<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
( ) 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, P.O. BOX 2653
WEST CHESTER, PENNSYLVANIA 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 April 30 1999, the registrant had outstanding 7,876,625 shares of
Series A common stock and 2,089,019 shares of common stock.
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<TABLE>
<CAPTION>
Index Page
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<S> <C>
Part I - Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheets -
March 31, 2000 and December 31, 1999 1-2
Consolidated Statements of Operations -
Three Months Ended March 31, 2000 and 1999 3
Consolidated Statements of Cash Flows -
Three Months Ended March 31, 2000 and 1999 4
Notes to Consolidated Financial Statements 5-6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6-8
Part II - Other Information 8-9
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
</TABLE>
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ROY F. WESTON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
(Unaudited)
(Thousands of Dollars)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 1,013 $ 4,355
Accounts receivable, trade, net of allowance for doubtful
accounts of $2,105 in 2000 and $2,040 in 1999 56,926 56,919
Unbilled costs and estimated earnings on contracts in 24,207 27,291
process
Deferred income taxes 2,244 2,202
Other 5,596 4,760
--------- ----------
Total current assets 89,986 95,527
--------- ----------
PROPERTY AND EQUIPMENT
Land 215 215
Buildings and improvements 11,249 11,196
Furniture and equipment 33,075 32,643
Leasehold improvements 1,865 1,846
Construction in progress 139 132
--------- ----------
Total property and equipment 46,543 46,032
Less accumulated depreciation and amortization 36,816 36,184
--------- ----------
Property and equipment, net 9,727 9,848
--------- ----------
OTHER ASSETS
Goodwill, net of accumulated amortization of $4,215 in
2000 and $4,200 in 1999 1,739 1,754
Deferred income taxes 5,103 5,634
Other 8,811 8,664
--------- ----------
Total other assets 15,653 16,052
--------- ----------
TOTAL ASSETS $115,366 $ 121,427
========= ==========
</TABLE>
See notes to consolidated financial statements.
1
<PAGE> 4
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
(Unaudited)
(Thousands of Dollars)
<S> <C> <C>
CURRENT LIABILITIES
Borrowings under line of credit $ 7,300 $ 3,400
Current maturities of long-term debt 382 3,284
Accounts payable and accrued expenses 14,903 17,299
Billing on contracts in process in excess of costs
and estimated earnings 7,662 11,867
Employee compensation, benefits and payroll taxes 7,517 8,732
Income taxes payable 298 288
Other 5,795 5,916
---------- -----------
Total current liabilities 43,857 50,786
---------- -----------
LONG-TERM DEBT 9,601 9,648
---------- -----------
OTHER LIABILITIES 3,914 3,830
---------- -----------
CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $.10 par value, 10,500,000 shares
authorized; 3,170,294 shares issued in 2000
and 1999 317 317
Series A common stock, $.10 par value, 20,500,000
shares authorized; 8,650,778 shares issued in
2000 and 1999 865 865
Unrealized gain on investments 487 419
Additional paid-in capital 55,928 55,928
Retained earnings 5,440 4,695
---------- -----------
63,037 62,224
Less treasury stock at cost, 1,081,275 common
shares in 2000 and 1999; 775,657 Series A
common shares in 2000 and 783,043 Series A
common shares in 1999 5,043 5,061
---------- -----------
Total stockholders' equity 57,994 57,163
---------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $115,366 $ 121,427
========== ===========
</TABLE>
See notes to consolidated financial statements.
2
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ROY F. WESTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31,
2000 1999
(Thousands of Dollars)
<S> <C> <C>
Gross revenues $ 69,700 $ 72,804
Direct project costs 31,009 34,989
------------- ------------
Net revenues 38,691 37,815
------------- ------------
Expenses:
Direct salaries and other operating costs 33,834 32,723
General and administrative expenses 3,977 4,375
------------- ------------
37,811 37,098
------------- ------------
Income from operations 880 717
------------- ------------
Other income (expense):
Investment income 226 205
Interest expense (430) (341)
Equity in earnings of WESKEM, LLC 315 -
Other 250 37
------------- ------------
361 (99)
------------- ------------
Income before income taxes 1,241 618
Provision for income taxes 496 247
------------- ------------
Net income $ 745 $ 371
============= ============
Basic earnings per share $ .07 $ .04
============= ============
Weighted average shares outstanding - basic 9,964,140 9,946,992
============= ============
Diluted earnings per share $ .07 $ .04
============= ============
Weighed average shares outstanding - diluted 9,964,140 9,946,992
============= ============
</TABLE>
See notes to consolidated financial statements.
3
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ROY F. WESTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31,
2000 1999
(Thousands of Dollars)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 745 $ 371
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,008 877
Provision for losses on accounts receivable 75 195
Equity in earnings of WESKEM, LLC (315) -
Other (154) (6)
Change in assets and liabilities:
Accounts receivable, trade (82) 255
Unbilled costs and estimated earnings on contracts 3,084 (1,170)
in process
Other current assets (842) (639)
Accounts payable and accrued expenses (2,396) (1,284)
Billings on contracts in excess of costs and (4,205) (1,721)
estimated earnings
Employee compensation, benefits and payroll taxes (1,215) (1,568)
Income taxes 16 17
Deferred income taxes 454 222
Other current liabilities 32 (131)
Other assets and liabilities 179 305
----------- ----------
Net cash used for operating activities (3,616) (4,277)
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of investments 56 882
Payments for purchase of investments (12) -
Capital expenditures (629) (1,289)
----------- ----------
Net cash used for investing activities (585) (407)
----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under line of credit 3,900 2,500
Principal payments under long-term debt (3,059) (1,735)
Other, net 18 -
----------- ----------
Net cash provided by financing activities 859 765
----------- ----------
Net decrease in cash and cash equivalents (3,342) (3,919)
Cash and cash equivalents:
Beginning of period 4,355 3,993
----------- ----------
End of period $ 1,013 $ 74
=========== ==========
</TABLE>
See notes to consolidated financial statements.
4
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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 1999 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 ended March 31, 2000 are not
necessarily indicative of results for the full year 2000.
NOTE 2 - LINE OF CREDIT AGREEMENT
On April 26, 2000, the Company entered into a new $15,000,000 revolving credit
facility to provide cash borrowings and letters of credit. The facility is
collateralized by liens on substantially all of the Company's tangible and
intangible assets, excluding real estate. The facility, which replaced the
Company's previous credit arrangements, is for a three-year period and is
available for working capital and other general corporate purposes.
Under the terms of the agreement, cash borrowings bear interest at 1/2% 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 tangible net worth
and certain financial ratios and restricts certain expenditures and debt outside
the agreement.
NOTE 3 - SEGMENTS
Net revenues and segment profit (loss) for the three months ended March 31, 2000
and 1999 were as follows:
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Net revenues:
Infrastructure Redevelopment $ 33,266 $ 30,285
Federal Programs 4,410 6,140
Knowledge Systems and Solutions 676 778
Corporate 339 612
----------- ------------
Consolidated $ 38,691 $ 37,815
============ ============
Segment profit (loss):
Infrastructure Redevelopment $ 3,201 $ 3,930
Federal Programs 1,331 1,228
Knowledge Systems and Solutions 8 (197)
Corporate (3,299) (4,343)
----------- ------------
Consolidated $ 1,241 $ 618
============ ============
</TABLE>
5
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NOTE 4 - COMPREHENSIVE INCOME
Comprehensive income consists of net income, adjusted for other increases and
decreases affecting stockholders' equity that, under generally accepted
accounting principles are excluded from the determination of net income.
The calculation of comprehensive income for the three months ended March 31,
2000 and 1999 follows.
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Net income $ 745 $ 371
Unrealized gain (loss) on investments,
net of tax 68 (13)
----------- -----------
Comprehensive income $ 813 $ 358
=========== ===========
</TABLE>
NOTE 5 - CONSOLIDATED STATEMENTS OF CASH FLOW
Cash payments for income taxes were $142,000 in the first three months of 2000.
In the first three months of 1999, the Company received net cash refunds for
income taxes of $2,000. Cash payments for interest were $275,000 and $100,000 in
the three months ended March 31, 2000 and 1999, respectively.
The Company incurred $110,000 and $195,000 of capital lease obligations in the
three months ended March 31, 2000 and 1999, respectively, when the Company
entered into leases for office equipment.
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, 1999.
On April 27, 2000 the Company announced that it had retained Raymond James &
Associates, Inc. to help the Company explore all of its strategic alternatives;
that the Company's Board of Directors had appointed a special committee of
independent directors to evaluate the alternatives on behalf of the holders of
the Company's publicly traded Series A common shares; and that members of the
Weston family who control a majority of the Company's non-publicly traded Common
shares were working with the special committee and Raymond James.
RESULTS OF OPERATIONS
Net income for the three months ended March 31, 2000 was $745,000 or $.07 per
share, compared to $371,000 or $.04 per share, for the three months ended March
31, 1999.
Net revenues increased 2% to $38,691,000 for the three months ended March 31,
2000 compared to $37,815,000 for the comparable 1999 period. An increase of
$2,981,000, or 10%, from the Company's Infrastructure Redevelopment segment was
partially offset by a decrease of
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$1,730,000, or 28%, in net revenues from the Company's Federal Programs segment.
The increase in Infrastructure Redevelopment net revenues is primarily due to
increased volume of work as a result of higher contract bookings in 1999 and
2000. The decrease in Federal Programs' net revenues was primarily due to the
loss of one large contract in the middle of 1999.
For the three months ended March 31, 2000, income from operations was $880,000,
up 23% from $717,000 in the 1999 period. General and administrative expenses
declined $398,000, or 9%, in the three months ended March 31, 2000 due
principally to continued cost containment and operating efficiencies. The 1999
quarter contained unusually high computer training costs related to the
implementation of new systems.
The Company had $361,000 of other income in the three months ended March 31,
2000 compared to other expense of $99,000 in the comparable 1999 period. The
2000 quarter includes $315,000 of equity in undistributed earnings of WESKEM,
LLC, a limited liability company 40%-owned by the Company, which began
operations in late 1999. Other income includes $210,000 and $52,000 in the three
months ended March 31, 2000 and March 31, 1999, respectively, of gains on
redemption of the Company's 7% Convertible Subordinated Debentures. Interest
expense increased $89,000, or 26%, in the three months ended March 31, 2000, due
to an increase in short-term borrowings, partially offset by reduced interest on
the subordinated debentures.
MATERIAL CHANGES IN FINANCIAL CONDITION
Cash and cash equivalents decreased $3,342,000 in the first three months of 2000
to $1,013,000 at March 31, 2000 from $4,355,000 at December 31, 1999.
Operating activities used cash of $3,616,000 for the first three months of 2000,
compared to $4,277,000 in the comparable 1999 period. Unbilled costs and
estimated earnings on contracts in process, net of advance billings increased
$1,203,000 in the three months ended March 31, 2000. Capital expenditures were
$629,000 in the first three months of 2000, compared to $1,289,000 in the
comparable 1999 period. A substantial portion of the 1999 investments related to
the Company's new business systems. Financing activities provided cash of
$859,000 in the three months ended March 31, 2000 as the Company borrowed
$3,900,000 under its line of credit facility and repurchased $3,000,000
principal amount of its 7% convertible subordinated debentures in order to
satisfy the April 15, 2000 sinking fund requirement.
On April 26, 2000, the Company entered into a new three-year $15,000,000
revolving credit facility. The facility, which replaced the Company's previous
credit arrangements, increases the Company's access to working capital
borrowings needed to finance the growth of the Company's business. The Company
is required to maintain minimum levels of tangible net worth and certain
financial ratios and certain expenditures and debt outside the facility are
restricted.
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 Act of 1995 provides a safe harbor for these forward looking statements,
including statements contained in this report. 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
7
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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 in which the Company operates.
- - 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, including successful resolution of any contract disputes.
- - Funding appropriation, funding delay, and the 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, including adequate financing to fund working capital
needs and the Company's acquisition strategy.
- - The Company's ability to execute its strategic plan through successful
marketing activities and continued cost containment.
- - The nature of te Company's work with hazardous materials, toxic wastes, and
other pollutants, and the potential for uninsured claims or claims in excess
of insurance limits, including professional liability and pollution claims.
- - The Company's ability to conclude and implement acquisitions of other
businesses consistent with the Company's acquisition strategy.
- - The Company's ability to retain key personnel.
- - The Company's ability to successfully complete its ongoing exploration and
evaluation of strategic alternatives.
The Company disclaims any intent or obligation to update forward looking
statements.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On April 14, 2000, the Company filed a Preliminary Complaint
against the United States in the United States Court of
Federal Claims (Roy F. Weston, Inc. v. The United States, C.A.
No. 00-213c). The Complaint arises out of a thermal
remediation project that the Company performed under a
contract with the United States Army Corps of Engineers
("USACE") in St. Charles, Missouri during 1998 and 1999. In
its Preliminary Complaint, the Company
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seeks to recover approximately $13 million, plus interest and
legal costs, relating to contract modifications requested by
the Company for work performed on the project, which had been
denied by the USACE project contracting officer. The Company
also disputes the contracting officer's finding that the
Company has been overpaid by approximately $2.6 million. The
Company's Preliminary Complaint asserts that the Company
encountered site conditions that were materially different
from those indicated in the contract documents, as well as
other grounds for relief.
Although the outcome of any litigation is uncertain, the
Company believes that its position is sound and that it will
achieve a favorable result in the litigation, in which event
the Company could recognize a significant gain. In the event
of an unfavorable resolution, the Company could sustain a
material loss.
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.
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
10.1 Financing and Security Agreement
dated April 26, 2000 by and
between the Company and Bank of
America, N.A.
11 Statements of Computation of
Earnings per Share
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K. There were no reports on Form 8-K
in the three months ended March 31, 2000.
9
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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: May 11, 2000 By:/s/ William L. Robertson
---------------------------------
William L. Robertson
Chief Executive Officer
(Duly Authorized Officer)
Date: May 11, 2000 By:/s/ William G. Mecaughey
---------------------------------
William G. Mecaughey
Vice President and
Chief Financial Officer
(Principal Financial Officer)
<PAGE> 1
Exhibit 10.1
FINANCING AND SECURITY AGREEMENT
DATED
APRIL 26, 2000
BY AND BETWEEN
ROY F. WESTON, INC.
AND
BANK OF AMERICA, N.A.
<PAGE> 2
Exhibit 10.1
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
<S> <C>
ARTICLE I DEFINITIONS ................................................. 1
Section 1.1 Certain Defined Terms ....................................... 1
Section 1.2 Accounting Terms and Other Definitional Provisions .......... 19
ARTICLE II THE CREDIT FACILITIES ........................................... 19
Section 2.1 The Revolving Credit Facility ............................... 19
2.1.1 Revolving Credit Facility......................................... 19
2.1.2 Procedure for Making Advances Under the Revolving Loan; Lender
Protection Loans.................................................. 20
2.1.3 Borrowing Base.................................................... 20
2.1.4 Borrowing Base Report............................................. 21
2.1.5 Revolving Credit Note............................................. 21
2.1.6 Mandatory Prepayments of Revolving Loan........................... 22
2.1.7 Optional Prepayments of Revolving Loan............................ 22
2.1.8 The Collateral Account............................................ 22
2.1.9 Revolving Loan Account............................................ 23
2.1.10 Revolving Credit Unused Line Fee ................................ 24
Section 2.2 The Letter of Credit Facility ................................ 24
2.2.1 Letters of Credit................................................. 24
2.2.2 Letter of Credit Fees............................................. 24
2.2.3 Terms of Letters of Credit........................................ 24
2.2.4 Procedure for Letters of Credit................................... 25
2.2.5 Change in Law; Increased Cost..................................... 25
Section 2.3 General Financing Provisions ................................. 25
2.3.1 Borrower's Representatives........................................ 25
2.3.2 Use of Proceeds of the Loan....................................... 26
2.3.3 Origination Fee................................................... 26
2.3.4 Administrative and Audit Fees..................................... 26
2.3.5 Computation of Interest and Fees.................................. 26
2.3.6 Maximum Interest Rate............................................. 26
2.3.7 Payments.......................................................... 27
2.3.8 Liens; Setoff..................................................... 27
2.3.9 Requirements of Law............................................... 27
2.3.10 Funds Transfer Services ......................................... 28
2.3.11 ACH Transactions and Swap Transactions .......................... 29
Section 2.4 Interest ..................................................... 29
2.4.1 Applicable Interest Rates......................................... 29
2.4.2 Selection of Interest Rates....................................... 29
2.4.3 Inability to Determine Eurodollar Base Rate....................... 31
2.4.4 Indemnity......................................................... 31
2.4.5 Payment of Interest............................................... 33
ARTICLE III THE COLLATERAL.................................................. 33
Section 3.1 Debt and Obligations Secured ................................. 33
Section 3.2 Grant of Liens ............................................... 33
Section 3.3 Collateral Disclosure List ................................... 34
Section 3.4 Personal Property ............................................ 34
3.4.1 Securities, Chattel Paper, Promissory Notes, etc.................. 34
3.4.2 Patents, Copyrights and Other Property Requiring Additional
Steps to Perfect.................................................. 35
</TABLE>
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<TABLE>
<S> <C>
Section 3.5 Record Searches .............................................. 35
Section 3.6 Costs ........................................................ 35
Section 3.7 Release ...................................................... 35
Section 3.8 Inconsistent Provisions ...................................... 36
ARTICLE IV REPRESENTATIONS AND WARRANTIES................................... 36
Section 4.1 Representations and Warranties ............................... 36
4.1.1 Subsidiaries...................................................... 36
4.1.2 Good Standing..................................................... 36
4.1.3 Power and Authority............................................... 36
4.1.4 Binding Agreements................................................ 36
4.1.5 No Conflicts...................................................... 37
4.1.6 No Defaults, Violations........................................... 37
4.1.7 Compliance with Laws.............................................. 37
4.1.8 Margin Stock...................................................... 37
4.1.9 Investment Company Act; Margin Securities......................... 37
4.1.10 Litigation ...................................................... 38
4.1.11 Financial Condition ............................................. 38
4.1.12 Full Disclosure ................................................. 38
4.1.13 Indebtedness for Borrowed Money ................................. 38
4.1.14 Taxes ........................................................... 39
4.1.15 ERISA ........................................................... 39
4.1.16 Title to Properties ............................................. 39
4.1.17 Patents, Trademarks, Etc ........................................ 39
4.1.18 Presence of Hazardous Materials or Hazardous
Materials Contamination. ........................................ 40
4.1.19 Perfection and Priority of Collateral 40
4.1.20 No Suspension or Debarment ...................................... 40
4.1.21 Places of Business and Location of Collateral ................... 40
4.1.22 Business Names and Addresses .................................... 40
4.1.23 Equipment ....................................................... 41
4.1.24 Accounts ........................................................ 41
4.1.25 Compliance with Eligibility Standards ........................... 41
4.1.26 Solvency ........................................................ 41
Section 4.2 Survival; Updates of Representations and Warranties .......... 41
ARTICLE V CONDITIONS PRECEDENT ............................................. 42
Section 5.1 Conditions to the Initial Advance and Initial Letter of
Credit. ......................................................... 42
5.1.1 Organizational Documents - Borrower............................... 42
5.1.2 Opinion of Borrower's Counsel..................................... 42
5.1.3 Organizational Documents - Guarantors............................. 43
5.1.4 Consents, Licenses, Approvals, Etc................................ 43
5.1.5 Note.............................................................. 43
5.1.6 Financing Documents and Collateral................................ 44
5.1.7 Other Financing Documents......................................... 44
5.1.8 Other Documents, Etc.............................................. 44
5.1.9 Payment of Fees................................................... 44
5.1.10 Collateral Disclosure List ....................................... 44
5.1.11 Recordings and Filings ........................................... 44
5.1.12 Insurance Certificate ............................................ 44
5.1.13 Field Examination ................................................ 44
5.1.14 Confirmation of Intercreditor Agreement .......................... 45
</TABLE>
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<TABLE>
<S> <C>
Section 5.2 Conditions to all Extensions of Credit ....................... 45
5.2.1 Compliance........................................................ 45
5.2.2 Borrowing Base.................................................... 45
5.2.3 Default........................................................... 45
5.2.4 Representations and Warranties.................................... 45
5.2.5 Adverse Change.................................................... 45
5.2.6 Legal Matters..................................................... 45
ARTICLE VI COVENANTS OF THE BORROWER........................................ 46
Section 6.1 Affirmative Covenants ........................................ 46
6.1.1 Financial Statements.............................................. 46
6.1.2 Reports to SEC and to Stockholders................................ 48
6.1.3 Recordkeeping, Rights of Inspection, Audit, Etc................... 48
6.1.4 Corporate Existence............................................... 49
6.1.5 Compliance with Laws.............................................. 49
6.1.6 Preservation of Properties........................................ 49
6.1.7 Line of Business.................................................. 49
6.1.8 Insurance......................................................... 49
6.1.9 Taxes............................................................. 50
6.1.10 ERISA ........................................................... 50
6.1.11 Notification of Events of Default and Adverse Developments ...... 50
6.1.12 Government Contracts ............................................ 51
6.1.13 Hazardous Materials; Contamination .............................. 51
6.1.14 Disclosure of Significant Transactions .......................... 52
6.1.15 Financial Covenants ............................................. 52
6.1.16 Collection of Receivables ....................................... 53
6.1.17 Assignments of Receivables ...................................... 53
6.1.18 Insurance With Respect to Equipment ............................. 54
6.1.19 Maintenance of the Collateral ................................... 54
6.1.20 Equipment ....................................................... 54
6.1.21 Defense of Title and Further Assurances ......................... 54
6.1.22 Business Names; Locations ....................................... 55
6.1.23 Subsequent Opinion of Counsel as to Recording Requirements ...... 55
6.1.24 Use of Premises and Equipment ................................... 55
6.1.25 Protection of Collateral ........................................ 56
6.1.26 Appraisals ...................................................... 56
Section 6.2 Negative Covenants ........................................... 56
6.2.1 Capital Structure, Merger, Acquisition or Sale of Assets ......... 56
6.2.2 Subsidiaries ..................................................... 56
6.2.3 Purchase or Redemption of Securities, Dividend Restrictions ...... 57
6.2.4 Indebtedness ..................................................... 57
6.2.5 Investments, Loans and Other Transactions ........................ 57
6.2.6 Stock of Subsidiaries ............................................ 58
6.2.7 Subordinated Indebtedness ........................................ 58
6.2.8 Liens; Confessed Judgment ........................................ 59
6.2.9 Transactions with Affiliates ..................................... 59
6.2.10 Other Businesses ................................................ 59
6.2.11 ERISA Compliance ................................................ 59
6.2.12 Method of Accounting; Fiscal Year ............................... 59
6.2.13 Compensation .................................................... 60
</TABLE>
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<TABLE>
<S> <C>
6.2.14 Transfer of Collateral .......................................... 60
6.2.15 Sale and Leaseback .............................................. 60
6.2.16 Disposition of Collateral ....................................... 60
ARTICLE VII DEFAULT AND RIGHTS AND REMEDIES................................. 60
Section 7.1 Events of Default ............................................ 60
7.1.1 Failure to Pay.................................................... 60
7.1.2 Breach of Representations and Warranties.......................... 61
7.1.3 Failure to Comply with Covenants.................................. 61
7.1.4 Default Under Other Financing Documents or Obligations............ 61
7.1.5 Receiver; Bankruptcy.............................................. 61
7.1.6 Involuntary Bankruptcy, etc....................................... 61
7.1.7 Judgment.......................................................... 62
7.1.8 Execution; Attachment............................................. 62
7.1.9 Default Under Other Borrowings.................................... 62
7.1.10 Challenge to Agreements ......................................... 62
7.1.11 Material Adverse Change ......................................... 62
7.1.12 Impairment of Position .......................................... 62
7.1.13 Collateral Inadequacy ........................................... 63
7.1.14 Liquidation, Termination, Dissolution ........................... 63
7.1.15 Change in Senior Management of the Borrower ..................... 63
7.1.16 Contract Default, Debarment or Suspension ....................... 63
Section 7.2 Remedies ..................................................... 63
7.2.1 Acceleration...................................................... 63
7.2.2 Further Advances.................................................. 63
7.2.3 Uniform Commercial Code........................................... 64
7.2.4 Specific Rights With Regard to Collateral......................... 64
7.2.5 Application of Proceeds........................................... 65
7.2.6 Performance by Lender............................................. 66
7.2.7 Other Remedies.................................................... 66
ARTICLE VIII MISCELLANEOUS.................................................. 66
Section 8.1 Notices ...................................................... 66
Section 8.2 Amendments; Waivers .......................................... 67
Section 8.3 Cumulative Remedies .......................................... 68
Section 8.4 Severability ................................................. 68
Section 8.5 Assignments by Lender ........................................ 69
Section 8.6 Successors and Assigns ....................................... 69
Section 8.7 Continuing Agreements ........................................ 69
Section 8.8 Enforcement Costs ............................................ 70
Section 8.9 Applicable Law; Jurisdiction ................................. 70
8.9.1 Applicable Law ................................................... 70
8.9.2 Submission to Jurisdiction ....................................... 70
8.9.3 Appointment of Agent for Service of Process ...................... 70
8.9.4 Service of Process ............................................... 71
Section 8.10 Duplicate Originals and Counterparts ........................ 71
Section 8.11 Headings .................................................... 71
Section 8.12 No. Agency .................................................. 71
Section 8.13 Date of Payment ............................................. 71
Section 8.14 Entire Agreement ............................................ 72
Section 8.15 Waiver of Trial by Jury ..................................... 72
</TABLE>
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<TABLE>
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Section 8.16 Liability of the Lender ..................................... 72
</TABLE>
<PAGE> 7
FINANCING AND SECURITY AGREEMENT
--------------------------------
THIS FINANCING AND SECURITY AGREEMENT (this "Agreement") is made this ___
day of April, 2000, by and between ROY F. WESTON, INC., a corporation organized
under the laws of the Commonwealth of Pennsylvania (the "Borrower"); and BANK OF
AMERICA, N. A., a national banking association (the "Lender").
RECITALS
--------
A. The Borrower has applied to the Lender for certain credit facilities
consisting of a revolving credit facility in the maximum principal amount of
$15,000,000 and a letter of credit facility in the maximum principal amount of
$7,500,000, as part of that revolving credit facility to be used by the Borrower
for the Permitted Uses described in this Agreement.
B. The Lender is willing to make the credit facilities available to the
Borrower upon the terms and subject to the conditions set forth in this
Agreement.
ARTICLE I
DEFINITIONS
-----------
Section 1.1 Certain Defined Terms.
