<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 31, 1996
Commission File Number 0-11688
AMERICAN ECOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 95-3889638
- ---------------------------------- -----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
805 W. Idaho
Ste. 200
Boise, Idaho 83702-1779
- ---------------------------------------- ------------------------------
(Address of principle executive offices) (Zip Code)
(208) 331-8400
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by a check mark whether Registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
YES /x/ NO / /
AMERICAN ECOLOGY CORPORATION FORM 8-K
SEC File Number 00-11688
<PAGE> 2
ITEM 5. OTHER EVENTS.
On December 31, 1996, American Ecology Corporation (the "Company") and
its subsidiaries as guarantors, entered into a Third Amended Credit Agreement
(the "Agreement") with Texas Commerce Bank National Association (the "Bank"),
amending and restating the Company's existing secured debt agreement.
The new loan terms extend the maturity date of the Company's existing
debt to December 31, 2000. Interest at the rate of 7% will accrue on the debt
and be added to the principal balance through December 1998. Thereafter,
interest will be paid quarterly at the greater of 10% or prime. Repayment of
principal commences with a $5.0 million payment due December 31, 1999, and
$250,000 quarterly payments thereafter. The Bank receives warrants,
exercisable only upon maturity of the loan, or a monetary default, to purchase
up to 10% of the Company's then outstanding common stock at a price of $1.50
per share. The warrants are eliminated when the Company pays the difference
between the 7% accrued interest and the greater interest rate of 10% or prime
for the period of October 31, 1996 to December 31, 1998, at loan maturity. The
financial covenants were also amended, and the Bank agreed to permit the Company
to use certain capital freed up by the restructuring as working capital. The
Company is prohibited from paying dividends on its common stock until the debt
is fully paid.
As a condition to the Agreement, the Company was required to raise $3.0
million in additional equity on or before December 31, 1996 which it
accomplished on November 15, 1996 through the issuance of a new Series E
Redeemable Convertible Preferred Stock to two of its directors. That
transaction was previously reported on SEC Form 8-K dated November 27, 1996.
Additionally, the Agreement requires the Company use its best efforts to raise
an additional $2.0 million in equity capital on or before June 30, 1997. The
Agreement is effective as of October 31, 1996.
The Agreement is attached hereto and incorporated herein as an exhibit.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits:
99.8 Third Amended and Restated Credit Agreement Among American
Ecology Corporation and its Subsidiaries as Guarantors and Texas
Commerce Bank National Association, as executed on December 31, 1996.
<PAGE> 3
AMERICAN ECOLOGY CORPORATION FORM 8-K
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
American Ecology Corporation
Dated February 12, 1997 By: /s/ Jack K. Lemley
------------------------------------
Jack K. Lemley
Chairman and Chief Executive Officer
<PAGE> 4
EXHIBIT 99.8
THIRD AMENDED AND RESTATED
CREDIT AGREEMENT
AMONG
AMERICAN ECOLOGY CORP.,
AS THE COMPANY
THE SUBSIDIARIES OF THE COMPANY
LISTED AS GUARANTORS HEREIN
AND
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
DATED AS OF OCTOBER 31, 1996
<PAGE> 1
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I DEFINITIONS ..................................................... 1
SECTION 1.01.DEFINITIONS .......................................... 1
ARTICLE II MAKING AND REPAYING THE LOANS .................................. 13
SECTION 2.01.THE REVOLVING CREDIT LOAN ............................ 13
SECTION 2.02.ADVANCES UNDER THE REVOLVING CREDIT LOAN13
SECTION 2.03.THE TERM LOAN ........................................ 14
SECTION 2.04.ADVANCES UNDER THE TERM LOAN ......................... 14
SECTION 2.05.NOTES ................................................ 14
SECTION 2.06.PAYMENT OF INTEREST .................................. 14
SECTION 2.07.REQUIRED PAYMENTS OF PRINCIPAL ....................... 15
SECTION 2.08.WARRANTS ............................................. 16
SECTION 2.09.VOLUNTARY PREPAYMENTS THE ............................ 16
SECTION 2.10.METHOD AND PLACE OF PAYMENT; LOCKBOX AGREEMENT ....... 16
SECTION 2.11.INCREASED TAXES OR COSTS ............................. 17
ARTICLE III LETTERS OF CREDIT ............................................. 18
SECTION 3.01.LETTERS OF CREDIT .................................... 18
SECTION 3.02.LETTER OF CREDIT REQUESTS ............................ 18
SECTION 3.03.REPAYMENT OF LETTER OF CREDIT DRAWINGS ............... 18
SECTION 3.04.RIGHTS OF BANK REGARDING LETTERS OF CREDIT ........... 18
SECTION 3.05.INCREASED LETTER OF CREDIT COSTS ..................... 19
SECTION 3.06.LETTER OF CREDIT COLLATERAL .......................... 19
ARTICLE IV FEES, COMMITMENTS AND PARTIAL RELEASES ......................... 19
SECTION 4.01.FEES ................................................. 19
SECTION 4.02.INTENTIONALLY DELETED.20
SECTION 4.03.MANDATORY REDUCTION OF COMMITMENT .................... 20
SECTION 4.04.PARTIAL RELEASE OF COLLATERAL ........................ 20
ARTICLE V CONDITIONS PRECEDENT ............................................ 21
SECTION 5.01.CONDITIONS PRECEDENT TO THE INITIAL
CREDIT EVENT ......................................... 21
SECTION 5.02.CONDITIONS PRECEDENT TO ALL CREDIT EVENTS ............ 23
ARTICLE VI REPRESENTATIONS AND WARRANTIES ................................. 24
SECTION 6.01.ORGANIZATION AND QUALIFICATION ....................... 24
SECTION 6.02.AUTHORIZATION AND VALIDITY ........................... 24
SECTION 6.03.GOVERNMENTAL CONSENTS ................................ 24
SECTION 6.04.CONFLICTING OR ADVERSE AGREEMENTS OR RESTRICTIONS .... 24
SECTION 6.05.TITLE TO ASSETS ...................................... 25
SECTION 6.06.LITIGATION ........................................... 25
SECTION 6.07.FINANCIAL STATEMENTS ................................. 25
</TABLE>
<PAGE> 2
<TABLE>
<S> <C>
SECTION 6.08.NO DEFAULTS OR VIOLATIONS OF LAWS .................... 25
SECTION 6.09.INVESTMENT COMPANY ACT ............................... 26
SECTION 6.10.PUBLIC UTILITY HOLDING COMPANY ACT ................... 26
SECTION 6.11.ERISA ................................................ 26
SECTION 6.12.TAX RETURNS AND PAYMENTS ............................. 26
SECTION 6.13.ENVIRONMENTAL MATTERS ................................ 26
SECTION 6.14.PURPOSE OF LOANS ..................................... 27
SECTION 6.15.FRANCHISES AND OTHER OPERATING RIGHTS ................ 27
SECTION 6.16.INTELLECTUAL PROPERTY ................................ 27
SECTION 6.17.SUBSIDIARIES ......................................... 28
ARTICLE VII AFFIRMATIVE COVENANTS ......................................... 28
SECTION 7.01.INFORMATION COVENANTS ................................ 28
SECTION 7.02.BOOKS, RECORDS AND INSPECTIONS ....................... 30
SECTION 7.03.INSURANCE AND MAINTENANCE OF PROPERTIES .............. 31
SECTION 7.04.PAYMENT OF TAXES ..................................... 31
SECTION 7.05.CORPORATE EXISTENCE .................................. 31
SECTION 7.06.COMPLIANCE WITH LAWS ................................. 31
SECTION 7.07.ERISA ................................................ 31
SECTION 7.08.ADDITIONAL GUARANTIES ............................... 32
SECTION 7.09.NEW EQUITY ........................................... 32
SECTION 7.10.BANK WARRANTS ........................................ 32
ARTICLE VIII NEGATIVE COVENANTS ........................................... 32
SECTION 8.01.CHANGE IN BUSINESS ................................... 32
SECTION 8.02.CONSOLIDATION, MERGER OR SALE OF ASSETS .............. 32
SECTION 8.03.LIENS ................................................ 33
SECTION 8.04.INDEBTEDNESS ......................................... 33
SECTION 8.05.INVESTMENTS .......................................... 34
SECTION 8.06.RESTRICTED PAYMENTS .................................. 34
SECTION 8.07.CHANGE IN ACCOUNTING; FISCAL YEAR .................... 34
SECTION 8.08.MINIMUM EBITDA ....................................... 34
SECTION 8.09.MINIMUM NET WORTH .................................... 34
SECTION 8.10.CAPITAL EXPENDITURES ................................. 35
SECTION 8.11.TRANSACTIONS WITH AFFILIATES ......................... 35
SECTION 8.12.CHANGE OF CERTAIN INDEBTEDNESS ....................... 35
SECTION 8.13.NEGATIVE PLEDGE ...................................... 35
ARTICLE IX GUARANTY ....................................................... 35
SECTION 9.01.GUARANTY ............................................. 35
SECTION 9.02.CONTINUING GUARANTY .................................. 36
SECTION 9.03.EFFECT OF DEBTOR RELIEF LAWS ......................... 37
SECTION 9.04.WAIVER OF SUBROGATION ................................ 37
SECTION 9.05.SUBORDINATION ........................................ 38
SECTION 9.06.WAIVER ............................................... 38
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
SECTION 9.07.FULL FORCE AND EFFECT ............................... 39
ARTICLE X EVENTS OF DEFAULT AND REMEDIES .................................. 39
SECTION 10.01.EVENTS OF DEFAULT AND REMEDIES ...................... 39
SECTION 10.02.PRIMARY REMEDIES .................................... 41
SECTION 10.03.OTHER REMEDIES ...................................... 42
ARTICLE XI MISCELLANEOUS 42
SECTION 11.01.AMENDMENTS .......................................... 42
SECTION 11.02.NOTICES ............................................. 42
SECTION 11.03.NO WAIVER; REMEDIES ................................. 43
SECTION 11.04.COSTS, EXPENSES AND TAXES ........................... 43
SECTION 11.05.INDEMNITY AND RELEASE ............................... 44
SECTION 11.06.RIGHT OF SETOFF ..................................... 45
SECTION 11.07.GOVERNING LAW ....................................... 45
SECTION 11.08.MAXIMUM INTEREST .................................... 45
SECTION 11.09.SURVIVAL OF REPRESENTATIONS AND WARRANTIES .......... 46
SECTION 11.10.BINDING EFFECT ...................................... 46
SECTION 11.11.SUCCESSORS AND ASSIGNS; PARTICIPATIONS .............. 46
SECTION 11.12.INTENTIONALLY DELETED ............................... 46
SECTION 11.13.ACCOUNTING TERMS .................................... 46
SECTION 11.14.INDEPENDENCE OF COVENANTS ........................... 47
SECTION 11.15.SEPARABILITY ........................................ 47
SECTION 11.16.EXECUTION IN COUNTERPARTS ........................... 47
SECTION 11.17.INTERPRETATION ...................................... 47
SECTION 11.18.SUBMISSION TO JURISDICTION .......................... 48
SECTION 11.19.WAIVER OF JURY TRIAL ................................ 49
SECTION 11.20.FINAL AGREEMENT OF THE PARTIES ...................... 49
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
EXHIBITS AND SCHEDULES:
- ----------------------
<S> <C>
EXHIBIT 2.05A FORM OF REVOLVING CREDIT NOTE
EXHIBIT 2.05B FORM OF TERM NOTE
EXHIBIT 2.08 FORM OF WARRANT AGREEMENT
EXHIBIT 7.01(C) FORM OF BORROWING BASE CERTIFICATE
EXHIBIT 7.01(E) FORM OF NO DEFAULT CERTIFICATE
SCHEDULE 3.01 EXISTING LETTERS OF CREDIT
SCHEDULE 6.06 PENDING LITIGATION
SCHEDULE 6.08 DEFAULTS UNDER OTHER AGREEMENTS
SCHEDULE 6.11 MULTIEMPLOYER PLANS
SCHEDULE 6.13 EXCEPTIONS TO ENVIRONMENTAL MATTERS
SCHEDULE 6.15 LICENSES, PERMITS AND FRANCHISES
SCHEDULE 8.03 PERMITTED LIENS
SCHEDULE 8.04 INDEBTEDNESS
SCHEDULE 8.05 PERMITTED INVESTMENTS
</TABLE>
<PAGE> 5
THIRD AMENDED AND RESTATED
CREDIT AGREEMENT
THIS THIRD AMENDED AND RESTATED CREDIT AGREEMENT executed on
December 31, 1996, but dated effective as of October 31, 1996 (this
"Agreement"), except for the provisions of Section 11.05, which are effective
as of the date on which this Agreement is signed, is among AMERICAN ECOLOGY
CORPORATION, a Delaware corporation (the "Company"), the subsidiaries of the
Company listed on the signature pages hereof under the caption "Guarantors"
(together with each other Person (as hereinafter defined) who becomes a
Guarantor pursuant to Section 7.08, collectively, the "Guarantors") and TEXAS
COMMERCE BANK NATIONAL ASSOCIATION, a national banking association having its
principal place of business in Houston, Texas (the "Bank").
WHEREAS, the Company and the Bank, as agent and as a Bank,
entered into that certain Second Amended and Restated Credit Agreement dated
effective as of June 30, 1995, (as amended by that certain First Amendment to
Second Amended and Restated Credit Agreement dated effective as of February 7,
1996, the "Second Restated Agreement") which Second Restated Agreement was a
restatement of that certain Amended and Restated Credit Agreement dated as of
December 1, 1994, (the "First Restated Agreement") which First Restated
Agreement was a restatement of that certain Credit Agreement between the
Company and the Bank, dated April 22, 1994 (the "Original Agreement") (the
Second Restated Agreement, the First Restated Agreement and the Original
Agreement hereinafter collectively referred to as, the "Prior Agreements"); and
WHEREAS, the Company has requested the Bank to renew, extend and
modify the Second Restated Agreement and make certain changes to the terms and
provisions thereof; and
WHEREAS, the Bank has agreed to do so upon certain terms and
conditions; and
WHEREAS, the parties wish to execute this document for the
purpose of evidencing this agreement and these terms and conditions.
NOW THEREFORE, in consideration of the mutual covenants herein
contained, the below signed parties do hereby agree to restate and replace the
Second Amendment with this Agreement as follows:
<PAGE> 6
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. As used in this Agreement, the
following terms shall have the following meanings:
"Additional Guaranties" has the meaning specified in Section
7.08.
"AERC" means American Ecology Recycle Center, Inc., a Delaware
corporation and a Subsidiary of the Company.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling (including all directors and officers
of such Person), controlled by, or under direct or indirect common
control with such Person, and any other Person in which such Person's
direct or indirect equity interest is 10% or more of the total
outstanding equity interests of such Person.
"Agreement" has the meaning specified in the introduction to this
Agreement.
"ALEX" means American Liability and Excess Insurance Company, a
Vermont corporation headquartered in Burlington, Vermont, and a wholly-
owned subsidiary of the Company.
"Application For Letter of Credit" has the meaning specified in
Section 3.02.
"Bank" has the meaning specified in the introduction to this
Agreement.
"Bankruptcy Code" has the meaning specified in Section 10.01(e).
"Beatty Site" means that certain chemical and hazardous waste
disposal site located in Beatty, Nevada, operated by US Ecology, Inc., a
California corporation, and a Subsidiary of the Company.
"Board" means the Board of Governors of the Federal Reserve
System of the United States (or any successor).
"Borrowing Base" means an amount equal to eighty percent (80%) of
the Eligible Receivables.
12
<PAGE> 7
"Borrowing Base Certificate" means, as of any date, a certificate
as to the Borrowing Base as of such date in the form of Exhibit 7.01(c).
"Business Day" means any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of Texas) on which the
Bank is open for business in Houston, Texas.
"Capital Lease" means, as to any Person, any lease in respect of
which the rental obligations of such Person constitute Capitalized Lease
Obligations.
