<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 0-4643
ROY F. WESTON, INC.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 23-1501990
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1400 WESTON WAY, WEST CHESTER, PA 19380
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (610)-701-3000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
As of July 24, 1998, the registrant had outstanding 7,857,973 shares of
Series A common stock and 2,089,019 shares of common stock.
<PAGE> 2
Index Page
----- ----
Part I - Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheets -
June 30, 1998 and December 31, 1997 1-2
Consolidated Statements of Operations -
Three Months Ended June 30, 1998 and 1997 3
Consolidated Statements of Operations -
Six Months Ended June 30, 1998 and 1997 4
Consolidated Statements of Cash Flows -
Six Months Ended June 30, 1998 and 1997 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-8
Part II - Other Information 9
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
<PAGE> 3
ROY F. WESTON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
(Unaudited)
(Thousands of Dollars)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 1,003 $ 10,767
Marketable securities 6,012 4,168
Accounts receivable, trade, net of allowance for doubtful
Accounts of $1,751 in 1998 and $1,750 in 1997 49,607 54,497
Unbilled costs and estimated earnings on contracts in process 21,181 20,920
Prepaid and refundable income taxes 860 1,000
Deferred income taxes 2,273 3,104
Other 4,880 2,643
-------- --------
Total current assets 85,816 97,099
-------- --------
PROPERTY AND EQUIPMENT
Land 215 215
Buildings and improvements 11,688 11,625
Furniture and equipment 36,161 38,803
Leasehold improvements 1,774 2,849
Construction in progress -- 8
-------- --------
Total property and equipment 49,838 53,500
Less accumulated depreciation and amortization 40,328 43,248
-------- --------
Property and equipment, net 9,510 10,252
-------- --------
OTHER ASSETS
Goodwill, net of accumulated amortization of $4,107 in
1998 and $4,076 in 1997 1,847 1,878
Deferred income taxes 5,829 5,125
Other 11,206 10,894
-------- --------
Total other assets 18,882 17,897
-------- --------
TOTAL ASSETS $114,208 $125,248
======== ========
</TABLE>
See notes to consolidated financial statements.
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<PAGE> 4
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
(Unaudited)
(Thousands of Dollars)
<S> <C> <C>
CURRENT LIABILITIES
Current maturities of long-term debt $ 2,319 $ 2,914
Accounts payable and accrued expenses 13,338 13,879
Billings on contracts in process in excess of costs and
estimated earnings 8,919 14,275
Employee compensation, benefits and payroll taxes 7,250 8,721
Income taxes payable 163 59
Other 9,662 11,012
-------- --------
Total current liabilities 41,651 50,860
-------- --------
LONG TERM DEBT 13,116 15,884
-------- --------
OTHER LIABILITIES 3,327 3,137
-------- --------
CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $.10 par value, 10,500,000 shares authorized;
3,170,294 shares issued in 1998; 3,170,494
shares issued in 1997 317 317
Series A common stock, $.10 par value, 20,500,000 shares
authorized; 8,650,778 shares issued in 1998; 8,581,821
shares issued in 1997 865 858
Unrealized gain on investments 886 733
Additional paid-in capital 55,928 55,700
Retained earnings 3,208 2,849
-------- --------
61,204 60,457
Less treasury stock at cost, 1,081,275 common shares in 1998
and 1997; 792,805 Series A common shares in 1998
and 1997 5,090 5,090
-------- --------
Total stockholders' equity 56,114 55,367
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $114,208 $125,248
======== ========
</TABLE>
See notes to consolidated financial statements
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<PAGE> 5
ROY F. WESTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended June 30,
---------------------------
1998 1997
(Thousands of Dollars)
<S> <C> <C>
Gross revenues $ 58,780 $ 55,777
Direct project costs 23,844 21,686
----------- -----------
Net revenues 34,936 34,091
----------- -----------
Expenses:
Direct salaries and other operating costs 29,994 34,900
General and administrative expenses 4,774 7,888
Restructuring credit -- (597)
----------- -----------
34,768 42,191
----------- -----------
Income (loss) from operations 168 (8,100)
----------- -----------
Other income (expense):
Investment income 400 322
Interest expense (333) (395)
Other 19 (19)
----------- -----------
86 (92)
----------- -----------
Income (loss) before income taxes 254 (8,192)
Provision (benefit) for income taxes 102 (2,798)
----------- -----------
Net income (loss) $ 152 $ (5,394)
=========== ===========
Basic earnings (loss) per share $ .02 $ (.56)
=========== ===========
Weighted average shares outstanding - basic 9,881,588 9,644,466
=========== ===========
Diluted earnings (loss) per share $ .02 $ (.56)
=========== ===========
Weighted average shares outstanding - diluted 9,922,385 9,644,466
=========== ===========
</TABLE>
See notes to consolidated financial statements
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<PAGE> 6
ROY F. WESTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
1998 1997
(Thousands of Dollars)
<S> <C> <C>
Gross revenues $ 113,457 $ 117,257
Direct project costs 45,770 43,548
----------- -----------
Net revenues 67,687 73,709
----------- -----------
Expenses:
Direct salaries and other operating costs 57,947 69,431
General and administrative expenses 9,224 13,629
Restructuring credit -- (1,668)
----------- -----------
67,171 81,392
----------- -----------
Income (loss) from operations 516 (7,683)
----------- -----------
Other income (expense):
Investment income 787 869
Interest expense (706) (825)
Other 2 66
----------- -----------
83 110
----------- -----------
Income (loss) before income taxes 599 (7,573)
Provision (benefit) for income taxes 240 (2,575)
----------- -----------
Net income (loss) $ 359 $ (4,998)
=========== ===========
Basic earnings (loss) per share $ .04 $ (.52)
=========== ===========
Weighted average shares outstanding - basic 9,881,226 9,651,794
=========== ===========
Diluted earnings (loss) per share $ .04 $ (.52)
=========== ===========
Weighted average shares outstanding - diluted 9,911,434 9,651,794
=========== ===========
</TABLE>
See notes to consolidated financial statements.
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<PAGE> 7
ROY F. WESTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
1998 1997
(Thousands of Dollars)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 359 $ (4,998)
Adjustments to reconcile net income (loss) to net cash
provided by (used for) operating activities:
Depreciation and amortization 1,948 2,754
Provision for losses on accounts receivable 298 275
Other 212 780
Change in assets and liabilities:
Accounts receivable, trade 4,592 11,982
Unbilled costs and estimated earnings on contracts in process (261) (803)
Other current assets (2,237) (1,047)
Accounts payable and accrued expenses (541) 1,080
Billings on contracts in excess of costs and estimated earnings (5,356) (2,677)
Employee compensation, benefits and payroll taxes (1,471) (3,663)
Income taxes 244 (1,427)
Deferred income taxes 49 (625)
Other current liabilities (1,565) (2,621)
Other assets and liabilities 969 3,392
-------- --------
Net cash provided by (used for) operating activities (2,760) 2,402
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of investments 3,739 9,403
Payments for purchase of investments (5,412) (9,940)
Purchase of property and equipment, net (849) (1,296)
Investments in other assets (693) (71)
-------- --------
Net cash used for investing activities (3,215) (1,904)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments under long-term debt (4,024) (1,353)
Proceeds from issuance of Series A common stock 235 335
Purchase of Series A common treasury stock -- (84)
-------- --------
Net cash used for financing activities (3,789) (1,102)
-------- --------
Net decrease in cash and cash equivalents (9,764) (604)
Cash and cash equivalents:
Beginning of period 10,767 9,878
-------- --------
End of period $ 1,003 $ 9,274
======== ========
</TABLE>
See notes to consolidated financial statements.
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<PAGE> 8
ROY F. WESTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The unaudited consolidated financial statements reflect all adjustments which
are, in the opinion of management, necessary for a fair presentation of the
financial position, results of operations and cash flows for the interim
periods. The unaudited consolidated financial statements do not include all of
the information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
and should be read in conjunction with the consolidated financial statements and
notes thereto included in the Company's 1997 Annual Report to Shareholders which
is incorporated by reference in its Form 10-K filed with the Securities and
Exchange Commission. Results for the three months and six months ended June 30,
1998 are not necessarily indicative of results for the full year 1998.
NOTE 2 - LINE OF CREDIT AGREEMENT
On June 5, 1998, the Company entered into an $18,000,000 revolving credit
facility with a bank to provide cash borrowings and letters of credit. The
facility, which replaced the Company's previous credit arrangements, is for a
two-year period with a one-year renewal option and is available for working
capital and other general corporate purposes including permitted acquisitions.
Under the terms of the agreement, cash borrowings bear interest at 1% over the
prime rate or, at the Company's option, other variable rates. The Company is
subject to a 3/8% annual charge on the unused portion of the facility. The
agreement requires the Company to maintain minimum levels of cash and marketable
securities, tangible net worth and certain financial ratios and restricts
certain expenditures and debt outside the agreement.
The Company had no outstanding cash borrowings under the facility at June 30,
1998 and the unused portion of the facility was $15,174,000.
NOTE 3 - RESTRUCTURING CREDIT
During the six months ended June 30, 1997, the Company completed the sale of net
assets of its Weston Interactive, Inc. subsidiary and the sale of net assets of
its Environmental Metrics Division. The proceeds from these transactions
exceeded amounts anticipated in recording the restructuring charge in the three
months ended September 30, 1996. The excess is included as restructuring credit
in the accompanying consolidated statements of operations for the three months
($597,000) and six months ($1,668,000) ended June 30, 1997.
NOTE 4 - CONSOLIDATED STATEMENTS OF CASH FLOW
Net cash refunds for income taxes were $226,000 and $563,000 in the first six
months of 1998 and 1997, respectively. Cash payments for interest were $663,000
and $748,000 in the six months ended June 30, 1998 and 1997, respectively.
Capital lease obligations of $661,000 were incurred in the six months ended June
30, 1998.
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<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
The following information should be read in conjunction with the unaudited
interim consolidated financial statements and the notes thereto included in this
Quarterly Report and the audited financial statements and Management's
Discussion and Analysis of Financial Condition and Results of Operations
contained in the Company's Form 10-K filed with the Securities and Exchange
Commission for the fiscal year ended December 31, 1997.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Net income for the three months ended June 30, 1998 was $152,000, or $.02 per
share, compared to a loss of $5,394,000, or $.56 per share, for the three months
ended June 30, 1997. Net income for the six months ended June 30, 1998 was
$359,000, or $.04 per share, compared to a net loss of $4,998,000, or $.52 per
share, for the six months ended June 30, 1997.
Net revenues increased 2% to $34,936,000 for the three months ended June 30,
1998 and decreased 8% to $67,687,000 for the six months ended June 30, 1998
compared to the 1997 periods. Net revenues for the three months and six months
ended June 30, 1998 include approximately $800,000 from a U.S. government agency
in payment for work performed in an earlier period. A significant portion of the
revenue decline in the six months ended June 30, 1998 is due to the sale of the
Company's analytical laboratory operations in May 1997.
The Company had income from operations of $168,000 and $516,000 in the three
months and six months ended June 30, 1998, respectively, compared to losses from
operations of $8,100,000 and $7,683,000 in the three months and six months ended
June 30, 1997, respectively. The improved results are due to higher margins,
greater utilization of staff and cost reduction efforts that began in the middle
of 1997. The 1997 periods included charges of $2,500,000 for reductions in the
Company's work force and changes to its Board of Directors and senior
management.
Investment income increased $78,000, or 24%, to $400,000 in the three months
ended June 30, 1998, due to gains on the sale of certain investments. Interest
expense declined $62,000, or 16%, and $119,000, or 14%, in the three months and
six months ended June 30, 1998, due to the reduction of 7% Convertible
Subordinated Debentures outstanding and the repayment of a term loan.
MATERIAL CHANGES IN FINANCIAL CONDITION
Cash and cash equivalents decreased $9,764,000 in the first six months of 1998
to $1,003,000 from $10,767,000 at December 31, 1997. Marketable securities
increased $1,844,000 in the first six months of 1998 to $6,012,000 from
$4,168,000 at December 31, 1997.
Operating activities used cash of $2,760,000 for the first six months of 1998,
compared to providing cash of $2,402,000 in the comparable 1997 period. Net cash
investments in property and equipment and other assets were $1,542,000 in the
first six months of 1998, compared to $1,367,000 in the comparable 1997 period.
The Company used cash of $3,789,000 in financing activities in the first six
months of 1998, compared to $1,102,000 in the comparable 1997 period. The six
months ended June 30, 1998 included the repurchase of $3,393,000 principal
amount of the Company's 7% Convertible Subordinated Debentures in order to
satisfy the April 15, 1998 sinking fund requirement and a portion of the April
15, 1999 sinking
-7-
<PAGE> 10
fund requirement. Further debenture repurchases of $1,976,000 are required
before April 15, 1999.
On June 5, 1998 the Company entered into an $18,000,000 revolving credit
facility to provide cash borrowings and letters of credit. The facility is for a
two-year period with a one-year renewal option and is available for working
capital and other general corporate purposes including permitted acquisitions.
FORWARD LOOKING STATEMENTS
From time to time, the Company, its management, or other Company representatives
may make or publish statements that contain projections, beliefs, expectations,
predictions or intentions relating to anticipated financial performance,
business prospects, potential contract value, business strategy and plans,
technological developments and other matters. The Private Securities Litigation
Reform Acts of 1995 provides a safe harbor for these forward looking statements.
In order to comply with the terms of the safe harbor, the Company notes that a
number of factors could cause the Company's actual results, experience or
outcome to differ materially from projections, beliefs, expectations,
predictions or intentions expressed in forward looking statements. These risks
and uncertainties which may affect the operations, performance, development and
results of the Company's business, include, but are not limited to, the
following:
- - The highly competitive marketplace for the Company's services.
- - Changes in and levels of enforcement of federal, state and local
environmental legislation and regulations.
- - The Company's ability to obtain new contracts from existing as well as
new clients, and the uncertain timing of awards and contracts.
- - The Company's ability to execute new projects and those currently in
backlog within reasonable cost estimates, as well as other contract
performance risks.
- - Funding appropriation, funding delay, and issuance of work orders on
government projects.
- - The Company's ability to achieve any planned overhead or other cost
reductions while maintaining adequate work flow.
- - The Company's ability to obtain adequate financing for its current
operations and future expansion.
- - The Company's ability to execute its strategic plan through successful
marketing activities and continued cost containment.
- - The nature of the Company's work with hazardous materials, toxic
wastes, and other pollutants, and the potential for uninsured claims or
claims in excess of insurance limits.
The Company disclaims any intent or obligation to update forward looking
statements.
-8-
<PAGE> 11
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable.
Item 2. Changes in Securities
Not Applicable.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable.
Item 5. Other Information
Not Applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) The exhibits are numbered in accordance with
the Exhibit Table of Item 601 of Regulation
S-K.
Exhibit No. Description
10.2 Termination Agreement between
International Corporate Travel
Services and the Company dated May
28, 1998.
10.3 Consulting Services Agreement
between Katherine W. Swoyer and the
Company effective July 1, 1998.
10.4 Amendment to Employment Agreement
between William L. Robertson and
the Company dated May 19, 1998.
10.5 Credit Agreement between the
Company and Bank of America
National Trust and Savings
Association dated as of June 5,
1998.
11 Statements of Computation of Basic
and Diluted Earnings (Loss) Per
Share.
27 Financial Data Schedule.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the
three months ended June 30, 1998.
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<PAGE> 12
SIGNATURES
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.
ROY F. WESTON, INC.
(Registrant)
Date: August 11, 1998 By: s/William Robertson
-------------------------
William Robertson
Chairman and Chief Executive Officer
(Duly Authorized Officer)
Date: August 11, 1998 By: s/William G. Mecaughey
----------------------------
William G. Mecaughey
Vice President and
Chief Financial Officer
(Chief Accounting Officer)
<PAGE> 1
Exhibit 10.2
TERMINATION AGREEMENT
This Termination Agreement is made as of this 28th day of May, 1998, between
International Corporate Travel Services, Inc., a Delaware corporation
("InterCorp") and Roy F. Weston, Inc., a Pennsylvania corporation ("WESTON").
For good and sufficient consideration, and intending to be legally bound,
InterCorp and WESTON agree as follows:
The Travel Management Services Agreement ("Agreement") dated 15 March 1996 by
and between InterCorp and WESTON is hereby terminated for the convenience of the
parties effective 30 June 1998.
The parties agree that InterCorp will discontinue the performance of services
under the Agreement in an orderly manner as directed by WESTON, however all
services shall cease on the effective date of termination.
The parties agree that InterCorp shall be paid in accordance with the terms of
the Agreement for all services provided and accepted by WESTON through the date
of termination. The parties further agree that WESTON's annual fee for the final
twelve (12) month period of the Agreement is reduced by $275,000 from $550,000
to $275,000. WESTON's right to offset from the annual fee, all commissions, fees
and other payments received by InterCorp from travel service providers in
respect to WESTON related travel will not be affected by termination of the
Agreement. This includes all revenues resulting from WESTON travel received by
InterCorp after the date of termination of the Agreement, which revenues shall
be credited to WESTON on InterCorp's final invoice. As consideration for
termination of the Agreement, InterCorp will be paid $150,000, in three equal
payments of $50,000, the first of which is due on the date of termination; the
second payment is due on 30 June 1999 and the third and final payment is due 30
June 2000.
Subject only to receipt by InterCorp of a final payment by WESTON of the
$150,000 termination payment described above, InterCorp does release and forever
discharge WESTON from any and all actions, causes of action, liens, debts,
claims and demands of whatsoever nature which InterCorp now has or ever has had
against WESTON, which shall have arisen or may arise out of or be incidental to
the Agreement or services performed in connection with the Agreement.
In witness whereof, the parties hereto have executed this Termination Agreement
as of the date last executed.
INTERNATIONAL CORPORATE ROY F. WESTON, INC.
TRAVEL SERVICES, INC.
By: /s/Katherine Swoyer By: /s/William L. Robertson
----------------------- -----------------------
Katherine Swoyer W.L. Robertson
President Chief Executive Officer
Date: 5-28-98 Date: 5-28-98
---------------------- -----------------------
<PAGE> 1
Exhibit 10.3
CONSULTING SERVICES AGREEMENT
(HEREINAFTER REFERRED TO AS AGREEMENT)
BETWEEN
ROY F. WESTON, INC.
(HEREINAFTER REFERRED TO AS WESTON)
ONE WESTON WAY
WEST CHESTER, PA 19380
AND
KATHERINE W. SWOYER
(HEREINAFTER REFERRED TO AS CONSULTANT)
ARTICLE 1 - INTRODUCTION
WHEREAS, WESTON, a Pennsylvania Corporation, requires travel management
consulting services and expertise from CONSULTANT.
WHEREAS, CONSULTANT has represented to WESTON that she is uniquely
qualified, because of her experience as the owner of WESTON's travel management
provider, to perform such services.