----------------------
As used in this Agreement, the terms defined in the Preamble and Recitals
hereto shall have the respective meanings specified therein, and the following
terms shall have the following meanings:
"Account" individually and "Accounts" collectively mean all presently
existing or hereafter acquired or created accounts, accounts receivable,
contract rights, notes, drafts, instruments, acceptances, chattel paper, leases
and writings evidencing a monetary obligation or a security interest in, or a
lease of, goods, all rights to receive the payment of money or other
consideration under present or future contracts (including, without limitation,
all rights to receive payments under presently existing or hereafter acquired or
created letters of credit), or by virtue of merchandise sold or leased, services
rendered, loans and advances made or other considerations given, by or set forth
in or arising out of any present or future chattel paper, note, draft, lease,
acceptance, writing, bond, insurance policy, instrument, document or general
intangible, and all extensions and renewals of any thereof, all rights under or
arising out of present or future contracts, agreements or general interest in
merchandise which gave rise to any or all of the foregoing, including all goods,
all claims or causes of action now existing or hereafter arising in connection
with or under any agreement or document or by operation of law or otherwise, all
collateral security of any kind (including, without limitation, real property
mortgages and deeds of trust) and letters of credit given by any Person with
respect to any of the foregoing, all books and records in whatever media (paper,
electronic or otherwise) recorded or stored, with respect to any or all of the
foregoing and all equipment and general intangibles necessary or beneficial to
retain, access and/or process the information contained in those books and
records, and all proceeds (cash and non-cash) of the foregoing.
"Account Debtor" means any Person who is obligated on a Receivable and
"Account Debtors" mean all Persons who are obligated on the Receivables.
<PAGE> 8
"ACH Settlement Risk Reserve" means any and all reserves which the Lender
from time to time establishes, in its sole discretion, with respect to ACH
Transactions.
"ACH Transactions" means any cash management or related services including
the automatic clearing house transfer of funds by the Lender for the account of
the Borrower pursuant to agreement or overdrafts.
"Additional Borrower" means each Person that has executed and delivered an
Additional Borrower Joinder Supplement that has been accepted and approved by
the Lender.
"Additional Borrower Joinder Supplement" means an Additional Borrower
Joinder Supplement in substantially the form attached hereto as EXHIBIT A, with
the blanks appropriately completed and executed and delivered by the Additional
Borrower and accepted by the Designated Borrower on behalf of the Borrowers.
"Administrative Fees" has the meaning described in Section 2.3.4
(Administrative and Audit Fees).
"Affiliate" means, with respect to any designated Person, any other
Person, (a) directly or indirectly controlling, directly or indirectly
controlled by, or under direct or indirect common control with the Person
designated, (b) directly or indirectly owning or holding five percent (5%) or
more of any equity interest in such designated Person, or (c) five percent (5%)
or more of whose stock or other equity interest is directly or indirectly owned
or held by such designated Person. For purposes of this definition, the term
"control" (including with correlative meanings, the terms "controlling",
"controlled by" and "under common control with") means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through ownership of voting securities or
other equity interests or by contract or otherwise.
"Agreement" means this Financing and Security Agreement, as amended,
restated, supplemented or otherwise modified in writing in accordance with the
provisions of Section 8.2 (Amendments; Waivers).
"Applicable Interest Rate" means (a) the Eurodollar Rate or (b) the
Base Rate.
"Applicable Margin" means the applicable rate per annum added, as set
forth in Section 2.4.1 (Applicable Interest Rates), to the Eurodollar Base Rate
or the Prime Rate.
"Assets" means at any date all assets that, in accordance with GAAP
consistently applied, should be classified as assets on a consolidated balance
sheet of the Borrower and its Subsidiaries.
"Bankruptcy Code" means the United States Bankruptcy Code, as amended from
time to time.
"Base Rate" means the sum of (a) the Applicable Margin plus (b) the
Prime Rate.
"Base Rate Loan" means any Loan for which interest is to be computed with
reference to the Base Rate.
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<PAGE> 9
"Blocked Account Agreement" means the Blocked Account Agreement of even
date herewith by and between Allfirst Bank, the Lender and the Borrower, as from
time to time extended, amended, restated, supplemented or other wise modified.
"Borrowing Base" has the meaning described in Section 2.1.3 (Borrowing
Base).
"Borrowing Base Deficiency" has the meaning described in Section 2.1.3
(Borrowing Base).
"Borrowing Base Report" has the meaning described in Section 2.1.4
(Borrowing Base Report).
"Borrower" means each Person defined as a "Borrower" in the preamble of
this Agreement and each Additional Borrower; "Borrowers" means the collective
reference to all Persons defined as "Borrowers" in the preamble to this
Agreement and all Additional Borrowers.
"Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks in the State are authorized or required to close.
"Capital Adequacy Regulation" means any guideline, request or directive of
any central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.
"Capital Expenditure" means an expenditure for Fixed or Capital Assets
including, without limitation, the entering into of a Capital Lease.
"Capital Lease" means any lease of real or personal property, for which
the related Lease Obligations have been or should be, in accordance with GAAP
consistently applied, capitalized on the balance sheet.
"Cash Equivalents" means (a) securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed or insured by the
United States Government or any agency thereof, (b) certificates of deposit with
maturities of one (1) year or less from the date of acquisition of, or money
market accounts maintained with, the Lender, any Affiliate of the Lender, or any
other domestic commercial bank having capital and surplus in excess of One
Hundred Million Dollars ($100,000,000.00) or such other domestic financial
institutions or domestic brokerage houses to the extent disclosed to, and
approved by, the Lender and (c) commercial paper of a domestic issuer rated at
least either A-1 by Standard & Poor's Corporation or P-1 by Moody's Investors
Service, Inc. with maturities of six (6) months or less from the date of
acquisition.
"Cash Flow" means as to the Borrower and its Subsidiaries for any period
of determination thereof, the sum of earnings before deduction of interest
expenses, taxes, depreciation and amortization expense minus capital
expenditures directly related to maintenance and cash taxes paid, all calculated
in accordance with GAAP consistently applied.
"Chattel Paper" means a writing or writings which evidence both a monetary
obligation and a security interest in or lease of specific goods; any returned,
rejected or repossessed goods covered by any such writing or writings and all
proceeds (in any form including, without limitation,
3
<PAGE> 10
accounts, contract rights, documents, chattel paper, instruments and general
intangibles) of such returned, rejected or repossessed goods; and all proceeds
(cash and non-cash) of the foregoing.
"Closing Date" means the Business Day, in any event not later than April
__, 2000, on which the Lender shall be satisfied that the conditions precedent
set forth in Section 5.1 (Conditions to Initial Advance) have been fulfilled.
"Collateral" means all property of the Borrower subject from time to time
to the Liens of this Agreement, any of the Security Documents and/or any of the
other Financing Documents, together with any and all cash and non-cash proceeds
and products thereof.
"Collateral Account" has the meaning described in Section 2.1.8 (The
Collateral Account).
"Collateral Disclosure List" has the meaning described in Section 3.3
(Collateral Disclosure List).
"Collection" means each check, draft, cash, money, instrument, item, and
other remittance in payment or on account of payment of the Accounts or
otherwise with respect to any Collateral, including, without limitation, cash
proceeds of any returned, rejected or repossessed goods, the sale or lease of
which gave rise to an Account, and other proceeds of Collateral; and
"Collections" means the collective reference to all of the foregoing.
"Commitment" means the collective reference to the Revolving Credit
Commitment.
"Committed Amount" means the Revolving Credit Committed Amount.
"Compliance Certificate" means a periodic Compliance Certificate
described in Section 6.1.1 (Financial Statements).
"Commonly Controlled Entity" means an entity, whether or not incorporated,
which is under common control with the Borrower within the meaning of Section
414(b) or (c) of the Internal Revenue Code.
"Copyrights" means and includes, in each case whether now existing or
hereafter arising, all of the Borrower's rights, title and interest in and to
(a) all copyrights, rights and interests in copyrights, works protectable by
copyright, copyright registrations, copyright applications, and all renewals of
any of the foregoing, (b) all income, royalties, damages and payments now or
hereafter due and/or payable under any of the foregoing, including, without
limitation, damages or payments for past, current or future infringements of any
of the foregoing, (c) the right to sue for past, present and future
infringements of any of the foregoing, and (d) all rights corresponding to any
of the foregoing throughout the world.
"Credit Facility" means the Revolving Credit Facility or the Letter of
Credit Facility, as the case may be, and "Credit Facilities" means collectively
the Revolving Credit Facility and the Letter of Credit Facility and any and all
other credit facilities now or hereafter extended under or secured by this
Agreement.
"Default" means an event which, with the giving of notice or lapse of
time, or both, could or would constitute an Event of Default under the
provisions of this Agreement.
4
<PAGE> 11
"Documents" means all documents of title, whether now existing or
hereafter acquired or created, and all proceeds (cash and non-cash) of the
foregoing.
"Eligible Receivable" and "Eligible Receivables" mean, at any time of
determination thereof, the unpaid portion of each account receivable (net of any
returns, discounts, claims, credits, charges, accrued rebates or other
allowances, offsets, deductions, counterclaims, disputes or other defenses and
reduced by the aggregate amount of all reserves, limits and deductions provided
for in this definition and elsewhere in this Agreement) in United States Dollars
by the Borrower, provided each account receivable conforms and continues to
conform to the following criteria to the reasonable satisfaction of the Lender:
(a) the account arose in the ordinary course of the
Borrower's business from services performed by the Borrower;
(b) the account is a valid, legally enforceable
obligation of the Account Debtor and requires no further act on the
part of any Person under any circumstances to make the account payable
by the Account Debtor;
(c) the account is based upon an enforceable order or
contract, written or oral, for services performed, and the same were
performed in accordance with such order or contract;
(d) if the account arises from the performance of
services, such services have been fully rendered (or, in the case
progress billings, the performance relating to such Receivable has been
rendered) and do not relate to any warranty claim or obligation;
(e) the account is evidenced by an invoice or other
documentation in form acceptable to the Lender, the invoice or
documentation dated no later than the date of shipment or performance
and containing only terms normally offered by the Borrower;
(f) the amount shown on the books of the Borrower and
on any invoice, certificate, schedule or statement delivered to the
Lender is owing to the Borrower and no partial payment has been
received unless reflected with that delivery;
(g) the account is not outstanding more than ninety
(90) days from the date of the invoice therefor or past due more than
sixty (60) days after its due date, which shall not be later than
thirty (30) days after the invoice date;
(h) the account is not owing by any Account Debtor for
which the Lender has deemed fifty percent (50%) or more of such Account
Debtor's other accounts (or any portion thereof) due to the Borrower to
be non-Eligible Receivables, excluding accounts described in
subsections (m), (q), (t), (u), (v) or (z) and Receivables that are not
denominated in United States Dollars;
5
<PAGE> 12
(i) the account is not owing by an Account Debtor or a
group of affiliated Account Debtors whose then existing accounts owing
to the Borrower exceed in aggregate face amount fifteen percent (15%)
of the Borrower's total Eligible Receivables;
(j) the Account Debtor has not returned, rejected or
refused to retain, or otherwise notified the Borrower of any dispute
concerning, or claimed nonconformity of, any services from the
furnishing of which the account arose (except to the extent the
disputed amount is not included in the amount of Eligible Receivables);
(k) the account is not subject to any present or
contingent (and no facts exist which are the basis for any future)
offset, claim, deduction or counterclaim, dispute or defense in law or
equity on the part of such Account Debtor, or any claim for credits,
allowances, or adjustments by the Account Debtor because of
unsatisfactory services, or for any other reason including, without
limitation, those arising on account of a breach of any express or
implied representation or warranty (except to the extent the disputed
amount is not included in the amount of Eligible Receivables);
(l) the Account Debtor is not a Subsidiary or
Affiliate of the Borrower or an employee, officer, director or
shareholder of the Borrower or any Subsidiary or Affiliate of the
Borrower; provided, however, if the Account Debtor is an Affiliate and
the account arose from an arms-length transaction with the Borrower,
the account may be included as an Eligible Receivable if all other
conditions therefore set forth in this definition are satisfied;
(m) the Account Debtor is not incorporated or
primarily conducting business or otherwise located in any jurisdiction
outside of the United States of America, unless the account is
supported by a letter of credit acceptable to the Lender in all
respects;
(n) as to which none of the following events has
occurred with respect to the Account Debtor on such account: death or
judicial declaration of incompetency of an Account Debtor who is an
individual; the filing by or against the Account Debtor of a request or
petition for liquidation, reorganization, arrangement, adjustment of
debts, adjudication as a bankrupt, winding-up, or other relief under
the bankruptcy, insolvency, or similar laws of the United States, any
state or territory thereof, or any foreign jurisdiction, now or
hereafter in effect; the making of any general assignment by the
Account Debtor for the benefit of creditors; the appointment of a
receiver or trustee for the Account Debtor or for any of the assets of
the Account Debtor, including, without limitation, the appointment of
or taking possession by a "custodian," as defined in the Federal
Bankruptcy Code; the institution by or against the Account Debtor of
any other type of insolvency proceeding (under the bankruptcy laws of
the United States or otherwise) or of any formal or informal proceeding
for the dissolution or liquidation of, settlement of claims against, or
winding up of affairs of, the Account Debtor; the sale, assignment, or
transfer of all or any material part of the
6
<PAGE> 13
assets of the Account Debtor; the nonpayment generally by the Account
Debtor of its debts as they become due; or the cessation of the
business of the Account Debtor as a going concern;
(o) the Borrower is not indebted to the Account Debtor
in an amount equal to or in excess of that owed to the Borrower by the
Account Debtor (as creditor, lessor, supplier or otherwise), with the
exception of customary credits, adjustments and/or discounts given to
an Account Debtor by the Borrower in the ordinary course of its
business and in this instance, the account shall be included only to
the extent of the positive difference owed to the Borrower by the
Account Debtor;
(p) the account does not arise from services under or
related to any warranty obligation of the Borrower or out of service
charges, finance charges or other fees for the time value of money;
(q) the account is not evidenced by chattel paper or
an instrument of any kind;
(r) if the account is secured by a letter of credit,
the letter of credit has been delivered to the Lender;
(s) the title of the Borrower to the account is
absolute and is not subject to any prior assignment, claim, Lien, or
security interest, except Permitted Liens;
(t) no bond or other undertaking by a guarantor or
surety has been or is required to be obtained, supporting the
performance of the Borrower or any other obligor in respect of any of
the Borrower's agreements with the Account Debtor;
(u) the Borrower has the full and unqualified right
and power to assign and grant a security interest in, and Lien on, the
account to the Lender as security and collateral for the payment of the
Obligations;
(v) the account does not arise out of a contract with,
or order from, an Account Debtor that, by its terms, forbids or makes
void or unenforceable the assignment or grant of a security interest by
the Borrower to the Lender of the account arising from such contract or
order;
(w) the account is subject to a Lien in favor of the
Lender, which Lien is perfected as to the account by the filing of
financing statements and which Lien upon such filing constitutes a
first priority security interest and Lien;
(x) the Lender in the good faith exercise of its
reasonable discretion has not deemed the account ineligible because of
uncertainty as to the creditworthiness of the Account Debtor or because
the
7
<PAGE> 14
Lender otherwise considers the collateral value of such account to the
Lender to be impaired or its ability to realize such value to be
insecure; and
(y) if the Account Debtor is located in a state
requiring the filing of a Notice of Business Activities Report or
similar report in order to permit the Borrower to seek judicial
enforcement in such state of payment of such account, the Borrower has
qualified to do business in such state or has filed a Notice of
Business Activities Report or equivalent report for the then current
year.
In the event of any dispute, under the foregoing criteria, as to whether
an account is, or has ceased to be, an Eligible Receivable, the decision of the
Lender in the good faith exercise of its reasonable discretion shall control.
"Enforcement Costs" means all reasonable expenses, charges, costs and fees
whatsoever (including, without limitation, reasonable attorney's fees and
expenses) of any nature whatsoever paid or incurred by or on behalf of the
Lender in connection with (a) any or all of the Obligations, this Agreement
and/or any of the other Financing Documents, (b) the creation, perfection,
collection, maintenance, preservation, defense, protection, realization upon,
disposition, sale or enforcement of all or any part of the Collateral, this
Agreement or any of the other Financing Documents, including, without
limitation, those costs and expenses more specifically enumerated in Section 3.6
(Costs) and/or Section 8.8 (Enforcement Costs), and further including, without
limitation, amounts paid to lessors, processors, bailees, warehousemen,
sureties, judgment creditors and others in possession of or with a Lien against
or claimed against the Collateral, and (c) the monitoring, administration,
processing and/or servicing of any or all of the Obligations, the Financing
Documents, and/or the Collateral.
"Equipment" means all equipment, machinery, computers, chattels, tools,
parts, machine tools, furniture, furnishings, fixtures and supplies of every
nature, presently existing or hereafter acquired or created and wherever
located, whether or not the same shall be deemed to be affixed to real property,
and all of such types of property leased by the Borrower and all of the
Borrower's rights and interests with respect thereto under such leases
(including, without limitation, options to purchase, but not including interests
in Equipment and leases thereof that cannot be assigned without the lessor's
consent) together with all accessions, additions, fittings, accessories, special
tools, and improvements thereto and substitutions therefor and all parts and
equipment which may be attached to or which are necessary or beneficial for the
operation, use and/or disposition of such personal property, all licenses,
warranties, franchises and general intangibles related thereto or necessary or
beneficial for the operation, use and/or disposition of the same, together with
all Accounts, Chattel Paper, Instruments and other consideration received by the
Borrower on account of the sale, lease or other disposition of all or any part
of the foregoing, and together with all rights under or arising out of present
or future Documents and contracts relating to the foregoing and all proceeds
(cash and non-cash) of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurodollar Base Rate" means for any Interest Period with respect to any
Eurodollar Loan, the per annum interest rate rounded upward, if necessary, to
the nearest 1/100 of 1%, appearing on Telerate Page 3750 (or any successor page)
as the London interbank offered rate for
8
<PAGE> 15
deposits in Dollars at or about 11:00 a.m. (London time) on the date that is two
(2) Eurodollar Business Days prior to the first day of such Interest Period for
a term comparable to such Interest Period. If for any reason such rate is not
available, the term "Eurodollar Base Rate" shall mean, for any Eurodollar Loan
for any Interest Period therefore, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as
the London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two (2) Eurodollar Business Days prior to the first day of
such Interest Period for a term comparable to such Interest Period; provided,
however, if more than one rate is specified on Reuters Screen LIBO Page, the
applicable rate shall be the arithmetic mean of all such rates (rounded upwards,
if necessary, to the nearest 1/100 of 1%).
"Eurodollar Business Day" means any Business Day on which dealings in
United States Dollar deposits are carried out on the London interbank market and
on which commercial banks are open for domestic and international business
(including dealings in Dollar deposits) in London, England.
"Eurodollar Loan" means any Loan for which interest is to be computed with
reference to the Eurodollar Rate.
"Eurodollar Rate" means for any Interest Period with respect to any
Eurodollar Loan, (a) the Applicable Margin, plus (b) the per annum rate of
interest calculated pursuant to the following formula:
Eurodollar Base Rate
-------------------------
1.00 - Reserve Percentage
"Event of Default" has the meaning described in ARTICLE VII (Default
and Rights and Remedies).
"Facilities" means the collective reference to the loan, letter of credit,
interest rate protection, foreign exchange risk, cash management, and other
credit facilities now or hereafter provided to the Borrower by the Lender
whether under this Agreement or otherwise.
"Fees" means the collective reference to each fee payable by the Borrower
to the Lender under the terms of this Agreement or under the terms of any of the
other Financing Documents, including, without limitation, the following:
Revolving Credit Unused Line Fees, Letter of Credit Fees, Administrative Fees
and the Origination Fee.
"Financing Documents" means at any time collectively this Agreement, the
Note, the Guaranty, the Security Documents, the Letter of Credit Documents, and
any other instrument, agreement or document previously, simultaneously or
hereafter executed and delivered by the Borrower, any Guarantor and/or any other
Person, singly or jointly with another Person or Persons, evidencing, securing,
guarantying or in connection with this Agreement, any Note, any of the Security
Documents, any of the Facilities, and/or any of the Obligations.
"Fixed Charges" means for any period of determination, the scheduled or
required payments (including, without limitation, principal and interest) on all
Indebtedness for Borrowed Money of the Borrower and its Subsidiaries.
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<PAGE> 16
"Fixed Charge Coverage Ratio" means for the period of any determination
thereof the ratio of (a) Cash Flow to (b) Fixed Charges.
"GAAP" means generally accepted accounting principles in the United States
of America in effect from time to time.
"General Intangibles" means all general intangibles of every nature,
whether presently existing or hereafter acquired or created, and without
implying any limitation of the foregoing, further means all books and records,
claims (including without limitation all claims for income tax and other
refunds), choses in action, claims, causes of action in tort or equity, contract
rights, judgments, customer lists, Patents, Trademarks, licensing agreements,
rights in intellectual property, goodwill (including goodwill of the Borrower's
business symbolized by and associated with any and all trademarks, trademark
licenses, Copyrights and/or service marks), royalty payments, licenses,
contractual rights, rights as lessee under any lease of personal property
(except leases that cannot be assigned without the lessor's consent), literary
rights, Copyrights, service names, service marks, logos, trade secrets, amounts
received as an award in or settlement of a suit in damages, deposit accounts,
interests in joint ventures, general or limited partnerships, or limited
liability companies or partnerships, rights in applications for any of the
foregoing, books and records in whatever media (paper, electronic or otherwise)
recorded or stored, with respect to any or all of the foregoing and all
equipment and general intangibles necessary or beneficial to retain, access
and/or process the information contained in those books and records, and all
proceeds (cash and non-cash) of the foregoing.
"Government Contracts" means any contract with the United States or with
any state or political subdivision thereof or any department, agency or
instrumentality of the United States, or any state or political subdivision
thereof.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any department, agency or instrumentality thereof.
"Guarantor" means Roy F. Weston of New York, Inc., a corporation
organized and existing under the laws of the State or New York, Roy F. Weston
of Missouri, Inc., a corporation organized and existing under the laws of the
State of Delaware, Roy. F. Weston, Inc. of Michigan, a corporation organized
and existing under the laws of the State of Michigan or Weston International
Holdings, Inc., a corporation organized and existing under the laws of the
State of Delaware, as the case may be and each of their respective successors
and assigns, and "Guarantors" means Roy F. Weston of New York, Inc., Roy F.
Weston of Missouri, Inc., Roy. F. Weston, Inc. of Michigan, and Weston
International Holdings, Inc. and each of their respective successors and
assigns.
"Guaranty" means that certain guaranty of payment for the benefit of the
Lender dated the date hereof to the Lender from the Guarantors, as the same may
from time to time be amended, restated, supplemented or otherwise modified.
"Hazardous Materials" means (a) any "hazardous waste" as defined by the
Resource Conservation and Recovery Act of 1976, as amended from time to time,
and regulations
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<PAGE> 17
promulgated thereunder; (b) any "hazardous substance" as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended from time to time, and regulations promulgated thereunder; (c) any
substance the presence of which on any property now or hereafter owned, acquired
or operated by the Borrower is prohibited by any Law similar to those set forth
in this definition; and (d) any other substance which by Law requires special
handling in its collection, storage, treatment or disposal.
"Hazardous Materials Contamination" means the contamination (whether
presently existing or occurring after the date of this Agreement) by Hazardous
Materials of any property owned, operated or controlled by the Borrower or for
which the Borrower has responsibility, including, without limitation,
improvements, facilities, soil, ground water, air or other elements on, or of,
any property now or hereafter owned, acquired or operated by the Borrower, and
any other contamination by Hazardous Materials for which the Borrower is, or is
claimed to be, responsible.
"Indebtedness" of a Person means at any date the total liabilities of such
Person at such time determined in accordance with GAAP consistently applied.
"Indebtedness for Borrowed Money" of a Person means at any time the sum at
such time of (a) indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services, (b) any obligations of such
Person in respect of letters of credit, banker's or other acceptances or similar
obligations issued or created for the account of such Person, (c) Lease
Obligations of such Person with respect to Capital Leases, (d) all liabilities
secured by any Lien on any property owned by such Person, to the extent attached
to such Person's interest in such property, even though such Person has not
assumed or become personally liable for the payment thereof, (e) obligations of
third parties which are being guaranteed or indemnified against by such Person
or which are secured by the property of such Person; (f) any obligation of such
Person under a employee stock ownership plan or other similar employee benefit
plan; (g) any obligation of such Person or a Commonly Controlled Entity to a
Multi-employer Plan; and (h) any obligations, liabilities or indebtedness,
contingent or otherwise, under or in connection with, any Swap Transaction; but
excluding trade and other accounts payable in the ordinary course of business in
accordance with customary trade terms and which are not overdue (as determined
in accordance with customary trade practices) or which are being disputed in
good faith by such Person and for which adequate reserves are being provided on
the books of such Person in accordance with GAAP.
"Indenture" means that certain Indenture dated as of April 15, 1987 (as
amended, supplemented or otherwise modified from time to time), between the
Borrower and the Trustee.
"Intercreditor Agreement" means that certain Intercreditor Agreement dated
June 5, 1998, by and between Reliance and Bank of America, N. A., successor to
Bank of America National Trust and Savings Association, as from time to time,
extended, amended, restated, supplemented or otherwise modified.
"Interest Period" means as to any Eurodollar Loan, the period commencing
on and including the date such Eurodollar Loan is made (or on the effective date
of the Borrower's election to convert any Base Rate Loan to a Eurodollar Loan in
accordance with the provisions of this Agreement) and ending on and including
the day which is one month, two months or three months thereafter, as selected
by the Borrower in accordance with the provisions of this Agreement, and
thereafter, each period commencing on the last day of the then preceding
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<PAGE> 18
Interest Period for such Eurodollar Loan and ending on and including the day
which is one month, two months or three months thereafter, as selected by the
Borrower in accordance with the provisions of this Agreement; provided, however
that:
(a) the first day of any Interest Period shall be a
Eurodollar Business Day;
(b) if any Interest Period would end on a day that
shall not be a Eurodollar Business Day, such Interest Period shall be
extended to the next succeeding Eurodollar Business Day unless such
next succeeding Eurodollar Business Day would fall in the next calendar
month, in which case, such Interest Period shall end on the next
preceding Eurodollar Business Day; and
(c) no Interest Period shall extend beyond the
Revolving Credit Expiration Date.
"Interest Rate Election Notice" has the meaning described in Section
2.4.2(e) (Selection of Interest Rates).
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, and the Income Tax Regulations issued thereunder.
"Instrument" means a negotiable instrument (as defined under Article 3 of
the Uniform Commercial Code), a "certificated security" (as defined under
Article 8 of the Uniform Commercial Code), or any other writing which evidences
a right to payment of money and is not itself a security agreement or lease and
is of a type which is in the ordinary course of business transferred by delivery
with any necessary endorsement.
"Item of Payment" means each check, draft, cash, money, instrument, item,
and other remittance in payment or on account of payment of the Receivables or
otherwise with respect to any Collateral, including, without limitation, cash
proceeds of any returned, rejected or repossessed goods, the sale or lease of
which gave rise to a Receivable, and other proceeds of Collateral; and "Items of
Payment" means the collective reference to all of the foregoing.
"Laws" means all ordinances, statutes, rules, regulations, orders,
injunctions, writs, or decrees of any Governmental Authority.
