Document:

exh10-1_17313.htm

EXHIBIT 10.1

 

 

 

 

 

AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT

 

This AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (“Amendment”) is entered into as of April 11, 2012, among SCHNITZER STEEL INDUSTRIES, INC., an Oregon corporation (the “US Borrower”), SCHNITZER STEEL BC, INC., a British Columbia corporation (“Schnitzer BC”), and SCHNITZER STEEL PACIFIC, INC., a British Columbia corporation (“Schnitzer Pacific” and together with Schnitzer BC, collectively, the
“Canadian Borrowers” and individually, a “Canadian Borrower”), BANK OF AMERICA, N.A., a national banking association (“Bank of America”), WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association (“Wells Fargo”), UNION BANK, N.A., a national banking association (“Union”), U.S. BANK NATIONAL ASSOCIATION, a national banking association (“U.S. Bank”), JPMORGAN CHASE BANK, N.A., a national banking association
(“JPMorgan Chase”), PNC BANK, NATIONAL ASSOCIATION, a national banking association (“PNC Bank”), FIRST HAWAIIAN BANK, a Hawaii corporation (“First Hawaiian”), BANK OF THE WEST, a California banking corporation (“BOW”), HSBC BANK USA, N.A., a national banking association (“HSBC”), SUMITOMO MITSUI BANKING CORPORATION, a banking corporation organized under the laws of Japan (“SMBC”), UMPQUA BANK, an Oregon banking corporation
(“Umpqua Bank”), THE NORTHERN TRUST COMPANY, an Illinois banking corporation (“Northern Trust”), BANK OF MONTREAL, a Canadian chartered bank, acting through its Chicago Branch (“BMO”), BANNER BANK, a Washington banking corporation (“Banner Bank” and together with Bank of America, Wells Fargo, Union, U.S. Bank, JPMorgan Chase, PNC Bank, First Hawaiian, BOW, HSBC, SMBC, Umpqua Bank, Northern Trust and BMO, collectively, the “US Lenders” and individually, a
“US Lender”), BANK OF MONTREAL, as Canadian Lender (the Canadian Lender together with the US Lenders, collectively, the “Lenders” and individually, a “Lender”), and BANK OF AMERICA, N.A., as administrative agent for the Lenders (in such capacity, the “Administrative Agent”), Swing Line Lender and L/C Issuer.

 

RECITALS

 

A.           The US Borrower, the Canadian Borrowers (the Canadian Borrowers together with the US Borrower, collectively, the “Borrowers” and individually, a “Borrower”), the Lenders, the Administrative Agent, the Swing Line Lender and the L/C Issuer are parties to that certain Second Amended and Restated Credit Agreement dated as of February 9, 2011 (as the same has been or may be amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”), pursuant to which the US Lenders have agreed to make revolving loans and the L/C Issuer has agreed to issue letters of credit to or for the account of the US Borrower and the Canadian Lender has agreed to make revolving loans and to issue letters of credit to or for the account of the Canadian Borrowers.

 

B.           The Borrowers have requested that the Lenders, the Swing Line Lender, the L/C Issuer and the Administrative Agent amend the Credit Agreement to reduce the Applicable Rate 

 

  

  

  

(as defined in the Credit Agreement), extend the Maturity Date (as defined in the Credit Agreement), increase the amount of the Aggregate Commitments (as defined in the Credit Agreement) and to modify certain covenants contained in the Credit Agreement binding upon the US Borrower, which the Lenders, the Administrative Agent and the L/C Issuer have agreed to do, subject to the terms and conditions set forth below.

 

C.           Immediately prior to the execution and delivery of this Amendment, the US Lenders and The Bank Of Tokyo-Mitsubishi UFJ, Ltd. (“BTMU”) entered into that certain Assignment and Assumption Agreement dated effective April 11, 2012, pursuant to which, among other things, BTMU assigned and sold, and Union and certain other US Lenders assumed and purchased all of BTMU’s rights and obligations under the Credit Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:

 

AGREEMENT

 

1.           Definitions; Interpretation.  Capitalized terms not otherwise defined in this Amendment shall have the meanings given in the Credit Agreement as amended by this Amendment.  The rules of construction and interpretation specified in Sections 1.02 and 1.03 of the Credit Agreement also apply to this Amendment and are incorporated herein by this reference.