"Capitalized Expenditures" has the meaning specified in Section
8.10.
"Capitalized Lease Obligations" means, as to any Person, all
rental obligations of such Person which, in accordance with GAAP, are or
will be required to be capitalized on the books of such Person.
"Cash Management and Lock Box Agreement" has the meaning
specified in Section 2.10(a).
"Change in Ownership or Control" means the Company shall cease to
directly or indirectly own 100% of any of the direct or indirect
Subsidiaries.
"Code" means Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.
"Collateral" means all the collateral pledged to the Bank (i)
pursuant to the Pledge Agreements and the Security Agreements and (ii)
to secure the issuance of any Letters of Credit.
"Company" has the meaning specified in the introduction to this
Agreement.
"Consolidated EBITDA" means, for any period, Consolidated Net
Income for such period, plus Consolidated Interest Expense actually
deducted in arriving at Consolidated Net Income, Deferred Site
Maintenance Expense, depreciation, depletion, amortization and provision
for taxes, without giving effect to any extraordinary gains or gains
from sales of assets or write downs in the value of assets owned by any
of the Loan Parties.
"Consolidated Interest Expense" means, as to the Company and its
Subsidiaries and for any period, the total consolidated gross interest
expense, including all amortization of debt discount and imputed
interest for such period.
13
<PAGE> 8
"Consolidated Net Income" means, for any period, the net income
(or loss) of the Company and its Subsidiaries for such period,
determined on a consolidated basis.
"Consolidated Net Worth" means the excess of assets over all
liabilities of the Company and its Subsidiaries, determined on a
consolidated basis.
"Credit Event" means the making of any Loan or the issuance or
the extension of any Letter of Credit.
"Default" means the occurrence of any event which with the giving
of notice or the passage of time or both could become an Event of
Default.
"Deferred Site Maintenance Expense" means the amount of money
allocated on the Company's consolidated statement of income to the
Deferred Site Maintenance Reserve.
"Deferred Site Maintenance Reserve" means the amount shown on the
Company's consolidated balance sheet as a reserve to be utilized in
connection with preparing to close and maintaining closed disposal
sites.
"Designated Payment Date" means the last day of each month until
December 31, 1998, and thereafter, it shall mean the last day of each
calendar quarter commencing with the quarter ending March 31, 1999;
provided, if a Designated Payment Date shall be a day which is not a
Business Day, such Designated Payment Date shall be the next succeeding
Business Day, and such extension of time shall be included in
determining the amount to be paid on such date.
"Effective Date" means the date on which all conditions to
borrowing set forth in Section 5.01 are first met or waived in
accordance with Section 11.01.
"Eligible Receivable" means all (i) billed Receivables of the
Company and (ii) all unbilled Receivables of the Company as to which the
work therefor has been completed, each of which meets all of the
following criteria on the date of any determination of Eligible
Receivables:
(a) the Receivable arose in the ordinary course of
business from the sale of goods or the providing of services by
the Company;
(b) the Receivable is owned by the Company free and
clear of any and all Liens and or rights of others, other than
Permitted Liens;
14
<PAGE> 9
(c) the Receivable is not more than ninety (90) days
past due;
(d) not more than thirty (30) days have elapsed since
(A) the date the service was provided and (B) the date of the
invoice for such goods (this provision shall not apply to any
unbilled Receivables);
(e) the Receivable is not evidenced by a promissory
note, chattel paper or other instrument;
(f) the account debtor has made no claim that the
Receivable is subject to set-off, counterclaim, defense,
allowance or adjustment and there has been no dispute, objection
or complaint by the account debtor concerning its liability on
the Receivable, provided that if any such claim has been made in
regard to a portion of a receivable, the remainder may still be
considered to be an Eligible Receivable;
(g) no notice of bankruptcy, insolvency or financial
distress of the account debtor has been received by the Company;
(h) the Bank has a valid and perfected Lien in the
Receivable;
(i) the account debtor is domiciled in the United
States of America or any of its possessions and the Receivable is
denominated in dollars; and
(j) with respect to any Receivable, the Company shall
not have received notification from the Bank that, in the
reasonable discretion of the Bank, such Receivable is not
acceptable to the Bank.
"Environmental Laws" means federal, state or local laws, rules,
codes, regulations or ordinances, and any reported judicial or
administrative interpretations thereof, including any judicial or
administrative order, judgment, permit, approval, decision or
determination pertaining to conservation or protection of the
environment in effect at the time in question, including the Clean Air
Act, the Comprehensive Environmental Response, Compensation and
Liability Act as amended from time to time ("CERCLA"), the Federal Water
Pollution Control Act, the Occupational Safety and Health Act, the
Resource Conservation and Recovery Act, the Safe Drinking Water Act, the
Toxic Substances Control Act, the Superfund Amendment and
Reauthorization Act of 1986, the Hazardous Materials Transportation Act,
and comparable state and local laws, and other
15
<PAGE> 10
environmental conservation and protection laws as each of the same may
be amended from time to time.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the regulations promulgated thereunder.
"ERISA Affiliate" means (a) any trade or business (whether or not
incorporated) which is either a member of the same "controlled group" or
under "common control," within the meaning of Section 414 of the Code
and the regulations thereunder, with a Loan Party and (b) any
Subsidiary.
"Events of Default" has the meaning specified in Section 10.01.
"Execution Date" means October 31, 1996.
"FDIC" means the Federal Deposit Insurance Corporation (or any
successor).
"Fees" means all amounts payable pursuant to Section 4.01.
"Financial Statement Delivery Date" means the date on which the
quarterly or annual financial statements of the Company are delivered
pursuant to Section 7.01(a) or Section 7.01(b), as the case may be.
"Financials" has the meaning specified in Section 6.07.
"First Restated Agreement" has the meaning set forth in the
Recitals.
"GAAP" means generally accepted accounting principles as in
effect from time to time as set forth in the opinions, statements and
pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants, the Financial Accounting
Standards Board and such other Persons who shall be approved by a
significant segment of the accounting profession and concurred in by the
independent certified public accountants certifying any audited
financial statements of the Company.
"Guaranteed Obligations" has the meaning specified in Section
9.01.
"Guarantors" has the meaning specified in the introduction to
this Agreement.
"Guaranty" means the guaranty of the Guarantors contained in
Article IX and shall include any Additional Guaranty.
16
<PAGE> 11
"Hazardous Materials" means (a) hazardous waste as defined in the
Resource Conservation and Recovery Act of 1976, as amended from time to
time, or in any other Environmental Law, (b) hazardous substances, as
defined in CERCLA or in any other Environmental Law, or in any
applicable state or local law or regulation, (c) gasoline, or any other
petroleum product or by-product, (d) toxic substances, as defined in the
Toxic Substances Control Act of 1976, as amended from time to time, or
in any other Environmental Law, or (e) insecticides, fungicides, or
rodenticides, as defined in the Federal Insecticide, Fungicide, and
Rodenticide Act of 1975, as amended from time to time, or in any other
Environmental Law, as each such Act, statute or regulation may be
amended from time to time.
"Highest Lawful Rate" means the maximum nonusurious rate of
interest that, under applicable law, may be contracted for, taken,
reserved, charged or received by the Bank on the Loans or under the Loan
Documents at any time or from time to time. If the maximum rate of
interest which, under applicable law, the Bank is permitted to charge
the Company on the Loans shall change after the date hereof, to the
extent permitted by applicable law, the Highest Lawful Rate shall be
automatically increased or decreased, as the case may be, as of the
effective time of such change without notice to the Company or any other
Person.
"Indebtedness" means, when used with respect to any Person,
without duplication (a) all indebtedness of such Person for borrowed
money (whether by loan or the issuance and sale of debt securities) or
for the deferred purchase price of property or services (excluding,
however, accounts payable and other accrued liabilities arising in the
ordinary course of such Person's business that are a current liability
under GAAP and payments or benefits in the nature of compensation for
services of employees, officers and directors), (b) all indebtedness
created or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person, (c) all
Capitalized Lease Obligations of such Person, (d) all guaranties or
other contingent obligations of any kind of such Person in respect of
the Indebtedness of any other Person of the type referred to in clause
(a), (b) or (c) above and (e) all Indebtedness of the type referred to
in clause (a), (b) or (c) above secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise to be
secured by) any Lien upon or interest in property owned by such Person,
even though such Person has not assumed or become liable for the payment
of such indebtedness, to the extent any of the foregoing described in
clauses (a) through (e) above constitute a liability on such Person's
balance sheet prepared in accordance with GAAP.
"Indemnified Person" has the meaning specified in Section 11.05.
17
<PAGE> 12
"Investment" means, as applied to any Person, any direct or
indirect purchase or other acquisition by such Person of the assets,
stock or other securities of any other Person, or any direct or indirect
loan, advance or capital contribution by such Person to any other
Person, and any other item which would be classified as an "investment"
on a balance sheet of such Person, including any direct or indirect
contribution by such Person of property or assets to a joint venture,
partnership or other business entity in which such Person retains an
interest.
"Letter of Credit" has the meaning provided in Section 3.01.
"Letter of Credit Collateral" means cash, securities issued by or
directly and fully guaranteed by the United States, deposits in the Bank
or other securities, which other securities are, in the Bank's sole
discretion, satisfactory collateral.
"Letter of Credit Commitment" means the Bank's obligation to
issue Letters of Credit hereunder.
"Letter of Credit Fee" has the meaning provided in Section
4.01(a).
"Letter of Credit Termination Date" means the date that is (a)
one year subsequent to the Maturity Date or (b) the earlier acceleration
of the Obligations pursuant hereto.
"Lien" means, when used with respect to any Person, any mortgage,
lien, charge, pledge, security interest or encumbrance of any kind
(whether voluntary or involuntary and whether imposed or created by
operation of law or otherwise) upon, or pledge of, any of its property
or assets, whether now owned or hereafter acquired, or any lease
intended as security, any Capital Lease in the nature of the foregoing,
any conditional sale agreement or other title retention agreement, in
each case, for the purpose, or having the effect, of protecting a
creditor against loss of securing the payment or performance of an
obligation.
"Loans" has the meaning provided in Section 2.03
"Loan Date" means, with respect to each Loan, the Business Day
upon which the proceeds of such Loan are to be made available to the
Company.
"Loan Documents" means this Agreement (including the Guaranty),
the Notes, the Application for Letter of Credit, the Security
Agreements, the Pledge Agreements, the Mortgage and all other security
documents granting liens in the Letter of Credit Collateral and, to the
extent the context requires, the Prior Agreements and related documents.
18
<PAGE> 13
"Loan Party" means the Company or any Guarantor and "Loan
Parties" means the Company and the Guarantors.
"Material Adverse Effect" means, relative to any occurrence of
whatever nature (including any adverse determination in any litigation,
arbitration or governmental investigation or proceeding), (a) a material
adverse effect on the financial condition, business or operations of the
Company and its Subsidiaries taken as a whole or (b) an event which
materially impairs the ability of the Company to make payment hereunder
or under the Notes or the right of the Bank to enforce any of its
remedies to collect any amounts owing under the Loan Documents.
"Maturity Date" means the earlier of: (a) December 31, 2000, or
(b) acceleration of the Notes pursuant to Section 2.07(d) or 10.02.
"Maximum Guaranteed Amount" means for each Guarantor the maximum
amount which any Guarantor could pay under the Guaranty without having
such payment set aside as a fraudulent transfer or conveyance or similar
action under the Bankruptcy Code or any applicable state law.
"Mortgage" means any Mortgage or Deed of Trust of even date
herewith, or supplement to a prior mortgage and deed of trust executed
by the Company or any of its Subsidiaries and granting a lien by the
Company for the benefit of the Bank on certain real property owned by
the Company or any of its Subsidiaries as security for the Obligations.
"Multiemployer Plan" means any plan which is a "multiemployer
plan" (as such term is defined in Section 4001(a)(3) of ERISA).
"Notes" means the Revolving Credit Note and the Term Note.
"Notice of Default" has the meaning specified in Section 10.02.
"Obligations" means all the obligations of the Company and the
other Loan Parties now or hereafter existing under the Loan Documents or
any of the Prior Agreements or any documents executed in connection
therewith, whether for principal, Unpaid Drawings, interest, Fees,
expenses, indemnification or otherwise.
"Original Agreement" has the meaning set forth in the Recitals.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to all or any of its functions under ERISA.
19
<PAGE> 14
"Permitted Investments" means, as to any Person,
(a) securities issued or directly and fully guaranteed
or insured by the United States or any agency or instrumentality
thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities of not
more than twelve months from the date of acquisition thereof,
(b) time deposits and certificates of deposit with
maturities of not more than twelve months from the date of
acquisition by such Person in the Bank or other commercial bank
incorporated in the United States or any U.S. branch of any other
commercial bank, in each case having capital, surplus and
undivided profits aggregating $100,000,000 or more with a
long-term unsecured debt rating of at least A- from Standard &
Poor's Ratings Group or A3 from Moody's Investors Service, Inc.,
or bank deposits of any kind that are fully insured by the
Federal Deposit Insurance Corporation,
(c) commercial paper issued by any Person incorporated
in the United States rated at least A-1 or the equivalent thereof
by Standard & Poor's Ratings Group or at least P-1 or the
equivalent thereof by Moody's Investors Service, Inc. and, in
each case, maturing not more than 270 days after the date of
issuance,
(d) investments in money market mutual funds having
assets in excess of $2,000,000,000 substantially all of whose
assets are comprised of securities of the types described in
clauses (a) through (c) above,
(e) repurchase or reverse purchase agreements
respecting obligations with a term of not more than seven days
for underlying securities of the types described in clause (a)
above entered into with any bank listed in or meeting the
qualifications specified in clause (b) above, and
(f) banker's acceptances maturing within one year from
the date of origin issued by a bank or trust company organized
under the laws of the United States having capital, surplus and
undivided profits aggregating at least $100,000,000 and a long-
term deposit rating of A- or higher by Standard & Poor's Ratings
Group.
"Permitted Liens" means, (a) Liens for taxes or
assessments or other governmental charges or levies, either not yet due
and payable or being contested in good faith and by appropriate
proceedings for which adequate reserves have been established,
20
<PAGE> 15
(b) minor defects, irregularities and deficiencies in
title to, and easements, rights-of-way, zoning restrictions and
other similar restrictions, charges or encumbrances on, real
property of such Person which do not interfere with the ordinary
conduct of the business of such Person and which do not
materially detract from the value of the real property which they
affect,
(c) Liens existing on the Effective Date, which are
described in the Financials or listed on Schedule 8.03 and
approved by the Bank, and
(d) any renewal, extension or replacement of any Lien
referred to in the foregoing clauses; provided that no Lien
arising as a result of such extension or renewal shall cover any
property not theretofore subject to the Lien being extended or
secure any increased Indebtedness.
"Person" means an individual, partnership, corporation (including
a business trust), limited liability company, joint stock company,
trust, unincorporated association, joint venture or other entity, or a
foreign or domestic state or political subdivision thereof or any agency
of such state or subdivision.
"Plan" means any employee benefit plan (as defined in Section
3(3) of ERISA), subject to Title IV of ERISA or Section 412 of the Code,
other than a Multiemployer Plan, with respect to which a Loan Party or
an ERISA Affiliate contributes or has an obligation or liability to
contribute, including any such plan that may have been terminated.
"Pledge Agreements" mean those certain Amended and Restated
Pledge Agreements of even date herewith executed by the Company,
American Ecology Services Corporation and US Ecology, Inc.,
respectively, pledging to the Bank the stock of each of the above-
referenced entities' Subsidiaries (including ALEX) as security for the
Obligations.
"Prime Rate" shall mean, as of a particular date, the prime rate
most recently determined by the Bank and thereafter entered in the
minutes of the Bank's Loan and Discount Committee, automatically
fluctuating upward and downward with and at the time specified in each
such announcement without notice to the Company or any other Person,
which prime rate may not necessarily represent the lowest or best rate
actually charged to a customer. Any change in the Prime Rate shall be
effective on the effective date of such change.