NOW, THEREFORE, the parties agree that the terms and conditions set
forth below shall govern the services to be provided by CONSULTANT to WESTON.
Page 1
<PAGE> 2
ARTICLE 2 - SCOPE OF WORK
The Consultant under this Agreement shall provide WESTON with expert consulting
services in the area of travel management, including the successful transition
of travel management services from WESTON's current travel management provider
to WESTON Travel. Consultant shall also provide specialized expertise in all
areas related to travel management including: travel policy and program reviews;
travel agency services; on-going travel management; global consolidations;
technology assessments; contracting and negotiations; and development of
strategies and objectives. Further, WESTON and Consultant recognize that travel
costs are a significant expense to WESTON in the conduct of its business. Both
parties agree that travel costs are controllable and have a direct impact on the
profitability of WESTON. Therefore, CONSULTANT's services shall include
assistance to WESTON in controlling its travel costs, thereby improving the
profitability of WESTON.
CONSULTANT agrees to devote its best professional effort to the accomplishment
of its assignments and to perform with diligence and expedition, consistent with
the highest recognized professional standards and in compliance with all
applicable laws and regulations.
ARTICLE 3 - ORDER OF PRECEDENCE
In the event of an inconsistency or ambiguity between the documents comprising
this Agreement, the following order of precedence shall govern:
A. Attachment A.
B. Agreement.
ARTICLE 4 - CONFIDENTIALITY
(a) CONSULTANT shall receive and retain all Proprietary Information in
confidence and shall not disclose such information to any person
without the express written authorization of WESTON. CONSULTANT
shall use Proprietary Information solely for the purpose of
performing her obligations hereunder and for no other purpose. Upon
termination of this Agreement, CONSULTANT shall promptly return all
Proprietary Information to WESTON, and will, if requested by WESTON,
execute a certificate warranting that all Proprietary Information
has been returned to WESTON in accordance with this Agreement.
(b) CONSULTANT may not represent that CONSULTANT is associated with
WESTON for her own promotional purposes without prior written
permission of WESTON.
ARTICLE 5 - AUTHORIZED REPRESENTATIVES
The following individuals are the authorized representatives of the respective
parties to execute this Agreement:
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<PAGE> 3
CONSULTANT: Katherine W. Swoyer
WESTON: William L. Robertson
Any subsequent changes to the authorized representatives cited above must be
mutually agreed to via written modification to this Agreement.
ARTICLE 6 - WORK PRODUCT
(a) All information, including, but not limited to, all designs,
drawings, specifications, standards, processes, manuals, reports,
computer software and related information, first produced by
CONSULTANT for WESTON during the performance of the Services
hereunder, shall be the sole property of WESTON or its assignee. All
such information shall be considered Proprietary Information and
shall be retained and used solely in accordance with the provisions
of Article 4 hereof. To the extent any such information comprises
work susceptible to protection under the Copyright laws, CONSULTANT
agrees that such work shall be deemed "work made for hire"
hereunder. In the event that such work is determined not to be "work
made for hire" under the copyright laws, this Agreement shall
operate as an irrevocable assignment by CONSULTANT to WESTON of the
copyright in the work, including all right, title and interest
therein, in perpetuity.
(b) All inventions, improvements and discoveries, whether patentable or
not, first conceived, developed or reduced to practice by
CONSULTANT, either alone or with others, in the course of the
performance of CONSULTANT's Services hereunder, or as a consequence
of CONSULTANT's receipt of information hereunder, shall be the sole
property of WESTON. All such inventions, improvements and
discoveries shall be promptly disclosed to WESTON in writing. At
WESTON's request and expense, CONSULTANT agrees to (i) assist WESTON
in making application for patents on such inventions, improvement
and discoveries in the United States and any foreign countries (ii)
assign all such applications to WESTON or its designee without
further charges, (iii) assist WESTON in the prosecution of any
patent applications and the enforcement of any resulting patents and
(iv) execute any and all documents necessary for the accomplishment
of the foregoing.
ARTICLE 7 - CONFLICTS OF INTEREST
(a) CONSULTANT warrants that, to the best of her knowledge and belief,
there are no relevant facts or circumstances which could give rise
to a conflict of interest under this Agreement, or that CONSULTANT
has disclosed all such relevant information.
(b) The CONSULTANT agrees that if an actual or potential conflict of
interest is discovered after award, the CONSULTANT will make a full
disclosure in writing to WESTON. This disclosure shall include a
description of actions which the
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<PAGE> 4
CONSULTANT has taken or proposes to take, after consultation with
WESTON to avoid, mitigate or neutralize the actual or potential
conflict.
(c) If CONSULTANT is a former United States government employee,
CONSULTANT agrees to furnish WESTON all necessary information
regarding any potential conflict of interest.
ARTICLE 8 - TERM OF AGREEMENT
The effective date of this Agreement shall be the date of termination of the
Travel Management Services Agreement, dated 15 March 1996 between International
Corporate Travel Services, Inc., the CONSULTANT and WESTON, or 1 July 1998,
which ever shall occur later. The Agreement shall continue in full force and
effect for a period of three years thereafter unless earlier terminated as
provided herein.
ARTICLE 9 - COMPENSATION
(a) Compensation, shall be in accordance with the terms contained in
Attachment A.
ARTICLE 10 - TERMINATION
This Agreement may be terminated at any time for the convenience of the parties
upon the mutual consent of both WESTON and CONSULTANT. Either party may
terminate this Agreement, in writing, if the other party fails to fulfill its
obligations under this Agreement and such failure to perform remains uncured for
a period of ten (10) days following written notice from the non-breaching party
in which the performance deficiencies complained of are specified. Termination
of this Agreement will not affect the provisions of Articles 4 and 6 which shall
remain in effect for a period of five (5) years from the date of termination or
expiration of this Agreement.
ARTICLE 11 - RECORDS RETENTION
CONSULTANT shall retain all records related to this Agreement in legible form
for a period of three (3) years from date of final payment hereunder. CONSULTANT
authorizes WESTON to inspect and audit these records during business hours with
prior notice to CONSULTANT.
ARTICLE 12 - TAXES
CONSULTANT shall have sole responsibility for payment of all Federal, state,
local and other income taxes and for all employment and other taxes applicable
to the consideration paid to CONSULTANT hereunder. CONSULTANT further agrees to
indemnify and hold WESTON harmless from and against any and all claims related
to such taxes.
ARTICLE 13 - INDEPENDENT CONTRACTOR
Page 4
<PAGE> 5
In performance of all Services, CONSULTANT shall be deemed to be an "independent
contractor" and as such, shall not be entitled to any benefits applicable to the
employees of WESTON. The CONSULTANT declares that she is engaged in an
independent business. CONSULTANT shall in no way be deemed to be an agent or
representative of WESTON. CONSULTANT shall have no authority to bind or speak
for WESTON except as may be specifically given to CONSULTANT in writing from
time to time.
ARTICLE 14 - INSURANCE
CONSULTANT shall maintain insurance at her own expense for services performed
hereunder. Such insurance shall include, Private Health (Major Medical or
comparable), and Automobile Liability (Bodily Injury and Property
Damage/$250,000 Minimum each). Certificates of insurance shall be provided to
WESTON immediately upon request.
ARTICLE 15 - WARRANTY
CONSULTANT warrants and represents that she possesses the expertise and
capability to properly and professionally perform her services hereunder, that
she is properly and legally licensed (if applicable) to perform such services,
and that she shall at all times in the performance of such services comply with
all applicable laws, ordinances and regulations and shall perform all services
in a good, workmanlike, professional, efficient and non-negligent manner; and
she does not and during the period of performance of this Agreement will not
represent any competitor of WESTON.
ARTICLE 16 - INDEMNIFICATION
The CONSULTANT agrees to indemnify and hold harmless WESTON, its officers,
directors, agents and employees for any loss, including reasonable and actual
attorney's fees, costs or damages that WESTON may incur as a result of the
negligent acts or omissions of the CONSULTANT or the CONSULTANT's employees or
agents.
Neither party shall be liable to the other for incidental, indirect or
consequential damages, except where same arises out of the gross negligence or
willful misconduct of the other party.
ARTICLE 17 - ASSIGNMENT
This Agreement may not be assigned by CONSULTANT, either in whole or in part,
without the prior written consent of WESTON and any attempted assignment shall
be null and void and without force and effect.
ARTICLE 18 - DISPUTES
Any dispute arising under this Agreement, including disputes under termination,
not settled by agreement of the parties, shall be decided by litigation in a
court of competent jurisdiction. Pending any decision, appeal, suit, or claim
pursuant to this Article, CONSULTANT shall proceed diligently with the
performance of the work authorized under this Agreement.
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<PAGE> 6
ARTICLE 19 - SEVERABILITY
Any provision or part thereof of this Agreement held to be void or unenforceable
under any law or by any court shall be deemed stricken, and all remaining
provisions shall continue to be valid and binding upon the parties. The parties
may reform or replace such stricken provision or part thereof with a valid and
enforceable provision which expresses the intent of the stricken provision.
ARTICLE 20 - GOVERNING LAW
This Agreement shall be governed by and interpreted in accordance with the laws
of the Commonwealth of Pennsylvania.
ARTICLE 21 - ENTIRE AGREEMENT
This Agreement constitutes the sole and only agreement of the parties hereto and
supersedes any prior understandings or written or oral agreements between the
parties. This Agreement may be amended only by a writing signed by the duly
authorized representative of each party.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives.
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<PAGE> 7
(CONSULTANT): ROY F. WESTON, INC. (WESTON):
- ---------------------------------- -----------------------------------
BY: /s/ BY: /s/
---------------------------- ----------------------------
NAME: Katherine W. Swoyer NAME: William L. Robertson
---------------------------- ----------------------------
(Print/Type) (Print/Type)
SS #: ###-##-####
----------------------------
TITLE: President TITLE: Chairman and
---------------------------- ----------------------------
Chief Executive Officer
----------------------------
DATE: 5-28-98 DATE: 5-28-98
---------------------------- ----------------------------
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<PAGE> 8
ATTACHMENT A
COMPENSATION
(1) The Consultant shall receive, for services provided under this Agreement,
an annual retainer of $125,000 paid in twelve (12) equal monthly
installments.
(2) The Consultant is incentivised to assist WESTON reduce its travel
management cost, which for the twelve (12) month period ending April 1998
was $310,000. To the extent WESTON is successful in reducing this cost,
Consultant shall share in WESTON's savings. For each $30,000 increment of
annual savings, or part thereof, Consultant shall earn $10,000 up to an
annual limit, of $25,000. For example, if WESTON's total travel management
cost during the initial twelve (12) months of this Agreement is $250,000,
WESTON will have reduced its cost $60,000 below $310,000. This would
result in Consultant earning $20,000 ($310,000 - $250,000 = $60,000 /
$30,000 = 2 x $10,000 = $20,000). The amount of $310,000 is based upon 8%
commissions on domestic air fares, should the percentage of commission
change the $310,000 will be adjusted accordingly for calculation of the
Consultant's earnings. WESTON will make quarterly provisional payments
under this Article (2) as mutually agreed between the parties. For the
purpose of calculating the Consultant's incentive fee, travel management
costs shall include the cost to operate the WESTON travel department less
all commissions, rebates, overrides, or any other travel management
revenue generated by WESTON travel.
<PAGE> 1
Exhibit 10.4
AMENDMENT TO EMPLOYMENT AGREEMENT
BETWEEN
WILLIAM L. ROBERTSON
AND
ROY F. WESTON, INC.
This Amendment to Employment Agreement is made this 19th day of May, 1998,
between William L. Robertson ("Executive") and Roy F. Weston, Inc. ("Company").
WHEREAS, Executive and Company entered into an Employment Agreement (the
"Agreement") as of July 14, 1997; and
WHEREAS, Executive and Company wish to amend the agreement as set forth in this
Amendment;
NOW, THEREFORE, for good and sufficient consideration, receipt of which is
acknowledged, and intending to be legally bound by this Amendment, Executive and
Company agree as follows:
1. Section 4.1(b), captioned "Change in Control", and Section 4.1 (c) (ii) are
deleted from the Agreement.
2. Executive has been appointed Chairman of the Company. Executive agrees that
Section 4.1(c) (i) of the Agreement shall not apply to any change in his
position as Chairman or to the change in his title from "President and Chief
Executive Officer" to "Chairman and Chief Executive Officer". The words
"President and" shall be deleted from the last line of Section 4.1(c) (i).
WHEREFORE, the parties have executed this Amendment as of May 19, 1998.
s/William L. Robertson
- ------------------------
WILLIAM L. ROBERTSON
ROY F. WESTON, INC. Attest:
By:/s/Katherine W. Swoyer /s/Arnold P. Borish
--------------------------- ----------------------
Katherine W. Swoyer Secretary
Vice-Chairman
<PAGE> 1
Exhibit 10.5
CREDIT AGREEMENT
dated as of June 5, 1998
between
ROY F. WESTON, INC.
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
<PAGE> 2
CREDIT AGREEMENT
This CREDIT AGREEMENT dated as of June 5, 1998 (this "Agreement") is
entered into between ROY F. WESTON, INC., a Pennsylvania corporation (the
"Company"), and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (the
"Bank").
In consideration of the premises and the mutual agreements herein
contained, the parties hereto agree as follows:
SECTION 1 DEFINITIONS AND INTERPRETATION.
1.1 Certain Definitions. When used herein, the following terms shall
have the following meanings:
Account Debtor means any Person obligated under any Account Receivable.
Account Receivable means, with respect to any Person, any right of such
Person to payment for services performed.
Affiliate of any Person means any other Person which, directly or
indirectly, controls or is controlled by or is under common control with such
Person. A Person shall be deemed to control another Person if the controlling
Person owns 5% more of any class of voting securities (or other ownership
interests) of the controlled Person or possesses, directly or indirectly, the
power to direct or cause the direction of the management or policies of the
controlled Person, whether through ownership of stock, by contract or otherwise.
Agreement - see the Preamble.
Attorney Costs means and includes all reasonable fees and disbursements
of any law firm or other external counsel and, without duplication, the
reasonable allocated cost of internal legal services and all reasonable
disbursements of internal counsel.
Bank - see the Preamble.
Base Rate means at any time the greater of (a) the Federal Funds Rate
plus 0.50% or (b) the rate per annum then most
<PAGE> 3
recently announced by the Bank as its reference rate at San Francisco,
California. (The "reference rate" is a rate set by the Bank based upon various
factors, including the Bank's costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above, or below such announced rate.)
Bond means any surety agreement, undertaking or instrument of guaranty
issued by a bonding or surety company in order to assure completion by the
Company or any Subsidiary of a contract.
Bonded Receivable means an Account Receivable arising out of a contract
for which a Bond is issued on behalf of the Company or any Subsidiary.
Bonded Working Assets means all inventory, materials and equipment
which are purchased for, and installed in or located at, projects covered by
Bonds, whether completed or in process.
Borrowing Base means an amount equal to 75% of the amount of all
Eligible Receivables.
Business Day means any day on which the Bank is open for commercial
banking business in Chicago and, in the case of a Business Day which relates to
a Eurodollar Loan, on which dealings are carried on in the interbank eurodollar
market.
Capital Expenditures means all expenditures which, in accordance with
GAAP, would be required to be capitalized and shown on the consolidated balance
sheet of the Company, but excluding expenditures made in connection with the
replacement, substitution or restoration of assets to the extent financed (i)
from insurance proceeds (or other similar recoveries) paid on account of the
loss of or damage to the assets being replaced or restored or (ii) with awards
of compensation arising from the taking by eminent domain or condemnation of the
assets being replaced.
Capital Lease means, with respect to any Person, any lease of (or other
agreement conveying the right to use) any real or personal property by such
Person which, in conformity with GAAP, is accounted for as a capital lease on
the balance sheet of such Person.
<PAGE> 4
Cardinal means Cardinal Indemnity Company of North America, a
wholly-owned subsidiary of the Company which is organized and regulated as a
company engaged in the business of insurance.
Cash Equivalent Investment means, at any time:
(a) any evidence of Debt, maturing not more than one year
after such time, issued or guaranteed by the United States Government;
(b) commercial paper, maturing not more than one year from
the date of issue, which is issued by
(i) a corporation (except the Company or an
Affiliate thereof) organized under the laws of any State of
the United States of America or of the District of Columbia
and rated at least A-1 by Standard & Poor's Ratings Group or
P-1 by Moody's Investors Service, Inc., at the time of
investment, or
(ii) the Bank or any of its Affiliates;
(c) any certificate of deposit or bankers' acceptance or
eurodollar time deposit, maturing not more than one year after the date
of issue, which is issued by either
(i) a financial institution that is a member of the
Federal Reserve System and has a combined capital and surplus
and undivided profits of not less than $100,000,000, or
(ii) the Bank;
(d) any repurchase agreement with a term of one year or
less which
(i) is entered into with
(A) the Bank, or
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<PAGE> 5
(B) any other commercial banking institution
of the stature referred to in clause (c)(i),
(ii) is secured by a fully perfected Lien in any
obligation of the type described in any of clauses (a) through
(c), and
(iii) has a market value at the time such
repurchase agreement is entered into of not less than 100% of
the repurchase obligation of the Bank (or other commercial
banking institution) thereunder;
(e) investments in money market funds that invest primarily
in Cash Equivalent Investments of the types described in clauses (a)
through (d); or
(f) investments in short-term asset management accounts
offered by the Bank for the purpose of investing in loans to any
corporation (other than the Company or an Affiliate thereof) organized
under the laws of any state of the United States or of the District of
Columbia and rated at least A-2 by Standard & Poor's Ratings Group or
P-2 by Moody's Investors Service, Inc.
CERCLA means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980.
CERCLIS means the Comprehensive Environmental Response Compensation
Liability Information System List.
Collateral means any property on which the Bank is granted a lien
pursuant to the Collateral Documents.
Collateral Documents means the Security Agreement, each Pledge
Agreement and any other document pursuant to which the Company or any Subsidiary
grants to the Bank a Lien on any of its property.
Commitment means the commitment of the Bank to make Loans and issue
Letters of Credit hereunder. The amount of the Bank's Commitment is $18,000,000
(as reduced from time to time pursuant to Section 6.1).
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<PAGE> 6
Company - see the Preamble.
Company Pledge Agreement - see Section 11.1.7.
Consolidated Net Income means, with respect to the Company and its
Subsidiaries for any period, the net income (or loss) of the Company and its
Subsidiaries for such period; provided that there shall be excluded therefrom
the income of any Subsidiary to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary of such income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to such Subsidiary.
