be due, including
interest and penalties, except those presently being or to be contested by
Borrower, a Subsidiary, or a Guarantor in good faith in the ordinary course of
business and for which adequate reserves have been provided in Bank’s reasonable
judgment.
4.13
Debt. Exhibit 4.13
is a complete and correct list of all credit agreements, indentures, purchase
agreements, guaranties, capital leases, and other investments, agreements, and
arrangements presently in effect providing for or relating to extensions of
credit (including agreements and arrangements for the issuance of letters of
credit or for acceptance financing) in respect of which the Borrower or any
Subsidiary is in any manner directly or contingently obligated; and the maximum
principal or face amounts of the credit in question, which are outstanding and
which can be outstanding, are correctly stated, and all Liens of any nature
given or agreed to be given as security therefore are correctly described or
indicated in such Exhibit.
4.14
Environmental Matters. To
the best of its knowledge and except as disclosed in Borrower’s Forms 10K and
10Q filed with the Securities and Exchange Commission and copies of which have
been delivered to Bank, the Borrower and each Subsidiary has materially complied
with, and its businesses, operations, assets, equipment, property, leaseholds or
other facilities are in compliance with, the provisions of the Environmental
Laws and all other federal, state, and local environmental, health and safety
laws, codes and ordinances, and all rules and regulations promulgated
thereunder. The Borrower and each Subsidiary has been issued and will
maintain all required federal, state, and local permits, licenses, certificates,
and approvals relating to (1) air emissions; (2) discharges to surface
water or groundwater; (3) noise emissions; (4) solid or liquid waste
disposal; (5) the use, generation, storage, transportation, or disposal of
Hazardous Substances; or (6) other environmental, health, or safety
matters. Except as disclosed in Borrower’s Forms 10K and 10Q filed
with the Securities and Exchange Commission and copies of which have been
delivered to Bank, neither Borrower nor any Subsidiary has received notice of,
nor knows of, or suspects facts that might constitute any material violations of
an Environmental Law or any other federal, state, or local environmental,
health, noise emission, or safety laws, codes, or ordinances and any rules or
regulations promulgated thereunder with respect to its businesses, operations,
assets, equipment, property, leaseholds, or other facilities. To the
best of Borrower’s knowledge, except in accordance with a valid governmental
regulation, permit, license, certificate, or approval, and except as previously
disclosed, there has been no emission, spill, release, or discharge into or upon
(1) the air; (2) soils, or any improvements located thereon;
(3) surface water or groundwater; or (4) the sewer, septic system or
waste treatment, storage, or disposal system servicing the premises of any
Hazardous Substances or from the premises.
19
4.15
Investment Company Act. Neither
Borrower nor any Subsidiary is an “investment company” or a company “controlled”
by an “investment company”, within the meaning of the Investment Company Act of
1940, as amended.
4.16
Subsidiaries and Ownership of Stock. Set
forth in Exhibit 4.16
is a complete and accurate list of the Subsidiaries of the Borrower, showing the
jurisdiction of incorporation of each and showing the percentage of the
Borrower’s ownership of the outstanding stock of each Subsidiary. All
of the outstanding capital stock of each such Subsidiary has been validly
issued, is fully paid and nonassessable, and is owned by the Borrower free and
clear of all Liens.
ARTICLE
5 - AFFIRMATIVE
COVENANTS
The
Borrower covenants and agrees that so long as any Obligation is outstanding it
will comply with the following provisions:
5.1
Maintenance of Existence. Borrower
shall preserve and maintain, and cause each Subsidiary to preserve and maintain,
its existence and good standing in the jurisdiction of its organization, and
qualify and remain qualified, as a foreign corporation in each jurisdiction in
which such qualification is required.
5.2
Maintenance of Records. Borrower
shall keep, and cause each Subsidiary to keep, adequate records and books of
account, in which complete entries will be made in accordance with GAAP
consistently applied, reflecting all financial transactions of the
Borrower.
5.3
Maintenance of Properties. Borrower
shall maintain, keep, and preserve, and cause each Subsidiary to maintain, keep,
and preserve, all of its properties (tangible and intangible) necessary or
useful in the proper conduct of its business in good working order and
condition, ordinary wear and tear excepted.
20
5.4
Conduct of Business. Borrower
shall continue, and cause each Subsidiary to continue, to engage in a
commercially reasonable and efficient and economical manner in businesses of the
same general type as conducted by it on the date of this
Agreement.
5.5
Maintenance of Insurance. Borrower
shall, at its expense, maintain, and cause each Subsidiary to maintain,
insurance with financially sound and reputable insurance companies or
associations in such amounts, covering such risks, and in such form as shall be
consistent with the industry practices and satisfactory to
Bank. Borrower, upon request of Bank, shall deliver to Bank from time
to time the policies or certificates of insurance in form satisfactory to Bank,
including stipulations that coverages will not be canceled or diminished without
at least thirty (30) calendar days’ prior written notice to Bank and not
including any disclaimer of the insurer’s liability for failure to give such a
notice. If Borrower at any time fails to obtain or maintain any
insurance required under the Loan Documents, Bank may, but shall not be
obligated to, obtain such insurance as Bank deems appropriate.
5.6
Compliance with Laws. Borrower
shall comply, and cause each Subsidiary to comply, in all material respects with
all applicable laws, rules, regulations, and orders, such compliance to include,
without limitation, paying before the same become delinquent all taxes,
assessments, and governmental charges imposed upon it or upon its property,
except for such taxes, assessments or charges that are contested by Borrower or
a Subsidiary in good faith in the ordinary course of business and for which
adequate reserves have been provided in Bank’s reasonable judgment.
5.7
Right of Inspection. Borrower
shall, at any reasonable time and from time to time with reasonable notice,
permit the Bank or any agent or representative thereof to examine and make
copies of and abstracts from the records and books of account of, and visit the
properties of, the Borrower and any Subsidiary, and to discuss the affairs,
finances, and accounts of the Borrower and any Subsidiary with any of its
employees, officers, and directors and the Borrower’s independent
accountants.
5.8.1
Annual Financial Statements. Borrower
shall furnish to Bank within one hundred twenty (120) calendar days after the
end of each fiscal year of the Borrower, consolidated balance sheets of the
Borrower and its Subsidiaries as of the end of such fiscal year, and
consolidated statements of income and retained earnings of the Borrower and its
Subsidiaries for such fiscal year, and consolidated statements of cash flows of
the Borrower and its Subsidiaries for such fiscal year, all in reasonable detail
and stating in comparative form the respective figures for the corresponding
date and period in the prior fiscal year and all prepared in accordance with
GAAP consistently applied and audited by independent certified public
accountants selected by the Borrower and acceptable to the Bank.
5.8.2
Management Letters. Borrower
shall furnish to Bank promptly upon receipt thereof, copies of any reports
submitted to the Borrower by independent certified public accountants in
connection with examination of the financial statements of the Borrower made by
such accountants.
21
5.8.3
Notice of Litigation. Borrower
shall furnish to Bank promptly after the commencement thereof, notice of all
actions, suits, and proceedings before any court or governmental department,
commission, board, bureau, agency, or instrumentality, domestic or foreign,
affecting the Borrower that, if determined adversely to the Borrower, could have
a material adverse effect on the financial condition, properties, or operations
of the Borrower.
5.8.4
Notice of Defaults and Events of Default. Borrower
shall furnish to Bank as soon as possible and in any event within five Business
Days after the occurrence of each Event of Default, a written notice setting
forth the details of such Event of Default and the action that is proposed to be
taken by the Borrower with respect thereto.
5.8.5
ERISA Reports. Borrower
shall furnish to Bank as soon as possible, and in any event within thirty (30)
calendar days after the Borrower knows or has reason to know that any
circumstances exist that constitute grounds entitling the PBGC to institute
proceedings to terminate a Plan subject to ERISA with respect to the Borrower or
any Commonly Controlled Entity, and promptly but in any event within ten (10)
Business Days of receipt by the Borrower or any Commonly Controlled Entity of
notice that the PBGC intends to terminate a Plan or appoint a trustee to
administer the same, and promptly but in any event within ten (10) Business Days
of the receipt of notice concerning the imposition of withdrawal liability with
respect to the Borrower or any Commonly Controlled Entity, a certificate of an
authorized officer of the Borrower setting forth all relevant details and the
action that the Borrower proposes to take with respect thereto.