"Lease Obligations" of a Person means for any period the rental
commitments of such Person for such period under leases for real and/or personal
property (net of rent from subleases thereof, but including taxes, insurance,
maintenance and similar expenses which such Person, as the lessee, is obligated
to pay under the terms of said leases, except to the extent that such taxes,
insurance, maintenance and similar expenses are payable by sublessees),
including rental commitments under Capital Leases.
"Letter of Credit" and "Letters of Credit" shall have the meanings
described in Section 2.2.1 (Letters of Credit).
"Letter of Credit Agreement" means the collective reference to each letter
of credit application and agreement substantially in the form of the Lender's
then standard form of
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<PAGE> 19
application for letter of credit or such other form as may be approved by the
Lender, executed and delivered by the Borrower in connection with the issuance
of a Letter of Credit, as the same may from time to time be amended, restated,
supplemented or modified and "Letter of Credit Agreements" means all of the
foregoing in effect at any time and from time to time.
"Letter of Credit Documents" means any and all drafts under or purporting
to be under a Letter of Credit, any Letter of Credit Agreement, and any other
instrument, document or agreement executed and/or delivered by the Borrower or
any other Person under, pursuant to or in connection with a Letter of Credit or
any Letter of Credit Agreement.
"Letter of Credit Facility" means the facility established by the Lender
pursuant to Section 2.2 (Letter of Credit Facility).
"Letter of Credit Fee" and "Letter of Credit Fees" have the meanings
described in Section 2.2.2 (Letter of Credit Fees).
"Letter of Credit Obligations" means all Obligations of the Borrower with
respect to the Letters of Credit and the Letter of Credit Agreements.
"Leverage Ratio" means for the date of any determination thereof the ratio
of (a) Liabilities minus Subordinated Indebtedness to (b) the Tangible Net Worth
plus Subordinated Indebtedness.
"Liabilities" means at any date all liabilities that in accordance with
GAAP consistently applied should be classified as liabilities on a consolidated
balance sheet of the Borrower and its Subsidiaries.
"Lien" means any mortgage, deed of trust, deed to secure debt, grant,
pledge, security interest, assignment, encumbrance, judgment, lien, financing
statement, hypothecation, Capital Lease, provision in any instrument or other
document for confession of judgment, cognovit or other similar right or other
remedy, claim, charge, control over or interest of any kind in real or personal
property securing any indebtedness, duties, obligations, and liabilities owed
to, or a claimed to be owed to, a Person, all whether perfected or unperfected,
avoidable or unavoidable, based on the common law, statute or contract or
otherwise, including, without limitation, any conditional sale or other title
retention agreement, any lease in the nature thereof, and the filing of or
agreement to give any financing statement under the Uniform Commercial Code of
any jurisdiction, excluding the precautionary filing of any financing statement
by any lessor in a true lease transaction, by any bailor in a true bailment
transaction or by any consignor in a true consignment transaction under the
Uniform Commercial Code of any jurisdiction or the agreement to give any
financing statement by any lessee in a true lease transaction, by any bailee in
a true bailment transaction or by any consignee in a true consignment
transaction.
"Loan" means an advance of the Revolving Loan and "Loans" means any or all
advances of the Revolving Loan.
"Loan Notice" has the meaning described in Section 2.1.2 (Procedure for
Making Advances).
"Lockbox" has the meaning described in Section 2.1.8 (The Collateral
Account).
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"Maximum Rate" has the meaning described in Section 2.3.6 (Maximum
Interest Rate).
"Multi-employer Plan" means a Plan that is a multi-employer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Worth" means as to the Borrower and its Subsidiaries at any date the
excess of (a) the Assets, over (b) the Liabilities.
"Note" means the Revolving Credit Note, and "Notes" means collectively the
Revolving Credit Note and any other promissory note which may from time to time
evidence all or any portion of the Obligations.
"Obligations" means all present and future indebtedness, duties,
obligations, and liabilities, whether now existing or contemplated or hereafter
arising, of the Borrower to the Lender under, arising pursuant to, in connection
with and/or on account of the provisions of this Agreement, each Note, each
Security Document, and/or any of the other Financing Documents, the Loan, and/or
any of the Facilities including, without limitation, the principal of, and
interest on, each Note, late charges, the Fees, Enforcement Costs, and
prepayment fees (if any), letter of credit fees or fees charged with respect to
any guaranty of any letter of credit; also means all other present and future
indebtedness, liabilities and obligations, whether now existing or contemplated
or hereafter arising, of the Borrower to the Lender of any nature whatsoever,
including, without limitation, any obligations, liabilities or indebtedness,
under or in connection with, any Swap Transaction, regardless of whether such
indebtedness, obligations and liabilities be direct, indirect, primary,
secondary, joint, several, joint and several, fixed or contingent; and also
means any and all renewals, extensions, substitutions, amendments, restatements
and rearrangements of any such debts, obligations and liabilities.
"Origination Fee" has the meaning described in Section 2.3.3
(Origination Fee).
"Outstanding Letter of Credit Obligations" has the meaning described in
Section 2.2.3 (Terms of Letters of Credit).
"Patents" means and includes, in each case whether now existing or
hereafter arising, all of the Borrower's rights, title and interest in and to
(a) any and all patents and patent applications, (b) any and all inventions and
improvements described and claimed in such patents and patent applications, (c)
reissues, divisions, continuations, renewals, extensions and
continuations-in-part of any patents and patent applications, (d) income,
royalties, damages, claims and payments now or hereafter due and/or payable
under and with respect to any patents or patent applications, including, without
limitation, damages and payments for past and future infringements, (e) rights
to sue for past, present and future infringements of patents, and (f) all rights
corresponding to any of the foregoing throughout the world.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Liens" means: (a) Liens for Taxes which are not delinquent or
which the Lender has determined in the exercise of its reasonable discretion (i)
are being diligently contested in good faith and by appropriate proceedings,
(ii) the Borrower has the financial ability to pay, with all penalties and
interest, at all times without materially and adversely affecting the Borrower,
and (iii)
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<PAGE> 21
except for property and Pennsylvania corporate Taxes that are not the subject of
enforcement action, will not be with appropriate filing, the giving of notice
and/or the passage of time, entitled to priority over any Lien of the Lender;
(b) deposits or pledges to secure obligations under workers' compensation,
social security or similar laws, or under unemployment insurance in the ordinary
course of business; (c) Liens in favor of the Lender; (d) judgment Liens to the
extent the entry of such judgment does not constitute a Default or an Event of
Default under the terms of this Agreement or result in the sale or levy of, or
execution on, any of the Collateral; and (e) purchase money security interests
securing Indebtedness for Borrowed Money for the purchase of Equipment in
arms-length, commercially reasonable transactions with persons who are not
Affiliates; provided, however, that (i) the indebtedness secured shall not
exceed the unpaid purchase price of the Equipment acquired, plus reasonable
finance charges and the reasonable costs of collection (including, without
limitation, reasonable attorneys fees), (ii) each item of Equipment shall secure
only its portion of the indebtedness described in item (i); and (iii) the
aggregate outstanding amount of such indebtedness and of all Capital Leases does
not exceed $2,000,000 at any time; (f) Capital Leases, provided that the
aggregate outstanding amount of Capital Leases and of all Indebtedness for
Borrowed Money permitted under clause (e) above does not exceed $2,000,000 at
any time; and (g) such other Liens, if any, as are set forth on Schedule 4.1.19
attached hereto and made a part hereof.
"Permitted Uses" means the refinance of existing indebtedness of the
Borrower to Bank of America Environmental Services Group, the payment of
expenses incurred in the ordinary course of the Borrower's business, to support
the issuance of Letters of Credit and the funding of advances to of Weston
International Holdings, Inc. in an amount not to exceed $1,000,000 at any time
outstanding.
"Person" means and includes an individual, a corporation, a partnership, a
joint venture, a limited liability company or partnership, a trust, an
unincorporated association, a Governmental Authority, or any other organization
or entity.
"Plan" means any pension plan that is covered by Title IV of ERISA and in
respect of which the Borrower or a Commonly Controlled Entity is an "employer"
as defined in Section 3 of ERISA.
"Post-Default Rate" means the Prime Rate in effect from time to time, plus
two percent (2%) per annum.
"Prepayment" means a Revolving Loan Mandatory Prepayment or a Revolving
Loan Optional Prepayment, and "Prepayments" mean collectively all Revolving Loan
Mandatory Prepayments and all Revolving Loan Optional Prepayments.
"Prime Rate" means the floating and fluctuating per annum prime commercial
lending rate of interest of the Lender, as established and declared by the
Lender at any time or from time to time. The Prime Rate shall be adjusted
automatically, without notice, as of the effective date of any change in such
prime commercial lending rate. The Prime Rate does not necessarily represent the
lowest rate of interest charged by the Lender to borrowers.
"Receivable" means one of the Borrower's now owned and hereafter owned,
acquired or created Accounts, Chattel Paper, General Intangibles and
Instruments; and "Receivables" means all
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<PAGE> 22
of the Borrower's now or hereafter owned, acquired or created Accounts, Chattel
Paper, General Intangibles and Instruments, and all cash and non-cash proceeds
and products thereof.
"Reliance" means, collectively with such entities' successors, Reliance
Surety Company, a Delaware corporation, Reliance Insurance Company, a
Pennsylvania corporation, United Pacific Insurance Company, a Pennsylvania
corporation and Reliance National Indemnity Company, a Wisconsin corporation.
"Reportable Event" means any of the events set forth in Section 4043(c) of
ERISA or the regulations thereunder.
"Reserve Percentage" means, at any time, the then current maximum rate for
which reserves (including any basic, special, supplemental, marginal and
emergency reserves) are required to be maintained by member banks of the Federal
Reserve System under Regulation D of the Board of Governors of the Federal
Reserve System against "Eurocurrency liabilities", as that term is defined in
Regulation D. Without limiting the effect of the foregoing, the Reserve
Percentage shall reflect any other reserves required to be maintained by such
member banks with respect to (i) any category of liabilities which includes
deposits by reference to which the Eurodollar Rate is to be determined, or (ii)
any category of extensions of credit or other assets which include Eurodollar
Loans. The Eurodollar Rate shall be adjusted automatically on and as of the
effective date of any change in the Reserve Percentage.
"Responsible Officer" means the chief executive officer of the Borrower or
the president of the Borrower or, with respect to financial matters, the chief
financial officer of the Borrower.
"Revolving Credit Commitment" means the agreement of the Lender relating
to the making of the Revolving Loan and advances thereunder subject to and in
accordance with the provisions of this Agreement.
"Revolving Credit Commitment Period" means the period of time from the
Closing Date to the Business Day preceding the Revolving Credit Termination
Date.
"Revolving Credit Committed Amount" has the meaning described in
Section 2.1 (Revolving Credit Facility).
"Revolving Credit Expiration Date" means April __, 2003.
"Revolving Credit Facility" means the facility established by the Lender
pursuant to Section 2.1 (Revolving Credit Facility).
"Revolving Credit Note" has the meaning described in Section 2.1.5
(Revolving Credit Note).
"Revolving Credit Termination Date" means the earlier of (a) the Revolving
Credit Expiration Date, or (b) the date on which the Revolving Credit Commitment
is terminated pursuant to Section 7.2 (Remedies) or otherwise.
"Revolving Credit Unused Line Fee" and "Revolving Credit Unused Line
Fees" have the meanings described in Section 2.1.10 (Revolving Credit Unused
Line Fee).
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<PAGE> 23
"Revolving Loan" has the meaning described in Section 2.1 (Revolving
Credit Facility).
"Revolving Loan Account" has the meaning described in Section 2.1.9
(Revolving Loan Account).
"Revolving Loan Mandatory Prepayment" and "Revolving Loan Mandatory
Prepayments" have the meanings described in Section 2.1.6 (Mandatory
Prepayments of Revolving Loan).
"Revolving Loan Optional Prepayment" and "Revolving Loan Optional
Prepayments" have the meanings described in Section 2.1.7 (Optional
Prepayment of Revolving Loan).
"Securities" means the collective reference to each and every certificated
or uncertificated security which constitutes a "security" under the provisions
of Title 8 of the Uniform Commercial Code and to each and every "investment
property" under the provisions of Title 9 of the Uniform Commercial Code (if
that definition is included in that Title), and all proceeds (cash and non-cash)
of the foregoing.
"Security Documents" means collectively any assignment, pledge agreement,
security agreement, mortgage, deed of trust, deed to secure debt, financing
statement and any similar instrument, document or agreement under or pursuant to
which a Lien is now or hereafter granted to, or for the benefit of, the Lender
on any real or personal property of any Person to secure all or any portion of
the Obligations, all as the same may from time to time be amended, restated,
supplemented or otherwise modified.
"Security Procedures" means the rules, policies and procedures adopted and
implemented by the Lender and its Affiliates at any time and from time to time
with respect to security procedures and measures relating to electronic funds
transfers, all as the same may be amended, restated, supplemented, terminated,
or otherwise modified at any time and from time to time by the Lender in its
sole and absolute discretion.
"Senior Management" means William Robertson, Chairman and Chief
Executive Officer and Patrick McCann, President and Chief Operating Officer.
"Solvent" means when used with respect to any Person that at the time of
determination:
(a) the assets of such Person, at a fair valuation,
are in excess of the total amount of its debts (including, without
limitation, contingent liabilities); and
(b) the present fair saleable value of its assets is
greater than its probable liability on its existing debts as such debts
become absolute and matured; and
(c) it is then able and expects to be able to pay its
debts (including, without limitation, contingent debts and other
commitments) as they mature; and
(d) it has capital sufficient to carry on its business
as conducted and as proposed to be conducted.
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<PAGE> 24
For purposes of determining whether a Person is Solvent, the amount of any
contingent liability shall be computed as the amount that, in light of all the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"State" means the Commonwealth of Virginia.
"Subordinated Indebtedness" means all Indebtedness, incurred at any time
by the Borrower, including but not limited to the Subordinated Debentures, which
is in amounts, subject to repayment terms, and subordinated to the Obligations,
as set forth in one or more written agreements, all in form and substance
satisfactory to the Lender in its sole and absolute discretion.
"Subordinated Debentures" means any and all 7% Convertible Subordinated
Debentures due April 15, 2002 to be issued from time to time under the
Indenture, in the maximum original principal amount of $34,500,000.
"Subsidiary" means any corporation the majority of the voting shares of
which at the time are owned directly by the Borrower and/or by one or more
Subsidiaries of the Borrower.
"Swap Reserve" means any and all reserves which the Lender from time to
time establishes, in its reasonable sole discretion, with respect to Swap
Transactions.
"Swap Transactions" means any interest rate swap transaction, forward rate
transaction, treasury lock transaction, interest rate cap, floor or collar
transaction, any similar transaction, any option to enter into any of the
foregoing, or any combination of any of the foregoing.
"Tangible Net Worth" means as to the Borrower and its Subsidiaries at any
date of determination thereof, the sum at such time of: the Net Worth less the
total of (a) all Assets which would be classified as intangible assets under
GAAP consistently applied and (b) any revaluation or other write-up in book
value of assets subsequent to the date of the most recent financial statements
delivered to the Lender
"Taxes" means all taxes and assessments whether general or special,
ordinary or extraordinary, or foreseen or unforeseen, of every character
(including all penalties or interest thereon), which at any time have been
assessed, levied, confirmed or imposed by any Governmental Authority on the
Borrower or any of its properties or assets or any part thereof or in respect of
any of its franchises, businesses, income or profits.
"Trademarks" means and includes in each case whether now existing or
hereafter arising, all of the Borrower's rights, title and interest in and to
(a) any and all trademarks (including service marks), trade names and trade
styles, and applications for registration thereof and the goodwill of the
business symbolized by any of the foregoing, (b) any and all licenses of
trademarks, service marks, trade names and/or trade styles, whether as licensor
or licensee, (c) any renewals of any and all trademarks, service marks, trade
names, trade styles and/or licenses of any of the foregoing, (d) income,
royalties, damages and payments now or hereafter due and/or payable with respect
thereto, including, without limitation, damages, claims, and payments for past,
present and future infringements thereof, (e) rights to sue for past, present
and future infringements of any of the
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<PAGE> 25
foregoing, including the right to settle suits involving claims and demands for
royalties owing, and (f) all rights corresponding to any of the foregoing
throughout the world.
"Trustee" means Mellon Bank, N. A. and its successor and assigns as
Trustee under the Indenture.
"Uniform Commercial Code" means, unless otherwise provided in this
Agreement, the Uniform Commercial Code as adopted by and in effect from time to
time in the State or in any other applicable jurisdiction.
"Wholly Owned Subsidiary" means any domestic United States corporation all
the shares of stock of all classes of which (other than directors' qualifying
shares) at the time are owned directly or indirectly by the Borrower and/or by
one or more Wholly Owned Subsidiaries of the Borrower.
"Wire Transfer Procedures" means the rules, policies and procedures
adopted and implemented by the Lender and its Affiliates at any time and from
time to time with respect to electronic funds transfers, including, without
limitation, the Security Procedures, all as the same may be amended, restated,
supplemented, terminated or otherwise modified at any time and from time to time
by the Lender in its sole and absolute discretion.
Section 1.2 Accounting Terms and Other Definitional Provisions.
---------------------------------------------------
Unless otherwise defined herein, as used in this Agreement and in any
certificate, report or other document made or delivered pursuant hereto,
accounting terms not otherwise defined herein, and accounting terms only partly
defined herein, to the extent not defined, shall have the respective meanings
given to them under GAAP, as consistently applied to the applicable Person.
Unless otherwise defined herein, all terms used herein which are defined by the
Uniform Commercial Code shall have the same meanings as assigned to them by the
Uniform Commercial Code unless and to the extent varied by this Agreement. The
words "hereof", "herein" and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and article, section, subsection,
schedule and exhibit references are references to articles, sections or
subsections of, or schedules or exhibits to, as the case may be, this Agreement
unless otherwise specified. As used herein, the singular number shall include
the plural, the plural the singular and the use of the masculine, feminine or
neuter gender shall include all genders, as the context may require. Reference
to any one or more of the Financing Documents shall mean the same as the
foregoing may from time to time be amended, restated, substituted, extended,
renewed, supplemented or otherwise modified.
ARTICLE II
THE CREDIT FACILITIES
---------------------
Section 2.1 The Revolving Credit Facility.
--------------------------------
2.1.1 Revolving Credit Facility.
Subject to and upon the provisions of this Agreement, the
Lender establishes a revolving credit facility in favor of the Borrower. The
aggregate of all advances
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under the Revolving Credit Facility is sometimes referred to in this Agreement
as the "Revolving Loan".
The principal amount of Fifteen Million Dollars ($15,000,000)
is the "Revolving Credit Committed Amount". If at any time the unpaid principal
balance of the Revolving Loan exceeds the Revolving Credit Committed Amount in
effect from time to time, the Borrower shall pay such excess to the Lender ON
DEMAND.
During the Revolving Credit Commitment Period, the Lender
agrees to make advances under the Revolving Loan requested by the Borrower from
time to time provided that after giving effect to the Borrower's request, the
outstanding principal balance of the Revolving Loan and of the Letter of Credit
Obligations would not exceed the lesser of (a) the Revolving Credit Committed
Amount, or (b) the then most current Borrowing Base.
Unless sooner paid, the unpaid Revolving Loan, together with
interest accrued and unpaid thereon, and all other Obligations shall be due and
payable in full on the Revolving Credit Expiration Date.
2.1.2 Procedure for Making Advances Under the
Revolving Loan; Lender Protection Loans.
The Borrower may borrow under the Revolving Credit Commitment
on any Business Day. Advances under the Revolving Loan shall be deposited to a
demand deposit account of the Borrower with the Lender (or an Affiliate of the
Lender) or shall be otherwise applied as directed by the Borrower, which
direction the Lender may require to be in writing. No later than 12:00 noon
(Baltimore time) on the date of the requested borrowing, the Borrower shall give
the Lender oral or written notice (a "Loan Notice") of the amount and (if
requested by the Lender) the purpose of the requested borrowing. Any oral Loan
Notice shall be confirmed in writing by the Borrower within three (3) Business
Days after the making of the requested Revolving Loan.
In addition, the Borrower hereby irrevocably authorizes the
Lender at any time and from time to time, without further request from or notice
to the Borrower, to make advances under the Revolving Loan, and irrevocably
authorizes the Lender to establish, without duplication, reserves against the
Borrowing Base, which the Lender, in its reasonable discretion, deems necessary
or appropriate to pay Enforcement Costs that have become due and payable prior
to, on, or after the termination of other advances under this Agreement,
regardless of whether the outstanding principal amount of the Revolving Loan
which the Lender may make hereunder exceeds the Revolving Credit Committed
Amount or the Borrowing Base.
2.1.3 Borrowing Base.
---------------
As used in this Agreement, the term "Borrowing Base" means at
any time, an amount equal to (a) seventy five percent (75%) of the amount of
Eligible Receivables, increasing to eighty five percent (85%) upon the Lender's
receipt of three (3) consecutive quarterly financial reports that reflect
positive quarterly income from operations of the Borrower minus (b) Nine Million
Dollars ($9,000,000).
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The Borrowing Base shall be computed based on the Borrowing
Base Report most recently delivered to, and accepted by, the Lender in its
reasonable discretion. In the event the Borrower shall fail to furnish a
Borrowing Base Report required by Section 2.1.4 (Borrowing Base Report) or in
the event the Lender reasonably believes that a Borrowing Base Report is no
longer accurate, the Lender may, in its reasonable discretion exercised from
time to time and without limiting its other rights and remedies under this
Agreement, suspend the making of or limit advances under the Revolving Loan.
If at any time the total of the aggregate principal amount of
the Revolving Loan and Outstanding Letter of Credit Obligations exceeds the
Borrowing Base, a borrowing base deficiency ("Borrowing Base Deficiency") shall
exist. Each time a Borrowing Base Deficiency exists, the Borrower, at the sole
and absolute discretion of the Lender exercised from time to time, shall pay the
Borrowing Base Deficiency ON DEMAND to the Lender.
Without implying any limitation on the Lender's discretion
with respect to the Borrowing Base, the criteria for Eligible Receivables
contained in the definition of Eligible Receivables is in part based upon the
business operations of the Borrower existing on or about the Closing Date and
upon information and records furnished to the Lender by the Borrower. If at any
time or from time to time hereafter, the business operations of the Borrower
change or such information and records furnished to the Lender is incorrect or
misleading, the Lender in its reasonable discretion, may at any time and from
time to time during the duration of this Agreement change such criteria or add
new criteria. The Lender may communicate such changed or additional criteria to
the Borrower from time to time either orally or in writing.
2.1.4 Borrowing Base Report.
-----------------------
The Borrower will furnish to the Lender within fifteen (15)
days after the end of each month and at such other times as may be reasonably
requested by the Lender a report of the Borrowing Base (each a "Borrowing Base
Report"; collectively, the "Borrowing Base Reports") in the form required from
time to time by the Lender, appropriately completed and duly signed. The
Borrowing Base Report shall contain the amount and payments on the Receivables
and the calculations of the Borrowing Base, all in such detail, and accompanied
by such supporting and other information, as the Lender may from time to time
reasonably request. Upon the Lender's reasonable request upon the creation of
any Receivables or at such other intervals as the Lender may reasonably require,
the Borrower will provide the Lender with: (a) confirmatory assignment
schedules; (b) copies of Account Debtor invoices; (c) such further schedules,
documents and/or information regarding any of the Receivables as the Lender may
reasonably require. The items to be provided under this subsection shall be in
form satisfactory to the Lender, certified as true and correct by a Responsible
Officer (or by any other officers or employees of the Borrower whom a
Responsible Officer from time to time authorizes in writing to do so), and
delivered to the Lender from time to time solely for the Lender's convenience in
maintaining records of the Collateral. The failure of the Borrower to deliver
any such items to the Lender shall not affect, terminate, modify, or otherwise
limit the Lender's security interests in, and Liens on, the Collateral.
2.1.5 Revolving Credit Note.
----------------------
The obligation of the Borrower to pay the Revolving Loan, with
interest, shall be evidenced by a promissory note (as from time to time
extended, amended, restated,
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<PAGE> 28
supplemented or otherwise modified, the "Revolving Credit Note") substantially
in the form of EXHIBIT "B" attached hereto and made a part hereof, with
appropriate insertions. The Revolving Credit Note shall be dated as of the
Closing Date, shall be payable to the order of the Lender at the times provided
in the Revolving Credit Note, and shall be in the principal amount of the
Revolving Credit Committed Amount. The Borrower acknowledges and agrees that, if
the outstanding principal balance of the Revolving Loan outstanding from time to
time exceeds the face amount of the Revolving Credit Note, the excess shall bear
interest at the Post-Default Rate for the Revolving Loan and shall be payable,
with accrued interest, ON DEMAND. The Revolving Credit Note shall not operate as
a novation of any of the Obligations or nullify, discharge, or release any such
Obligations or the continuing contractual relationship of the parties hereto in
accordance with the provisions of this Agreement.
2.1.6 Mandatory Prepayments of Revolving Loan.
----------------------------------------
The Borrower shall make the mandatory prepayments (each a
"Revolving Loan Mandatory Prepayment" and collectively, the "Revolving Loan
Mandatory Prepayments") of the Revolving Loan in the following amounts and at
the following times:
(a) The Borrower shall make a Revolving Loan Mandatory
Prepayment at any time and from time to time in such amounts requested
by the Lender pursuant to Section 2.1.3 (Borrowing Base) of this
Agreement in order to cover any Borrowing Base Deficiency; and
(b) The Borrower shall make a Revolving Loan Mandatory
Prepayment at any time that the balance in the Lockbox account exceeds
$1,000,000 in an amount equal to the lesser of (i) the balance in the
Lockbox account in excess of $1,000,000 or (ii) the outstanding
principal balance under the Revolving Loan.
2.1.7 Optional Prepayments of Revolving Loan.
---------------------------------------
The Borrower shall have the option, at any time and from time
to time, to prepay (each a "Revolving Loan Optional Prepayment" and collectively
the "Revolving Loan Optional Prepayments") the Revolving Loan, in whole or in
part without premium or penalty. Revolving Loan Optional Prepayments shall be
made following a written notice to the Lender with respect thereto given not
later than 12:00 noon on the proposed prepayment date, specifying the date and
amount of any intended Revolving Loan Optional Prepayment. The amount to be
prepaid shall be paid by the Borrower to the Lender on the date specified for
such prepayment.
2.1.8 The Collateral Account.
-----------------------
The Borrower will deposit, or cause to be deposited, all Items
of Payment to a bank account designated by the Lender and from which the Lender
alone has power of access and withdrawal (the "Collateral Account"). Each
deposit shall be made not later than the next Business Day after the date of
receipt of the Items of Payment. The Items of Payment shall be deposited in
precisely the form received, except for the endorsements of the Borrower where
necessary to permit the collection of any such Items of Payment, the Borrower
hereby agreeing to make such endorsement. In the event the Borrower shall fail
to do so, the Lender is hereby authorized by the Borrower to make the
endorsement in the name of the Borrower. Prior to such a deposit, the Borrower
will not commingle any Items of Payment with any of the other funds or
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<PAGE> 29
property of the Borrower, but will hold them separate and apart in trust and for
the account of the Lender.
