SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q/A
Amended Quarterly Report Under Section 13 or 15 (d) of
the Securities Exchange Act of 1934
FOR QUARTER ENDED April 30, 1997
COMMISSON FILE NO. 0-8190
WILLIAMS INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
VIRGINIA 54-0899518
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2849 MEADOW VIEW ROAD, FALLS CHURCH, VIRGINIA 22042
(Address of Principal Executive Offices) (Zip Code)
(703) 560-5196
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former names, former address and former fiscal year,
if changes since last report)
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 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
2,839,656
Number of Shares of Common Stock Outstanding at April 30, 1997
<PAGE>
<TABLE>
WILLIAMS INDUSTRIES, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<CAPTION>
April 30, July 31,
1997 1996
(As restated)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 1,798,700 $ 1,300,867
Accounts and notes receivable, net 11,689,311 11,109,854
Inventories 2,549,754 2,169,353
Costs and estimated earnings in
excess of billings on
uncompleted contracts 702,212 620,199
Investments in unconsolidated affiliates 1,950,702 1,986,300
Property and equipment, net of
accumulated depreciation and
amortization 10,939,799 9,452,326
Prepaid expenses and other assets 1,639,553 1,372,853
Deferred income taxes 1,800,000 -
TOTAL ASSETS $33,070,031 $28,011,752
LIABILITIES
Notes payable $13,513,259 $15,142,321
Accounts payable 5,442,392 6,561,815
Accrued compensation, payroll taxes
and amounts withheld from employees 781,396 853,923
Billings in excess of costs and
estimated earnings on uncompleted
contracts 3,354,256 2,231,188
Other accrued expenses 3,747,471 5,219,248
Income taxes payable 140,018 96,000
Total Liabilities 26,978,792 30,104,495
Minority Interests 160,036 131,371
STOCKHOLDERS' EQUITY (DEFICIENCY IN ASSETS)
Common stock - $0.10 par value,
10,000,000 shares authorized:
2,839,656 and 2,576,017 shares
issued and outstanding 283,966 257,602
Additional paid-in capital 15,706,538 13,147,433
Accumulated deficit (10,059,301) (15,629,149)
Total stockholders' equity
(deficiency in assets) 5,931,203 (2,224,114)
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIENCY IN ASSETS) $33,070,031 $28,011,752
</TABLE>
See notes to condensed consolidated financial statements.
</PAGE>
<PAGE>
<TABLE>
WILLIAMS INDUSTRIES, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
April 30, April 30,
1997 1996 1997 1996
(As restated) (As restated)
<S> <C> <C> <C> <C>
REVENUE
Construction $5,933,637 $3,487,532 $16,886,654 $10,538,283
Manufacturing 3,113,824 2,402,604 7,989,642 7,089,108
Other 267,637 283,107 1,115,331 687,471
Total Revenue 9,315,098 6,173,243 25,991,627 18,314,862
DIRECT COSTS
Construction 3,796,929 2,036,574 10,715,221 6,482,670
Manufacturing 2,267,868 1,703,442 5,576,172 4,975,394
Total Direct
Costs 6,064,797 3,740,016 16,291,393 11,458,064
GROSS PROFIT 3,250,301 2,433,227 9,700,234 6,856,798
OTHER INCOME - 46,464 60,035 2,509,864
EXPENSES
Overhead 783,294 637,073 2,487,569 1,906,555
General and
Administrative 1,477,101 1,145,661 4,603,206 3,998,143
Depreciation 263,417 245,268 766,246 718,432
Interest 466,110 336,098 1,182,427 1,113,186
Total Expenses 2,989,922 2,364,100 9,039,448 7,736,316
PROFIT BEFORE INCOME
TAXES, EQUITY
EARNINGS AND MINORITY
INTERESTS 260,379 115,591 720,821 1,630,346
INCOME TAX PROVISION
(BENEFIT) (1,752,000) 25,000 (1,684,000) 50,000
PROFIT BEFORE EQUITY
IN EARNINGS AND
MINORITY
INTERESTS 2,012,379 90,591 2,404,821 1,580,346
Equity in earnings
of unconsolidated
affiliates 9,380 10,880 14,690 62,330
Minority interest
in consolidated
subsidiaries (10,079) (9,887) (38,663) (12,468)
PROFIT BEFORE
EXTRAORDINARY ITEM 2,011,680 91,584 2,380,848 1,630,208
EXTRAORDINARY ITEM
Gain on
extinguishment
of debt 3,189,000 - 3,189,000 348,000
NET PROFIT $5,200,680 $91,584 $5,569,848 $1,978,208
PROFIT PER COMMON
SHARE-PRIMARY
Profit before
extraordinary item $0.78 $0.04 $0.92 $0.63
Extraordinary item 1.23 - 1.23 0.14
PROFIT PER COMMON
SHARE-PRIMARY $2.01 $0.04 $2.15 $0.77
PROFIT PER COMMON SHARE-
ASSUMING FULL DILUTION
(NOTE 1 )
Profit before
extraordinary item $0.72 $0.03 $0.86 $0.62
Extraordinary item 1.15 - 1.15 0.13
PROFIT PER COMMON SHARE-
ASSUMING FULL DILUTION $1.87 $0.03 $2.01 $0.75
</TABLE>
See notes to condensed consolidated financial statements.
</PAGE>
<PAGE>
<TABLE>
WILLIAMS INDUSTRIES, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Nine Months Ended
April 30, April 30,
1997 1996
(As restated)
<S> <C> <C<
CASH FLOWS FROM OPERATING ACTIVITIES
Net profit $5,569,848 $1,978,208
Adjustments to reconcile net cash
used in operating activities:
Depreciation and amortization 766,246 718,432
Interest expense related to
convertible debentures 269,937 -
Gain on extinguishment of debt (3,189,000) (348,000)
Gain on disposal of property,
plant and equipment (337,214) (2,298,452)
Interest in deferred income taxes (1,800,000) -
Minority interests in earnings 38,663 12,468
Equity in earnings of
unconsolidated affiliates (14,690) (62,330)
Changes in assets and liabilities:
Increase in accounts and notes
receivable (579,457) (1,151,156)
Increase in inventories (380,401) (15,147)
Decrease in costs and estimated
earnings related to billings
on uncompleted contracts (net) 1,041,055 1,278,014
Increase in prepaid expenses and
other assets (266,700) (527,821)
Decrease in accounts payable (1,119,423) (260,385)
(Decrease) increase in accrued
compensation, payroll taxes, and
amounts withheld from employees (72,527) 29,825
Decrease in other accrued expenses (611,840) (271,808)
Increase in income taxes payable 44,018 33,506
NET CASH USED IN OPERATING ACTIVITIES (641,485) (884,646)
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property,
plant and equipment (2,512,351) (2,516,626)
Proceeds from sale of property,
plant and equipment 595,846 3,427,548
Purchase of minority interest - (22,900)
Minority interest dividends (9,998) (6,278)
Dividends from unconsolidated
affiliate 50,288 16,763
NET CASH (USED IN) PROVIDED BY
INVESTING ACTIVITIES (1,876,215) 898,507
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings 8,171,851 2,809,954
Repayments of notes payable (5,297,593) (2,955,860)
Issuance of common stock 141,275 55,980
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 3,015,533 (89,926)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 497,833 (76,065)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 1,300,867 819,735
CASH AND CASH EQUIVALENTS,
END OF PERIOD 1,798,700 743,670
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the period for:
Income taxes $ 71,982 $ 16,494
Interest $849,778 $1,112,689
</TABLE>
See notes to condensed consolidated financial statements.
</PAGE>
WILLIAMS INDUSTRIES, INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (AS REVISED)
April 30, 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
At the March 13, 1997 meeting of the Emerging Issues Task Force,
the
staff of the Securities and Exchange Commission (SEC) issued an
announcement regarding accounting for the issuance of convertible
debt
securities. The announcement dealt with, among other things, the
belief by the SEC that any discounts on future conversions of debt
securities increase the effective rate of the securities and should
be
reflected as a charge to expense. During the quarter ended April 30,
1997, the Company issued debentures with conversion features that
permit
the holders of the debentures to convert their holdings to common
shares, at a discount from the market price at the time the
debentures
were issued.
Subsequent to the issuance of the Company's 10-Q for the quarter
ended
April 30, 1997, in conjunction with a review of a Registration
Statement
on Form S-2 filed by the Company relating to the registration of the
aforementioned conversion shares and certain other stock, the SEC
requested that the Company apply the accounting suggested in its
announcements. Accordingly, the Company determined that it was
necessary to restate the accompanying condensed consolidated
financial statements from those previously published to recognize the
impact of the beneficial conversion features of convertible debentures
issued by the Company during the quarter ended April 30, 1997 (Notes 2 and
10). In addition, the previously issued financial statements have been
restated to recognize the benefit of a portion of the Company's
income tax loss carryforward during the three and nine months ended April
30, 1997 and certain reclassifications have been made in the accompanying
condensed consolidated statements of operations compared to
those previously published.
The accompanying condensed consolidated financial statements
have been prepared in accordance with rules established by the
Securities and Exchange Commission. Certain financial
disclosures required to present the financial position and
results of operations in accordance with generally accepted
accounting principles are not included herein. The reader is
referred to the financial statements included in the annual
report to shareholders for the year ended July 31, 1996. The
interim financial information included herein is unaudited.
However, such information reflects all adjustments, consisting
solely of normal recurring adjustments which are, in the opinion
of management, necessary for a fair presentation of the financial
position as of April 30, 1997 and the results of operations for
the three and nine months ended April 30, 1997 and 1996, and cash
flows for the nine months ended April 30, 1997 and 1996.
Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimates.
Earnings Per Share - Earnings per share are based on the
weighted average number of shares outstanding during the year.
Fully diluted earnings per share for the three and nine months
ended April 30, 1997 and 1996 reflect the assumed conversion of
convertible debentures.
Basis of Consolidation - The condensed consolidated
financial statements include the accounts of the Company and all
of its majority-owned subsidiaries, which are as follows:
<TABLE>
<CAPTION>
Subsidiary Percent
Owned
<S> <C>
John F. Beasley Construction Company 100
Greenway Corporation 100
Williams Bridge Company 100
Williams Enterprises, Inc. 100
Williams Equipment Corporation 100
WII Realty Management, Inc. 100
Williams Steel Erection Company, Inc. 100
Williams Industries Insurance Trust 100
Capital Benefit Administrators, Inc 90
Construction Insurance Agency, Inc. 64
Insurance Risk Management Group, Inc. 100
Piedmont Metal Products, Inc. 80
</TABLE>
All material intercompany balances and transactions have been
eliminated in consolidation.
2. NOTES PAYABLE
A. Bank Group Debt
The restructuring of the Bank Group debt was concluded as of
March 31, 1997 with the signing of documents between the Company,
representatives of the Company's Bank Group, and CIT/Credit
Finance Inc. Funding of the transactions occurred on April 2,
1997. The following is a summary of the transactions which
enabled the closing to occur:
CIT: The Company has entered into a Loan and Security
Agreement with The CIT Group/Credit Finance, Inc. for a credit
facility of approximately $3 million. This loan requires monthly
principal payments as well as interest at prime plus 2.5%.
Payments are due on the first of each month starting May 1, 1997.
The loan has a three year term. This loan is secured by the
Company's equipment and receivable as well as subordinate deeds
of trust on the real estate.
At closing, the Company received an advance of $2.5 million
from the CIT credit facility. These funds, along with funds
already paid to the Bank Group, were used to pay the required
amount of Bank Group debt and other outstanding past due
obligations of the Company.
NationsBank: The restructuring of the Bank Group debt was
concluded and all debt forgiveness granted. The debt forgiveness
is reflected in the accompanying financial statements as "Gain On
Extinguishment of Debt". In return for the debt forgiveness, the
company has issued $500,000 of debentures which bear interest
until paid or converted (into 20% of WMSI's outstanding stock).
In the final restructuring of the Bank Group debt, the Bank Group
and Real Estate loans were combined and the combined balance was
reduced to $2.5 million, resulting in a "Gain on Extinguishment
of Debt" of $3.189 million as of March 31, 1997, which was
calculated as follows:
Debt Retired $9,891,000
New Debt Incurred to Retire Debt:
NationsBank - new loan 2,500,000
Bank Group Debentures - at Fair
Market Value of Stock Issuable
upon Conversion 2,338,000
Cash Paid to Bank Group 1,864,000
---------
Total $6,702,000
----------
Gain on Extinguishment of Debt $3,189,000
----------
The Gain on Extinguishment of Debt is net of the fair market value
of the Company's stock, approximately $2,338,000, issuable upon
conversion of the debentures, as determined at the date of closing
of the restructuring. The difference between the fair market
value of the stock and the face value of the debentures has been
recorded as additional paid in capital.
The new NationsBank loan is secured by first deeds of trust
on all of the Company's real property (with the exception of the
Richmond facility encumbered by the Industrial Revenue Bond), and
by certain other collateral not granted to CIT to secure the
Company's new loan. The revised loan bears interest at 11%, and
requires monthly payments based on a 20 year amortization. The
loan is due and payable in full on December 31, 1997.
Pribyla: In order to obtain the CIT loan, the Company was
required to reach agreement on several old legal issues. Most of
the necessary settlements occurred in the first and second
quarter of Fiscal 1997, but a settlement with Mrs. Karen Pribyla
and the estate of Mr. Eugene Pribyla, regarding claims for excess
medical expenses, coincided with the Bank Group closing. Under
the Company's settlement with Pribyla, the Company issued a
promissory note in the face amount of $744,000 which does not
bear interest but allows a prepayment discount at a 10% annual
rate. The value is approximately $524,000 at April 30, 1997.
Payments are due on the first of each month starting May 1, 1997,
$8,000 for the first three years, $9,000 for the following two
years and $10,000 for the final two years. This note is secured
by subordinate deeds of trust on the Company's Prince William
County and Fairfax County real estate. Additionally, the
Company paid $205,000 in cash and issued 215,000 shares of the
Company's common stock as part of the Pribyla settlement.
As a result of the above mentioned transactions, the Company
has satisfied all of the default issues in relation to the Bank
Group and is current under the terms and conditions of all of its
debt.
B. Real Estate Loan
As described in Item A above, the Company's real estate loan
has been modified in connection with the Bank Group settlement.
The Company intends to obtain a replacement lender for the $2.5
million loan prior to December 31, 1997. It is anticipated that
the new lender will offer the Company a standard real estate loan
with an extended term.
C. Industrial Revenue Bond
The City of Richmond Industrial Revenue Bond (IRB) has been
paid up to date as of April 30, 1997 as a result of the recent
sale of the Richmond office building and the reimbursement of
Central Fidelity Bank for taxes and fees. As of April 30, 1997,
the IRB was approximately $1.54 million. This does not include a
$200,000 payment which is currently held in an interest-bearing
escrow account and will be applied against principal on August
1, 1997 according to the terms of the bond documents. The IRB is
secured by the real estate in the City of Richmond. Principal
payments are due in increasing amounts through the maturity of
the bonds in 2008. A portion of the property covered by the IRB
is leased by a non-affiliated third party.