5.8.6
Reports to Other Creditors. Borrower
shall furnish to Bank promptly after the furnishing thereof, copies of any
statement or report furnished to any party pursuant to the terms of any
indenture, loan, credit, or similar agreement and not otherwise required to be
furnished to the Bank pursuant to any other clause of this Section.
5.8.7
SEC Reports. Borrower
shall furnish to Bank as soon as possible and in any event within five (5)
Business Days after the filing thereof, copies of all regular, periodic, and
special reports, and all registration statements that the Borrower or any
Subsidiary files with the Securities and Exchange Commission or any governmental
authority that may be substituted therefore, or with any national securities
exchange, including, without limitation, 10Q, 10K, and 8K
reports. Notwithstanding anything in this Agreement to the contrary,
Borrower shall furnish Bank with a copy of Borrower’s 10Q report no later than
45 calendar days after the end of each fiscal quarter and a copy of Borrower’s
10K report no later than 120 calendar days after the end of each fiscal
year.
5.8.8 Compliance
Certificate. Borrower
shall furnish Bank within 45 calendar days after the end of each fiscal quarter
and 120 calendar days after each fiscal year (in the case of the 4th fiscal
quarter) a certificate of the chief executive officer or the chief financial
officer or other officer approved by Bank in writing stating that he or she has
individually reviewed the provisions of this Agreement and that review of the
activities of Borrower during such quarter period has been made by
him or her or under his or her supervision, with a view to determining whether
Borrower had fulfilled all its obligations under this Agreement, and that
Borrower has observed and performed each undertaking contained in the Loan
Documents and is not in default in the observance or performance of any of the
provisions of the Loan Documents or, if Borrower shall be so in default,
specifying all such defaults and events of which he or she may have
knowledge.
22
5.8.9
General Information. Borrower
shall furnish to Bank such other information respecting the condition or
operations, financial or otherwise, of the Borrower as the Bank may from time to
time reasonably request.
5.8.10
XXXXX Filings. Borrower’s
obligation to furnish any item or information to Bank may be satisfied if the
item or information is available on the Securities and Exchange Commission’s
XXXXX database and Borrower provides Bank written notice that such item or
information is so available.
5.9
Environment. Borrower
shall, and shall cause each Subsidiary to, (i) be and remain in substantial
compliance with Environmental Laws and with the provisions of all other federal,
state, and local environmental, health, and safety laws, codes, and ordinances,
and all rules and regulations issued thereunder; (ii) notify the Bank
immediately of any notice of a material Hazardous Substance discharge or
environmental complaint received by Borrower from any governmental agency or
other party; (iii) notify the Bank immediately of any material Hazardous
Substance discharge from or affecting its premises; (iv) immediately comply
with all applicable laws regarding the same; (v) promptly pay any fine or
penalty assessed in connection therewith after exhausting all recourse;
(vi) permit the Bank to inspect the premises, to conduct tests thereon, and
to inspect all books, correspondence, and records pertaining thereto; and
(vii) at the Bank’s request, and at the Borrower’s expense, provide a
report of a qualified environmental engineer, satisfactory in scope, form, and
content to the Bank, and such other and further assurances reasonably
satisfactory to the Bank that the condition has been corrected. For
purposes of this Section, the term “material” means any event that alone or in
the aggregate with other events listed in this section, if determined adversely
to the Borrower or a Subsidiary, could have a material adverse effect on the
financial condition, properties, or operations of the Borrower or a
Subsidiary.
5.10
Reimbursement of Lender Expenses. Borrower
shall promptly on demand reimburse Bank for sums expended by Bank that
constitute Lender Expenses and Borrower authorizes and approves all advances and
payments by Bank for items constituting Lender Expenses after written notice to
Borrower. In addition, the Borrower shall pay any and all stamp and
other taxes and fees payable or determined to be payable in connection with the
execution, delivery, filing, and recording of any of the Loan Documents and the
other documents to be delivered under any such Loan Documents, and agrees to
hold the Bank harmless from and against any and all liabilities with respect to
or resulting from any delay in paying or omission to pay such taxes and
fees. This provision shall survive termination of this
Agreement.
5.11
Bank Accounts. Borrower
shall use Bank as Borrower’s primary depository and transaction
bank.
23
ARTICLE
6 - NEGATIVE
COVENANTS
The
Borrower covenants and agrees that so long as any Obligation is outstanding it
will comply with the following provisions:
6.1
Liens. Without
Bank’s prior written consent, Borrower shall not create, incur, assume, or
suffer to exist, or permit any Subsidiary to create, incur, assume, or suffer to
exist, any Lien upon any of its property or assets, now owned or hereafter
acquired, except for the following (“Permitted Liens”):
(i) Liens
(if any) granted to Bank to secure the Obligations,
(ii) Liens
described in the attached Exhibit 6.1,
(iii) pledges
or deposits made to secure payment of worker’s compensation insurance (or to
participate in any fund in connection with worker’s compensation insurance),
unemployment insurance, pensions, or social security programs,
(iv) Liens
imposed by mandatory provisions of law such as for materialmen, mechanics,
warehousemen, and other like Liens arising in the ordinary course of business,
securing indebtedness whose payment is not yet due, or that is being contested
by Borrower in good faith and for which adequate reserves have been
provided,
(v) Liens
for taxes, assessments, and governmental charges or levies imposed upon a person
or upon such person’s income or profits or property, if the same are not yet due
and payable or if the same are being contested in good faith and as to which
adequate cash reserves have been provided,
(vi) Liens
arising from good faith deposits in connection with tenders, leases, real estate
bids, or contracts (other than contracts involving the borrowing of money),
pledges or deposits to secure public or statutory obligations and deposits to
secure (or in lieu of) surety, stay, appeal, or customs bonds and deposits to
secure the payment of taxes, assessments, customs duties, or other similar
charges,
(vii) encumbrances
consisting of zoning restrictions, easements, or other restrictions on the use
of real property, provided that such items do not impair the use of such
property for the purposes intended, and none of which is violated by existing or
proposed structures or land use, or
(viii) purchase-money
Liens on any property hereafter acquired or the assumption of any Lien on
property existing at the time of such acquisition (and not created in
contemplation of such acquisition), or a Lien incurred in connection with any
conditional sale or other title retention agreement or a capital lease, provided
that (a) any property subject to any of the foregoing is acquired by the
Borrower in the ordinary course of its business and the Lien on any such
property attaches to such asset concurrently or within ninety (90) calendar days
after the acquisition thereof; (b) the obligation secured by any Lien so
created, assumed, or existing shall not exceed the lesser of the cost or the
fair market value as of the time of acquisition of the property covered thereby
to the Borrower, (c) each such Lien shall attach only to the property so
acquired, (d) the debt secured by all such Liens shall not exceed One
Hundred Thousand Dollars ($100,000) at any time outstanding in the aggregate,
and (e) the debt secured by such Lien is permitted by the provisions of
Section 6.2.
24
6.2
Debt. Without
Bank’s prior written consent, Borrower shall not incur, assume, or suffer to
exist, or permit any Subsidiary to incur, assume, or suffer to exist, any debt
other than (i) the Obligations; (ii) indebtedness and liabilities of
Borrower identified in Exhibit 4.13;
(iii) indebtedness and liabilities of Borrower that have been subordinated
to the Obligations by written agreement in form and substance acceptable to
Bank; (iv) accounts payable to trade creditors for goods or services that
are incurred in the ordinary course of business, as presently conducted, and
paid within a reasonable time, unless contested in good faith and by appropriate
proceedings; and (v) debt of the Borrower secured by purchase-money liens
that are Permitted Liens.
6.3
Mergers or Reorganization. Borrower
shall not, without Bank’s prior written consent, which consent shall not be
unreasonably withheld, wind up, liquidate or dissolve itself, reorganize, merge
or consolidate with or into, or convey, sell, assign, transfer, lease, or
otherwise dispose of (whether in one transactions or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to any Person, or acquire all or substantially all of the
assets or the business of any Person, or permit any Subsidiary to do so, except
that (1) any Subsidiary may merge into or transfer assets to the
Borrower, (2) any Subsidiary may merge into or consolidate with
or transfer assets to any other Subsidiary., (3) acquire or merge with any
entity whose assets are valued at ten percent (10%) or less of the Borrower’s
net worth.
