Item 1.01 Entry into a Material Definitive Agreement.
On May 8, 2020, Badlands Power Fuels, LLC, a North Dakota limited liability company (“BPF”) and indirect wholly-owned subsidiary of Nuverra Environmental Solutions, Inc. (the “Company”), received proceeds of a loan (the “Loan”) from First International Bank & Trust (the “Lender”) in the principal amount of $4.0 million, pursuant to the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was enacted on March 27, 2020.
The Loan is evidenced by a promissory note (the “Note”), dated May 8, 2020, issued by the Company to the Lender. The Note is unsecured, matures on May 8, 2022, bears interest at a rate of 1.00% per annum, and is subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act. Under the terms of the PPP, up to the entire principal amount of the Loan, and accrued interest, may be forgiven if the proceeds are used for certain qualifying expenses as described in the CARES Act and applicable implementing guidance issued by the U.S. Small Business Administration. BPF intends to use the Loan proceeds for designated qualifying expenses and to apply for forgiveness of the Loan in accordance with the terms of the PPP, but there is no assurance provided that BPF will obtain forgiveness of the Loan in whole or in part.
With respect to any portion of the Loan that is not forgiven, the Loan will be subject to customary provisions for a loan of this type, including customary events of default relating to, among other things, payment defaults, breaches of the provisions of the Note and cross-defaults on any other loan with the Lender or other creditors. Upon a default under the Note, including the non-payment of principal or interest when due, the obligations of BPF may be accelerated.
The Company has obtained the consent of the lenders under each of the First Lien Credit Agreement dated as of August 7, 2017, as amended, by and among the lenders party thereto, ACF FinCo I, LP, as administrative agent, and the Company, and the Second Lien Term Loan Agreement dated as of August 7, 2017, as amended, by and among the lenders party thereto, Wilmington Savings Fund Society, FSB, as administrative agent, and the Company, for BPF to enter into and obtain the funds provided by the Loan.
The foregoing description of the Note does not purport to be complete and is qualified in its entirety by reference to the full text of the Note, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.