In addition, if so directed by the Lender, the Borrower shall
direct the mailing of all Items of Payment from its Account Debtors to a
post-office box designated by the Lender, or to such other additional or
replacement post-office boxes pursuant to the request of the Lender from time to
time (collectively, the "Lockbox"). The Lender shall have unrestricted and
exclusive access to the Lockbox subject to the terms of the Blocked Account
Agreement.
The Borrower hereby authorizes the Lender to inspect all Items
of Payment, endorse all Items of Payment in the name of the Borrower, and
deposit Items of Payment in the Collateral Account. The Lender reserves the
right, exercised in its sole and absolute discretion from time to time, to
provide to the Collateral Account credit prior to final collection of an Item of
Payment and to disallow credit for any Item of Payment which is unsatisfactory
to the Lender. In the event Items of Payment are returned to the Lender for any
reason whatsoever, the Lender may, in the exercise of its discretion from time
to time, forward such Items of Payment a second time. Any returned Items of
Payment shall be charged back to the Collateral Account, the Revolving Loan
Account, or other account, as appropriate.
The Lender will apply the whole or any part of the collected
funds credited to the Collateral Account against the Revolving Loan (or with
respect to Items of Payment which are not proceeds of accounts or inventory or
after a Default or Event of Default, against any of the Obligations) or credit
such collected funds to the depository account of the Borrower with the Lender
(or an Affiliate of the Lender), the order and method of such application to be
in the sole discretion of the Lender.
2.1.9 Revolving Loan Account.
-------------------------
The Lender will establish and maintain a loan account on its
books (the "Revolving Loan Account") to which the Lender will (a) debit (i) the
principal amount of each advance of the Revolving Loan made by the Lender
hereunder as of the date made, (ii) the amount of any interest accrued on the
Revolving Loan as and when due, and (iii) any other amounts due and payable by
the Borrower to the Lender from time to time under the provisions of this
Agreement in connection with the Revolving Loan, including, without limitation,
Enforcement Costs, Fees, late charges, and service, collection and audit fees,
as and when due and payable, and (b) credit all payments made by the Borrower to
the Lender on account of the Revolving Loan as of the date made including,
without limitation, funds credited to the Revolving Loan Account from the
Collateral Account. The Lender may debit the Revolving Loan Account for the
amount of any Item of Payment that is returned to the Lender unpaid. All credit
entries to the Revolving Loan Account are conditional and shall be readjusted as
of the date made if final and indefeasible payment is not received by the Lender
in cash or solvent credits. Any and all periodic or other statements or
reconciliations, and the information contained in those statements or
reconciliations, of the Revolving Loan Account shall be final, binding and
conclusive upon the Borrower in all respects, absent manifest error, unless the
Lender receives specific written objection thereto from the Borrower within
thirty (30) Business Days after such statement or reconciliation shall have been
sent by the Lender.
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<PAGE> 30
2.1.10 Revolving Credit Unused Line Fee.
---------------------------------
The Borrower shall pay to the Lender a revolving credit
facility fee (collectively, the "Revolving Credit Unused Line Fees" and
individually, a "Revolving Credit Unused Line Fee") in an amount equal to .375%
per annum of the average daily unused and undisbursed portion of the Revolving
Credit Committed Amount in effect from time to time accruing during each month.
The accrued and unpaid portion of the Revolving Credit Unused Line Fee shall be
paid by the Borrower to the Lender on the first day of each month, commencing on
the first such date following the date hereof, and on the Revolving Credit
Termination Date.
Section 2.2 The Letter of Credit Facility.
------------------------------
2.2.1 Letters of Credit.
------------------
Subject to and upon the provisions of this Agreement, and as a
part of the Revolving Credit Commitment, the Borrower may, upon the prior
approval of the Lender, obtain standby letters of credit (as the same may from
time to time be amended, supplemented or otherwise modified, each a "Letter of
Credit" and collectively the "Letters of Credit") from the Lender from time to
time from the Closing Date until the Business Day preceding the Revolving Credit
Termination Date. The Borrower will not be entitled to obtain a Letter of Credit
hereunder unless (a) after giving effect to the request, the outstanding
principal balance of the Revolving Loan and of the Letter of Credit Obligations
would not exceed the lesser of (i) the Revolving Credit Committed Amount, or
(ii) the most current Borrowing Base and (b) the sum of the aggregate face
amount of the then outstanding Letters of Credit (including the face amount of
the requested Letter of Credit) does not exceed Seven Million Five Hundred
Thousand Dollars ($7,500,000).
2.2.2 Letter of Credit Fees.
----------------------
With the opening of each Letter of Credit, the Borrower shall
pay to the Lender, a letter of credit fee (each a "Letter of Credit Fee" and
collectively the "Letter of Credit Fees") in an amount equal to two percent (2%)
per annum of the amount of the Letter of Credit. Such Letter of Credit Fees
shall be paid monthly in arrears on the first day of the first month after the
opening of the Letter of Credit and on the first day of each month thereafter.
In addition, the Borrower shall pay to the Lender any and all additional
issuance, negotiation, processing, transfer or other fees to the extent and as
and when required by the provisions of any Letter of Credit Agreement; such
additional fees are included in and a part of the "Fees" payable by the Borrower
under the provisions of this Agreement.
2.2.3 Terms of Letters of Credit.
---------------------------
Each Letter of Credit shall (a) be opened pursuant to a Letter
of Credit Agreement, and (b) expire on a date not later than the Business Day
preceding the Revolving Credit Expiration Date; provided, however, if any Letter
of Credit does have an expiration date later than the Business Day preceding the
Revolving Credit Termination Date, as of the Business Day preceding the
Revolving Credit Termination Date an advance of the Revolving Credit Facility
shall be made by the Lender in the face amount of such Letter of Credit (or
Letters of Credit) and the proceeds thereof shall be deposited in an account
titled in the name of the Lender as trustee for the Borrower. The proceeds of
the trustee account referred to in the immediately
24
<PAGE> 31
preceding sentence shall be held as collateral for the Letter of Credit (or
Letters of Credit) and in the event of a draw under the Letter of Credit (or
Letters of Credit), used to pay any such draw. The aggregate face amount of all
Letters of Credit at any one time outstanding and issued by the Lender pursuant
to the provisions of this Agreement, plus the amount of any unpaid Letter of
Credit Fees accrued or scheduled to accrue thereon, and less the aggregate
amount of all drafts issued under or purporting to have been issued under such
Letters of Credit that have been paid by the Lender, is herein called the
"Outstanding Letter of Credit Obligations".
2.2.4 Procedure for Letters of Credit.
--------------------------------
The Borrower shall give the Lender written notice at least
three (3) Business Days prior to the date on which a Letter of Credit is
requested to be opened of their request for a Letter of Credit. Such notice
shall be accompanied by a duly executed and delivered Letter of Credit
Agreement. Upon receipt of the Letter of Credit Agreement and the Letter of
Credit Fee, the Lender shall process such Letter of Credit Agreement in
accordance with its customary procedures and open such Letter of Credit on the
Business Day specified in such notice.
2.2.5 Change in Law; Increased Cost.
-------------------------------
If any change in any law or regulation or in the
interpretation thereof by any court or other Governmental Authority charged with
the administration thereof shall either (a) impose, modify or deem applicable
any reserve, special deposit or similar requirement against Letters of Credit
issued by the Lender, or (b) impose on the Lender any other condition regarding
this Agreement or any Letter of Credit, and the result of any event referred to
in clauses (a) or (b) above shall be to increase the cost to the Lender of
issuing, maintaining or extending the Letter of Credit or the cost to the Lender
of funding any obligation under or in connection with the Letter of Credit,
then, upon demand by the Lender, the Borrower shall immediately pay to the
Lender from time to time as specified by the Lender, additional amounts which
shall be sufficient to compensate the Lender for such increased cost, together
with interest on each such amount from the date demanded until payment in full
thereof at a rate per annum equal to the then highest current rate of interest
on the Revolving Loan. A certificate as to such increased cost incurred by the
Lender, including a calculation thereof in reasonable detail submitted by the
Lender to the Borrower, shall be conclusive, absent manifest error.
Section 2.3 General Financing Provisions.
---------------------------------
2.3.1 Borrower's Representatives.
----------------------------
The Lender is hereby irrevocably authorized by the Borrower to
make advances under the Loan to the Borrower pursuant to the provisions of this
Agreement upon the written, oral or telephone request of any one of the Persons
who is from time to time a Responsible Officer of the Borrower under the
provisions of the most recent "Certificate" of corporate resolutions of the
Borrower on file with the Lender or who is an officer or employee of the
Borrower whom a Responsible Officer from time to time authorizes in writing to
do so. The Lender does not and shall not assume any responsibility or liability
for any errors, mistakes, and/or discrepancies in the oral, telephonic, written
or other transmissions of any instructions, orders, requests and confirmations
between the Lender and the Borrower in connection with the Credit Facilities,
any Loan or any other transaction in connection with the provisions of this
Agreement.
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2.3.2 Use of Proceeds of the Loan.
-----------------------------
The proceeds of each advance under the Loan shall be used by
the Borrower for Permitted Uses, and for no other purposes except as may
otherwise be agreed by the Lender in writing. The Borrower shall use the
proceeds of the Loan promptly.
2.3.3 Origination Fee.
---------------
The Borrower shall pay to the Lender on or before the Closing
Date a loan origination fee (the "Origination Fee") in the amount of Seventy
Five Thousand Dollars ($75,000), which fee has been fully earned and is
non-refundable. By its execution hereof, the Lender acknowledges receipt of the
Origination Fee.
2.3.4 Administrative and Audit Fees.
-------------------------------
The Borrower shall pay to the Lender a quarterly
administrative and audit fee (each an "Administrative Fee" and collectively, the
"Administrative Fees") for administrative and/or audit services performed in
conjunction with the Revolving Credit Facility. The quarterly Administrative Fee
shall be $5,000 and shall be payable on the Closing Date and in advance on the
first (1st) day of each July, October, January and April thereafter until the
Revolving Credit Termination Date, excluding the final such date prior to the
Revolving Credit Termination Date. In addition, the Borrower shall pay such out
of pocket expenses as are described in Section 6.1.3(d) (Recordkeeping, Rights
of Inspection, Audit, Etc).
2.3.5 Computation of Interest and Fees.
---------------------------------
All applicable Fees and interest shall be calculated on the
basis of a year of 360 days for the actual number of days elapsed. Any change in
the interest rate on any of the Obligations resulting from a change in the Prime
Rate shall become effective as of the opening of business on the day on which
such change in the Prime Rate is announced.
2.3.6 Maximum Interest Rate.
---------------------
In no event shall any interest rate provided for hereunder
exceed the maximum rate permissible for corporate borrowers under applicable law
for loans of the type provided for hereunder (the "Maximum Rate"). If, in any
month, any interest rate, absent such limitation, would have exceeded the
Maximum Rate, then the interest rate for that month shall be the Maximum Rate,
and, if in future months, that interest rate would otherwise be less than the
Maximum Rate, then that interest rate shall remain at the Maximum Rate until
such time as the amount of interest paid hereunder equals the amount of interest
which would have been paid if the same had not been limited by the Maximum Rate.
In the event that, upon payment in full of the Obligations, the total amount of
interest paid or accrued under the terms of this Agreement is less than the
total amount of interest which would, but for this Section, have been paid or
accrued if the interest rates otherwise set forth in this Agreement had at all
times been in effect, then the Borrower shall, to the extent permitted by
applicable law, pay the Lender, an amount equal to the excess of (a) the lesser
of (i) the amount of interest which would have been charged if the Maximum Rate
had, at all times, been in effect or (ii) the amount of interest which would
have accrued had the interest rates otherwise set forth in this Agreement, at
all times, been in effect over (b) the amount of interest actually paid or
accrued under this Agreement. In the event that a court determines that the
Lender has received interest and other charges hereunder in excess of the
Maximum Rate, such excess shall be deemed received on account of, and shall
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<PAGE> 33
automatically be applied to reduce, the Obligations other than interest, in the
inverse order of maturity, and if there are no Obligations outstanding, the
Lender shall refund to the Borrower such excess.
2.3.7 Payments.
----------
All payments of the Obligations, including, without
limitation, principal, interest, Prepayments, and Fees, shall be paid by the
Borrower without setoff, recoupment or counterclaim to the Lender in immediately
available funds not later than 12:00 noon, Baltimore, Maryland time on the due
date of such payment. All such payments shall be made to the Lender's principal
office in Baltimore, Maryland or at such other location as the Lender may at any
time and from time to time notify the Borrower. Alternatively, at its sole
discretion, the Lender may charge any deposit account of the Borrower at the
Lender or any Affiliate of the Lender with all or any part of any amount due to
the Lender under this Agreement or any of the other Financing Documents to the
extent that the Borrower shall have not otherwise tendered payment to the
Lender. All payments shall be applied first to any unpaid Fees, second to any
and all accrued and unpaid late charges and Enforcement Costs, third to any and
all accrued and unpaid interest on the Obligations, and then to the then unpaid
principal balance of the Obligations, all in such order and manner as shall be
determined by the Lender in its sole and absolute discretion.
2.3.8 Liens; Setoff.
--------------
The Borrower hereby grants to the Lender as additional
collateral and security for all of the Obligations, a continuing Lien on any and
all monies, Securities, and other personal property of the Borrower and any and
all proceeds thereof, now or hereafter held or received by, or in transit to,
the Lender or any Affiliate of the Lender from, or for the account of, the
Borrower, and also upon any and all depository accounts (whether general or
special) and credits of the Borrower, if any, with the Lender or any Affiliate
of the Lender, at any time existing, excluding any depository accounts held by
the Borrower in its capacity as trustee for Persons who are not Affiliates of
the Borrower. Without implying any limitation on any other rights the Lender may
have under the Financing Documents or applicable Laws, during the continuance of
an Event of Default, the Lender is hereby authorized by the Borrower at any time
and from time to time at the Lender's option, without notice to, or consent of,
the Borrower, to set off, appropriate, seize, freeze and apply any or all items
hereinabove referred to against all Obligations then outstanding (whether or not
then due), all in such order and manner as shall be determined by the Lender in
its sole and absolute discretion.
2.3.9 Requirements of Law.
--------------------
In the event that the Lender shall have determined in good
faith that (a) the adoption of any Capital Adequacy Regulation, or (b) any
change in any Capital Adequacy Regulation or in the interpretation or
application thereof or (c) compliance by the Lender or any corporation
controlling the Lender with any request or directive regarding capital adequacy
(whether or not having the force of law) from any Governmental Authority or
central bank, does or shall have the effect of reducing the rate of return on
the capital of the Lender or such controlling corporation as a consequence of
the Lender's obligations under this Agreement to a level below that which the
Lender or such corporation would have achieved but for such adoption, change or
compliance (taking into consideration the policies of the Lender and its
27
<PAGE> 34
controlling corporation with respect to capital adequacy) by an amount deemed by
the Lender, in its reasonable discretion, to be material, then from time to
time, after submission by the Lender to the Borrower of a written request
therefor and a statement in reasonable detail of the basis for the Lender's
determination, the Borrower shall pay to the Lender ON DEMAND such additional
amount or amounts in order to compensate the Lender or its controlling
corporation for any such reduction.
2.3.10 Funds Transfer Services.
------------------------
(a) The Borrower has requested that the Lender and its
Affiliates make available to the Borrower electronic funds transfer services and
related security measures in connection with the Obligations. A copy of the
Lender's current Wire Transfer Procedures, including the Security Procedures, is
attached to this Agreement as EXHIBIT B. The Borrower acknowledges and agrees
that all electronic funds transfers made by the Lender or any Affiliate of the
Lender to, or for the account of, the Borrower shall be governed by, and subject
to, the Wire Transfer Procedures and the Security Procedures in effect from time
to time. The Borrower and the Lender agree that the current Wire Transfer
Procedures and the Security Procedures are commercially reasonable. The Borrower
further acknowledges and agrees, however, that the full scope of the Security
Procedures which the Lender and its Affiliates offer and strongly recommend for
electronic funds transfers is available only if the Borrower communicates
directly with the Lender or its Affiliate, as applicable, in accordance with and
as required by the Wire Transfer Procedures and the Security Procedures. If the
Borrower attempts to communicate with the Lender or any Affiliate of the Lender
by any other method or otherwise does not communicate with the Lender and/or its
Affiliate, as appropriate, in accordance with the Wire Transfer Procedures and
the Security Procedures, the Lender and/or its Affiliate, as applicable, shall
not be required to execute the instructions of the Borrower, but if the Lender
or such Affiliate, as applicable, does so, the Borrower will be deemed to have
refused and waived the Security Procedures that the Lender or its Affiliate, as
applicable, offers and strongly recommends, and the Borrower will be bound by
any funds transfer, whether or not authorized, which is issued in the Borrower's
name and accepted by the Lender or any Affiliate, as applicable, in good faith.
The Lender or its Affiliate, as applicable, may modify the Wire Transfer
Procedures including, without limitation, the Security Procedures at such time
or times and in such manner as the Lender and/or any Affiliate of the Lender, as
applicable, in its or their sole and absolute discretion, deems appropriate to
meet then prevailing standards of good banking practice. The Lender shall notify
the Borrower of any material change or modification to the Wire Transfer
Procedures and/or the Security Procedures. By continuing to use the wire
transfer services of the Lender and/or any Affiliate of the Lender following
notice to the Borrower of any such change or modification to the Wire Transfer
Procedures and/or the Security Procedures, the Borrower shall be deemed
automatically to have agreed to the Wire Transfer Procedures and the Security
Procedures, as changed and/or modified and to have further agreed that the Wire
Transfer Procedures and the Security Procedures, as changed and/or modified, are
likewise commercially reasonable. The Borrower further agrees to establish and
maintain procedures to safeguard the Security Procedures and any information
related thereto. Neither the Lender nor any Affiliate of the Lender is
responsible for detecting any error in any payment order sent by the Borrower to
the Lender or any Affiliate of the Lender.
(b) The Lender and its Affiliates, as applicable, will
generally use the Fedwire funds transfer system for domestic funds transfers,
and the funds transfer system
28
<PAGE> 35
operated by the Society for Worldwide International Financial Telecommunication
(SWIFT) for international funds transfers. International funds transfers may
also be initiated through the Clearing House InterBank Payment System (CHIPs) or
international cable. However, the Lender and/or its Affiliates, as applicable,
may use any means and routes that the Lender or any such Affiliate, as
applicable, in its sole discretion, may consider suitable for the transmission
of funds. Each payment order, or cancellation thereof, carried out through a
funds transfer system or a clearinghouse will be governed by all applicable
funds transfer system rules and clearing house rules and clearing arrangements,
whether or not the Lender or any Affiliate, as applicable, is a member of the
system, clearinghouse or arrangement and the Borrower acknowledges that the
right of the Lender or any Affiliate, as applicable, to reverse, adjust, stop
payment or delay posting of an executed payment order is subject to the Laws,
regulations, rules, circulars and arrangements described herein.
2.3.11 ACH Transactions and Swap Transactions.
---------------------------------------
The Borrower may request and the Lender or its affiliates may,
in their sole and absolute discretion, provide ACH Transactions and Swap
Transactions although the Borrower is not required to do so. In the event the
Borrower requests Lender or its affiliates to procure ACH Transactions or Swap
Transactions, then the Borrower agrees to indemnify and hold the Lender or its
affiliates harmless from any and all obligations now or hereafter owing to the
Lender or its affiliates. The Borrower agrees to pay the Lender or its
affiliates all amounts owing to the Lender or its affiliates pursuant to ACH
Transactions and Swap Transactions. In the event the Borrower shall not have
paid to the Lender or its affiliates such amounts, the Lender may cover such
amounts by an advance under the Revolving Loan, which advance shall be deemed to
have been requested by the Borrower. The Borrower acknowledges and agrees that
the obtaining of ACH Transactions and Swap Transactions from the Lender or its
affiliates (a) is in the sole and absolute discretion of the Lender or its
affiliates and (b) is subject to all rules and regulations of the Lender or its
affiliates.
Section 2.4 Interest
---------
2.4.1 Applicable Interest Rates.
--------------------------
(a) Each Loan shall bear interest until maturity
(whether by acceleration, declaration, extension or otherwise) at either the
Base Rate or the Eurodollar Rate, as selected and specified by the Borrower in
an Interest Rate Election Notice furnished to the Lender in accordance with the
provisions of Section 2.4.2(e), or as otherwise determined in accordance with
the provisions of this Section 2.4.
(b) Notwithstanding the foregoing, following the
occurrence and during the continuance of an Event of Default, at the option of
the Lender, all Loans and all other Obligations shall bear interest at the
Post-Default Rate.
(c) The Applicable Margin for (i) Eurodollar Loans
shall be 300 basis points per annum, and (ii) Base Rate Loans shall be 50 basis
points per annum.
2.4.2 Selection of Interest Rates.
----------------------------
(a) The Borrower may select the initial Applicable
Interest Rate or Applicable Interest Rates to be charged on the Loans.
29
<PAGE> 36
(b) From time to time after the date of this Agreement
as provided in this Section, by a proper and timely Interest Rate Election
Notice furnished to the Lender in accordance with the provisions of Section
2.4.2(e), the Borrower may select an initial Applicable Interest Rate or
Applicable Interest Rates for any Loans or may convert the Applicable Interest
Rate and, when applicable, the Interest Period, for any existing Loan to any
other Applicable Interest Rate or, when applicable, any other Interest Period.
(c) The Borrower's selection of an Applicable Interest
Rate and/or an Interest Period, the Borrower's election to convert an Applicable
Interest Rate and/or an Interest Period to another Applicable Interest Rate or
Interest Period, and any other adjustments in an interest rate are subject to
the following limitations:
(i) the Borrower shall not at any time select
or change to an Interest Period that extends beyond the Revolving
Credit Expiration Date;
(ii) except as otherwise provided in Section
2.4.4 (Indemnity), no change from the Eurodollar Rate to the Base
Rate shall become effective on a day other than a Business Day and
on a day which is the last day of the then current Interest Period,
no change of an Interest Period shall become effective on a day
other than the last day of the then current Interest Period, and no
change from the Base Rate to the Eurodollar Rate shall become
effective on a day other than a day which is a Eurodollar Business
Day;
(iii) any Applicable Interest Rate change for
any Loan to be effective on a date on which any principal payment on
account of such Loan is scheduled to be paid shall be made only
after such payment shall have been made;
(iv) no more than three (3) different
Eurodollar Rates may be outstanding at any time and from time to
time with respect to the Revolving Loan;
(v) the first day of each Interest Period
shall be a Eurodollar Business Day;
(vi) as of the effective date of a selection,
there shall not exist an Event of Default; and
(vii) the minimum principal amount of a
Eurodollar Loan shall be One Million Dollars ($1,000,000).
(d) If a request for an advance under the Loans is not
accompanied by an Interest Rate Election Notice or does not otherwise include a
selection of an Applicable Interest Rate and, if applicable, an Interest Period,
or if, after having made a selection of an Applicable Interest Rate and, if
applicable, an Interest Period, the Borrower fails or is not otherwise entitled
under the provisions of this Agreement to continue such Applicable Interest
30
<PAGE> 37
Rate or Interest Period, the Borrower shall be deemed to have selected the Base
Rate as the Applicable Interest Rate until such time as the Borrower has
selected a different Applicable Interest Rate and specified an Interest Period
in accordance with, and subject to, the provisions of this Section.
(e) The Lender will not be obligated to make Loans, to
convert the Applicable Interest Rate on Loans to another Applicable Interest
Rate, or to change Interest Periods, unless the Lender shall have received an
irrevocable written or telephonic notice (an "Interest Rate Election Notice")
from the Borrower specifying the following information:
(i) the amount to be borrowed or converted;
(ii) a selection of the Base Rate or the Eurodollar
Rate;
(iii) the length of the Interest Period if the
Applicable Interest Rate selected is the Eurodollar Rate; and
(iv) the requested date on which such election is
to be effective.
Any telephonic notice must be confirmed in writing within
three (3) Business Days. Each Interest Rate Election Notice must be received by
the Lender not later than 12:00 noon (Baltimore City time) on the Business Day
of any requested borrowing or conversion in the case of a selection of the Base
Rate and not later than 12:00 noon (Baltimore City time) on the third Business
Day before the effective date of any requested borrowing or conversion in the
case of a selection of the Eurodollar Rate.
2.4.3 Inability to Determine Eurodollar Base Rate.
--------------------------------------------
In the event that (a) the Lender shall have determined that,
by reason of circumstances affecting the London interbank eurodollar market,
adequate and reasonable means do not exist for ascertaining the Eurodollar Base
Rate for any requested Interest Period with respect to a Loan the Borrower has
requested to be made as or to be converted to a Eurodollar Loan or (b) the
Lender shall determine that the Eurodollar Base Rate for any requested Interest
Period with respect to a Loan the Borrower has requested to be made as or to be
converted to a Eurodollar Loan does not adequately and fairly reflect the cost
to the Lender of funding or converting such Loan, the Lender shall give
telephonic or written notice of such determination to the Borrower at least one
(1) day prior to the proposed date for funding or converting such Loan. If such
notice is given, any request for a Eurodollar Loan shall be made as or converted
to a Base Rate Loan. Until such notice has been withdrawn by the Lender, the
Borrower will not request that any Loan be made as or converted to a Eurodollar
Loan. Any such notice must be withdrawn promptly following the cessation of the
circumstances that caused such notice to be given.
2.4.4 Indemnity.
----------
The Borrower agrees to indemnify and reimburse the Lender and
to hold the Lender harmless from any loss, cost (including administrative costs)
or expense which the
31
<PAGE> 38
Lender may sustain or incur as a consequence of (a) a default by the Borrower in
payment when due of the principal amount of or interest on any Eurodollar Loan,
(b) the failure of the Borrower to make, or convert the Applicable Interest Rate
of, a Loan after the Borrower has given a Loan Notice or an Interest Rate
Election Notice as of the date specified in such Notice and/or (c) the making by
the Borrower of a prepayment of a Eurodollar Loan on a day which is not the last
day of the Interest Period for such Eurodollar Loan, calculated as provided in
the following section. This agreement and covenant of the Borrower shall survive
termination or expiration of this Agreement and payment of the other
Obligations.
Contemporaneously with any prepayment of principal of a
Eurodollar Loan on a day that is not the last day for the Interest Period for
such Eurodollar Loan, a prepayment fee shall be due and payable to the Lender in
an amount equal to the product of
(A) the amount so prepaid
multiplied by
-------------
(B) the difference (but not less than zero) of
(i) the constant maturity 360-day interest yield (as of the first
day of the then effective Interest Period and expressed as a
decimal) for a United States Treasury bill, note, or bond (a
"Treasury obligation") selected by the Lender, in an aggregate
amount comparable to the amount prepaid, and having, as of the first
day of the then effective Interest Period, a remaining term
approximately equal to the original Interest Period,
minus
-----
(ii) the 360-day interest yield (as of the Business Day immediately
preceding the prepayment date and expressed as a decimal) on such
Treasury obligation and having, as of the Business Day immediately
preceding the prepayment date, a remaining term until maturity
approximately equal to the unexpired portion of the Interest Period,
multiplied by
-------------
(C) the quotient of
(i) the number of calendar days in the unexpired portion
of the Interest Period,
divided by
----------
(ii) 360.