6.4
Leases. Without
Bank’s prior written consent, Borrower shall not create, incur, assume, or
suffer to exist, or permit any Subsidiary to create, incur, assume, or suffer to
exist, any obligation as lessee for the rental or hire of any real or personal
property, except: (1) leases existing on the date of this Agreement and any
extensions or renewals thereof; (2) leases with Bank or an affiliate of
Bank; (3) leases (other than capital leases) that do not in the aggregate
require the Borrower and its Subsidiaries on a consolidated basis to make
payments (including taxes, insurance, maintenance, and similar expenses that the
Borrower or any Subsidiary is required to pay under the terms of any lease) in
any fiscal year of the Borrower in excess of One Hundred Thousand Dollars
($100,000); and (4) leases (other than capital leases) for the rental of
transportation equipment (e.g., rail cars and trucks) that is required in order
to transport material to the facilities of Borrower and its
Subsidiaries.
6.5
Sale and Leaseback. Without
Bank’s prior written consent, Borrower shall not sell, transfer, or otherwise
dispose of, or permit any Subsidiary to sell, transfer, or otherwise dispose of,
any real or personal property to any Person other than Bank or an affiliate of
Bank and thereafter directly or indirectly lease back the same or similar
property.
6.6
Dividends. Without
Bank’s prior written consent, Borrower shall not declare or pay any dividends;
or purchase, redeem, retire, or otherwise acquire for value any of its capital
stock now or hereafter outstanding; or make any distribution of assets to its
shareholders as such whether in cash, assets, or in obligations of the Borrower;
or allocate or otherwise set apart any sum for the payment of any dividend or
distribution on, or for the purchase, redemption, or retirement of any shares of
its capital stock; or make any other distribution by reduction of capital or
otherwise in respect of any shares of its capital stock, except that the
Borrower (1) may declare and deliver dividends and make distributions
payable solely in common stock of the Borrower; (2) may purchase or
otherwise acquire shares of its capital stock by exchange for or out of the
proceeds received from a substantially concurrent issue of new shares of its
capital stock; (3) may purchase, redeem, retire, or otherwise acquire
shares of its capital stock for cash as long as on the date the share repurchase
is declared by Borrower, no Event of Default shall have occurred and be
continuing, no event or condition that, with the giving of notice or the passage
of time or both, would constitute an Event of Default shall have occurred and be
continuing, and the share repurchase will not result in the occurrence of an
Event of Default; and (4) may declare and pay quarterly or annual dividends
as long as on the date the dividend is declared by Borrower, no Event of Default
shall have occurred and be continuing, no event or condition that, with the
giving of notice or the passage of time or both, would constitute an Event of
Default shall have occurred and be continuing, and the payment of the dividend
will not result in the occurrence of an Event of Default.
25
6.7
Sale of Assets. Without
Bank’s prior written consent, Borrower shall not sell, lease, assign, transfer,
or otherwise dispose of any of its now owned or hereafter acquired material
operating assets (including, without limitation, receivables),
except: (1) assets disposed of in the ordinary course of
business; and (2) the sale or other disposition of assets no longer used or
useful in the conduct of its business.
6.8
Investments. Without
Bank’s Prior written consent, Borrower shall not make any loan or advance to any
Person, or purchase or otherwise acquire any capital stock, assets, obligations,
or other securities of, make any capital contribution to, or otherwise invest in
or acquire any interest in any Person, or participate as a partner or joint
venturer with any other Person, except: (1) investments
permitted under Borrower’s investment policy, a copy of which is attached as
Exhibit 6.8;
(2) stock, obligations, or securities received in settlement of debts
(created in the ordinary course of business) owing to the Borrower;
(3) investments made through Bank or one of its affiliates, and (4) as
provided for in Section 6.3.
6.9
Guaranties. Without
Bank’s prior written consent, Borrower shall not assume, guarantee, endorse, or
otherwise be or become directly or contingently responsible or liable
(including, but not limited to, an agreement to purchase any obligation, stock,
assets, goods, or services, or to supply or advance any funds, assets, goods, or
services, or an agreement to maintain or cause such Person to maintain a minimum
working capital or net worth, or to otherwise assure the creditors of any Person
against loss) for obligations of any Person, except guaranties by endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business.
6.10
ERISA Plans. Borrower
shall not, without the Bank’s prior written consent, enter into, contribute to,
or become a party to any Plan, other than those Plans listed in Exhibit 6.10.
26
6.11
Transactions With Affiliates. Without
Bank’s prior written consent, Borrower shall not enter into any transaction,
including, without limitation, the purchase, sale, or exchange of property or
the rendering of any service, with any Affiliate except in the ordinary course
of and pursuant to the reasonable requirements of the Borrower’s business and
upon fair and reasonable terms no less favorable to the Borrower than would
obtain in a comparable arm’s-length transaction with a Person not an Affiliate;
except that Borrower may repay Affiliate Debt, as listed on Exhibit 4.13
at anytime.
6.12
Change of Name. Borrower
shall not, without Bank’s prior written consent, change the Borrower’s name,
business structure, or identity, or add any new assumed business
name.
6.13
Change in Management. Borrower
shall not materially and adversely alter the executive management positions of
Chief Executive Officer and/or Chief Financial Officer without giving Bank
written notice of such alteration at least sixty (60) calendar days prior to the
effective date of such alteration in executive management. If such
advance notice is not possible, Borrower shall notify Bank of such change as
soon as is possible.
6.14
Accounting. Borrower
shall not (i) modify or change its method of accounting to depart from GAAP
without advising Bank of such change, or (ii) enter into, modify, or
terminate any material agreement presently existing or at any time hereafter
entered into with any third party accounting firm and/or service bureau for the
preparation and/or storage of Borrower’s accounting records without Borrower
instructing said accounting firm and/or service bureau to provide to Bank
information regarding Borrower’s financial condition.
6.15
Location of Chief Executive Office. Borrower
shall not relocate its chief executive office from Ada County, Idaho without
thirty (30) calendar days prior written notice to Bank.
So long
as any Obligation is outstanding or the Bank shall have any commitment under
this Agreement, Borrower shall maintain the following financial
covenants:
7.1
Funded Debt Ratio.
Borrower shall maintain at the end of each fiscal quarter a Funded Debt Ratio
(as defined in paragraph 2.3.4.2) of not greater than 2.50 to
1.00.
7.2
Minimum Tangible Net Worth. Borrower
shall maintain on a consolidated basis at the end of each fiscal quarter a
Tangible Net Worth of not less than Seventy-five Million and No/100 Dollars
($75,000,000.00), plus 40% of Borrower’s consolidated pre-tax net income before
distributions for taxes after March 31, 2008, and without regard to any
consolidated net losses. “Tangible Net Worth” means the sum of
(i) Borrower’s total consolidated assets excluding all intangible assets
(such as goodwill, trademarks, patents, copyrights, and similar items), plus
(ii) all indebtedness of Borrower that is subordinated to payment in full
of the Obligations pursuant to a written agreement in form and substance
acceptable to Bank (“Subordinated Debt”), less (iii) all of Borrower’s
liabilities other than Subordinated Debt.
27
7.3
Leverage Ratio. Borrower
shall maintain at the end of each fiscal quarter a ratio of Borrower’s total
liabilities to Borrower’s shareholder’s equity of not greater than 0.60 to
1.00.
8.1
Events of Default. Each
of the following events, at the option of Bank, shall constitute an event of
default (each an “Event of Default”):
8.1.1
Payment Failure. The
Borrower shall fail to pay the principal of, or interest on, the Revolving Note,
or any Obligation within fifteen (15) calendar days of when due and
payable.
8.1.2
Misrepresentation. Any
representation or warranty made or deemed made by Borrower in this Agreement or
any other Loan Document or that is contained in any certificate, document,
opinion, or financial or other statement furnished at any time under or in
connection with any Loan Document shall prove to have been incorrect,
incomplete, or misleading in any material respect on or as of the date made or
deemed made.
8.1.3
Performance Failure. Borrower
shall fail to perform or observe any term, covenant, or agreement contained in
this Agreement or other Loan Document, or Borrower shall be in default under any
other agreement with Bank or an affiliate of Bank.
8.1.4
Failure to Pay Debts. Borrower
shall (a) fail to pay any indebtedness for borrowed money (other than the
Loans) of the Borrower in excess of an aggregate principal amount of $100,000,
or any interest or premium thereon, when due (whether by scheduled maturity,
required prepayment, acceleration, demand, or otherwise); or (b) fail to
perform or observe any term, covenant, or condition on its part to be performed
or observed under any agreement or instrument relating to any such indebtedness,
when required to be performed or observed, if the effect of such failure to
perform or observe is to accelerate, or to permit the acceleration of after the
giving of notice or passage of time, or both, the maturity of such indebtedness,
whether or not such failure to perform or observe shall be waived by the holder
of such indebtedness, or any such indebtedness shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof.