 

2.           Amendments to Credit Agreement.  The Credit Agreement is amended as follows:

 

(a)           Amendment to Definitions.  In Section 1.01, amendments are made to the definitions as follows:

 

(i)           Applicable Rate - US Obligations.  The table set forth in cause (a) of the definition of “Applicable Rate” is amended and restated as follows:

 

	
Applicable Rate

	
Pricing Level

	
Consolidated Leverage Ratio

	
Commitment Fee

	
Eurocurrency Rate +

                                                                                                         

Standby Letters of Credit

	
Base Rate +

	
1

	
<0.15:1

	
0.15%

	
1.25%

	
0.00%

	
2

	
≥0.15:1 but <0.25:1

	
0.20%

	
1.50%

	
0.25%

	
3

	
≥0.25:1 but <0.35:1

	
0.25%

	
1.75%

	
0.50%

	
4

	
≥0.35:1 but <0.45:1

	
0.30%

	
2.00%

	
0.75%

	
5

	
≥0.45:1

	
0.35%

	
2.25%

	
1.00%

  

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(ii)           Applicable Rate – Canadian Obligations.  The table set forth in cause (b) of the definition of “Applicable Rate” is amended and restated as follows:

 

	
Applicable Rate

	
Pricing Level

	
Consolidated Leverage Ratio

	
Commitment Fee

	
CDOR Rate +

                                                                                                         

Standby Canadian Letters of Credit

	
Canadian Prime Rate +

	
1

	
<0.15:1

	
0.15%

	
1.25%

	
0.00%

	
2

	
≥0.15:1 but <0.25:1

	
0.20%

	
1.50%

	
0.25%

	
3

	
≥0.25:1 but <0.35:1

	
0.25%

	
1.75%

	
0.50%

	
4

	
≥0.35:1 but <0.45:1

	
0.30%

	
2.00%

	
0.75%

	
5

	
≥0.45:1

	
0.35%

	
2.25%

	
1.00%

(iii)           EBITDA.  The definition of “EBITDA” is amended and restated to read as follows:

 

“EBITDA” means, for any period, for any Person (which term shall be deemed to include for purposes of this definition any Disposed Business or assets, business line or division acquired in a Permitted Acquisition), an amount equal to Net Income of such Person for such period plus (a) the following to the extent deducted in calculating such Net Income: (i) Interest Charges of such Person for such period, (ii) the provision for Federal, state, local and foreign income taxes payable by such Person for such period, (iii) the amount of depreciation and
amortization expense deducted in determining such Net Income, (iv) other non-recurring expenses (including non-recurring inventory write-downs) of such Person reducing such Net Income which do not represent a cash item in such period or any future period, (v) non-cash expenses of such Person resulting from the application of Statement of Financial Accounting Standards No. 123 (revised), (vi) amounts reserved for Willamette River Remediation Obligations, (vii) any non-recurring fees, expenses or charges related to any issuance of debt or Equity Interests, any Permitted Acquisition or any sale or other transfer of a Disposed Business (in each case, whether or not consummated), and (viii) non-cash exchange, translation or performance losses relating to any foreign currency hedging transaction or currency fluctuations and
minus (b) the following to the extent included in calculating such Net Income: (i) non-cash exchange, translation or performance gains relating to any foreign currency hedging transaction or currency fluctuations, and (ii) all non-cash items of such Person increasing such Net Income in such period or any future period.  For any four fiscal quarter period, any non-cash reversal of a non-recurring fee, expense or charge which had been incurred during the four fiscal quarter period shall be included in Net Income during such period.

 

  

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(iii)           Shareholders’ Equity.  The definition of “Shareholders’ Equity” is amended and restated to read as follows:

 

“Shareholders’ Equity” means, as of any date of determination, consolidated total equity of the US Borrower and its Subsidiaries as of that date determined in accordance with GAAP.

 

(iv)           Maturity Date.  The definition of “Maturity Date” is amended and restated to read as follows:

 

“Maturity Date” means April 11, 2017.

 

(b)           Amendment to Schedule.  Schedule 2.01 attached to the Credit Agreement is hereby deleted in its entirety and replaced with Schedule 2.01 attached to this Amendment, which is incorporated into the Credit Agreement by this reference.  The increase in the Aggregate Commitments effected by the amendment to Schedule 2.01 of the Credit Agreement pursuant to this
Amendment is not and shall not be deemed to be an increase the Aggregate Commitments pursuant to Section 2.16 of the Credit Agreement.

 

3.           Conditions to Effectiveness.  Notwithstanding anything contained herein to the contrary, this Amendment shall become effective as of April 11, 2012 (for purposes of this Amendment, the “Effective Date”); provided that each of the following conditions is fully and concurrently satisfied not later than 5:00 p.m., Seattle time, on April 11, 2012:

 

(a)           Delivery of Amendment.  Each Borrower, each Lender, the Administrative Agent, the Swing Line Lender and the L/C Issuer shall have executed and delivered counterparts of this Amendment to the Administrative Agent;

 

(b)           Payment of Fees.  The US Borrower shall have paid to (i) the Administrative Agent for the account of US Lenders in proportion to their Applicable Percentage an amendment fee in the amount of 0.125% of the Aggregate Commitments as amended by this Amendment and (ii) the Arranger for its own account the arrangement fee set forth in the letter agreement, dated March 20, 2012, among the US Borrower, the Administrative Agent and the Arranger, which fees shall be deemed fully earned when due and non-refundable when paid;

 

(c)           Certificates and Resolutions.  The Administrative Agent shall have received (in sufficient copies for each Lender) in form and substance reasonably satisfactory to it:

 