"Prior Agreements" has the meaning set forth in the Recitals.
21
<PAGE> 16
"Receivables" means (i) any account (as that term is defined in
Section 9-106 of the UCC) or (ii) a general intangible (as that term is
defined in Section 9-106 of the UCC) for money due or to become due
arising in the ordinary course of business of the Company.
"Regulation U" means Regulation U of the Board (respecting margin
credit extended by banks), as the same is from time to time in effect,
and all official rulings and interpretations thereunder or thereof.
"Regulation X" means Regulation X of the Board (respecting
borrowers who obtain margin credit), as the same is from time to time in
effect, and all official rulings and interpretations thereunder or
thereof.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing into the environment (air, soil, surface water or ground
water) including the abandonment or discarding of barrels, containers
and other closed receptacles.
"Reportable Event" means an event described in Section 4043(b) of
ERISA with respect to a Plan as to which the 30-day notice requirement
has not been waived by the PBGC.
"Requirements of Environmental Laws" means, as to any Person, the
requirements of any applicable Environmental Law relating to or
affecting such Person or the condition or operation of such Person's
business or its properties, both real and personal.
"Responsible Officer" means, with respect to any Loan Party, the
president, chief executive officer, treasurer or chief financial officer
of such Loan Party.
"Restricted Payment" means (a) any dividend or other
distribution, direct or indirect, on account of any shares of any class
of stock of the Company now or hereafter outstanding, except a dividend
payable solely in shares of stock or warrants, rights or options to
acquire shares of stock of the Company and (b) any redemption,
retirement, purchase or other acquisition, direct or indirect, of any
shares of any class of stock of the Company, now or hereafter
outstanding, or of any warrants, rights or options to acquire any such
shares, except to the extent that the consideration therefor consists of
shares of stock (including warrants, rights or options relating thereto)
of the Company (other than the purchase of odd lot shares from
individual shareholders of not more than 100 shares per shareholder, up
to a maximum of $25,000.00 per year).
22
<PAGE> 17
"Revolving Credit Commitment" means the Bank's obligation to make
Revolving Credit Loans hereunder.
"Revolving Credit Loan" has the meaning specified in Section
2.01.
"Revolving Credit Note" has the meaning specified in Section
2.05(a).
"Second Restated Agreement" has the meaning set forth in the
Recitals.
"Security Agreements" mean those certain supplemental Security
Agreements dated as of the date hereof, executed by the Company and the
Guarantors, respectively, in favor of the Bank, pledging to the Bank a
security interest in all of the personal property and assets of each of
the Loan Parties as described therein and all proceeds thereof as
security for the Obligations.
"Standby Letter of Credit" means a letter of credit that is
issued to secure the payment or performance of an obligation and payable
upon notice of a failure or default in regard thereto and that is not a
Commercial Letter of Credit.
"Subrogation Agreement" means that certain Subrogation and
Contribution Agreement among the Company and the Guarantors of even date
herewith.
"Subsidiary" means and includes, with respect to any Person, (a)
any corporation more than 50% of whose stock of any class or classes
having by the terms thereof ordinary voting power to elect a majority of
the directors of such corporation (irrespective of whether or not at the
time stock of any class or classes of such corporation shall have or
might have voting power by reason of the happening of any contingency)
is at the time owned by such Person, directly or indirectly and (b) any
partnership, association, joint venture or other entity in which such
Person, directly or indirectly, has greater than 50% of (i) the
directors (or Persons performing similar functions) thereof or (ii)
equity interest.
"Term Loan" has the meaning specified in Section 2.03.
"Term Note" has the meaning specified in Section 2.05(b).
"UCC" means the Uniform Commercial Code as in effect from time to
time in the State of New York.
23
<PAGE> 18
"Unfunded Current Liability" means, with respect to any Plan, the
amount, if any, by which the present value of the accrued benefits under
the Plan as of the close of its most recent Plan year exceeds the fair
market value of the assets allocable thereto, determined in accordance
with Section 412 of the Code.
"Ward Valley Project" means the leasehold interest of the Company
(or one of its Subsidiaries) and the low level radioactive waste
disposal operations located thereon, in certain property located in Ward
Valley, California currently owed by the U.S. government, and
contemplated to be transferred to the State of California subject to the
leasehold interest of the Company.
"Warrant Agreement" means the Warrant Agreement attached hereto
as Exhibit 2.08(a).
"Warrants" has the meaning specified in the Warrant Agreement.
"Winona Site" means the deep well injection disposal site
operated by American Ecology Environmental Services Corporation, a
Subsidiary of the Company, located in Winona, Texas.
ARTICLE II
MAKING AND REPAYING THE LOANS
SECTION 2.01. The Revolving Credit Loan. Subject to the terms
and conditions herein set forth, the Bank agrees at any time and from time to
time on and after the Effective Date and prior to the Maturity Date, to make
and maintain a revolving credit loan or loans up to a maximum aggregate
principal amount not to exceed, in any event, $5,000,000.00 (each a "Revolving
Credit Loan" and collectively, the "Revolving Credit Loans") to the Company.
So long as no Default or Event of Default exists hereunder, Revolving Credit
Loans may be repaid and reborrowed in accordance with the provisions hereof and
shall, in the aggregate, not exceed the lesser of (i) $5,000,000.00 or (ii) the
Borrowing Base. There shall be no further advances of any Revolving Credit
Loans after the Maturity Date. The original outstanding balance of the
Revolving Credit Loan of $4,832,612.54 evidences amounts owed to the Bank under
the Prior Agreements.
SECTION 2.02. Advances Under the Revolving Credit Loan. (a)
The Bank shall make an initial advance under the Revolving Credit Loan in an
amount sufficient to repay Indebtedness outstanding under the Prior Agreements
not repaid
24
<PAGE> 19
by the Term Loan as described in Section 2.03. Thereafter, the Bank shall,
from time to time, make Revolving Credit Loans to the Company in the form of
advances to the Company or third parties for the sole purpose of paying any
drafts, checks, wire transfer requests or clearinghouse debits which name the
Company as maker or drawer thereon and are presented to the Bank by the Company
or such third parties. The Bank shall not make any other advances under the
Revolving Credit Loans except pursuant to paragraph (b) hereof and Section
2.10(a).
(b) The parties hereto recognize that the Company and the
Bank, pursuant to Section 2.10, and the Cash Management and Lockbox Agreement,
have agreed to utilize daily cash inflows to the Company to reduce the amount
outstanding on the Revolving Credit Loan. In connection therewith, the Bank
and the Company agree that the Bank shall, if all conditions to advance have
been met and the Company is not in default hereunder, make advances each day
sufficient to pay the items hereinabove described. The Bank may make such
advances without notice to the Company but shall use its best efforts to give
notice of all such advances to the Company promptly without the need for any
request therefor by the Company. The outstanding balance of the Revolving
Credit Loan as of the Execution Date is $4,832,612.54.
SECTION 2.03. The Term Loan. Subject to the terms and
conditions herein set forth, the Bank agrees to lend to the Company an
advancing term loan, in a series of advances, of up to a maximum of
$38,000,000.00 (the "Term Loan" and, together with the Revolving Credit Loan
and any advances under a Letter of Credit described in Article III hereof, the
"Loans"). The original outstanding balance of the Term Loan in the amount of
$31,592,006.57 evidences amounts owed to the Bank under the Prior Agreements.
SECTION 2.04. Advances Under the Term Loan. Subject to the
terms and conditions hereof, the Bank shall (i) on the date of the initial
Credit Event, make a Term Loan to the Company in the amount of $31,592,006.57,
and (ii) commencing on November 30, 1996, and continuing regularly thereafter
on the end of each calendar month until December 31, 1998, make additional
advances under the Term Loan to the Company in the amount of the accrued and
unpaid interest due and payable on the Loans, at the rate set forth herein, and
in the amount of actual expenses incurred by the Bank in connection herewith,
for legal and accounting fees and similar items, which advances shall be used
for the purposes of paying such interest or expense. There shall be no
advances under the Term Loan for any other purpose.
SECTION 2.05. Notes. (a) The Company's obligation to pay the
Revolving Credit Loans made by the Bank shall be evidenced by a single
revolving promissory note in the original principal sum of
25
<PAGE> 20
$5,000,000.00 (the "Revolving Credit Note") duly executed and delivered by the
Company substantially in the form of Exhibit 2.05A hereto.
(b) The Company's obligation to repay the Term Loan shall be
evidenced by a single term promissory note in the maximum principal sum of
$38,000,000.00 (the "Term Note"), duly executed and delivered by the Company
substantially in the form of Exhibit 2.05B hereto.
SECTION 2.06. Payment of Interest. (a) Subject to Section
11.08, the Company agrees that interest shall accrue in respect of the unpaid
principal amount of the Revolving Credit Loan and the Term Loan (i) from the
date of the making of each such Loan to the earlier of December 31, 1998 or
maturity (whether by acceleration or otherwise) at a rate per annum which shall
at all times be equal to the lesser of (A) the Highest Lawful Rate and (B)
seven percent (7%) and (ii) from January 1, 1999 to maturity (whether by
acceleration or otherwise) at a rate per annum which shall at all times be
equal to the lesser of (A) the Highest Lawful Rate and (B) the greater of ten
percent (10%) or the Prime Rate; provided, the Company and the Bank agree that
up to and including December 31, 1998, all accrued interest may be paid by
advances under the Term Loan and thereafter such interest shall be payable by
the Company. Interest shall be computed on the basis of the actual number of
days elapsed over a year of 365 or 366 days, as the case may be.
(b) On the Maturity Date, the Company shall pay the
incremental interest described in Section 2.08(c).
(c) Overdue principal and, to the extent permitted by law,
overdue interest in respect of each Loan and all other overdue amounts owing
hereunder shall bear interest for each day that such amounts are overdue at a
rate per annum equal to the lower of: (i) Prime Rate plus 4% per annum, or (ii)
Highest Lawful Rate.
(d) Interest on each Loan shall accrue from the date of such
Loan to the date of any repayment thereof and shall be payable in accordance
with the above provisions (i) on each Designated Payment Date and (ii) on the
date of any voluntary or mandatory prepayment and (iii) at maturity.
SECTION 2.07. Required Payments of Principal. (a) All
outstanding principal (and any accrued, unpaid interest) on the Revolving
Credit Note shall be due and payable on the Maturity Date.
(b) Outstanding principal on the Term Note shall be due and
payable as follows:
26
<PAGE> 21
(i) a principal payment of $5,000,000.00 shall be due
and payable on December 31, 1999 and a principal payment of
$250,000.00 shall be due and payable quarterly on the last day of
each calendar quarter commencing March 31, 2000; provided,
however, if any such payment date shall be a day which is not a
Business Day, such payment date shall be the next succeeding
Business Day; and
(ii) all remaining outstanding principal and any
accrued, unpaid interest shall be due on the Maturity Date.
(c) In addition to all other payments required by this Section
2.07, the Company shall repay the outstanding principal amount of the Revolving
Credit Note on any day to the extent that the aggregate outstanding principal
amount of the Revolving Credit Loans exceeds the lesser of (1) the outstanding
Borrowing Base as set forth in the most recent Borrowing Base Certificate or
(2) $5,000,000.00.
(d) In addition to the amounts required by this Section 2.07,
immediately upon transfer of fee simple ownership in the Ward Valley Project to
the State of California from the U.S. Department of the Interior and the
leasehold interest of the Company or any of its Subsidiaries or designees
becoming effective and the development thereof to a point on which operations
can commence, all remaining principal and interest on the Term Note and the
Revolving Credit Note shall be immediately due and payable. The Company and
the Bank agree to enter into good faith negotiations regarding the exact date
of such repayment immediately following the transfer of legal title of the Ward
Valley, California site as hereinabove referenced.
(e) Each repayment pursuant to this Section which is not
specifically characterized as a repayment of principal shall be applied first
to the payment of accrued and unpaid interest, and then to the outstanding
principal of the Loans.
SECTION 2.08. Warrants. (a) If the Loans and other
Obligations (including, without limitation, the additional interest referred to
in paragraph (c) below) have not been paid in accordance with the terms hereof
, then, at any time thereafter, but no later than October 31, 2003, the Bank
shall be entitled to exercise all rights granted it in the Warrant Agreement
attached as Exhibit 2.08 (a). The Warrants shall be issued pursuant to, and
shall be governed by and subject to the terms of, the Warrant Agreement.
(b) Concurrently with delivery of the Warrants to the Bank,
the Company shall cause to be delivered to the Bank an opinion of counsel, in
form and substance satisfactory to the Bank, covering such matters as the Banks
may request, including that (i) the Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware,
(ii) the execution,
27
<PAGE> 22
delivery and performance of the Warrant Agreement, and the issuance of the
Warrants, have been duly authorized by all necessary corporate action, (iii)
the Warrants and the Warrant Agreement have been duly executed and delivered
by the Company, and constitute the legal, valid and binding obligations of the
Company, enforceable against it in accordance with their respective terms, and
(iv) the execution, delivery and performance by the Company of the Warrants and
the Warrant Agreement will not violate any applicable law or breach any
provision contained in the articles or certificate of incorporation or bylaws
of the Company or any material agreement, instrument or document to which it is
now a party or by which it or its properties is bound.
(c) If, on or prior to the Maturity Date, the Company has
timely paid all scheduled principal and interest payments on the Loans and the
Bank receives additional incremental interest per annum on the Loans in the
amount of the difference between (y) the greater of : (i) 10% or (ii) the Prime
Rate and (z) seven percent (7%), for the period from the Execution Date to
December 31, 1998, the Bank agrees to release all rights to any of the
Company's capital stock granted to it hereunder, including, but not limited to,
all rights to Warrants pursuant to the Warrant Agreement.
SECTION 2.09. Voluntary Prepayments. The Company shall have
the right to voluntarily prepay the Loans in whole or in part from time to time
without notice or penalty.
SECTION 2.10. Method and Place of Payment; Lockbox Agreement.
(a) All payments shall be made to the Bank at its office in Houston, Texas. In
addition, all of the Company's and the Subsidiaries' accounts receivable will
be deposited by the Company's and its Subsidiaries' third party account debtors
into the Company's lockbox maintained at the Bank, pursuant to that certain
Cash Management and Lock Box Agreement between the Bank and the Company dated
December 22, 1992 (the "Cash Management and Lockbox Agreement"), account number
00100354902. The Bank shall have the right, but not the obligation, and the
Company hereby grants the Bank the right, to deduct and set-off any amounts due
and owing to the Bank under this Agreement from the collections made pursuant
to the above-referenced Cash Management and Lock Box Agreement. All available
funds in account number 00100354902 will be swept daily by the Bank and
applied, first, against any accrued interest which is due and payable on the
Loans, second, to reduce the amount outstanding under the Revolving Credit Loan
and third, against the outstanding principal balance of the Term Loan that is
then due and payable. Any sums over and above such amounts shall be deposited
into the primary account of the Company. If at any time any payments are owing
by the Company to the Bank and funds in the above referenced account are
insufficient to satisfy the same, the Company shall make such payment
28
<PAGE> 23
to the Bank immediately upon demand therefor by the Bank. Any chargebacks or
other debits subsequently affecting said funds or account shall adjust the
subsequent balance of the account, or if same is insufficient, will allow the
Bank to make an advance, at its sole option, to allow payment of such items.
(b) The Company irrevocably authorizes the Bank to make, and
irrevocably appoints the Bank as its attorney-in-fact (which power shall be
coupled with an interest), to make transfers of funds to and from the Cash
Management and Lock Box Account, any other (except special trust, pension and
tax accounts) account of the Company, or any of them, necessary to accomplish
the purposes of the Loan Documents.