8.1.5
Insolvency. Borrower
(a) shall generally not pay, or shall be unable to pay, or shall admit in
writing its inability to pay its debts as such debts become due; or
(b) shall make an assignment for the benefit of creditors, or petition or
apply to any tribunal for the appointment of a custodian, receiver, or trustee
for it or a substantial part of its assets; or (c) shall commence any
proceeding under any bankruptcy, reorganization, arrangement, readjustment of
debt, dissolution, or liquidation law or statute of any jurisdiction, whether
now or hereafter in effect; or (d) shall have had any such petition or
application filed or any such proceeding commenced against it in which an order
for relief is entered or an adjudication or appointment is made, and that
remains undismissed for a period of sixty (60) calendar days or more; or
(e) shall take any corporate action indicating its consent to, approval of,
or acquiescence in any such petition, application, proceeding, or order for
relief or the appointment of a custodian, receiver, or trustee for all or any
substantial part of its properties; or (f) shall suffer any such
custodianship, receivership, or trusteeship to continue undischarged for a
period of sixty (60) calendar days or more.
28
8.1.6
Judgments. One
or more judgments, decrees, or orders for the payment of money in excess of
$250,000 in the aggregate shall be rendered against the Borrower, and such
judgments, decrees, or orders shall continue unsatisfied and in effect for a
period of sixty (60) consecutive calendar days without being vacated,
discharged, satisfied, or stayed or bonded pending appeal.
8.1.7
Guaranty. Any
Guaranty shall at any time after its execution and delivery and for any reason
cease to be in full force and effect or shall be declared null and void, or the
validity or enforceability thereof shall be contested by the Guarantor, or the
Guarantor shall deny he has any further liability under, or shall fail to
perform its obligations under, the Guaranty, or the Guarantor, if a natural
person, shall die.
8.1.8
ERISA. Any
of the following events shall occur or exist with respect to Borrower and any
Commonly Controlled Entity under ERISA: any Reportable Event shall occur;
complete or partial withdrawal from any Multiemployer Plan shall take place; any
Prohibited transaction shall occur; a notice of intent to terminate a Plan shall
be filed, or a Plan shall be terminated; or circumstances shall exist that
constitute grounds entitling the PBGC to institute proceedings to terminate a
Plan, or the PBGC shall institute such proceedings; and in each case above, such
event or condition, together with all other events or conditions, if any, could
subject the Borrower to any tax, penalty, or other liability that in the
aggregate may exceed $100,000.
8.1.9
Environmental Lien. If
any federal, state, or local agency asserts or creates a Lien upon any or all of
the assets, equipment, property, leaseholds, or other facilities of Borrower by
reason of the occurrence of a hazardous discharge or an environmental complaint;
or if any federal, state, or local agency asserts a claim against the Borrower
and/or its assets, equipment, property, leaseholds or other facilities for
damages or cleanup costs relating to a hazardous discharge or an environmental
complaint; provided, however, that such claim shall not constitute a default if,
within ten (10) Business Days of the occurrence giving rise to the claim,
(a) the Borrower can prove to the Bank’s reasonable satisfaction that the
Borrower has commenced and is diligently pursuing an investigation of the claim
to be followed promptly by either: (i) a cure or plan for
correction of the event that constitutes the basis for the claim, and continues
diligently to pursue such cure or correction to completion, or
(ii) proceedings for an injunction, a restraining order, or other
appropriate emergent relief preventing such agency or agencies from asserting
such claim, that relief is granted within ten (10) Business Days of the
occurrence giving rise to the claim and the injunction, order, or relief is not
thereafter resolved or reversed on appeal; and (b) in either of the
foregoing events, the Borrower has posted a bond, letter of credit, or other
security satisfactory in form, substance and amount to both the Bank and the
agency or entity asserting the claim to secure the proper and complete cure or
correction of the event that constitutes the basis for the claim.
29
8.1.10
Material Misrepresentation. Any
material misrepresentation exists now or hereafter in any warranty or
representation made to Bank by any officer or director of Borrower, or if any
such warranty or representation is withdrawn by any officer or
director.
8.1.11
Agreement Unenforceable. This
Agreement shall at any time after its execution and delivery and for any reason
cease to be in full force and effect or shall be declared null and void, or the
validity or enforceability thereof shall be contested by Borrower, or Borrower
shall deny it has any further liability or obligation under this
Agreement.
8.2
Cure of Event of Default. If
any Event of Default, other than a payment default, is curable and if Borrower
has not been given a notice of a similar default within the preceding twelve
(12) months, it may be cured (and no Event of Default will have occurred) if
Borrower, after receiving written notice from Bank demanding cure of such
default: (a) cures the default within fifteen (15) calendar
days; or (b) if the cure requires more than fifteen (15) calendar days,
immediately initiates steps that Bank deems in Bank’s sole, but reasonable,
discretion to be sufficient to cure the default and thereafter continues and
completes all reasonable and necessary steps sufficient to produce compliance as
soon as reasonably practical. Bank at its sole discretion may elect
to give Borrower additional cure opportunities.
9.1
Specific Remedies. Upon
the occurrence of an Event of Default by Borrower under this Agreement, Bank
may, at its election and without notice of its election and without demand, do
any one or more of the following, all of which are authorized by
Borrower:
9.1.1
Terminate Loans. Terminate the
obligation of the Bank to make Loans.
9.1.2
Acceleration. Declare all
Obligations, whether evidenced by this Agreement or the Loan Documents,
immediately due and payable in full.
9.1.3
Terminate Agreement. Terminate this
Agreement and any of the other Loan Documents as to any future liability or
obligation of Bank, but without affecting the Obligations.
9.1.4
Lender Expenses. Borrower shall
pay all Lender Expenses incurred in connection with Bank’s enforcement and
exercise of any of its rights and remedies as herein provided, whether or not
suit is commenced by Bank.
9.1.5
Attorney-in-Fact. Borrower appoints
Bank as Borrower’s attorney to carry out the terms of this Agreement, with power
to endorse Borrower’s name on any checks, notes, money orders, drafts, or other
forms of payment or security that may come into Bank’s
possession. The appointment of Bank as Borrower’s attorney being
coupled with an interest is irrevocable so long as any Obligations remain
unsatisfied.
30
9.1.6
Other Remedies. Bank may exercise
any other right or remedy provided in this Agreement or the Loan Documents or
otherwise available in law or in equity.
9.2
Set Off. Upon
the occurrence and during the continuance of any Event of Default the Bank is
hereby authorized at any time and from time to time, without notice to the
Borrower (any such notice being expressly waived by the Borrower), to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by the Bank
to or for the credit or the account of Borrower against any and all of the
obligations of the Borrower now or hereafter existing under this Agreement or
the Revolving Note or any other Loan Document, irrespective of whether or not
the Bank shall have made any demand under this Agreement or the Revolving Note
or such other Loan Document and although such obligations may be
unmatured. The Bank agrees promptly to notify the Borrower after any
such setoff and application, provided that the failure to give such notice shall
not affect the validity of such setoff and application. The rights of
the Bank under this Section are in addition to other rights and remedies
(including, without limitation, other rights of setoff) that the Bank may
have.
9.3
Cumulative Remedies. The
rights and remedies provided herein are cumulative, and are not exclusive of any
other rights, powers, privileges, or remedies, now or hereafter existing, at law
or in equity or otherwise.
9.4.1
Arbitration. The
parties shall, upon demand by any party, submit to binding arbitration all
claims, disputes and controversies between or among them (and their respective
employees, officers, directors, attorneys, and other agents), whether in tort,
contract or otherwise arising out of or relating to in any way (i) the
Loans and the Loan Documents and their negotiation, execution,
collateralization, administration, repayment, modification, extension,
substitution, formation, inducement, enforcement, default or termination; or
(ii) requests for additional credit.