3. ACCOUNTS AND NOTES RECEIVABLE
<TABLE>
Accounts and notes receivable consist of the following:
<CAPTION>
April 30, July 31,
1997 1996
<S> <C> <C>
Accounts Receivable:
Contracts:
Open accounts $ 8,257,825 $ 8,645,575
Retainage 641,535 689,144
Trade 1,664,142 1,396,207
Contract claims 747,285 886,647
Other 933,322 221,202
Allowance for doubtful
accounts (779,798) (953,921)
Total accounts receivable 11,464,311 10,884,854
Notes Receivable 225,000 225,000
Total Accounts and Notes
Receivable $11,689,311 $11,109,854
</TABLE>
Included in the above amount at April 30, 1997 is
approximately $690,000 that is not expected to be received within
one year.
4. INVENTORIES
Inventory of equipment held for resale is valued at cost,
which is less than market value, as determined on a specific
identification basis.
The costs of materials and supplies are accounted for as assets
for financial statement purposes. These costs are written off
when incurred for Federal income tax purposes. The items are
taken into account in the accompanying statements as follows:
<TABLE>
<CAPTION>
April 30, July 31,
1997 1996
<S> <C> <C>
Equipment held for resale $ 21,393 $ 42,786
Expendable construction
equipment and tools, at average
cost which does not exceed
market value 799,551 801,039
Materials, structural steel, metal
decking, and steel cable at
lower of cost or estimated
market value 1,336,782 927,038
Supplies at lower of cost or
estimated market value 392,028 398,490
$2,549,754 $2,169,353
</TABLE>
5. CONTRACT CLAIMS
The Company maintains procedures for review and evaluation of
performance on its contracts. Occasionally, the Company will
incur certain excess costs due to circumstances not anticipated
at the time the project was bid. These costs may be attributed
to delays, changed conditions, defective engineering or
specifications, interference by other parties in the performance
of the contracts, and other similar conditions for which the
Company claims it is entitled to reimbursement by the owner,
general contractor, or other participants. These claims are
recorded at the estimated net realizable amount after deduction
of estimated legal fees and other costs of collection.
6. RELATED-PARTY TRANSACTIONS
Certain shareholders owning 18.3% of the outstanding stock of
the Company own 67.49% of the outstanding stock of Williams
Enterprises of Georgia, Inc. Intercompany billings to this
entity and its affiliates were approximately $941,000 for the
nine months ended April 30, 1997.
Certain shareholders owning 13.8% of the outstanding stock of
the Company own 100% of the stock of Williams and Beasley
Company. Intercompany billings to and from this entity during
the nine months ended April 30, 1997 were approximately $414,000.
7. INCOME TAXES
As a result of tax losses incurred in prior years, the Company, at
April 30, 1997, has tax loss carryforwards in excess of $15 million.
Under Statement of Financial Accounting Standards No. 109 ("SFAS
109"),
the Company is required to recognize the value of these tax loss
carryforwards if it is more likely than not that they will be
realized
by reducing the amount of income taxes payable in future income tax
returns. This is turn depends of projections of the Company's
profitability in future years during the carryforward period. As a
result of the completion of the restructuring of the Company's Bank
Group debt during the three months ended April 30, 1997, and the
return to profitable operations of the Company's ongoing businesses
during the past two years, the Company expects to report profits for
income tax purposes in the future. As a consequence, the Company
recognized a $1.8 million portion of the benefit available from its
tax loss carryforwards during the three months ended April 30, 1997.
Realization of this asset is dependent on generating sufficient
taxable income prior to expiration of the loss carryforwards.
Although
realization is not assured, management believes that it more likely
than not that all of the recorded deferred tax asset will be
realized. The amount of the deferred tax asset considered
realizable, however, could be reduced in the near term if estimates
of future taxable income during the carryforward period are reduced.
8. COMMITMENTS/CONTINGENCIES
Precision Components Corp.
The Company is party to a suit by Industrial Alloy
Fabricators, Inc. and Precision Components Corp. against Williams
Industries, Inc. and IAF Transfer Corporation, filed in the
Circuit Court for the City of Richmond, Law No. 96B02451. The
Company retained counsel to respond to the suit and filed a
counterclaim seeking reimbursement of damages caused by the
plaintiffs. The Company intends to aggressively defend this
claim. Management believes that the ultimate outcome of this
matter will not have a material adverse impact on the Company's
financial position, results of operations, or cash flows .
FDIC
The Company was party to a guaranty under which the FDIC
claimed that the Company was responsible for 50% of the alleged
deficiencies on the part of Atchison & Keller, Inc.,
the borrower. Suit was filed against the Company for $350,000,
but the FDIC accepted the Company's proposal to settle the
matter. In the settlement, the Company was to issue a $100,000
convertible debenture under which the FDIC would receive 110,000
shares of unregistered stock. In March 1997, the Company closed
its settlement with the FDIC. Under the terms of the final
Settlement Agreement, a cash payment of $25,000 was made at
closing and the Company issued a $75,000 convertible debenture,
which may be converted into 110,294 shares of common stock.
In connection with the settlement, the difference between the
fair market value of the Company's stock, approximately $345,000, issuable
upon conversion of the debenture, as determined at the date of
settlement, and the $75,000 face amount of the debenture, has been
recorded as interest expense for the three and nine months ended
April 30, 1997.
Foss Maritime
The Company's subsidiary, Williams Enterprises, Inc., was
named a third party defendant in a suit pending in the U.S.
District for the Western District of Washington, Foss Maritime v.
Salvage Assn. v. Williams Enterprises & Etalco, #C95-1835R. The
suit arises from damage in transit to cargo which was shipped from
Charleston, SC to Bremerton, WA. Williams Enterprises was hired
by Foss Maritime to sea-fasten the cargo according to a design by
Etalco, and the Salvage Association was hired to conduct a marine
survey prior to the voyage. The Salvage Association filed the
Third-Party Complaint, alleging that Williams Enterprises was
negligent in the performance of its work. The damages claimed
are approximately $3.6 million, which was paid by the Cargo
Insurance carrier. Williams Enterprises' exposure under its own
liability coverage is $100,000, but the Company believes that
this insurance is not involved because the agreement between Foss
and Williams Enterprises was that Williams Enterprises would be a
named insured on the Cargo Insurance policy with a "waiver of
subrogation" endorsement. Although Foss failed to have Williams
Enterprises named on the policy, management believes that Foss
will be responsible for any damage or expense incurred by
Williams Enterprises. In addition, the Company disputes that it
was in any way responsible for the damage.
On March 19, 1997, the court entered a Summary Judgment in
favor of the Salvage Association and against Foss Maritime. This
effectively ends the case against Williams Enterprises because
the claim was a third-party claim brought by the Salvage
Association. However, Foss has filed an appeal with the U.S.
Court of Appeals for the Ninth Circuit, so the case remains
active until a disposition of the appeal. Management believes
that the ultimate outcome will not have a material adverse impact
upon the Company's financial position, results of operations, or
cash flows .
Koppleman
The Company has been named a defendant in an action filed in
the Circuit Court for the City of Baltimore, Maryland, by the
estate of Joseph Koppleman. The suit seeks in excess of $2
million in damages for fraud and other asserted causes of action.
The case results from an injury award in favor of Koppleman
against Harbor Steel Erectors, Inc. and Arthur Phillips &
Company, Inc. (the "Original Judgment Debtors") in the amount of
$270,600, entered in 1995. The claim resulted from an injury to
Mr. Koppleman in 1989. The claim falls within the deductible of
the applicable insurance policy. Because of the plaintiff's
failure to collect their judgment against the Original Judgment
Debtors, this action has been filed, naming as defendants the
Company, numerous present and former subsidiaries, the insurance
carrier, and the insurance broker who were involved in the
creation of the insurance arrangement. Management believes that
this case is groundless and that the conduct of the underlying
litigation was appropriate. The Company has retained counsel and
intends to defend this matter aggressively. Management believes
that the ultimate outcome will not have a material adverse impact
upon the Company's financial position, results of operations, or
cash flows .
General
The Company is also party to various other claims arising in he
ordinary course of its business. Generally, claims exposure in
the construction services industry consists of workers
compensation, personal injury, products' liability and property
damage. The Company believes that its insurance accruals,
coupled with its excess liability coverage, is adequate coverage
for such claims.
9. NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards (SFAS) No. 128
"Earnings Per Share" was recently issued by the Financial
Accounting Standards Board. SFAS No. 128 is effective for
periods ending after December 15, 1997 and early adoption is not
permitted.
SFAS No. 128 requires the Company to compute and present a
basic and diluted earnings per share. Had the Company computed
earnings per share in accordance with SFAS No. 128 for the
quarter ended April 30, 1997, there would be no material
difference in the reported earnings per share.
10. SUPPLEMENTAL CASH FLOW INFORMATION
During the third quarter of Fiscal 1997, convertible debentures
with an aggregate face amount of $575,000 were issued to settle
outstanding obligations of the Company. In connection with the
issuance of the debentures, the $2,108,000 difference between the fair market
value of the shares issuable upon conversion of the debentures
(approximately $2,683,000) as determined at the dates the related
transactions were closed, and the face amount of the debentures, was
added to paid-in capital.
Item 2. Management's Discussion and Analysis of
Financial Condition and Result of Operations
General
The financial condition of Williams Industries, Inc.
improved dramatically during the third quarter of Fiscal
1997, as the Company completed debt restructuring with its
Bank Group and cured all outstanding defaults. Details of
these transactions are included in the Notes to the
Condensed Financial Statements. In addition to the
$3.189 million Bank debt forgiveness discussed in the Notes
and reflected as "Gain on Extinguishment of Debt" in the
Financial Statements and the $1.8 million benefit recognized
from income tax loss carryforwards, the Company also reported
on-going profitable operations which were not a result of unusual
or extraordinary transactions. These profits are being
generated by the aggregate results of the Company's core
subsidiaries, Greenway Corporation, Piedmont Metal Products,
Inc., Williams Bridge Company, Williams Equipment
Corporation, and Williams Steel Erection Company, Inc.
With a few exceptions, the Company has essentially sold
all the assets that are not part of its long-range
activities. The remaining assets will be used in Company
businesses or for rental purposes.
Financial Condition
The third quarter of Fiscal 1997 culminated the
Company's lengthy efforts to restructure its debt and cure
the Bank Group and real estate loan defaults. With the Bank
Group settlement and the accompanying debt forgiveness, as well
as the benefit recognized from tax loss carryforwards, as
shown in the accompanying financial statements, the Company
has returned to a positive equity position and is now in
compliance with the covenants of its various loan
agreements.
A number of other issues which had the potential to
impact the Company's future earnings have also been
resolved. The settlement and quantification of expense and
exposure to old legal issues such as Pribyla, as described
in the accompanying Notes to Condensed Consolidated
Financial Statements, enables the Company to be in a much
stronger position going forward. Uncertainties that could
have impacted the Company's financial posture have
essentially been removed, enabling management, potential
creditors and customers to have a much clearer picture of
the Company's financial future.
For the three months ended April 30, 1997, the Company
had a net profit of $5,200,680 or $1.87 per share. This
compares to $91,584 or three cents per share for the
comparable quarter in 1996. Although $3,189,000 of the 1997
profit is attributable to debt forgiveness and $1,800,000 to
recognition of a tax benefit, $481,617 is a
result of operations. It is also significant to note that
the earnings per share are shown assuming full dilution,
which includes the dilution that would occur with the issuance
of unregistered shares committed to the Bank Group
(approximately 750,000 shares),the FDIC settlement (110,294 shares)
and First Tennessee (70,000 shares).
The Company's equity position was greatly enhanced as a
result of these transactions. A combination of events in the
third quarter,most specifically dealing with the issuance of
debentures, the debt forgiveness and the tax benefit described
elsewhere in this document, have given the Company a positive
equity position of $5,931,203 as of April 30, 1997. As indicated
in Note 1 to the Condensed Consolidated Financial Statements, this
filing is a restatement of the Company's previous third quarter
report. The shareholders' equity is now in excess of $4 million,
one of the prime requirements for NASDAQ relisting, The goal of
relisting on NASDAQ is paramount in management's thinking and a
variety of efforts will be employed to meet the relisting
requirements as soon as practical without compromising the
Company's long-term posture. It is managment's intention to use
the audited results from its upcoming 10-K filing to apply for
NASDAQ relisting.
In addition to the significant strides made in removing
Bank Group debt and curing defaults, the Company had an
outstanding operational quarter. Core operations (those of
Greenway, Piedmont, Williams Bridge, Williams Equipment, and
Williams Steel) saw an increase of 52% in total revenues for
the third quarter of Fiscal 1997 when compared to the
similar quarter in Fiscal 1996. Part of this increase was
attributable to the mild weather in the winter of 1997 as
comparable to the severe weather in the winter of 1996, but,
for the most part, the increases were due to the overall
increases in activity in the Company's traditional market
areas.
The Company is now in compliance with its lenders. Central
Fidelity Bank, the agent on the Company's Industrial Revenue
Bond (IRB) related to the Richmond property, is now in the
process of reviewing the covenants contained in the IRB to make
sure that the Company's new loan agreements fully satisfy all
requirements of the IRB relating to the parent Company's
financial position. Approximately $1.54 million remained on
this obligation as of April 30, 1997. This does not include
a $200,000 payment which is currently held in an interest-
bearing escrow account and which will be applied against
principal on August 1, 1997 according to the terms of the
bond documents.
Bonding
The Company's ability to furnish payment and performance
bonds is improving along with its financial condition, but
essentially all of its projects have been obtained without
providing bonds. Management does not believe the Company
has lost any significant work due to bonding concerns in
recent years.
Liquidity
The Company's liquidity position has improved. On-going
operations continue to provide the cash necessary to finance
day-to-day operations and to service the restructured debt.
Sale of Assets
During the quarter, several large pieces of equipment
were sold for a total value of $543,000 and resulted in a
gain of approximately $337,000. Of this amount,
approximately $325,000 was paid to CIT against the Company's
new credit facility.
Operations
Each of the Company's core operations has benefited from
the increased activity in the construction marketplace as
well as the improved financial condition of the parent
corporation. Once the parent cured its defaults, the
subsidiaries found it much easier to obtain new equipment or
supplies based on their own results and profitability. This
trend is expected to continue and leads to further improved
results through reduced finance costs and the more efficient
delivery of services through enhanced capabilities.