Debt of any Person means, without duplication, (a) all indebtedness of
such Person for borrowed money, whether or not evidenced by bonds, debentures,
notes or similar instruments, (b) all obligations of such Person as lessee under
Capital Leases which have been recorded as liabilities on a balance sheet of
such Person, (c) all obligations of such Person to pay the deferred purchase
price of property or services (excluding (i) current accounts payable in the
ordinary course of business and (ii) salaries, bonuses and other accruals
payable in the ordinary course of business), (d) all indebtedness secured by a
Lien on the property of such Person, whether or not such indebtedness shall have
been assumed by such Person (it being understood that if such Person has not
assumed or otherwise become personally liable for any such indebtedness, the
amount of the Debt of such Person in connection therewith shall be limited to
the lesser of the face amount of such indebtedness or the fair market value of
all property of such Person securing such indebtedness), (e) all obligations,
contingent or otherwise, with respect to the face amount of all letters of
credit (whether or not drawn) and banker's acceptances issued for the account of
such Person, (f) liabilities of such Person in respect of Hedging Agreements and
(g) all Suretyship Liabilities of such Person.
Dollar and the sign "$" mean lawful money of the United States of
America.
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<PAGE> 7
EBITDA means, with respect to any period, the Company's Consolidated
Net Income for such period plus (to the extent deducted in computing
Consolidated Net Income) Interest Expense, taxes, depreciation and amortization.
Effective Date - see Section 11.1.
Eligible Receivable means an Account Receivable of the Company or a
Guarantor who meets each of the following requirements: (a) it arises from the
performance of services which have been performed; (b) it is a valid, legally
enforceable obligation of the Account Debtor thereunder, and is not subject to
any offset, counterclaim or other defense on the part of such Account Debtor
denying liability thereunder in whole or in part, provided that no Account
Receivable shall be ineligible under this clause (b) to the extent that the
aggregate amount of all otherwise Eligible Receivables from the applicable
Account Debtor exceeds the aggregate amount of all offsets, counterclaims and
defenses of such Account Debtor; (c) it is owned by the Company or a Guarantor,
is subject to a first-priority perfected security interest in favor of the Bank
and is not subject to any other Lien whatsoever other than Liens permitted by
clauses (a) and (k) of Section 10.8; (d) it is evidenced by an invoice (dated
not earlier than the date of performance and having payment terms of not more
than 30 days from the date of invoice) rendered to such Account Debtor, is not
more than 60 days past due, is not unpaid more than 90 days after the date of
invoice and is not evidenced by any instrument or chattel paper; (e) the
customary billing address of the Account Debtor with respect thereto is located
in the United States of America, Yukon Territory, Canada, or the Canadian
Provinces of British Columbia, Alberta, Manitoba, Saskatchewan or Ontario,
provided that no Account Receivable shall be ineligible under this clause (e) if
such Account Receivable is supported by an irrevocable and transferable letter
of credit in form and substance, and issued by a Person, acceptable to the Bank
for the full amount thereof; (f) it is not a Bonded Receivable; (g) it is
payable in the United States and in Dollars; (h) it does not arise out of a
contract which, by its terms, prohibits, restricts or makes void or
unenforceable the grant by the owner thereof to the Bank of a security interest
in such Account Receivable; (i) no event has occurred or condition exists which
is likely to result in the nonpayment of such
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<PAGE> 8
Account Receivable (it being understood that the Bank shall give the Company
five Business Days' notice of its determination that any Account Receivable is
ineligible under this clause (i)); and (j) it is not owing by an Account Debtor
who (I) shall have failed to pay 25% or more of the aggregate amount then owed
by such Account Debtor under all Account Receivables owed to the Company and the
Guarantors within 90 days after the respective date of invoice therefor, (II) is
the Company or an Affiliate thereof or (III) is subject to any bankruptcy,
insolvency or similar proceeding. An Account Receivable which is at any time an
Eligible Receivable, but which subsequently fails to meet any of the foregoing
requirements, shall forthwith cease to be an Eligible Receivable.
Environmental Laws means all applicable federal, state or local
statutes, laws, ordinances, codes, rules, regulations and guidelines (including
consent decrees and administrative orders) relating to public health and safety
and protection of the environment.
ERISA means the Employee Retirement Income Security Act of 1974.
Eurocurrency Reserve Percentage means for any day for any Interest
Period the maximum reserve percentage (expressed as a decimal) in effect on such
day (whether or not applicable to the Bank) under regulations issued from time
to time by the Federal Reserve Board for determining the reserve requirements
(including any emergency, supplemental or other marginal reserve requirement)
with respect to Eurocurrency funding (currently referred to as "Eurocurrency
liabilities").
Eurodollar Loan means any Loan which bears interest at a rate
determined by reference to the Eurodollar Rate (Adjusted).
Eurodollar Office means the office or offices of the Bank which shall
be making or maintaining Eurodollar Loans hereunder or the other office or
offices through which the Bank determines its Eurodollar Rate. A Eurodollar
Office of the Bank may be, at the option of the Bank, either a domestic or
foreign office.
-7-
<PAGE> 9
Eurodollar Rate means, with respect to any Eurodollar Loan for any
Interest Period, the rate per annum equal to the rate at which Dollar deposits
in immediately available funds are offered by the Bank two Business Days prior
to the beginning of such Interest Period by major banks in the interbank
eurodollar market as at or about 10:00 A.M., Chicago time, for delivery on the
first day of such Interest Period, for the number of days comprised therein and
in an amount equal or comparable to the amount of the Eurodollar Loan of the
Bank for such Interest Period.
Eurodollar Rate (Adjusted) means, with respect to any Eurodollar Loan
for any Interest Period, a rate per annum (rounded upwards, if necessary, to the
nearest 1/16 of 1%) determined pursuant to the following formula:
Eurodollar Rate = Eurodollar Rate
---------------------------
(Adjusted) 1 - Eurocurrency Reserve
Percentage
Event of Default means any of the events described in Section 12.1.
Federal Funds Rate means, for any day, the rate set forth in the weekly
statistical release designated as H.15(519), or any successor publication,
published by the Federal Reserve Bank of New York (including any such successor,
"H.15(519)") on the preceding Business Day opposite the caption "Federal Funds
(Effective)"; or, if for any relevant day such rate is not so published on any
such preceding Business Day, the rate for such day will be the arithmetic mean
as determined by the Bank of the rates for the last transaction in overnight
Federal funds arranged prior to 9:00 a.m. (New York City time) on that day by
each of three leading brokers of Federal funds transactions in New York City
selected by the Bank.
Financial Letter of Credit means any Letter of Credit determined by the
Bank to be a "financial guaranty-type Standby Letter of Credit" as defined in
footnote 13 to Appendix A to the Risk Based Capital Guidelines issued by the
Comptroller of the Currency (or in any successor regulation, guideline or ruling
by any applicable banking regulatory authority).
-8-
<PAGE> 10
First Union Agreement means the Credit Agreement among the Company,
various Subsidiaries and First Union National Bank (successor to Corestates Bank
N.A.).
Fiscal Quarter means any quarter of a Fiscal Year.
Fiscal Year means any period of 12 consecutive calendar months ending
on December 31.
Floating Rate Loan means any Loan which bears interest at or by
reference to the Base Rate.
Foreign Subsidiary means each Subsidiary of the Company which is
organized under the laws of any jurisdiction other than, and which is conducting
the majority of its business outside of, the United States or any state thereof.
GAAP means generally accepted accounting principles set forth from time
to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of any
determination, and as modified at the Company's election to tax basis reporting.
Guaranty - see Section 11.1.6.
Guarantor means (a) as of the Effective Date, Roy F. Weston (Delaware),
Inc., Roy F. Weston (IPR), Inc., Moorstein, Inc., Weston International Holdings,
Inc. and Roy F. Weston of New York, Inc.; and (b) thereafter, the entities named
in clause (a) and any other Person which executes and delivers a counterpart of
the Guaranty.
Hazardous Material means
(a) any "hazardous substance" as defined by CERCLA;
(b) any "hazardous waste" as defined by RCRA;
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<PAGE> 11
(c) any crude oil, petroleum product or fraction thereof
(excluding gasoline and oil in motor vehicles, small amounts of
cleaners and similar items used in the ordinary course of business); or
(d) any pollutant or contaminant or hazardous, dangerous or
toxic chemical, material or substance within the meaning of any
Environmental Law.
Hedging Agreement means any interest rate, currency or commodity swap
agreement, interest rate cap agreement, interest rate collar agreement, or other
agreement or arrangement designed to protect a Person against fluctuations in
interest rates, currency exchange rates or commodity prices.
Intercreditor Agreement means an intercreditor agreement substantially
in the form of Exhibit H or in such other form as may be satisfactory to the
Bank.
Interest Expense means for any period the consolidated interest expense
of the Company and its Subsidiaries for such period (including all imputed
interest on Capital Leases).
Interest Period means, as to any Eurodollar Loan, the period commencing
on the date such Loan is made, or continued as or converted into a Eurodollar
Loan, and ending on the date one, two, three or six months thereafter as
selected by the Company in the notice pursuant to which such Eurodollar Loan was
made, continued or converted; provided that
(i) if any Interest Period would otherwise end on a day which
is not a Business Day, such Interest Period shall be
extended to the following Business Day (unless such
extension would carry such Interest Period into another
calendar month, in which case such Interest Period shall
end on the preceding Business Day);
(ii) any Interest Period which begins on a day for which there
is no numerically corresponding day in the calendar month
at the end of such Interest Period
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<PAGE> 12
shall end on the last Business Day of the calendar month
at the end of such Interest Period; and
(iii) no Interest Period shall end after the scheduled
Termination Date.
Investment means, with respect to any Person:
(a) any loan or advance made by such Person to any other
Person; and
(b) any ownership or similar interest held by such Person in
any other Person.
The amount of any Investment shall be the original principal or capital
amount thereof less all returns of principal or equity thereon (and without
adjustment by reason of the financial condition of such other Person) and shall,
if made by the transfer or exchange of property other than cash, be deemed to
have been made in an original principal or capital amount equal to the fair
market value of such property.
Letter of Credit - see Section 2.1.1.
Letter of Credit Application means a letter of credit application in
the form then used by the Bank for the type of letter of credit requested.
Lien means, when used with respect to any Person, any interest in any
real or personal property, asset or other right owned or being purchased or
acquired by such Person which secures payment or performance of any obligation,
and shall include any mortgage, lien, encumbrance, charge or other security
interest of any kind, whether arising by contract, as a matter of law, by
judicial process or otherwise.
Loan Documents means this Agreement, the Note, the Letter of Credit
Applications, the Guaranty and the Collateral Documents.
Loan Party means the Company and each Guarantor.
Loans - see Section 2.1.1.
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<PAGE> 13
Margin Stock means any "margin stock" as defined in Regulation U of the
Board of Governors of the Federal Reserve System.
Material Adverse Effect means a material adverse effect on (a) the
financial condition, operations, business or assets of the Company and its
Subsidiaries taken as a whole or (b) the ability of the Company to timely and
fully perform any of its payment or other material obligations under this
Agreement or any other Loan Document to which it is a party.
Non-Financial Letter of Credit means any Letter of Credit other than a
Financial Letter of Credit.
Note - see Section 3.1.
PBGC means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
Pension Plan means a "pension plan", as such term is defined in section
3(2) of ERISA, which is subject to Title IV of ERISA (other than a
"multi-employer plan" as defined in section 4001(a)(3) of ERISA), and to which
the Company or any corporation, trade or business that is, along with the
Company, a member of a controlled group of corporations or a controlled group of
trades or businesses, as described in section 414 of the Internal Revenue Code
of 1986 or section 4001 of ERISA, may have any liability under Title IV of
ERISA, including any liability by reason of having been a substantial employer
within the meaning of section 4063 of ERISA at any time during the preceding
five years or by reason of being deemed to be a contributing sponsor under
section 4069 of ERISA.
Permitted Acquisition means any purchase or acquisition by the Company
or any Subsidiary of all or substantially all of the assets of any other Person
(or of a particular business unit of any other Person), or of any equity
interest in any other Person, provided that no such transaction shall constitute
a Permitted Acquisition if such other Person (or its board of directors) has (i)
announced that it will oppose such purchase or other acquisition or (ii)
commenced any litigation which alleges that
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<PAGE> 14
such purchase or other acquisition violates, or will violate, applicable law.
Person means any natural person, corporation, partnership, trust,
association, governmental authority or unit, or any other entity, whether acting
in an individual, fiduciary or other capacity.
Pledge Agreement means each of the Company Pledge Agreement and any
Subsidiary Pledge Agreement.
RCRA means the Resource Conservation and Recovery Act, 42. U.S.C.
Section 6901, et seq.
Release means a "release" as such term is defined in CERCLA.
Security Agreement - see Section 11.1.5.
Stated Amount means, with respect to any Letter of Credit at any date
of determination, the maximum aggregate amount available for drawing thereunder
at any time during the then ensuing term of such Letter of Credit under any and
all circumstances, plus the aggregate amount of all unreimbursed payments and
disbursements under such Letter of Credit.
Subordinated Debentures means the 7% Convertible Subordinated
Debentures due April 15, 2002 issued pursuant to the Subordinated Indenture.
Subordinated Indenture means the Indenture dated as of April 15, 1987
between the Company and Mellon Bank, N.A., as Trustee.
Subsidiary means, with respect to any Person, (i) a corporation of
which such Person and/or its other Subsidiaries own, directly or indirectly,
such number of outstanding shares as have more than 50% of the ordinary voting
power for the election of directors and (ii) a partnership, limited liability
company or other entity in which such Person and/or its other Subsidiaries own,
directly or indirectly, more than 50% of the equity interests. Unless the
context otherwise requires, each reference
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to a Subsidiary herein shall be a reference to a Subsidiary of the Company.
Subsidiary Pledge Agreement means each pledge agreement substantially
in the form of Exhibit G (or such other form as is acceptable to the Bank)
issued by any Subsidiary, whether pursuant to Section 11.1.7 or Section 10.17.
Suretyship Liability means any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to or otherwise to invest in a
debtor, or otherwise to assure a creditor against loss) any indebtedness,
obligation or other liability of any other Person (other than by endorsements of
instruments in the course of collection), or guarantees the payment of dividends
or other distributions upon the shares of any other Person. The amount of any
Person's obligation under any Suretyship Liability shall (subject to any
limitation set forth therein) be deemed to be the principal amount of the debt,
obligation or other liability guaranteed thereby.
Tangible Net Worth means the consolidated net worth of the Company and
its Subsidiaries after subtracting therefrom all goodwill.
Termination Date means June 5, 2000 (or such later date to which the
Termination Date may be extended pursuant to a written agreement signed by the
Company and the Bank) or such other date on which the Commitment terminates
pursuant to Section 6.1 or Section 12.
Type of Loan - see Section 2.2.
Unmatured Event of Default means any event which if it continues
uncured will, with lapse of time or notice or both, constitute an Event of
Default.
Welfare Plan means an "employee welfare benefit plan" as such term is
defined in section 3(1) ERISA.
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Weston Family means Roy F. Weston and his lineal descendants, the
spouses and estates of such individuals, any trust established primarily for the
benefit of any of the foregoing, and any corporation, partnership or limited
liability company of which a majority of the equity interests and voting rights
are owned and controlled by any of the foregoing.
Wholly-Owned Subsidiary means, at any time, a Subsidiary, all the
shares, partnership interest or other equity interests of which (except
directors' qualifying shares) are at such time owned, directly or indirectly, by
the Company and/or its other Subsidiaries.
1.2 Other Interpretive Provisions
(a) The meanings of defined terms are equally applicable to
the singular and plural forms of the defined terms.
(b) The term "including" is not limiting and means "including
without limitation."
(c) Unless otherwise expressly provided herein, (i) references
to agreements (including this Agreement) and other contractual instruments shall
be deemed to include all subsequent amendments and other modifications thereto,
but only to the extent such amendments and other modifications are not
prohibited by the terms of any Loan Document, and (ii) references to any statute
or regulation are to be construed as including all statutory and regulatory
provisions consolidating, amending, replacing, supplementing or interpreting
such statute or regulation.
(d) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
SECTION 2 COMMITMENTS OF THE BANK; TYPES OF LOANS;
BORROWING, CONVERSION AND LETTER OF CREDIT PROCEDURES.
2.1 Commitment. On and subject to the terms and conditions of this
Agreement, the Bank agrees as follows:
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2.1.1 Commitment. The Bank agrees (a) to make loans to the Company
on a revolving basis (each such loan, a "Loan") from time to time before the
Termination Date in such amounts as the Company may request from time to time
and (b) to issue standby letters of credit, in each case containing such terms
and conditions as are permitted by this Agreement and are reasonably
satisfactory to the Bank (each a "Letter of Credit"), at the request of and for
the account of the Company from time to time before the Termination Date;
provided (i) that the sum of the aggregate principal amount of all outstanding
Loans plus the aggregate Stated Amount of all Letters of Credit shall not at any
time exceed the lesser of (x) the amount of the Commitment and (y) the Borrowing
Base; and (ii) the aggregate Stated Amount of all Letters of Credit shall not at
any time exceed $7,500,000.
2.2 Various Types of Loans. Each Loan shall be either a Floating
Rate Loan or a Eurodollar Loan, as the Company shall specify in the related
notice of borrowing or conversion pursuant to Section 2.3 or 2.4 (each being
herein called a "type" of Loan). Loans of different types may be outstanding at
the same time, it being understood, however, that not more than five different
Interest Periods shall be outstanding at any one time for all Eurodollar Loans.
2.3 Borrowing Procedures. The Company shall give notice to the
Bank of each proposed Loan by 11:00 A.M., Chicago time, on a day which, in the
case of a Floating Rate Loan, is the proposed date of such Loan and, in the case
of a Eurodollar Loan, is at least three Business Days prior to the proposed date
of such Loan. Each such notice shall be effective upon receipt by the Bank,
shall be in writing (or by telephone to be promptly confirmed in writing by the
Company), and shall specify the date, amount and type of Loan and, in the case
of a Eurodollar Loan, the initial Interest Period therefor. Subject to the
satisfaction of the conditions precedent set forth in Section 11 with respect to
such Loan, the Bank shall advance the requested amount to the Company in
immediately available funds on the requested borrowing date. Each Loan shall be
made on a Business Day and shall be in a principal amount of $100,000 or a
higher integral multiple thereof.
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2.4 Conversion and Continuation Procedures. Subject to the
provisions of Section 2.2, the Company may convert all or any part of any
outstanding Loan into a Loan of the other type, or continue any Eurodollar Loan
for a new Interest Period, by giving notice to the Bank of such conversion or
continuation by 11:00 A.M., Chicago time, on a day which, in the case of a
conversion into a Floating Rate Loan, is the proposed date of such conversion
and, in the case of a conversion into or continuation of a Eurodollar Loan, is
at least three Business Days prior to such date. Each such notice shall be
effective upon receipt by the Bank and shall specify the date and amount of such
conversion or continuation, the Loan to be so converted or continued and, in the
case of a conversion into or continuation of a Eurodollar Loan, the initial or
new (as the case may be) Interest Period therefor. Subject to Sections 2.8 and
2.9, such Loan shall be so converted or continued on the requested date of
conversion or continuation. Each conversion and continuation shall be on a
Business Day and shall be in a principal amount of $100,000 or a higher integral
multiple thereof. Any conversion of a Eurodollar Loan on a day other than the
last day of the current Interest Period therefor shall be subject to Section
8.4. If the Company fails to give timely notice of the continuation of any
Eurodollar Loan, such Eurodollar Loan shall automatically convert to a Floating
Rate Loan on the last day of the current Interest Period therefor.