SECTION 2.11. Increased Taxes or Costs. (a) If the Bank shall
have determined in good faith that any law, rule, regulation or guideline
regarding required reserves or reserve percentages, capital adequacy, or any
change therein, or any change in the interpretation or administration thereof
or compliance by the Bank with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency has or would have the effect of reducing the
rate of return on the capital of the Bank as a consequence of its obligations
hereunder to a level below that which it could have achieved but for such
adoption, change or compliance by an amount deemed to be material, then, from
time to time, the Company shall pay to the Bank such additional amount or
amounts as will reasonably compensate the Bank for such reduction.
(b) The Bank will notify the Company of any event which will
entitle it to compensation pursuant to this Section promptly, provided, the
Company shall not be obligated hereunder for any such amounts in respect of
changes occurring more than ninety (90) days prior to the date of such notice.
A certificate of the Bank setting forth in reasonable detail (i) such amount or
amounts as shall be necessary to compensate the Bank as specified in paragraph
(a) above, as the case may be, and (ii) the calculation of such amount or
amounts, shall be delivered to the Company and shall be conclusive absent
manifest error. The Company shall pay to the Bank the amount shown as due on
any such certificate as will reasonably compensate the Bank for such matters
within thirty (30) days after its receipt of the same.
(c) Failure on the part of the Bank to demand compensation for
any increased costs or reduction in amounts received or receivable or reduction
in return on capital shall not constitute a waiver of the Bank's rights to
demand compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital, provided, the Bank shall be
entitled to collect such costs or expenses only in regard to change in
circumstances occurring after the Effective Date.
29
<PAGE> 24
ARTICLE III
LETTERS OF CREDIT
SECTION 3.01. Letters of Credit. (a) Subject to and upon the
terms and conditions herein set forth, the Bank agrees that it will, at any
time and from time to time on or after the Effective Date and prior to the
Maturity Date, following its receipt of a letter of credit request, and
satisfaction of the conditions described in Section 3.02 below, issue for the
account of the Company and in support of the obligations of the Company, one or
more irrevocable standby, but not commercial, letters of credit (all such
letters of credit together with any existing letters of credit previously
issued by the Bank, collectively, the "Letters of Credit"), in an amount
requested by the Company equal to or less than the amount of the Letter of
Credit Collateral specifically pledged to the Bank in connection therewith.
All Letters of Credit shall be Standby Letters of Credit and have a maturity
date not later than the Letter of Credit Termination Date. All Letters of
Credit outstanding under either of the Prior Agreements, which are described on
Schedule 3.01, shall be considered Letters of Credit hereunder.
(b) The Bank shall not issue, renew, extend or permit the
renewal or extension of any Letter of Credit if (i) any of the conditions
precedent to such issuance or renewal set forth in Section 5.02 are not
satisfied, (ii) the expiry date is a date that is later than the later of one
(1) year after the date of issuance or renewal, as the case may be or the
Letter of Credit Termination Date and (iii) Letter of Credit Collateral for
such Letter of Credit is not received by and pledged to the Bank in a manner
satisfactory to the Bank in its sole discretion.
SECTION 3.02. Letter of Credit Requests. Whenever the
Company desires that a Letter of Credit be issued for its account or that the
existing expiry date of a Letter of Credit shall be renewed or extended, it
shall give the Bank at least two (2) Business Days' prior written request
therefor. Each such request shall be in the form of an Application for Letter
of Credit on the Bank's standard form therefor, completed to the satisfaction
of the Bank, shall be accompanied by the Letter of Credit Collateral, pledged
to the Bank in a manner satisfactory to the Bank in its sole discretion (except
in the case of renewals in which such Collateral is already pledged), and such
other certificates, documents and other papers and information as the Bank may
reasonably request. Each Letter of Credit shall be in such form as may be
reasonably approved from time to time by the Bank and the Company.
SECTION 3.03. Repayment of Letter of Credit Drawings. The
Company hereby agrees that, for any payment made by the Bank under any Letter
of Credit
30
<PAGE> 25
issued by it on the date of such payment the Bank may setoff all or part of the
Letter of Credit Collateral or the proceeds thereof, securing such Letter of
Credit, or, if the Company so requests and the Bank agrees, in its sole and
absolute discretion, make a Revolving Credit Loan under the Revolving Credit
Note to effect such repayment to reimburse itself for such payment. The Bank's
right to such setoff under this Section 3.03 (including, in each case, interest
owing thereon) shall be absolute and unconditional under any and all
circumstances and irrespective of any set-off, counterclaim or defense to
payment which the Company may have or have had against the Bank, including any
defense based upon the failure of any drawing under a Letter of Credit to
conform to the terms of the Letter of Credit or any non-application or
misapplication by the beneficiary of the proceeds of such drawing.
SECTION 3.04. Rights of Bank Regarding Letters of Credit. The
Bank shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions caused by the Bank's willful misconduct. IT IS THE EXPRESS INTENTION
OF THE PARTIES HERETO THAT THE BANK, ITS OFFICERS, DIRECTORS, SHAREHOLDERS,
EMPLOYEES, ATTORNEYS AND AGENTS SHALL BE INDEMNIFIED AND HELD HARMLESS FROM ANY
ACTION TAKEN OR OMITTED BY SUCH PERSON UNDER OR IN CONNECTION WITH ANY LETTER
OF CREDIT OR ANY RELATED DRAFT OR DOCUMENT ARISING OUT OF OR RESULTING FROM
SUCH PERSON'S SOLE OR CONTRIBUTORY NEGLIGENCE. The Company agrees that any
action taken or omitted by the Bank under or in connection with any Letter of
Credit or the related drafts or documents, if done in accordance with the
standards of care specified in the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce, Publication No. 500
(and any subsequent revisions thereof approved by a Congress of the
International Chamber of Commerce and adhered to by the Bank) and, to the
extent not inconsistent therewith, the UCC, shall not result in any liability
of the Bank to the Company or any other Loan Party.
SECTION 3.05. Increased Letter of Credit Costs.
Notwithstanding any other provision herein, but subject to Section 11.08, if
the Bank shall determine in good faith that any change in any law, rule,
regulation or guideline (whether or not having the force of law) either (i)
shall impose, modify or make applicable any reserve, deposit, capital adequacy
or similar requirement against letters of credit issued, or participated in, by
the Bank or (ii) shall impose on the Bank any other conditions affecting this
Agreement or any Letter of Credit; and the result of any of the foregoing is to
increase the cost to the Bank of issuing, maintaining or participating in any
Letter of Credit, or reduce the amount received or receivable by the Bank
hereunder with respect to Letters of Credit, by an amount deemed to be
material, then, from time to time, the Company shall pay to the Bank such
additional amount or amounts as will reasonably compensate such Bank for such
increased cost, provided, the Bank shall notify the Company of such change
31
<PAGE> 26
promptly and the Company shall not be obligated hereunder for any such amounts
in respect of changes occurring more than ninety (90) days prior to the date of
any such notice.
SECTION 3.06. Letter of Credit Collateral. Notwithstanding
the terms of Section 3.01 but subject to Sections 3.03 and 4.04(a), any Letter
of Credit Collateral pledged by the Company which is not used to repay the Bank
for any draws under any Letter of Credit shall secure and, in the event of an
Event of Default, be applied as provided in Section 2.10.
ARTICLE IV
FEES, COMMITMENTS AND PARTIAL RELEASES
SECTION 4.01. Fees. (a) Upon the date of issuance of any
Letter of Credit and on each annual anniversary thereof, the Company agrees to
pay the Bank a fee in respect of each Letter of Credit issued for the account
of the Company (the "Letter of Credit Fee"), for the period from the date of
issuance of such Letter of Credit to the expiry date of such Letter of Credit,
computed at the rate of one-half of one percent (0.5%) per annum of the face
amount of any Letter of Credit secured by Letter of Credit Collateral. The
Letter of Credit Fees (i) will be in lieu of all commissions and fees for the
Letters of Credit other than customary administrative, issuance, amendment,
payment and negotiation charges, (ii) shall be paid in immediately available
funds, (iii) shall be calculated on the basis of the actual number of days
elapsed over a year of 365 or 366 days, as the case may be, and (iv) shall be
deemed earned when paid and are non-refundable.
(b) In no event shall the Fees payable under this Section (to
the extent, if any, constituting interest under applicable laws) together with
all amounts constituting interest under applicable laws and payable in
connection with this Agreement, the Notes and the other Loan Documents exceed
the Highest Lawful Rate.
SECTION 4.02. Intentionally Deleted.
SECTION 4.03. Mandatory Reduction of Commitment. Unless
sooner terminated pursuant to Article X hereof, the Revolving Credit Commitment
and the Letter of Credit Commitment shall terminate on the Maturity Date.
32
<PAGE> 27
SECTION 4.04. Partial Release of Collateral. Notwithstanding
the terms of any of the Security Documents, the Bank hereby agrees with the
Company, in regard to the following specific items of collateral that, prior to
the occurrence and continuance of a Default hereunder:
(a) If any of the Letter of Credit Collateral currently
serving as security for Letter of Credit No. I-433707030 is no longer needed
due to the termination or cancellation of such Letter of Credit, such
additional collateral shall continue to serve as security for the Obligations,
provided, upon request therefor and the Company's written representation to the
Bank that such collateral is being used to pay, in whole or in part, past due
fees owing to the State of Nevada in respect of the licensing and operation of
its facility in Beatty, Nevada, the Bank agrees to release any of such funds
that are being used to pay the State of Nevada such fees. All remaining funds
shall continue to serve as collateral for the Loans.
(b) The Bank agrees that it will release the following
collateral to the Company to be used as general working capital:
(i) any cash proceeds from the sale or other
disposition or realization upon any of the assets of ALEX,
(ii) any income tax refunds from the Internal Revenue
Service,
(iii) any proceeds of insurance received by the Company
or any of its Subsidiaries because of the business interruption
suffered by the facility in Oakridge, Tennessee, operated by
AERC, and
(iv) fire insurance proceeds from the damage at AERC,
which proceeds are held by the Bank pursuant to that one certain
Agreement Regarding Escrow Account dated October 30, 1996,
provided, such funds are used in a manner consistent with and
contemplated by said agreement.
(c) In addition, the Bank agrees that upon the sale of any of
the Perma Fix stock currently held as collateral for the Obligations, the Bank
will pay down the Term Loan and readvance to the Company under the Term Loan,
an amount up to the maximum of one-third ( ) of the total value of said stock,
at the time of such sale. If less than one-third ( ) of the stock is sold, the
Bank will pay down and readvance an amount equal to the amount of stock sold;
if more than one-third ( ) is of such stock sold, the Bank will pay down and
readvance up to one-third ( ) of the total value. Further, upon receipt of the
additional $2,000,000.00 of equity referred in Section 7.09, the Bank will
release to the Company for use as general
33
<PAGE> 28
working capital, all proceeds from the sale of any further Perma Fix stock at
the time of such sale.
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.01. Conditions Precedent to the Initial Credit
Event. The obligation of the Bank to make its initial Loan or issue a Letter of
Credit to the Company is subject to receipt by the Bank of the following, each
in form satisfactory to the Bank, executed by the appropriate party:
(a) this Agreement;
(b) the Revolving Credit Note;
(c) the Term Note;
(d) the Warrant Agreement;
(e) the most recent management letter delivered to the Company
by the Company's independent certified public accountants dealing with
management or operational issues of the Company or its Subsidiaries;
(f) the Security Agreements;
(g) the Pledge Agreements, together with all of the pledged
securities referred to therein as required to be delivered to effectuate and
perfect such stock pledge, accompanied by an executed and undated stock power
in blank, or such other instrument, as may be required under applicable law to
perfect the pledge;
(h) duly executed UCC-1 Financing Statements and all other
requisite filing documents necessary to perfect the Liens granted pursuant to
the Security Agreements, Pledge Agreements and the Mortgage;
(i) the Mortgages;
(j) the Guaranties;
(k) the Subrogation Agreement;
34
<PAGE> 29
(l) independent auditor's report and opinion on the Company's
financials in form and substance satisfactory to the Bank;
(m) if the Credit Event is the issuance of a Letter of Credit,
the Bank shall have received the Letter of Credit Collateral pledged to it in a
manner satisfactory to the Bank in its sole discretion;
(n) a certificate of an officer and of the secretary or an
assistant secretary of each Loan Party certifying, inter alia, (A) true and
correct copies of the articles or certificate of incorporation, as amended and
in effect, of such Person and, the bylaws, as amended and in effect, of each
Loan Party, as well as resolutions adopted by the Board of Directors of such
Person (1) authorizing the execution, delivery and performance by such Person
of this Agreement and the other Loan Documents to which it is or will be a
party and, in the case of the Company, the Loans to be made hereunder, (2)
approving the forms of the Loan Documents to which it is a party and which will
be delivered at or prior to the initial Borrowing Date and (3) authorizing
officers of such Person to execute and deliver the Loan Documents to which it
is or will be a party and any related documents, and (B) the incumbency and
specimen signatures of the officers of such Person executing any documents on
its behalf;
(o) favorable, signed opinions dated the Effective Date and
addressed to the Bank from Jenner & Block, counsel to the Loan Parties, in form
and substance satisfactory to the Bank and its counsel;
(p) evidence satisfactory to the Bank of the receipt by the
Company of an equity infusion of not less than $3,000,000.00;
(q) certificates of appropriate public officials as to the
existence, good standing and qualification to do business as a foreign
corporation, as applicable, of each Loan Party in each jurisdiction in which
the ownership of its properties or the conduct of its business requires such
qualifications and where the failure to so qualify would have a Material
Adverse Effect;
(r) a certificate from the Company's insurance broker
describing in detail all insurance by the Company and its Subsidiaries on its
property and its business as of the Effective Date in form and amounts
satisfactory to the Bank and naming the Bank as a loss payee of all hazard
insurance and an additional insured of liability insurance maintained by the
Company and its Subsidiaries;
(s) a certificate of an officer of the Company listing all
jurisdictions in which the Company owns and/or maintains Collateral, including,
without limitation, all licenses and permits; and
35
<PAGE> 30
(t) an Agreement Regarding Escrow Account executed by the
Company, accompanied by evidence satisfactory to the Bank that the Company has
delivered into an escrow account maintained by the Bank all insurance proceeds
received in connection with damage to AERC, all pursuant to said Agreement.
SECTION 5.02. Conditions Precedent to All Credit Events. The
obligation of the Bank to make any Loan or to issue or extend any Letter of
Credit is subject to the further conditions precedent that on the date of such
Credit Event:
(a) The conditions precedent set forth in Section 5.01 shall
have theretofore been satisfied or waived.
(b) The representations and warranties set forth in Article VI
shall be true and correct in all material respects as of, and as if such
representations and warranties were made on, the date of the proposed Loan or
Letter of Credit, as the case may be (unless such representation and warranty
expressly relates to an earlier date or are no longer true and correct solely
as a result of transactions permitted by the Loan Documents), and the Company
shall be deemed to have certified to the Bank that such representations and
warranties are true and correct in all material respects by submitting a Notice
of Loan Request or a letter of credit request, as the case may be.
(c) The Company shall have appropriately requested the Loan or
issuance of Letters of Credit.
(d) No Default or Event of Default shall have occurred and be
continuing or would result from such Credit Event.
(e) No Material Adverse Effect shall have occurred since the
delivery of the Financials.
(f) If the Credit Event is the issuance of a Letter of Credit,
the Bank shall have received the Letter of Credit Collateral pledged to it in a
manner satisfactory to the Bank in its sole discretion.
(g) The Cash Management and Lockbox Agreement shall continue
to be in full force and effect and the Company shall be in compliance with the
terms thereof.
(h) The Bank shall have received such other approvals,
opinions or documents as the Bank may reasonably request.
36
<PAGE> 31
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to enter into this Agreement and to
make the Loans provided for herein and issue Letters of Credit, each Loan Party
makes to the extent applicable and relevant, the following representations and
warranties to the Bank.