(i)           a certificate of each Loan Party dated as of the Effective Date signed by a Responsible Officer of such Loan Party (A) certifying and attaching the resolutions adopted by such Loan Party approving or consenting to the increase the amount of the Aggregate Commitments provided for in Section 2(b) of this Amendment and (B) establishing the identity of and verifying the capacity of each Responsible Officer of such Loan Party authorized to act as a Responsible Officer in connection this Amendment;

 

(ii)           such evidence as the Administrative Agent may reasonably require to verify that each Loan Party is duly organized or formed, validly existing, in good 

 

  

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standing, if applicable, and qualified to engage in business in each jurisdiction in which it is required to be qualified to engage in business, including a certificate of each Loan Party dated as of the Effective Date signed by a Responsible Officer of such Loan Party certifying that the Organization Documents of each of the Loan Parties delivered to the Administrative Agent as a condition to closing the Credit Agreement have not been modified, or if modified, attaching copies of each of the documents that modified the Organization Documents of such Loan Party, and are in full force and effect on the date of this Amendment, and certificates of good standing and/or qualification to engage in business;
and

 

(iii)           a certificate of Borrower dated as of the Effective Date signed by a Responsible Officer of Borrower certifying that (A) the representations of the Borrower as set forth in Article V of the Credit Agreement shall be true and correct in all material respects (except to the extent any such representation and warranty itself is qualified by “materiality,” “Material Adverse Effect” or similar qualifier, in which case it shall be true and correct in all respects) on and as of the Effective Date, except to the extent that such representations and
warranties specifically refer to an earlier date, in which case they are true and correct in all material respects (except to the extent any such representation and warranty itself is qualified by “materiality,” “Material Adverse Effect” or similar qualifier, in which case it shall be true and correct in all respects) as of such earlier date, and except that, the representations and warranties contained in subsections (a) and (b) of Section 5.05 of the Credit Agreement shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01 of the Credit Agreement, (B) there has been no event or circumstance since August 31, 2011 that has had or could be
reasonably expected to have, either individually or in the aggregate, a Material Adverse Effect; and (C) no Default shall have occurred and be continuing or will occur as a result of the execution of this Amendment;

 

(d)           Consent of Guarantors.  The Administrative Agent shall have received the Consent of Guarantors in the form of Exhibit A attached hereto, executed by each of the Guarantors;

 

(e)           Reimbursement for Expenses.  The Borrower shall have reimbursed the Administrative Agent for all expenses actually incurred by and invoiced to Administrative Agent in connection with the preparation of this Amendment and the other Loan Documents and shall have paid all other amounts due and owing under the Loan Documents; and

 

(f)           Other Documents.  The Administrative Agent and the Lenders shall have received such other documents, instruments, and undertakings as the Administrative Agent or the Required Lenders may reasonably request.

 

4.           Administrative Agent Authorization.  Each Lender, the Swing Line Lender and the L/C Issuer hereby authorize and instruct the Administrative Agent to execute and deliver this Amendment.

 

  

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5.           No Further Amendment.  Except as expressly modified by this Amendment, the Credit Agreement and the other Loan Documents shall remain unmodified and in full force and effect and the parties hereby ratify their respective obligations thereunder.

 

6.           Reservation of Rights.  The Borrower acknowledges and agrees that the execution and delivery by the Lenders, the Administrative Agent, the Swing Line Lender and the L/C Issuer of this Amendment shall not be deemed to create a course of dealing or otherwise obligate any Lender, the Administrative Agent, the Swing Line Lender or the L/C Issuer to forbear or execute similar amendments under the same or similar circumstances in the future.

 

7.           Miscellaneous.

 

(a)           Integration.  This Amendment and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.

 

(b)           Severability.  If any provision of this Amendment or any of the other Loan Documents is held to be illegal, invalid or unenforceable, (i) the legality, validity and enforceability of the remaining provisions of this Amendment and the other Loan Documents shall not be affected or impaired thereby and (ii) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable
provisions.  The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

(c)           Counterparts.  This Amendment may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  Delivery of an executed counterpart of a signature page of this Amendment by fax transmission or other electronic mail transmission (e.g. “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this Amendment.

 

(d)           Governing Law.  THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF WASHINGTON, WITHOUT REFERENCE TO CONFLICT-OF-LAWS OR CHOICE-OF-LAW RULES OF THE STATE OF WASHINGTON THAT WOULD DIRECT THE GENERAL APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.

 

(e)           Oral Agreements Not Enforceable.

 

ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FOREBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.

 

 

[Remainder of page intentionally left blank]

 

  

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IN WITNESS WHEREOF, the Borrowers, the Lenders, the Swing Line Lender, the L/C Issuer and the Administrative Agent have each caused this Amendment to be duly executed as of the date first above written.