9.4.2
Governing Rules. Any
arbitration proceeding will (i) proceed in a location in Idaho selected by
the American Arbitration Association (“AAA”); (ii) be governed by the
Federal Arbitration Act (Title 9 of the United States Code),
notwithstanding any conflicting choice of law provision in any of the documents
between the parties; and (iii) be conducted by the AAA, or such other
administrator as the parties shall mutually agree upon, in accordance with the
AAA’s commercial dispute resolution procedures, unless the claim or counterclaim
is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and
costs in which case the arbitration shall be conducted in accordance with the
AAA’s optional procedures for large, complex commercial disputes (the commercial
dispute resolution procedures or the optional procedures for large, complex
commercial disputes to be referred to, as applicable, as the
“Rules”). If there is any inconsistency between the terms hereof and
the Rules, the terms and procedures set forth herein shall
control. Any party who fails or refuses to submit to arbitration
following a demand by any other party shall bear all costs and expenses incurred
by such other party in compelling arbitration of any dispute. Nothing
contained herein shall be deemed to be a waiver by any party that is a bank of
the protections afforded to it under 12 U.S.C. § 91 or any similar
applicable state law.
31
9.4.3
No Waiver of Provisional Remedies, Self-Help and Foreclosure. The
arbitration requirement does not limit the right of any party to
(i) foreclose against real or personal property collateral;
(ii) exercise self-help remedies relating to collateral or proceeds of
collateral such as setoff or repossession; or (iii) obtain provisional or
ancillary remedies such as replevin, injunctive relief, attachment or the
appointment of a receiver, before during or after the pendency of any
arbitration proceeding. This exclusion does not constitute a waiver
of the right or obligation of any party to submit any dispute to arbitration or
reference hereunder, including those arising from the exercise of the actions
detailed in sections (i), (ii) and (iii) of this
paragraph.
9.4.4
Arbitrator Qualifications and Powers. Any
arbitration proceeding in which the amount in controversy is $5,000,000.00 or
less will be decided by a single arbitrator selected according to the Rules, and
who shall not render an award of greater than $5,000,000.00. Any
dispute in which the amount in controversy exceeds $5,000,000.00 shall be
decided by majority vote of a panel of three arbitrators; provided however, that
all three arbitrators must actively participate in all hearings and
deliberations. The arbitrator will be a neutral attorney licensed in
the State of Idaho or a neutral retired judge of the state or federal judiciary
of Idaho, in either case with a minimum of ten years experience in the
substantive law applicable to the subject matter of the dispute to be
arbitrated. The arbitrator will determine whether or not an issue is
arbitratable and will give effect to the statutes of limitation in determining
any claim. In any arbitration proceeding the arbitrator will decide
(by documents only or with a hearing at the arbitrator’s discretion) any
pre-hearing motions which are similar to motions to dismiss for failure to state
a claim or motions for summary adjudication. The arbitrator shall
resolve all disputes in accordance with the substantive law of Idaho and may
grant any remedy or relief that a court of such state could order or grant
within the scope hereof and such ancillary relief as is necessary to make
effective any award. The arbitrator shall also have the power to
award recovery of all costs and fees, to impose sanctions and to take such other
action as the arbitrator deems necessary to the same extent a judge could
pursuant to the Federal Rules of Civil Procedure, the Idaho Rules of Civil
Procedure or other applicable law. Judgment upon the award rendered
by the arbitrator may be entered in any court having
jurisdiction. The institution and maintenance of an action for
judicial relief or pursuit of a provisional or ancillary remedy shall not
constitute a waiver of the right of any party, including the plaintiff, to
submit the controversy or claim to arbitration if any other party contests such
action for judicial relief.
9.4.5
Discovery. In
any arbitration proceeding discovery will be permitted in accordance with the
Rules. All discovery shall be expressly limited to matters directly
relevant to the dispute being arbitrated and must be completed no later than 20
calendar days before the hearing date and within 180 calendar days of the filing
of the dispute with the AAA. Any requests for an extension of the
discovery periods, or any discovery disputes, will be subject to final
determination by the arbitrator upon a showing that the request for discovery is
essential for the party’s presentation and that no alternative means for
obtaining information is available.
32
9.4.6
Class Proceedings and Consolidations. The
resolution of any dispute arising pursuant to the terms of this Agreement shall
be determined by a separate arbitration proceeding and such dispute shall not be
consolidated with other disputes or included in any class
proceeding.
9.4.7
Payment Of Arbitration Costs And Fees. The
arbitrator shall award all costs and expenses of the arbitration
proceeding.
9.4.8
Real Property Collateral. Notwithstanding
anything herein to the contrary, no dispute shall be submitted to arbitration if
the dispute concerns indebtedness secured directly or indirectly, in whole or in
part, by any real property unless (i) the holder of the mortgage, lien or
security interest specifically elects in writing to proceed with the
arbitration, or (ii) all parties to the arbitration waive any rights or
benefits that might accrue to them by virtue of the single action rule statute
of Idaho, thereby agreeing that all indebtedness and obligations of the parties,
and all mortgages, liens and security interests securing such indebtedness and
obligations, shall remain fully valid and enforceable.
9.4.9
Miscellaneous. To
the maximum extent practicable, the AAA, the arbitrators and the parties shall
take all action required to conclude any arbitration proceeding within 180
calendar days of the filing of the dispute with the AAA. No
arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business or by applicable law or
regulation. If more than one agreement for arbitration by or between
the parties potentially applies to a dispute, the arbitration provision most
directly related to the Loan Documents or the subject matter of the dispute
shall control. This arbitration provision shall survive termination,
amendment or expiration of any of the Loan Documents or any relationship between
the parties.
10.1
Amendments, Etc. No
amendment, modification, termination, or waiver of any provision of any Loan
Document to which the Borrower is a party, nor consent to any departure by the
Borrower from any Loan Document to which it is a party, shall in any event be
effective unless the same shall be in writing and signed by the Bank and
Borrower, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
10.2
Notices, Etc. Unless
otherwise provided in this Agreement, All notices and other communications
provided for under this Agreement and under the other Loan Documents to which
the Borrower is a party shall be in writing and either personally served or sent
by verified facsimile transmission, overnight delivery service, or regular
United States mail, postage prepaid, to Borrower or to Bank as the case may be
at the addresses set forth below:
33
|
If
to Borrower:
|
American
Ecology Corporation
|
|
000
Xxxx Xxxxxxx Xxxxx
|
|
Xxxxx
000
|
|
Xxxxx,
Xxxxx 00000
|
|
Attention:
Xxxxxxx Xxxxxx
|
|
Fax:
208/000-0000
|
|
With
a copy to:
|
Xxxx
X. Xxxx, Esq.
|
|
Stoel
Rives
|
|
000
Xxxxx Xxxxxxx Xxxx., Xxxxx 0000
|
|
Xxxxx,
Xxxxx 00000-0000
|
|
Fax: 208/000-0000
|
|
If
to Bank:
|
Xxxxx
Fargo Bank, National Association
|
|
MAC
U1858-032
|
|
000
Xxxx Xxxx Xxxxxx – 0xx Xxxxx
|
|
Xxxxx,
Xxxxx 00000
|
|
Attention: Regional
Commercial Banking
|
|
Fax: 208/000-0000
|
|
With
a copy to:
|
Xxxxxxx,
Xxxxxx, Xxxxxxx, Rock & Fields,
Chartered
|
|
000
X. Xxxxxxx Xxxx., 00xx Xxxxx
(83702)
|
|
X.X.
Xxx 000
|
|
Xxxxx,
Xxxxx 00000-0000
|
|
Attention: Xxxxx
X. Xxxxxx
|
|
Fax: 208/000-0000
|
The
parties may change the address at which they are to receive notices and other
communications hereunder by notice in writing in the foregoing manner given to
the other. All notices or demands sent in accordance with this
Section shall be deemed received on the earlier of the date of confirmed
actual receipt or three (3) Business Days after the deposit thereof in the
mail.
10.3
No Waiver. No
failure or delay on the part of the Bank in exercising any right, power, or
remedy hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right, power, or remedy preclude any other or
further exercise thereof or the exercise of any other right, power, or remedy
hereunder.
10.4
Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of the Borrower and the
Bank and their respective successors and assigns, except that the Borrower may
not assign or transfer any of its rights under any Loan Document to which the
Borrower is a party without the prior written consent of the Bank.
10.5
Integration. This
Agreement and the Loan Documents contain the entire agreement between the
parties relating to the subject matter hereof and supersede all oral statements
and prior writings with respect thereto.
34
10.6
Application of Payments. Borrower
waives the right to direct the application of any and all payments at any time
or times hereafter received by Bank on account of the Obligations, and Borrower
agrees that Bank shall have the continuing exclusive right to apply and reapply
such payments in any manner as Bank may deem advisable, notwithstanding any
entry by Bank upon its books.