The applicable yields on the Treasury obligations described
above shall be determined based upon the Federal Reserve statistical release
H.15 published for the applicable determination dates set forth above. Any
Treasury obligation selected when the related Interest Period is one year or
less shall be United States Treasury Bills. The Lender shall not be
32
<PAGE> 39
obligated or required to have actually reinvested the prepaid amount of the
Eurodollar Loan in any such Treasury obligation as a condition precedent to the
Borrower's being obligated to pay a prepayment fee as outlined above. The Lender
shall not be obligated to accept any prepayment of principal unless it is
accompanied by the prepayment fee, if any, due in connection therewith as
calculated pursuant to the provisions of this paragraph. No prepayment fee
payable in connection herewith shall in any event or under any circumstances be
deemed or construed as a penalty.
2.4.5 Payment of Interest.
(a) Unpaid and accrued interest on any portion of the
Loans which consists of a Base Rate Loan shall be paid monthly, in arrears, on
the first day of each calendar month, commencing on the first such date after
the date of this Agreement, and on the first day of each calendar month
thereafter, and at maturity (whether by acceleration, declaration, extension or
otherwise).
(b) Notwithstanding the foregoing, any and all unpaid
and accrued interest on any Base Rate Loan converted to a Eurodollar Loan or
prepaid shall be paid immediately upon such conversion and/or prepayment, as
appropriate.
(c) Unpaid and accrued interest on any Eurodollar Loan
shall be paid monthly and on the last Business Day of each Interest Period for
such Eurodollar Loan and at maturity (whether by acceleration, declaration,
extension or otherwise); provided, however that any and all unpaid and accrued
interest on any Eurodollar Loan prepaid prior to expiration of the then current
Interest Period for such Eurodollar Loan shall be paid immediately upon
prepayment.
ARTICLE III
THE COLLATERAL
--------------
Section 3.1 Debt and Obligations Secured.
------------------------------
All property and Liens assigned, pledged or otherwise granted under or in
connection with this Agreement (including, without limitation, those under
Section 3.2 (Grant of Liens)) or any of the Financing Documents shall secure (a)
the payment of all of the Obligations, and (b) the performance, compliance with
and observance by the Borrower of the provisions of this Agreement and all of
the other Financing Documents or otherwise under the Obligations.
Section 3.2 Grant of Liens.
---------------
The Borrower hereby assigns, pledges and grants to the Lender, and agrees
that the Lender shall have a perfected and continuing security interest in, and
Lien on, (a) all of the Borrower's Accounts, Chattel Paper, Government
Contracts, Documents, Instruments, Equipment, Securities, and General
Intangibles and all of the Borrower's deposit accounts with any financial
institution with which the Borrower maintains deposits, whether now owned or
existing or hereafter acquired or arising, (b) all insurance policies relating
to the foregoing, (c) all books and records in whatever media (paper, electronic
or otherwise) recorded or stored, with respect to the foregoing and all
Equipment and General Intangibles necessary or beneficial to retain, access
and/or process the information contained in those books and records, and (d) all
33
<PAGE> 40
cash and non-cash proceeds and products of the foregoing. The Borrower further
agrees that the Lender shall have in respect thereof all of the rights and
remedies of a secured party under the Uniform Commercial Code as well as those
provided in this Agreement, under each of the other Financing Documents and
under applicable Laws.
The Borrower covenants and agrees that the Borrower shall provide the
Lender with all necessary information and will execute and deliver such
documents as are required to comply with the Federal Assignment of Claims Act of
1940 (31 U.S.C. Section 3727 and 41 U.S.C. Section 15), to perfect the Lender's
security interest in Government Contracts with a contract value equal to or
greater than Two Million Dollars ($2,000,000) and such other Government
Contracts as the Lender may determine in its sole discretion.
Section 3.3 Collateral Disclosure List.
---------------------------
On or prior to the Closing Date, the Borrower shall deliver to the Lender
a list (the "Collateral Disclosure List") which shall contain such information
with respect to the Borrower's business and personal property as the Lender may
require and shall be certified by a Responsible Officer of the Borrower, all in
the form provided to the Borrower by the Lender. Promptly after demand by the
Lender, the Borrower shall furnish to the Lender an update of the information
contained in the Collateral Disclosure List at any time and from time to time as
may be reasonably requested by the Lender.
Section 3.4 Personal Property.
------------------
The Borrower acknowledges and agrees that it is the intention of the
parties to this Agreement that the Lender shall have a first priority, perfected
Lien, in form and substance satisfactory to the Lender and its counsel, on all
of the Borrower's personal property of any kind and nature whatsoever, whether
now owned or hereafter acquired, subject only to the Permitted Liens, if any. In
furtherance of the foregoing:
3.4.1 Securities, Chattel Paper, Promissory Notes, etc.
-------------------------------------------------
(a) On the Closing Date and without implying any
limitation on the scope of Section 3.2 (Grant of Liens), the Borrower shall
deliver to the Lender all originals of all of the Borrower's letters of credit,
Securities, Chattel Paper, Documents and Instruments and, if the Lender so
requires, shall execute and deliver to the Lender separate pledges, assignments
and security agreements in form and content acceptable to the Lender, which
pledges, assignments and security agreements shall assign, pledge and grant a
Lien to the Lender on all letters of credit, Securities, Chattel Paper,
Documents, and Instruments.
(b) In the event that the Borrower shall acquire after
the Closing Date any letters of credit, Securities, Chattel Paper, Documents, or
Instruments, the Borrower shall promptly so notify the Lender and deliver the
originals of all of the foregoing to the Lender promptly and in any event within
ten (10) Business Days following each acquisition.
(c) All letters of credit, Securities, Chattel Paper,
Documents and Instruments shall be delivered to the Lender endorsed and/or
assigned as required by any pledge, assignment and security agreement and/or as
the Lender may require and, if applicable, shall be accompanied by blank
irrevocable and unconditional stock or bond powers and/or notices as the Lender
may require.
34
<PAGE> 41
3.4.2 Patents, Copyrights and Other Property Requiring
------------------------------------------------
Additional Steps to Perfect.
- ----------------------------
On the Closing Date and without implying any limitation on the
scope of Section 3.2 (Grant of Liens), the Borrower shall execute and deliver
all Financing Documents and take all actions requested by the Lender in order to
perfect a first priority assignment of Patents, Copyrights, Trademarks or any
other type or kind of intellectual property acquired by the Borrower after the
Closing Date.
Section 3.5 Record Searches.
---------------
As of the Closing Date and thereafter at the time any Financing Document
is executed and delivered by the Borrower pursuant to this Section, the Lender
shall have received, in form and substance satisfactory to the Lender, such Lien
or record searches with respect to the Borrower and/or any other Person, as
appropriate, and the property covered by such Financing Document showing that
the Lien of such Financing Document will be a perfected first priority Lien on
the property covered by such Financing Document subject only to Permitted Liens
or to such other matters as the Lender may approve.
Section 3.6 Costs.
------
The Borrower agrees to pay, as part of the Enforcement Costs and to the
fullest extent permitted by applicable Laws, on demand all reasonable costs,
fees and expenses incurred by the Lender in connection with the taking,
perfection, preservation, protection and/or release of a Lien on the Collateral,
including, without limitation:
(a) customary fees and expenses incurred in preparing
Financing Documents from time to time (including, without limitation,
reasonable attorneys' fees incurred in connection with preparing the
Financing Documents);
(b) all filing and/or recording taxes or fees;
(c) all costs of Lien and record searches;
(d) reasonable attorneys' fees in connection with all
legal opinions required; and
(e) all related costs, fees and expenses.
Section 3.7 Release.
---------
Upon the indefeasible repayment in full in cash of the Obligations and
performance of all Obligations of the Borrower and all obligations and
liabilities of each other Person, other than the Lender, under this Agreement
and all other Financing Documents, the termination and/or expiration of the
Commitment and Outstanding Letter of Credit Obligations, upon the Borrower's
request and at the Borrower's sole cost and expense, the Lender shall release
and/or terminate any Financing Document but only if and provided that there is
no commitment or obligation (whether or not conditional) of the Lender to
re-advance amounts which would be secured thereby.
35
<PAGE> 42
Section 3.8 Inconsistent Provisions.
------------------------
In the event that the provisions of any Financing Document directly
conflict with any provision of this Agreement, the provisions of this Agreement
govern.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 4.1 Representations and Warranties.
-------------------------------
The Borrower represents and warrants to the Lender, as follows:
4.1.1 Subsidiaries.
-------------
The Borrower has the Subsidiaries listed on the Collateral
Disclosure List attached hereto and made a part hereof and no others. Each of
the Subsidiaries is a Wholly Owned Subsidiary except as shown on the Collateral
Disclosure List, which correctly indicates the nature and amount of the
Borrower's ownership interests therein.
4.1.2 Good Standing.
--------------
Each of the Borrower and its Subsidiaries (a) is a corporation
duly organized, existing and in good standing under the laws of the jurisdiction
of its incorporation, (b) has the corporate power to own its property and to
carry on its business as now being conducted, and (c) is duly qualified to do
business and is in good standing in each jurisdiction in which the character of
the properties owned by it therein or in which the transaction of its business
makes such qualification necessary.
4.1.3 Power and Authority.
--------------------
The Borrower has full corporate power and authority to execute
and deliver this Agreement, the other Financing Documents to which it is a
party, to make the borrowings under this Agreement, and to incur and perform the
Obligations whether under this Agreement, the other Financing Documents or
otherwise, all of which have been duly authorized by all proper and necessary
corporate action. No consent or approval of shareholders or any creditors of the
Borrower, and no consent, approval, filing or registration with or notice to any
Governmental Authority on the part of the Borrower, is required as a condition
to the execution, delivery, validity or enforceability of this Agreement, the
other Financing Documents, the performance by the Borrower of the Obligations.
4.1.4 Binding Agreements.
---------------------
This Agreement and the other Financing Documents executed and
delivered by the Borrower have been properly executed and delivered and
constitute the valid and legally binding obligations of the Borrower and are
fully enforceable against the Borrower in accordance with their respective
terms, subject to bankruptcy, insolvency, reorganization, moratorium and other
laws of general applications affecting the rights and remedies of creditors and
secured parties, and general principles of equity regardless of whether applied
in a proceeding in equity or at law.
36
<PAGE> 43
4.1.5 No Conflicts.
------------
Neither the execution, delivery and performance of the terms
of this Agreement or of any of the other Financing Documents executed and
delivered by the Borrower nor the consummation of the transactions contemplated
by this Agreement will conflict with, violate or be prevented by (a) the
Borrower's charter or bylaws, (b) any existing mortgage, indenture, contract or
agreement binding on the Borrower or affecting its property, or (c) any Laws.
4.1.6 No Defaults, Violations.
-------------------------
(a) No Default or Event of Default has occurred and is
continuing.
(b) Neither the Borrower nor any of its Subsidiaries is
in default under or with respect to any obligation under any existing mortgage,
indenture, contract or agreement binding on it or affecting its property in any
respect which could be materially adverse to the business, operations, property
or financial condition of the Borrower, or which could materially adversely
affect the ability of the Borrower to perform its obligations under this
Agreement or the other Financing Documents, to which the Borrower is a party.
4.1.7 Compliance with Laws.
----------------------
Neither the Borrower nor any of its Subsidiaries is in
violation of any applicable Laws (including, without limitation, any Laws
relating to employment practices, to environmental, occupational and health
standards and controls) or order, writ, injunction, decree or demand of any
court, arbitrator, or any Governmental Authority affecting the Borrower or any
of its properties, the violation of which, considered in the aggregate, could
materially adversely affect the business, operations or properties of the
Borrower and its Subsidiaries taken as a whole.
4.1.8 Margin Stock.
-------------
None of the proceeds of the Loan will be used, directly or
indirectly, by the Borrower or any Subsidiary for the purpose of purchasing or
carrying, or for the purpose of reducing or retiring any indebtedness which was
originally incurred to purchase or carry, any "margin stock" within the meaning
of Regulation U (12 CFR Part 221), of the Board of Governors of the Federal
Reserve System or for any other purpose which might make the transactions
contemplated in this Agreement a "purpose credit" within the meaning of said
Regulation U, or cause this Agreement to violate any other regulation of the
Board of Governors of the Federal Reserve System or the Securities Exchange Act
of 1934, as amended, or any rules or regulations promulgated under any of such
statutes.
4.1.9 Investment Company Act; Margin Securities.
------------------------------------------
Neither the Borrower nor any of its Subsidiaries is an
investment company within the meaning of the Investment Company Act of 1940, as
amended, nor is it, directly or indirectly, controlled by or acting on behalf of
any Person which is an investment company within the meaning of said Act.
Neither the Borrower nor any of its Subsidiaries is engaged principally, or as
one of its important activities, in the business of extending credit for the
37
<PAGE> 44
purpose of purchasing or carrying "margin stock" within the meaning of
Regulation U (12 CFR Part 221), of the Board of Governors of the Federal Reserve
System.
4.1.10 Litigation.
------------
Except as otherwise disclosed to the Lender on Schedule 4.1.10
attached hereto and made a part hereof, there are no proceedings, actions or
investigations pending or, so far as the Borrower knows, threatened before or by
any court, arbitrator or any Governmental Authority which, in any one case or in
the aggregate, if determined adversely to the interests of the Borrower or any
Subsidiary, would have a material adverse effect on the business, properties,
condition (financial or otherwise) or operations, present or prospective, of the
Borrower.
4.1.11 Financial Condition.
--------------------
The consolidated financial statements of the Borrower dated
December 31, 1999, are complete and correct and fairly present the financial
position of the Borrower and its Subsidiaries and the results of their
operations as of the date and for the period referred to and have been prepared
in accordance with GAAP applied on a consistent basis throughout the period
involved. There are no liabilities, direct or indirect, fixed or contingent, of
the Borrower or its Subsidiaries as of the date of such financial statements
that are not reflected therein or in the notes thereto. There has been no
adverse change in the financial condition or operations of the Borrower or its
Subsidiaries since the date of such financial statements and to the Borrower's
knowledge no such adverse change is pending or threatened. Neither the Borrower
nor any Subsidiary has guaranteed the obligations of, or made any investment in
or advances to, any Person, except as disclosed in such financial statements.
4.1.12 Full Disclosure.
----------------
The financial statements referred to in Section 4.1.11
(Financial Condition), the Financing Documents (including, without limitation,
this Agreement), and the statements, reports or certificates furnished by the
Borrower in connection with the Financing Documents (a) do not contain any
untrue statement of a material fact and (b) when taken in their entirety, do not
omit any material fact necessary to make the statements contained therein not
misleading. There is no fact known to the Borrower which the Borrower has not
disclosed to the Lender in writing prior to the date of this Agreement with
respect to the transactions contemplated by the Financing Documents which
materially and adversely affects or in the future could, in the reasonable
opinion of the Borrower materially adversely affect the condition, financial or
otherwise, results of operations, business, or assets of the Borrower or of any
Subsidiary.
4.1.13 Indebtedness for Borrowed Money.
--------------------------------
Except for the Obligations, the obligations under the
Subordinated Debentures and except as set forth in Schedule 4.1.13 attached
hereto and made a part hereof, the Borrower has no Indebtedness for Borrowed
Money. The Lender has received photocopies of all promissory notes (including a
pro-forma Subordinated Debenture in the form issued under the Indenture)
evidencing any Indebtedness for Borrowed Money set forth in Schedule 4.1.13,
together with any and all subordination agreements, other agreements, documents,
or instruments securing, evidencing, guarantying or otherwise executed and
delivered in connection therewith.
38
<PAGE> 45
4.1.14 Taxes.
------
Each of the Borrower and its Subsidiaries has filed all
returns, reports and forms for Taxes which, to the knowledge of the Borrower,
are required to be filed, and has paid all Taxes as shown on such returns or on
any assessment received by it, to the extent that such Taxes have become due,
unless and to the extent only that such Taxes, assessments and governmental
charges are currently contested in good faith and by appropriate proceedings by
the Borrower, such Taxes are not the subject of any Liens other than Permitted
Liens, and adequate reserves therefor have been established as required under
GAAP. All tax liabilities of the Borrower were as of the date of audited
financial statements referred to in Section 4.1.11 (Financial Condition), and
are now, adequately provided for on the books of the Borrower or its
Subsidiaries, as appropriate. No tax liability has been asserted by the Internal
Revenue Service or any state or local authority against the Borrower for Taxes
in excess of those already paid.
4.1.15 ERISA.
------
With respect to any "pension plan" as defined in Section 3(2)
of ERISA, which plan is now or within the last five (5) years has been
maintained or contributed to by the Borrower and/or by any Commonly Controlled
Entity: (a) no "accumulated funding deficiency" as defined in Internal Revenue
Code Section 412 or ERISA Section 302 has occurred, whether or not that
accumulated funding deficiency has been waived; (b) no Reportable Event has
occurred; (c) no termination of any plan subject to Title IV of ERISA has
occurred for which notice has not been waived by the regulation issued under
Section 404 of ERISA; (d) neither the Borrower nor any Commonly Controlled
Entity has incurred a "complete withdrawal" within the meaning of ERISA Section
4203 from any Multi-employer Plan; (e) neither the Borrower nor any Commonly
Controlled Entity has incurred a "partial withdrawal" within the meaning of
ERISA Section 4205 with respect to any Multi-employer Plan; (f) no
Multi-employer Plan to which the Borrower or any Commonly Controlled Entity has
an obligation to contribute is in "reorganization" within the meaning of ERISA
Section 4241 nor has notice been received by the Borrower or any Commonly
Controlled Entity that such a Multi-employer Plan will be placed in
"reorganization".
4.1.16 Title to Properties.
--------------------
The Borrower has good and marketable title, subject only to
Permitted Liens, to all of its properties, including, without limitation, the
Collateral and the properties and assets reflected in the balance sheets
described in Section 4.1.11 (Financial Condition). The Borrower has legal,
enforceable and uncontested rights to use freely such property and assets as
such property and assets are currently being used.
4.1.17 Patents, Trademarks, Etc.
--------------------------
Each of the Borrower and its Subsidiaries owns, possesses, or
has the right to use all necessary Patents, licenses, Trademarks, Copyrights,
permits and franchises to own its properties and to conduct its business as now
conducted, without known conflict with the rights of any other Person. Any and
all obligations to pay royalties or other charges with respect to such
properties and assets are properly reflected on the financial statements
described in Section 4.1.11 (Financial Condition).
39
<PAGE> 46
4.1.18 Presence of Hazardous Materials or Hazardous Materials
------------------------------------------------------
Contamination.
- --------------
To the best of the Borrower's knowledge as to owned property
and to the Borrower's knowledge as to leased property, (a) no Hazardous
Materials are located on any real property owned, controlled or operated by of
the Borrower or for which the Borrower is, or is claimed to be, responsible,
except for reasonable quantities of necessary supplies for use by the Borrower
in the ordinary course of its current line of business and stored, used and
disposed in accordance with applicable Laws; and (b) no property owned,
controlled or operated by the Borrower or for which the Borrower has, or is
claimed to have, responsibility has ever been used as a manufacturing, storage,
or dump site for Hazardous Materials nor is affected by Hazardous Materials
Contamination at any other property.
4.1.19 Perfection and Priority of Collateral.
---------------------------------------
The Lender has, or upon execution and recording of this
Agreement and the Security Documents will have, and will continue to have as
security for the Obligations, a valid and perfected Lien on and security
interest in all Collateral, free of all other Liens, claims and rights of third
parties whatsoever except Permitted Liens, including, without limitation, those
described on Schedule 4.1.19 attached hereto and made a part hereof.
4.1.20 No Suspension or Debarment.
---------------------------
Neither the Borrower nor any Subsidiary of the Borrower nor
any of their respective directors or officers has received any notice of, or
information concerning, any proposed, contemplated or initiated suspension or
debarment, be it temporary or permanent, due to an administrative or a statutory
basis, of the Borrower or any Subsidiary of the Borrower by any Governmental
Authority. The Borrower and each Subsidiary of the Borrower further warrants and
represents that neither the Borrower nor any Subsidiary of the Borrower has
defaulted under any Government Contract which default would be a basis of
terminating such Government Contract.
4.1.21 Places of Business and Location of Collateral.
----------------------------------------------
The information contained in the Collateral Disclosure List is
complete and correct. The Collateral Disclosure List completely and accurately
identifies the address of (a) the chief executive office of the Borrower, (b)
any and each other place of business of the Borrower, (c) the location of all
books and records pertaining to the Collateral, and (d) each location, other
than the foregoing, where any of the Collateral is located. The proper and only
places to file financing statements with respect to the Collateral within the
meaning of the Uniform Commercial Code are the filing offices for those
jurisdictions in which the Borrower maintains a place of business as identified
on the Collateral Disclosure List or where the Collateral is located.
4.1.22 Business Names and Addresses.
-----------------------------
In the six (6) years preceding the date hereof, the Borrower
has not changed its name, identity or corporate structure, has not conducted
business under any name other than its current name, and has not conducted its
business in any jurisdiction other than those disclosed on the Collateral
Disclosure List.
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4.1.23 Equipment.
----------
All Equipment is personalty and is not and will not be affixed
to real estate in such manner as to become a fixture or part of such real
estate. No equipment is held by the Borrower on a sale on approval basis.
4.1.24 Accounts.
---------
With respect to all Accounts and to the best of the Borrower's
knowledge (a) they are genuine, and in all respects what they purport to be, and
are not evidenced by a judgment, an Instrument, or Chattel Paper (unless such
judgment has been assigned and such Instrument or Chattel Paper has been
endorsed and delivered to the Lender); (b) they represent bona fide transactions
completed in accordance with the terms and provisions contained in the invoices,
purchase orders and other contracts relating thereto, and the underlying
transaction therefor is in accordance with all applicable Laws; (c) the amounts
shown on the Borrower's books and records are maintained in accordance with
GAAP; (d) no payments have been or shall be made thereon except payments turned
over to the Lender by the Borrower; (e) all Account Debtors thereon have the
capacity to contract; and (f) the amounts shown thereon are not subject to any
Liens except the security interest granted to the Lender by this Agreement and
Permitted Liens.
4.1.25 Compliance with Eligibility Standards.
---------------------------------------
Each Account included in the calculation of the Borrowing Base
does and will at all times meet and comply with all of the standards for
Eligible Receivables. With respect to those Accounts which constitutes Eligible
Receivables (a) to the Borrower's knowledge there are no facts, events or
occurrences which in any way impair the validity, collectibility or
enforceability thereof or tend to reduce the amount payable thereunder; and (b)
there are no proceedings or actions known to the Borrower which are threatened
or pending against any Account Debtor which might result in any material adverse
change in the Borrowing Base.
4.1.26 Solvency
---------
The Borrower is Solvent prior to and after giving effect to
the making of the Loan.
Section 4.2 Survival; Updates of Representations and Warranties.
----------------------------------------------------
All representations and warranties contained in or made under or in
connection with this Agreement and the other Financing Documents shall survive
the Closing Date, the making of any advance under the Loan and extension of
credit made hereunder, and the incurring of any other Obligations and shall be
deemed to have been made at the time of each request for, and again at the time
the making of, each advance under the Loan or the issuance of each Letter of
Credit, except to the extent they expressly relate to an earlier specified date
or are affected by transactions or events occurring after the Closing Date and
permitted or not prohibited hereunder and except that the representations and
warranties which relate to financial statements which are referred to in Section
4.1.11 (Financial Condition), shall also be deemed to cover financial statements
furnished from time to time to the Lender pursuant to Section 6.1.1 (Financial
Statements).
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ARTICLE V
CONDITIONS PRECEDENT
Section 5.1 Conditions to the Initial Advance and Initial Letter of
Credit.
The making of the initial advance under the Loan and the issuance of the
initial Letter of Credit is subject to the fulfillment on or before the Closing
Date of the following conditions precedent in a manner satisfactory in form and
substance to the Lender and its counsel:
5.1.1 Organizational Documents - Borrower.
The Lender shall have received:
(a) a certificate of good standing for the Borrower
certified by the Secretary of State, or other appropriate Governmental
Authority, of the state of incorporation for the Borrower;
(b) a certificate of qualification to do business for
the Borrower certified by the Secretary of State or other Governmental
Authority of each state in which the Borrower conducts business;
(c) a certificate dated as of the Closing Date by the
Secretary or an Assistant Secretary of the Borrower covering:
(i) true and complete copies of the Borrower's
corporate charter, bylaws, and all amendments thereto;
(ii) true and complete copies of the resolutions of
its Board of Directors authorizing (A) the execution, delivery and
performance of the Financing Documents to which the Borrower is a
party, (B) the borrowings by the Borrower hereunder, (C) the granting
of the Liens contemplated by this Agreement and the Financing Documents
to which the Borrower is a party;
(iii) the incumbency, authority and signatures of
the officers of the Borrower authorized to sign this Agreement and the
other Financing Documents to which the Borrower is a party; and
(iv) the identity of the Borrower's current
directors, common stock holders and other equity holders, as well as
their respective percentage ownership interests.
5.1.2 Opinion of Borrower's Counsel.
The Lender shall have received the favorable opinion of
counsel for the Borrower addressed to the Lender.
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5.1.3 Organizational Documents - Guarantors.
The Lender shall have received for each of the Guarantors:
(a) a certificate of good standing certified by the
Secretary of State, or other appropriate Governmental Authority, of the
state of incorporation for the Guarantor;
(b) a certificate of qualification to do business
certified by the Secretary of State or other Governmental Authority of
each state in which the Guarantor conducts business;
(c) a certificate dated as of the Closing Date by the
Secretary or an Assistant Secretary of the Guarantor covering:
(i) true and complete copies of the Guarantor's
corporate charter, bylaws, and all amendments thereto;
(ii) true and complete copies of the resolutions of
the Board of Directors of the Guarantor authorizing the
execution, delivery and performance of the Financing Documents
to which the Guarantor is a party and the granting of the
Liens contemplated by any of the Financing Documents to which
the Guarantor is a party;
(iii) the incumbency, authority and signatures of
the officers of the Guarantor authorized to sign the Guaranty
and all other Financing Documents to which the Guarantor is a
party;
(iv) the identity of the Guarantor's current
directors, common stock holders and other equity holders, as
well as their respective percentage ownership interests;
(d) the favorable opinion of counsel for the Guarantor
addressed to the Lender and in form satisfactory to the Lender.
5.1.4 Consents, Licenses, Approvals, Etc.
The Lender shall have received copies of all consents,
licenses and approvals, required in connection with the execution, delivery,
performance, validity and enforceability of the Financing Documents and such
consents, licenses and approvals shall be in full force and effect.
5.1.5 Note.
The Lender shall have received the Revolving Credit Note,
conforming to the requirements hereof and executed by a Responsible Officer of
the Borrower and attested by a duly authorized representative of the Borrower.