The remaining administrative activities of operations
that have been liquidated continue to be included in the
Company's overall results, but they had minimal negative
impact on this quarter's results. It is anticipated that
their impact going forward will continue to be a small
component of the overall results until such time as all the
administrative activities are formally concluded.
1997 Quarter Compared to 1996 Quarter
The third quarter of Fiscal 1997 was a tremendous
improvement over the same quarter of the prior year.
Overall revenues, gross profit and pre-tax profits increased
on an aggregate basis for the core companies and the parent
Company received $3,189,000, previously described, in debt
forgiveness. Profit Before Extraordinary Items increased
from $91,584 in the quarter ended April 30, 1996 to $2,011,680
in the quarter ended April 30, 1997. $1.8 million of this
improvement is a result of recognition of the income tax benefit
discussed in Note 7 to the Condensed Consolidated Financial
Statements. Approximately $140,000 of this increase is the result
of an the reversal of an over accrual of Bank Group debt interest.
In addition, during quarter ended April 30, 1997, the Company
incurred an interest expense of $270,000 as a result of the
settlement with the FDIC discussed in Note 8 to the Condensed
Consolidated Financial Statements. Because of the milder
weather in the third quarter of Fiscal 1997 as compared to
the third quarter of Fiscal 1996, the core companies were
not only able to do more work, but they were able to do so
both at higher gross profit and pre-tax profit levels.
Williams Steel Erection Company continued to lead the
core companies in total revenue, nearly doubling its revenue
from the third quarter of Fiscal 1996 to the third quarter
of Fiscal 1997. Gross profits and pre-tax profits also
increased significantly. This subsidiary has been highly
visible in its work at the MCI Arena in downtown Washington,
D.C. as well as its semi-conductor plant work in Manassas
and Richmond, Virginia. The company is also doing work in
the construction of the new National Airport terminal and
several area high schools, including the massive Montgomery
Blair High School in Montgomery County, Maryland.
Williams Bridge Company, which has experienced
difficulties in the bridge fabrication market in recent
years, also had improved results during the third quarter of
Fiscal 1997. The company saw improvements in its revenue,
gross profit and pre-tax profit. The company's pre-tax
profit for the quarter marks a significant turnaround over
the prior year's comparable loss and is attributable to
reduced costs in acquiring materials and in working more
hours in the company's two facilities. An increase in work
available to bid through a geographic expansion in the
company's area of service is also cited as a contributing
factor to the company's improvement.
The Company's equipment rental and rigging subsidiaries,
Greenway Corporation and Williams Equipment Corporation,
both saw increases in revenue and gross profit, although a
portion of Greenway's increase came from the sale of
equipment. The rental market continues to be very active
and both companies are acquiring new equipment in order to
stay abreast of the competition. Increased activity in the
construction marketplace in the companies traditional market
areas has resulted in some new "outside" competition in the
equipment rental markets and both subsidiaries are working
to retain old business and acquire new customers.
The remaining core company, Piedmont Metal Products, had
a small dip in revenue for the third quarter of Fiscal 1997
when compared to the third quarter of Fiscal 1996, but the
company continues to enjoy improved gross profits and pre-
tax profits. In order to handle work more efficiently and
increase its capabilities, the company completed
construction and payment for a sand-blasting facility and a
paint shop during the quarter.
While aggregate core results appear to be at a level for
each company to sustain its own operations, the core
companies' profits must continue at a level not only to
cover their own obligations, but also the parent operations
and restructured debt. Management believes that the
combination of debt reduction, the parent's improved
financial position, and the improvement in the overall
construction market has reached a level where the Company
should continue to be operationally profitable on a quarter
to quarter basis. However, due to the unpredictability of
the weather, the degree of profitability is always
susceptible to large fluctuations from quarter to quarter.
Nine Months Ended April 30, 1997 Compared to Comparable 1996
Period
Comparing the nine months ended April 30, 1997 to the
nine months ended April 30, 1996 is more complex than the
quarter to quarter comparison for a variety of reasons. The
nine-month numbers in both 1996 and 1997 include a number of
"non-routine" or extraordinary activities or revenue
attributable to different sources other than routine
operating profit. For example, the $2,509,864 in "Other
Income" in 1996 includes approximately $2.4 million that was
derived from the sale of the Company's real property in
Manassas, Virginia to the Commonwealth of Virginia for
highway right-of-way. By comparison, the 1997 "Revenue:
Construction" includes $500,000 paid to the John F. Beasley
Construction Company,and subsequently to the Bank Group,
representing proceeds of life insurance policies held on Mr.
Eugene Pribyla. Neither of these events is likely to recur and
therefore emphasis should be placed on operational activity.
For the nine months ended April 30, 1996, the total
construction and manufacturing revenue, which included some
subsidiaries that are now defunct, was $17,627,391. By
contrast, for the nine months ended April 30, 1997, a
smaller number of subsidiaries produced $24,876,296, or a
more than 40 percent increase in revenue.
Extraordinary transactions or sales in both years are
highly complicated. For details of these events, refer to
the Notes to Condensed Consolidated Financial Statements
accompanying this documents and the Notes which accompanied
the Company's prior filings, most notably the 1996 10-K in
which all prior transactions were explained in detail.
Comparing the profit before extraordinary items of
$2,380,848 for the nine months ended April 30, 1997 to the
$1,630,208 in the the nine months ended April 30, 1996, one must
first take out the $1,800,000 deferred tax benefit recognized in
the nine months ended April 30, 1997 and the $2.4 million real
estate gain recognized in the nine months ended April 30, 1996.
This comparison shows just how dramatic the swing in
profitability has been.
Revenues for the nine months ended April 30, 1997 are
ahead of projected levels and expenses have been kept to
reasonable and customary levels. From a core company
aggregate operating perspective, revenues, gross profit and
pre-tax profit all increased when the nine months are
compared. While Williams Bridge Company did have a loss for
the nine-month period, the company substantially reduced its
losses when compared to the same period in the prior year.
All other core operations were profitable on a nine-month
basis.
Management believes that the removal of Bank Group debt
will greatly benefit both the parent and subsidiary
operations. As a consequence of better financing terms, the
subsidiaries should be able to increase their profit margins
and become more competitive in the marketplace, thereby
increasing their revenues.
BACKLOG
The Company's backlog of work under contract or
otherwise believed to be firm as of April 30, 1997 was
$12,197,690. This number is a reduction from the prior
quarter and reflects the tremendous amount of work completed
during the third quarter. Both Greenway Corporation and
Williams Equipment Corporation perform work on a rapid
response basis and therefore only have a small portion, if
any, of their work included in the backlog.
Management would like to see the Company's backlog
increase in the coming months, but nevertheless believes the
level of work in the core companies is sufficient to carry
the Company well into Fiscal 1998. Most of the backlog will
be completed within the next 12 months if contract schedules
are followed.
Management
The restructuring and repayment of the Bank Group debt
removed a major obstacle for management, who can now focus
more completely on operational activities. The relisting of
the Company's stock on NASDAQ becomes a high priority, as
does consistently improving consolidated results. With Bank
Group repayment, management can now spend more concentrated
effort on strategic planning for the future and development
of long-range goals for growth rather than on survival.
PART II
ITEM 1. Legal Proceedings
Precision Components Corp.
The Company is party to a suit by Industrial Alloy
Fabricators, Inc. and Precision Components Corp. against
Williams Industries, Inc. and IAF Transfer Corporation,
filed in the Circuit Court for the City of Richmond, Law No.
96B02451. The Company retained counsel to respond to the
suit and filed a counterclaim seeking reimbursement of
damages caused by the plaintiffs. The Company intends to
aggressively defend this claim. Management believes that the
ultimate outcome of this matter will not have a material
adverse impact on the Company's financial position or
results of operations.
FDIC
The Company was party to a guaranty under which the FDIC
claimed that the Company was responsible for 50% of the
alleged deficiencies on the part of Atchison & Keller, Inc.,
the borrower. Suit was filed against the Company for
$350,000, but the FDIC accepted the Company's proposal to
settle the matter. In the settlement, the Company was to
issue a $100,000 convertible debenture under which the FDIC
would receive 110,000 shares of unregistered stock. In
March 1997, the Company closed its settlement with the FDIC.
Under the terms of the final Settlement Agreement, a cash
payment of $25,000 was made at closing and the Company
issued a $75,000 convertible debenture, which may be
converted into 110,294 shares of common stock.
Foss Maritime
The Company's subsidiary, Williams Enterprises, Inc.,
was named a third party defendant in a suit pending in the
U.S. District for the Western District of Washington, Foss
Maritime v. Salvage Assn. v. Williams Enterprises & Etalco,
#C95-1835R. The suit arises from damage in transit to
cargo which was shipped from Charleston, SC to Bremerton,
WA. Williams Enterprises was hired by Foss Maritime to sea-
fasten the cargo according to a design by Etalco, and the
Salvage Association was hired to conduct a marine survey
prior to the voyage. The Salvage Association filed the
Third-Party Complaint, alleging that Williams Enterprises
was negligent in the performance of its work. The damages
claimed are approximately $3.6 million, which was paid by
the Cargo Insurance carrier. Williams Enterprises' exposure
under its own liability coverage is $100,000, but the
Company believes that this insurance is not involved because
the agreement between Foss and Williams Enterprises was that
Williams Enterprises would be a named insured on the Cargo
Insurance policy with a "waiver of subrogation" endorsement.
Although Foss failed to have Williams Enterprises named on
the policy, management believes that Foss will be
responsible for any damage or expense incurred by Williams
Enterprises. In addition, the Company disputes that it was
in any way responsible for the damage.
On March 19, 1997, the court entered a Summary Judgment
in favor of the Salvage Association and against Foss
Maritime. This effectively ends the case against Williams
Enterprises because the claim was a third-party claim
brought by the Salvage Association. However, Foss has filed
an appeal with the U.S. Court of Appeals for the Ninth
Circuit, so the case remains active until a disposition of
the appeal. Management believes that the ultimate outcome
will not have a material adverse impact upon the Company's
financial position or results of operations.
Koppleman
The Company has been named a defendant in an action
field in the Circuit Court for the City of Baltimore,
Maryland, by the estate of Joseph Koppleman. The suit seeks
in excess of $2 million in damages for fraud and other
asserted causes of action. The case results from an injury
award in favor of Koppleman against Harbor Steel Erectors,
Inc. and Arthur Phillips & Company, Inc. (the "Original
Judgment Debtors") in the amount of $270,600, entered in
1995. The claim resulted from an injury to Mr. Koppleman in
1989. The claim falls within the deductible of the
applicable insurance policy. Because of the plaintiff's
failure to collect their judgment against the Original
Judgment Debtors, this action has been filed, naming as
defendants the Company, numerous present and former
subsidiaries, the insurance carrier, and the insurance
broker who were involved in the creation of the insurance
arrangement. Management believes that this case is
groundless and that the conduct of the underlying litigation
was appropriate. The Company has retained counsel and
intends to defend this matter aggressively. Management
believes that the ultimate outcome will not have a material
adverse impact upon the Company's financial position or
results of operations.
General
The Company is also party to various other claims
arising in the ordinary course of its business. Generally,
claims exposure in the construction services industry
consists of workers compensation, personal injury, products'
liability and property damage. The Company believes that
its insurance accruals, coupled with its excess liability
coverage, is adequate coverage for such claims.
ITEM 2. Changes in Securities
The effect of stock issued during the current fiscal
year is reflected in the profit per common share on a
weighted average basis, based on the date of issuance. As
of April 30, 1997, the number of shares issued and
outstanding was 2,839,656, and the weighted average number
of shares used to calculate profit per common share is
2,586,908.
The dilutive effect of commitments to issue shares, in
addition to other stock issued during the current fiscal
year, is included in the profit per common share-assuming
full dilution on a weighted average basis, based on the date
of issuance or commitment. For instance, of the stock
committed to the Bank Group as of March 31, 1997,
approximately 750,000 shares was outstanding for
approximately 10% of the nine months ended April 30, 1997,
so the dilutive impact of that commitment is approximately
75,000 shares. As of April 30, 1997, the aggregate number
of common shares issued and committed was approximately
3,775,000 and the weighted average number of shares used to
calculate profit per common share assuming full dilution is
2,777,020.
The Company has issued the following securities, which have
not yet been registered under the Securities Act of 1933 in
reliance upon the exemptions provided by Section 4(2) of, and
Regulation D adopted under, that Act.
1. A $410,000 convertible debenture bearing interest at Prime
+2.5%, maturing February 1, 2001, was issued on March 31, 1997, to
NationsBank, N.A., convertible into 16.4% of the Company's stock,
which on April 30, 1997, would have been approximately 619,000
shares.
2. A $90,000 convertible debenture bearing interest at Prime
+2.5%, maturing February 1, 2001, was issued to the FDIC as
Receiver for the NationsBank of Washington and the Washington Bank
of Virginia, convertible into 3.6% of the Company's stock, which
on April 30, 1997, would have been approximately 136,000 shares
3. 215,000 Shares of the Company's stock were issued as of March
31, 1997, to or on account of Karen Pribyla and the Estate of
Eugene Pribyla.
4. A non-interest bearing convertible debenture in the face
amount of $75,000, due August 1, 1998, was issued on March 24,
1997, to the FDIC as receiver for the Washington Bank of Virginia.
This debenture is convertible into 110,294 shares of the Company's
stock.
5. A $100,000 convertible debenture bearing interest at Prime
+1.5% but no less than 10% per annum, maturing August 1, 1998, was
issued on May 3, 1995 to First Tennessee Equipment Finance
Corporation. This debenture is convertible into common stock at
the rate of $1.43 per share (70,000 shares).
ITEM 3. Defaults Upon Senior Securities
None.
ITEM 4. Submission to a Vote of Security Holders
None.
ITEM 5. Other Information
None
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
EX 4.A FDIC (Atchison and Keller) Debenture
EX 4.B FDIC (Bank Group) Debenture
EX 4.C NationsBank Debenture
EX 27 Financial Data Schedule for Nine Months
Ended April 30, 1997
EX 99.A Bank Group Settlement Agreement
EX 99.B CIT Loan Agreement
(b) Reports on Form 8-K
A report on Form 8-K was filed April 2, 1997, and amended on
October 16, 1997.
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.