SECTION 6.01. Organization and Qualification. Each Loan Party
(a) is a corporation or partnership duly organized, validly existing and in
good standing under the laws of the state of its incorporation or organization,
(b) has the corporate or partnership power and authority to own its property
and to carry on its business as now conducted and as proposed to be conducted
and (c) is duly qualified as a foreign corporation or foreign partnership to do
business and is in good standing in every jurisdiction in which the failure to
be so qualified would have a Material Adverse Effect.
SECTION 6.02. Authorization and Validity. Each Loan Party has
the corporate power and authority to execute, deliver and perform its
obligations hereunder and under the other Loan Documents, and all such action
has been duly authorized by all necessary proceedings on its part. This
Agreement has been duly and validly executed and delivered by each Loan Party
and constitutes a valid and legally binding agreement of such Loan Party
enforceable in accordance with its terms, and the Notes and the other Loan
Documents to which such Loan Party is a party, when duly executed and delivered
by such Loan Party, will constitute valid and legally binding obligations of
such Loan Party enforceable in accordance with the respective terms thereof and
of this Agreement, except, in each case, as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or
other similar laws relating to or affecting the enforcement of creditors'
rights generally, and by general principles of equity.
SECTION 6.03. Governmental Consents. No authorization,
consent, approval, license or exemption of or filing or registration with, any
court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, is necessary for the valid execution,
delivery or performance by any Loan Party of any Loan Document.
SECTION 6.04. Conflicting or Adverse Agreements or
Restrictions. No Loan Party is a party to any contract or agreement or subject
to any restriction which would reasonably be expected to have a Material
37
<PAGE> 32
Adverse Effect. Neither the execution nor delivery of the Loan Documents nor
compliance with the terms and provisions hereof or thereof require any consent
or approval of its stockholders (other than such as have been obtained and
remain in full force and effect) or will be contrary to the provisions of, or
constitute a default under or a breach of (a) the charter or bylaws of such
Loan Party or (b) any applicable law (including Regulation U) or any applicable
regulation, order, writ, injunction or decree of any court or governmental
instrumentality or (c) any material agreement, contract or other document or
instrument to which such Loan Party is a party or by which it is bound or to
which it is subject.
SECTION 6.05. Title to Assets. Each Loan Party has good and
indefeasible title to all of its assets and properties, subject to no Liens,
except those permitted hereunder; provided, the property located in Butte,
Nebraska, commonly known as the Butte facility, is subject to an equitable
interest in favor of the Central Interstate Low Level Radioactive Waste Compact
Commission requiring conveyance of said property to said commission or its
designee upon issuance by the State of Nebraska of a license to US Ecology,
Inc. to operate said facility as a low level radioactive waste disposal site.
All of such assets and properties have been and are being maintained by the
appropriate Person in good working condition in accordance with industry
standards.
SECTION 6.06. Litigation. Except as disclosed on Schedule
6.06, no actions, suits or proceedings, including arbitral proceedings, against
or affecting any Loan Party are pending or, to the knowledge of any Loan Party,
threatened before any court or governmental agency or department which involve
a risk of having a Material Adverse Effect.
SECTION 6.07. Financial Statements. The Company has furnished
to the Bank its audited consolidated balance sheet, income statement and
statement of cash flow for itself and its consolidated Subsidiaries as of
December 31, 1995 (the "Financials") and unaudited statements as of September
30, 1996. The Financials have been prepared in conformity with GAAP
consistently applied (except as otherwise disclosed in such financial
statements) throughout the periods involved and present fairly, in all material
respects, the consolidated financial position of the Company and its
consolidated Subsidiaries as of December 31, 1995 and the results of their
operations for the period then ended. There are no material liabilities,
direct or indirect, fixed or contingent, of the Loan Parties as of the date of
such Financials that are not reflected therein or in the notes thereto. As of
the Effective Date, no Material Adverse Effect has occurred in the consolidated
financial condition of the Company and its consolidated Subsidiaries since the
date of said Financials.
38
<PAGE> 33
SECTION 6.08. No Defaults or Violations of Laws. Except as
disclosed on Schedule 6.08, (i) upon the execution hereof, no Loan Party is in
default under the provisions of any instrument evidencing any Indebtedness or
of any agreement relating thereto, or in default in any respect under any
order, writ, injunction or decree of any court, or in default or violation in
any respect under or in violation of any order, injunction or decree of any
governmental instrumentality, which defaults or violations would, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect;
(ii) no Loan Party is a party to any material agreement evidencing any
Indebtedness of such Person with an outstanding principal amount in excess of
$250,000.00 on the date of the execution of this Agreement; and (iii) no Loan
Party is in violation of any applicable requirement of Law except for such
violations that will not have a Material Adverse Effect on such Person.
SECTION 6.09. Investment Company Act. No Loan Party is, or is
directly or indirectly controlled by or acting on behalf of any Person which
is, an "investment company," as such term is defined in the Investment Company
Act of 1940, as amended.
SECTION 6.10. Public Utility Holding Company Act. No Loan
Party is a non-exempt "holding company," or subject to regulation as such, or,
to the knowledge of any Loan Party's officers, an "affiliate" of a "holding
company" or a "subsidiary company" of a "holding company," within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
SECTION 6.11. ERISA. (a) Except as disclosed on Schedule
6.11, (i) each Plan and, to the knowledge of each Loan Party, each
Multiemployer Plan is in all material respects in compliance with the
applicable provisions of ERISA, the Code and all other applicable federal or
state law and no event or condition is occurring concerning which a Loan Party
would be under an obligation to furnish a report in accordance with Section
7.07; (ii) no accumulated funding deficiency (as defined in Section 412 of the
Code or Section 302 of ERISA), whether or not waived, exists or is expected to
be incurred with respect to any Plan(s); (iii) no liability to the PBGC (other
than required premium payments) has been or is expected by the Loan Parties to
be incurred with respect to any Plan(s) by the Loan Parties or any ERISA
Affiliate which would reasonably be expected to have a Material Adverse Effect;
and (iv) neither the Company nor any ERISA Affiliate has incurred any
withdrawal liability under Title IV of ERISA with respect to any Multiemployer
Plans which would reasonably be expected to have a Material Adverse Effect.
(b) No Plan provides (or has a commitment to provide) health
benefits with respect to any current or former employees or independent
39
<PAGE> 34
contractors (or beneficiary thereof) or a Loan Party or any ERISA Affiliate
beyond their retirement or other termination of service (other than coverage
mandated by Part 6 of Subtitle B of Title I of ERISA).
SECTION 6.12. Tax Returns and Payments. Each Loan Party has
filed all federal income tax returns and other material tax returns, statements
and reports (or obtained extensions with respect thereto) which, are required
to be filed and have paid or deposited or made adequate provision in accordance
with GAAP for the payment of all taxes (including estimated taxes shown on such
returns, statements and reports) which are shown to be due pursuant to such
returns, except for such taxes as are being contested in good faith and by
appropriate proceedings.
SECTION 6.13. Environmental Matters. Each Loan Party and each
of its Subsidiaries (a) possesses all environmental, transportation, health and
safety licenses, permits, authorizations, registrations, approvals and similar
rights necessary under Environmental Laws for such Loan Party or such
Subsidiary to conduct its operations as now being conducted (other than those
with respect to which the failure to possess or maintain would not,
individually or in the aggregate for all Loan Parties and such Subsidiaries,
have a Material Adverse Effect) and (b) each of such licenses, permits,
authorizations, registrations, approvals and similar rights is valid and
subsisting, in full force and effect and enforceable by such Loan Party or such
Subsidiary, and each Loan Party and each of its Subsidiaries is in compliance
with all terms, conditions or other provisions of such permits, authorizations,
registrations, approvals and similar rights except for such failure or
noncompliance that, individually or in the aggregate for all Loan Parties and
such Subsidiaries, would not have a Material Adverse Effect. Except as
disclosed on Schedule 6.13, no Loan Party nor any of its Subsidiaries has
received any notices of any violation of, noncompliance with, or remedial
obligation under, Requirements of Environmental Laws (which violation or non-
compliance has not been cured, and there are no writs, injunctions, decrees,
orders or judgments outstanding, or lawsuits, claims, proceedings,
investigations or inquiries pending or, to the knowledge of such Loan Party,
threatened, relating to the ownership, use, condition, maintenance or operation
of, or conduct of business related to, any property owned, leased or operated
by such Loan Party or such Subsidiary or other assets of such Loan Party or
such Subsidiary, other than those violations, instances of noncompliance,
obligations, writs, injunctions, decrees, orders, judgments, lawsuits, claims,
proceedings, investigations or inquiries that, individually or in the aggregate
for all Loan Parties and such Subsidiaries, would not have a Material Adverse
Effect. Except as disclosed on Schedule 6.13, there are no material
obligations, undertakings or liabilities arising out of or relating to
Environmental Laws to which any Loan Party or any of its Subsidiaries has
agreed, assumed or retained, or by which any Loan Party or any of its
Subsidiaries is adversely affected, by contract or otherwise, which would have
a Material Adverse Effect. Except as disclosed on
40
<PAGE> 35
Schedule 6.13, no Loan Party or any of its Subsidiaries has received a written
notice, citation, summons or order or claim to the effect that such Person is
or may be liable to any other Person as the result of a Release or threatened
Release of a Hazardous Material, which liability would have a Material Adverse
Effect.
SECTION 6.14. Purpose of Loans. None of the proceeds of the
Loans will be used directly or indirectly for the purpose of purchasing or
carrying any "margin stock" within the meaning of Regulation U (herein called
"margin stock") or for the purpose of reducing or retiring any indebtedness
which was originally incurred to purchase or carry a margin stock, or for any
other purpose which might constitute this transaction a "purpose" credit within
the meaning of Regulation U. Neither any Loan Party nor any agent acting on
its behalf has taken or will take any action which might cause this Agreement
or any other Loan Document to violate Regulation U, Regulation X, or any other
regulation of the Board or to violate the Securities Exchange Act of 1934, as
amended.
SECTION 6.15. Franchises and Other Operating Rights. Except
as shown on Schedule 6.15, each Loan Party and each of its Subsidiaries have
all franchises, permits, licenses and other authority as are necessary or
appropriate to enable them to carry on their respective businesses as now being
conducted.
SECTION 6.16. Intellectual Property. Each of the Loan Parties
own or hold valid licenses to use all the patents, trademarks, service marks,
and trade names, free of any burdensome restrictions, that are necessary to the
operation of the business of the Loan Parties as presently conducted (other
than those with respect to which the failure to possess or maintain would not,
individually or in the aggregate for the Loan Parties and their Subsidiaries,
have a Material Adverse Effect.
SECTION 6.17. Subsidiaries. The Subsidiaries executing this
Agreement are all the Subsidiaries owned by the Company as of the Effective
Date.
ARTICLE VII
AFFIRMATIVE COVENANTS
Each Loan Party covenants and agrees for itself, that on and
after the date hereof and for so long as this Agreement is in effect and until
all Loans have been paid in full and each Letter of Credit shall have
terminated:
41
<PAGE> 36
SECTION 7.01. Information Covenants. The Company will furnish
or cause to be furnished to the Bank:
(a) (i) As soon as available, and in any event within fifteen
(15) Business Days following the end of each month and forty-five (45) Business
Days after the close of each of the quarterly accounting periods in each fiscal
year of the Company, the consolidated and consolidating balance sheet of the
Company and its consolidated Subsidiaries as of the end of such monthly or
quarterly period, as applicable, and the related consolidated and consolidating
statements of income, retained earnings and cash flows for such period, setting
forth, in each case, comparative consolidated figures for the related periods
in the prior fiscal year, and with the quarterly reports all proposed budgets
for the next succeeding quarter or year, all of which shall be certified by the
chief financial officer or chief executive officer of the Company as fairly
presenting in all material respects, the financial position of the Company and
its consolidated Subsidiaries as of the end of such period and the results of
their operation for the period then ended in accordance with GAAP, subject to
changes resulting from normal year-end audit adjustments and the inclusion of
abbreviated footnotes. Bank agrees not to disclose any such monthly statements
until disclosure of such information to the public by the Company, except as
may be required by applicable law or regulatory action.
(ii) As soon as available, and in any event within
forty-five (45) days following the close of each of the first three
quarterly accounting periods in each fiscal year of the Company (or such
additional period as the Securities and Exchange Commission may extend
to the Company), all Form 10-Q filings and any other reports filed with
the Securities and Exchange Commission (provided, if the Securities and
Exchange Commission extends the 45-day filing deadline, the Company
shall furnish or cause to be furnished to the Bank, within forty-five
(45) days following the close of each of the first three quarterly
accounting periods in each fiscal year of the Company, drafts of the
Form 10-Q filings and drafts of any other reports to be filed with the
Securities and Exchange Commission), all of which shall be certified by
the chief financial officer or chief executive officer of the Company as
fairly presenting in all material respects, the financial position of
the Company and its consolidated Subsidiaries as of the end of such
period and the results of their operation for the period then ended in
accordance with GAAP, subject to changes resulting from normal year-end
audit adjustments and the inclusion of abbreviated footnotes.
(b) As soon as available, and in any event within ninety (90)
days (or such additional period as the Securities and Exchange Commission may
extend to the Company), after the close of each fiscal year of the Company, the
consolidated and consolidating balance sheet of the Company and its
consolidated Subsidiaries as at the end of such fiscal year and the related
consolidated and consolidating
42
<PAGE> 37
statements of income, retained earnings and cash flows for such fiscal year,
setting forth, in each case, comparative figures for the preceding fiscal year
and certified by Balukoff, Lindstrom & Co., P.A., Boise, Idaho or other
independent certified public accountants of recognized standing reasonably
acceptable to the Bank, whose report shall be without limitation as to the
scope of the audit and reasonably satisfactory in substance to the Bank along
with the Annual Report on Form 10-K of the Company for such year filed with the
Securities and Exchange Commission (provided, if the Securities and Exchange
Commission extends the 90-day filing deadline, the Company shall furnish or
cause to be furnished to the Bank, within ninety (90) days following the close
of each fiscal year of the Company, drafts of the Form 10-Q filings and drafts
of any other reports to be filed with the Securities and Exchange Commission).
(c) Simultaneously with the delivery of the financial
statements described in paragraph (a) above and in any event within fifteen
(15) days after the end of each month, (i) a Borrowing Base Certificate
substantially in the form of Exhibit 7.01(c) and (ii) a summary report of all
Receivables and payables of the Company and its Subsidiaries, in form and
substance satisfactory to the Bank.
(d) Immediately after any Responsible Officer of any Loan
Party obtains knowledge thereof, notice of
(i) any material violation of, noncompliance with, or
remedial obligations under, Requirements of Environmental Laws,
(ii) any material Release or threatened material Release
of Hazardous Materials affecting any property owned, leased or operated
by such Loan Party or any of its Subsidiaries,
(iii) any event or condition which constitutes a Default
or an Event of Default,
(iv) any condition or event which, in the opinion of
management of the Company, would be expected to have a Material Adverse
Effect,
(v) any Person having given any written notice to any
Loan Party or taken any other action with respect to a claimed material
default or event under any material instrument or material agreement,
(vi) the institution of any litigation, arbitration or
other proceeding which might reasonably be expected either to have a
Material Adverse Effect or result in a final, non-appealable judgment or
award in excess of (A) $1,000,000.00 with respect to any single cause of
action, (B) $5,000,000.00 with respect to all causes of action in the
aggregate or
43
<PAGE> 38
(C) $100,000.00 if such litigation is attempting to collect an account
receivable owing to the Plaintiff by the Company or a Subsidiary, or
(vii) any condition or event which, in the opinion of
management of the Company, could be expected to jeopardize the existence
or good standing of any license or permit held by the Company.
A notice of such event or condition will be delivered to the Bank
specifying the nature and period of existence thereof and specifying the notice
given or action taken by such Person and the nature of any such claimed
default, event or condition and, in the case of an Event of Default or Default,
what action has been taken, is being taken or is proposed to be taken with
respect thereto.