 

SCHNITZER STEEL INDUSTRIES, INC., as the US Borrower

 

By:   /s/ Robert B. Stone                                                                          

 

Name:   Robert B. Stone                                                                          

 

Title:   Vice President & Treasurer                           

                                               

 

SCHNITZER STEEL BC, INC., as a Canadian Borrower

 

By:   /s/  Richard C. Josephson                                                                          

 

Name:   Richard C. Josephson                                                                          

 

Title:   Secretary                      

                                                    

 

SCHNITZER STEEL PACIFIC, INC., as a Canadian Borrower

 

By:   /s/  Richard C. Josephson                                                                          

 

Name:   Richard C. Josephson                                                                          

 

Title:   Secretary                                                                          

 

 

BANK OF AMERICA, N.A., as

Administrative Agent

 

By:     /s/ Dora A. Brown                                                                          

 

Name:    Dora A. Brown                                                                          

 

Title:    Vice President                                                                          

 

 

 

 

 

[Signature page to Amendment to 2nd A&R Credit Agreement (Schnitzer Steel)]

 

  

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BANK OF AMERICA, N.A., as a US Lender, an L/C Issuer and Swing Line Lender

 

By:   /s/ Timothy G. Holsapple                                                                          

 

Name:   Timothy G. Holsapple                                                                          

 

Title:   Senior Vice President                                                                          

 

 

WELLS FARGO BANK, NATIONAL ASSOCIATION, as a US Lender and an L/C Issuer

 

By:   /s/  James L. Franzen                                                                          

 

Name:   James L. Franzen                                                                          

 

Title:   Vice President                                                                          

 

 

UNION BANK, N.A., as a US Lender

 

By:   /s/  John F. Wharton                                                                          

 

Name:   John F. Wharton                                                                          

 

Title:   Vice President                                                                          

 

 

BANK OF MONTREAL, CHICAGO BRANCH, as a US Lender

 

By:   /s/  Larry Allan Swiniarski                                                                          

 

Name:   Larry Allan Swiniarski                                                                          

 

Title:   Director                                                                          

 

 

BANK OF MONTREAL, as the Canadian Lender

 

By:   /s/ Robert Tuck                                                                          

 

Name:  Robert Tuck                                                                          

 

Title:   Senior Relationship Manager                                                                          

 

 

 

[Signature page to Amendment to 2nd A&R Credit Agreement (Schnitzer Steel)]

 

  

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U.S. BANK NATIONAL ASSOCIATION, as a US Lender

 

By:   /s/ Brandon R. Zabrocki                                                                          

 

Name:   Brandon R. Zabrocki                                                                          

 

Title:   Vice President                                                                          

 

 

JPMORGAN CHASE BANK, N.A., as a US Lender

 

By:   /s/ Keith Winzenried                                                                          

 

Name:   Keith Winzenried                                                                          

 

Title:   Credit Executive                                                                          

 

 

PNC BANK, NATIONAL ASSOCIATION, as a US Lender

 

By:   /s/  John Berry                                                                          

 

Name:   John Berry                                                                          

 

Title:   Vice President                                                                          

 

 

FIRST HAWAIIAN BANK, as a US Lender

 

By:   /s/  Susan Takeda                                                                          

 

Name:   Susan Takeda                                                                          

 

Title:   Vice President                                                                          

 

 

BANK OF THE WEST, as a US Lender

 

By:   /s/  Brett German                                                                          

 

Name:   Brett German                                                                          

 

Title:   Vice President                                                                          

 

 

 

 

 

[Signature page to Amendment to 2nd A&R Credit Agreement (Schnitzer Steel)]

 

  

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HSBC BANK USA, N.A., as a US Lender

 

By:   /s/  Mike A. Mitchell                                                                          

 

Name:   Mike A. Mitchell                                                                          

 

Title:   Vice President                                                                          

 

 

SUMITOMO MITSUI BANKING CORPORATION, as a US Lender

 

By:   /s/  Shuji Yabe                                                                          

 

Name:   Shuji Yabe                                                                          

 

Title:   Managing Director                                                                          

 

 

UMPQUA BANK, as a US Lender

 

By:   /s/  Jeffrey Seiler                                                                          

 

Name:   Jeffrey Seiler                                                                          

 

Title:   Vice President                                                                          

 

 

THE NORTHERN TRUST COMPANY, as a US Lender

 

By:   /s/  Brandon Rolek                                                                          

 

Name:   Brandon Rolek                                                                          

 

Title:  Vice President                                                                          

 

 

BANNER BANK, as a US Lender

 

By:   /s/  John N. Austenson                                                                          

 

Name:  John N. Austenson                                                                          

 

Title:   SVP                                                                          

 

 

 

 

 

[Signature page to Amendment to 2nd A&R Credit Agreement (Schnitzer Steel)]

 

  

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SCHEDULE 2.01

 

COMMITMENTS

AND APPLICABLE PERCENTAGES

 

	
 

US Lender

	 	
Commitment

	 	 	
Applicable Percentage

	 
	
Bank of America, N.A.

	 	$	146,000,000.00	 	 	 	21.791044776	%
	
Wells Fargo Bank, National Association

	 	$	100,000,000.00	 	 	 	14.925373134	%
	
U.S. Bank National Association

	 	$	65,000,000.00	 	 	 	9.701492537	%
	
Union Bank, N.A.

	 	$	60,000,000.00	 	 	 	8.955223881	%
	
JPMorgan Chase Bank, N.A.