WILLIAMS INDUSTRIES, INCORPORATED
October 17, 1997 /s/ Frank E. Williams, III
Frank E. Williams, III
President, Chairman of the
Board
Chief Financial Officer
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> APR-30-1997
<CASH> 1,798,700
<SECURITIES> 0
<RECEIVABLES> 12,469,109
<ALLOWANCES> (779,798)
<INVENTORY> 2,549,754
<CURRENT-ASSETS> 0
<PP&E> 20,274,379
<DEPRECIATION> (9,334,580)
<TOTAL-ASSETS> 33,070,031
<CURRENT-LIABILITIES> 0
<BONDS> 13,513,259
0
0
<COMMON> 283,966
<OTHER-SE> 5,647,237
<TOTAL-LIABILITY-AND-EQUITY> 33,070,031
<SALES> 0
<TOTAL-REVENUES> 25,991,627
<CGS> 0
<TOTAL-COSTS> 16,291,393
<OTHER-EXPENSES> 7,857,021
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,182,427
<INCOME-PRETAX> 720,821
<INCOME-TAX> (1,684,000)
<INCOME-CONTINUING> 2,404,821
<DISCONTINUED> 0
<EXTRAORDINARY> 3,189,000
<CHANGES> 0
<NET-INCOME> 5,569,848
<EPS-PRIMARY> 2.15
<EPS-DILUTED> 2.01
</TABLE>
The securities evidenced by this instrument and the securities
which may be issued upon exercise of these securities have not
been registered under the Securities Act of 1933 or comparable
State statutes and may not be transferred, nor will any assignee
or endorsee of the securities be recognized as an owner by the
Issuer for any purpose, unless a registration statement with
respect to such securities shall then be in effect or unless the
availability of an exemption from registration with respect to any
proposed transfer or disposition of such securities shall be
established to the satisfaction of counsel for the Issuer.
Fairfax County, Virginia
$75,000.00 March 24, 1997
WILLIAMS INDUSTRIES, INC.
Convertible Debenture Due August 1, 1998
Williams Industries, Inc., a Virginia corporation (the
"Company"), for value received, hereby promises to pay to the
Federal Deposit Insurance Corporation as Receiver of The
Washington Bank of Virginia ("Holder") the principal sum of
Seventy Five Thousand Dollars ($75,000.00), without interest, on
or before August 1, 1998. Payments of principal are to be made in
lawful money of the United States by check mailed to Holder at 500
W. Monroe, Suite 3200, Chicago, IL 60661, or such other address
as Holder may designate in writing.
ARTICLE I: Terms
SECTION 1.01 Debenture.
This debenture ("Debenture") is issued in the principal
amount of Seventy Five Thousand Dollars ($75,000.00) in connection
with the delivery of a Settlement Agreement of even date herewith
between the Company and Holder.
SECTION 1.03 Conversion Rights.
The Holder shall have the right to convert the entire
principal balance due upon this Debenture into 110,294 shares of
the Common Stock, $0.10 par value per share ("Common Stock") of
the company, as adjusted subject to the terms set forth in Article
II, hereof ("Conversion Price") on or after the date of issuance.
ARTICLE II: Conversion
SECTION 2.01 Exercise of Conversion Rights.
The Holder may exercise conversion rights by delivering
notice to the company at the address of the Company's principal
offices. Said notice shall be accompanied by the Debenture. The
Company shall calculate and issue the number of shares of Common
Stock to be issued and in lieu of issuing a fractional share may
pay to Holder the value of such fraction determined by the most
recently reported sale on an exchange or NASDAQ.
SECTION 2.02 Conversion Date.
The conversion shall be deemed to and shall occur, at 5:00
p.m. Eastern Time, on the business day of receipt by the Company
of properly completed notice as provided in Section 2.01
("Conversion Date"). Certificate(s) representing the Common Stock
issuable upon conversion shall be delivered to Holder within ten
business days following the Conversion Date.
SECTION 2.03 Registration Rights for Debenture Common.
The Company shall have the right to require, as a condition
precedent to the sale of Common Stock issued upon conversion, that
the Holder furnish such information, including an opinion of
counsel, as may in the opinion of counsel for the Company be
appropriate to permit the Company, in light of the then existence
or non-existence of an effective registration statement under the
Act in respect to such Common Stock, to issue the Common Stock in
compliance with the provision of the Securities Act of 1933 or any
comparable federal or state law. Holder, however, shall not be
required to extend any warranty or indemnity with respect to
information it provides to the Company. In addition, Holder
shall, however, retain the rights and benefits described in the
Registration Rights Agreement of even date herewith between the
Holder and the Company on the form of Schedule 1 hereto.
SECTION 2.04 Anti-Dilution Provisions.
(a) If, prior to the expiration or exercise of the
conversion rights set forth in this Debenture, the Company shall
issue any shares of its Common Stock as a stock dividend or
subdivide the number of outstanding shares of Common Stock in to a
greater number of shares, then the Conversion rate of the shares
of Common Stock convertible pursuant to this Debenture in effect
at the time of such action shall be proportionately reduced and
the number of shares at the time convertible pursuant to the
Debenture shall be proportionately increased; and conversely, in
the event the Company shall contract the number of outstanding
shares of Common Stock by combining such shares into a smaller
number of shares, then the Conversion Price per share of the
shares of Common Stock convertible pursuant to this Debenture in
effect at the time of such action shall be proportionately
increased and the number of shares at the time convertible
pursuant to this Debenture shall be proportionately decreased. If
the Company shall, at any time during the life of this Debenture,
declare a dividend payable in cash on its Common Stock and shall
at substantially the same time offer to its stockholders a right
to purchase new Common Stock from the proceeds of such dividend or
for an amount substantially equal to the dividend, all Common
Stock so issued shall, for the purpose of this Debenture, be
deemed to have been issued as stock dividend. Any dividend paid
or distributed upon the Common Stock in stock of any other class
or securities convertible into shares of Common Stock shall be
treated as a dividend paid in Common Stock to the extent that
shares of Common Stock are issuable upon the conversion thereof.
For purposes hereof the issuance of any options to purchase, or
securities convertible into, Common Stock (or the direct issuance
of Common Stock other than the exercise of options or convertible
securities) for a price or at an exercise price per share less
than the per share market value of Common Stock at the time of
issuance shall be deemed a stock dividend of the number of shares
equal to the number of shares of Common Stock represented by the
issuance below market value represented by the issuance below
market value on a fully diluted basis. In addition, to the extent
that the aggregate issuance after the date of this Debenture (the
"Issue Date") to affiliates of the Company of (i) Common Stock
represented by the issuance below market value (other than upon
the exercise of options or convertible securities), (ii) options
to purchase Common Stock and (iii) securities convertible into
Common Stock, exceeds (on a fully diluted basis), five percent
(5%) of the outstanding shares of Common Stock as of the Issue
Date, such excess shall be deemed a stock dividend for purposes of
this Section 2.04.
(b) If, prior to the expiration or exercise of the
conversion rights of this Debenture, the Company shall be
recapitalized by reclassifying its outstanding Common Stock, $0.10
par value, into stock with a different par value, or the Company
or a successor corporation shall consolidate or merge with or
convey all or substantially all of its or any successor
corporation's property and assets to any other corporation or
corporations, the Holder shall immediately thereafter have the
right to purchase or convert, such shares of stock, securities or
assets as may be issued or payable with respect to, or in exchange
for, the number of shares of Common Stock of the Company
theretofore convertible upon the conversion of this Debenture.
The amount of any stock, securities or assets which a Holder
becomes entitled to purchase under this Section 2.04(b) and the
Conversion Price therefore shall be proportionately adjusted
thereafter in the same manner as provided by this Section 2.04 for
Common Stock.
(c) When any adjustment is required to be made under this
Section 2.04, the Company shall forthwith determine such
adjustment and (i) prepare and retain in its file a statement
describing in reasonable detail the method used in arriving at the
adjustment; and (ii) cause a copy of such statement to be mailed
to the Holder within ten days after the date when the
circumstances giving rise to the adjustment occurred.
(d) In case:
(i) the Company shall take a record of the holders of
its Common Stock for the purpose of entitling them to receive a
dividend payable otherwise than in cash, or any other distribution
in respect to the Common Stock (including cash), pursuant to,
without limitation, any spin-off, split-off, or distribution of
the Company's assets, or
(ii) the Company shall take a record of the holders of
its common stock for the purpose of entitling them to subscribe
for or Purchase any shares of stock of any class or to receive any
rights, or
(iii) of any classification, reclassification, or other
reorganization of the capital stock of the Company, consolidation
or merger of the Company with or into another corporation, or
conveyance of all or substantially all of the assets of the
Company; or
(iv) of the voluntary or involuntary dissolution,
liquidation, or winding up of the Company;then, and as in any such
case, the Company shall mail to the Holder, at least twenty days
prior thereto, a notice stating the date or expected date on which
a record is to be taken for the purpose of such dividend,
distribution or rights, or the date on which such classification,
reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation, or winding up is to take
place, as the case may be. Such notice shall also specify the date
or expected date, if any is to be fixed, as of which holders of
Common Stock of record shall be entitled to participate in such
dividend, distribution or rights, or shall be entitled to exchange
their shares of Common Stock for securities or other property
deliverable upon such classification, reclassification,
reorganization, consolidation, merger, conveyance, dissolution,
liquidation, or winding up, as the case may be.
(e) In case the Company, at any time prior to the expiration
of the conversion rights of this Debenture shall sell all or
substantially all of its property or dissolve, liquidate, or wind
up its affairs, a Holder may thereafter elect by notice of
conversion prior to the effective date of such action to receive
upon exercise hereof in lieu of each share of Common Stock of the
Company which it would have been entitled to receive, the same
kind and amount of any securities or assets as may be issuable,
distributable, or payable upon any such sale, dissolution,
liquidation, or winding up with respect to each share of Common
Stock of the Company.
(f) The Company will not, by amendment of its Articles of
Incorporation or through reorganization, consolidation, merger,
dissolution or sale of assets, or by any other voluntary act or
deed, avoid or seek to avoid the observance or performance of any
of the covenants. stipulations or conditions to be observed or
performed hereunder by the Company, but will at all times in good
faith assist in so far as it is able, in the carrying out of all
provisions hereof, and in the taking of all other legally
available action which may be necessary in order to protect the
rights of Holders against dilution. Without limiting the
generality of the foregoing, the Company agrees that it will not
increase the par value of shares of Common Stock above the
Purchase Price then in effect, and that, before taking any action
which would cause an adjustment reducing the Conversion Price
hereunder below the then par value of the shares of stock issuable
upon exercise of the conversion rights evidenced hereby, the
Company will take any corporate action which may, in the opinion
of its counsel, be necessary in order that the Company may validly
and legally issue fully paid and nonassessable shares of such
stock at the Conversion Price so adjusted.
ARTICLE III: Default
SECTION 3.01 Events of Default.
The following events shall constitute an event of default
under this Debenture:
(a) The failure of the Company to pay the principal due upon
the Debenture on or before the due date therefor.
(b) The Company shall Commence any voluntary proceeding
under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, receivership, dissolution, or liquidation
law or statute of any Jurisdiction, whether now or hereafter in
effect, or the Company shall be adjudicated insolvent or bankrupt
by a decree of a Court of competent jurisdiction; or the Company
shall petition or apply for, acquiesce in, or assent to, the
appointment of any receiver or trustee of the Company or for all
or a substantial part of the property of the Company; or the
Company shall make an assignment for the benefit of creditors, or
the Company shall admit in writing its inability to pay its debts
as they mature.
(c) There shall be commenced against the Company a
proceeding relating to the Company under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt,
receivership, dissolution, or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect, and any such
proceeding shall remain undismissed for a period of sixty (60)
days or the Company by any act indicates its consent to, approval
of, or acquiescence in, any such proceeding; or a receiver or
trustee shall be appointed for the Company or for a substantial
part of the property of the Company and any such receivership or
trusteeship shall remain undischarged for a period of sixty (60)
days; or a warrant of attachment, execution, or process shall be
issued against any substantial part of the property of the
Company, and the same shall not dismissed or bonded within sixty
(60) days after levy.
(d) A judgment shall be rendered against the Company in an
amount in excess of $100,000 and the same shall not be discharged
or execution thereon stayed pending appeal within sixty (60) days
from the date of the judgment; or the Company shall not have
discharged such judgment within sixty (60) days after the
expiration of any such stay.
SECTION 3.02 Acceleration.
On the happening of any one or more of such events of
default, this Debenture shall, upon the written election of
Holder, forthwith mature and become due and payable, without
presentment, demand, protest or notice, all of which are hereby
waived. No default shall have the effect of canceling or otherwise
impairing the conversion rights of Holder set forth herein.
ARTICLE IV: Miscellaneous
SECTION 4.O1 Debenture.
Upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this
Debenture, and (in the case of loss, theft, or destruction) upon
delivery of an indemnity bond in such reasonable amount as the
Company may determine or other form of indemnity satisfactory to
the Company, or (in the case of mutilation) upon surrender and
cancellation of such Debenture, the Company at its expense will
execute and deliver, in lieu thereof, a new Debenture of like
tenor dated the Issue Date. The rights of Holder pursuant to and
under the terms of the Debenture are absolute and independent and
shall not be subject to set-off of any kind.
SECTION 4.02 Transfer of Debenture.
No transfer of this Debenture shall be valid unless:
(a) made at the principal office of the Company (i) by the
Holder in person or by duly authorized attorney, the name of the
transferee being noted on this Debenture by the Company or (ii) by
surrender and cancellation of this Debenture and upon such
cancellation, a new Debenture of the same principal amount and
tenor will be issued to the transferee in exchange therefore; and
(b) made in conformity with the terms of that certain
Settlement Agreement entered into by and between the Company and
Holder and dated as of even date herewith. This restriction on
transfer is in addition to restrictions noted in the legend on the
face hereof.
IN WITNESS WHEREOF, this Debenture is executed and delivered
as of the date first above written.
WILLIAMS INDUSTRIES, INCORPORATED
By:___________________
Its: President
$90,000 Prime Plus 2.5%
March 27, 1997
WILLIAMS INDUSTRIES, INCORPORATED
INTEREST BEARING CONVERTIBLE DEBENTURE
due February 1, 2001
WILLIAMS INDUSTRIES, INCORPORATED, a corporation organized and
existing under the laws of the commonwealth of Virginia,
hereinafter referred to as "WII," for value received, hereby
promises to pay to the Federal Deposit Insurance Corporation, as
receiver for the National Bank of Washington and the Washington
Bank of Virginia, or its assigns (hereinafter "Holder"), the
principal sum of Ninety Thousand and no/100 Dollars ($90,000), on
or before February 1, 2001 (the "Maturity Date"), at the office of
the Holder, unless the same is sooner paid or converted as
hereinafter described.
1. CONVERSION. The Holder has the right, at its option, at any
time before or after the Maturity Date upon five days notice to
WII at its registered office in the Commonwealth of Virginia and
upon surrender of this Debenture, to convert all or any portion of
the unpaid principal amount hereof into fully paid and non-
assessable common shares of WII, $0.10 par value, as such shares
shall be constituted at the date of conversion, provided, however,
that any partial conversion shall be in principal increments of
$25,000. The number of shares of such stock shall be calculated
to represent Three and Six Tenths Percent (3.6%) of the
outstanding shares as of the date of conversion (such 3.6% to be
determined on a fully diluted basis and after giving pro forma
effect to the issuance of common stock pursuant to any
subscriptions, agreements, options, securities, conversion or
other rights or commitments outstanding as of the date of
conversion, shown on Schedule A hereto, rounded up to the next
full share) assuming that the principal amount of this Debenture
at the time of conversion is $90,000; in the event of a partial
conversion of this Debenture or that there has been a prepayment
of the Debenture in accordance with Section 3 hereof prior to a
conversion hereunder, the Holder shall be entitled to the number
of shares then representing One Percent (1%) of the then
outstanding common shares on a fully-diluted basis for each
$25,000 of outstanding principal hereunder so converted.