(e) At the time of the delivery of the financial statements
provided for in paragraphs (a) and (b), a certificate of the chief financial
officer, treasurer or the controller of the Company, substantially in the form
of Exhibit 7.01(e) hereto, to the effect that no Default or Event of Default
exists or, if any Default or Event of Default does exist, specifying the nature
and extent thereof and the action that is being taken or that is proposed to be
taken with respect thereto, which certificate shall set forth among other
matters, the calculations required to establish whether the Company was in
compliance with the provisions of Section 8.08 through Section 8.12 as at the
end of such fiscal period or year, as the case may be.
(f) Upon request by the Bank, but not more often than semi-
annually, such environmental reports, studies and audits (all of which shall be
reasonable in scope) of any Loan Party's procedures and policies, assets and
operations in respect of Environmental Laws as the Bank may request.
(g) Promptly upon transmission thereof, copies of any filings
and registrations with, and reports to, the SEC, and copies of all financial
statements, proxy statements, notices and reports as the Company shall send to
its public shareholders.
(h) From time to time and with reasonable promptness, such
other information or documents as the Bank may reasonably request.
SECTION 7.02. Books, Records and Inspections. The Company
will maintain, and will permit, or cause to be permitted, any Person designated
by the Bank in writing upon one (1) Business Day's notice and without
materially disrupting the operations of any Loan Party to visit and inspect any
of the Collateral, facilities, operations, books, records, accounts and
properties of such Loan Party, to examine the corporate books and financial
records of such Loan Party and make copies thereof or extracts therefrom and to
discuss the affairs, finances and accounts of any such corporations with the
officers, employees and
44
<PAGE> 39
agents of such Loan Parties and with their independent public accountants, all
at such reasonable times and as often as the Bank may reasonably request.
SECTION 7.03. Insurance and Maintenance of Properties. (a)
Each Loan Party will keep adequately insured by financially sound and
reputable insurers all of its property of a character, and in amounts and
against such risks, usually insured by similar Persons engaged in the same or
similar businesses, including insurance against fire, casualty and any other
hazards normally insured against and shall name the Bank as an additional loss
payee in respect thereof. Each Loan Party will at all times maintain insurance
against its liability for injury to Persons or property, which insurance shall
be by financially sound and reputable insurers (which shall, for purposes of
this agreement, include ALEX) and in such amounts and form as are customary for
corporations of established reputation engaged in the same or similar
businesses and owning and operating similar properties and shall name the Bank
as an additional insured in respect thereof.
(b) Each Loan Party will cause all of its material properties
used or useful in the conduct of its business to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals and replacements
thereof, all as in the judgment of such Person may be reasonably necessary so
that the business carried on in connection therewith may be properly conducted
at all times.
SECTION 7.04. Payment of Taxes. Each Loan Party will pay and
discharge all taxes, assessments and governmental charges or levies imposed
upon it or upon its income or profits, or upon any properties belonging to it,
prior to the date on which penalties attach thereto, except for such amounts
that are being contested in good faith and by appropriate proceedings and in
respect of which adequate reserves in accordance with GAAP have been provided.
SECTION 7.05. Corporate Existence. Each Loan Party will do
all things necessary to preserve and keep in full force and effect the
corporate or partnership existence of such Person, and the rights and
franchises of such Loan Party.
SECTION 7.06. Compliance with Laws. Each Loan Party will
comply with all material applicable laws, statutes, regulations and orders of,
and all applicable restrictions imposed by, all governmental bodies, domestic
or foreign, in respect of the conduct of its business and the ownership of its
property, including ERISA and Environmental Laws.
45
<PAGE> 40
SECTION 7.07. ERISA. As soon as possible and, in any event,
within ten (10) days after any Responsible Officer of any Loan Party knows or
has reason to know any of the following items are true, such Loan Party will
deliver or cause to be delivered to the Bank a certificate of the chief
financial officer of the Company setting forth details as to such occurrence
and such action, if any, which the Loan Party or its ERISA Affiliate is
required or proposes to take, together with any notices required or proposed to
be given to or filed with or by such Loan Party or ERISA Affiliate with respect
thereto: that a Reportable Event has occurred or that an application may be or
has been made to the Secretary of the Treasury for a waiver or modification of
the minimum funding standard; that a Multiemployer Plan has been or may be
terminated, reorganized, partitioned or declared insolvent under Title IV of
ERISA; that any required contribution to a Plan or Multiemployer Plan has not
been or may not be timely made; that proceedings may be or have been instituted
under Section 4069(a) of ERISA to impose liability on a Loan Party or an ERISA
Affiliate or under Section 4042 of ERISA to terminate a Plan or appoint a
trustee to administer a Plan; that a Loan Party or any ERISA Affiliate has
incurred or may incur any liability (including any contingent or secondary
liability) on account of the termination of or withdrawal from a Plan or a
Multiemployer Plan; and that a Loan Party or an ERISA Affiliate may be required
to provide security to a Plan under Section 401(a)(29) of the Code; or any
other condition(s) exist(s) or may occur with respect to one or more Plans
and/or Multiemployer Plans.
SECTION 7.08. Additional Guaranties. Whenever the Company
acquires any new Subsidiary, the Company shall, within ten (10) Business Days,
cause such Subsidiary to deliver to the Bank (A) a guaranty agreement in form
and substance reasonably satisfactory to the Bank (an "Additional Guaranty")
and (B) a certificate of an officer and of the secretary or an assistant
secretary of such Subsidiary certifying a true and correct copy of the
resolutions adopted by the Board of Directors of such Subsidiary authorizing
the execution, delivery and performance of the Additional Guaranty.
SECTION 7.09. New Equity. The Company will use its best
efforts to raise an additional Two Million Dollars ($2,000,000.00) of new
equity on or before June 30, 1997.
SECTION 7.10. Bank Warrants. The shares of common stock to be
issued upon exercise of the Warrants will be validly authorized and, when the
Warrants are exercised, such shares will be validly issued, fully paid and
nonassessable.
46
<PAGE> 41
ARTICLE VIII
NEGATIVE COVENANTS
Each Loan Party covenants and agrees for itself, that on and
after the date hereof and for so long as this Agreement is in effect and until
all of the Loans and each Letter of Credit shall have terminated, and the
Obligations are paid in full:
SECTION 8.01. Change in Business. No Loan Party will engage
in any business not of the same general type as that conducted by it on the
date of this Agreement.
SECTION 8.02. Consolidation, Merger or Sale of Assets. No
Loan Party will wind up, liquidate or dissolve its affairs, or enter into any
transaction of merger or consolidation, unless a Loan Party is the surviving
entity, or sell, lease, transfer or otherwise dispose of (whether in one
transaction or a series of transactions) all or any part of its property or
assets, except for
(a) sales of inventory or surplus or obsolete assets in the
ordinary course of business;
(b) in any 12-month period the Company may sell, lease,
transfer or otherwise dispose of assets in an amount not to exceed, together
with all other dispositions by the Loan Parties during such period, $400,000.00
(such amount determined by reference to net book value);
(c) the winding up or liquidation of or contraction of
operations at the Winona Site; and
(d) the sale, lease, transfer or disposition of all or
substantially all of the assets of ALEX; provided that all proceeds received
from such disposition are paid to the Company in the form of a dividend.
SECTION 8.03. Liens. No Loan Party, except ALEX, will create,
incur, assume or suffer to exist any Lien upon or with respect to any of its
property or assets of any kind whether now owned or hereafter acquired, except
for Permitted Liens.
SECTION 8.04. Indebtedness. No Loan Party , except ALEX, will
create, incur, assume or permit to exist any Indebtedness other than
Indebtedness created hereby, including renewals and extensions thereof (in the
same amounts or less), except:
47
<PAGE> 42
(a) Indebtedness existing on the Effective Date and described
in the Financials or, if not so shown, listed on Schedule 8.04;
(b) accounts payable incurred in the ordinary course of
business;
(c) Indebtedness arising as a result of the endorsement in the
ordinary course of business of negotiable instruments in the ordinary course of
collection;
(d) unsecured Indebtedness of the Loan Parties not to exceed
that currently existing as of the Execution Date, plus $250,000.00 in the
aggregate;
(e) liabilities for taxes, assessments, governmental charges
or liens not yet due and payable or being contested in good faith by
appropriate proceedings for which adequate reserves in accordance with GAAP
have been established;
(f) Industrial Revenue Bonds, Industrial Development Bonds or
similar instruments used to finance improvements at sites operated by the
Company or its Subsidiaries and agreed to, prior to their issuance, by the
Bank;
(g) other purchase money Indebtedness or assets acquired by
the Company but only if such Indebtedness does not exceed $250,000.00 in the
aggregate at any one time outstanding; and
(h) renewals and extensions (in the same or lesser principal
amount on similar terms and conditions) of any Indebtedness listed in the
foregoing clauses.
SECTION 8.05. Investments. No Loan Party , except ALEX, will,
directly or indirectly, make or own any Investment in any Person, except:
(a) Permitted Investments owned on the date hereof as set
forth on Schedule 8.05; and
(b) Endorsements of negotiable instruments for collection in
the ordinary course of business.
SECTION 8.06. Restricted Payments. The Company will not make
or declare any Restricted Payment, provided after January 1, 1999 and if no
default has occurred hereunder, the Company may pay dividends of not more than
$420,000.00 per annum on its currently outstanding Class D preferred stock.
48
<PAGE> 43
SECTION 8.07. Change in Accounting; Fiscal Year. No Loan
Party will change its method of accounting except for immaterial changes in
methods, changes permitted by GAAP in which such Loan Party's auditors concur
and changes required by GAAP. The Company shall advise the Bank in writing
promptly upon making any such change to the extent same is not disclosed in the
financial statements required hereunder.
SECTION 8.08. Minimum EBITDA. (a) The Company will not permit
Consolidated EBITDA, as of the last day of each calendar month and each
calendar quarter, to be less than the amounts shown on the following table:
<TABLE>
<CAPTION>
Minimum Minimum
Year Monthly EBITDA Quarterly EBITDA
--------------------------------------------
<S> <C> <C>
1997 $ 500,000.00
1998 $250,000.00 $1,000,000.00
</TABLE>
(b) Such calculations shall be based on the financial
information provided by the Company to the Bank as required in Section 7.01.
SECTION 8.09. Minimum Net Worth. The Company will not permit
Consolidated Net Worth to be less than eighty percent (80%) of the Consolidated
Net Worth on June 30, 1996 as indicated in the Company's Form 10-Q Filing for
such date, less the Company's writeoffs caused by the shut down of the Winona
Property; plus one hundred percent (100%) of the net proceeds of any debt or
equity offering of the Company, plus one hundred percent (100%) of all positive
net income, if any, from the Company's prior fiscal year after the payment of
taxes.
SECTION 8.10. Capital Expenditures. The Company will not
permit total consolidated capital expenditures (including permitting costs,
costs of the proposed slurry wall at the disposal site of Texas Ecologists,
Inc., a Subsidiary of US Ecology, Inc., in Robstown, Texas, but excluding other
capital expenditures financed by other Industrial Revenue Bonds, Industrial
Development Bonds or other third party financing as approved by the Bank and
any interest capitalized in regard to the Ward Valley Project or the facility
operated by US Ecology, Inc. in Butte, Nebraska or on the Term Loan and the
Revolving Credit Loan, the "Capital Expenditures") to be greater than
$5,000,000.00 per calendar year.
49
<PAGE> 44
SECTION 8.11. Transactions with Affiliates. No Loan Party
will, directly or indirectly, engage in any transaction with any Affiliate of
such Loan Party, including the purchase, sale or exchange of assets or the
rendering of any service, except in the ordinary course of business or pursuant
to the reasonable requirements of such Loan Party's business and, in each case,
upon terms that are no less favorable to such Loan Party than those which might
be obtained in an arm's-length transaction at the time from non-Affiliates.
Specifically, no Loan Party will transfer any of its assets to any Subsidiary
of the Company that is not a Guarantor.
SECTION 8.12. Change of Certain Indebtedness. No Loan Party
will, after the occurrence and during the continuance of any Event of Default,
(i) make any voluntary prepayments of principal of or interest on any
Consolidated Funded Indebtedness (whether or not subordinated) or (ii) alter,
amend, modify or otherwise change the terms, conditions and provisions of any
Consolidated Funded Indebtedness to accelerate the scheduled payments of
principal of such Indebtedness.
SECTION 8.13. Negative Pledge. The Company shall not enter
into any agreement other than this Agreement or the Loan Documents, prohibiting
the creation or assumption of any Lien upon its properties, revenues or assets,
whether now owned or hereafter acquired (except with respect to Permitted
Liens), or prohibiting or restricting the Company to amend or otherwise modify
this Agreement.
50
<PAGE> 45
ARTICLE IX
GUARANTY
SECTION 9.01. Guaranty. In consideration of, and in order to
induce the Bank to make the Loans and to issue Letters of Credit hereunder,
each Guarantor hereby absolutely, unconditionally and irrevocably, jointly and
severally guarantees the punctual payment and performance when due, whether at
stated maturity, by acceleration or otherwise, of the Obligations, and all
other obligations and covenants of the Company now or hereafter existing under
this Agreement, the Notes and the other Loan Documents whether for principal,
interest (including interest accruing or becoming owing both prior to and
subsequent to the commencement of any proceeding against or with respect to the
Company under any chapter of the Bankruptcy Code), fees, commissions, expenses
(including reasonable attorneys' fees and expenses) or otherwise, and all
reasonable costs and expenses, if any, incurred by the Bank in connection with
enforcing any rights under this Guaranty (all such obligations being the
"Guaranteed Obligations"), and agree to pay any and all reasonable expenses
incurred by the Bank in enforcing this Guaranty; provided that anything herein
or in any other Loan Document to the contrary notwithstanding, the maximum
liability of each Guarantor hereunder and under the other Loan Documents shall
in no event exceed such Guarantor's Maximum Guaranteed Amount. This Guaranty
is an absolute, unconditional, present and continuing guaranty of payment and
not of collectibility and is in no way conditioned upon any attempt to collect
from the Company or any other action, occurrence or circumstance whatsoever.
Each Guarantor agrees that the Guaranteed Obligations may at any time and from
time to time exceed the Maximum Guaranteed Amount of such Guarantor without
impairing this Guaranty or affecting the rights and remedies of the Bank
hereunder.
SECTION 9.02. Continuing Guaranty. Each Guarantor guarantees
that the Guaranteed Obligations will be paid strictly in accordance with the
terms of this Agreement, the Notes and the other Loan Documents. Each
Guarantor agrees that the Guaranteed Obligations and Loan Documents may be
extended or renewed, and Loans repaid and reborrowed in whole or in part,
without notice to or assent by such Guarantor, and that it will remain bound
upon this Guaranty notwithstanding any extension, renewal or other alteration
of any Guaranteed Obligations or Loan Documents, or any repayment and
reborrowing of Loans. To the maximum extent permitted by applicable law, the
obligations of each Guarantor under this Guaranty shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms hereof under any circumstances whatsoever, including:
(a) any extension, renewal, modification, settlement,
compromise, waiver or release in respect of any Guaranteed Obligations;
51
<PAGE> 46
(b) any extension, renewal, amendment, modification,
rescission, waiver or release in respect of any Loan Documents;
(c) any release, exchange, substitution, non-perfection or
invalidity of, or failure to exercise rights or remedies with respect to, any
direct or indirect security for any Guaranteed Obligations, including the
release of any Guarantor or other Person liable on any Guaranteed Obligations;
(d) any change in the corporate existence, structure or
ownership of the Company, any Guarantor, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting the Company, such
Guarantor, any other Guarantor or any of their respective assets;
(e) the existence of any claim, defense, set-off or other
rights or remedies which such Guarantor at any time may have against the
Company, or the Company or such Guarantor may have at any time against the
Bank, any other Guarantor or any other Person, whether in connection with this
Guaranty, the Loan Documents, the transactions contemplated thereby or any
other transaction other than by the payment in full by the Company of the
Guaranteed Obligations after the termination of the commitments of the Bank and
the expiration or termination of all Letters of Credit;
(f) any invalidity or unenforceability for any reason of this
Agreement or other Loan Documents, or any provision of law purporting to
prohibit the payment or performance by the Company, such Guarantor or any other
Guarantor of the Guaranteed Obligations or Loan Documents, or of any other
obligation to the Bank; or
(g) any other circumstances or happening whatsoever, whether
or not similar to any of the foregoing.