2.5 Letter of Credit Procedures. The Company shall give notice to
the Bank of the proposed issuance of each Letter of Credit on a Business Day
which is at least two Business Days (or such lesser period as the Bank may
agree) prior to the proposed date of issuance of such Letter of Credit. Each
such notice shall be accompanied by a Letter of Credit Application, duly
executed by the Company and in all respects reasonably satisfactory to the Bank,
together with such other documentation as the Bank may reasonably request in
support thereof, it being understood that each Letter of Credit Application
shall specify, among other things, the date on which the proposed Letter of
Credit is to be issued, the expiration date of such Letter of Credit (it being
understood that if such expiration date is later than the Termination Date (or,
in the case of a commercial Letter of Credit, later than 25 days prior to such
date), the Company shall be obligated to pledge cash collateral to the Bank
therefor
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on or prior to the Termination Date in an amount, and pursuant to documentation,
reasonably satisfactory to the Bank) and whether such Letter of Credit is to be
transferable in whole or in part. Subject to the satisfaction of the conditions
precedent set forth in Section 11 with respect to the issuance of such Letter of
Credit, the Bank shall issue such Letter of Credit on the requested issuance
date.
2.6 Reimbursement Obligations. The Company hereby unconditionally
and irrevocably agrees to reimburse the Bank for each payment or disbursement
made by the Bank under any Letter of Credit honoring any demand for payment made
by the beneficiary thereunder, in each case on the date that such payment or
disbursement is made. Any amount not reimbursed on the date of such payment or
distribution shall bear interest from and including the date of such payment or
disbursement to but not including the date that the Bank is reimbursed by the
Company therefor, payable on demand, at a rate per annum equal to the sum of the
Base Rate from time to time in effect plus, beginning on the third Business Day
after demand by the Bank, 2%. The Bank shall notify the Company whenever any
demand for payment is made under any Letter of Credit by the beneficiary
thereunder; provided that the failure of the Bank to so notify the Company shall
not affect the rights of the Bank in any manner whatsoever.
2.7 Limitation on the Bank's Obligations. In determining whether
to pay under any Letter of Credit, the Bank shall have no obligation to the
Company other than to confirm that any documents required to be delivered under
such Letter of Credit appear to have been delivered and appear to comply on
their face with the requirements of such Letter of Credit. Any action taken or
omitted to be taken by the Bank under or in connection with any Letter of
Credit, if taken or omitted in the absence of gross negligence and willful
misconduct, shall not impose upon the Bank any liability to the Company and
shall not reduce or impair the Company's reimbursement obligations set forth in
Section 2.6.
2.8 Warranty. Each notice of borrowing and/or of conversion
pursuant to Section 2.3 or 2.4, and the delivery of each Letter of Credit
Application pursuant to Section 2.5, shall automatically constitute a warranty
by the Company to the Bank to the effect that on the date of such requested
borrowing or
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conversion or the issuance of the requested Letter of Credit, as the case may
be, (a) the warranties of the Company contained in Section 9 of this Agreement
shall be true and correct as of such requested date as though made on the date
thereof and (b) no Event of Default or Unmatured Event of Default shall exist or
will result therefrom.
2.9 Conditions. Notwithstanding any other provision of this
Agreement, the Bank shall not be obligated to make any Loan, to convert into or
permit the continuation of any Eurodollar Loan, or to issue any Letter of Credit
if, in any such case, an Event of Default or Unmatured Event of Default exists
or would result therefrom; provided that the conversion into or continuation of
Eurodollar Loans shall be permitted during the existence of an Unmatured Event
of Default unless the Bank notifies the Company that such conversions and
continuations will not be permitted. If the Bank determines, pursuant to this
Section 2.9, not to permit the continuation of any Eurodollar Loan, such Loan
shall, unless then repaid in full, automatically become a Floating Rate Loan at
the end of such Loan's then-current Interest Period.
SECTION 3 NOTE EVIDENCING LOANS.
3.1 Note. The Loans of the Bank shall be evidenced by a promissory
note (the "Note") substantially in the form set forth in Exhibit A, with
appropriate insertions, dated the Effective Date (or such earlier date as shall
be satisfactory to the Bank), payable to the order of the Bank in full on the
Termination Date.
3.2 Recordkeeping. The Bank shall record in its records, or at its
option on the schedule attached to the Note, the date and amount of each Loan
made by the Bank, each repayment or conversion thereof and, in the case of each
Eurodollar Loan, the dates on which each Interest Period for such Loan shall
begin and end. The aggregate unpaid principal amount so recorded shall (in the
absence of demonstrable error) be conclusive evidence of the principal amount
owing and unpaid on the Note. The failure to so record any such amount or any
error in so recording any such amount shall not, however, limit or otherwise
affect the obligations of the Company hereunder or under the Note to repay the
principal amount of the Loans together with all interest accruing thereon.
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SECTION 4 INTEREST.
4.1 Interest Rates. The Company hereby promises to pay interest on
the unpaid principal amount of each Loan for the period commencing on the date
of such Loan until such Loan is paid in full, as follows:
(a) at all times while such Loan is a Floating Rate
Loan, at a per annum equal to the Base Rate plus 1.0%;
(b) at all times while such Loan is a Eurodollar Loan,
at a rate per annum equal to the Eurodollar Rate (Adjusted) applicable
to each Interest Period for such Loan plus 3.0%; and
(c) notwithstanding the provisions of the preceding
clauses (a) and (b), in the event that any principal of any Loan is not
paid when due (whether by acceleration or otherwise), after the due
date of such principal until such principal is paid, at a rate per
annum equal to the Base Rate from time to time in effect (but not less
than the applicable interest rate in effect for such Loan as at such
due date) plus 2%.
4.2 Interest Payment Dates. Accrued interest on each Floating Rate
Loan shall be payable on the last day of each calendar quarter and at maturity,
commencing with the first of such dates to occur after the date hereof. Accrued
interest on each Eurodollar Loan shall be payable on the last day of each
Interest Period relating to such Loan (and, in the case of a Eurodollar Loan
with a six-month Interest Period, on the three-month anniversary of the first
day of such Interest Period) and at maturity. After maturity, accrued interest
on all Loans shall be payable on demand.
4.3 Setting and Notice of Eurodollar Rates. The applicable
Eurodollar Rate for each Interest Period shall be determined by the Bank, and
notice thereof shall be given by the Bank promptly to the Company. Each
determination of the applicable Eurodollar Rate by the Bank shall be conclusive
and binding upon the Company, in the absence of demonstrable error. The Bank
shall, upon written request of the Company, deliver to the Company a
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statement showing the computations used by the Bank in determining any
applicable Eurodollar Rate hereunder.
4.4 Computation of Interest. Interest shall be computed for the
actual number of days elapsed on the basis of a 360-day year. The applicable
interest rate under clauses (a) and (c) of Section 4.1 shall (to the extent
applicable in the case of clause (c)) change simultaneously with each change in
the Base Rate.
SECTION 5 FEES.
5.1 Non-Use Fee. The Company agrees to pay to the Bank a non-use
fee for the period from and including the date of the execution and delivery of
this Agreement to the Termination Date equal to 0.375% per annum on the daily
average of the unused amount of the Commitment. Such non-use fee shall be
payable in arrears on the last day of each calendar quarter and on the
Termination Date for any period then ending for which such non-use fee shall not
have been theretofore paid. The non-use fee shall be computed for the actual
number of days elapsed on the basis of a 360-day year. For purposes of computing
the non-use fee, the Commitment shall be deemed to be used in an amount equal to
the sum of the principal amount of all outstanding Loans plus the Stated Amount
of all Letters of Credit.
5.2 Letter of Credit Fees. (a) The Company agrees to pay the Bank
a letter of credit fee for each Letter of Credit in an amount equal to (i) in
the case of non-financial Letters of Credit, 1.5% per annum, and (ii) in the
case of financial Letters of Credit, 3.0% per annum, on the daily average of the
Stated Amount of such Letter of Credit, computed for the actual number of days
elapsed on the basis of a year of 360 days and payable in arrears on the last
day of each calendar quarter and on the Termination Date (or such later date on
which such Letter of Credit expires or is terminated) for the period from and
including the date of the issuance of such Letter of Credit to but excluding the
date such payment is due or, if earlier, the date on which such Letter of Credit
expires or is terminated.
(b) In addition, with respect to each Letter of Credit, the
Company agrees to pay to the Bank such reasonable fees and expenses as the Bank
customarily requires in connection with the
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issuance, negotiation, processing and/or administration of letters of credit in
similar situations.
5.3 Closing Fee. The Company agrees to pay the Bank a closing fee
of $90,000 on the Effective Date; it being understood that each of (a) the
remainder of the $10,000 work fee previously paid to the Bank after subtracting
all due diligence expenses of the Bank to be paid therefrom and (b) the $10,000
commitment fee previously paid to the Bank shall be credited against such fee.
SECTION 6 REDUCTION OR TERMINATION OF THE COMMITMENT;
VOLUNTARY PREPAYMENTS.
6.1 Reduction or Termination of the Commitment. The Company may
from time to time on at least three Business Days' prior written notice received
by the Bank permanently reduce the amount of the Commitment to an amount not
less than the sum of the aggregate unpaid principal amount of the Loans then
outstanding plus the Stated Amount of all Letters of Credit. Any such reduction
shall be in the amount of $500,000 or a higher integral multiple thereof. The
Company may at any time on like notice terminate the Commitment; provided that,
concurrently with such termination, the Company shall pay in full all Loans and
all other then-payable obligations of the Company hereunder in respect of the
Commitment and shall cash collateralize in full, pursuant to documentation in
form and substance reasonably satisfactory to the Bank, all obligations in
respect of the Letters of Credit.
6.2 Prepayments.
6.2.1 Mandatory Prepayments. (a) On any date on which the sum of the
aggregate principal amount of all outstanding Loans plus the aggregate Stated
Amount of all Letters of Credit exceeds the Borrowing Base, the Company will
make a prepayment of Loans in an amount equal to such excess (rounded upward, if
necessary, to an integral multiple of $100,000).
6.2.2 Voluntary Prepayments. The Company may from time to time
prepay the Loans in whole or in part, provided that (i) the Company shall give
the Bank not less than one Business Day's prior notice thereof, specifying the
Loans to be prepaid and the
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date and amount of prepayment and (ii) each partial prepayment shall be in a
principal amount of $100,000 or an integral multiple thereof.
6.2.3 Prepayments of Eurodollar Loans. Any prepayment of a
Eurodollar Loan pursuant to Section 6.2.1 or 6.2.2 shall include accrued
interest on the principal amount being prepaid and, if not made on the last day
of the Interest Period therefor, shall be subject to Section 8.4.
SECTION 7 MAKING AND APPLICATION OF PAYMENTS; SETOFF.
7.1 Making of Payments. All payments of principal of or interest
on the Note, and any fees or other amounts payable hereunder, shall be made by
the Company to the Bank in immediately available funds at its office in Chicago
not later than 2:00 p.m., Chicago time, on the date due; and funds received
after that hour shall be deemed to have been received by the Bank on the next
following Business Day.
7.2 Application of Certain Payments. Each payment of principal
shall be applied to such Loans as the Company shall direct by notice to be
received by the Bank on or before the date of such payment or, in the absence of
such notice, as the Bank shall determine in its discretion.
7.3 Due Date Extension. If any payment of principal or interest
with respect to any Loan, or any fee, falls due on a Saturday, Sunday or other
day which is not a Business Day, then such due date shall be extended to the
next following Business Day (unless, in the case of a Eurodollar Loan, such next
following Business Day is the first Business Day of a calendar month, in which
case such due date shall be the immediately preceding Business Day), and
additional interest or fees shall accrue and be payable for the period of such
extension.
7.4 Setoff. The Company agrees that the Bank has all rights of
set-off and bankers' lien provided by applicable law, and in addition thereto,
the Company agrees that at any time (i) any payment or other amount owing by the
Company under this Agreement is then due to the Bank or (ii) any Unmatured Event
of Default under Section 12.1.4 or any Event of Default exists, the
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Bank may apply to the payment of such payment or other amount (or, in the case
of clause (ii), to any obligations of the Company hereunder, whether or not then
due) any and all balances, credits, deposits, accounts or moneys of the Company
then or thereafter with the Bank.
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR
EURODOLLAR LOANS.
8.1 Increased Costs. (a) If, after the date hereof, the adoption
of or any change in any applicable law, rule or regulation, or any change in the
interpretation or administration of any applicable law, rule or regulation by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Bank (or any
Eurodollar Office of the Bank) with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency
(1) shall subject the Bank (or any Eurodollar Office of
the Bank) to any tax, duty or other charge with respect to its
Eurodollar Loans, the Note or its obligation to make Eurodollar Loans,
or shall change the basis of taxation of payments to the Bank of the
principal of or interest on its Eurodollar Loans or any other amounts
due under this Agreement in respect of its Eurodollar Loans or its
obligation to make Eurodollar Loans (except for changes in the rate of
tax on the overall net income of the Bank or its Eurodollar Office
imposed by the State of Illinois, the State of California or the
jurisdiction in which the Bank's Eurodollar Office is located); or
(2) shall impose, modify or deem applicable any reserve
(including any reserve imposed by the Board of Governors of the Federal
Reserve System, but excluding any reserve included in the determination
of interest rates pursuant to Section 4), special deposit or similar
requirement against assets of, deposits with or for the account of, or
credit extended by, the Bank (or any Eurodollar Office of the Bank); or
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(3) shall impose on the Bank (or its Eurodollar Office)
any other condition affecting, or increasing the cost to the Bank of
making or maintaining, the Eurodollar Loans, the Note or its obligation
to make Eurodollar Loans;
and the result of any of the foregoing is to increase the cost to (or to impose
a cost on) the Bank (or any Eurodollar Office of the Bank) of making or
maintaining any Eurodollar Loan, or to reduce the amount of any sum received or
receivable by the Bank (or its Eurodollar Office) under this Agreement or under
the Note with respect thereto, then within five days after demand by the Bank
(which demand shall be accompanied by a statement setting forth the basis of
such demand), the Company shall pay directly to the Bank such additional amount
or amounts as will compensate the Bank for such increased cost or such
reduction.
(b) If the Bank shall reasonably determine that the adoption or
phase-in of, or any change in, any applicable law, rule or regulation regarding
capital adequacy, or any change in the interpretation or administration of any
applicable law, rule or regulation regarding capital adequacy by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Bank (or its
Eurodollar Office) or any Person controlling 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 Bank's or such controlling Person's
capital as a consequence of the Bank's obligations hereunder (including the
Commitment) to a level below that which the Bank or such controlling Person
could have achieved but for such adoption, change or compliance (taking into
consideration the Bank's or such controlling Person's policies with respect to
capital adequacy) by an amount deemed by the Bank or such controlling Person to
be material, then from time to time, within five Business Days after demand by
the Bank, the Company shall pay to the Bank such additional amount or amounts as
will compensate the Bank or such controlling Person for such reduction. A
statement of the Bank as to any such additional amount (including calculations
thereof in reasonable detail) shall, in the absence of demonstrable error, be
conclusive and binding on the Company. In determining such amount, the Bank may
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use any reasonable method of averaging and attribution it deems appropriate.
(c) The Bank will promptly notify the Company of any event of
which it has knowledge which will entitle the Bank to compensation pursuant to
this Section 8.1 and will designate a different Eurodollar Office if such
designation will not, in the sole judgment of the Bank, be otherwise
disadvantageous to the Bank.
(d) Notwithstanding the foregoing provisions of this Section 8.1,
the Bank shall not make a claim for compensation under this Section 8.1 unless
the Bank is then making a claim against a substantial portion of the other
borrowers from the Bank which have language in the applicable borrowing
agreement similar to that found in the foregoing provisions of this Section 8.1.
8.2 Basis for Determining Interest Rate Inadequate or Unfair. If
with respect to any Interest Period deposits in Dollars (in the applicable
amounts) are not being offered to the Bank in the relevant market for such
Interest Period, or the Bank otherwise reasonably determines (which
determination shall be binding and conclusive on the Company) that by reason of
circumstances affecting the interbank eurodollar market adequate and reasonable
means do not exist for ascertaining the applicable Eurodollar Rate, then the
Bank shall promptly notify the Company thereof and so long as such circumstances
shall continue, (i) the Bank shall be under no obligation to make, convert into
or continue any Eurodollar Loan and (ii) on the last day of the current Interest
Period for each Eurodollar Loan, such Loan shall, unless then repaid in full,
automatically convert to a Floating Rate Loan.
8.3 Changes in Law Rendering Certain Loans Unlawful. If any change
in (including the adoption of any new) applicable laws or regulations, or any
change in the interpretation of applicable laws or regulations by any
governmental or other regulatory body charged with the administration thereof,
should make it (or in the good faith judgment of the Bank cause a substantial
question as to whether it is) unlawful for the Bank to make, maintain or fund
Eurodollar Loans, then the Bank shall promptly notify the
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Company and, so long as such circumstances shall continue, (i) the Bank shall
have no obligation to make, convert into or continue any Eurodollar Loan and
(ii) on the last day of the current Interest Period for each Eurodollar Loan
(or, if the Bank so requests, on such earlier date as may be required by the
relevant law, regulation or interpretation), such Eurodollar Loan shall, unless
then repaid in full, automatically Convert to a Floating Rate Loan.
8.4 Funding Losses. The Company hereby agrees that upon demand by
the Bank (which demand shall be accompanied by a statement setting forth the
basis for the calculations of the amount being claimed) the Company will
indemnify the Bank against any net loss or expense which the Bank may sustain or
incur (including any net loss or expense incurred by reason of the liquidation
or reemployment of deposits or other funds acquired by the Bank to fund or
maintain Eurodollar Loans, but excluding lost profits), as reasonably determined
by the Bank, as a result of (i) any payment, prepayment or conversion of any
Eurodollar Loan on a date other than the last day of an Interest Period for such
Loan (including any conversion pursuant to Section 8.3) or (ii) any failure of
the Company to borrow, convert or continue any Loan on a date specified therefor
in a notice of borrowing, conversion or continuation pursuant to this Agreement.
For this purpose, all notices to the Bank pursuant to this Agreement shall be
deemed to be irrevocable.
8.5 Right of Bank to Fund through Other Offices. The Bank may, if
it so elects, fulfill its commitment as to any Eurodollar Loan by causing a
foreign branch or affiliate of the Bank to make such Loan, provided that in such
event for the purposes of this Agreement such Loan shall be deemed to have been
made by the Bank and the obligation of the Company to repay such Loan shall
nevertheless be to the Bank and shall be deemed held by it, to the extent of
such Loan, for the account of such branch or affiliate.