	 	$	55,000,000.00	 	 	 	8.208955224	%
	
PNC Bank, National Association

	 	$	50,000,000.00	 	 	 	7.462686567	%
	
Bank of The West

	 	$	27,000,000.00	 	 	 	4.029850745	%
	
First Hawaiian Bank

	 	$	27,000,000.00	 	 	 	4.029850745	%
	
HSBC Bank USA, N.A.

	 	$	27,000,000.00	 	 	 	4.029850745	%
	
Umpqua Bank

	 	$	27,000,000.00	 	 	 	4.029850745	%
	
Bank of Montreal, Chicago Branch

	 	$	25,000,000.00	 	 	 	3.731343284	%
	
Sumitomo Mitsui Banking Corporation

	 	$	25,000,000.00	 	 	 	3.731343284	%
	
The Northern Trust Company

	 	$	20,000,000.00	 	 	 	2.985074627	%
	
Banner Bank

	 	$	16,000,000.00	 	 	 	2.388059701	%
	
Total

	 	$	670,000,000.00	 	 	 	100.000000000	%

 

 

  

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EXHIBIT A

 

CONSENT OF GUARANTORS

 

This CONSENT OF GUARANTORS (this “Consent”) is entered into as of April 11, 2012, by SCHNITZER STEEL INDUSTRIES, INC., an Oregon corporation (the “US Borrower”), MANUFACTURING MANAGEMENT, INC., an Oregon corporation (“Manufacturing”), GENERAL METALS OF TACOMA, INC., a Washington corporation (“General Metals”), CASCADE STEEL ROLLING MILLS, INC., an Oregon corporation
(“Cascade”), NORPROP, INC., an Oregon corporation (“Norprop”), JOINT VENTURE OPERATIONS, INC., a Delaware corporation (“JV Operations”), PROLERIDE TRANSPORT SYSTEMS, INC., a Delaware corporation (“Proleride”), PROLERIZED NEW ENGLAND COMPANY LLC, a Delaware limited liability company (“Prolerized”), PICK-N-PULL AUTO DISMANTLERS, a California general partnership (“Auto Dismantlers”), PICK AND PULL AUTO DISMANTLING, INC., a California
corporation (“Auto Dismantling”), SCHNITZER SOUTHEAST, LLC, a Georgia limited liability company (“Schnitzer Southeast”), SCHNITZER STEEL HAWAII CORP., a Delaware corporation (“Schnitzer Hawaii”), PICK-N-PULL AUTO DISMANTLERS, STOCKTON, LLC, a California limited liability company (“Stockton”), METALS RECYCLING L.L.C., a Rhode Island limited liability company (“Metals Recycling”), EDMAN CORP., an Oregon corporation, (“Edman”),
PICK-N-PULL NORTHWEST, LLC, an Oregon limited liability company (“Northwest”), U-PULL-IT, INC., a California corporation (“U-Pull-It”), LEVI’S IRON AND METAL, INC., an Oregon corporation (“Levi’s”), AUTO PARTS GROUP SOUTHWEST, LLC, a Delaware limited liability company (“Auto Parts” and together with the US Borrower, Manufacturing, General Metals, Cascade, Norprop, JV Operations, Proleride, Prolerized, Auto Dismantlers, Auto Dismantling, Schnitzer Southeast, Schnitzer Hawaii, Stockton, Metals Recycling, Edman, Northwest, U-Pull-It and Levi’s, collectively, the
“Guarantors” and individually, a “Guarantor”), to and in favor of BANK OF AMERICA, N.A., a national banking association (“Bank of America”), WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association (“Wells Fargo”), UNION BANK, N.A., a national banking association (“Union”), U.S. BANK NATIONAL ASSOCIATION, a national banking association (“U.S. Bank”), JPMORGAN CHASE BANK, N.A., a national banking association
(“JPMorgan Chase”), PNC BANK, NATIONAL ASSOCIATION, a national banking association (“PNC Bank”), FIRST HAWAIIAN BANK, a Hawaii corporation (“First Hawaiian”), BANK OF THE WEST, a California banking corporation (“BOW”), HSBC BANK USA, N.A., a national banking association (“HSBC”), SUMITOMO MITSUI BANKING CORPORATION, a banking corporation organized under the laws of Japan (“SMBC”), UMPQUA BANK, an Oregon banking corporation
(“Umpqua Bank”), THE NORTHERN TRUST COMPANY, an Illinois banking corporation (“Northern Trust”), BANK OF MONTREAL, a Canadian chartered bank, acting through its Chicago Branch (“BMO”), BANNER BANK, a Washington banking corporation (“Banner Bank” and together with Bank of America, Wells Fargo, Union, U.S. Bank, JPMorgan Chase, PNC Bank, First Hawaiian, BOW, HSBC, SMBC, Umpqua Bank, Northern Trust and BMO, collectively, the “US Lenders” and individually, a
“US Lender”), BANK OF MONTREAL, as Canadian Lender (together with the US Lenders, collectively, the “Lenders” and individually, a “Lender”) and BANK OF AMERICA, N.A., as administrative agent for the Lenders (in such capacity, the “Administrative Agent”), Swing Line Lender and L/C Issuer.