SECTION 9.03. Effect of Debtor Relief Laws. If after receipt
of any payment of, or proceeds of any security applied (or intended to be
applied) to the payment of all or any part of the Guaranteed Obligations, the
Bank is for any reason compelled to surrender or voluntarily surrenders, such
payment or proceeds to any Person (a) because such payment or application of
proceeds is or may be avoided, invalidated, declared fraudulent, set aside,
determined to be void or voidable as a preference, fraudulent conveyance,
fraudulent transfer, impermissible set-off or a diversion of trust funds or (b)
for any other reason, including (i) any judgment, decree or order of any court
or administrative body having jurisdiction over the Bank, or any of its
properties or (ii) any settlement or compromise of any such claim effected by
the Bank with any such claimant (including the Company),
52
<PAGE> 47
then the Guaranteed Obligations or part thereof intended to be satisfied shall
be reinstated and continue, and this Guaranty shall continue in full force as
if such payment or proceeds have not been received, notwithstanding any
revocation thereof or the cancellation of any Note or any other instrument
evidencing any Guaranteed Obligations or otherwise; and each Guarantor, jointly
and severally, shall be liable to pay the Bank, and hereby does indemnify the
Bank and hold it harmless for the amount of such payment or proceeds so
surrendered and all expenses (including reasonable attorneys' fees, court costs
and expenses attributable thereto) incurred by the Bank in the defense of any
claim made against it that any payment or proceeds received by the Bank in
respect of all or part of the Guaranteed Obligations must be surrendered. The
provisions of this paragraph shall survive the termination of this Guaranty,
and any satisfaction and discharge of the Company by virtue of any payment,
court order or any federal or state law.
SECTION 9.04. Waiver of Subrogation. Notwithstanding any
payment or payments made by any Guarantor hereunder, or any set-off or
application by the Bank of any security or of any credits or claims, no
Guarantor will assert or exercise any rights of the Bank or of such Guarantor
against the Company to recover the amount of any payment made by such Guarantor
to the Bank hereunder by way of any claim, remedy or subrogation,
reimbursement, exoneration, contribution, indemnity, participation or otherwise
arising by contract, by statute, under common law or otherwise, and such
Guarantor shall not have any right of recourse to or any claim against assets
or property of the Company, unless and until, the Obligations of the Company
guaranteed hereby have been fully and finally satisfied. Until such time, each
Guarantor hereby expressly waives any right to exercise any claim, right or
remedy which such Guarantor may now have or hereafter acquire against the
Company (but not any other Guarantor) that arises under this Agreement or any
other Loan Document or from the performance by any Guarantor of the Guaranty
hereunder including any claim, remedy or right of subrogation, reimbursement,
exoneration, contribution, indemnification or participation in any claim, right
or remedy of the Bank against the Company, or any security that the Bank now
has or hereafter acquires, whether or not such claim, right or remedy arises in
equity, under contract, by statute, under common law or otherwise. If any
amount shall be paid to a Guarantor by the Company or another Guarantor after
payment in full of the Obligations, and the Obligations shall thereafter be
reinstated in whole or in part and the Bank forced to repay and sums received
by any of them in payment of the Obligations, this Guaranty shall be
automatically reinstated and such amount shall be held in trust for the benefit
of the Bank and shall forthwith be paid to the Bank to be credited and applied
to the Guaranteed Obligations, whether matured or unmatured. The provisions of
this paragraph shall survive the termination of this Guaranty, and any
satisfaction and discharge of the Company by virtue of any payment, court order
or any federal or state law, provided such provisions shall not apply to ALEX.
53
<PAGE> 48
SECTION 9.05. Subordination. If any Guarantor becomes the
holder of any indebtedness payable by the Company or another Guarantor
(including, without limitation, by way of subrogation or contribution right),
each Guarantor hereby subordinates all indebtedness owing to it from the
Company to all indebtedness of the Company to the Bank, and agrees that during
the continuance of any Default or Event of Default it shall not accept any
payment on the same until payment in full of the Obligations of the Company
under this Agreement and the other Loan Documents after the termination of the
commitments of the Bank and the termination or expiration of the Letters of
Credit, the Notes and all other Loan Documents, and shall in no circumstance
whatsoever attempt to set-off or reduce any obligations hereunder because of
such indebtedness. If any amount shall nevertheless be paid to a Guarantor by
the Company or another Guarantor prior to payment in full of the Guaranteed
Obligations, such amount shall be held in trust for the benefit of the Bank and
shall forthwith be paid to the Bank to be credited and applied to the
Guaranteed Obligations, whether matured or unmatured. The provisions of this
Section 9.05 shall not apply to ALEX.
SECTION 9.06. Waiver. Each Guarantor hereby waives
promptness, diligence, notice of acceptance and any other notice with respect
to any of the Guaranteed Obligations and this Guaranty and waives presentment,
demand of payment, notice of intent to accelerate or of acceleration, notice of
dishonor or nonpayment and any requirement that the Bank institute suit,
collection proceedings or take any other action to collect the Guaranteed
Obligations, including any requirement that the Bank protect, secure, perfect
or insure any Lien against any property subject thereto or exhaust any right or
take any action against the Company or any other Person or any Collateral (it
being the intention of the Bank and each Guarantor that this Guaranty is to be
a guaranty of payment and not of collection). It shall not be necessary for
the Bank, in order to enforce any payment by any Guarantor hereunder, to
institute suit or exhaust its rights and remedies against the Company, any
other Guarantor or any other Person, including others liable to pay any
Guaranteed Obligations, or to enforce its rights against any security ever
given to secure payment thereof. To the extent any such may be applicable, each
Guarantor hereby expressly waives to the maximum extent permitted by applicable
law each and every right to which it may be entitled by virtue of the
suretyship laws of the State of Texas, including any and all rights it may have
pursuant to Rule 31, Texas Rules of Civil Procedure, Section 17.001 of the
Texas Civil Practice and Remedies Code and Chapter 34 of the Texas Business and
Commerce Code. Each Guarantor hereby waives marshaling of assets and
liabilities, notice by the Bank of any indebtedness or liability to which the
Bank applies or may apply any amounts received, and of the creation,
advancement, increase, existence, extension, renewal, rearrangement or
modification of the Guaranteed Obligations. Each Guarantor expressly waives,
to the extent permitted by applicable law, the benefit of any and all laws
providing for exemption of property from execution or for valuation and
appraisal upon foreclosure.
54
<PAGE> 49
SECTION 9.07. Full Force and Effect. This Guaranty is a
continuing guaranty and shall remain in full force and effect until all of the
Obligations of the Company under this Agreement and the other Loan Documents
and all other amounts payable under this Guaranty have been paid in full (after
the termination of the commitments of the Bank and the termination or
expiration of the Letters of Credit). All rights, remedies and powers provided
in this Guaranty may be exercised, and all waivers contained in this Guaranty
may be enforced, only to the extent that the exercise or enforcement thereof
does not violate any provisions of applicable law which may not be waived.
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
SECTION 10.01. Events of Default and Remedies. The following
events shall constitute Events of Default hereunder:
(a) any installment of principal or payment of interest on any
Note, any Fee or any Unpaid Drawing or any other amount due (whether on the
Maturity Date, by acceleration, or otherwise) shall not be paid on the date on
which such payment is due as required under this Agreement and the Notes; or
(b) any representation or warranty made or, for purposes of
Article V, deemed made by or on behalf of any Loan Party herein or in any of
the Loan Documents or other document, certificate or financial statement
delivered in connection with this Agreement or any other Loan Document shall
prove to have been incorrect in any material respect when made or deemed made
or reaffirmed, as the case may be; or
(c) the Company shall fail to perform or observe or cause any
Subsidiary to fail to perform or observe any duty or covenant contained in this
Agreement including the Exhibits and Schedules hereto; or
(d) any Loan Party fails to make (whether as primary obligor
or as guarantor or other surety) any principal payment of or interest or
premium, if any, on any Indebtedness (other than the Notes or the Guaranty)
outstanding beyond any period of grace provided with respect thereto or fails
to duly observe, perform or comply with any agreement with any Person or any
term or condition of any such instrument, if such failure is to cause, or to
permit the holder or holders to cause, such obligations to become due prior to
any stated maturity; or
55
<PAGE> 50
(e) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction
seeking (i) relief in respect of any Loan Party, or of a substantial part of
the property or assets of such Loan Party, under Title 11 of the United States
Code, as now or hereafter in effect, or any successor thereto (the "Bankruptcy
Code"), or any other federal or state bankruptcy, insolvency, receivership or
similar law, (ii) the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for any Loan Party or for a
substantial part of the property or assets of such Loan Party or (iii) the
winding-up or liquidation of any Loan Party; and such proceeding or petition
shall continue undismissed for 60 days or an order or decree approving or
ordering any of the foregoing shall be entered; or
(f) any Loan Party shall (i) voluntarily commence any
proceeding or file any petition seeking relief under the Bankruptcy Code or any
other federal or state bankruptcy, insolvency, receivership or similar law,
(ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or the filing of any petition described in
clause (e) above, (iii) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for any Loan
Party or for a substantial part of the property or assets of such Loan Party,
(iv) file an answer admitting the material allegations of a petition filed
against it in any such proceeding, (v) make a general assignment for the
benefit of creditors, (vi) become unable, admit in writing its inability or
fail generally to pay its debts as they become due, (vii) take any action for
the purpose of effecting any of the foregoing or (viii) any case, action or
proceeding relating to the dissolution or winding up of the Company shall be
commenced by any Person and continue undismissed for sixty (60) days or an
order or decree establishing the same shall be entered; or
(g) any Plan shall incur an "accumulated funding deficiency"
(as defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived, or a waiver of the minimum funding standard or extension of any
amortization period is sought or granted under Section 412 of the Code with
respect to a Plan; any proceeding shall have occurred or is reasonably likely
to occur by the PBGC under Section 4069(a) of ERISA to impose liability on the
Company, any Subsidiary or an ERISA Affiliate; any Plan shall have an Unfunded
Current Liability; any required contribution to a Plan or Multiemployer Plan
shall not have been timely made; or the Company, any Subsidiary or any ERISA
Affiliate has incurred or is reasonably likely to incur a liability to or on
account of a Plan or Multiemployer Plan under Section 515, 4062, 4063, 4064,
4201 or 4204 of ERISA, and there shall result (individually or collectively)
from any such event or events a material risk of either (i) the imposition of a
Lien(s) upon, or the granting of a security interest(s) in, the assets of the
Company, any Subsidiary and/or an ERISA Affiliate in an amount(s) equal to or
exceeding $1,000,000.00 or (ii) the Company, any Subsidiary and/or an ERISA
Affiliate incurring a liability(ies) or obligation(s) with respect thereto
equal to or exceeding $ 1,000,000.00; or
56
<PAGE> 51
(h) a judgment or order, which with other outstanding
judgments and orders against any Loan Party equals or exceeds $1,000,000.00 in
the aggregate (to the extent not covered by insurance as to which the
respective insurer has acknowledged coverage), shall be entered against any
Loan Party and (i) within 30 days after entry thereof such judgment shall not
have been discharged or execution thereof stayed pending appeal or, within 30
days after the expiration of any such stay, such judgment shall not have been
discharged or (ii) any enforcement proceeding shall have been commenced (and
not stayed) by any creditor or upon such judgment; or
(i) there shall occur a Change in Ownership or Control without
the consent of the Bank; or
(j) the current owner of the property on which is to be
located the Ward Valley Project shall transfer said property to any party other
than the Company's designated lessor or the Ward Valley Project license or
lease is cancelled or revoked by the State of California; or
(k) any Loan Party shall lose any material permit, license or
lease which materially affects the operations of such Loan Party or its
Subsidiaries (other than those which relate to the Winona Site); or
(l) the Company's capital stock shall fail to be listed on
NASDAQ or other national or regional exchange; or
(m) except pursuant to the express terms of any Loan Document,
any Loan Document shall, at any time after its execution and delivery and for
any reason (except for Bank action or inaction), cease to be in full force and
effect or be declared null and void, or any Lien granted pursuant to any Loan
Document shall cease to be perfected and of first priority due to any action or
inaction of the Company or any Affiliate thereof (except for Permitted Liens),
or the validity or enforceability thereof shall be contested by the Company, a
Guarantor, a Loan Party or any Affiliate thereof or any Person shall deny that
it has any further liability or obligations under any Loan Document to which it
is party.
SECTION 10.02. Primary Remedies. At any time any Event of
Default has occurred and is continuing, the Bank may, by written notice to the
Company (a "Notice of Default") take any or all of the following actions,
without prejudice to the rights of the Bank or other holder of any of the
Obligations to enforce its claims against any Loan Party (provided that, if an
Event of Default specified in Section 10.01(e) or Section 10.01(f) shall occur
with respect to any Loan Party, the following shall occur automatically without
the giving of any Notice of Default): (i) declare the Bank's Revolving Credit
Commitment and the Letter of Credit Commitment terminated; (ii) declare the
57
<PAGE> 52
principal of and any accrued and unpaid interest in respect of all Loans, and
all obligations owing hereunder, to be, whereupon the same shall become,
forthwith due and payable without presentment, demand, notice of demand or of
dishonor and non-payment, protest, notice of protest, notice of intent to
accelerate, declaration or notice of acceleration or any other notice of any
kind, all of which are hereby waived by each Loan Party; (iii) exercise any
rights or remedies under any document securing or guaranteeing any of the
obligations; and (iv) terminate any Letter of Credit which may be terminated in
accordance with its terms (whether by the giving of written notice to the
beneficiary or otherwise).
SECTION 10.03. Other Remedies. Upon the occurrence and during
the continuance of any Event of Default, the Bank, may proceed to protect and
enforce its rights, either by suit in equity or by action at law or both,
whether for the specific performance of any covenant or agreement contained in
this Agreement or in any other Loan Document or in aid of the exercise of any
power granted in this Agreement or in any other Loan Document; or may proceed
to realize on any collateral securing the Loans or to enforce the payment of
all amounts owing to the Bank under the Loan Documents and any accrued and
unpaid interest thereon in the manner set forth herein or therein; it being
intended that no remedy conferred herein or in any of the other Loan Documents
is to be exclusive of any other remedy, and each and every remedy contained
herein or in any other Loan Document shall be cumulative and shall be in
addition to every other remedy given hereunder and under the other Loan
Documents now or hereafter existing or provided it at law or in equity or by
statute or otherwise.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Amendments. No amendment or waiver of any
provision of this Agreement, any Note or any other Loan Document, nor consent
to any departure by any Loan Party herefrom or therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Company, as to
amendments, and by the Bank in all cases, and then, in any case, such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
SECTION 11.02. Notices. All notices, consents, requests,
approvals, demands and other communications provided for herein shall be in
writing (including telecopy communications) and mailed, telecopied, sent by
overnight courier or delivered:
58
<PAGE> 53
(a) If to the Loan Parties, to them at:
805 West Idaho, Suite 200
Boise, Idaho 83702
Telecopy No.: (208) 331-7900
Telephone No.: (208) 331-8400
Attention: Mr. Jack K. Lemley and
Mr. Phillip K. Chattin
(b) If to the Bank, to it at:
712 Main Street, 24 TCB E-74
Houston, Texas 77002
Telecopy No.: (713) 216-2092
Telephone No.: (713) 216-5162
Attention: Mr. Bruce A. Shilcutt
With a copy to:
Andrews & Kurth L.L.P.