2. PAYMENT OF INTEREST. Interest shall accrue from March 31,
1997, and shall be payable quarterly in arrears at the NationsBank
Prime rate as in effect from time to time, plus two and one half
of one percent (2.5%) per annum. However, any principal of, and
to the extent permitted by law, any interest on this Debenture,
and any other sum payable hereunder, which is not paid when due
shall bear interest, from the date due and payable until paid,
payable on demand, at a rate per annum equal to the NationsBank
Prime rate as in effect from time to time, plus six and one-half
percent (6.5%) per annum.
3. PREPAYMENT. WII has the right to prepay any portion of the
principal balance hereof at any time before maturity upon thirty
days notice to holder, provided that: (a) any such payment shall
be applied first to accrued interest outstanding, and (b) any such
prepayments of principal shall be in increments of $25,000.
Notwithstanding intended prepayment, Holder may elect to convert
this Debenture into common stock in accordance with Section 1
hereof at any time after receipt of such notice and prior to the
expiration of the notice period or the receipt of payment,
whichever is later.
4. TRANSFER. WII makes no warranty or representation concerning
the registration for sale of this Debenture or the shares into
which it is convertible, under the Securities Act of 1933, as
amended, or their listing on any recognized securities exchange.
In the event of any conversion of this Debenture, Holder may not
sell or transfer by public sale more than 1/8 of the shares issued
(or issuable pursuant hereto if only part of the principal balance
is converted) during any three month period during the period
commencing on March 31, 1997 and ending on December 31, 1998.
However, there shall be no restrictions on private sales at any
time or upon public sales on or after January 1, 1999, subject to
compliance with all applicable law. All certificates issued upon
conversion (which exceed 1/8 of the issuable shares during any
three month period) shall bear a legend indicating that the shares
are subject to restrictions on transfer pursuant to this section,
unless such shares are issued on or after January 1, 1999. So
long as the principal balance of this Debenture is not then due
and payable in accordance with the terms of Section 5 hereof, the
Holder shall give WII at least three (3) business days' prior
notice of the Holder's intent to sell this Debenture or any shares
received by it in connection with any conversion hereunder.
5. REMEDIES. In addition to any other rights and remedies
available to the Holder, the principal balance of this Debenture
shall become immediately due and payable without notice or demand
in the event of: (i) a Default as defined in that certain
Settlement Agreement of even date herewith among WII, NationsBank,
N.A., and certain other parties (as amended, restated,
supplemented and modified from time to time, the "Settlement
Agreement"); or (ii) the declaration or payment of dividends
(other than those payable in common stock) in respect of any
capital stock of WII.
6. EXPENSES. If the Holder retains an attorney in connection
with any default under or at maturity of or to collect, enforce,
or defend this Debenture or the Debenture Guaranty as defined in
the Settlement Agreement in any lawsuit or in any probate,
reorganization, bankruptcy, arbitration or other proceeding, or if
WII or any guarantor under the Debenture Guaranty sues the Holder
in connection with this Debenture or the Debenture Guaranty, then
WII agrees to pay to the Holder, in addition to principal,
interest and any other sums owing to Holder hereunder and under
the Debenture Guaranty, all costs and expenses incurred by the
Holder in trying to collect this Debenture or in any such suit or
proceeding, including attorney's fees.
IN WITNESS WHEREOF Williams Industries, Incorporated, has caused
this Debenture to be signed in its name by the signature of its
President and its Secretary and has caused its corporate seal to
be hereto affixed.
WILLIAMS INDUSTRIES,
INCORPORATED
By: __________________ Attest: ________________
President Secretary
<TABLE>
SCHEDULE A:
<CAPTION>
OUTSTANDING STOCK AND COMMITMENTS
(Williams Industries, Incorporated Common Stock, $0.10 Par Value):
<S> <C> <C>
Shares Outstanding at 1/31/97: 2,598,167
Commitments:
First Tennessee Debenture 70,000
Pribyla Settlement 215,000
FDIC (Atchison & Keller) Settlement 110,294
Bank Group Settlement:
NationsBank (16.4%) 613,660
FDIC (3.6%) 134,706
Total Bank Group Settlement 748,366
>>><<<
Total Pro Forma Outstanding 3,741,827
</TABLE>
$410,000 Prime Plus 2.5%
March 27, 1997
WILLIAMS INDUSTRIES, INCORPORATED
INTEREST BEARING CONVERTIBLE DEBENTURE
due February 1, 2001
WILLIAMS INDUSTRIES, INCORPORATED, a corporation organized and
existing under the laws of the commonwealth of Virginia,
hereinafter referred to as "WII," for value received, hereby
promises to pay to NATIONSBANK, N.A. or its assigns (hereinafter
"Holder"), the principal sum of Four Hundred and Ten Thousand and
no/100 Dollars ($410,000), on or before February 1, 2001 (the
"Maturity Date"), at the office of the Holder, unless the same is
sooner paid or converted as hereinafter described.
1. CONVERSION. The Holder has the right, at its option, at any
time before or after the Maturity Date upon five days notice to
WII at its registered office in the Commonwealth of Virginia and
upon surrender of this Debenture, to convert all or any portion of
the unpaid principal amount hereof into fully paid and non-
assessable common shares of WII, $0.10 par value, as such shares
shall be constituted at the date of conversion, provided, however,
that any partial conversion shall be in principal increments of
$25,000. The number of shares of such stock shall be calculated
to represent Sixteen and Four Tenths Percent (16.4%) of the
outstanding shares as of the date of conversion (such 16.4% to be
determined on a fully diluted basis and after giving pro forma
effect to the issuance of common stock pursuant to any
subscriptions, agreements, options, securities, conversion or
other rights or commitments outstanding as of the date of
conversion, shown on Schedule A hereto, rounded up to the next
full share) assuming that the principal amount of this Debenture
at the time of conversion is $410,000; in the event of a partial
conversion of this Debenture or that there has been a prepayment
of the Debenture in accordance with Section 3 hereof prior to a
conversion hereunder, the Holder shall be entitled to the number
of shares then representing One Percent (1%) of the then
outstanding common shares on a fully-diluted basis for each
$25,000 of outstanding principal hereunder so converted.
2. PAYMENT OF INTEREST. Interest shall accrue from March 31,
1997, and shall be payable quarterly in arrears at the NationsBank
Prime rate as in effect from time to time, plus two and one half
of one percent (2.5%) per annum. However, any principal of, and
to the extent permitted by law, any interest on this Debenture,
and any other sum payable hereunder, which is not paid when due
shall bear interest, from the date due and payable until paid,
payable on demand, at a rate per annum equal to the NationsBank
Prime rate as in effect from time to time, plus six and one-half
percent (6.5%) per annum.
3. PREPAYMENT. WII has the right to prepay any portion of the
principal balance hereof at any time before maturity upon thirty
days notice to holder, provided that: (a) any such payment shall
be applied first to accrued interest outstanding, and (b) any such
prepayments of principal shall be in increments of $25,000.
Notwithstanding intended prepayment, Holder may elect to convert
this Debenture into common stock in accordance with Section 1
hereof at any time after receipt of such notice and prior to the
expiration of the notice period or the receipt of payment,
whichever is later.
4. TRANSFER. WII makes no warranty or representation concerning
the registration for sale of this Debenture or the shares into
which it is convertible, under the Securities Act of 1933, as
amended, or their listing on any recognized securities exchange.
In the event of any conversion of this Debenture, Holder may not
sell or transfer by public sale more than 1/8 of the shares issued
(or issuable pursuant hereto if only part of the principal balance
is converted) during any three month period during the period
commencing on March 31, 1997 and ending on December 31, 1998.
However, there shall be no restrictions on private sales at any
time or upon public sales on or after January 1, 1999, subject to
compliance with all applicable law. All certificates issued upon
conversion (which exceed 1/8 of the issuable shares during any
three month period) shall bear a legend indicating that the shares
are subject to restrictions on transfer pursuant to this section,
unless such shares are issued on or after January 1, 1999. So
long as the principal balance of this Debenture is not then due
and payable in accordance with the terms of Section 5 hereof, the
Holder shall give WII at least three (3) business days' prior
notice of the Holder's intent to sell this Debenture or any shares
received by it in connection with any conversion hereunder.
5. REMEDIES. In addition to any other rights and remedies
available to the Holder, the principal balance of this Debenture
shall become immediately due and payable without notice or demand
in the event of: (i) a Default as defined in that certain
Settlement Agreement of even date herewith among WII, NationsBank,
N.A., and certain other parties (as amended, restated,
supplemented and modified from time to time, the "Settlement
Agreement"); or (ii) the declaration or payment of dividends
(other than those payable in common stock) in respect of any
capital stock of WII.
6. EXPENSES. If the Holder retains an attorney in connection
with any default under or at maturity of or to collect, enforce,
or defend this Debenture or the Debenture Guaranty as defined in
the Settlement Agreement in any lawsuit or in any probate,
reorganization, bankruptcy, arbitration or other proceeding, or if
WII or any guarantor under the Debenture Guaranty sues the Holder
in connection with this Debenture or the Debenture Guaranty, then
WII agrees to pay to the Holder, in addition to principal,
interest and any other sums owing to Holder hereunder and under
the Debenture Guaranty, all costs and expenses incurred by the
Holder in trying to collect this Debenture or in any such suit or
proceeding, including attorney's fees.
IN WITNESS WHEREOF Williams Industries, Incorporated, has caused
this Debenture to be signed in its name by the signature of its
President and its Secretary and has caused its corporate seal to
be hereto affixed.
WILLIAMS INDUSTRIES,
INCORPORATED
By: __________________ Attest: ________________
President Secretary
<TABLE>
SCHEDULE A:
<CAPTION>
OUTSTANDING STOCK AND COMMITMENTS
(Williams Industries, Incorporated Common Stock, $0.10 Par Value):
<S> <C> <C>
Shares Outstanding at 1/31/97: 2,598,167
Commitments:
First Tennessee Debenture 70,000
Pribyla Settlement 215,000
FDIC (Atchison & Keller) Settlement 110,294
Bank Group Settlement:
NationsBank (16.4%) 613,660
FDIC (3.6%) 134,706
Total Bank Group Settlement 748,366
>>><<<
Total Pro Forma Outstanding 3,741,827
</TABLE>
SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT (this "Agreement") is made as of
this _31st_ day of March, 1997, by and among WILLIAMS INDUSTRIES,
INC., a corporation organized and existing under the laws of the
Commonwealth of Virginia ("WII"), WILLIAMS ENTERPRISES, INC., a
corporation organized and existing under the laws of the District
of Columbia ("WEI"), WILLIAMS EQUIPMENT CORPORATION, a corporation
organized and existing under the laws of the District of Columbia
("WEC"), ARTHUR PHILLIPS & COMPANY, INCORPORATED, a corporation
formerly organized and existing under the laws of the State of
Maryland ("APCI"), WILLIAMS STEEL ERECTION COMPANY, INC., a
corporation organized and existing under the laws of the
Commonwealth of Virginia ("WSECI"), UNION IRON WORKS COMPANY, a
corporation formerly organized and existing under the laws of the
State of Delaware ("UIWC"), IAF TRANSFER CORPORATION, a
corporation organized and existing under the laws of the
Commonwealth of Virginia and previously known as Industrial Alloy
Fabricators, Inc. ("IAFI"), CRANES UNLIMITED, INC., a corporation
formerly organized and existing under the laws of the Commonwealth
of Virginia ("CUI"), PIEDMONT METAL PRODUCTS, INC., a corporation
organized and existing under the laws of the Commonwealth of
Virginia ("PMPI"), WILLIAMS MID-ATLANTIC HOLDINGS, INC., a
corporation formerly organized and existing under the laws of the
Commonwealth of Pennsylvania ("WMAHI"), formerly known as Delaware
Valley Erectors, Inc. ("DVEI"), CAPITOL TOWER CRANES, INC., a
corporation formerly organized and existing under the laws of the
Commonwealth of Virginia ("CTCI"), GREENWAY CORPORATION, a
corporation organized and existing under the laws of the State of
Maryland ("GC"), JOHN F. BEASLEY CONSTRUCTION COMPANY, a
corporation formerly organized and existing under the laws of the
State of Texas and a debtor and debtor in possession ("JFBCC"),
HARBOR STEEL ERECTORS, INCORPORATED, a corporation formerly
organized and existing under the laws of the State of Maryland
("HSEI"), WILLIAMS ENVIRONMENTAL SERVICES, INC., a corporation
organized and existing under the laws of the Commonwealth of
Virginia ("WESI"), WILLIAMS ENTERPRISES OF VIRGINIA, INC., a
corporation organized and existing under the laws of the
Commonwealth of Virginia and formerly known as Williams Marine
Construction Corporation ("WEVI"), WILLIAMS INDUSTRIES INSURANCE
TRUST, a trust organized and existing under the laws of the
Commonwealth of Virginia ("WIIT"), WILLIAMS BRIDGE COMPANY, a
corporation organized and existing under the laws of the
Commonwealth of Virginia ("WBC"), INTER-HARBOR HOLDING COMPANY,
INC., a corporation formerly organized and existing under the laws
of the State of Maryland ("IHHC"), HARBOR IRON WORKS, INC., a
corporation formerly organized and existing under the laws of the
State of Maryland ("HIWI") and CREATIVE IRON, INC., a corporation
formerly organized and existing under the laws of the Commonwealth
of Virginia ("CII"), BEASLEY ENGINEERING COMPANY, a corporation
formerly organized and existing under the laws of the State of
Texas ("BEC"), BEASLEY CONSTRUCTION COMPANY, a corporation
formerly organized and existing under the laws of the State of
Texas and a debtor and debtor in possession ("BCC") and WII REALTY
MANAGEMENT, INC., a corporation organized and existing under the
laws of the Commonwealth of Virginia ("WRMI") (WII, WEI, WEC,
APCI, WSECI, UIWC, IAFI, CUI, PMPI, WMAHI, CTCI, GC, JFBCC, WESI,
HSEI, WEVI, WIIT, WBC, IHHC, HIWI, CII, BEC, BCC and WRMI are
herein collectively referred to as the "Borrowers" and
individually as a "Borrower"); NATIONSBANK, N.A., a national
banking association, in its capacity as a lender, formerly known
as NationsBank of Virginia, N.A., formerly known as Sovran Bank,
N.A. ("NationsBank/Virginia"), NATIONSBANK, N.A., a national
banking association, successor by merger to American Security
Bank, N.A., a national banking association ("NationsBank/ASB" and,
collectively with NationsBank/Virginia, "NationsBank"), and the
FEDERAL DEPOSIT INSURANCE CORPORATION AS RECEIVER OF THE NATIONAL
BANK OF WASHINGTON (which receivership, or its predecessor bank,
is referred to as "NBW," and FEDERAL DEPOSIT INSURANCE CORPORATION
AS RECEIVER OF THE WASHINGTON BANK OF VIRGINIA (which
receivership, or its predecessor bank, is referred to as "TWB,"
and which two receiverships collectively are referred to as
"FDIC"); (NationsBank, NBW, TWB and the FDIC, in its capacity as
receiver for NBW and TWB, are herein collectively referred to as
the "Lenders" and individually as a "Lender"); and NATIONSBANK,
N.A., in its capacity as agent for the Lenders pursuant to the
Bank Group Loan Documents as hereinafter defined (the "Agent").