8.6 Discretion of Bank as to Manner of Funding. Notwithstanding
any provision of this Agreement to the contrary, the Bank shall be entitled to
fund and maintain its funding of all or any part of its Loans in any manner it
sees fit, it being understood, however, that for purposes of this Agreement all
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determinations hereunder shall be made as if the Bank had actually funded and
maintained each Eurodollar Loan during each Interest Period for such Loan
through the purchase of deposits having a maturity corresponding to such
Interest Period and bearing an interest rate equal to the Eurodollar Rate for
such Interest Period.
8.7 Conclusiveness of Statements; Survival of Provisions.
Determinations and statements of the Bank pursuant to Section 8.1, 8.2, 8.3 or
8.4 shall be conclusive absent demonstrable error. The Bank may use reasonable
averaging and attribution methods in determining compensation under Sections 8.1
and 8.4, and the provisions of such Sections shall survive termination of this
Agreement.
SECTION 9 WARRANTIES.
To induce the Bank to enter into this Agreement and to make Loans
hereunder, the Company warrants to the Bank that:
9.1 Organization, etc. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania; each Subsidiary is a corporation, limited
partnership or other entity, as the case may be, duly organized, validly
existing and, if applicable, in good standing under the jurisdiction of its
organization; the Company and each Subsidiary is duly qualified to do business
in each jurisdiction where the nature of its business makes such qualification
necessary, except where the failure to be so qualified would not have a Material
Adverse Effect; and the Company and each Subsidiary has full power and authority
to own its property and conduct its business as presently conducted by it.
9.2 Authorization; No Conflict. The execution and delivery by the
Company of this Agreement and each other Loan Document to which it is a party,
the borrowings hereunder, the execution and delivery by each Subsidiary of each
Loan Document to which it is a party and the performance by each of the Company
and each Subsidiary of its obligations under each Loan Document to which it is a
party are within the organizational powers of the Company and each Subsidiary,
have been duly authorized by all necessary
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action on the part of the Company and each Subsidiary (including any necessary
member, general partner or shareholder action), have received all necessary
governmental approval (if any shall be required), and do not and will not (a)
violate any provision of law or any order, decree or judgment of any court or
other government agency which is binding on the Company or any Subsidiary, (b)
contravene or conflict with, or result in a breach of, any provision of the
operating agreement, certificate of incorporation, by-laws, partnership
agreement or other organizational documents of the Company or any Subsidiary or
of any agreement, indenture, instrument or other document, or any judgment,
order or decree, which is binding on the Company or any Subsidiary or (c) result
in, or require, the creation or imposition of any Lien on any property of the
Company or any Subsidiary (other than pursuant to the Loan Documents).
9.3 Validity and Binding Nature. This Agreement is, and upon the
execution and delivery thereof each other Loan Document to which the Company is
a party will be, the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except that
enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance,
fraudulent transfer, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in equity or
at law); and each Loan Document will be, upon the execution and delivery thereof
by each Subsidiary which is a party thereto, the legal, valid and binding
obligation of such Subsidiary, enforceable against such Subsidiary in accordance
with its terms, except that enforceability may be limited by bankruptcy,
insolvency, fraudulent conveyance, fraudulent transfer, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and by general principles of equity (regardless of
whether enforcement is sought in equity or at law).
9.4 Financial Information. The Company's audited consolidated
financial statements as at December 31, 1997 and unaudited consolidated
financial statements as at March 31, 1998, copies of which have been furnished
to the Bank, were prepared in conformity with GAAP(subject, in the case of such
unaudited
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statements, to the absence of footnotes and normal year-end adjustments) and
fairly present the financial position of the Company and its Subsidiaries as at
such date and the results of their operations for the periods then ended.
9.5 No Material Adverse Change. Since December 31, 1997, no event
has occurred or conditions have arisen which, individually or in the aggregate,
have had or are reasonably likely to have a Material Adverse Effect.
9.6 Litigation and Contingent Liabilities. No litigation
(including derivative actions), arbitration proceeding or governmental
proceeding is pending or, to the Company's knowledge, threatened against the
Company or any Subsidiary which is reasonably likely to have a Material Adverse
Effect, except as set forth on Schedule 9.6. Other than any liability incident
to such litigation or proceeding, neither the Company nor any Subsidiary has any
material contingent liabilities not listed on Schedule 9.6.
9.7 Ownership of Properties; Liens. Each of the Company and each
Subsidiary owns good and marketable title to, or a valid leasehold interest in,
all of its material properties and assets, real and personal, tangible and
intangible, of any nature whatsoever (including patents, trademarks, trade
names, service marks and copyrights), free and clear of all Liens, charges and
claims (including infringement claims with respect to patents, trademarks,
copyrights and the like) except as permitted pursuant to Section 10.8.
9.8 Subsidiaries. The Company has no Subsidiaries except those
listed in Schedule 9.8.
9.9 Pension and Welfare Plans. Except as disclosed on Schedule
9.9, during the twelve-consecutive-month period prior to the date of the
execution and delivery of this Agreement or the making of any Loan hereunder, no
steps have been taken to terminate any Pension Plan and no contribution failure
has occurred with respect to any Pension Plan sufficient to give rise to a Lien
under section 302(f) of ERISA. No condition exists or event or transaction has
occurred with respect to any Pension
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Plan which could result in the incurrence by the Company of any material
liability, fine or penalty.
9.10 Regulation U. The Company is not engaged principally, or as
one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying Margin Stock.
9.11 Taxes. Each of the Company and each Subsidiary has filed all
material tax returns and reports required by law to have been filed by it and
has paid all taxes and governmental charges thereby shown to be owing, except
for any such taxes or charges which are being diligently contested in good faith
by appropriate proceedings and for which adequate reserves in accordance with
GAAP shall have been set aside on its books.
9.12 Environmental Warranties. Except as set forth on Schedule
9.12:
(a) all facilities and property (including underlying groundwater)
owned, leased or operated by the Company or any Subsidiary are owned, leased or
operated by the Company and its Subsidiaries in material compliance with all
Environmental Laws;
(b) there have been no past and there are no pending or, to the
Company's knowledge, threatened
(1) claims, complaints, notices or requests for
information received by the Company or any Subsidiary with respect to
any alleged violation of any Environmental Law, or
(2) complaints, notices or inquiries to the Company or
any Subsidiary regarding potential liability under any Environmental
Law,
which claims, complaints, notices, requests or inquiries, singly or in the
aggregate, have had, or may reasonably be expected to have, a Material Adverse
Effect;
(c) there have been no Releases of Hazardous Materials at, on or
under any property or facility now owned, leased or operated by (or, to the
Company's knowledge, at, on or under any
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property or facility previously owned, leased or operated by) the Company or any
Subsidiary that, singly or in the aggregate, have had, or may reasonably be
expected to have, a Material Adverse Effect;
(d) the Company and its Subsidiaries have been issued and are in
material compliance with all permits, licenses and other authorizations required
by Environmental Laws;
(e) no property or facility now owned, leased or operated by the
Company or any Subsidiary is listed or proposed for listing on the National
Priorities List pursuant to CERCLA, on the CERCLIS or on any similar state list
of sites requiring investigation or clean-up;
(f) no property or facility previously owned, leased or operated
by the Company or any Subsidiary is listed or proposed for listing on the
National Priorities List pursuant to CERCLA, on the CERCLIS or on any similar
state list of sites requiring investigation or clean-up (i) as a result of
actions or inactions attributable to the Company or any Subsidiary or (ii) which
may reasonably be expected to have, a Material Adverse Effect;
(g) there are no underground storage tanks, active or abandoned,
including petroleum storage tanks, on or under any property or facility now
owned, leased or operated by (or, to the Company's knowledge, on or under any
property or facility previously owned, leased or operated by) the Company or any
Subsidiary that, singly or in the aggregate, have had, or may reasonably be
expected to have, a Material Adverse Effect;
(h) neither the Company nor any Subsidiary has transported or
arranged for the transportation or disposal of any Hazardous Material to any
location which is listed or proposed for listing on the National Priorities List
pursuant to CERCLA, on the CERCLIS or on any similar state list or which is the
subject of federal, state or local enforcement actions or other investigations
which may lead to claims against the Company or such Subsidiary for any remedial
work, damage to natural resources or personal injury, including claims under
CERCLA, that, singly or in the aggregate with all other such claims, have
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had, or may reasonably be expected to have, a Material Adverse Effect;
(i) there are no polychlorinated biphenyls or friable asbestos
present at any property or facility now owned, leased or operated by (or, to the
Company's knowledge, present at any property or facility previously owned,
leased or operated by) the Company or any Subsidiary that, singly or in the
aggregate, have had, or may reasonably be expected to have, a Material Adverse
Effect; and
(j) to the Company's knowledge, no condition exists at, on or
under any property or facility now or previously owned, leased or operated by
the Company or any Subsidiary which would give rise to liability under any
Environmental Law that, singly or in the aggregate with all other such
conditions, has had, or may reasonably be expected to have, a Material Adverse
Effect.
9.13 Regulated Entities. None of the Company, any Person
controlling the Company or any Subsidiary, is an "Investment Company" within the
meaning of the Investment Company Act of 1940. The Company is not subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, any state public utilities code, or any
other Federal or state statute or regulation limiting its ability to incur
Indebtedness.
9.14 Absence of Default. Neither the Company nor any Subsidiary is
in material default under the Subordinated Indenture or any other material
contract to which it is a party or by which it is bound.
9.15 Information. All written information heretofore or
contemporaneously herewith furnished by the Company or any Subsidiary to the
Bank for purposes of or in connection with this Agreement and the transactions
contemplated hereby is, and all written information hereafter furnished by or on
behalf of the Company or any Subsidiary to the Bank pursuant hereto or in
connection herewith will be, true and accurate in every material respect on the
date as of which such information is dated or certified, and such information
taken as a whole is not, or at the time of delivery thereof will not be,
incomplete by omitting
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to state any material fact necessary to make such information not misleading (it
being understood that the Company does not warrant the accuracy of any
projections provided to the Bank pursuant hereto or in connection herewith, but
the Company warrants that all such projections have been or will be prepared in
good faith and have represented or will represent a reasonable estimate of the
anticipated financial condition and results of operations for any periods in
question based upon assumptions which the Company believes, at the time of
preparation, to be reasonable).
9.16 Lock-Box Banks. As of the Effective Date, Schedule 9.16
contains a complete listing of each bank or other financial institution at which
the Company or its Subsidiaries receive payments in respect of Accounts
Receivable.
9.17 Year 2000 Problem. The Company and its Subsidiaries have
reviewed the areas within their business and operations which could be adversely
affected by, and have developed a program to address on a timely basis, the
"Year 2000 Problem" (that is, the risk that computer applications used by the
Company and its Subsidiaries may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any date after
December 31, 1999). Based on such review and program, the Company reasonably
believes that the "Year 2000 Problem" will not have a Material Adverse Effect.
9.18 Solvency, etc. On the Effective Date (or, in the case of any
Person which becomes a Loan Party after the Effective Date, on the date such
Person becomes a Loan Party), and immediately prior to and after giving effect
to the making of each Loan (and the use of the proceeds thereof) and the
issuance of each Letter of Credit, (a) each of the Company's and each other Loan
Party's assets will exceed its liabilities and (b) each of the Company and each
other Loan Party will be solvent, will be able to pay its debts as they mature,
will own property with fair saleable value greater than the amount required to
pay its debts and will have capital sufficient to carry on its business as then
constituted.
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SECTION 10 COVENANTS.
Until the expiration or termination of the Commitment and thereafter
until all obligations of the Company hereunder and under the Note are paid in
full, the Company agrees that, unless at any time the Bank shall otherwise
expressly consent in writing, it will:
10.1 Reports, Certificates and Other Information. Furnish to the
Bank:
10.1.1 Audit Report. Promptly when available and in any event within
90 days after the close of each Fiscal Year, a copy of the annual audit report
of the Company and its Subsidiaries for such Fiscal Year, including therein
consolidated balance sheets of the Company and its Subsidiaries as of the end of
such Fiscal Year and consolidated statements of earnings and cash flow of the
Company and its Subsidiaries for such Fiscal Year, which audit report shall be
without qualification as to going concern or scope and shall be prepared by
Coopers & Lybrand LLP or other independent auditors selected by the Company and
reasonably acceptable to the Bank, together with a written statement from such
auditors to the effect that in making the examination necessary for the signing
of such audit report by such accountants, they have not become aware of any
Event of Default or Unmatured Event of Default that has occurred and is
continuing or, if they have become aware of any such event, describing it in
reasonable detail.
10.1.2 Quarterly Reports. Promptly when available and in any event
within 45 days after the end of each Fiscal Quarter, (except the last Fiscal
Quarter of any Fiscal Year), (i) a consolidated balance sheet of the Company and
its Subsidiaries as of the end of such Fiscal Quarter and (ii) consolidated
statements of earnings and cash flows for such Fiscal Quarter and for the period
beginning with the first day of the applicable Fiscal Year and ending on the
last day of such Fiscal Quarter, together with a certificate of the chief
financial officer, the treasurer, an assistant treasurer or the controller of
the Company certifying that such financial statements fairly present the
financial condition and results of operations of the Company and its
Subsidiaries as of the date and periods indicated,
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subject to changes resulting from normal year-end adjustments. Delivery to the
Bank of the Company's quarterly report on Form 10-Q shall satisfy the
requirements of this Section 10.1.2.
10.1.3 Monthly Reports. Promptly when available and in any event
within 40 days after the end of each fiscal month (except the last fiscal month
of each Fiscal Quarter), (i) a consolidated balance sheet of the Company and its
Subsidiaries as of the end of such month, (ii) consolidated statements of
earnings and cash flows for such month, together with a certificate of the chief
financial officer, the treasurer, an assistant treasurer or the controller of
the Company certifying that such financial statements fairly present the
financial condition and results of operations of the Company and its
Subsidiaries as of the date and for such month, subject to changes resulting
from normal year-end adjustments, and (iii) a project status report
substantially in the form agreed to by the Company and the Bank from time to
time.
10.1.4 Certificates. (a) Contemporaneously with the furnishing of a
copy of each annual audit report pursuant to Section 10.1.1 and of each set of
financial statements pursuant to Section 10.1.2, a duly completed certificate in
the form of Exhibit B, with appropriate insertions, dated the date of such
annual report or such quarterly statements and signed by the chief financial
officer, the treasurer, an assistant treasurer or the controller of the Company,
containing a computation of each of the financial ratios and restrictions set
forth in this Section 10 and to the effect that such officer has not become
aware of any Event of Default or Unmatured Event of Default that has occurred
and is continuing or, if there is any such event, describing it and the steps,
if any, being taken to cure it; and (b) not later than 40 days after the end of
each fiscal month, a duly-completed borrowing base certificate in the form of
Exhibit C signed by the chief financial officer, the treasurer, an assistant
treasurer or the controller of the Company.
10.1.5 Reports to SEC and to Shareholders. Promptly upon the filing
or sending thereof, copies of all regular, periodic or special reports of the
Company or any Subsidiary filed with the Securities and Exchange Commission
(excluding exhibits thereto, provided that the Company shall promptly deliver
any such exhibit to the Bank upon request therefor); copies of all registration
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statements of the Company or any subsidiary filed with the Securities and
Exchange Commission (other than on Form S-8); and copies of all proxy statements
or other communications made to security holders generally concerning material
developments in the business of the Company or any Subsidiary.
10.1.6 Notice of Default, Litigation and Other Matters. Promptly (and
in any event within one Business Day in the case of clause (a) and within five
Business Days in the case of clauses (b) through (d)) after learning of any of
the following, written notice describing the same and the steps being taken by
the Company or the Subsidiary affected thereby with respect thereto: (a) the
occurrence of an Event of Default or an Unmatured Event of Default; (b) any
litigation, arbitration or governmental investigation or proceeding not
previously disclosed by the Company to the Bank which has been instituted or, to
the knowledge of the Company, is threatened against the Company or any
Subsidiary or to which any of the properties of any thereof is subject which has
had or is reasonably likely to have a Material Adverse Effect; (c) any material
adverse development which occurs in any litigation, arbitration or governmental
investigation or proceeding previously disclosed pursuant to clause (b); (d) the
institution of any steps by the Company, any Subsidiary or any other Person to
terminate any Pension Plan, or the failure to make a required contribution to
any Pension Plan if such failure is sufficient to give rise to a Lien under
Section 302(f) of ERISA, or the taking of any action with respect to a Pension
Plan which could reasonably be expected to result in the requirement that the
Company furnish a bond or other security in a material amount to the PBGC or
such Pension Plan, or the occurrence of any event with respect to any Pension
Plan which could reasonably be expected to result in the incurrence by the
Company of any material liability, fine or penalty, or any material increase in
the contingent liability of the Company with respect to any post-retirement
Welfare Plan benefit; and (e) the occurrence of any other event or circumstance
which has had or is reasonably likely to have a Material Adverse Effect.
10.1.7 Subsidiaries. Promptly upon the occurrence thereof, a written
report of any change in the list of its Subsidiaries.
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10.1.8 Lock-Box Banks. Promptly upon the occurrence thereof, any
change to the banks or financial institutions at which payments in respect of
Accounts Receivable are received.
10.1.9 Management Reports. Promptly upon the request of the Bank,
copies of all detailed financial and management reports submitted to the Company
by independent auditors in connection with any annual or interim audit made by
such auditors of the books of the Company.
10.1.10 Projections. As soon as practicable and in any event within 60
days after the commencement of each Fiscal Year, a business plan and financial
forecast for such Fiscal Year including (a) a forecasted consolidated balance
sheet and a consolidated statement of cash flow of the Company for such Fiscal
Year and (b) a forecasted consolidated statement of income of the Company for
each quarter of such Fiscal Year.
10.1.11 Other Information. Promptly from time to time, such other
information concerning the Company and its Subsidiaries as the Bank may
reasonably request.
10.2 Books, Records and Inspections. Keep, and cause each
Subsidiary to keep, its books and records in accordance with sound business
practices sufficient to allow the preparation of financial statements in
accordance with GAAP; permit, and cause each Subsidiary to permit, on reasonable
notice and at reasonable times and intervals (or at any time without notice
during the existence of an Event of Default) the Bank or any representative
thereof to inspect the properties and operations of the Company and of such
Subsidiary; and permit, and cause each Subsidiary to permit, on reasonable
notice and at reasonable times and intervals (or at any time without notice
during the existence of an Event of Default) the Bank or any representative
thereof to visit any or all of its offices, to discuss its financial matters
with its officers and its independent auditors (and the Company hereby
authorizes such independent auditors to discuss such financial matters with the
Bank or any representative thereof, provided that the Company shall have the
right to be present at any such discussions) and to examine (and, at the expense
of the Company or the applicable Subsidiary, photocopy extracts from) any of its
books or other corporate records. The Company agrees
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to pay the fees of its auditors incurred in connection with any reasonable
exercise of the rights of the Bank pursuant to this Section.