 

  

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RECITALS

 

A.           The US Borrower, the Canadian Borrowers (the Canadian Borrowers together with the US Borrower, collectively, the “Borrowers” and individually, a “Borrower”), the Lenders, the Administrative Agent, the Swing Line Lender and the L/C Issuer are parties to that certain Second Amended and Restated Credit Agreement dated as of February 9, 2011 (as the same has been or may be amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”), pursuant to which the US Lenders have agreed to make revolving loans and the L/C Issuer has agreed to issue letters of credit to or for the account of the US Borrower and the Canadian Lender has agreed to make revolving loans and to issue letters of credit to or for the account of the Canadian Borrowers.

 

B.           In connection with and as a condition to the obligation of the Lenders to make loans and the L/C Issuer to issue letters of credit under the Credit Agreement, each Guarantor entered into or became a party to that certain Second Amended and Restated Continuing Guaranty dated as of February 9, 2011 (as the same has been or may be amended, restated, supplemented or otherwise modified from time to time, the “Guaranty”), pursuant to which each Guarantor has guaranteed, among other things, the indebtedness, liabilities and obligations of the Borrowers arising pursuant to
the Credit Agreement and related documents.

 

C.           The Borrowers, the Lenders, the Administrative Agent, the Swing Line Lender and the L/C Issuer intend to enter into that certain Amendment to Second Amended and Restated Credit Agreement dated as of April 11, 2012 (the “Amendment”), pursuant to which, among other things, the Borrowers, the Lenders, the Administrative Agent, the Swing Line Lender and the L/C Issuer will amend the Credit Agreement to reduce the Applicable Rate (as defined in the Credit Agreement), extend the Maturity Date (as defined in the Credit Agreement), increase the amount of the Aggregate
Commitments (as defined in the Credit Agreement) and to modify certain covenants contained in the Credit Agreement binding upon the US Borrower.

 

D.           It is a condition precedent to the effectiveness of the Amendment that each Guarantor enter into this Consent.

 

NOW THEREFORE, in consideration of the foregoing, and for other good and valuable consideration receipt of which is hereby acknowledged, each Guarantor agrees as follows:

 

AGREEMENT

 

1.           Definitions.  Capitalized terms not otherwise defined in this Consent shall have the meanings given in the Guaranty, and if not defined therein shall have the meanings given in the Credit Agreement.

 

2.           Consent.  Each Guarantor hereby acknowledges that it has received a copy of the Amendment and hereby consents to its contents, including all prior and current amendments to the Credit Agreement (notwithstanding that such consent is not required).

 

3.           Ratification and Confirmation.  Each Guarantor hereby ratifies and confirms that its indebtedness, liabilities and obligations to each Lender, the Administrative Agent, the Swing Line Lender and the L/C Issuer arising under the Guaranty and the other Loan Documents 

 

  

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to which the Guarantor is a party.  Each Guarantor hereby confirms and agrees that its guarantee of the Obligations (as defined in the Guaranty to which such Guarantor is a party) remains in full force and effect, and that such Obligations shall include, without limitation, the indebtedness, liabilities and obligations of the Borrower to each Lender, the Administrative Agent, the Swing Line Lender and the L/C Issuer arising under the Credit Agreement, as amended by the Amendment.

 

4.           Representations and Warranties.  The Guarantor hereby represents and warrants to each Lender, the Administrative Agent, the Swing Line Lender and the L/C Issuer that each of the representations and warranties set forth the Guaranty is true and correct as if made on and as of the date of this Consent.

 

5.           Severability.  If any provision of this Consent or any of the other Loan Documents is held to be illegal, invalid or unenforceable, (i) the legality, validity and enforceability of the remaining provisions of this Consent and the other Loan Documents shall not be affected or impaired thereby and (ii) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or
unenforceable provisions.  The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

6.           Counterparts.  This Consent may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  Delivery of an executed counterpart of a signature page of this Consent by fax transmission or other electronic mail transmission (e.g. “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this Consent.

 

7.           Governing Law.  THIS CONSENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF WASHINGTON, WITHOUT REFERENCE TO CONFLICT-OF-LAWS OR CHOICE-OF-LAW RULES OF THE STATE OF WASHINGTON THAT WOULD DIRECT THE GENERAL APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.

 

8.           Oral Agreements Not Enforceable.

 

ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FOREBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.

 

 

[Remainder of page intentionally left blank]

 

  

14

  

 

IN WITNESS WHEREOF, each Guarantor has caused this Consent to be duly executed as of the date first above written.

 

SCHNITZER STEEL INDUSTRIES, INC.

 

By:  ____________________________

 

Name:   _________________________ 

 

Title:   __________________________ 

 

 

MANUFACTURING MANAGEMENT, INC.

 

 

By:  ____________________________

 

Name:   _________________________ 

 

Title:   __________________________ 

 

 

GENERAL METALS OF TACOMA, INC.