10.7
Continuing Warranties, Representations and Covenants. Each
warranty, representation, and covenant contained in this Agreement shall
continue until the Agreement is terminated and all Obligations have been paid or
satisfied in full and shall be conclusively presumed to have been relied upon by
Bank regardless of any investigation made or information possessed by
Bank. The warranties, representations, and covenants set forth herein
shall be cumulative and in addition to any and all other warranties,
representations, and covenants that Borrower shall give or cause to be given to
Bank, either now or hereafter.
10.8
Indemnity. The
Borrower shall defend, indemnify, and hold the Bank harmless from and against
any and all claims, damages, judgments, penalties, costs, and expenses
(including attorney fees and court costs now or hereafter arising from the
aforesaid enforcement of this clause) arising directly or indirectly from the
activities of the Borrower and its Subsidiaries, its predecessors in interest,
or third parties with whom it has a contractual relationship, or arising
directly or indirectly from the violation of any environmental protection,
health, or safety law, whether such claims are asserted by any governmental
agency or any other person. This indemnity shall survive termination
of this Agreement for a period of five years.
10.9
Choice of Law and Venue. This
Agreement is made in the state of Idaho, which state the parties agree has a
substantial relationship to the parties and to the underlying transaction
embodied hereby. Accordingly, in all respects, this Agreement and the
Loan Documents and the obligations arising hereunder and thereunder shall be
governed by, and construed in accordance with, the laws of the state of Idaho
applicable to contracts made and performed in such state and any applicable law
of the United States of America. Each party hereby unconditionally
and irrevocably waives, to the fullest extent permitted by law, any claim to
assert that the law of any jurisdiction other than the state of Idaho governs
this Agreement. All disputes, controversies, or claims arising out
of, or in connection with, this Agreement or any Loan Document shall be
litigated in any court of competent jurisdiction within the state of
Idaho. Each party hereby accepts jurisdiction of such state and
agrees to accept service of process as if it were personally served within such
state. Each party irrevocably waives, to the fullest extent permitted
by law, any objection that the party may now or hereafter have to the
jurisdiction of the courts of such state and any claim that any such litigation
brought in any such court has been brought in an inconvenient
forum.
10.10
Severability of Provisions. Any
provision of any Loan Document that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions of such Loan Document or affecting the validity or enforceability of
such provision in any other jurisdiction.
35
10.11
Headings. Article
and Section headings in the Loan Documents are included in such Loan Documents
for the convenience of reference only and shall not constitute a part of the
applicable Loan Documents for any other purpose.
10.12
Jury Trial Waiver. THE
BANK AND THE BORROWER HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING,
CLAIM, OR COUNTERCLAIM, WHETHER IN CONTRACT OR TORT, AT LAW OR IN EQUITY,
ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE LOAN
DOCUMENTS.
10.13
Destruction of Borrower’s Documents. After
notice to Borrower, any documents, schedules, invoices, or other papers
delivered to Bank may be destroyed or otherwise disposed of by Bank at any time
six (6) months after they are delivered to or received by Bank, unless Borrower
requests in writing the return of the said documents, schedules, invoices, or
other papers and makes arrangements at Borrower’s expense for their
return.
10.14
Participations. With
Borrower’s consent, which consent shall not be unreasonably withheld, Bank may,
at any time, sell to one or more banks, financial institutions or other Persons
(each a “Participant”) participating interests in the Loans or any other
interest of Bank under the Loan Documents. If Obligations are due or
unpaid, or shall have been declared or shall have become due or unpaid, upon the
occurrence of an Event of Default, each Participant shall, to the maximum extent
permitted by applicable law, be deemed to have the right of setoff in respect of
its participating interest in amounts owing under the Loan Documents to the same
extent as if the amount of its participating interest were owing directly to it
as Bank under this Agreement.
10.14.1
Consent. With
Borrower’s consent, which consent shall not be unreasonably withheld, Borrower
authorizes Bank to disclose to any actual or prospective Participant and/or
assignee, any and all financial information in Bank’s possession or known to
Bank concerning Borrower, its affiliates.
10.14.2
Lead Lender. Notwithstanding
any contrary provision of this Section, Bank shall at all times be the lead
lender (i.e., the sole party with whom Borrower needs to communicate) with
respect to the Loans, and Borrower shall only be required to communicate with
Bank. Each Participant that receives confidential information
regarding Borrower must agree to use reasonable efforts to keep all information
acquired by it in connection with the Loans or Loan Documents and relating to
Borrower confidential; provided, however, that such information may be
distributed by any Participant (i) pursuant to a court order or a demand
made by any governmental agency or authority, or otherwise in connection with
litigation or as otherwise required by law, (ii) to such person’s
consultants or professionals, as necessary, (iii) in connection with a sale
or participation of such person’s interest in the Loans, and (iv) to
regulators in connection with audits.
10.15
Effective Date. This
Agreement shall be binding and deemed effective as of the date first written
above when executed by Borrower and accepted and executed by Bank.
36
10.16
Counterparts. This
Agreement may be executed in any number of counterparts and delivered by
facsimile transmission. Each counterpart when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same Agreement.
[Signature
Page Follows]
37
BORROWER:
AMERICAN
ECOLOGY CORPORATION
By /s/ Xxxxxxx X.
Xxxxxx
Xxxxxxx
X. Xxxxxx
Vice
President and Chief Financial
Officer
|
GUARANTORS’
CONSENT AND REAFFIRMATION
Each
Guarantor consents to, acknowledges, and accepts the forgoing
Agreement. Each Guarantor affirms and ratifies its Continuing and
Unconditional Guaranty made by Guarantor for the benefit of Bank (the
“Guaranty”), and confirms that the Guaranty remains in full force and effect and
binding upon the Guarantor without any setoffs, defenses, or counterclaims of
any kind whatsoever.
Dated as
of June 30, 2008.
GUARANTORS:
US
ECOLOGY TEXAS, INC.
By
/s/ Xxxxxxx X.
Xxxxxx
Xxxxxxx
X. Xxxxxx
Vice
President and Treasurer
AMERICAN
ECOLOGY RECYCLE CENTER, INC.
By
/s/ Xxxxxxx X.
Xxxxxx
Xxxxxxx
X. Xxxxxx
Vice
President and Treasurer
AMERICAN
ECOLOGY ENVIRONMENTAL SERVICES CORPORATION
By /s/ Xxxxxxx X.
Xxxxxx
Xxxxxxx
X. Xxxxxx
Vice
President and Treasurer
|
38
US
ECOLOGY, INC.
By /s/ Xxxxxxx X.
Xxxxxx
Xxxxxxx
X. Xxxxxx
Vice
President and Treasurer
US
ECOLOGY IDAHO, INC.
By /s/ Xxxxxxx X.
Xxxxxx
Xxxxxxx
X. Xxxxxx
Vice
President and Treasurer
US
ECOLOGY NEVADA, INC.
By /s/ Xxxxxxx X.
Xxxxxx
Xxxxxxx
X. Xxxxxx
Vice
President and Treasurer
US
ECOLOGY WASHINGTON, INC.
By /s/ Xxxxxxx X.
Xxxxxx
Xxxxxxx
X. Xxxxxx
Vice
President and Treasurer
|
BANK’S
ACCEPTANCE
Accepted
and effective as of June 30, 2008, in the State of Idaho.
XXXXX
FARGO BANK, NATIONAL ASSOCIATION
By
/s/ Xxxxx X.
Xxxx
Xxxxx
X. Xxxx, Vice President
|
39
EXHIBIT
2.1.1.1
Bank
shall make the Revolving Loans upon written or, at the discretion of Bank,
telephonic instructions received from any one of the following:
Xxxxxxx
Xxxxxx
|
President and Chief Executive Officer |
Xxxxxxx X.
Xxxxxx
|
Vice President and
Chief Financial Officer
|
Xxxx
Xxxxxxx
|
Vice President and Controller |
EXHIBIT 2.1.1.1
EXHIBIT
2.1.1.2
LIBOR
LOAN REQUEST FORM
Date:
_____________________
Xxxxx
Fargo Bank, National Association
MAC
U1858-032
000 Xxxx
Xxxx Xxxxxx, 0xx Xxxxx
Xxxxx,
XX 00000
Attention: Corporate
Banking
Ladies
& Gentlemen:
We refer
to the Revolving Credit Agreement (the “Agreement”), dated June 30, 2008,
between Xxxxx Fargo Bank, National Association (“Bank”) and American Ecology
Corporation (“Borrower”). Borrower requests that Bank make a LIBOR
Loan pursuant to the Agreement and specifies as follows:
1. The
date of the requested Loan is to be __________________________.