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5.1.6 Financing Documents and Collateral.
The Borrower shall have executed and delivered the Financing
Documents to be executed by it, and shall have delivered original Chattel Paper,
Instruments, Securities, and related Collateral and all opinions, title
insurance, and other documents contemplated by ARTICLE III (The Collateral).
5.1.7 Other Financing Documents.
In addition to the Financing Documents to be delivered by the
Borrower, the Lender shall have received the Financing Documents duly executed
and delivered by Persons other than the Borrower.
5.1.8 Other Documents, Etc.
The Lender shall have received such other certificates,
opinions, documents and instruments confirmatory of or otherwise relating to the
transactions contemplated hereby as may have been reasonably requested by the
Lender.
5.1.9 Payment of Fees.
The Lender shall have received payment of any Fees due on or
before the Closing Date.
5.1.10 Collateral Disclosure List.
The Borrower shall have delivered the Collateral Disclosure
List required under the provisions of Section 3.3 (Collateral Disclosure List)
duly executed by a Responsible Officer of the Borrower.
5.1.11 Recordings and Filings.
The Borrower shall have: (a) executed and delivered all
Financing Documents (including, without limitation, UCC-1 and UCC-3 statements)
required to be filed, registered or recorded in order to create, in favor of the
Lender, a perfected Lien in the Collateral (subject only to the Permitted Liens)
in form and in sufficient number for filing, registration, and recording in each
office in each jurisdiction in which such filings, registrations and
recordations are required, and (b) delivered such evidence as the Lender require
that all necessary filing fees and all recording and other similar fees, and all
Taxes and other expenses related to such filings, registrations and recordings
will be or have been paid in full.
5.1.12 Insurance Certificate.
The Lender shall have received an insurance certificate in
accordance with the provisions of Section 6.1.8 (Insurance) and Section 6.1.18
(Insurance With Respect to Equipment)
5.1.13 Field Examination.
The Lender shall have completed a field examination and audit
of the Borrower's business, operations and income, the results of which field
examination and audit shall be in all respects acceptable to the Lender in its
reasonable discretion and shall include reference discussions with key customers
and vendors.
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5.1.14 Confirmation of Intercreditor Agreement.
The Lender shall have received confirmation of the
Intercreditor Agreement from Reliance in form satisfactory to the Lender.
Section 5.2 Conditions to all Extensions of Credit.
The making of all advances under the Loan and the issuance of all Letters
of Credit is subject to the fulfillment of the following conditions precedent in
a manner satisfactory in form and substance to the Lender and its counsel:
5.2.1 Compliance.
The Borrower shall have complied and shall then be in
compliance with all terms, covenants, conditions and provisions of this
Agreement and the other Financing Documents that are binding upon it.
5.2.2 Borrowing Base.
The Borrower shall have furnished all Borrowing Base Reports
required by Section 2.1.4 (Borrowing Base Report), there shall exist no
Borrowing Base Deficiency, and as evidence thereof, the Borrower shall have
furnished to the Lender such reports, schedules, certificates, records and other
papers as may be reasonably requested by the Lender.
5.2.3 Default.
There shall exist no Event of Default or Default hereunder.
5.2.4 Representations and Warranties.
The representations and warranties of the Borrower contained
among the provisions of this Agreement shall be true and with the same effect as
though such representations and warranties had been made at the time of the
making of, and of the request for, each advance under the Loan or the issuance
of each Letter of Credit, except to the extent they expressly relate to an
earlier specified date or are affected by transactions or events occurring after
the Closing Date and permitted or not prohibited hereunder and except that the
representations and warranties which relate to financial statements which are
referred to in Section 4.1.11 (Financial Condition), shall also be deemed to
cover financial statements furnished from time to time to the Lender pursuant to
Section 6.1.1 (Financial Statements).
5.2.5 Adverse Change.
No adverse change shall have occurred in the condition
(financial or otherwise), operations or business of the Borrower that would, in
the good faith judgment of the Lender, materially impair the ability of the
Borrower to pay or perform any of the Obligations.
5.2.6 Legal Matters.
All legal documents incident to each advance under the Loan
and each of the Letters of Credit shall be reasonably satisfactory to counsel
for the Lender.
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ARTICLE VI
COVENANTS OF THE BORROWER
Section 6.1 Affirmative Covenants.
So long as any of the Obligations or the Commitment shall be outstanding
hereunder, the Borrower agrees with the Lender as follows:
6.1.1 Financial Statements.
The Borrower shall furnish to the Lender:
(a) Annual Statements and Certificates. The Borrower
shall furnish to the Lender as soon as available, but in no event more than one
hundred and twenty (120) days after the close of each fiscal year of the
Borrower, (i) a copy of the annual financial statement in reasonable detail
satisfactory to the Lender relating to the Borrower and its Subsidiaries,
prepared in accordance with GAAP and examined and certified by independent
certified public accountants satisfactory to the Lender, which financial
statement shall include a consolidated balance sheet of the Borrower and its
Subsidiaries as of the end of such fiscal year and consolidated statements of
income, cash flows and changes in shareholders equity of the Borrower and its
Subsidiaries for such fiscal year, (ii) a Compliance Certificate, in
substantially the form attached to this Agreement as EXHIBIT C, containing a
detailed computation of each financial covenant which is applicable for the
period reported and a certification that no change has occurred to the
information contained in the Collateral Disclosure List (except as set forth on
any schedule attached to the certification), each prepared by a Responsible
Officer of the Borrower in a format acceptable to the Lender, all as prepared
and certified by a Responsible Officer of the Borrower and accompanied by a
certificate of that officer stating whether any event has occurred which
constitutes a Default or an Event of Default hereunder, and, if so, stating the
facts with respect thereto, and (iii) a management letter in the form prepared
by the Borrower's independent certified public accountants.
(b) Annual Opinion of Accountant. The Borrower shall
furnish to the Lender as soon as available, but in no event more than one
hundred and twenty (120) days after the close of the Borrower's fiscal years, a
letter or opinion of the accountant who examined and certified the annual
financial statement relating to the Borrower and its Subsidiaries (i) stating
whether anything in such accountant's examination has revealed the occurrence of
a Default or an Event of Default hereunder, and, if so, stating the facts with
respect thereto and (ii) acknowledging that the Lender will rely on the
statement and that the Borrower knows of the intended reliance by the Lender.
(c) Quarterly Statements and Certificates. The Borrower
shall furnish to the Lender as soon as available, but in no event more than
forty five (45) days after the close of the Borrower's fiscal quarters (for all
but the fourth fiscal quarter) consolidated balance sheets of the Borrower and
its Subsidiaries as of the close of such period, consolidated income and cash
flow statements, and a Compliance Certificate, in substantially the form
attached to this Agreement as EXHIBIT C, containing a detailed computation of
each financial covenant which is applicable for the period reported and a
certification that no change has occurred to the information contained in the
Collateral Disclosure List (except as set forth on any schedule attached to the
certification), each prepared by a Responsible Officer of the Borrower in a
format
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acceptable to the Lender, all as prepared and certified by a Responsible Officer
of the Borrower and accompanied by a certificate of that officer stating whether
any event has occurred which constitutes a Default or an Event of Default
hereunder, and, if so, stating the facts with respect thereto.
(d) Monthly Statements and Certificates. The Borrower
shall furnish to the Lender as soon as available, but in no event more than
forty (40) days after the close of each month, consolidated balance sheets of
the Borrower and its Subsidiaries as of the close of such period, consolidated
income and cash flow statements for such period, and a Compliance Certificate,
in substantially the form attached to this Agreement as EXHIBIT C, containing a
detailed computation of each financial covenant which is applicable for the
period reported and a certification that no change has occurred to the
information contained in the Collateral Disclosure List (except as set forth on
any schedule attached to the certification), each prepared by a Responsible
Officer of the Borrower in a format acceptable to the Lender, all as prepared
and certified by a Responsible Officer of the Borrower and accompanied by a
certificate of that officer stating whether any event has occurred which
constitutes a Default or an Event of Default hereunder, and, if so, stating the
facts with respect thereto.
(e) Monthly reports. The Borrower shall furnish to the
Lender the Borrowing Base Report as described in Section 2.1.4 (Borrowing Base
Report) within fifteen (15) days after the end of each month, accompanied by the
following information:
(i) a detailed aging schedule of all Receivables by
Account Debtor, in such detail, and accompanied by such supporting
information, as the Lender may from time to time reasonably request;
(ii) a detailed aging of all accounts payable by
supplier, in such detail, and accompanied by such supporting
information, as the Lender may from time to time reasonably request;
and
(iii) such other information as the Lender may
reasonably request.
(f) Contract Backlog Reports. The Borrower shall furnish
to the Lender within forty five (45) days after the end of each calendar
quarter, a report in form satisfactory to the Lender detailing the status of all
contracts as of the end of the applicable quarter.
(g) Project Status Report. The Borrower shall furnish to
the Lender within thirty (30) days after the end of each month, a project status
report in such detail, and accompanied by such supporting information, as the
Lender may from time to time reasonably request.
(h) Annual Projections. The Borrower shall furnish to
the Lender as soon as available, but in no event later than the 30th day after
the end of each fiscal year a projection for the succeeding year on a monthly
basis, including, at a minimum, an income statement and a projected balance
sheet as of the end of the applicable fiscal year.
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(i) Additional Reports and Information. The Borrower
shall furnish to the Lender promptly, such additional information, reports or
statements as the Lender may from time to time reasonably request.
6.1.2 Reports to SEC and to Stockholders.
-----------------------------------
The Borrower will furnish to the Lender, promptly upon the
filing or making thereof, at least one (1) copy of all financial statements,
reports, notices and proxy statements sent by the Borrower to its stockholders,
and of all regular and other reports filed by the Borrower with any securities
exchange or with the Securities and Exchange Commission.
6.1.3 Recordkeeping, Rights of Inspection, Audit, Etc.
-------------------------------------------------
(a) The Borrower shall, and shall cause each of its
Subsidiaries to, maintain (i) a standard system of accounting in accordance with
GAAP, and (ii) proper books of record and account in which full, true and
correct entries are made of all dealings and transactions in relation to its
properties, business and activities.
(b) The Borrower shall, and shall cause each of its
Subsidiaries to, permit authorized representatives of the Lender upon reasonable
notice and at reasonable intervals to visit and inspect the properties of the
Borrower and its Subsidiaries, to review, audit, check and inspect the
Collateral at any time with or without notice, to review, audit, check and
inspect the Borrower's other books of record at any time with or without notice
and to make abstracts and photocopies thereof, and to discuss the affairs,
finances and accounts of the Borrower and/or any Subsidiaries, with the
officers, directors, employees and other representatives of the Borrower and/or
any Subsidiaries and their respective accountants, all at such times during
normal business hours and other reasonable times and as often as the Lender may
reasonably request.
(c) The Borrower hereby irrevocably authorizes and
directs all accountants and auditors employed by the Borrower and/or any
Subsidiaries at any time prior to the repayment in full of the Obligations to
exhibit and deliver to the Lender copies of any and all of the financial
statements, trial balances, management letters, or other accounting records of
any nature of the Borrower and/or any Subsidiaries in the accountant's or
auditor's possession, and to disclose to the Lender any information they may
have concerning the financial status and business operations of the Borrower and
its Subsidiaries solely for the purpose of assessing compliance with this
Agreement or the Financing Documents. Further, the Borrower hereby authorizes
all Governmental Authorities to furnish to the Lender copies of reports or
examinations relating to the Borrower and/or any Subsidiaries, whether made by
the Borrower or otherwise solely for the purpose of assessing compliance with
this Agreement or the Financing Documents.
(d) Any and all costs and expenses incurred by, or on
behalf of, the Lender in connection with the conduct of any of the foregoing,
including, without limitation, travel, lodging, meals, and other expenses shall
be part of the Enforcement Costs and shall be payable to the Lender upon demand.
The Borrower acknowledges and agrees that such expenses may include, but shall
not be limited to, any and all out-of-pocket costs and expenses of the Lender's
employees and agents in, and when, travelling to the Borrower's facilities.
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6.1.4 Corporate Existence.
Except as provided in Section 6.2.6 (Stock of Subsidiaries) of
this Agreement, the Borrower shall maintain, and cause each of its Subsidiaries
to maintain, its corporate existence in good standing in the jurisdiction in
which it is incorporated and in each other jurisdiction where it is required to
register or qualify to do business if the failure to do so in such other
jurisdiction might have a material adverse effect on the ability of the Borrower
to perform the Obligations, the conduct of the Borrower's operations, the
Borrower's financial condition, or the value of, or the ability of the Lender to
realize upon, the Collateral.
6.1.5 Compliance with Laws.
The Borrower shall comply, and cause each of its Subsidiaries
to comply, with all applicable Laws and observe the valid requirements of
Governmental Authorities, the noncompliance with or the nonobservance of which
might have a material adverse effect on the ability of the Borrower to perform
the Obligations, the conduct of the Borrower's operations, the financial
condition of the Borrower and its Subsidiaries taken as a whole, or the value
of, or the ability of the Lender to realize upon, the Collateral.
6.1.6 Preservation of Properties.
The Borrower will, and will cause each of its Subsidiaries to,
at all times (a) maintain, preserve, protect and keep its properties, whether
owned or leased, in good operating condition, working order and repair (ordinary
wear and tear excepted), and from time to time will make all proper repairs,
maintenance, replacements, additions and improvements thereto needed to maintain
such properties in good operating condition, working order and repair, and (b)
do or cause to be done all things necessary to preserve and to keep in full
force and effect its material franchises, leases of real and personal property,
trade names, Patents, Trademarks, Copyrights and permits which are necessary for
the orderly continuance of its business.
6.1.7 Line of Business.
The Borrower will continue to engage substantially only in the
business of environmental consulting, engineering and design, infrastructure and
impaired property redevelopment, construction, health and safety, facilities,
and business management services.
6.1.8 Insurance.
The Borrower will, and will cause each of its Subsidiaries to,
at all times maintain with A-or better rated insurance companies such insurance
as is required by applicable Laws and such other insurance, all in such amounts
not less than the Lender shall reasonably determine from time to time, of such
types and against such risks, hazards, liabilities, casualties and contingencies
as are usually insured against in the same geographic areas by business entities
engaged in the same or similar business. Without limiting the generality of the
foregoing, the Borrower will, and will cause each of its Subsidiaries to, keep
adequately insured all of its property against loss or damage resulting from
fire or other risks insured against by extended coverage and maintain public
liability insurance against claims for personal injury, death or property damage
occurring upon, in or about any properties occupied or controlled by it, or
arising in any manner out of the businesses carried on by it. The Borrower shall
deliver to the Lender on the Closing Date (and thereafter on each date there is
a material change in the
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insurance coverage) a certificate of a Responsible Officer of the Borrower
containing a detailed list of the insurance then in effect and stating the names
of the insurance companies, the types, the amounts and rates of the insurance,
dates of the expiration thereof and the properties and risks covered thereby.
Within thirty (30) days after notice in writing from the Lender, the Borrower
will obtain such additional insurance as the Lender may reasonably request.
6.1.9 Taxes.
Except to the extent that the validity or amount thereof is
being contested in good faith and by appropriate proceedings, the Borrower will,
and will cause each of its Subsidiaries to, pay and discharge all Taxes prior to
the date when any interest or penalty would accrue for the nonpayment thereof.
The Borrower shall furnish to the Lender at such times as the Lender may require
proof satisfactory to the Lender of the making of payments or deposits required
by applicable Laws including, without limitation, payments or deposits with
respect to amounts withheld by the Borrower from wages and salaries of employees
and amounts contributed by the Borrower on account of federal and other income
or wage taxes and amounts due under the Federal Insurance Contributions Act, as
amended.
6.1.10 ERISA.
The Borrower will, and will cause each of its Subsidiaries and
Affiliates to, comply with the funding requirements of ERISA with respect to
employee pension benefit plans for its respective employees. The Borrower will
not permit with respect to any employee benefit plan or plans of the Borrower or
of any Commonly Controlled Entity covered by Title IV of ERISA (a) any nonexempt
prohibited transaction or transactions under Section 406 of ERISA or Section
4925 of the Internal Revenue Code that results, or may result, in any material
liability of the Borrower and/or any Subsidiary and/or Affiliate, or (b) any
Reportable Event for which notice has not been waived under the regulations
issued under Section 4043 of ERISA if, upon termination of the plan or plans
with respect to which one or more such Reportable Events shall have occurred,
there is or would be any material liability of the Borrower and/or any
Subsidiary and/or Affiliate to the PBGC. Upon the Lender's request, the Borrower
will deliver to the Lender a copy of the most recent actuarial report, financial
statements and annual report completed with respect to any "defined benefit
plan", as defined in Section 3(35) of ERISA.
6.1.11 Notification of Events of Default and Adverse Developments.
The Borrower shall promptly notify the Lender upon obtaining
knowledge of the occurrence of:
(a) any Event of Default;
(b) any Default;
(c) any litigation instituted or threatened against the
Borrower or its Subsidiaries and of the entry of any judgment or Lien (other
than any Permitted Liens) against any of the assets or properties of the
Borrower or any Subsidiary where the claims against the Borrower or any of its
Subsidiaries exceed Two Hundred Fifty Thousand Dollars ($250,000) and are not
covered by insurance;
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(d) any event, development or circumstance whereby the
financial statements furnished hereunder fail in any material respect to present
fairly, in accordance with GAAP, the consolidated financial condition and
operational results of the Borrower and its Subsidiaries;
(e) any judicial, administrative or arbitral proceeding
pending against the Borrower or any of its Subsidiaries and any judicial or
administrative proceeding known by the Borrower to be threatened against it or
any of its Subsidiaries which, if adversely decided, could materially adversely
affect the financial condition or operations (present or prospective) of the
Borrower and its Subsidiaries taken as a whole;
(f) the receipt by the Borrower or any of its Subsidiaries of
any notice, claim or demand from any Governmental Authority which alleges that
the Borrower or any Subsidiary is in violation in any material respect of any of
the terms of, or has failed to comply in any material respect with any
applicable Laws regulating its operation and business, including, but not
limited to, the Occupational Safety and Health Act and the Environmental
Protection Act; and
(g) any other development in the business or affairs of the
Borrower and any of its Subsidiaries which may be materially adverse to the
Borrower and its Subsidiaries taken as a whole;
in each case describing in detail satisfactory to the Lender the nature thereof
and the action the Borrower proposes to take with respect thereto.
6.1.12 Government Contracts.
The Borrower shall promptly notify the Lender of the execution
of any Government Contract and shall in accordance with Section 3.2 execute any
instruments and take any steps in order that all moneys due and to become due
under such Government Contracts shall be assigned to the Lender and notice
thereof given to the Government under the Federal Assignment of Claims Act of
1940 (31 U.S.C. Section 3727 and 41 U.S.C. Section 15) or any other similar
applicable law.
6.1.13 Hazardous Materials; Contamination.
The Borrower agrees to:
(a) give notice to the Lender immediately upon the
Borrower's acquiring knowledge of the presence of any Hazardous Materials and of
any Hazardous Materials Contamination on any property owned, operated or
controlled by the Borrower or for which the Borrower is, or is claimed to be,
responsible (provided that such notice shall not be required for Hazardous
Materials placed or stored on such property in accordance with applicable Laws
in the ordinary course (including, without limitation, quantity) of the
Borrower's line of business expressly described in this Agreement) or of any
Hazardous Materials Contamination, with a full description thereof;
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(b) promptly comply with any Laws requiring the removal,
treatment or disposal of Hazardous Materials or Hazardous Materials
Contamination and provide the Lender with satisfactory evidence of such
compliance;
(c) provide the Lender, within thirty (30) days after a
demand by the Lender, with a bond, letter of credit or similar financial
assurance evidencing to the Lender's satisfaction that the necessary funds are
available to pay the cost of removing, treating, and disposing of such Hazardous
Materials or Hazardous Materials Contamination and discharging any Lien which
may be established as a result thereof on any property owned or controlled by
the Borrower or for which the Borrower is, or is claimed to be, responsible; and
(d) as part of the Obligations, defend, indemnify and
hold harmless the Lender and its agents, employees, trustees, successors and
assigns from any and all claims which may now or in the future (whether before
or after the termination of this Agreement) be asserted as a result of the
presence of any Hazardous Materials or of any Hazardous Materials Contamination
on any property owned or controlled by the Borrower or for which the Borrower
is, or is claimed to be, responsible. The Borrower acknowledges and agrees that
this indemnification shall survive the termination of this Agreement and the
Commitment and the payment and performance of all of the other Obligations.
6.1.14 Disclosure of Significant Transactions.
The Borrower shall deliver to the Lender a written notice
describing in detail each transaction by it involving the purchase, sale, lease,
or other acquisition or loss or casualty to or disposition of an interest in
Fixed or Capital Assets which exceeds Five Hundred Thousand Dollars
($500,000.00), said notices to be delivered to the Lender within thirty (30)
days of the occurrence of each such transaction.
6.1.15 Financial Covenants.
(a) Tangible Net Worth. The Borrower will at all times
maintain a Tangible Net Worth, measured as of the end of each fiscal month, of
not less than the following:
<TABLE>
<CAPTION>
PERIOD AMOUNT
<S> <C>
Closing Date through December 30, 2000 $52,200,000
December 31, 2000 through December 30, $54,600,000
2001
December 31, 2001 through December 30, $59,200,000
2002
December 31, 2002 and at all times $66,300,000
thereafter
</TABLE>
(b) Leverage Ratio. The Borrower will maintain, tested as of
the end of each of the Borrower's fiscal quarters, a Leverage Ratio so that it
is not more than 2.0 to 1.0.
(c) Fixed Charge Coverage Ratio. The Borrower will maintain,
tested as of the last day of each of the Borrower's fiscal quarters for the four
(4) quarter period ending on that date, a Fixed Charge Coverage Ratio of not
less than 1.25 to 1.0; provided, however, on June 30, 2000, the test shall
include only the quarter ending on such date,
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on September 30, 2000, the test shall include the quarter ending on such date
and the preceding quarter ending June 30, 2000 and on December 31, 2000, the
test shall include the quarter ending on such date and the two preceding
quarters.
(d) Capital Expenditures. The Borrower will not, and will not
permit any Subsidiary to, directly or indirectly (by way of the acquisition of
the securities of a Person or otherwise), make any Capital Expenditures in the
aggregate for the Borrower and the Subsidiaries (taken as a whole) in any fiscal
year exceeding Five Million Dollars ($5,000,000).
6.1.16 Collection of Receivables.
Until such time that the Lender shall notify the Borrower of
the revocation of such privilege, the Borrower and each of the Subsidiaries
shall at its own expense have the privilege for the account of, and in trust
for, the Lender of collecting its Receivables and receiving in respect thereto
all Items of Payment and shall otherwise completely service all of the
Receivables including (a) the billing, posting and maintaining of complete
records applicable thereto, (b) the taking of such action with respect to the
Receivables as the Lender may request or in the absence of such request, as the
Borrower and each of the Subsidiaries may deem advisable; and (c) the granting,
in the ordinary course of business, to any Account Debtor, any rebate, refund or
adjustment to which the Account Debtor may be lawfully entitled, and may accept,
in connection therewith, the return of goods, the sale or lease of which shall
have given rise to a Receivable and may take such other actions relating to the
settling of any Account Debtor's claim as may be commercially reasonable. The
Lender may, at its option, at any time or from time to time after and during the
continuance of an Event of Default hereunder, revoke the collection privilege
given in this Agreement to the Borrower and any one or more of the Subsidiaries
by either giving notice of its assignment of, and lien on the Collateral to the
Account Debtors or giving notice of such revocation to the Borrower. The Lender
shall not have any duty to, and the Borrower hereby releases the Lender from all
claims of loss or damage caused by the delay or failure to collect or enforce
any of the Receivables or to preserve any rights against any other party with an
interest in the Collateral. The Lender shall be entitled at any time and from
time to time to confirm and verify Receivables.
6.1.17 Assignments of Receivables.
The Borrower will promptly, upon request, execute and deliver
to the Lender written assignments, in form and content acceptable to the Lender,
of specific Receivables or groups of Receivables; provided, however, the Lien
and/or security interest granted to the Lender under this Agreement shall not be
limited in any way to or by the inclusion or exclusion of Receivables within
such assignments. Receivables so assigned shall secure payment of the
Obligations and are not sold to the Lender whether or not any assignment
thereof, which is separate from this Agreement, is in form absolute. The
Borrower agrees that neither any assignment to the Lender nor any other
provision contained in this Agreement or any of the other Financing Documents
shall impose on the Lender any obligation or liability of the Borrower with
respect to that which is assigned and the Borrower hereby agrees to indemnify
the Lender and hold the Lender harmless from any and all claims, actions, suits,
losses, damages, costs, expenses, fees, obligations and liabilities which may be
incurred by or imposed upon the Lender by virtue of the assignment of and Lien
on the Borrower's rights, title and interest in, to, and under the Collateral.
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6.1.18 Insurance With Respect to Equipment.
The Borrower will (a) maintain and cause each of its
Subsidiaries to maintain hazard insurance with fire and extended coverage and
naming the Lender as an additional insured with loss payable to the Lender as
its respective interest may appear on the Equipment in an amount at least equal
to the lesser amount of the outstanding principal amount of the Obligations or
the fair market value of the Equipment (but in any event sufficient to avoid any
co-insurance obligations) and with a specific endorsement to each such insurance
policy pursuant to which the insurer agrees to give the Lender at least thirty
(30) days written notice before any alteration or termination of such insurance
policy and that no act or default of the Borrower shall affect the right of the
Lender to recover under such policy in the event of loss or damage; (b) file,
and cause each of its Subsidiaries to file, with the Lender, upon its request, a
detailed list of the insurance then in effect and stating the names of the
insurance companies, the amounts and rates of the insurance, dates of the
expiration thereof and the properties and risks covered thereby; and (c) within
thirty (30) days after notice in writing from the Lender, obtain, and cause each
of its Subsidiaries to obtain, such additional insurance as the Lender may
reasonably request.
6.1.19 Maintenance of the Collateral.
The Borrower will maintain the Collateral in good working
order, saving and excepting ordinary wear and tear, and will not intentionally
permit anything to be done by any employee or agent of the Borrower to the
Collateral that may materially impair the value thereof. The Lender, or an agent
designated by the Lender, shall be permitted to enter the premises of the
Borrower and the Subsidiaries and examine, audit and inspect the Collateral at
any reasonable time and from time to time upon reasonable notice to the Borrower
or, if an Event of Default shall have occurred and is continuing, without
notice. The Lender agrees to act in a commercially reasonable manner when
inspecting the premises of the Borrower and the Subsidiaries and when examining,
auditing and/or inspecting the Collateral. The Lender shall not have any duty
to, and the Borrower hereby releases the Lender from all claims of loss or
damage caused by the delay or failure to collect or enforce any of the
Receivables or to, preserve any rights against any other party with an interest
in the Collateral.