10.3 Insurance. Maintain, and cause each Subsidiary to maintain,
with reputable, financially sound insurance companies, insurance in such amounts
and covering such risks as are necessary or appropriate for the business and
operations of the Company and its Subsidiaries from time to time, as determined
in good faith by the management of the Company (and, in any event, such
insurance as may be required by any law or governmental regulation or any court
order or decree); and, upon request of the Bank, furnish to the Bank a
certificate setting forth in reasonable detail the nature and extent of all
insurance maintained by the Company and its Subsidiaries.
10.4 Compliance with Laws; Payment of Taxes and Liabilities. (a)
Comply, and cause each Subsidiary to comply, in all material respects with all
material applicable laws, rules, regulations and orders; and (b) pay, and cause
each Subsidiary to pay, prior to delinquency, all material taxes and other
governmental charges against it or any of its property; provided that the
foregoing shall not require the Company or any Subsidiary to pay any such tax or
charge so long as it shall contest the validity thereof in good faith by
appropriate proceedings and shall set aside on its books adequate reserves with
respect thereto in accordance with GAAP.
10.5 Maintenance of Existence, etc. Maintain and preserve, and
(subject to Section 10.11) cause each Subsidiary to maintain and preserve, (a)
its existence and, wherever applicable, good standing in the jurisdiction of its
organization and (b) its qualification and good standing as a foreign entity in
each jurisdiction where the nature of its business makes such qualification
necessary; provided that any Inactive Subsidiary (excluding any Guarantor) may
be dissolved or liquidated.
10.6 Financial Covenants.
10.6.1 Cash On Hand. Not permit the combined amount of cash
and Cash Equivalent Investments of the Company and the Guarantors as of
the end of any fiscal month to be less than
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the greater of (a) the lesser of (i) the sum of (A) the principal
amount of all outstanding Loans and (B) the Stated Amount of all
outstanding Letters of Credit and (ii) $10,000,000 and (b) $5,000,000.
10.6.2 EBITDA Ratio. Not permit the ratio of (a) the sum of
(i) EBITDA for any period of four consecutive Fiscal Quarters plus (ii)
all cash and Cash Equivalent Investments of the Company and its
Subsidiaries as of the last day of such period plus (iii) all payments
on leases (including Capital Leases) of the Company and its
Subsidiaries during such period to (b) the sum, without duplication, of
(i) principal payments on Indebtedness during such period plus (ii)
Interest Expense for such period plus (iii) all payments on leases
(including Capital Leases) of the Company and its Subsidiaries during
such period plus (iv) income tax expense for such period plus (v)
Capital Expenditures for such period to be less than the applicable
ratio set forth below for such period:
Period Ending Ratio
------------- -----
6/30/98 - 12/31/98 1.25 to 1
Thereafter 1.50 to 1.
10.6.3 Tangible Net Worth. Not permit Tangible Net Worth at
any time to be less than the sum of (i) $49,500,000 plus (ii) 75% of
any Consolidated Net Income for each Fiscal Quarter ending after the
Effective Date plus (iii) 100% of any net equity proceeds received by
the Company after the Effective Date.
10.6.4 Capital Expenditures. Not, and not permit any
Subsidiary to, make or commit to make any Capital Expenditure in any
Fiscal Year unless, after giving effect to such Capital Expenditure,
the aggregate amount of all Capital Expenditures made by the Company
and its Subsidiaries during such Fiscal Year will not exceed
$5,000,000.
10.7 Limitations on Debt. Not, and not permit any Subsidiary to,
create, incur, assume or suffer to exist any Debt,
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except (a) obligations arising under the Loan Documents; (b) Debt of
Subsidiaries to the Company or to other Subsidiaries; (c) Hedging Agreements
entered into by the Company or any Subsidiary, provided that (i) any Hedging
Agreement with any Person other than the Bank or any Affiliate of the Bank shall
be unsecured and (ii) all Hedging Agreements shall be entered into in the
ordinary course of business for the purpose of directly mitigating risks
associated with interest or currency exchange rates or commodity prices; (d)
Suretyship Liabilities in respect of any obligation of the Company or any
Subsidiary permitted under this Agreement; (e) Debt in respect of taxes,
assessments or governmental charges to the extent that payment thereof shall not
at the time be required to be made in accordance with Section 10.4; (f) Debt
hereafter incurred in connection with Liens permitted by clause (c) of Section
10.8, and extensions, renewals and refinancings of Debt described in this clause
(f) so long as the principal amount thereof is not increased; (g) Capital Leases
in an aggregate amount not exceeding $750,000; (h) the Subordinated Debentures;
and (i) debt under the Installment Payment Agreement dated as of May 27, 1998
between the Company and International Software Finance Corporation in an
aggregate principal amount not exceeding $360,000.
10.8 Liens. Not, and not permit any Subsidiary to, create or permit
to exist any Lien on any of its real or personal properties, assets or rights of
whatsoever nature (whether now owned or hereafter acquired), except (a) Liens
for taxes or other governmental charges not at the time delinquent or thereafter
payable without penalty or being contested in good faith by appropriate
proceedings and, in each case, for which it maintains adequate reserves; (b)
Liens arising in the ordinary course of business (such as (i) Liens of carriers,
warehousemen, mechanics and materialmen and other similar Liens imposed by law
and (ii) Liens incurred in connection with worker's compensation, unemployment
compensation and other types of social security (excluding Liens arising under
ERISA) or in connection with surety and appeal bonds, bids, performance bonds
and similar obligations) for sums not overdue or being contested in good faith
by appropriate proceedings and not involving any deposits, advances, borrowed
money or the deferred purchase price of property or services, and, in each case,
for which it maintains adequate reserves; (c) any Lien arising in connection
with the
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acquisition, construction or improvement of property after the date hereof, and
attaching only to the property being acquired, constructed or improved, if the
Debt secured thereby does not exceed 100% of the fair market value of the
property acquired at the time of acquisition thereof or 100% of the cost of such
construction or improvement, as the case may be, not exceeding $250,000 in the
aggregate for all such Debt of the Company and all Subsidiaries at any one time
outstanding; (d) attachments, judgments and other similar Liens, for sums not
exceeding $500,000 (excluding any portion thereof which is covered by insurance
so long as the insurer has not denied coverage) arising in connection with court
proceedings, provided the execution or other enforcement of such Liens is
effectively stayed and the claims secured thereby are being actively contested
in good faith and by appropriate proceedings; (e) easements, rights of way,
restrictions, minor defects or irregularities in title and other similar Liens
not interfering in any material respect with the ordinary conduct of the
business of the Company and its Subsidiaries taken as a whole; (f) leases or
subleases granted by the Company or any Subsidiary in the ordinary course of its
business; (g) the interest or title of the lessor of any lease with respect to
which the Company or a Subsidiary is lessee; (h) Liens existing on the Effective
Date and described on Schedule 10.8; (i) extensions, renewals or replacements of
any Lien permitted by the foregoing provisions of this Section 10.8, but only if
the principal amount of the Debt secured thereby immediately prior to such
extension, renewal or replacement is not increased and such Lien is not extended
to any other property; (j) Liens arising under Capital Leases on the property
leased pursuant thereto; (k) Liens on Accounts Receivable and Bonded Working
Assets in favor of a person issuing Bonds for the Company or a Subsidiary,
provided that the holder of any such Lien shall be a party to an Intercreditor
Agreement; and (l) Liens in favor of the Bank or any Affiliate of the Bank.
10.9 Restricted Payments. Not, and not permit any Subsidiary to,
(a) declare or pay any dividends on any of its capital stock (other than stock
dividends), (b) purchase or redeem any such stock or any warrants, units,
options or other rights in respect of such stock, (c) make any other
distribution to shareholders, (d) set aside funds for any of the foregoing or
(e) make any payment on, or purchase, redeem or defease, any
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Subordinated Debenture; provided that (i) any Subsidiary may declare and pay
dividends to the Company or to any Wholly-Owned Subsidiary and (ii) so long as
no Event of Default or Unmatured Event of Default exists or would result
therefrom, the Company may make payments of principal of, and the Company or any
Subsidiary may purchase, Subordinated Debentures in an aggregate amount not
exceeding $5,000,000 in any Fiscal Year.
10.10 Investments. The Company will not, and will not permit any
Subsidiary to, make, incur, assume or suffer to exist any Investment, except:
(a) Cash Equivalent Investments;
(b) loans or advances for travel, commissions and similar
items in the ordinary course of business to officers and employees of
the Company and its Subsidiaries not in excess of $250,000 in the
aggregate at any time;
(c) loans and advances made by the Company to any
Subsidiary or by any Subsidiary to the Company or another Subsidiary;
provided that the aggregate amount of all loans and advances by the
Company and its Subsidiaries to all Foreign Subsidiaries shall not at
any time exceed $1,000,000;
(d) Investments existing on the Effective Date and
described on Schedule 10.10;
(e) Permitted Acquisitions; provided that (i) the Bank
shall have consented to such Permitted Acquisition and (ii) the
aggregate proceeds of Loans used by the Company and its Subsidiaries to
consummate any Permitted Acquisition shall not exceed the total of (a)
$5,000,000 minus (b) the aggregate proceeds of Loans used by the
Company and its Subsidiaries for all previous Permitted Acquisitions
made after the Effective Date plus (c) an amount equal to the Clawback
Amount for all Permitted Acquisitions made after the Effective Date.
For purposes of the foregoing, "Clawback Amount" means, for any
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Permitted Acquisition, an amount determined by multiplying (a) an
amount equal to 5% of the amount of the proceeds of Loans used by the
Company or the applicable Subsidiary in connection with such Permitted
Acquisition times (b) the number of full Fiscal Quarters completed
since the six-month anniversary of the date of such Acquisition;
(f) bank deposits in the ordinary course of business;
provided that the aggregate amount of all such deposits (excluding (x)
amounts in payroll accounts or for accounts payable, in each case to
the extent that checks have been issued to third parties, and (y)
amounts maintained (in the ordinary course of business consistent with
past practice) in accounts of any Person which is acquired by the
Company or a Subsidiary in accordance with the terms hereof during the
45 days following the date of such acquisition) which are maintained in
any account, other than accounts with the Bank or accounts with respect
to which the applicable bank has delivered a blocked account letter in
the form of Exhibit J, shall not at any time exceed $75,000 in the
aggregate for three consecutive Business Days; and
(g) other Investments in an aggregate amount not at any
time exceeding $10,000.
10.11 Mergers, Consolidations, Sales. Not, and not permit any
Subsidiary to, be a party to any merger or consolidation, or purchase or
otherwise acquire all or substantially all of the assets or any stock of any
class of, or any partnership or joint venture interest in, any other Person (or
of a particular business unit of any other Person), or, except in the ordinary
course of its business, sell, transfer, convey or lease any of its assets, or
sell with or without recourse any Accounts Receivable, except for (i) any such
merger or consolidation, sale, transfer, conveyance, lease or assignment of or
by any Wholly-Owned Subsidiary into the Company or into, with or to any other
Wholly-Owned Subsidiary, (ii) any such purchase or other
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acquisition by the Company or any Wholly-Owned Subsidiary of the assets or stock
of any Wholly-Owned Subsidiary; (iii) Permitted Acquisitions; and (iv) sales of
assets outside the ordinary course of business so long as the aggregate amount
of all such assets sold in any Fiscal Year pursuant to this clause (iv) does not
exceed $500,000.
10.12 Use of Proceeds. Use the proceeds of the Loans for working
capital needs and for other general purposes of the Company and its
Subsidiaries; and not use or permit any proceeds of any Loan to be used, either
directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of "purchasing or carrying" any Margin Stock (within the meaning of
Regulation U).
10.13 Transactions with Affiliates. Not, and not permit any
Subsidiary to, enter into or cause, suffer or permit to exist any transaction,
arrangement or contract with any Affiliate (other than the Company or a
Subsidiary) which is on terms which are less favorable than are obtainable from
any Person which is not an Affiliate.
10.14 Employee Benefit Plans. Maintain, and cause each Subsidiary to
maintain, each Pension Plan in compliance in all material respects with all
applicable requirements of law and regulations.
10.15 Environmental Covenant. Cause, and cause each Subsidiary to,
(a0 own, use, lease and operate all of its facilities and
properties, and otherwise conduct its business, in material compliance
with all Environmental Laws;
(b0 (i) promptly after receipt thereof, notify the Bank
(and provide copies) of all written claims, complaints, notices or
investigations relating to the condition of the facilities and
properties owned, leased or operated by the Company or any Subsidiary
and/or compliance with Environmental Laws, except claims, complaints,
notices or investigations for which the liability of the Company and
its Subsidiaries is reasonably expected to be less than
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$250,000; and (ii) promptly undertake reasonable measures to cure and
have dismissed with prejudice to the satisfaction of the Bank any
action or proceeding relating to compliance with Environmental Laws (it
being understood that the Company shall not be in default under this
clause (ii) with respect to any action or proceeding so long as (x) the
Company or the applicable Subsidiary is diligently defending such
action or proceeding in good faith by appropriate proceedings and has
set aside on its books adequate reserves with respect thereto or (ii)
in the case of all proceedings not covered by clause (x), there is no
material interference with or disruption of the business of the Company
or the applicable Subsidiary as a result of such action or proceeding
and the aggregate liability of the Company and its Subsidiaries in
connection with all such proceedings is reasonably expected to be less
than $250,000); and
(c0 provide such information and certifications which the
Bank may reasonably request from time to time to evidence compliance
with this Section 10.15.
10.16 Unconditional Purchase Obligations. Not, and not
permit any Subsidiary to, enter into or be a party to any contract for the
purchase of materials, supplies or other property or services, if such contract
requires that payment be made by it regardless of whether or not delivery is
ever made of such materials, supplies or other property or services.
10.17 Further Assurances. Take, and cause each Subsidiary
to take, such actions as are necessary, or as the Bank may reasonably request,
from time to time (including the execution and delivery of security agreements,
pledge agreements, stock powers, financing statements and other documents, the
filing of any of the foregoing, and the delivery of stock certificates and other
Collateral with respect to which perfection is obtained by possession) to ensure
that (a) the obligations of the Company hereunder and under the other Loan
Documents are secured by substantially all of the assets of the Company (other
than real estate) and guaranteed by Subsidiaries of the Company, which, when
taken together with the Company, own at least 95% of the consolidated assets and
account for at least 95% of the consolidated revenues (for the last Fiscal
Quarter) of the
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Company and its Subsidiaries (excluding the assets and revenues of Cardinal) and
(b) the obligations of each Guarantor under the Guaranty are secured by
substantially all of the assets of such Guarantor (other than real estate);
provided that (i) neither the Company nor any Subsidiary shall be required to
pledge more than 65% of the stock of any Foreign Subsidiary and (ii) to the
extent that the grant of a perfected security thereon requires any action by, or
consent of, any third party, the Company shall not be required to grant the Bank
a perfected security interest in its interest in Water Solutions Group, LLC,
Triptych International, LLC or Rocky Flats Engineers and Constructors, LLC until
45 days after the Effective Date.
10.18 Business. Not, and not permit any Subsidiary (other
than Cardinal) to, engage in any business other than the business of
environmental consulting, engineering, construction, redevelopment, remediation
and knowledge solutions services or other services reasonably related thereto;
and not permit Cardinal to engage in any business other than providing insurance
to the Company and its Subsidiaries (and investing funds in connection
therewith).
10.19 Inconsistent Agreements. Not, and not permit any Subsidiary
to, enter into any material agreement containing any provision which would be
violated or breached by any borrowing by the Company hereunder or by the
performance by the Company or any Subsidiary of any of its obligations hereunder
or under any other Loan Document.
10.20 Amendments to Certain Documents. Not amend or otherwise modify
the Subordinated Indenture in any manner which is materially adverse to the
interests of the Bank.
SECTION 11 CONDITIONS PRECEDENT.
The obligation of the Bank to make any Loan or to issue any Letter of
Credit is subject to the following conditions precedent:
11.1 Initial Credit Extension. The obligation of the Bank to make
its initial Loan or to issue the initial Letter of Credit (whichever first
occurs) is, in addition to the conditions
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precedent specified in Section 11.2, subject to the conditions precedent that
the Bank shall have received (a) evidence that the commitment under the First
Union Agreement has been terminated, all Debt under the First Union Agreement
has been (or concurrently with the initial credit extension will be) paid in
full and all Liens securing such Debt have been (or concurrently with the
initial credit extension will be) terminated; and (b) all of the following, each
duly executed and dated the Effective Date (or such earlier date as shall be
satisfactory to the Bank), in form and substance satisfactory to the Bank (and
the date on which all such conditions precedent have been satisfied or waived in
writing by the Bank is called the "Effective Date"):
11.1.1 Note. The Note of the Company payable to the order of the
Bank.
11.1.2 Resolutions. Certified copies of resolutions of the Board of
Directors of each Loan Party authorizing or ratifying the execution, delivery
and performance of the Loan Documents to which such Loan Party is a party.
11.1.3 Consents, etc. Certified copies of all documents evidencing
any necessary consents and governmental approvals with respect to this
Agreement, the Note, the Guaranty, the Collateral Documents and the other
documents provided for herein.
11.1.4 Incumbency and Signatures. A certificate of the Secretary or
an Assistant Secretary of each Loan Party certifying the names of the officer or
officers of such Loan Party authorized to sign the Loan Documents to which such
Loan Party is a party, together with a sample of the true signature of each such
officer.
11.1.5 Security Agreement. A security agreement substantially in the
form of Exhibit D (the "Security Agreement") executed by the Company and each
Guarantor, together with evidence, satisfactory to the Bank, that all filings
necessary to perfect the Bank's Lien on the Collateral granted under the
Security Agreement have been duly made and are in full force and effect.
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11.1.6 Guaranty. A guaranty, substantially in the form of Exhibit E
(the "Guaranty") executed by each Guarantor as of the Effective Date.
11.1.7 Pledge Agreement. A pledge agreement substantially in the form
of Exhibit F (the "Company Pledge Agreement") executed by the Company and
Subsidiary Pledge Agreements executed by each of Roy F. Weston (Delaware), Inc.
and Roy F. Weston (IPR), Inc., in each case together with all stock certificates
required to be delivered thereunder and appropriate stock powers executed in
blank.
11.1.8 Opinion. An opinion of the General Counsel of the Company,
substantially in the form of Exhibit I.
11.1.9 Blocked Account Letters. A blocked account letter in the form
of Exhibit J from each bank or other financial institution listed on Schedule
9.16 hereto.
11.1.10 Other. Such other documents as the Bank may reasonably
request.