RECITALS
WHEREAS, the Borrowers (other than BCC, BEC, IHHC and WRMI),
CONCRETE STRUCTURES, INC., a former subsidiary of WII ("CSI"),
Concrete ERECTORS, Inc., a corporation organized and existing
under the laws of the Commonwealth of Virginia ("CEI"), WILLIAMS
MISCELLANEOUS ERECTION CO., INC., a corporation formerly organized
and existing under the laws of the Commonwealth of Virginia
("WMECI"), and Dominion Caisson Corporation, a former subsidiary
of WII ("DCC") applied to the Lenders for loans, advances and
other financial accommodations under the provisions of that
certain Amended and Restated Credit and Security Agreement dated
March 30, 1990 by and among CSI, CEI, WMECI, DCC and all of the
Borrowers (except for WBC, IHHC, BEC, BCC and WRMI), the Lenders
and the Agent, as amended by (i) that certain First Amendment to
Amended and Restated Credit and Security Agreement dated July 16,
1991 by and among CSI, CEI, WMECI, DCC and all of the Borrowers
(except for WBC, IHHC, BEC, BCC and WRMI), the Lenders and the
Agent, (ii) that certain Second Amendment to Amended and Restated
Credit and Security Agreement dated August 1, 1992 by and among
CSI, CEI, WMECI and all of the Borrowers (other than IHHC, BEC,
BCC and WRMI), the Lenders and the Agent, (iii) that certain Debt
Restructuring Agreement dated September 14, 1993 by and among the
Borrowers (other than WRMI), Williams Miscellaneous Metals Group,
a general partnership among UIWC and CII ("WMMG"), the Lenders and
the Agent, and (iv) that certain Amended and Restated Debt
Restructuring Agreement dated as of November 30, 1994 by and among
the Borrowers (other than WRMI), the Lenders and the Agent, as
amended by a letter agreement dated on or about August 28, 1995
and a Second Modification to Amended and Restated Debt
Restructuring Agreement dated as of March 14, 1996 (the Amended
and Restated Credit and Security Agreement, as amended, restated,
supplemented and modified at any time and from time to time, is
herein collectively referred to as the "Credit Agreement"); and
WHEREAS, under and subject to the provisions of the Credit
Agreement, NationsBank/Virginia, NationsBank/ASB, and TWB agreed
(i) to make loans (collectively, the "Revolving Credit Loans" and
individually, a "Revolving Credit Loan") to the Borrowers (except
IHHC, BEC, BCC and WRMI) under a revolving credit facility in a
principal amount not to exceed, in the aggregate, Eight Million
Dollars ($8,000,000) and (ii) to make term loans to the Borrowers
(other than IHHC, BEC, BCC and WRMI) under a term loan facility in
the aggregate principal amount of Seventeen Million Dollars
($17,000,000). In addition, under and subject to the provisions
of the Credit Agreement, (i) NationsBank/Virginia, NationsBank/ASB
and NBW agreed to issue one or more letters of credit
(collectively, the "Letters of Credit" and individually, a "Letter
of Credit") under a letter of credit facility available to the
Borrowers (other than IHHC, BEC, BCC and WRMI) in a maximum
principal amount of Four Million Seven Hundred Thousand Dollars
($4,700,000) (the "Bank Group Letter of Credit Facility")
(although NBW did not fund its share of any drawings thereunder)
and (ii) NationsBank/Virginia agreed to issue one or more
additional letters of credit under a separate letter of credit
facility in a maximum principal amount of Sixty-Nine Thousand
Ninety-Six Dollars ($69,096); and
WHEREAS, the Revolving Credit Loans are evidenced by, and are
to be repaid with interest in accordance with, the terms and
conditions of (i) that certain Amended and Restated Revolving
Credit Note dated March 30, 1990 from CSI, CEI, WMECI, DCC and all
of the Borrowers (except for IHHC, WBC, BEC, BCC and WRMI), as
joint and several co-makers, payable to the order of
NationsBank/ASB, as amended by that certain Revolving Credit Note
Modification Agreement dated September 14, 1993 by and among WMMG,
all of the Borrowers (except BCC, BEC and WRMI) and
NationsBank/ASB and that certain Second Revolving Credit Note
Modification Agreement dated November 30, 1994 by and among CSI,
all of the Borrowers (except BCC, BEC and WRMI) and
NationsBank/ASB (as amended, restated, supplemented or otherwise
modified the "NationsBank/ASB Revolving Credit Note"), (ii) that
certain Amended and Restated Revolving Credit Note dated March 30,
1990 from CSI, CEI, WMECI, DCC, and all of the Borrowers (except
for IHHC, WBC, BEC, BCC and WRMI), as joint and several co-makers,
payable to the order of TWB, as amended by that certain Revolving
Credit Note Modification Agreement dated September 14, 1993 by and
among WMMG, all of the Borrowers (except BCC, BEC and WRMI) and
the FDIC, in its capacity as receiver for TWB and that certain
Second Revolving Credit Note Modification Agreement dated
November 30, 1994 by and among CSI, all of the Borrowers (except
BCC, BEC and WRMI) and the FDIC, in its capacity as receiver for
TWB (as amended, restated, supplemented or otherwise modified, the
"TWB Revolving Credit Note"), and (iii) that certain Amended and
Restated Revolving Credit Note dated March 30, 1990 from CSI, CEI,
WMECI, DCC and all of the Borrowers (except for IHHC, WBC, BEC,
BCC and WRMI), as joint and several co-makers, payable to the
order of Sovran Bank, N.A., predecessor in interest to
NationsBank/Virginia, as amended by that certain Revolving Credit
Note Modification Agreement dated September 14, 1993 by and among
WMMG, all of the Borrowers (except BCC, BEC and WRMI) and
NationsBank/Virginia and that certain Second Revolving Credit Note
Modification Agreement dated November 30, 1994 by and among CSI,
all of the Borrowers (except BCC, BEC and WRMI) and
NationsBank/Virginia (as amended, restated, supplemented or
otherwise modified, the "NationsBank/Virginia Revolving Credit
Note") (the NationsBank/ASB Revolving Credit Note, the TWB
Revolving Credit Note and the NationsBank/Virginia Revolving
Credit Note are herein collectively referred to as the "Revolving
Credit Notes"); and
WHEREAS, the Term Loans are evidenced by, and are to be
repaid with interest in accordance with, the terms and conditions
of (i) that certain Amended and Restated Term Note dated March 30,
1990 from CSI, CEI, WMECI, DCC, and all of the Borrowers (except
for IHHC, WBC, BEC, BCC and WRMI), as joint and several co-makers,
payable to the order of NationsBank/ASB in the original principal
amount of Three Million Nine Hundred Thirty-four Thousand Nine
Hundred Twenty-Seven Dollars ($3,934,927), as amended by that
certain Term Note Modification Agreement dated September 14, 1993
by and among WMMG, all of the Borrowers (except BCC, BEC and WRMI)
and NationsBank/ASB and that certain Second Term Note Modification
Agreement dated November 30, 1994 by and among CSI, all of the
Borrowers (except BCC, BEC and WRMI) and NationsBank/ASB (as
amended, restated, supplemented or otherwise modified, the
"NationsBank/ASB Term Note"), (ii) that certain Amended and
Restated Term Note dated March 30, 1990 from CSI, CEI, WMECI, DCC,
and all of the Borrowers (except for IHHC, WBC, BEC, BCC and
WRMI), as joint and several co-makers, payable to the order of TWB
in the original principal amount of One Million Nine Hundred
Sixty-Seven Thousand Four Hundred Sixty-Three Dollars
($1,967,463), as amended by that certain Term Note Modification
Agreement dated September 14, 1993 by and among WMMG, all of the
Borrowers (except BCC, BEC and WRMI) and TWB and that certain
Second Term Note Modification Agreement dated November 30, 1994 by
and among CSI, all of the Borrowers (except BCC, BEC and WRMI) and
the FDIC, in its capacity as receiver for TWB (as amended,
restated, supplemented or otherwise modified the "TWB Term Note"),
and (iii) that certain Amended and Restated Term Note dated March
30, 1990 from CSI, CEI, WMECI, DCC, and all of the Borrowers
(except for IHHC, WBC, BEC, BCC and WRMI), as joint and several
co-makers, payable to the order of Sovran Bank, N.A., predecessor
in interest to NationsBank/Virginia in the original principal
amount of Three Million Nine Hundred Thirty-Four Thousand Nine
Hundred Twenty-Seven Dollars ($3,934,927), as amended by that
certain Term Note Modification Agreement dated September 14, 1993
by and among WMMG, all of the Borrowers (except BCC, BEC and WRMI)
and NationsBank/Virginia and that certain Second Term Note
Modification Agreement dated November 30, 1994 by and among CSI,
all of the Borrowers (except BCC, BEC and WRMI) and
NationsBank/Virginia (as amended, restated, supplemented or
otherwise modified, the "NationsBank/Virginia Term Note") (the
NationsBank/ASB Term Note, the TWB Term Note and the
NationsBank/Virginia Term Note are herein collectively referred to
as the "Term Notes"); and
WHEREAS, the joint and several obligations of the Borrowers
(other than WRMI) under and in connection with the Bank Group
Letter of Credit Facility (the "Letter of Credit Obligations") are
evidenced by, and are to be repaid with interest in accordance
with, the terms and conditions of (i) that certain Amended and
Restated Letter of Credit Note dated March 30, 1990 from CSI, CEI,
WMECI, DCC, and all of the Borrowers (except for IHHC, WBC, BEC,
BCC and WRMI), as joint and several co-makers, payable to the
order of NationsBank/ASB, as amended by that certain Letter of
Credit Note Modification Agreement dated September 14, 1993 by and
among WMMG, all of the Borrowers (except BCC, BEC and WRMI) and
NationsBank/ASB and that certain Second Letter of Credit Note
Modification Agreement dated November 30, 1994 by and among CSI,
all of the Borrowers (except BCC, BEC and WRMI) and
NationsBank/ASB (as amended, restated, supplemented or otherwise
modified, the "NationsBank/ASB Letter of Credit Note") and
(ii) that certain Amended and Restated Letter of Credit Note dated
March 30, 1990 from CSI, CEI, WMECI, DCC, and all of the Borrowers
(except for IHHC, WBC, BEC, BCC and WRMI), as joint and several
co-makers, payable to the order of Sovran Bank, N.A., predecessor
in interest to NationsBank/Virginia, as amended by that certain
Letter of Credit Note Modification Agreement dated September 14,
1993 by and among WMMG, all of the Borrowers (except BCC, BEC and
WRMI) and NationsBank/Virginia and that certain Second Letter of
Credit Note Modification Agreement dated November 30, 1994 by and
among CSI, all of the Borrowers (except BCC, BEC and WRMI) and
NationsBank/Virginia (as amended, restated, supplemented or
otherwise modified, the "NationsBank/Virginia Letter of Credit
Note") (the NationsBank/ASB Letter of Credit Note and the
NationsBank/Virginia Letter of Credit Note are herein collectively
referred to as the "Letter of Credit Notes") (the Revolving Credit
Notes, the Term Notes, and the Letter of Credit Notes are herein
collectively referred to as the "Bank Group Notes" and
individually as a "Bank Group Note"); and
WHEREAS, the "Obligations" (as defined in the Credit
Agreement and herein collectively referred to as the "Bank Group
Obligations"), including, without limitation, the Revolving Credit
Loans, the Term Loans and the Letter of Credit Obligations, are
secured by, among other things, the Collateral as defined in the
Credit Agreement (as so defined, the "Collateral"). As used
herein and in the Credit Agreement, the term Collateral includes,
without limitation, all of each Borrower's now owned and hereafter
acquired chattel paper, contract rights, documents, instruments,
inventory, equipment, fixtures, accounts, and business records,
together with the stock of any of the Borrowers other than WII and
WRMI and includes, without limitation, (a) all of WII's rights in
the DCC Loan Documents as defined below, (b) that certain
promissory note in the original principal amount of Three Hundred
Twenty-Five Thousand Dollars ($325,000) and having an outstanding
principal balance as of the date hereof of Two Hundred Eighty-Two
Thousand Five Hundred Eighty-One Dollars ($282,581) from CSI and
payable to the order of WII and personally guaranteed by Mr.