4200 Texas Commerce Tower
Houston, Texas 77002
Telecopy No.: (713) 220-4285
Telephone No.: (713) 220-4268
Attention: Mr. Thomas J. Perich
All communications shall, when mailed, telecopied or delivered,
be effective when mailed by certified mail, return receipt requested to any
party at its address specified herein (or other address designated by such
party in a communication to the other parties hereto), or telecopied to any
party to the telecopy number set forth herein, or delivered personally to any
party at its address herein specified; provided, that communications to the
Bank pursuant to Article II and Article III shall not be effective until
actually received.
SECTION 11.03. No Waiver; Remedies. No failure on the part of
the Bank to exercise, and no delay in exercising, any right hereunder, under
any Note or under any other Loan Document shall operate as a waiver thereof;
nor shall any single or partial exercise of any such right, or any abandonment
or discontinuance of any steps to enforce such right, preclude any other or
further exercise thereof or the exercise of any other right. No notice to or
demand on the Company in any case shall entitle the Company to any other or
further notice or demand in similar or other circumstances. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law, at equity or in any other agreement.
SECTION 11.04. Costs, Expenses and Taxes. The Company agrees
to pay on demand: (a) all reasonable out-of-pocket costs and expenses of the
Bank in
59
<PAGE> 54
connection with the preparation, execution, delivery, interpretation or
enforcement of the Loan Documents and the other documents to be delivered
hereunder, including the reasonable fees and out-of-pocket expenses of counsel
for the Bank with respect thereto, (b) all reasonable out-of-pocket costs and
expenses of the Bank in connection with the syndication of the credit evidenced
by this Agreement and the other Loan Documents, and (c) reasonable costs and
expenses incurred in connection with other third party professional services
required by the Bank. In addition, the Company shall pay any and all stamp and
similar taxes payable or determined to be payable in connection with the
execution and delivery of the Loan Documents and the other documents to be
delivered hereunder, and agrees to save the Bank harmless from and against any
and all liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes, if any, which may be payable or determined to be
payable in connection with the execution and delivery of this Agreement, any
Note or any other Loan Document. Without prejudice to the survival of any
other obligations of the Company hereunder and under the Notes, the obligations
of the Company under this Section shall survive the termination of this
Agreement and the payment of the Obligations or the assignment of the Notes.
SECTION 11.05. Indemnity and Release. (a) The Loan Parties
jointly and severally agree to indemnify, defend and save harmless the Bank and
each Affiliate thereof and their respective directors, officers, employees,
attorneys, agents and the Bank's parent company(the "Indemnified Parties")
from, and against, any and all losses, liabilities, claims, actions, suits and
other legal proceedings, damages, costs, interest, charges, taxes, reasonable
attorneys' fees, and other expense and penalties to which any of the
Indemnified Parties may sustain, incur, or become subject insofar as such
losses, liabilities, claims or damages arise out of or result from (i) the
execution and delivery of this Agreement, the Notes, the Letters of Credit and
the other Loan Documents and the exercise of the Bank's rights under this
Agreement, the Notes, the Letters of Credit and the other Loan Documents or
otherwise and any actual or proposed use by the Company of the proceeds of any
extension of credit by the Bank hereunder or (ii) any investigation, litigation
or other proceeding (including any threatened investigation or proceeding)
relating to the foregoing or any of the other Loan Documents, and the Loan
Parties jointly and severally shall reimburse the Indemnified Parties upon
demand for any damages, costs and expenses by any of the Indemnified Parties
in investigating, preparing for, defending against, or providing evidence,
producing documents, or taking any other action in respect of such
investigation or proceeding; but excluding any such losses, liabilities,
claims, damages or expenses incurred by reason of the gross negligence or
willful misconduct of the Indemnified Party to be indemnified.
(b) WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT, IT IS
THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED
HEREUNDER OR THEREUNDER
60
<PAGE> 55
SHALL BE INDEMNIFIED AND HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES,
CLAIMS OR DAMAGES ARISING OUT OF OR RESULTING FROM THE ORDINARY SOLE OR
CONTRIBUTORY NEGLIGENCE OF SUCH PERSON. Without prejudice to the survival of
any other obligations of the Loan Parties hereunder and under the other Loan
Documents, the obligations of the Loan Parties under this Section shall survive
the termination of this Agreement and the other Loan Documents and the payment
of the Obligations or the assignment of the Notes.
(c) The Loan Parties do hereby release and forever discharge
the Bank and each Affiliate thereof and their respective employees, officers,
directors, trustees, agents, successors, assigns or other representatives from
any and all claims, demands, damages, actions, cross-actions, causes of action,
costs and expenses (including legal expenses), of any kind or nature
whatsoever, which any Loan Party has held or may now or in the future own or
hold, whether known or unknown, for or because of any matter or thing done,
omitted or suffered to be done on or before the actual date upon which this
Agreement is signed by any of such parties (i) arising directly or indirectly
out of the loan documents, any of the prior documents or any other documents,
instruments or any other transactions relating thereto and/or (ii) relating
directly or indirectly to all transactions by and between the Loan Parties and
the Bank. Such release, waiver, acquittal and discharge shall and does
include, without limitation, any claims of usury which may or could be asserted
by the Loan Parties. This release shall not include a release of the Bank from
any claim by the Loan Parties for breach by the Bank of this Agreement or the
Agreement Regarding Escrow Account dated October 30, 1996.
SECTION 11.06. Right of Setoff. If any Event of Default shall
have occurred and be continuing, the Bank is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (time or demand, provisional or final) at any time held
and other indebtedness at any time owing by the Bank, or any branch, subsidiary
or Affiliate, to or for the credit or the account of any Loan Party against any
and all the Obligations of the Loan Parties now or hereafter existing under
this Agreement and the other Loan Documents and other obligations of the Loan
Parties held by the Bank, irrespective of whether or not the Bank shall have
made any demand under this Agreement, such Note, the Obligations or such other
obligations and although the Obligations or such other obligations may be
unmatured. The Bank agrees promptly to notify the Company after any such
setoff and application, but the failure to give such notice shall not affect
the validity of such setoff and application. The rights of the Bank under this
Section are in addition to other rights and remedies (including other rights of
setoff) which such Bank may have.
SECTION 11.07. Governing Law. THIS AGREEMENT, ALL NOTES, THE
OTHER LOAN DOCUMENTS AND ALL OTHER DOCUMENTS EXECUTED IN
61
<PAGE> 56
CONNECTION HEREWITH AND THEREWITH (INCLUDING THE VALIDITY AND ENFORCEABILITY
HEREOF OR THEREOF), SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.
SECTION 11.08. Maximum Interest. Each provision in this
Agreement and each other Loan Document is expressly limited so that in no event
whatsoever shall the amount paid, or otherwise agreed to be paid, charged,
contracted for, reserved, taken or received by the Company for the use,
forbearance or detention of the money to be loaned under this Agreement or any
other Loan Document or otherwise (including any sums paid as required by any
covenant or obligation contained herein or in any other Loan Document which is
for the use, forbearance or detention of such money), exceed that amount of
money which would cause the effective rate of interest to exceed the Highest
Lawful Rate, and all amounts owed under this Agreement and each other Loan
Document shall be held to be subject to reduction to the effect that such
amounts so paid or agreed to be paid, charged, contracted for, reserved, taken
or received which are for the use, forbearance or detention of money under this
Agreement or such Loan Document shall in no event exceed that amount of money
which would cause the effective rate of interest to exceed the Highest Lawful
Rate. To the extent that the Highest Lawful Rate applicable to the Bank is at
any time determined by Texas law, such rate shall be the "indicated rate
ceiling" described in Section (a)(1) of Article 1.04 of Chapter 1, Subtitle 1,
Title 79, of the Revised Civil Statutes of Texas, 1925, as amended; provided,
to the extent permitted by such Article, the Bank from time to time by notice
to Company may revise the aforesaid election of such interest rate ceiling as
such ceiling affects the then-current or future balances of the Loans
outstanding under the Notes. Notwithstanding any provision in this Agreement
or any other Loan Document to the contrary, if the maturity of the Notes or
the obligations in respect of the other Loan Documents are accelerated for any
reason, or in the event of prepayment of all or any portion of the Notes or
the obligations in respect of the other Loan Documents by the Company or in any
other event, earned interest on the Loans and such other obligations of the
Company may never exceed the maximum amount permitted by applicable law, and
any unearned interest otherwise payable under the Notes or the obligations in
respect of the other Loan Documents that is in excess of the maximum amount
permitted by applicable law shall be cancelled automatically as of the date of
such acceleration or prepayment or other such event and, if theretofore paid,
shall be credited on the principal of the Notes or, if the principal of the
Notes has been paid in full, held as collateral for any contingent or unmatured
obligation of the Company, or, if there are no contingent or unmatured
obligations of the Company then outstanding, refunded to the Company. In
determining whether or not the interest paid or payable, under any specific
contingency, exceeds the Highest Lawful Rate, the Company and the Bank shall,
to the maximum extent permitted by applicable law, amortize, prorate, allocate
and spread, in equal parts during the period of the actual term of this
Agreement, all
62
<PAGE> 57
interest at any time contracted for, charged, received or reserved in
connection with this Agreement.
SECTION 11.09. Survival of Representations and Warranties.
All representations, warranties and covenants contained herein or made in
writing by the Loan Parties in connection herewith and the other Loan Documents
shall survive the execution and delivery of this Agreement, the Notes and the
other Loan Documents until two years and one day after payment in full of the
Obligations, the termination of the commitments of the Bank and the termination
or expiration of the Letters of Credit and any reimbursement obligations with
respect thereto, and will bind and inure to the benefit of the respective
successors and assigns of the parties hereto, whether so expressed or not,
provided, that the Revolving Credit Commitment and the Letter of Credit
Commitment of the Bank shall not inure to the benefit of any successor or
assign of the Company.
SECTION 11.10. Binding Effect. This Agreement shall become
effective when it shall have been executed by the Loan Parties and the Bank and
shall inure to the benefit of the Loan Parties, Bank and their respective
permitted successors and assigns.
SECTION 11.11. Successors and Assigns; Participations. The
Loan Parties may not assign or transfer any of their rights or obligations
hereunder without the written consent of the Bank. The Bank may, without the
consent of any Loan Party, assign to or sell participations to one or more
banks in all or a portion of its rights and obligations under this Agreement
and the other Loan Documents.
SECTION 11.12. Intentionally Deleted.
SECTION 11.13. Accounting Terms. All accounting terms not
otherwise defined herein shall be construed in accordance with GAAP.
SECTION 11.14. Independence of Covenants. All covenants
contained in this Agreement and in the other Loan Documents shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that such action or condition would be
permitted by an exception to, or otherwise be within the limitations of,
another covenant, shall not avoid the occurrence of a Default or an Event of
Default if such action is taken or condition exists.
SECTION 11.15. Separability. Should any clause, sentence,
paragraph or Section of this Agreement be
63
<PAGE> 58
judicially declared to be invalid, unenforceable or void, such decision will
not have the effect of invalidating or voiding the remainder of this Agreement,
and the parties hereto agree that the part or parts of this Agreement so held
to be invalid, unenforceable or void will be deemed to have been stricken
herefrom and the remainder will have the same force and effectiveness as if
such part or parts had never been included herein.
SECTION 11.16. Execution in Counterparts. This Agreement may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
SECTION 11.17. Interpretation. (a) In this Agreement, unless
a clear contrary intention appears:
(i) the singular number includes the plural number and
vice versa;
(ii) reference to any gender includes each other gender;
(iii) the word "herein," "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole
and not to any particular Article, Section or other subdivision;
(iv) reference to any Person includes such Person's
successors and assigns but, if applicable, only if such
successors and assigns are permitted by this Agreement, and
reference to a Person in a particular capacity excludes such
Person in any other capacity or individually, provided that
nothing in this clause is intended to authorize any assignment
not otherwise permitted by this Agreement;
(v) except as expressly provided to the contrary
herein, reference to any agreement, document or instrument
(including this Agreement) means such agreement, document or
instrument as amended, supplemented or modified and in effect
from time to time in accordance with the terms thereof and, if
applicable, the terms hereof, and reference to any Note or other
note includes any note issued pursuant hereto in extension or
renewal thereof and in substitution or replacement therefor;
(vi) unless the context indicates otherwise, reference
to any Article, Section, Schedule or Exhibit means such Article
or Section hereof or such Schedule or Exhibit hereto;
64
<PAGE> 59
(vii) the word "including" (and with correlative meaning
"include") means including, without limiting the generality of
any description preceding such term;
(viii) with respect to the determination of any period of
time, except as expressly provided to the contrary, the word
"from" means "from and including" and the word "to" means "to but
excluding"; and
(ix) reference to any law, rule or regulation means such
as amended, modified, codified or reenacted, in whole or in part,
and in effect from time to time.
(b) The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction hereof.
(c) No provision of this Agreement shall be interpreted or
construed against any Person solely because that Person or its legal
representative drafted such provision.
SECTION 11.18. Submission to Jurisdiction.
(a) Each Loan Party hereby irrevocably submits to the non-
exclusive jurisdiction of any New York state court located in the Borough of
Manhattan, City and State of New York, or any federal court located in the
Southern District of New York over any action or proceeding arising out of or
relating to this Agreement or any of the other Loan Documents, and each of the
Loan Parties irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such New York state or federal court;
provided, nothing in this Section 11.18 is intended to waive the right of the
Bank to remove any such action or proceeding commenced in any such New York
state court to an appropriate New York federal court to the extent the basis
for such removal exists under applicable law. Each Loan Party hereby
irrevocably appoints CT Corporation (the "Process Agent"), with an office on
the date hereof at 1633 Broadway, New York, New York 10019, as its agent to
receive on behalf of it and its properties service of copies of the summons and
complaint and any other process which may be served in any such action or
proceeding. Such service may be made by mailing by certified mail a copy of
such process to such Loan Party in care of the Process Agent at the Process
Agent's above address, with a copy to such Person at its address specified
herein and each of the Loan Parties hereby irrevocably authorizes and directs
the Process Agent to accept such service on its behalf. As an alternative
method of service, each of the Loan Parties also irrevocably consents to the
service of any and all process in any such action or proceeding by the mailing
by certified mail of copies of such process to it at its address specified
herein. Each
65
<PAGE> 60
Loan Party agrees that a final judgment in any such action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
(b) Nothing in this Section 11.18 shall affect the right of
the Bank to serve legal process in any other manner permitted by law or affect
the right of the Bank to bring any action or proceeding against any of the Loan
Parties, or such Person's properties, in the courts of any other jurisdiction.
SECTION 11.19. Waiver of Jury Trial. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO A TRIAL
BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS
AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED
OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM
OR RELATING TO ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS
AGREEMENT, AND AGREES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
SECTION 11.20. Final Agreement of the Parties. THIS AGREEMENT
(INCLUDING THE SCHEDULES AND EXHIBITS HERETO), THE NOTES AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES RELATING TO THE
SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO ORAL AGREEMENTS BETWEEN THE PARTIES.
66
<PAGE> 61
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly authorized as of the
date first above written.
BORROWER:
AMERICAN ECOLOGY CORPORATION
By:/s/ Jack K. Lemley
Jack K. Lemley
President and Chief Executive Officer
BANK:
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
By: /s/ F. Hall Webb
F. Hall Webb
Senior Vice President
67
<PAGE> 62
GUARANTORS:
AMERICAN ECOLOGY ENVIRONMENTAL
SERVICES CORPORATION
AMERICAN ECOLOGY INTERNATIONAL, INC.
AMERICAN ECOLOGY MANAGEMENT CORPORATION
AMERICAN ECOLOGY RECYCLE CENTER, INC.
AMERICAN ECOLOGY SERVICES CORPORATION
AMERICAN LIABILITY AND EXCESS INSURANCE
COMPANY
TEXAS ECOLOGISTS, INC.
TRANSTEC ENVIRONMENTAL, INC.
US ECOLOGY, INC.
WPI TRANSPORTATION, INC.
WPI WASTE CARRIERS, INC.
By:/s/Jack K. Lemley
Jack K. Lemley
President and Chief Executive Officer
68