 

By:  ____________________________

 

Name:   _________________________ 

 

Title:   __________________________ 

 

 

CASCADE STEEL ROLLING MILLS, INC.

 

By:  ____________________________

 

Name:   _________________________ 

 

Title:   __________________________ 

 

 

NORPROP, INC.

 

By:  ____________________________

 

Name:   _________________________ 

 

Title:   __________________________ 

 

  

15

  

 

JOINT VENTURE OPERATIONS, INC.

 

By:  ____________________________

 

Name:   _________________________ 

 

Title:   __________________________ 

 

 

PROLERIDE TRANSPORT SYSTEMS, INC.

 

By:  ____________________________

 

Name:   _________________________ 

 

Title:   __________________________ 

 

 

PROLERIZED NEW ENGLAND COMPANY LLC

 

By:  Proleride Transport Systems, Inc.

Its:  Member

 

By:  ____________________________

 

Name:   _________________________ 

 

Title:   __________________________ 

 

 

PICK-N-PULL AUTO DISMANTLERS

 

By:  Norprop, Inc.

Its:  General Partner

 

By:  ____________________________

 

Name:   _________________________ 

 

Title:   __________________________ 

 

 

PICK AND PULL AUTO DISMANTLING, INC.

 

By:  ____________________________

 

Name:   _________________________ 

 

Title:   __________________________ 

 

 

  

16

  

SCHNITZER SOUTHEAST, LLC

 

By:  Schnitzer Steel Industries, Inc.

Its:  Member

 

By:  ____________________________

 

Name:   _________________________ 

 

Title:   __________________________ 

 

 

SCHNITZER STEEL HAWAII CORP.

 

By:  ____________________________

 

Name:   _________________________ 

 

Title:   __________________________ 

 

 

PICK-N-PULL AUTO DISMANTLERS, STOCKTON, LLC

 

By:  ____________________________

 

Name:   _________________________ 

 

Title:   __________________________ 

 

 

METALS RECYCLING L.L.C.

 

By:  Joint Venture Operations, Inc.

Its:  Member

 

By:  ____________________________

 

Name:   _________________________ 

 

Title:   __________________________ 

 

 

EDMAN CORP.

 

By:  ____________________________

 

Name:   _________________________ 

 

Title:   __________________________ 

 

 

  

17

  

PICK-N-PULL NORTHWEST, LLC

 

By:  Norprop, Inc.

Its:  Member

 

By:  ____________________________

 

Name:   _________________________ 

 

Title:   __________________________ 

 

 

U-PULL-IT, INC.

 

By:  ____________________________

 

Name:   _________________________ 

 

Title:   __________________________ 

 

 

LEVI’S IRON AND METAL, INC.

 

By:  ____________________________

 

Name:   _________________________ 

 

Title:   __________________________ 

 

 

AUTO PARTS GROUP SOUTHWEST, LLC

 

By:  Norprop, Inc.

Its:  Member

 

By:  ____________________________

 

Name:   _________________________ 

 

Title:   __________________________ 

 

 

 

 

 

 

18rjemployagree.htm

PERSONAL SERVICES AGREEMENT

 

This Personal Services Agreement is entered into this 1st day of March 2012 (the "Agreement") by and between Robertson J. Orr, an individual residing in Chandler, Arizona (the "Executive"), and Bollente Companies, Inc., a Nevada corporation located at 8501 North Scottsdale Road, Suite 165, Scottsdale, Arizona 85253 (the "Company").

 

WHEREAS, the Company wishes to contract for the services of the Executive to serve as the President and Chief Executive Officer of the Company on an interim basis;

 

WHEREAS, Executive wishes to be contracted by the Company as its interim President and Chief Executive Officer;

 

NOW, THEREFORE, the parties hereby agree as follows:

 

1. Executive's Services. Executive shall be available and shall provide to the Company professional services related to the general executive management of the Company, including providing counsel to the Board of Directors regarding the research, development, manufacture, marketing, and sales of a proprietary line of green products, as well as the development of a defensible intellectual property portfolio related to the same, as needed and requested by the Board of Directors ("Executive Services").

 

2. Remuneration.

 

a. Compensation. The gross annual cash compensation of the Executive shall be Twelve Thousand (12,000) US Dollars (hereinafter, the “Compensation”). All Compensation payable hereunder shall be payable on a monthly basis in arrears.

b. Alternative Payment. The Executive agrees that up to One Hundred Percent (100%) of such Compensation payable in accordance with Article 2.a above may, at the discretion of the Executive, be a value at the time of payment equal to the value of such unpaid (cash) Compensation (“Stock Based Payment”).  Securities issued to the Executive in connection with the Stock Based Payment shall be priced at One (1.00) US Dollar per share.

c. Expenses. The Executive will be reimbursed for reasonable business expenses, within such policy guidelines as may be established from time to time, by the Company’s Board of Directors, provided that such business expenses are incurred in the ordinary course of performing the Executive’s duties.

d. Stock. The Executive shall be entitled to receive Fifteen Thousand (15,000) restricted common shares of the Company per calendar quarter which shall vest to the Executive beginning on May 31, 2012 and on the last business day of each subsequent calendar quarter for the Term of the Agreement. Such shares shall bear piggy-back registration rights in connection with the filing by the Company of an effective registration statement with the US Securities and Exchange Commission.

e. Bonuses. The Executive shall be entitled to receive bonus compensation in the form of cash or restricted common shares of the Company (“Bonus Shares”) from time to time at the discretion of the Board of Directors. Bonus Shares shall bear piggy-back registration rights in connection with the filing by the Company of any registration statement with the US Securities and Exchange Commission.