Arthur V. Conover III and pledged to the Agent, (c) those 22,859
shares of Common Stock, $5.00 par value per share, of Atlas
Machine & Iron Works, Inc. owned by WII and pledged to the Agent,
(d) all rights of WEI and of WII, as transferee of WEI to payments
under the Navy Cranes Contract as defined in the Credit Agreement
and (e) all accounts and other assets of BCC (collectively, the
"Specified Collateral"). In addition, the Bank Group Obligations
are secured by (i) that certain Commercial Loan Deed of Trust
dated July 9, 1987 from WII to trustees for the Agent and the
Lenders and recorded in Clerk's Office of the Circuit Court of
Fairfax County, Virginia (the "Fairfax Recording Office") in Deed
Book 6787, page 500, as modified by a First Amendment to
Commercial Loan Deed of Trust dated March 30, 1990 and recorded in
the Fairfax Recording Office in Deed Book 7575, page 11 (as
amended, restated, supplemented or otherwise modified, the "Falls
Church Deed of Trust"), which Falls Church Deed of Trust covers
all of the right, title and interest of WRMI, as transferee from
WII, in and to certain real property located in Falls Church,
Virginia (the "Falls Church Property") and secures the Bank Group
Obligations to the extent of a maximum principal amount of Three
Million Two Hundred Thousand Dollars ($3,200,000), (ii) that
certain Commercial Loan Deed of Trust dated July 9, 1987 from WII
to trustees for the Agent and the Lenders and recorded in Clerk's
Office of the Circuit Court of Prince William County, Virginia
(the "Prince William Recording Office") in Deed Book 1493, page
1927, as modified by a First Amendment to Commercial Loan Deed of
Trust dated March 30, 1990 and recorded in the Prince William
Recording Office in Deed Book 1730, page 1589 (as amended,
restated, supplemented or otherwise modified, the "Manassas Deed
of Trust"), which Manassas Deed of Trust covers all of the right,
title and interest of WRMI, as transferee from WII, in and to
certain real property located in Manassas, Virginia (the "Manassas
Property") and secures the Bank Group Obligations to the extent of
a maximum principal amount of Two Million Dollars ($2,000,000),
(iii) that certain Commercial Loan Deed of Trust dated July 9,
1987 from PMPI and WII to trustees for the Agent and the Lenders
and recorded in Clerk's Office of the Circuit Court of Bedford
County, Virginia (the "Bedford Recording Office") in Deed Book
661, page 716, as modified by a First Amendment to Commercial Loan
Deed of Trust dated March 30, 1990 and recorded in the Bedford
Recording Office in Deed Book 762, page 56 (as amended, restated,
supplemented or otherwise modified, the "Bedford County Deed of
Trust"), which Bedford County Deed of Trust covers all of the
right, title and interest of PMPI and WII in and to certain real
property located in Bedford County, Virginia (the "Parcel 1
Bedford Property" and the "Parcel 2 Bedford Property",
respectively, and collectively, the "Bedford County Property") and
secures the Bank Group Obligations to the extent of a maximum
principal amount of Five Hundred Thousand Dollars ($500,000.00),
(iv) that certain Commercial Loan Deed of Trust dated July 9, 1987
from APCI to trustees for the Agent and the Lenders (as amended,
restated, supplemented or otherwise modified the "Baltimore Deed
of Trust"), which Baltimore Deed of Trust covers all of the right,
title and interest of APCI in and to certain real property located
in Baltimore, Maryland (the "Baltimore Property") and secures the
Bank Group Obligations to the extent of a maximum principal amount
of Two Hundred Thousand Dollars ($200,000), (v) that certain Deed
of Trust dated July 9, 1987 from JFBCC to trustees for the Agent
and the Lenders (as amended, restated, supplemented or otherwise
modified the "Dallas Parcel 2 Deed of Trust"), which Dallas Parcel
2 Deed of Trust covers all of the right, title and interest of
JFBCC in and to certain real property located in Dallas, Texas
(the "Second Dallas Property") and secures all of the Bank Group
Obligations, and (vi) all of the rights, title and interest of WII
in, to and under that certain loan made by WII to DCC on or about
March 4, 1992 (the "DCC Loan"), including, without limitation
(a) that certain Promissory Note dated March 4, 1992 from DCC, as
maker, payable to the order of WII in the original principal
amount of Two Hundred Twenty-Five Thousand Dollars ($225,000) (the
"DCC Note"), (b) that certain Security Agreement dated March 4,
1992 from DCC in favor of WII (the "DCC Security Agreement"), and
(c) that certain Deed of Trust dated March 4, 1992 from Dayton L.
Windham and Billie Jo Windham to certain trustees for WII (the
"DCC Deed of Trust") (the DCC Note, the DCC Security Agreement,
the DCC Deed of Trust and any and all other agreements, documents
or instruments which evidence, secure or guaranty all or any
portion of the DCC Loan are herein collectively referred to as the
"DCC Loan Documents") (the Falls Church Property, the Manassas
Property, the Bedford County Property, the Baltimore Property and
the Second Dallas Property are herein collectively referred to as
the "Properties"). In addition to the foregoing, the Letter of
Credit Obligations are secured by the "L/C Collateral" as defined
in the Credit Agreement. The Credit Agreement, the Notes, the
Falls Church Deed of Trust, the Manassas Deed of Trust, the
Bedford County Deed of Trust, the Baltimore Deed of Trust, the
Dallas Parcel 2 Deed of Trust, and any and all other agreements,
documents or instruments that evidence, secure or guaranty payment
of all or any portion of the Bank Group Obligations are herein
collectively referred to as the "Bank Group Loan Documents"; and
WHEREAS, NationsBank/Virginia is also the owner and holder of
that certain Replacement and Consolidation Note executed and
delivered by WII and made payable to NationsBank/Virginia dated as
of September 14, 1993 in the original principal amount of Three
Million Two Hundred Twenty-three Thousand Ninety-one and 66/100
Dollars ($3,223,091.66) (the "NB Real Estate Note"), which was
issued pursuant to that certain Loan Restructuring Agreement dated
as of September 14, 1993 among WII, WEC, WEI, WSECI (WEC, WEI and
WSECI are collectively referred to as the "NB Guarantors") and
NationsBank/Virginia (as amended, restated, supplemented or
otherwise modified, the "NB Restructuring Agreement"); and
WHEREAS, the obligations of WII under the NB Real Estate Note
and the NB Restructuring Agreement (collectively, the "NB
Obligations") are secured by (i) that certain Commercial Loan Deed
of Trust dated October 22, 1985 from WII to trustees for
NationsBank/Virginia, as modified by that certain Modification of
Deed of Trust dated July 15, 1986 and that certain Deed of
Appointment of Substitute Trustees and Second Modification to Deed
of Trust dated as of September 14, 1993 and recorded in the
Fairfax Recording Office in Deed Book 6253, page 1974 and in the
Prince William Recording Office in Deed Book 1345, page 1075, as
modified by a Modification of Deed of Trust dated July 15, 1986
and recorded in the Fairfax Recording Office in Deed Book 6452,
page 1274 and in the Prince William Recording Office in Deed Book
1402, page 1892 and by a Deed of Appointment of Substitute
Trustees and Second Modification to Deed of Trust dated as of
September 14, 1993 and recorded in the Fairfax Recording Office in
Deed Book 8860, page 1327 and in the Prince William Recording
Office in Deed Book 2075, page 1724 (as amended, restated,
supplemented or otherwise modified, the "NB Deed of Trust"), which
NB Deed of Trust covers all of the right, title and interest of
WII in and to the Falls Church Property and the Manassas Property,
is senior to the Falls Church Deed of Trust and the Manassas Deed
of Trust and secures the NB Obligations to the extent of a maximum
principal amount of Three Million One Hundred Thousand Dollars
($3,100,000), (ii) that certain Assignment of Leases and Rents
dated October 22, 1985 from WII to NationsBank/Virginia, as
amended by that certain Amendment of Assignment of Leases and
Rents dated July 16, 1986 (as amended, supplemented, restated or
otherwise modified, the "NB Lease Assignment"), (iii) that certain
Assignment of Leases, Rents and Profits dated September 14, 1993
from WII to NationsBank/Virginia and recorded in the Fairfax
Recording Office in Deed Book 8860, page 1332 and in the Prince
William Recording Office in Deed Book 2075, page 1724 (as amended,
supplemented, restated or otherwise modified, the "Additional NB
Lease Assignment"), (iv) that certain Guaranty of WEC dated
June 22, 1984, that certain Guaranty of WEI dated June 22, 1984,
that certain Guaranty of WSECI dated June 22, 1984, that certain
Unconditional Guaranty of WEI and WSECI dated October 22, 1985, as
amended by that certain Amendment to Unconditional Guaranty dated
July 15, 1986, that certain Guaranty of WEI dated October 22, 1985
and that certain Guaranty of WSECI dated October 22, 1985 (as
amended, supplemented, restated or otherwise modified,
collectively, the "NB Obligations Guaranties"; the NB Real Estate
Note, the NB Restructuring Agreement, the NB Deed of Trust, the NB
Lease Assignment, the Additional NB Lease Assignment, the NB
Obligations Guaranties, and any and all other agreements,
documents or instruments that evidence, secure or guaranty payment
of all or any portion of the NB Obligations are herein
collectively referred to as the "NB Loan Documents"); and
WHEREAS, WII transferred, subject to all encumbrances, to
WRMI the Falls Church Property and the Manassas Property pursuant
to a Deed dated November 27, 1996 and recorded in the Fairfax
Recording Office in Deed Book 9867, page 0893 and a Deed dated
November 27, 1996 and recorded in the Prince William Recording
Office in Deed Book 2395, page 1191, respectively, and WII intends
to transfer, subject to all encumbrances, to WRMI on the Closing
Date the Parcel 2 Bedford Property; and
WHEREAS, as of March 17, 1997, the aggregate unpaid principal
balance and accrued and unpaid interest under each of the Bank
Group Notes and the NB Real Estate Note was as follows:
<TABLE>
<CAPTION>
Note Principal Balance Accrued
and
Unpaid
Interest
<S> <C> <C>
NationsBank/ASB Revolving Credit Note 288,728.12 83,937.09
NationsBank/Virginia Revolving Credit Note 797,581.08 178,454.16
NationsBank/ASB Term Note 669,523.19 105,440.63
NationsBank/Virginia Term Note 493,513.22 77,721.48
NationsBank/ASB Letter of Credit Note 1,506,822.28 614,804.41
NationsBank/Virginia Letter of Credit Note 1,427,733.60 581,920.42
Total 5,183,901.49 1,642,278.19
TWB Revolving Credit Note 890,824.45 161,899.30
TWB Term Note 437,926.95 69,159.45
Total 1,328,751.40 231,058.75
NB Real Estate Note 1,530,852.10 196,746.38
</TABLE>
WHEREAS, (i) the Borrowers desire to make certain discounted
payments with respect to the Bank Group Obligations and the NB
Obligations such that, after giving effect thereto, all of the
Bank Group Obligations owing to the FDIC shall have been paid in
full and the Bank Group Obligations owing to NationsBank and the
NB Obligations shall have been paid in part, (ii) the Borrowers
and NationsBank desire to restructure a portion of the Bank Group
Obligations owing to NationsBank and a portion of the NB
Obligations, (iii) the Borrowers (other than WII) wish to become
jointly and severally liable for the NB Obligations and the
Borrowers wish to also secure the NB Obligations with the same
Collateral as currently secures the Bank Group Obligations and
(iv) WRMI desires to become a Borrower and assume all of WII's
obligations under the Falls Church Deed of Trust, the Manassas
Deed of Trust, the Bedford Deed of Trust, the NB Deed of Trust and
the Additional NB Lease Assignment;
NOW, THEREFORE, in consideration of the premises and for
other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Agent, NationsBank, the FDIC
and the Borrowers hereby agree as follows:
ARTICLE I
SETTLEMENT
This Agreement sets forth the understandings and agreements
by and among the Borrowers and the Lenders regarding the
discounted payments with respect to the Bank Group Obligations and
the NB Obligations, the restructuring of a portion of the Bank
Group Obligations owing to NationsBank and a portion of the NB
Obligations and the additional joint and several liability and
collateral security for the NB Obligations.
Subject to and in accordance with the terms and conditions of
this Agreement, on the date when all of the conditions precedent
set forth in Article VI have been satisfied but in no event later
than March 31, 1997 (the "Closing Date"), the events specified in
this Article I shall occur.
Section 1.01 NationsBank Settlement. The Borrowers shall
cause to be delivered to NationsBank the following:
(a) $1,606,332.87 in immediately available funds;
(b) a Replacement and Consolidation Note in the original
principal amount of Two Million Dollars substantially in the form
of Exhibit A-1 hereto (the "First Replacement Note") pursuant to
which Bank Group Obligations owing to NationsBank in such
principal amount shall be restructured as more fully described in
Article II hereof and consolidated, executed by each of the
Borrowers;
(c) a Replacement Note in the original principal amount of
Five Hundred Thousand Dollars substantially in the form of
Exhibit A-2 hereto (the "Second Replacement Note" and,
collectively with the First Replacement Note, the "Replacement
Notes") pursuant to which NB Obligations owing to NationsBank in
such principal amount shall be restructured as more fully
described in Article II hereof, executed by each of the Borrowers;
(d) an Interest Bearing Convertible Debenture executed by WII
substantially in the form of Exhibit B hereto in the original
principal amount of Four Hundred Ten Thousand Dollars ($410,000)
and convertible at the option of NationsBank for shares of Common
Stock, par value $.10 per share, of WII (the "WII Common Stock")
representing sixteen and four-tenths of one percent (16.4%) of the
shares of WII Common Stock outstanding on a fully diluted basis as
of the date of such conversion (the "NB Debenture");
(e) a Guaranty of WII's obligations under the NB Debenture
substantially in the form of Exhibit C hereto (the "NB Guaranty")
executed by each of the Borrowers other than WII; and
(f) a Registration Rights Agreement substantially in the form
of Exhibit D hereto (the "Registration Rights Agreement") executed
by WII and the FDIC.
In consideration of the foregoing, the release by the Borrowers of
NationsBank and others from certain liability pursuant to the
release provisions contained in Section 7.01 hereof and the
additional joint and several liability and collateral security for
the NB Obligations provided pursuant to the Second Replacement
Note and Section 8.10 hereof, and subject to the terms and
conditions contained in this Agreement, NationsBank hereby agrees
to (i) accept such deliveries as payment in full of (A) all of the
Bank Group Obligations owing to NationsBank other than the Two
Million Dollars ($2,000,000) in principal amount thereof to be
evidenced by the First Replacement Note and (B) all of the NB
Obligations outstanding as of the date hereof other than Five
Hundred Thousand Dollars ($500,000) in principal amount thereof to
be evidenced by the Second Replacement Note and (ii) release or,
in the case of WBC, assign to CIT the Agent's existing liens, if
any, on all personal property and proceeds thereof owned by GC,
PMPI (except to the extent such liens exist pursuant to the
Bedford Deed of Trust), WBC, WEC and WSECI (collectively, the
"Released Collateral").
Section 1.02 FDIC Settlement. The Borrowers shall cause to
be delivered to the FDIC the following:
(a) $501,933.62 in immediately available funds;
(b) an Interest Bearing Convertible Debenture executed by WII
substantially in the form of Exhibit B hereto in the original
principal amount of Ninety Thousand Dollars ($90,000) and
convertible at the option of the FDIC for shares of Common Stock,
par value $.10 per share, of WII (the "WII Common Stock")
representing three and six-tenths of one percent (3.6%) of the
shares of WII Common Stock outstanding on a fully diluted basis as
of the date of such conversion (the "FDIC Debenture" and,
collectively with the NB Debenture, the "Debentures");
(c) a Guaranty of WII's obligations under the FDIC Debenture
substantially in the form of Exhibit C hereto (the "FDIC
Guaranty") executed by each of the Borrowers other than WII; and
(d) the Registration Rights Agreement executed by WII and
NationsBank.