6.1.20 Equipment.
The Borrower shall (a) maintain all Equipment as personalty,
(b) not affix any Equipment to any real estate in such manner as to become a
fixture or part of such real estate, and (c) shall hold no Equipment on a sale
on approval basis. The Borrower hereby declares its intent that, notwithstanding
the means of attachment, no goods of the Borrower hereafter attached to any
realty shall be deemed a fixture, which declaration shall be irrevocable,
without the Lender's consent, until all of the Obligations have been paid in
full and all of the Commitments have been terminated.
6.1.21 Defense of Title and Further Assurances.
At its expense the Borrower will defend the title to the
Collateral (and any part thereof), and will immediately execute, acknowledge and
deliver any financing statement, renewal, affidavit, deed, assignment,
continuation statement, security agreement, certificate or other document which
the Lender may reasonably require in order to perfect, preserve, maintain,
continue, protect and/or extend the Lien granted to the Lender under this
Agreement or under
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any of the other Financing Documents and the first priority of that Lien subject
only to the Permitted Liens. The Borrower will from time to time do whatever the
Lender may require by way of obtaining, executing, delivering, and/or filing
financing statements, landlords', mortgagees' or bailees' waivers, notices of
assignment and other notices and amendments and renewals thereof and the
Borrower will take any and all steps and observe such formalities as the Lender
may reasonably require, in order to create and maintain a valid Lien upon,
pledge of, or paramount security interest in, the Collateral, subject to the
Permitted Liens. The Borrower shall pay to the Lender on demand all taxes and
reasonable costs and expenses incurred by the Lender in connection with the
preparation, execution, recording and filing of any such document or instrument.
To the extent that the proceeds of any of the Accounts or Receivables of the
Borrower are expected to become subject to the control of, or in the possession
of, a party other than the Borrower or the Lender, the Borrower shall cause all
such parties to execute and deliver on the Closing Date security documents,
financing statements or other documents as requested by the Lender and as may be
necessary to evidence and/or perfect the security interest of the Lender in
those proceeds. The Borrower agrees that a copy of a fully executed security
agreement and/or financing statement shall be sufficient to satisfy for all
purposes the requirements of a financing statement as set forth in Article 9 of
the applicable Uniform Commercial Code. The Borrower hereby irrevocably appoints
the Lender as the Borrower's attorney-in-fact, with power of substitution, in
the name of the Lender or in the name of the Borrower or otherwise, for the use
and benefit of the Lender, but at the cost and expense of the Borrower and
without notice to the Borrower, to execute and deliver any and all of the
instruments and other documents and take any action which the Lender may require
pursuant the foregoing provisions of this Section.
6.1.22 Business Names; Locations.
The Borrower will notify and cause each of the Subsidiaries to
notify the Lender not less than thirty (30) days prior to (a) any change in the
name under which the Borrower or the applicable Subsidiary conducts its
business, (b) any change of the location of the chief executive office of the
Borrower or the applicable Subsidiary, and (c) the opening of any new place of
business or the closing of any existing place of business, and any change in the
location of the places where the Collateral, or any part thereof, or the books
and records, or any part thereof, are kept.
6.1.23 Subsequent Opinion of Counsel as to Recording Requirements.
In the event that the Borrower or any Subsidiary shall
transfer its principal place of business or the office where it keeps its
records pertaining to the Collateral, upon the Lender's request, the Borrower
will provide to the Lender a subsequent opinion of counsel as to the filing,
recording and other requirements with which the Borrower and the Subsidiaries
have complied to maintain the Lien and security interest in favor of the Lender
in the Collateral.
6.1.24 Use of Premises and Equipment.
The Borrower agrees that until the Obligations are fully paid
and this Agreement has been terminated, the Lender (a) after and during the
continuance of a Default or an Event of Default, may use any of the Borrower's
owned or leased lifts, hoists, trucks and other facilities or equipment for
handling or removing the Collateral; and (b) shall have, and is
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hereby granted, a right of ingress and egress to the places where the Collateral
is located, and may proceed over and through any of the Borrower's owned or
leased property.
6.1.25 Protection of Collateral.
The Borrower agrees that the Lender may at any time following
an Event of Default take such steps as the Lender deems reasonably necessary to
protect the Lender's interest in, and to preserve the Collateral, including, the
hiring of such security guards or the placing of other security protection
measures as the Lender deems appropriate, may employ and maintain at any of the
Borrower's premises a custodian who shall have full authority to do all acts
necessary to protect the Lender's interests in the Collateral and may lease
warehouse facilities to which the Lender may move all or any part of the
Collateral to the extent commercially reasonable. The Borrower agrees to
cooperate fully with the Lender's efforts to preserve the Collateral and will
take such actions to preserve the Collateral as the Lender may reasonably
direct. All of the Lender's expenses of preserving the Collateral, including any
reasonable expenses relating to the compensation and bonding of a custodian,
shall be part of the Enforcement Costs.
6.1.26 Appraisals.
Whenever a Default or an Event of Default exists or to the
extent advances are made against fixed assets, but not more frequently than once
a year, the Borrower shall, at its expense, provide the Lender with appraisals
or updates thereof of any or all of the Collateral from an appraiser and in form
in all respects satisfactory to the Lender.
Section 6.2 Negative Covenants.
So long as any of the Obligations or the Commitment shall be outstanding
hereunder, the Borrower agrees with the Lender as follows:
6.2.1 Capital Structure, Merger, Acquisition or Sale of Assets.
Except for the anticipated sale of all of the equity interests
of the Borrower in Weston Internacional De Mexico S.A. de C.V. and as permitted
by Section 6.2.6 (Stock of Subsidiaries), the Borrower will not enter into any
merger or consolidation or amalgamation, windup or dissolve itself (or suffer
any liquidation or dissolution) or acquire all or substantially all the assets
of any Person, or sell, lease or otherwise dispose of any of its assets (except
Inventory disposed of in the ordinary course of business prior to an Event of
Default). Any consent of the Lender to the disposition of any assets may be
conditioned on a specified use of the proceeds of disposition.
6.2.2 Subsidiaries.
The Borrower will not create or acquire any Subsidiaries other
than the Subsidiaries identified on the Collateral Disclosure List and other
Subsidiaries formed with notice to the Lender, in connection with the
performance of particular contracts. Each Subsidiary formed after the date
hereof shall execute an Additional Borrower Joinder Supplement unless the
Borrower represents and warrants to the Lender that the Subsidiary will not
receive any benefit from the Credit Facilities and the Lender waives the
requirement that the Subsidiary execute an Additional Borrower Joinder
Supplement.
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6.2.3 Purchase or Redemption of Securities, Dividend Restrictions.
Other than the purchase of notes in connection with the
retirement of the Subordinated Debentures in accordance with the terms thereof,
the Borrower will not purchase, redeem or otherwise acquire any shares of its
capital stock or warrants now or hereafter outstanding, declare or pay any
dividends thereon (other than stock dividends), apply any of its property or
assets to the purchase, redemption or other retirement of, set apart any sum for
the payment of any dividends on, or for the purchase, redemption, or other
retirement of, make any distribution by reduction of capital or otherwise in
respect of, any shares of any class of capital stock of the Borrower, or any
warrants, permit any Subsidiary to purchase or acquire any shares of any class
of capital stock of, or warrants issued by, the Borrower, make any distribution
to stockholders or set aside any funds for any such purpose, and not prepay,
purchase or redeem any Indebtedness for Borrowed Money other than the
Obligations.
6.2.4 Indebtedness.
The Borrower will not, and will not permit any Subsidiary to,
create, incur, assume or suffer to exist any Indebtedness for Borrowed Money, or
permit any Subsidiary so to do, except:
(a) the Obligations;
(b) current accounts payable arising in the ordinary
course;
(c) Indebtedness secured by Permitted Liens;
(d) Subordinated Indebtedness;
(e) Indebtedness of the Borrower existing on the date
hereof and described on Schedule 6.2.4 or reflected on the financial
statements furnished pursuant to Section 4.1.11 (Financial Condition);
and
(f) Borrowing against the cash value of life insurance
policies in an amount not to exceed $4,500,000 increasing by $250,000
at each fiscal year end after the Closing Date.
6.2.5 Investments, Loans and Other Transactions.
The Borrower will not, and will not permit any of its
Subsidiaries to, (a) make, assume, acquire or continue to hold any investment in
any real property (other than its current headquarters campus known as 1400
Weston Way, West Chester, Pennsylvania) or any Person, whether by stock
purchase, capital contribution, acquisition of indebtedness of such Person or
otherwise (including, without limitation, investments in any joint venture or
partnership), (b) guaranty or otherwise become contingently liable for the
indebtedness or obligations of any Person, or (c) make any loans or advances, or
otherwise extend credit to any Person, except:
(i) any advance to an officer, employee or
representative of the Borrower or of any Subsidiary for travel or
other
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business expenses and related expenses in the ordinary course of
business, provided that the aggregate amount of all such advances by
the Borrower and its Subsidiaries (taken as a whole) outstanding at
any time shall not exceed One Hundred Fifty Thousand Dollars
($150,000);
(ii) the endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course
of business;
(iii) any investment in Cash Equivalents, which are
pledged to the Lender as collateral and security for the
Obligations;
(iv) trade credit extended to customers in the
ordinary course of business; and
(v) investments (other than investments in real
estate), with notice to the Lender, in entities formed in connection
with the performance of particular contracts; and
(vi) investments in real estate (other than the
Borrower's current headquarters campus known as 1400 Weston Way,
West Chester, Pennsylvania) that do not to exceed at any time an
aggregate amount of $2,000,000, provided such real estate is used or
operated in connection with the Borrower's or the Subsidiary's
business and is treated as a Fixed or Capital Asset of the Borrower
or the Subsidiary.
6.2.6 Stock of Subsidiaries.
The Borrower will not sell or otherwise dispose of any shares
of capital stock of any Subsidiary (except in connection with a merger or
consolidation of a Wholly Owned Subsidiary into the Borrower or another Wholly
Owned Subsidiary or with the dissolution of any Subsidiary) or permit any
Subsidiary to issue any additional shares of its capital stock except pro rata
to its stockholders.
6.2.7 Subordinated Indebtedness.
The Borrower will not, and will not permit any Subsidiary to
make:
(a) any payment of principal of, or interest on, any of the
Subordinated Indebtedness, if a Default or an Event of Default then
exists hereunder or would result from such payment;
(b) any payment of the principal or interest due on the
Subordinated Indebtedness as a result of acceleration thereunder or an
unscheduled mandatory prepayment thereunder;
(c) any amendment or modification of or supplement to the
documents evidencing or securing the Subordinated Indebtedness in any
manner adverse to the Borrower or the Lender; or
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(d) payment of principal or interest on the Subordinated
Indebtedness other than when due (without giving effect to any
acceleration of maturity or unscheduled mandatory prepayment).
6.2.8 Liens; Confessed Judgment.
The Borrower agrees that it (a) will not create, incur, assume
or suffer to exist any Lien upon any of its properties or assets, whether now
owned or hereafter acquired, or permit any Subsidiary so to do, except for Liens
securing the Obligations and Permitted Liens, (b) will not agree to, assume or
suffer to exist any provision in any instrument or other document for confession
of judgment, cognovit or other similar right or remedy, (c) will not allow or
suffer to exist any Permitted Liens to be superior to Liens securing the
Obligations, (d) will not enter into any contracts for the consignment of goods
to the Borrower, (e) will not execute or suffer the filing of any financing
statements, except to secure Permitted Liens described in clause (e) of the
definition thereof or the posting of any signs giving notice of consignments to
the Borrower, (f) will not, as a material part of its business, engage in the
sale of goods belonging to others, and (g) will not allow or suffer to exist the
failure of any Lien described in the Security Documents to attach to, and/or
remain at all times perfected on, any of the property described in the Security
Documents.
6.2.9 Transactions with Affiliates.
Except as disclosed on Schedule 6.2.9, the Borrower and its
Subsidiaries will not enter into or participate in any transaction with any
Affiliate (other than a wholly-owned subsidiary of the Borrower) other than on
arm's-length terms, or, except in the ordinary course of business and on
arm's-length terms, with the officers, directors, employees and other
representatives of the Borrower and/or any Subsidiary.
6.2.10 Other Businesses.
The Borrower and its Subsidiaries will not engage directly or
indirectly in any business other than its current line of business described
elsewhere in this Agreement.
6.2.11 ERISA Compliance.
Except as could not reasonably be expected to have a material
adverse effect on the Borrower and its Subsidiaries taken as a whole, neither
the Borrower nor any Commonly Controlled Entity shall: (a) engage in or permit
any "prohibited transaction" (as defined in Section 406 of ERISA); (b) cause any
"accumulated funding deficiency" as defined in Section 302 of ERISA and/or
Section 412 of the Internal Revenue Code; (c) terminate any pension plan in a
manner which could result in the imposition of a lien on the property of the
Borrower pursuant to ERISA; (d) terminate or consent to the termination of any
Multi-employer Plan; or (e) incur a complete or partial withdrawal with respect
to any Multi-employer Plan.
6.2.12 Method of Accounting; Fiscal Year.
(a) The Borrower shall not change the method of accounting
employed in the preparation of any financial statements furnished to the Lender
under the provisions of Section 6.1.1 (Financial Statements), unless required to
conform to GAAP and on the condition that the Borrower's accountants shall
furnish such information as the Lender may request to reconcile the changes with
the Borrower's prior financial statements.
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(b) The Borrower will not change its fiscal year from a year
ending on December 31.
6.2.13 Compensation.
Except as noted in the "Other Relationships and Related
Transactions" section of the Borrower's Proxy Statement for 2000 Annual Meeting
of Shareholders, neither the Borrower nor any of its Subsidiaries will pay any
bonuses, fees, compensation, commissions, salaries, drawing accounts, or other
payments (cash and non-cash), whether direct or indirect, to any stockholders of
the Borrower or its Subsidiaries, or any Affiliate of the Borrower or its
Subsidiaries, other than reasonable compensation for actual services rendered by
stockholders in their capacity as officers or employees of the Borrower.
6.2.14 Transfer of Collateral.
Unless all filings of such additional financing statements as
the Lender may require are completed to the Lender's satisfaction prior to any
such transfer, the Borrower and the Subsidiaries will not transfer, or permit
the transfer, to another location of any of the Collateral or the books and
records related to any of the Collateral.
6.2.15 Sale and Leaseback.
Other than the sale and leaseback of real estate, neither the
Borrower nor the Subsidiaries will directly or indirectly enter into any
arrangement to sell or transfer all or any substantial part of its fixed assets
and thereupon or within one year thereafter rent or lease the assets so sold or
transferred.
6.2.16 Disposition of Collateral.
Except in the ordinary course of business, the Borrower will
not sell, discount, allow credits or allowances, transfer, assign, extend the
time for payment on, convey, lease, assign, transfer or otherwise dispose of the
Collateral, except, prior to an Event of Default, dispositions expressly
permitted elsewhere in this Agreement, and the sale of unnecessary or obsolete
Equipment, but only if the proceeds of the sale of such Equipment are (a) used
to purchase similar Equipment to replace the unnecessary or obsolete Equipment
or (b) immediately turned over to the Lender for application to the Obligations.
ARTICLE VII
DEFAULT AND RIGHTS AND REMEDIES
Section 7.1 Events of Default.
The occurrence of any one or more of the following events shall constitute
an "Event of Default" under the provisions of this Agreement:
7.1.1 Failure to Pay.
The failure of the Borrower to pay any of the Obligations as
and when due and payable in accordance with the provisions of this Agreement,
the Notes and/or any of the other Financing Documents and, except in the case of
principal payments, the continuation of such failure for five (5) Business Days
after the due date.
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7.1.2 Breach of Representations and Warranties.
Any representation or warranty made in this Agreement or in
any report, statement, schedule, certificate, opinion (including any opinion of
counsel for the Borrower), financial statement or other document furnished in
connection with this Agreement, any of the other Financing Documents, or the
Obligations, shall prove to have been false or misleading when made (or, if
applicable, when reaffirmed) in any material respect.
7.1.3 Failure to Comply with Covenants.
The failure of the Borrower to perform, observe or comply with
any covenant, condition or agreement contained in this Agreement, and, only in
case of the covenants contained in Sections 6.1.1, 6.1.8, 6.1.9 and 6.1.18, the
continuation of such failure for fifteen (15) days after Borrower acquires
actual knowledge of the failure, and only in the case of the covenants contained
in Sections 6.1.4. (other than the requirement to maintain corporate existence),
6.1.6, 6.1.13(a) and 6.1.13(b), the continuation of such failure for thirty (30)
days after Borrower acquires actual knowledge of the failure.
7.1.4 Default Under Other Financing Documents or Obligations.
A default shall occur under any of the other Financing
Documents or under any other Obligations, and such default is not cured within
any applicable grace period provided therein.
7.1.5 Receiver; Bankruptcy.
The Borrower or any Subsidiary shall (a) apply for or consent
to the appointment of a receiver, trustee or liquidator of itself or any of its
property, (b) admit in writing its inability to pay its debts as they mature,
(c) make a general assignment for the benefit of creditors, (d) be adjudicated a
bankrupt or insolvent, (e) file a voluntary petition in bankruptcy or a petition
or an answer seeking or consenting to reorganization or an arrangement with
creditors or to take advantage of any bankruptcy, reorganization, insolvency,
readjustment of debt, dissolution or liquidation law or statute, or an answer
admitting the material allegations of a petition filed against it in any
proceeding under any such law, or take corporate action for the purposes of
effecting any of the foregoing, or (f) by any act indicate its consent to,
approval of or acquiescence in any such proceeding or the appointment of any
receiver of or trustee for any of its property, or suffer any such receivership,
trusteeship or proceeding to continue undischarged for a period of sixty (60)
days, or (g) by any act indicate its consent to, approval of or acquiescence in
any order, judgment or decree by any court of competent jurisdiction or any
Governmental Authority enjoining or otherwise prohibiting the operation of a
material portion of the Borrower's or any Subsidiary's business or the use or
disposition of a material portion of the Borrower's or any Subsidiary's assets.
7.1.6 Involuntary Bankruptcy, etc.
a) An order for relief shall be entered in any involuntary
case brought against the Borrower or any Subsidiary under the Bankruptcy Code,
or (b) any such case shall be commenced against the Borrower or any Subsidiary
and shall not be dismissed within sixty (60) days after the filing of the
petition, or (c) an order, judgment or decree under any other Law is entered by
any court of competent jurisdiction or by any other Governmental Authority on
the application of a Governmental Authority or of a Person other than the
Borrower or any
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Subsidiary (i) adjudicating the Borrower, or any Subsidiary bankrupt or
insolvent, or (ii) appointing a receiver, trustee or liquidator of the Borrower
or of any Subsidiary, or of a material portion of the Borrower's or any
Subsidiary's assets, or (iii) enjoining, prohibiting or otherwise limiting the
operation of a material portion of the Borrower's or any Subsidiary's business
or the use or disposition of a material portion of the Borrower's or any
Subsidiary's assets, and such order, judgment or decree continues unstayed and
in effect for a period of sixty (60) days from the date entered.
7.1.7 Judgment.
Unless adequately insured in the opinion of the Lender, the
entry of a final judgment for the payment of money which, when aggregated with
other judgments then outstanding, involve more than $500,000 against the
Borrower or any Subsidiary, and the failure by the Borrower or such Subsidiary
to discharge the same, or cause it to be discharged, within thirty (30) days
from the date of the order, decree or process under which or pursuant to which
such judgment was entered, or to secure a stay of execution pending appeal of
such judgment.
7.1.8 Execution; Attachment.
Any execution or attachment which, when aggregated with other
executions and attachments then outstanding, involve more than $500,000 shall be
levied against the Collateral, or any part thereof, and such execution or
attachment shall not be set aside, discharged or stayed within thirty (30) days
after the same shall have been levied.
7.1.9 Default Under Other Borrowings.
Default shall be made with respect to any Indebtedness for
Borrowed Money (other than the Loan) if the effect of such default is to
accelerate the maturity of such Indebtedness for Borrowed Money in an aggregate
amount greater than $500,000 or (unless the default shall have been waived or
cured) to permit the holder or obligee thereof or other party thereto to cause
any such Indebtedness for Borrowed Money to become due prior to its stated
maturity.
7.1.10 Challenge to Agreements.
The Borrower or any of the Guarantors shall challenge the
validity and binding effect of any provision of any of the Financing Documents
or shall state in writing its intention to make such a challenge of any of the
Financing Documents or any of the Financing Documents shall for any reason
(except to the extent permitted by its express terms) cease to be effective or
to create a valid and perfected first priority Lien (except for Permitted Liens)
on, or security interest in, any of the Collateral purported to be covered
thereby.
7.1.11 Material Adverse Change.
The Lender in its sole discretion determines in good faith
that a material adverse change has occurred in the financial condition of the
Borrower.
7.1.12 Impairment of Position.
The Lender reasonably determines in good faith that an event
has occurred which impairs the prospect of payment of the Obligations and/or the
value of the Collateral.
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7.1.13 Collateral Inadequacy.
The determination in good faith by the Lender that the
security for the Obligations is inadequate.
7.1.14 Liquidation, Termination, Dissolution.
The Borrower shall liquidate, dissolve or terminate its
existence or shall suspend or terminate a substantial portion of its business
operations without the prior written consent of the Lender.
7.1.15 Change in Senior Management of the Borrower.
A period of thirty (30) consecutive days shall have elapsed
during which either of the individuals named as Senior Management of the
Borrower shall have ceased to hold executive offices with the Borrower at least
equal in seniority to their present offices, unless any such individual has been
replaced by another similarly qualified individual or individuals acceptable to
the Lender (it being understood that any such replacement individuals shall be
deemed added to the definition of "Senior Management" on the date of approval
thereof by the Lender).
7.1.16 Contract Default, Debarment or Suspension.
Default shall be made under any Government Contract, or any
Government Contract is terminated for default by any Governmental Authority for
any reason whatsoever, or if the Borrower is debarred or suspended, whether
temporarily or permanently, by any Governmental Authority.
Section 7.2 Remedies.
Upon the occurrence of any Default or Event of Default, the Lender may at
any time thereafter when such Event of Default continues to exist exercise any
one or more of the following rights, powers or remedies:
7.2.1 Acceleration.
The Lender may declare the Obligations to be immediately due
and payable, notwithstanding anything contained in this Agreement or in any of
the other Financing Documents to the contrary, without presentment, demand,
protest, notice of protest or of dishonor, or other notice of any kind, all of
which the Borrower hereby waives.
7.2.2 Further Advances.
The Lender may from time to time without notice to the
Borrower suspend, terminate or limit any further loans or other extensions of
credit under this Agreement and under any of the other Financing Documents.
Further, upon the occurrence of an Event of Default or Default specified in
Section 7.1.5 (Receiver; Bankruptcy) or Section 7.1.6 (Involuntary Bankruptcy,
etc.), the Revolving Credit Commitment and any agreement in any of the Financing
Documents to provide additional credit shall immediately and automatically
terminate and the unpaid principal amount of the Notes (with accrued interest
thereon) and all other Obligations then outstanding, shall immediately become
due and payable without further
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action of any kind and without presentment, demand, protest or notice of any
kind, all of which are hereby expressly waived by the Borrower.
7.2.3 Uniform Commercial Code.
The Lender shall have all of the rights and remedies of a
secured party under the applicable Uniform Commercial Code and other applicable
Laws. Upon demand by the Lender, the Borrower shall assemble the Collateral and
make it available to the Lender, at a place designated by the Lender. The Lender
or its agents may without notice from time to time enter upon the Borrower's
premises to take possession of the Collateral, to remove it, to render it
unusable, to process it or otherwise prepare it for sale, or to sell or
otherwise dispose of it.
Any written notice of the sale, disposition or other intended
action by the Lender with respect to the Collateral which is sent by regular
mail, postage prepaid, to the Borrower at the address set forth in Section 8.1
(Notices), or such other address of the Borrower which may from time to time be
shown on the Lender's records, at least ten (10) days prior to such sale,
disposition or other action, shall constitute commercially reasonable notice to
the Borrower. The Lender may alternatively or additionally give such notice in
any other commercially reasonable manner. Nothing in this Agreement shall
require the Lender to give any notice not required by applicable Laws.
If any consent, approval, or authorization of any state,
municipal or other governmental department, agency or authority or of any
person, or any person, corporation, partnership or other entity having any
interest therein, should be necessary to effectuate any sale or other
disposition of the Collateral, the Borrower agrees to execute all such
applications and other instruments, and to take all other action, as may be
required in connection with securing any such consent, approval or
authorization.
The Borrower recognizes that the Lender may be unable to
effect a public sale of all or a part of the Collateral consisting of securities
by reason of certain prohibitions contained in the Securities Act of 1933, as
amended, and other applicable federal and state Laws. The Lender may, therefore,
in its discretion, take such steps as it may deem appropriate to comply with
such Laws and may, for example, at any sale of the Collateral consisting of
securities restrict the prospective bidders or purchasers as to their number,
nature of business and investment intention, including, without limitation, a
requirement that the Persons making such purchases represent and agree to the
satisfaction of the Lender that they are purchasing such securities for their
account, for investment, and not with a view to the distribution or resale of
any thereof. The Borrower covenants and agrees to do or cause to be done
promptly all such acts and things as the Lender may request from time to time
and as may be necessary to offer and/or sell the securities or any part thereof
in a manner which is valid and binding and in conformance with all applicable
Laws. Upon any such sale or disposition, the Lender shall have the right to
deliver, assign and transfer to the purchaser thereof the Collateral consisting
of securities so sold.
7.2.4 Specific Rights With Regard to Collateral.
In addition to all other rights and remedies provided
hereunder or as shall exist at law or in equity from time to time, the Lender
may (but shall be under no obligation to), without notice to the Borrower, and
the Borrower hereby irrevocably appoints the Lender as its attorney-in-fact,
with power of substitution, in the name of the Lender or in the name of the
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Borrower or otherwise, for the use and benefit of the Lender, but at the cost
and expense of the Borrower and without notice to the Borrower:
(a) request any account debtor obligated on any of the
Accounts to make payments thereon directly to the Lender, with the
Lender taking control of the cash and non-cash proceeds thereof;
(b) compromise, extend or renew any of the Collateral or
deal with the same as it may deem advisable;
(c) make exchanges, substitutions or surrenders of all
or any part of the Collateral;
(d) copy, transcribe, or remove from any place of
business of the Borrower or any Subsidiary all books, records, ledger
sheets, correspondence, invoices and documents, relating to or
evidencing any of the Collateral or without cost or expense to the
Lender, make such use of the Borrower's or any Subsidiary's place(s) of
business as may be reasonably necessary to administer, control and
collect the Collateral;
(e) demand, collect, receipt for and give renewals,
extensions, discharges and releases of any of the Collateral;
(f) institute and prosecute legal and equitable
proceedings to enforce collection of, or realize upon, any of the
Collateral;
(g) settle, renew, extend, compromise, compound,
exchange or adjust claims in respect of any of the Collateral or any
legal proceedings brought in respect thereof;
(h) endorse or sign the name of the Borrower upon any
Items of Payment, certificates of title, Instruments, Securities, stock
powers, documents, documents of title, financing statements,
assignments, notices, or other writing relating to or part of the
Collateral and on any Proof of Claim in Bankruptcy against an Account
Debtor;
(i) notify the Post Office authorities to change the
address for the delivery of mail to the Borrower to such address or
Post Office Box as the Lender may designate and receive and open all
mail addressed to the Borrower; and
(j) take any other action necessary or beneficial to
realize upon or dispose of the Collateral or to carry out the terms of
this Agreement.