2. The
amount of the requested Loan is to be $______________________.
3. The
requested Interest Period for the Loan is ___________________.
Borrower
certifies to Bank, as of the date of this letter, that the warranties and
representations set forth in the Agreement and the other Loan Documents are true
and correct, and that no Event of Default, as defined in the Agreement, has
occurred and is continuing or would result from the requested Loan.
Very
truly yours,
AMERICAN
ECOLOGY CORPORATION
By
_________________________
Title
________________________
|
EXHIBIT 2.1.1.2
EXHIBIT
2.1.2
FORM
OF REVOLVING NOTE
See
attached.
EXHIBIT 2.1.2
REVOLVING
NOTE
Borrower: | AMERICAN ECOLOGY CORPORATION |
June
30, 0000
Xxxxx,
Xxxxx
|
Address: |
000
X. Xxxxxxx Xxxxx, Xxxxx 000
Xxxxx,
Xxxxx 00000
|
Principal
Amount: Fifteen Million Dollars ($15,000,000)
FOR VALUE
RECEIVED, AMERICAN ECOLOGY CORPORATION, a Delaware corporation (“Borrower”),
promises to pay to the order of XXXXX FARGO BANK, NATIONAL ASSOCIATION (“Bank”)
the total principal amount outstanding on this note (the “Note”) together with
interest thereon as stated below, in lawful money of the United States of
America.
This Note
is executed pursuant to and is the Revolving Note referred to in that certain
Revolving Credit Agreement, dated June 30, 2008, between Borrower and Bank
(as amended, modified, or supplemented from time to time, the “Credit
Agreement”). Capitalized terms used but not defined in this Note
shall have the same definitions as are ascribed to such terms in the Credit
Agreement. This Note is governed by the provisions of the Credit
Agreement.
This Note
is a revolving promissory note and evidences a revolving line of credit not to
exceed the maximum principal amount stated above at any one time. The
amount outstanding on this Note at any specific time shall be the total amount
advanced by Bank less the amount of principal payments made from time to time,
plus any interest due and payable.
Borrower
agrees that any and all advances made hereunder shall be for Borrower’s benefit,
whether or not said advances are deposited to Borrower’s
account. Advances may be made at the request of those persons so
identified in the Credit Agreement and such persons are hereby authorized to
request advances and to direct the disposition of any such advances in the
manner provided in the Credit Agreement until written notice of revocation of
this authority is received by Bank from Borrower.
The
outstanding unpaid balance of this Note shall bear interest at a fluctuating per
annum rate as set forth in the Credit Agreement. This Note shall be
repaid in the manner set forth in the Credit Agreement.
This Note
is made in the state of Idaho, which state the parties agree has a substantial
relationship to the parties and to the underlying transaction embodied
hereby. Accordingly, in all respects, this Note and the obligations
arising hereunder shall be governed by, and construed in accordance with, the
laws of the state of Idaho applicable to contracts made and performed in such
state and any applicable law of the United States of America. Each
party hereby unconditionally and irrevocably waives, to the fullest extent
permitted by law, any claim to assert that the law of any jurisdiction other
than the state of Idaho governs this Note. All disputes,
controversies, or claims arising out of, or in connection with, this Note shall
be litigated in any court of competent jurisdiction within the state of
Idaho. Each party hereby accepts jurisdiction of such state and
agrees to accept service of process as if it were personally served within such
state. Each party irrevocably waives, to the fullest extent permitted
by law, any objection that the party may now or hereafter have to the
jurisdiction of the courts of such state and any claim that any such litigation
brought in any such court has been brought in an inconvenient
forum.
REVOLVING NOTE - 1
Except as
expressly provided in the Credit Agreement, the makers, sureties, guarantors and
endorsers of this Note jointly and severally waive presentment for payment,
protest, notice of protest and notice of nonpayment of this Note, and consent
that this Note or any payment due under this Note may be extended or renewed
without demand or notice.
AMERICAN
ECOLOGY CORPORATION
By
/s/ Xxxxxxx X.
Xxxxxx
Xxxxxxx
X. Xxxxxx
Vice
President and Chief Financial
Officer
|
REVOLVING NOTE - 2
EXHIBIT
3.1.4
FORM
OF OPINION OF COUNSEL FOR BORROWER AND GUARANTORS
June 30,
2008
Xxxxx
Fargo Bank, National Association
Xxxx
Xxxxxx Xxx 0000
Xxxxx,
Xxxxx 00000
Re: Loan
by Xxxxx Fargo Bank, National Association to American Ecology
Corporation
Ladies
and Gentlemen:
We are
counsel to American Ecology Corporation, a Delaware corporation, (the
“Borrower”), and US Ecology, Inc., a California corporation, US Ecology Texas,
Inc., a Delaware corporation, American Ecology Recycle Center, Inc., a Delaware
corporation, American Ecology Environmental Services Corporation, a Texas
corporation, US Ecology Idaho, Inc., a Delaware corporation, US Ecology Nevada,
Inc., a Delaware corporation, and US Ecology Washington, Inc., a Delaware
corporation (collectively, the “Guarantor”). The opinion expressed
below is furnished to you in connection with the Revolving Credit Agreement (the
“Credit Agreement”) dated as of June 30, 2008, between the Borrower and
Xxxxx Fargo Bank, National Association (“Bank”). This opinion is
being delivered pursuant to Section 3.1.4 of the Credit
Agreement. Unless otherwise defined herein, capitalized terms used
herein shall have the respective meanings set forth in the Credit
Agreement.
In
rendering the opinions set forth below, we have examined and relied upon such
documents and instruments as we have deemed appropriate, including the following
documents and instruments:
1. The
Credit Agreement;
2. The
Revolving Note made by Borrower to the order of Bank in the stated principal
amount of $15,000,000; and
3. The
Continuing and Unconditional Guaranty made by each Guarantor in favor of the
Bank (a “Guaranty,” and collectively the “Guaranties”).
The
Credit Agreement and the Revolving Note are collectively referred to as the
“Loan Documents.”
Based on
the foregoing, I am of the opinion that:
1. The
Borrower was incorporated under the Delaware General Corporation Law and exists
in good standing under the laws of the State of Delaware.
EXHIBIT 3.1.4 - 1
2. The
Borrower is authorized or qualified to do business in Idaho, and all other
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary.
3. The
Borrower has power and authority under the Delaware General Corporation Law and
all necessary material licenses, permits, and authorizations to own its
properties and to conduct its business in the manner and at the locations as
represented to Bank by Borrower.
4. The
Borrower has power and authority under the Delaware General Corporation Law to
execute and deliver the Loan Documents and perform its obligations
thereunder.
5. The
Borrower has authorized the execution and delivery of the Loan Documents and the
performance of its obligations thereunder by all requisite action under the
Delaware General Corporation Law.
6. Each
Guarantor was organized under the law of the state of its organization and
exists in good standing under the laws of such State.
7. Each
Guarantor has power and authority under the law of the state of its organization
to execute and deliver the Guaranty and perform its obligations
thereunder.
8. Each
Guarantor has authorized the execution, delivery, and reaffirmation of the
Guaranty and the performance of its obligations thereunder by all requisite
action under the law of the state if its organization.
9. Neither
the execution and delivery of the Loan Documents by the Borrower nor the
performance of its obligations thereunder (i) violates the Borrower’s
articles of incorporation or bylaws or any applicable provisions of statutory
law or regulation, or (ii) results in the material breach of or constitutes
a material default under any existing indenture or loan, credit, or other
agreement or instrument to which the Borrower is a party or by which it or its
property is bound or affected.
10. The
execution and delivery of the Guaranty by any Guarantor and the performance of
its obligations thereunder do not (i) violate such Guarantors’ articles of
incorporation or bylaws or any applicable provisions of statutory law or
regulation, or (ii) result in the material breach of or constitute a
material default under any existing indenture or loan, credit, or other
agreement or instrument to which such Guarantor is a party or by which it or its
property is bound or affected.
I confirm
that there are no legal or arbitral proceedings or any proceedings by or before
any governmental or regulatory authority or agency, now pending or threatened
against the Borrower or against any of its properties or revenues that, if
adversely determined, could be reasonably expected to have a material adverse
effect on the business operations, property, or financial condition of the
Borrower taken as a whole.