11.2 All Credit Extensions. The obligation of the Bank to make each
Loan and to issue each Letter of Credit is subject to the conditions precedent
that:
11.2.1 No Default. (a) No Event of Default, or Unmatured Event of
Default, has occurred and is continuing or will result from the making of such
Loan or the issuance of such Letter of Credit and (b) the warranties of the
Company contained in Section 9 are true and correct in all material respects as
of the date of such requested Loan or Letter of Credit, with the same effect as
though made on such date.
11.2.2 Confirmatory Certificate. If requested by the Bank, the Bank
shall have received a certificate dated the date of such requested Loan or
Letter of Credit and signed by the President, the chief financial officer, the
treasurer, an assistant treasurer or the controller of the Company as to the
matters set out in Sections 11.2.1 (it being understood that each request by the
Company for the making of a Loan or the issuance of a Letter of Credit shall be
deemed to constitute a certification as to the
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matters set out in Sections 11.2.1), together with such other documents as the
Bank may reasonably request in support thereof, including duly executed and
updated copies or other confirmations of the continuing effectiveness of any or
all of the documents (except the Note) provided for in Section 11.1.
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT.
12.1 Events of Default. Each of the following shall constitute an
Event of Default under this Agreement:
12.1.1 Non-Payment of the Loans, etc. Default, and continuance
thereof for five days, in the payment when due of any principal, interest, fee,
or other amount payable by the Company hereunder, under any other Loan Document
or under any other agreement between the Company and the Bank.
12.1.2 Non-Payment of Other Debt. Any default shall occur under the
terms applicable to any Debt of the Company or any Subsidiary (other than Debt
hereunder) in an aggregate amount (for all Debt so affected) exceeding $500,000
and such default shall (a) consist of the failure to pay any portion of such
Debt when due (subject to any applicable grace period), whether by acceleration
or otherwise, or (b) accelerate the maturity of such Debt or permit the holder
or holders thereof, or any trustee or agent for such holder or holders, to cause
such Debt to become due and payable prior to its expressed maturity.
12.1.3 Other Material Obligations. Default in the payment when due,
or in the performance or observance of, any material obligation of, or condition
agreed to by, the Company or any Subsidiary with respect to any material
purchase or lease of goods or services (except only to the extent that the
existence of any such default is being contested by the Company or such
Subsidiary in good faith and by appropriate proceedings and appropriate reserves
have been set aside in respect of such default) if, in the reasonable judgment
of the Bank, such default has had, or is reasonably likely to have, a Material
Adverse Effect.
12.1.4 Bankruptcy, Insolvency, etc. The Company or any Subsidiary
becomes insolvent or generally fails to pay, or admits
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in writing its inability or refusal to pay, debts as they become due; or the
Company or any Subsidiary applies for, consents to or acquiesces in the
appointment of a trustee, receiver or other custodian for the Company or such
Subsidiary or any property thereof, or makes a general assignment for the
benefit of creditors; or, in the absence of such application, consent or
acquiescence, a trustee, receiver or other custodian is appointed for the
Company or any Subsidiary or for a substantial part of the property of any
thereof and is not discharged within 60 days; or any bankruptcy, reorganization,
debt arrangement, or other case or proceeding under any bankruptcy or insolvency
law, or any dissolution or liquidation proceeding (except the voluntary
dissolution, not under any bankruptcy or insolvency law, of a Subsidiary), is
commenced in respect of the Company or any Subsidiary, and if such case or
proceeding is not commenced by the Company or such Subsidiary, it is consented
to or acquiesced in by the Company or such Subsidiary, or remains for 60 days
undismissed; or the Company or any Subsidiary takes any action to authorize, or
in furtherance of, any of the foregoing.
12.1.5 Non-Compliance with Provisions of This Agreement. Failure by
the Company to comply with or to perform any provision of Section 10.6, 10.7,
10.8, 10.9, 10.10, 10.11, 10.12 or 10.17; or failure by the Company to comply
with or to perform any other provision of this Agreement (and not constituting
an Event of Default under any of the other provisions of this Section 12) and
continuance of such failure for 15 days after notice thereof to the Company from
the Bank.
12.1.6 Warranties. Any warranty made by the Company herein is
breached or is false or misleading in any material respect, or any schedule,
certificate, financial statement, report, notice or other writing furnished by
the Company to the Bank is false or misleading in any material respect on the
date as of which the facts therein set forth are stated or certified.
12.1.7 Pension Plans. (i) Institution of any steps by the Company or
any other Person to terminate a Pension Plan if as a result of such termination
the Company could be required to make a contribution to such Pension Plan, or
could incur a liability or obligation to such Pension Plan, in excess of
$500,000, or (ii) a contribution failure occurs with respect to any Pension
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Plan sufficient to give rise to a Lien under section 302(f) of ERISA.
12.1.8 Judgments. Final judgments which exceed an aggregate of
$500,000 (excluding any portion thereof which is covered by insurance so long as
the insurer has a rating of A- or better from A.M. Best Company and has not
denied coverage) shall be rendered against the Company or any Subsidiary and
shall not have been discharged or vacated or had execution thereof stayed
pending appeal within 30 days after entry or filing of such judgments.
12.1.9 Invalidity of Collateral Documents, etc. Any Collateral
Document shall cease to be in full force and effect with respect to the Company
or any Subsidiary, the Company or any Subsidiary shall fail (subject to any
applicable grace period) to comply with or to perform any applicable provision
of any Collateral Document, or the Company or any Subsidiary (or any Person by,
through or on behalf of the Company or any Subsidiary) shall contest in any
manner the validity, binding nature or enforceability of any Collateral
Document.
12.1.10 Invalidity of Guaranty. The Guaranty shall cease to be in full
force and effect with respect to any Guarantor, any Guarantor shall fail
(subject to any applicable grace period) to comply with or to perform any
applicable provision of the Guaranty, or any Guarantor (or any Person by,
through or on behalf of any Guarantor) shall contest in any manner the validity,
binding nature or enforceability of the Guaranty.
12.1.11 Change in Control. (a) Any Person or group of Persons (within
the meaning of Section 13 or 14 of the Securities Exchange Act of 1934, but
excluding the Weston Family) shall acquire beneficial ownership (within the
meaning of Rule 13d-3 promulgated under such Act) of outstanding shares of stock
of the Company having more than 20% of the aggregate voting power in an election
of the Board of Directors of the Company; (b) during any 24-month period,
individuals who at the beginning of such period constituted the Company's Board
of Directors (together with any new directors whose
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election by the Company's Board of Directors or whose nomination for election by
the Company's shareholders was approved by a vote of at least two-thirds of the
directors who either were directors at beginning of such period or whose
election or nomination was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of the Company; or (c) a period
of 30 consecutive days shall have elapsed during which either of the individuals
named in Schedule 12.1.11 shall have ceased to hold executive offices with the
Company at least equal in seniority to their present offices, as set out in such
Schedule 12.1.11, excluding any such individual who has been replaced by another
individual or individuals reasonably satisfactory to the Bank (it being
understood that any such replacement individual shall be deemed added to
Schedule 12.1.11 on the date of approval thereof by the Bank).
12.1.12 Bonding Agreements. (a) Any Person issuing Bonds for the
Company or any Subsidiary for any reason (other than the fact that the Company
has reached its maximum bonding capacity so long as such maximum bonding
capacity is not less than $100,000,000) ceases to issue such Bonds and such
cessation could reasonably be expected to have a Material Adverse Effect; or (b)
the Company or its Subsidiary breaches or defaults with respect to any term of
any bonded contract if the effect of such breach or default is to cause any
Person issuing Bonds for the Company or such Subsidiary to take possession of
the work under such bonded contract.
12.1.13 Environmental Matters. The Company or any Subsidiary shall
have directly arranged for the transportation of any Hazardous Material to any
location which is listed or proposed for listing on the National Priorities List
pursuant to CERCLA, on the CERCLIS or on any similar state list or which is the
subject of federal, state or local enforcement actions or other investigations
which has resulted in any claim against the Company or such Subsidiary for any
remedial work, damage to natural resources or personal injury, including claims
under CERCLA, which, in the case of any event described above in this Section
12.1.3, individually or in the aggregate with all other such events, has had, or
is reasonably likely to have, a Material Adverse Effect.
12.2 Effect of Event of Default. If any Event of Default described
in Section 12.1.4 shall occur, the Commitment (if it has not theretofore
terminated) shall immediately terminate and the Note and all other obligations
hereunder shall become immediately due and payable, all without presentment,
demand,
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protest or notice of any kind; and, in the case of any other Event of Default,
the Bank may declare the Commitment (if it has not theretofore terminated) to be
terminated and/or declare the Note and all other obligations hereunder to be due
and payable and/or demand that the Company immediately deliver to the Bank cash
collateral in an amount equal to the outstanding face amount of all Letters of
Credit, whereupon the Commitment (if it has not theretofore terminated) shall
immediately terminate and/or the Note and all other obligations hereunder shall
become immediately due and payable and/or the Company shall immediately become
obligated to deliver to the Bank cash collateral in an amount equal to the face
amount of all Letters of Credit, all without presentment, demand, protest or
notice of any kind. The Bank shall promptly advise the Company of any such
declaration, but failure to do so shall not impair the effect of such
declaration. Any cash collateral delivered hereunder shall be held by the Bank
and applied to obligations arising in connection with any drawing under a Letter
of Credit. After the expiration or termination of all Letters of Credit, such
cash collateral shall be applied by the Bank to any remaining obligations
hereunder and any excess shall be delivered to the Company or as a court of
competent jurisdiction may direct.
SECTION 13 GENERAL.
13.1 Waiver; Amendments. No delay on the part of the Bank in the
exercise of any right, power or remedy shall operate as a waiver thereof, nor
shall any single or partial exercise by any of them of any right, power or
remedy preclude other or further exercise thereof, or the exercise of any other
right, power or remedy. No amendment, modification or waiver of, or consent with
respect to, any provision of this Agreement or any other Loan Document shall in
any event be effective unless the same shall be in writing and signed and
delivered by the Bank and, in the case of any such amendment or modification,
the Company.
13.2 Notices. Except as otherwise provided in Sections 2.3 and 2.4,
all notices hereunder shall be in writing (including facsimile transmission) and
shall be sent to the applicable party at its address shown below its signature
hereto or at such other address as such party may, by written notice received by
the other party, have designated as its address for such purpose.
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Notices sent by telegram or facsimile transmission shall be deemed to have been
given when sent; notices sent by mail shall be deemed to have been given three
Business Days after the date when sent by registered or certified mail, postage
prepaid; and notices sent by hand delivery shall be deemed to have been given
when received.
13.3 Computations. Where the character or amount of any asset or
liability or item of income or expense is required to be determined, or any
consolidation or other accounting computation is required to be made, for the
purposes of this Agreement, such determination or calculation shall, to the
extent applicable and except as otherwise specified in this Agreement, be made
in accordance with GAAP; provided that if the Company notifies the Bank that the
Company wishes to amend any covenant in Section 10 to eliminate the effect of
any change in GAAP on the operation of such covenant, or if the Bank notifies
the Company that the Bank wishes to amend Section 10 for such purpose, then the
Company's compliance with such covenant shall be determined on the basis of GAAP
in effect immediately before the relevant change in GAAP became effective, until
either such notice is withdrawn or such covenant is amended in a manner
satisfactory to the Company and the Bank.
13.4 Costs, Expenses and Taxes. The Company agrees to pay on demand
all reasonable out-of-pocket costs and expenses of the Bank (including Attorney
Costs) in connection with the preparation, execution, delivery and
administration (including periodic collateral audits) of this Agreement, the
Note, the other Loan Documents and all other instruments or documents provided
for herein or delivered or to be delivered hereunder or in connection herewith
(including any amendments to or other modifications of any of the foregoing
documents) and all reasonable out-of-pocket costs and expenses (including
Attorney Costs) incurred by the Bank in connection with the enforcement of this
Agreement, the Note, any other Loan Document or any such other instrument or
document or in connection with any "work-out" or restructuring of the Company's
obligations hereunder. In addition, the Company agrees to pay, and to save the
Bank harmless from all liability for, any stamp or other taxes or filing fees or
recording charges which may be payable in connection with the execution or
delivery of this Agreement, the
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borrowings hereunder, the issuance of the Note or the issuance of any other
instrument or document provided for herein or delivered or to be delivered
hereunder or in connection herewith. All obligations provided for in this
Section 13.4 shall survive any termination of this Agreement.
13.5 Governing Law. This Agreement and the Note shall be a contract
made under and governed by the laws of the State of Illinois applicable to
contracts made and to be performed entirely within such State. Whenever possible
each provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement. All obligations of the Company and rights of the Bank expressed
herein or in any other Loan Document shall be in addition to and not in
limitation of those provided by applicable law.
13.6 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Agreement.
13.7 Successors and Assigns. This Agreement shall be binding upon
the Company, the Bank and their respective successors and assigns, and shall
inure to the benefit of the Company and the Bank and the successors and assigns
of the Bank. The Bank shall not assign its obligations hereunder without the
prior written consent of the Company, which shall not be unreasonably withheld.
The Bank may sell participations herein in accordance with customary banking
practice (and any such participant shall have all rights of the Bank hereunder,
provided that the Company shall continue to deal solely with the Bank in
connection herewith).
13.8 Indemnification by the Company. (a) In consideration of the
execution and delivery of this Agreement by the Bank and the agreement of the
Bank to extend the Commitment provided hereunder, the Company hereby agrees to
indemnify, exonerate and
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hold the Bank and each of the officers, directors, employees and agents of the
Bank (collectively the "Bank Parties" and individually each a "Bank Party") free
and harmless from and against any and all actions, causes of action, suits,
losses, liabilities, damages and reasonable out-of-pocket expenses, including
Attorney Costs (collectively, the "Indemnified Liabilities"), incurred by the
Bank Parties or any of them as a result of, or arising out of, or relating to
(i) any tender offer, merger, purchase of stock, purchase of assets or other
similar transaction financed or proposed to be financed in whole or in part,
directly or indirectly, with the proceeds of any of the Loans or (ii) the
execution, delivery, performance or enforcement of this Agreement or any other
Loan Document by any of the Bank Parties, except for any Indemnified Liabilities
arising on account of any such Bank Party's gross negligence or willful
misconduct. If and to the extent that the foregoing undertaking may be
unenforceable for any reason, the Company hereby agrees to make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law.
(b) Without limiting clause (a), the Company agrees to reimburse
each Bank Party for, and hold each Bank Party harmless from, any and all
out-of-pocket losses, claims, damages, penalties, judgments, liabilities and
reasonable expenses (including Attorney Costs and consultant's fees) which any
Bank Party may pay, incur or become subject to arising out of or relating to the
use, handling, emission, discharge, transportation, storage, treatment or
disposal of any Hazardous Material at any real property owned, operated or
leased by the Company, except to the extent caused by the acts or omissions of
such Bank Party.
(c) All obligations provided for in this Section 13.8 shall
survive any termination of this Agreement.
13.9 Subsidiary References. References herein to Subsidiaries of
the Company, or to the Company's financial statements being prepared on a
"consolidated" basis or similar references, shall be applicable only at such
times as the Company has one or more Subsidiaries.
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13.10 FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE
COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ILLINOIS; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE
BANK'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER
PROPERTY MAY BE FOUND. EACH OF THE COMPANY AND THE BANK HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS
AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS
FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. THE COMPANY HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY
SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
13.11 WAIVER OF JURY TRIAL. EACH OF THE COMPANY AND THE BANK HEREBY
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT AND
ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING
RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
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Delivered at Chicago, Illinois, as of the day and year first above written.
ROY F. WESTON, INC.
By: /s/William G. Mecaughey
-------------------------------
Name:
Title:
1 Weston Way
West Chester, Pennsylvania 19380
Telephone: 610-701-3000
Facsimile: 610-701-3186
Attention: William G. Mecaughey
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ Venita Fields
--------------------------------
Name:
Title:
231 South LaSalle Street
Chicago, Illinois 60697
Telephone: 312-828-6773
Facsimile: 312-828-1974
Attention: Venita Fields
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SCHEDULE 9.6
to
Credit Agreement
dated as of June 5, 1998
Litigation and Contingent Liabilities
<PAGE> 62
SCHEDULE 9.8
Subsidiaries
Cardinal Indemnity Company of North America
Roy F. Weston (Delaware), Inc.
Roy F. Weston (IPR), Inc.
Moorstein, Inc.
Roy F. Weston of New York, Inc.
Weston Environmental Metrics, Inc.
Roy F. Weston of Missouri, Inc.
Weston International Holdings, Inc.
Weston International, Inc.
Weston International de Mexico S.A. de C.V.
Trans-Thermal Systems, Inc.
<PAGE> 63
SCHEDULE 9.12
to
Credit Agreement
dated as of June 5, 1998
Environmental Matters
<PAGE> 64
SCHEDULE 9.16
to
Credit Agreement
dated as of June 5, 1998
Lock-Box Banks
CoreStates Bank, N.A.
P.O. Box 8500 (S-6175)
Philadelphia, PA 19178-6175
<PAGE> 65
SCHEDULE 10.8
to
Credit Agreement
dated as of June 5, 1998
Existing Liens
<PAGE> 66
SCHEDULE 10.10
to
Credit Agreement
dated as of June 5, 1998
Investments
1. The Subsidiaries listed on Schedule 9.8.
2. 285,294 shares of the Eicon Group, Inc.
3. 65.16 common units of Water Solutions Group, LLC
4. 24.5 units of Triptych International, LLC
5. One unit of Rocky Flats Engineers and Constructors,
LLC
6. 4143 shares of Lycos, Inc. (533 additional shares are
in escrow and will be transferred on April 30, 1999)
7. 2000 shares of Recra Environmental, Inc. Series "B"
Redeemable Convertible Preferred
8. 1 unit of American Marine Rail, LLC (a New Jersey
LLC)
9. Miscellaneous investments, the aggregate value of
which does not exceed $10,000.
<PAGE> 67
SCHEDULE 12.1.11
to
Credit Agreement
dated as of June 5, 1998
Required Executive Officers
Name Current Responsibilities
- ------
William Robertson Chairman and Chief
Executive Officer
Patrick McCann President and Chief
Operating Officer
<PAGE> 68
EXHIBIT A
FORM OF
NOTE
$18,000,000 June 5, 1998
Chicago, Illinois
The undersigned, for value received, promises to pay to the order of
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking
association having its principal office at 231 South LaSalle Street, Chicago,
Illinois (the "Bank"), at the principal office of the Bank in Chicago, Illinois,
EIGHTEEN MILLION DOLLARS or, if less, the aggregate unpaid amount of all Loans
made to the undersigned pursuant to the Credit Agreement referred to below (as
shown on the schedule attached hereto (and any continuation thereof) or in the
records of the Bank), such principal amount to be payable on the dates set forth
in the Credit Agreement.