7.2.5 Application of Proceeds.
Any proceeds of sale or other disposition of the Collateral
will be applied by the Lender to the payment of the Enforcement Costs, and any
balance of such proceeds will
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be applied by the Lender to the payment of the balance of the Obligations in
such order and manner of application as the Lender may from time to time in its
sole and absolute discretion determine. If the sale or other disposition of the
Collateral fails to fully satisfy the Obligations, the Borrower shall remain
liable to the Lender for any deficiency.
7.2.6 Performance by Lender.
Upon the occurrence and continuation of an Event of Default,
the Lender without notice to or demand upon the Borrower and without waiving or
releasing any of the Obligations or any Event of Default, may (but shall be
under no obligation to) at any time thereafter make such payment or perform such
act for the account and at the expense of the Borrower, and may enter upon the
premises of the Borrower for that purpose and take all such action thereon as
the Lender may consider necessary or appropriate for such purpose and the
Borrower hereby irrevocably appoints the Lender as its attorney-in-fact to do
so, with power of substitution, in the name of the Lender or in the name of the
Borrower or otherwise, for the use and benefit of the Lender, but at the cost
and expense of the Borrower and without notice to the Borrower. All sums so paid
or advanced by the Lender together with interest thereon from the date of
payment, advance or incurring until paid in full at the Post-Default Rate and
all costs and expenses, shall be deemed part of the Enforcement Costs, shall be
paid by the Borrower to the Lender on demand, and shall constitute and become a
part of the Obligations.
7.2.7 Blocked Account Agreement.
The Lender may at any time during the continuance of an Event
of Default, but not otherwise, commence an "Activation Period" as that term is
defined in the Blocked Account Agreement.
7.2.8 Other Remedies.
The Lender may from time to time proceed to protect or enforce
its rights by an action or actions at law or in equity or by any other
appropriate proceeding, whether for the specific performance of any of the
covenants contained in this Agreement or in any of the other Financing
Documents, or for an injunction against the violation of any of the terms of
this Agreement or any of the other Financing Documents, or in aid of the
exercise or execution of any right, remedy or power granted in this Agreement,
the Financing Documents, and/or applicable Laws. The Lender is authorized to
offset and apply to all or any part of the Obligations all moneys, credits and
other property of any nature whatsoever of the Borrower now or at any time
hereafter in the possession of, in transit to or from, under the control or
custody of, or on deposit with, the Lender.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Notices.
All notices, requests and demands to or upon the parties to this Agreement
shall be in writing and shall be deemed to have been given or made when
delivered by hand on a Business Day, or three (3) Business Days after the date
when deposited in the mail, postage prepaid by registered or certified mail,
return receipt requested, or when sent by overnight courier, on the
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Business Day next following the day on which the notice is delivered to such
overnight courier, addressed as follows:
Borrower: Roy F. Weston, Inc.
1400 Weston Way
West Chester, PA 19380
Attention: Robert E. Grinwis
with a copy to Donald B. Bauer at the same address
Lender: Bank of America, N. A.
Business Credit
8300 Greensboro Drive
Suite 550
McLean, Virginia 22102-3604
Attention: Government Contractor Unit
By written notice, each party to this Agreement may change the address to
which notice is given to that party, provided that such changed notice shall
include a street address to which notices may be delivered by overnight courier
in the ordinary course on any Business Day.
Section 8.2 Amendments; Waivers.
This Agreement and the other Financing Documents may not be amended,
modified, or changed in any respect except by an agreement in writing signed by
the Lender and the Borrower. No waiver of any provision of this Agreement or of
any of the other Financing Documents, nor consent to any departure by the
Borrower therefrom, shall in any event be effective unless the same shall be in
writing. No course of dealing between the Borrower and the Lender and no act or
failure to act from time to time on the part of the Lender shall constitute a
waiver, amendment or modification of any provision of this Agreement or any of
the other Financing Documents or any right or remedy under this Agreement, under
any of the other Financing Documents or under applicable Laws.
Without implying any limitation on the foregoing:
(a) Any waiver or consent shall be effective only in the
specific instance, for the terms and purpose for which given, subject
to such conditions as the Lender may specify in any such instrument.
(b) No waiver of any Default or Event of Default shall
extend to any subsequent or other Default or Event of Default, or
impair any right consequent thereto.
(c) No notice to or demand on the Borrower in any case
shall entitle the Borrower to any other or further notice or demand in
the same, similar or other circumstance.
(d) No failure or delay by the Lender to insist upon the
strict performance of any term, condition, covenant or agreement of
this Agreement or of any of the other Financing Documents, or to
exercise any right,
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power or remedy consequent upon a breach thereof, shall constitute a
waiver, amendment or modification of any such term, condition, covenant
or agreement or of any such breach or preclude the Lender from
exercising any such right, power or remedy at any time or times.
(e) By accepting payment after the due date of any
amount payable under this Agreement or under any of the other Financing
Documents, the Lender shall not be deemed to waive the right either to
require prompt payment when due of all other amounts payable under this
Agreement or under any of the other Financing Documents, or to declare
a default for failure to effect such prompt payment of any such other
amount.
Section 8.3 Cumulative Remedies.
The rights, powers and remedies provided in this Agreement and in the
other Financing Documents are cumulative, may be exercised concurrently or
separately, may be exercised from time to time and in such order as the Lender
shall determine and are in addition to, and not exclusive of, rights, powers and
remedies provided by existing or future applicable Laws. In order to entitle the
Lender to exercise any remedy reserved to it in this Agreement, it shall not be
necessary to give any notice, other than such notice as may be expressly
required in this Agreement. Without limiting the generality of the foregoing,
the Lender may:
(a) proceed against the Borrower with or without
proceeding against any Person who may be liable (by endorsement,
guaranty, indemnity or otherwise) for all or any part of the
Obligations;
(b) proceed against the Borrower with or without
proceeding under any of the other Financing Documents or against any
Collateral or other collateral and security for all or any part of the
Obligations;
(c) without reducing or impairing the obligation of the
Borrower and without notice, release or compromise with any guarantor
or other Person liable for all or any part of the Obligations under
the Financing Documents or otherwise;
(d) without reducing or impairing the obligations of the
Borrower and without notice thereof: (i) fail to perfect the Lien in
any or all Collateral or to release any or all the Collateral or to
accept substitute Collateral, (ii) approve the making of advances
under the Revolving Loan under this Agreement, (iii) waive any
provision of this Agreement or the other Financing Documents, (iv)
exercise or fail to exercise rights of set-off or other rights, or (v)
accept partial payments or extend from time to time the maturity of
all or any part of the Obligations.
Section 8.4 Severability.
In case one or more provisions, or part thereof, contained in this
Agreement or in the other Financing Documents shall be invalid, illegal or
unenforceable in any respect under any Law, then without need for any further
agreement, notice or action:
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(a) the validity, legality and enforceability of the
remaining provisions shall remain effective and binding on the parties
thereto and shall not be affected or impaired thereby;
(b) the obligation to be fulfilled shall be reduced to
the limit of such validity;
(c) if such provision or part thereof pertains to
repayment of the Obligations, then, at the sole and absolute
discretion of the Lender, all of the Obligations of the Borrower to
the Lender shall become immediately due and payable; and
(d) if the affected provision or part thereof does not
pertain to repayment of the Obligations, but operates or would
prospectively operate to invalidate this Agreement in whole or in
part, then such provision or part thereof only shall be void, and the
remainder of this Agreement shall remain operative and in full force
and effect.
Section 8.5 Assignments by Lender.
The Lender may, without notice to, or consent of, the Borrower, sell,
assign or transfer to or participate with any Person or Persons all or any part
of the Obligations, and each such Person or Persons shall have the right to
enforce the provisions of this Agreement and any of the other Financing
Documents as fully as the Lender, provided that the Lender shall continue to
have the unimpaired right to enforce the provisions of this Agreement and any of
the other Financing Documents as to so much of the Obligations that the Lender
has not sold, assigned or transferred. In connection with the foregoing, the
Lender shall have the right to disclose to any such actual or potential
purchaser, assignee, transferee or participant all financial records,
information, reports, financial statements and documents obtained in connection
with this Agreement and any of the other Financing Documents or otherwise.
Section 8.6 Successors and Assigns.
This Agreement and all other Financing Documents shall be binding upon and
inure to the benefit of the Borrower and the Lender and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Lender.
Section 8.7 Continuing Agreements.
All covenants, agreements, representations and warranties made by the
Borrower in this Agreement, in any of the other Financing Documents, and in any
certificate delivered pursuant hereto or thereto shall survive the making by the
Lender of the Loan and the execution and delivery of the Notes, shall be binding
upon the Borrower regardless of how long before or after the date hereof any of
the Obligations were or are incurred, and shall continue in full force and
effect so long as any of the Obligations are outstanding and unpaid. From time
to time upon the Lender's request, and as a condition of the release of any one
or more of the Security Documents, the Borrower and other Persons obligated with
respect to the Obligations shall provide the Lender with such acknowledgments
and agreements as the Lender may require to the effect that there exists no
defenses, rights of setoff or recoupment, claims, counterclaims, actions
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or causes of action of any kind or nature whatsoever against the Lender, its
agents and others, or to the extent there are, the same are waived and released.
Section 8.8 Enforcement Costs.
The Borrower shall pay to the Lender on demand all Enforcement Costs,
together with interest thereon from the date incurred or advanced until paid in
full at a per annum rate of interest equal at all times to the Post-Default
Rate. Enforcement Costs shall be immediately due and payable at the time
advanced or incurred, whichever is earlier. Without implying any limitation on
the foregoing, the Borrower shall pay, as part of the Enforcement Costs, upon
demand any and all stamp and other Taxes and fees payable or determined to be
payable in connection with the execution and delivery of this Agreement and the
other Financing Documents and to save the Lender harmless from and against any
and all liabilities with respect to or resulting from any delay in paying or
omission to pay any Taxes or fees referred to in this Section. The provisions of
this Section shall survive the execution and delivery of this Agreement, the
repayment of the other Obligations and shall survive the termination of this
Agreement.
Section 8.9 Applicable Law; Jurisdiction.
8.9.1 Applicable Law.
As a material inducement to the Lender to enter into this
Agreement, the Borrower acknowledges and agrees that the Financing Documents,
including, this Agreement, shall be governed by the Laws of the State, as if
each of the Financing Documents and this Agreement had each been executed,
delivered, administered and performed solely within the State even though for
the convenience and at the request of the Borrower, one or more of the Financing
Documents may be executed elsewhere. The Lender acknowledges, however, that
remedies under certain of the Financing Documents that relate to property
outside the State may be subject to the laws of the state in which the property
is located.
8.9.2 Submission to Jurisdiction.
The Borrower irrevocably submits to the jurisdiction of any
state or federal court sitting in the State over any suit, action or proceeding
arising out of or relating to this Agreement or any of the other Financing
Documents. The Borrower irrevocably waives, to the fullest extent permitted by
law, any objection that it may now or hereafter have to the laying of the venue
of any such suit, action or proceeding brought in any such court and any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum. Subject to any right to appeal, final judgment
in any such suit, action or proceeding brought in any such court shall be
conclusive and binding upon the Borrower and may be enforced in any court in
which the Borrower is subject to jurisdiction, by a suit upon such judgment,
provided that service of process is effected upon the Borrower in one of the
manners specified in this Section or as otherwise permitted by applicable Laws.
8.9.3 Appointment of Agent for Service of Process.
The Borrower hereby irrevocably designates and appoints
Beverly L. Crump, Esquire, 11 South 12th Street, Richmond, Virginia 23219, as
the Borrower's authorized agent to receive on the Borrower's behalf service of
any and all process that may be served in any suit, action or proceeding of the
nature referred to in this Section in any state or federal court
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sitting in the State. If such agent shall cease so to act, the Borrower shall
irrevocably designate and appoint without delay another such agent in the State
satisfactory to the Lender and shall promptly deliver to the Lender evidence in
writing of such other agent's acceptance of such appointment and its agreement
that such appointment shall be irrevocable.
8.9.4 Service of Process.
To the extent permitted by law, the Borrower hereby consents
to process being served in any suit, action or proceeding of the nature referred
to in this Section by (a) the mailing of a copy thereof by registered or
certified mail, postage prepaid, return receipt requested, to the Borrower at
the Borrower's address designated in or pursuant to Section 8.1 (Notices), and
(b) serving a copy thereof upon the agent, if any, designated and appointed by
the Borrower as the Borrower's agent for service of process by or pursuant to
this Section. To the extent permitted by law, the Borrower irrevocably agrees
that such service (y) shall be deemed in every respect effective service of
process upon the Borrower in any such suit, action or proceeding, and (z) shall,
to the fullest extent permitted by law, be taken and held to be valid personal
service upon the Borrower. Nothing in this Section shall affect the right of the
Lender to serve process in any manner otherwise permitted by law or limit the
right of the Lender otherwise to bring proceedings against the Borrower in the
courts of any jurisdiction or jurisdictions.
Section 8.10 Duplicate Originals and Counterparts.
This Agreement may be executed in any number of duplicate originals or
counterparts, each of such duplicate originals or counterparts shall be deemed
to be an original and all taken together shall constitute but one and the same
instrument.
Section 8.11 Headings.
The headings in this Agreement are included herein for convenience only,
shall not constitute a part of this Agreement for any other purpose, and shall
not be deemed to affect the meaning or construction of any of the provisions
hereof.
Section 8.12 No Agency.
Nothing herein contained shall be construed to constitute the Borrower as
the Lender's agent for any purpose whatsoever or to permit the Borrower to
pledge any of the Lender's credit. The Lender shall not be responsible nor
liable for any shortage, discrepancy, damage, loss or destruction of any part of
the Collateral wherever the same may be located and regardless of the cause
thereof. The Lender shall not, by anything herein or in any of the Financing
Documents or otherwise, assume any of the Borrower's obligations under any
contract or agreement assigned to the Lender, and the Lender shall not be
responsible in any way for the performance by the Borrower of any of the terms
and conditions thereof.
Section 8.13 Date of Payment.
Should the principal of or interest on any of the Notes become due and
payable on other than a Business Day, the maturity thereof shall be extended to
the next succeeding Business Day and in the case of principal, interest shall be
payable thereon at the rate per annum specified in the Notes during such
extension.
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Section 8.14 Entire Agreement.
This Agreement is intended by the Lender and the Borrower to be a
complete, exclusive and final expression of the agreements contained herein.
Neither the Lender nor the Borrower shall hereafter have any rights under any
prior agreements pertaining to the matters addressed by this Agreement but shall
look solely to this Agreement for definition and determination of all of their
respective rights, liabilities and responsibilities under this Agreement.
Section 8.15 Waiver of Trial by Jury.
THE BORROWER AND THE LENDER HEREBY JOINTLY AND SEVERALLY WAIVE TRIAL BY
JURY IN ANY ACTION OR PROCEEDING TO WHICH THE BORROWER AND THE LENDER MAY BE
PARTIES, ARISING OUT OF OR IN ANY WAY PERTAINING TO (A) THIS AGREEMENT, (B) ANY
OF THE FINANCING DOCUMENTS, OR (C) THE COLLATERAL. THIS WAIVER CONSTITUTES A
WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS OR
PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO THIS
AGREEMENT.
This waiver is knowingly, willingly and voluntarily made by the Borrower
and the Lender, and the Borrower and the Lender hereby represent that no
representations of fact or opinion have been made by any individual to induce
this waiver of trial by jury or to in any way modify or nullify its effect. The
Borrower and the Lender further represent that they have been represented in the
signing of this Agreement and in the making of this waiver by independent legal
counsel, selected of their own free will, and that they have had the opportunity
to discuss this waiver with counsel.
Section 8.16 Liability of the Lender.
The Borrower hereby agrees that the Lender shall not be chargeable for any
negligence, mistake, act or omission of any accountant, examiner, agency or
attorney employed by the Lender in making examinations, investigations or
collections, or otherwise in perfecting, maintaining, protecting or realizing
upon any lien or security interest or any other interest in the Collateral or
other security for the Obligations.
By inspecting the Collateral or any other properties of the Borrower or by
accepting or approving anything required to be observed, performed or fulfilled
by the Borrower or to be given to the Lender pursuant to this Agreement or any
of the other Financing Documents, the Lender shall not be deemed to have
warranted or represented the condition, sufficiency, legality, effectiveness or
legal effect of the same, and such acceptance or approval shall not constitute
any warranty or representation with respect thereto by the Lender.
IN WITNESS WHEREOF, each of the parties hereto have executed and delivered
this Agreement under their respective seals as of the day and year first written
above.
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WITNESS: BANK OF AMERICA, N. A.
_________________________ By:s/Douglas Brown (Seal)
---------------------------------
Name: Douglas Brown
Title: Vice President
THE BORROWER'S SIGNATURE IS ON
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THE SIGNATURE PAGE THAT FOLLOWS
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The rest of this page has been left blank intentionally.
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WITNESS: ROY F. WESTON, INC.
_________________________ By:s/William G. Mecaughey (Seal)
---------------------------------
Name: William G. Mecaughey
Title: Vice President, Chief Financial
Officer and Treasurer
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LIST OF EXHIBITS
----------------
A. Additional Borrower Joinder Supplement
B. Revolving Note
C. Security Procedures
D. Form of Compliance Certificate
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EXHIBIT C
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BANK OF AMERICA BUSINESS CREDIT
WIRE TRANSFER PROCEDURES
The transfer of funds by means of wire may be made by Bank of America
(lender) at the request of its customer (borrower). Such wire transfers are
categorized by lender as either repetitive or non-repetitive.
Repetitive:
-----------
Repetitive wire transfers may vary in amount, but are consistent in terms
of the payee, the location to which funds are wired, the bank name, account
number and the routing transit number.
Either borrower or lender may initiate a repetitive wire transfer. The
borrower may identify the repetitive nature of transfers and request they be
established as such via the "Repetitive Wire Transfer Authorization Form" (copy
attached). Lender, after observing numerous transfers to the same recipient and
destination, may initiate the repetitive process by faxing or mailing the
"Repetitive Wire Authorization Form" to the borrower for completion and return.
Although a first request for a repetitive wire transfer may be honored
from a faxed copy of the "Repetitive Wire Transfer Authorization Form", a copy
of the form containing an original signature must be received from the borrower.
All transfer authorization forms must be approved by and contain the signature
of a person authorized by the borrower to advance funds from borrower's line of
credit with the lender.
After receipt of the original "Repetitive Wire Transfer Authorization
Form" by the lender, subsequent wire transfers to the recipient named thereon
may be initiated by telephone request, provided the requesting party is
identified by the lender as a person authorized by borrower to advance funds
from the borrower's line of credit with lender.
Non-Repetitive:
---------------
Non-Repetitive wire transfers are directed to recipients on a one-time or
infrequent basis or are directed to varied destinations. Non-repetitive wire
transfers require that written notification be provided to lender by borrower,
showing payee, location, account number, routing transit number and name and
location of bank into which funds are to be transferred. Such written
notification may be provided by means of a "Non-Repetitive Wire Transfer
Authorization Form" (copy attached).
Required information may be faxed to lender in order to expedite the
transfer; however, a copy of the transfer authorization form with an original
signature(s) must be received by lender from borrower. The transfer
authorization form must be approved by and contain the signature of a person
authorized by the borrower to advance funds from borrower's line of credit with
the lender.
<PAGE> 83
For any non-repetitive wire transfer, Lender may, at its discretion,
perform a telephone verification with an authorized representative (the original
signer or another authorized representative) of borrower prior to initiating the
transfer.
<PAGE> 84
BANK OF AMERICA BUSINESS CREDIT
REPETITIVE WIRE TRANSFER AUTHORIZATION
CUSTOMER INFORMATION
Customer Name:______________________________ Date: _______________
Name of Person Authorizing Transfer for Customer: _____________________
Note: Must be Person
Authorized to Advance Funds
Signature of Person Authorizing Transfer for Customer: _________________
PAYEE
Name of Recipient of Funds: ____________________________________________
Location: ______________________________________________________________
Account Number into Which Funds are to be Transferred: _________________
DESTINATION OF FUNDS
Name and Location of Bank Receiving Funds:
Bank Name: ___________________________________________________________
Routing Information (ABA Number): ______________________________________
Bank Location: City: ____________________________________________
State: _____________________________________________
(for International Wires) Country: _____________________________________
Special Instructions: __________________________________________________
________________________________________________________________________
________________________________________________________________________
BANK USE ONLY
Business Credit Department
Business Credit Authorization: _________________________________________
Print name of person at Bank approved to authorize Wire Transfers
Business Credit Authorization: _________________________________________
<PAGE> 85
Signature of person at Bank approved to authorize Wire Transfers
WIRE TRANSFER DEPARTMENT
F.D. Number Assigned: _____________________________________________
Account Number to Debit: ___________________________________________
<PAGE> 86
BANK OF AMERICA BUSINESS CREDIT
NON-REPETITIVE WIRE TRANSFER AUTHORIZATION
CUSTOMER INFORMATION
Customer Name: ___________________________ Date: __________________
Name of Person Authorizing Transfer for Customer: _______________________
Note: Must be Person
Authorized to Advance Funds
Signature of Person Authorizing Transfer for Customer: __________________
PAYEE
Name of Recipient of Funds: ____________________________________________
Location: _____________________________________________________________
Account Number into Which Funds are to be Transferred: _________________
DESTINATION OF FUNDS
Name and Location of Bank Receiving Funds:
Bank Name: _____________________________________________________
Routing Information (ABA Number): _________________________________
Bank Location: City: __________________________________
State: ____________________________________
(for International Wires) Country: _________________________________
Special Instructions: _____________________________________________
___________________________________________________________________
___________________________________________________________________
<PAGE> 87
Exhibit 10.1
EXHIBIT D
---------
FINANCING AGREEMENT
-------------------
COMPLIANCE CERTIFICATE
----------------------
THIS CERTIFICATE is made as of __________________, 200_, by ROY F. WESTON,
INC., a corporation organized under the laws of the State of ___________________
(the "Borrower"), to BANK OF AMERICA, N. A., a national banking association (the
"Lender"), pursuant to Section 6.1.1(__) of the Financing and Security Agreement
dated ______________, 2000, (as amended, modified, restated, substituted,
extended and renewed at any time and from time to time, the "Financing
Agreement") by and between the Borrower and the Lender.
I, ____________________, hereby certify that I am the ______________ of
the Borrower and am a Responsible Officer (as that term is defined in the
Financing Agreement) authorized to certify to the Lender on behalf the Borrower
as follows:
(a) This Certificate is given to induce the Lender to
make advances to the Borrower under the Financing Agreement.
(b) This Certificate accompanies the _____________
financial statements for the period ended ___________________, 200__ (the
"Current Financials") which the Borrower is furnishing to the Lender pursuant to
Section 6.1.1(__) of the Financing Agreement. The Current Financials have been
prepared in accordance with GAAP (as that term is defined in the Financing
Agreement).
(c) As required by Section 6.1.1(__) of the Financing
Agreement, I have set forth on Schedule 1 a detailed computation of each
financial covenant in Financing Agreement and a cash flow projection report.
(d) No change has occurred to the information contained
in the Collateral Disclosure List except as set forth on Schedule 2 to this
Certificate. By way of example and not limitation, the Collateral Disclosure
List, together with Schedule 2, contains a listing of all of the Borrower's
Patents, Trademarks, Copyrights (as those terms are defined in the Financing
Agreement), all locations (owned, leased, warehouses or otherwise) where any
Collateral (as that term is defined in the Financing Agreement) is located, all
Subsidiaries (as that term is defined in the Financing Agreement).
(e) As of the date hereof, there exists no Default or
Event of Default, as defined in the Article 7 of the Financing Agreement, nor
any event which, upon notice or the lapse of time, or both, would constitute
such an Event of Default.
(f) On the date hereof, the representations and
warranties contained in Article 4 of the Financing Agreement are true with the
same effect as though such representations and warranties had been made on the
date hereof.
<PAGE> 88
WITNESS my signature this _____ day of ____________, 200_.
ROY F. WESTON, INC.
------------------------------
Name:
Title:
<PAGE> 89
Schedule 1
----------
<PAGE> 90
Schedule 2
----------
<PAGE> 91
LIST OF SCHEDULES
-----------------
Schedule 4.1.10 Litigation
Schedule 4.1.13 Other Indebtedness
Schedule 4.1.19 Permitted Liens
<PAGE> 92
Schedule 4.1.10
---------------
LITIGATION
----------
<PAGE> 93
Schedule 4.1.13
---------------
OTHER INDEBTEDNESS
------------------
<PAGE> 94
Schedule 4.1.19
---------------
LIENS ON COLLATERAL
-------------------
- --------------------------------------------------------------------------------
ASSET COVERED LIENHOLDER UNPAID PRINCIPAL BALANCE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 1
Exhibit 11
ROY F. WESTON, INC. AND SUBSIDIARIES
STATEMENTS OF COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended March 31,
2000 1999
(Thousands of Dollars)
<S> <C> <C>
BASIC
Net income $ 745 $ 371
========== ==========
Weighted average shares outstanding 9,964,140 9,946,992
========== ==========
Basic earnings per share $ .07 $ .04
========== ==========
DILUTED
Net income $ 745 $ 371
========== ==========
Weighted average number of shares used in calculating
basic earnings per share 9,964,140 9,946,992
ADD:
Dilutive impact of stock options -- --
Weighted average number of shares used in calculating
diluted earnings per share 9,964,140 9,946,992
========== ==========
Diluted earnings per share $ .07 $ .04
========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE
CONSOLIDATED BALANCE SHEET OF MARCH 31, 2000 AND THE CONSOLIDATED STATEMENT OF
OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH (B) FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 1,013
<SECURITIES> 0
<RECEIVABLES> 81,133<F1>
<ALLOWANCES> 2,105
<INVENTORY> 0
<CURRENT-ASSETS> 89,986
<PP&E> 46,543
<DEPRECIATION> 36,816
<TOTAL-ASSETS> 115,366
<CURRENT-LIABILITIES> 43,857
<BONDS> 9,601
0
0
<COMMON> 1,182
<OTHER-SE> 56,812
<TOTAL-LIABILITY-AND-EQUITY> 115,366
<SALES> 0
<TOTAL-REVENUES> 69,700
<CGS> 0
<TOTAL-COSTS> 68,820
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 75
<INTEREST-EXPENSE> 430
<INCOME-PRETAX> 1,241
<INCOME-TAX> 496
<INCOME-CONTINUING> 745
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 745
<EPS-BASIC> .07
<EPS-DILUTED> .07
<FN>
<F1>Includes 24,207 of unbilled costs and estimated earnings there on.
</FN>
</TABLE>