Very
truly yours,
EXHIBIT 3.1.4 - 2
EXHIBIT
3.1.12
FORM
OF LETTER TO ACCOUNTANTS
[LETTERHEAD
OF BORROWER]
Xxxx
Xxxxx LLP
000 XX
Xxxxxxxx, Xxxxx 0000
Xxxxxxxx,
XX 00000
Ladies
and Gentlemen:
We
instruct you to send to Xxxxx Fargo Bank, National Association (“Bank”) all
financial statements (whether preliminary or final), and all reports that are
prepared as a result of any audit or other review of our operations, finances or
internal controls, specifically including any reports dealing with improper
accounting practices, defalcations, financial reporting errors or misstatements
or fraud perpetrated on us or by any of our employees or agents. We
further instruct you to meet with Bank, upon Bank’s request, to discuss such
financial statements and any questions regarding the same.
All of
the foregoing must be sent to Bank prior to or contemporaneously with such
reports being sent to us.
One of
the principal purposes of the audited financial statements that you may be asked
to prepare is to provide Bank with information regarding our financial
condition.
These
instructions may only be revoked by a writing signed by an officer of
Bank.
Thank
you.
AMERICAN
ECOLOGY CORPORATION
By
Xxxxxxx X. Xxxxxx
Vice President and Chief Financial
Officer
EXHIBIT 3.1.12
EXHIBIT
4.13
DEBT
Date of
Agreement
|
Type of
Debt
|
Security
|
||
Xxxxx
Fargo Bank
|
06/30/2008
|
$15,000,000
Revolving Credit
|
Unsecured
|
$0.00
|
Pitney
Xxxxx Global
Financial
Services LLC
|
06/26/2007
|
Capital
leases
|
Secured
|
$10,285.14
|
Pitney
Xxxxx Global
Financial
Services LLC
|
09/21/2007
|
Capital
leases
|
Secured
|
$5,085.58
|
Xxxxx
Fargo Leasing
|
01/09/2006
|
Capital
leases
|
Secured
|
$20,684.94
|
EXHIBIT 4.13
EXHIBIT
4.16
SUBSIDIARIES
Company
Name
|
Parent
Corporation
|
Percentage
of
Stock
Owned
by
Parent
|
State
of
Organization
|
|
American
Ecology Environmental Services
Corporation (AEESC)
|
AEC
|
100%
|
Texas
6/12/80
|
|
American
Ecology Recycle Center, Inc. (AERC)
|
AEC
|
100%
|
Delaware
3/31/94
|
|
US
Ecology, Inc. (USE)
|
AEC
|
100%
|
California
9/22/52
|
|
US
Ecology Idaho, Inc. (USEI)
|
AEC
|
100%
|
Delaware
5/26/81
|
|
US
Ecology Nevada, Inc. (USEN)
|
AEC
|
100%
|
Delaware
5/10/04
|
|
US
Ecology Washington, Inc. (USEW)
|
AEC
|
100%
|
Delaware
5/10/04
|
|
US
Ecology Texas, Inc. (USET)
|
AEC
|
100%
|
Delaware
2/24/93
|
EXHIBIT 4.16
EXHIBIT
6.1
PERMITTED
LIENS
Liens
against the equipment financed by the capital leases listed in Exhibit
4.13.
EXHIBIT 6.1
EXHIBIT
6.8
BORROWER’S
INVESTMENT POLICY
American
Ecology Corporation Investment Policy
American
Ecology Corporation’s (“AEC” or the “Company”) overall investment objectives are
preservation of principal, preservation of purchasing power through growth,
competitive investment yields and minimizing loss of principal or investment
risk. Cash may never be invested for more than 12 months.
General
Procedures
|
1.
|
Reporting
Structure
|
Investment
results are to be reported to the Board of Directors (“Board”) annually, or more
frequently if requested. Reported investment results should include a summary of
investment portfolio holdings and investment performance results. AEC may use
investment consultants and/or managers as deemed appropriate to make prudent
investment decisions.
|
2.
|
Reporting
Investment Results to Performance
Targets
|
On a
quarterly basis, investment performance results for both short-term and
long-term investments shall be reported to the CEO by the CFO. All investments
shall consist of money market accounts, investment sweep accounts and/or fixed
income/cash equivalent funds with maturities of less than two
years.
|
3.
|
Investment
Objectives
|
The
overall investment objectives of the short-term investment funds is preservation
of principal, and secondarily investment of all available funds at the highest
possible yield with minimum risk, while providing sufficient liquidity to meet
the operating cash requirements of AEC. Recognizing the inherent
uncertainty of cash flows and working capital needs, short-term funds are to be
invested in high-quality securities with minimum credit risk and short-term
maturities.
The
investments portfolio shall consist of fixed income high-quality securities with
individual maturities of one year or less. The following investments are
permitted under this Policy. There may be securities of similar safety,
liquidity, and yield, which may be utilized, which are not specifically
identified herein. Such investments will be periodically considered
and revisions will be made to the Policy as necessary.
EXHIBIT 6.8
A)
|
Obligations
of the U.S. Government and Agencies – All obligations of the U.S.
government or its agencies are approved for use, including direct
investments in U.S. Government Mortgage Pass-Through
Securities.
|
B)
|
Certificates
of Deposit, demand/ Transaction Deposits, and Time Deposits
–
|
Certificates
of deposit, Demand/Transaction Deposits, and time Deposits may be purchased from
domestic banks and savings and loans associations if (1) the principal amount of
the instrument (excluding maturity interest to be paid at least semi-annually)
is insured in full by the FDIC (current limit - $100,000) or, (2) the depository
institution meets at least one of the following rating criteria with a maximum
investment of $100,000 per depository institutions:
|
·
|
Xxxxxxxx
Bankwatch rating of at least C,
|
|
·
|
Sheshunoff
Bank rating of at least B
|
|
·
|
Moody’s
Bank Credit Report rating for long-term
bank
|
deposit
or long-term senior debt of at least BAA, or
|
·
|
Standard
& Poor’s Financial Institutional ratings for long-term bank deposit or
long-term senior debt of at least
BBB.
|
Demand/Transaction
accounts are expected to earn interest at market competitive rates.
Dealers
are to be selected based upon consideration of their relative financial
strength, reputation, participation in money and financial markets, evaluation
of the fund’s portfolio structure and securities, management fees, absence of
purchase or sales loads, rankings by various sources, etc.
Commercial
Paper must be A-1 by Standard & Poor’s, P-1 by Moody’s and mature within 270
days. Total outstanding commercial paper may not constitute more than
50% of the portfolio.
|
5.
|
Individual
security maturities in the investments portfolio are limited to two years,
except where the objective is to match the maturity of a related current
liability. The overall maturity structure should be laddered consistent with the
liquidity requirements of AEC.
No
individual investment issuer shall represent more than 50% at market of the
overall investments portfolio. However, direct obligations of the U.S.
government or its agencies, certificates of deposit, demand/transaction deposits
and time deposits, repurchase agreements, and money market funds are permitted
to exceed the 50% per issuer limit, providing they meet the guidelines noted
above.
EXHIBIT 6.8
The
following is a list of prohibited investments.
|
1.
|
Corporate
High Yield Bonds (i.e. less than BBB
quality),
|
|
2.
|
Common
Stock or other publicly-traded
equities,
|
|
3.
|
Private
Placements,
|
|
4.
|
Commercial
Mortgages,
|
|
5.
|
Non-liquid Equity
Participations,
|
|
6.
|
Limited
Partnerships,
|
|
7.
|
Real
Estate (excluding investments purchased for operational
purposes),
|
|
8.
|
Commodities,
|
|
9.
|
Precious
Metals,
|
|
10.
|
Derivatives:
Margin Trades, Options, Futures, Options on Futures, Short Sales and
Forwards, and
|
|
11.
|
Mutual
Funds comprised primarily of equity investments that would be otherwise
restricted.
|
Any
exceptions to the Restricted Investments must be approved by the Board in
writing. In the case of investments which were originally purchased as
“permitted investments but subsequently reverted to “restricted investments”
(e.g. downgrades of corporate bonds), such investments are to be separately
evaluated and sold/retained as deemed appropriate by the CFO with the objective
of liquidating any out-of-policy investments within a reasonable period
As
business needs and resources change, this policy may be modified to reflect the
needs of the company. The Board, with input from the CEO and CFO
shall review this investment policy as needed and make revisions as
necessary.
EXHIBIT 6.8
EXHIBIT
6.10
ERISA
PLANS
American
Ecology Corporation 401(k) Savings and Retirement Plan #003
American
Ecology Corporation Group Insurance Plan #712
EXHIBIT
6.10