The undersigned further promises to pay interest on the unpaid
principal amount of each Loan from the date of such Loan until such Loan is paid
in full, payable at the rate(s) and at the time(s) set forth in the Credit
Agreement. Payments of both principal and interest are to be made in lawful
money of the United States of America.
This Note evidences indebtedness incurred under, and is subject to the
terms and provisions of, the Credit Agreement, dated as of June 5, 1998 (as
amended or otherwise modified from time to time, the "Credit Agreement"; terms
not otherwise defined herein are used herein as defined in the Credit
Agreement), between the undersigned and the Bank, to which Credit Agreement
reference is hereby made for a statement of the terms and provisions under which
this Note may or must be paid prior to its due date or its due date accelerated.
This Note is made under and governed by the laws of the State of
Illinois applicable to contracts made and to be performed entirely within such
State.
ROY F. WESTON, INC.
A-1
<PAGE> 69
By:
---------------------------
Title:
------------------------
A-2
<PAGE> 70
Schedule attached to Note dated June 5, 1998 of ROY F. WESTON, INC. payable to
the order of BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
Date and Date and
Amount of Amount of
Loan or of Repayment or of Interest
Conversion from Conversion into Period/ Unpaid
another type of another type of Maturity Principal Notation
Loan Loan Date Balance Made by
1. FLOATING RATE LOANS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. EURODOLLAR LOANS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A-3
<PAGE> 71
EXHIBIT B
FORM OF COMPLIANCE CERTIFICATE
To: Bank of America National Trust and Savings Association
Please refer to the Credit Agreement dated as of June 5, 1998 (as
amended or otherwise modified from time to time, the "Credit Agreement") between
Roy F. Weston, Inc. (the "Company") and Bank of America National Trust and
Savings Association (the "Bank"). Terms used but not otherwise defined herein
are used herein as defined in the Credit Agreement.
I. Reports. Enclosed herewith is a copy of the [annual
audited/quarterly] report of the Company as at _____________,
____ (the "Computation Date"), which report fairly presents in
all material respects the financial condition and results of
operations [(subject to normal year-end adjustments)] of the
Company as of the Computation Date and has been prepared in
accordance with GAAP consistently applied.
II. Financial Tests. The Company hereby certifies and warrants to
you that the following is a true and correct computation as at
the Computation Date of the following ratios and/or financial
restrictions contained in the Credit Agreement:
A. SECTION 10.6.1 - CASH ON HAND
1. Principal amount of all outstanding Loans $________
2. Stated Amount of all outstanding $________
Letters of Credit
3. Sum of Items (1) and (2) $________
4. Lesser of (a) $10,000,000 and (b) Item 3 $________
5. Minimum Cash on Hand (Greater of $________
B-1
<PAGE> 72
(a) $5,000,000 and (b) Item 4)
6. Combined Amount of cash and Cash Equivalent $________
Investments of the Company and Guarantors
B. SECTION 10.6.2 - EBITDA RATIO
1. EBITDA for four preceding $________
Fiscal Quarters
2. Cash and Cash Equivalent Investments $________
of the Company and its Subsidiaries
at the end of the preceding Fiscal Quarter
3. Payments on leases (including Capital Leases) $________
of the Company and its Subsidiaries during
the four preceding Fiscal Quarters
4. Sum of Items (1), (2) and (3) $________
5. Principal payments on Indebtedness $________
of the Company and its Subsidiaries during
the four preceding Fiscal Quarters
6. Interest Expense during the $________
four preceding Fiscal Quarters
7. Payments on leases (including Capital Leases) $________
of the Company and its Subsidiaries during
the four preceding Fiscal Quarters
8. Income tax expense of the Company and $________
its Subsidiaries during the four
preceding Fiscal Quarters
9. Capital Expenditures during the $________
four preceding Fiscal Quarters
10. Sum of Items (5), (6), (7), (8) and (9) $________
11. Ratio of Item 4 to Item 10 ____ to ____
B-2
<PAGE> 73
12. Maximum allowed:
6/30/98 thru 12/31/98: 1.25 to 1.0
thereafter: 1.50 to 1.0
C. SECTION 10.6.4 - TANGIBLE NET WORTH
1. Consolidated Net Income for $__________
each Fiscal Quarter ending after
the Effective Date
2. Net equity proceeds received after $__________
the Effective Date
3. Minimum Tangible Net Worth $__________
(Sum of (a) $49,500,000
+ (b) 75% of Item 2
+ (c) Item 3)
4. Tangible Net Worth $__________
D. SECTION 10.6.4 - CAPITAL EXPENDITURES
1. Maximum Permitted Capital $5,000,000
Expenditures
2. Aggregate amount of all $__________
Capital Expenditures made by
the Company and its
Subsidiaries in the
preceding Fiscal Year
The Company further certifies to you that no Event of Default or
Unmatured Event of Default has occurred and is continuing.
IN WITNESS WHEREOF, the Company has caused this Certificate to be
executed and delivered by its duly authorized officer on _________, ____.
ROY F. WESTON, INC.
By_________________________
Title______________________
B-3
<PAGE> 74
EXHIBIT C
FORM OF BORROWING BASE CERTIFICATE
[Date]
To: Bank of America National Trust
and Savings Association
231 S. LaSalle St.
Chicago, Illinois 60697
Re: Roy F. Weston, Inc.
Ladies and Gentlemen:
Please refer to the Credit Agreement dated as of June 5, 1998 (as
amended or otherwise modified from time to time, the "Credit Agreement") between
Roy F. Weston, Inc. (the "Company") and Bank of America National Trust and
Savings Association (the "Bank"). This certificate (this "Certificate"),
together with supporting calculations attached hereto, is delivered to you
pursuant to the terms of the Credit Agreement. Capitalized terms used but not
otherwise defined herein shall have the same meanings herein as in the Credit
Agreement.
The Company hereby certifies and warrants to the Bank that at the close
of business on ______________, ____ (the "Calculation Date"), the Borrowing Base
was $_____________, computed as set forth on the schedule attached hereto.
IN WITNESS WHEREOF, the Company has caused this Certificate to be
executed and delivered by a Responsible Officer on ___________, ______.
ROY F. WESTON, INC.
By:______________________________
Title:___________________________
C-1
<PAGE> 75
SCHEDULE TO BORROWING BASE CERTIFICATE
DATED AS OF [_________________]
1. ACCOUNTS RECEIVABLE
(a) Gross Accounts Receivable: $_______
(b) Less ineligibles (without duplication):
-services not yet performed (Section 10.8(a)): $_______
-offset, counterclaim or other defense
(Section 10.8(b)): $_______
-subject to a Lien (Section 10.8(c)): $_______
-past due (Section 10.8(d)): $_______
-impermissible billing address (Section 10.8(e)):$_______
-Bonded Receivables (Section 10.8(f)): $_______
-not dollar-denominated (Section 10.8(g)): $_______
-prohibits security interest therein (Section 10.8(h)): $_______
-likely nonpayment condition exists (Section 10.8(i)): $_______
-Account Debtor 90 days past due on 25% or more
of any Receivable (Section 10.8(j)(I)): $_______
-Account Debtor is the Company or
an Affiliate (Section 10.8(j)(II)): $_______
-Account Debtor in Bankruptcy (Section 10.8(j)(III)): $_______
(c) Total Ineligibles (sum of items in (b)): $_______
(d) Eligible Accounts Receivable
((a) minus (c)): $_______
C-2
<PAGE> 76
(e) BORROWING BASE (75% of (d)): $_______
2. Aggregate amount of outstanding Loans: $_______
3. Aggregate Stated Amount of all Letters of Credit: $_______
4. Available Commitment: $_______
(Item 1 (e) minus Item 2 minus Item 3)
C-3
<PAGE> 77
TABLE OF CONTENTS
PAGE
SECTION 1 DEFINITIONS AND INTERPRETATION....................................1
1.1 Certain Definitions...............................................1
1.2 Other Interpretive Provisions....................................12
SECTION 2 COMMITMENTS OF THE BANK; TYPES OF LOANS;
BORROWING, CONVERSION AND LETTER OF CREDIT PROCEDURES. ...........13
2.1 Commitment.......................................................13
2.1.1 Commitment ...................................13
2.2 Various Types of Loans...........................................13
2.3 Borrowing Procedures.............................................13
2.4 Conversion and Continuation Procedures...........................14
2.5 Letter of Credit Procedures......................................14
2.6 Reimbursement Obligations........................................15
2.7 Limitation on the Bank's Obligations.............................15
2.8 Warranty ........................................................15
2.9 Conditions.......................................................16
SECTION 3 NOTE EVIDENCING LOANS............................................16
3.1 Note ........................................................16
3.2 Recordkeeping....................................................16
SECTION 4 INTEREST.........................................................16
4.1 Interest Rates...................................................16
4.2 Interest Payment Dates...........................................17
4.3 Setting and Notice of Eurodollar Rates...........................17
4.4 Computation of Interest..........................................17
SECTION 5 FEES.............................................................17
5.1 Non-Use Fee......................................................17
5.2 Letter of Credit Fees............................................18
-i-
<PAGE> 78
5.3 Closing Fee...................................................... 18
SECTION 6 REDUCTION OR TERMINATION OF THE COMMITMENT;
VOLUNTARY PREPAYMENTS ........................................... 18
6.1 Reduction or Termination of the Commitment........................18
6.2 Prepayments.......................................................18
6.2.1 Mandatory Prepayments.............................18
6.2.2 Voluntary Prepayments.............................19
6.2.3 Prepayments of Eurodollar Loans...................19
SECTION 7 MAKING AND APPLICATION OF PAYMENTS; SETOFF........................19
7.1 Making of Payments................................................19
7.2 Application of Certain Payments...................................19
7.3 Due Date Extension................................................19
7.4 Setoff .........................................................19
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR EURODOLLAR LOANS ..........20
8.1 Increased Costs...................................................20
8.2 Basis for Determining Interest Rate Inadequate or Unfair..........21
8.3 Changes in Law Rendering Certain Loans Unlawful...................22
8.4 Funding Losses....................................................22
8.5 Right of Bank to Fund through Other Offices.......................22
8.6 Discretion of Bank as to Manner of Funding........................23
8.7 Conclusiveness of Statements; Survival of Provisions..............23
SECTION 9 WARRANTIES........................................................23
9.1 Organization, etc.................................................23
9.2 Authorization; No Conflict........................................23
9.3 Validity and Binding Nature.......................................24
9.4 Financial Information.............................................24
9.5 No Material Adverse Change........................................25
9.6 Litigation and Contingent Liabilities.............................25
9.7 Ownership of Properties; Liens....................................25
9.8 Subsidiaries......................................................25
9.9 Pension and Welfare Plans.........................................25
9.10 Regulation U.....................................................25
9.11 Taxes .........................................................25
-ii-
<PAGE> 79
9.12 Environmental Warranties.........................................26
9.13 Regulated Entities...............................................27
9.14 Absence of Default...............................................27
9.15 Information......................................................28
9.16 Lock-Box Banks...................................................28
9.17 Year 2000 Problem................................................28
9.18 Solvency, etc .........................................................28
SECTION 10 COVENANTS........................................................29
10.1 Reports, Certificates and Other Information......................29
10.1.1 Audit Report ....................................29
10.1.2 Quarterly Reports................................29
10.1.3 Monthly Reports..................................29
10.1.4 Certificates ....................................30
10.1.5 Reports to SEC and to Shareholders...............30
10.1.6 Notice of Default, Litigation and Other Matters..30
10.1.7 Subsidiaries ....................................31
10.1.8 Lock-Box Banks...................................31
10.1.9 Management Reports...............................31
10.1.10 Projections ....................................31
10.1.11 Other Information...............................31
10.2 Books, Records and Inspections...................................31
10.3 Insurance........................................................32
10.4 Compliance with Laws; Payment of Taxes and Liabilities...........32
10.5 Maintenance of Existence, etc....................................32
10.6 Financial Covenants..............................................33
10.6.1 Cash On Hand ....................................33
10.6.2 EBITDA Ratio ....................................33
10.6.3 Tangible Net Worth...............................33
10.6.4 Capital Expenditures.............................33
10.7 Limitations on Debt..............................................33
10.8 Liens .........................................................34
10.9 Restricted Payments..............................................35
10.10 Investments.....................................................35
10.11 Mergers, Consolidations, Sales..................................37
10.12 Use of Proceeds.................................................37
10.13 Transactions with Affiliates....................................37
10.14 Employee Benefit Plans..........................................37
10.15 Environmental Covenant..........................................37
10.16 Unconditional Purchase Obligations..............................38
10.17 Further Assurances..............................................38
-iii-
<PAGE> 80
10.18 Business........................................................39
10.19 Inconsistent Agreements.........................................39
10.20 Amendments to Certain Documents.................................39
SECTION 11 CONDITIONS PRECEDENT.............................................39
11.1 Initial Credit Extension.........................................39
11.1.1 Note ....................................39
11.1.2 Resolutions ....................................40
11.1.3 Consents, etc....................................40
11.1.4 Incumbency and Signatures........................40
11.1.5 Security Agreement...............................40
11.1.6 Guaranty ....................................40
11.1.7 Pledge Agreement..................................40
11.1.8 Opinion ....................................40
11.1.9 Blocked Account Letters..........................40
11.1.10 Other ....................................40
11.2 All Credit Extensions............................................40
11.2.1 No Default ....................................41
11.2.2 Confirmatory Certificate.........................41
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT...............................41
12.1 Events of Default................................................41
12.1.1 Non-Payment of the Loans, etc....................41
12.1.2 Non-Payment of Other Debt........................41
12.1.3 Other Material Obligations.......................41
12.1.4 Bankruptcy, Insolvency, etc......................42
12.1.5 Non-Compliance with Provisions of This Agreement.42
12.1.6 Warranties ....................................42
12.1.7 Pension Plans....................................42
12.1.8 Judgments ....................................43
12.1.9 Invalidity of Collateral Documents, etc..........43
12.1.10 Invalidity of Guaranty..........................43
12.1.11 Change in Control...............................43
12.1.12 Bonding Agreements..............................44
12.1.13 Environmental Matters 44
12.2 Effect of Event of Default.......................................44
SECTION 13 GENERAL..........................................................45
-iv-
<PAGE> 81
13.1 Waiver; Amendments...............................................45
13.2 Notices .........................................................45
13.3 Computations.....................................................45
13.4 Costs, Expenses and Taxes........................................45
13.5 Governing Law....................................................46
13.6 Counterparts.....................................................46
13.7 Successors and Assigns...........................................46
13.8 Indemnification by the Company...................................47
13.9 Subsidiary References............................................47
13.10 FORUM SELECTION AND CONSENT TO JURISDICTION.....................47
13.11 WAIVER OF JURY TRIAL............................................48
-v-
<PAGE> 82
SCHEDULES
SCHEDULE 9.6 Litigation and Contingent Liabilities
SCHEDULE 9.8 Subsidiaries
SCHEDULE 9.9 ERISA Matters
SCHEDULE 9.12 Environmental Matters
SCHEDULE 9.16 Lock-Box Banks
SCHEDULE 10.8 Existing Liens
SCHEDULE 10.10 Investments
SCHEDULE 12.1.11 Required Executive Officers
EXHIBITS
EXHIBIT A Form of Note (Section 3.1)
EXHIBIT B Form of Compliance Certificate (Section 10.1.4)
EXHIBIT C Form of Borrowing Base Certificate
(Section 10.1.4)
EXHIBIT D Form of Security Agreement (Section 11.1.5)
EXHIBIT E Form of Guaranty (Section 11.1.8)
EXHIBIT F Form of Company Pledge Agreement (Section 11.1.7)
EXHIBIT G Form of Subsidiary Pledge Agreement (Section 1.1)
EXHIBIT H Form of Intercreditor Agreement (Section 1.1)
EXHIBIT I Form of Opinion (Section 11.1.8)
EXHIBIT J Form of Blocked Account Letter (Section 11.1.9)
-vi-
<PAGE> 1
Exhibit 11
ROY F. WESTON, INC. AND SUBSIDIARIES
STATEMENTS OF COMPUTATION OF EARNINGS (LOSS) PER SHARE
<TABLE>
<CAPTION>
Three Months Ended June 30,
---------------------------
1998 1997
---- ----
(Thousands of Dollars)
<S> <C> <C>
BASIC
Net income (loss) $ 152 $ (5,394)
=========== ===========
Weighted average shares outstanding 9,881,588 9,644,466
=========== ===========
Basic earnings (loss) per share $ .02 $ (.56)
=========== ===========
DILUTED
Net income (loss) $ 152 $ (5,394)
=========== ===========
Weighted average number of shares used in calculating
basic earnings (loss) per share 9,881,588 9,644,466
ADD:
Dilutive impact of stock options 40,797 --
----------- -----------
Weighted average number of shares used in calculating
diluted earnings (loss) per share 9,922,385 9,644,466
=========== ===========
Diluted earnings (loss) per share $ .02 $ (.56)
=========== ===========
</TABLE>
<PAGE> 2
Exhibit 11
ROY F. WESTON, INC. AND SUBSIDIARIES
STATEMENTS OF COMPUTATION OF EARNINGS (LOSS) PER SHARE
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
1998 1997
---- ----
(Thousands of Dollars)
<S> <C> <C>
BASIC
Net income (loss) $ 359 $ (4,998)
=========== ===========
Weighted average shares outstanding 9,881,226 9,651,794
=========== ===========
Basic earnings (loss) per share $ .04 $ (.52)
=========== ===========
DILUTED
Net income (loss) $ 359 $ (4,998)
=========== ===========
Weighted average number of shares used in calculating
basic earnings (loss) per share 9,881,226 9,651,794
ADD:
Dilutive impact of stock options 30,208 --
----------- -----------
Weighted average number of shares used in calculating
diluted earnings (loss) per share 9,911,434 9,651,794
=========== ===========
Diluted earnings (loss) per share $ .04 $ (.52)
=========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET OF JUNE 30, 1998 AND THE CONSOLIDATED STATEMENT OF
INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 1,003
<SECURITIES> 6,012
<RECEIVABLES> 70,788<F1>
<ALLOWANCES> 1,751
<INVENTORY> 0
<CURRENT-ASSETS> 85,816
<PP&E> 49,838
<DEPRECIATION> 40,328
<TOTAL-ASSETS> 114,208
<CURRENT-LIABILITIES> 41,651
<BONDS> 13,116
0
0
<COMMON> 1,182
<OTHER-SE> 54,932
<TOTAL-LIABILITY-AND-EQUITY> 114,208
<SALES> 0
<TOTAL-REVENUES> 113,457
<CGS> 0
<TOTAL-COSTS> 112,941
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 298
<INTEREST-EXPENSE> 706
<INCOME-PRETAX> 599
<INCOME-TAX> 240
<INCOME-CONTINUING> 359
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 359
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
<FN>
<F1>INCLUDES 21,181 OF UNBILLED COSTS AND ESTIMATED EARNINGS THEREON.
</FN>
</TABLE>