  

1

  

3. Confidentiality. In the course of performing Executive Services, the parties recognize that Executive may come in contact or become familiar with information which the Company or its subsidiaries or affiliates may consider confidential. This information may include, but is not limited to, information pertaining to manufacturing processes, marketing plans, sales prospects, customer lists, investors, stockholders, partnerships, joint ventures, intellectual property and other proprietary information, which information may be of value to a competitor. Executive agrees to keep all such information confidential and not to discuss or divulge it to anyone other than appropriate Company personnel or their designees.

 

4. Term. This Agreement shall commence on March 1, 2012 and shall terminate on February 28, 2013, unless earlier terminated by either party hereto. Either party may terminate this Agreement upon Thirty (30) days prior written notice. The Company may, at its option, renew this Agreement for an additional term of Twelve (12) months on the same terms and conditions as set forth herein by giving notice to Executive of such intent to renew on or before February 1, 2013.

 

5. Representations and Warranties. The Executive will make no representations, warranties, or commitments binding the Company without the Company's prior consent.

 

6. Legal Right. Executive covenants and warrants that it has the unlimited legal right to enter into this Agreement and to perform in accordance with its terms without violating the rights of others or any applicable law and that he/she has not and shall not become a party to any other agreement of any kind which conflicts with this Agreement. Executive shall indemnify and hold harmless the Company from any and all damages, claims and expenses arising out of or resulting from any claim that this Agreement violates any such agreements. Breach of this warranty shall operate to terminate this Agreement automatically without notice as specified in Paragraph 5 and to terminate all obligations of the Company to pay any amounts which remain unpaid under this Agreement.

 

7. No Waiver. Failure to invoke any right, condition, or covenant in this Agreement by either party shall not be deemed to imply or constitute a waiver of any rights, condition, or covenant and neither party may rely on such failure.

 

8. Notice. Any notice or communication permitted or required by this Agreement shall be deemed effective when personally delivered or deposited, postage prepaid, in the first class mail of the United States properly addressed to the appropriate party at the address set forth below:

 

a. Notices as to Executive:                                                      312 W. Macaw Dr.

Chandler, AZ 85286

b. Notices to the Company:                                                      8501 North Scottsdale Road, Suite 165

Scottsdale, Arizona 85253

9. Enforceability. If any provision of this Agreement is held by a court of competent jurisdiction to be unenforceable, the reminder of the Agreement shall remain in full force and effect and shall in no way be impaired

 

10. Entire Agreement and Amendments. This Agreement constitutes the entire agreement of the parties with regard to the subject matter hereof, and replaces and supersedes all other agreements or understandings, whether written or oral. No amendment or extension of this Agreement shall be binding unless in writing and signed by both parties.

 

  

2

  

 

11. Binding Effect, Assignment. This Agreement shall be binding upon and shall inure to the benefit of Executive and the Company and to the Company's successors and assigns. Nothing in this Agreement shall be construed to permit the assignment by Executive of any of its rights or obligations hereunder, and such assignment is expressly prohibited without the prior written consent of the Company.

 

12. Governing Law, Severability. This Agreement shall be governed by the laws of the State of Arizona. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision.

WHEREFORE, the parties have executed this Agreement as of the date written above.

COMPANY:

Bollente Companies, Inc.

 

/S/ Robertson J. Orr   

Robertson J. Orr

Duly Authorized

EXECUTIVE:

 

/S/ Robertson J. Orr   

Robertson J. Orr

Duly Authorized

  

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SCHEDULE A

	
Milestone

	
Bonus

	
Upon the first occurrence of Bollente Companies, Inc. ("Company") recording revenue, according to generally accepted accounting principles ("GAAP"), from the sale of its proprietary products.

	
25,000 Bonus Shares

	
Upon the first occurrence of the company recording revenue greater than $250,000, according to GAAP, during a fiscal quarter.

	
5,000 Bonus Shares

	
Upon the first occurrence of the company recording revenue greater than $500,000, according to GAAP, during a fiscal quarter.

	
10,000 Bonus Shares

	
Upon each occurrence of the company recording revenue greater than $1,000,000, according to GAAP, during a fiscal quarter.

	
25,000 Bonus Shares

	
Upon the first occurrence of the company recording earnings before interest, taxes, depreciation, and amortization, according to GAAP, during a fiscal quarter.

	
100,000 Bonus Shares

  

  

4

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