In consideration of the foregoing and the release by the Borrowers
of the FDIC and others from certain liability pursuant to the
release provisions contained in Section 7.01 hereof, and subject
to the terms and conditions contained in this Agreement, the FDIC
hereby agrees to (i) accept such deliveries as payment in full of
the Bank Group Obligations owing to the FDIC and (ii) acknowledge
that it shall no longer have any interest, directly or through the
Agent, in any of the Collateral and that its agency relationship
with the Agent pursuant to the Bank Group Loan Documents shall
terminate in its entirety.
Section 1.03 Settlement. The effective consummation of each
of the transactions referred to in this Article I is referred to
herein as the "Settlement".
ARTICLE II
THE REPLACEMENT NOTES
The Bank Group Obligations owing to NationsBank after giving
effect to the Settlement and to be evidenced by the First
Replacement Note (hereinafter collectively referred to, together
with all other indebtedness, liabilities, obligations and duties
relating thereto owing to NationsBank pursuant to the Settlement
Documents and the Surviving Documents, whether existing on the
date of this Agreement or arising hereafter, direct or indirect,
joint or several, absolute or contingent, matured or unmatured,
liquidated or unliquidated, secured or unsecured, arising by
contract, operation of law or otherwise, as the "Continuing BG
Obligations") shall be modified in accordance with the terms of
the First Replacement Note and this Article II and the NB
Obligations owing to NationsBank after giving effect to the
Settlement and to be evidenced by the Second Replacement Note
(hereinafter collectively referred to, together with all other
indebtedness, liabilities, obligations and duties relating thereto
owing to NationsBank pursuant to the Settlement Documents and the
Surviving Documents, whether existing on the date of this
Agreement or arising hereafter, direct or indirect, joint or
several, absolute or contingent, matured or unmatured, liquidated
or unliquidated, secured or unsecured, arising by contract,
operation of law or otherwise, as the "Continuing NB Obligations"
and, collectively with the Continuing BG Obligations, the
"Continuing Obligations") shall be modified in accordance with the
terms of the Second Replacement Note and this Article II.
Section 2.01 Payment Schedule and Maturity Date. (a) Prior
to final maturity, the First Replacement Note shall be due and
payable in installments of $21,221.38 each, inclusive of interest,
based on a twenty (20) year amortization schedule for $2,500,000
in principal and interest accruing at a fixed rate of eleven
percent (11%) per annum. The first installment shall be due and
payable on May 1, 1997 and a like installment shall be due and
payable on the first day of each succeeding month thereafter;
provided, however, that on December 31, 1997, the final maturity
of the First Replacement Note, the entire principal balance of the
First Replacement Note then unpaid and all accrued interest then
unpaid shall be finally due and payable.
(b) Prior to final maturity, the Second Replacement Note
shall accrue interest at a fixed rate of eleven percent (11%) per
annum which shall be due and payable commencing on May 1, 1997 and
on the first day of each succeeding month thereafter. On
December 31, 1997, the final maturity of the Second Replacement
Note, the entire principal balance of the Second Replacement Note
then unpaid and all accrued interest then unpaid shall be finally
due and payable.
Section 2.02 Prepayments. Any of the Borrowers may make
optional prepayments of the outstanding principal under the
Replacement Notes at any time and such prepayments shall be
applied first, to reduce the outstanding principal amount of the
Second Replacement Note and second, to reduce the scheduled
payments of principal under the First Replacement Note pursuant to
Section 2.01(a) in the inverse order of maturity; provided,
however, that so long as at the time of any such prepayment no
Default shall have occurred and be continuing, such prepayment
shall be applied first, to the payment of any interest currently
accrued and unpaid or to accrue and be payable within the next
thirty (30) days, second, to the payment of any principal
currently due or to become due within the next thirty (30) days
and third, as otherwise provided in this sentence.
Section 2.03 Collateral Security. The Continuing BG
Obligations shall continue to be secured by the same Collateral
(other than the Released Collateral) which currently secures the
Bank Group Obligations. The Continuing NB Obligations shall
continue to be secured by the same Collateral which currently
secures the NB Obligations and shall also be secured by the same
Collateral (other than the Released Collateral) which currently
secures the Bank Group Obligations.
Section 2.04 Carve-Out Note. NationsBank shall continue to
hold that certain Carve-Out Promissory Note dated July 26, 1996
from APCI payable to the order of NationsBank in the original
principal amount of Two Hundred Thousand Dollars ($200,000) (the
"Carve-Out Note"). The Carve-Out Note shall evidence that portion
of the Continuing BG Obligations that are secured by the Baltimore
Deed of Trust. In the event of that the Carve-Out Note is
endorsed over to a third party as is currently contemplated by the
parties, the amount of any consideration received by NationsBank
for such endorsement (which the parties acknowledge may be less
than the face amount of the Carve-Out Note) shall be applied to
reduce the outstanding Continuing BG Obligations by such amount of
consideration.
ARTICLE III
DELIVERY OF DOCUMENTS
Section 3.01 Deliveries to the Lenders. On or before the
Closing Date, each of the Borrowers shall deliver or cause to be
delivered to NationsBank each of the following documents
(collectively, the "Closing Documents") and each of the following
payments to the FDIC and NationsBank, except to the extent waived
by the applicable Lender, all of which shall be in form and
substance satisfactory to NationsBank:
(a) Settlement Documents. This Agreement, the NB
Debenture, the FDIC Debenture, the NB Debenture Guaranty, the FDIC
Debenture Guaranty, the Registration Rights Agreement, the
Replacement Notes, UCC-1 Financing Statements between WRMI as
debtor and the Agent as secured party to be filed in such
locations as are necessary or advisable to perfect the Agent's
security interest in the Collateral held by WRMI (the "WRMI
UCC's"), a Second Amendment to Commercial Deed of Trust and
Assumption Agreement with respect to the Falls Church Deed of
Trust substantially in the form of Exhibit E-1 hereto, a Second
Amendment to Commercial Deed of Trust and Assumption Agreement
with respect to the Manassas Deed of Trust substantially in the
form of Exhibit E-2 hereto, a Second Amendment to Commercial Deed
of Trust and Assumption Agreement with respect to the Bedford Deed
of Trust substantially in the form of Exhibit E-3 hereto and a
Third Modification to Deed of Trust and Assumption Agreement with
respect to the NB Deed of Trust and the Additional NB Lease
Assignment substantially in the form of Exhibit E-4 hereto
(collectively, the "Assumption Agreements" and, collectively with
this Agreement, the NB Debenture, the FDIC Debenture, the NB
Debenture Guaranty, the FDIC Debenture Guaranty, the Registration
Rights Agreement, the Replacement Notes and the WRMI UCC's, the
"Settlement Documents"), pursuant to which (i) the references in
the Falls Church Deed of Trust, the Manassas Deed of Trust and the
Bedford Deed of Trust to the indebtedness secured thereby will
contain an express reference to the First Replacement Note and the
references in the NB Deed of Trust and the Additional NB Lease
Assignment to the indebtedness secured thereby will contain an
express reference to the Second Replacement Note and (ii) WRMI, as
transferee of the Falls Church Property, the Manassas Property and
the Parcel 2 Bedford Property, will expressly assume all of WII's
obligations under the Falls Church Deed of Trust, the Manassas
Deed of Trust, the Bedford Deed of Trust and the NB Deed of Trust
(collectively, the "Deeds of Trust") as well as the Additional NB
Lease Assignment, shall have been executed by each of the
Borrowers party thereto and delivered to the Agent.
(b) Title Policies. Pre-paid full coverage mortgagee
policies of title insurance or endorsements to existing policies
on the Falls Church Property, the Manassas Property and the
Bedford County Property (collectively, the "Real Property"), as
appropriate (the "Title Policies") on the ALTA Loan Policy-1970
form in the amounts specified by NationsBank, acceptable in all
respects to the Lender and issued by a title company (the "Title
Company") that is satisfactory to the Lender, in its sole and
absolute discretion, or an unconditional obligation on the part of
the Title Company for the issuance thereof pursuant to a
countersigned instruction letter approved by the Lender, which
Title Policies shall (i) insure that the Deeds of Trust constitute
a valid and recorded first or, in the case of the Falls Church
Deed of Trust and the Manassas Deed of Trust only, second lien
upon, and that WRMI or PMPI, as applicable, has a good and
marketable fee simple title interest in, the Real Property,
subject only to such matters affecting title to the Property as
are approved by NationsBank in writing, and, except as otherwise
expressly provided herein, will secure all of the Continuing BG
Obligations or in the case of the NB Deed of Trust only, the
Continuing NB Obligations, (ii) contain no exception as to survey
matters, (iii) provide affirmative coverage against filed and
unfiled mechanics' and materialmen's liens, (iv) include such
endorsements (including, without limitation, comprehensive, usury
and variable mortgage rate endorsements) as are required by the
Lender and (v) provide for such reinsurance as the Lender may
require.
(c) UCC Searches. NationsBank shall have received from
the Borrowers the results of all UCC, tax lien and judgment
searches conducted by or for the benefit of CIT.
(d) Insurance. Insurance policies or certificates
therefor evidencing the insurance coverages required by the
respective Deeds of Trust, the Baltimore Deed of Trust and the
Dallas Parcel 2 Deed of Trust. All such insurance policies shall
name NationsBank as mortgagee and "additional insured," shall
provide that with respect to NationsBank, the insurance shall not
be invalidated by any action or inaction by the applicable
Borrower, including, without limitation, any representations made
by such Borrower in the procurement of such insurance, shall
provide that they shall not be canceled or amended without at
least sixty (60) days' prior written notice to NationsBank and all
such insurance policies except liability insurance shall be first
payable in case of loss to NationsBank by means of a standard non-
contributory mortgagee clause (or endorsement); provided, however,
that in the case of any loss, NationsBank may, in its reasonable
discretion, permit the use of any such insurance proceeds, and
make the same available, for the restoration of the damaged
Property covered by such insurance.
(e) Additional Collateral Information. Such other
information regarding the Collateral as the Lender may request.
(f) Required Payments. NationsBank and the FDIC shall
have received from the Borrowers the cash payments referred to in
Sections 1.01(a) and 1.02(a), respectively.
(g) Opinion of Counsel. The Borrowers shall have
delivered to the Lenders one or more opinions of counsel, opining,
among other things, that each of the Operating Borrowers has all
requisite power and authority to enter into the transactions that
are the subject of this Agreement and to execute and deliver each
of the Settlement Documents to which such Person is a party; that
each of the Settlement Documents has been duly and properly
executed and delivered by each of such Persons party thereto; and
that each of the Settlement Documents is and constitutes the
legal, valid and binding obligation of each of such Persons party
thereto, enforceable in accordance with its respective terms.
(h) Certificates of Incorporation; Good Standing;
Evidence of Revocation or Dissolution. Each of the Operating
Borrowers shall have delivered a copy of its Certificate or
Articles of Incorporation certified by and a Good Standing
Certificate issued by the Secretary of State or comparable
governmental authority of the jurisdiction of such Borrower's
incorporation. With respect to each of the Borrowers that is not
an Operating Borrower, such Borrower shall have delivered to the
Agent written evidence of the revocation of the charter or the
dissolution of such Borrower or such other written evidence that
such Borrower is not in good standing.
(i) Incumbency and Authorization. Each of the Borrowers
shall have provided evidence satisfactory to Agent of the
incumbency of the officers executing documents on behalf of such
Borrower, and copies, certified by a duly authorized officer to be
true and complete on and as of the Closing Date, of its
Certificate or Articles of Incorporation, its bylaws and the
records of all corporate action taken by such Borrower to
authorize its execution and delivery of each of the Settlement
Documents to which it is or is to become a party as contemplated
or required by this Agreement and its performance of all of its
agreements and obligations under each of such documents.
(j) Representations True, No Default. Each of the
representations and warranties of the Borrowers contained in this
Agreement, the other Settlement Documents or in any document or
instrument delivered pursuant to or in connection with this
Agreement shall be true as of the date as of which they were made
and shall also be true at and as of the Closing Date, with the
same effect as if made at and as of that time (except to the
extent of changes resulting from transactions contemplated or
permitted by this Agreement and the other Settlement Documents and
changes occurring in the ordinary course of business that singly
or in the aggregate are not materially adverse, and to the extent
that such representations and warranties relate expressly to an
earlier date) and no Default shall have occurred and be
continuing, and the Borrowers shall have delivered to the Lenders
a certificate to that effect.
(k) CIT/Pribyla Documents. The Borrowers shall have
delivered to the Lenders copies of all documents to be entered
into between any of the Borrowers on the one hand and The CIT
Group/Credit Finance, Inc. ("CIT") or Mrs. Eugene Pribyla and the
estate of Mr. Eugene Pribyla, on the other, and all such documents
shall be in form and substance satisfactory to the Lenders.
Section 3.02 Deliveries to the Borrowers. On or before the
Closing Date, the Agent shall deliver or cause to be delivered to
the Borrowers each of the following documents, except to the
extent waived by the Borrowers:
(a) Discharges or releases by the Agent with respect to
the NB Deed of Trust, the NB Lease Assignment, the Additional NB
Lease Assignment and the Released Collateral, as requested by the
Borrowers and in form and substance satisfactory to the Agent,
along with such original motor vehicle titles as are in the
Agent's possession and relate to the Released Collateral.
(b) The original Bank Group Notes issued to the FDIC and
the original NB Real Estate Note to the extent they are in the
Lenders' possession.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Agreement, each of
the Borrowers represents and warrants to each of the Lenders that,
each of the following are true and correct as of the Closing Date:
Section 4.01 Existence; Good Standing. Each of the
Operating Borrowers (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction
of its incorporation, (ii) has all requisite corporate power and
authority and full legal right to own its property and to carry on
the business in which it is engaged and (iii) is duly qualified to
do business in each jurisdiction in which the transaction of its
business or the ownership of its property makes such qualification
necessary or appropriate.
Section 4.02 Authority; Execution of Agreement. Each of the
Borrowers is executing this Agreement and the other Settlement
Documents to which such Person is a party of such Person's own
free will and accord with full knowledge of the facts stated
herein and therein, and based upon the legal advice given to such
Person by such Person's attorneys. Each of the Borrowers has full
power and authority to execute and deliver this Agreement and the
other Settlement Documents to which such Person is a party, and to
enter into and perform the transactions that are the subject
hereof and thereof. This Agreement and each of the other
Settlement Documents executed and delivered on or prior to the
Closing Date constitute, and each of the other Settlement
Documents thereafter executed and delivered will constitute,
legal, valid and binding obligations of each of the Borrowers
party thereto, enforceable in accordance with their respective
terms.
Section 4.03 No Conflicts. The execution and delivery by
each of the Borrowers of this Agreement and the other Settlement
Documents to which such Borrower is a party and the performance of
such Borrower's respective obligations under this Agreement and
the other Settlement Documents to which such Borrower is a party,
in order to effectuate the provisions hereof and thereof and the
consummation of the transactions contemplated hereby and thereby,
do not and will not, to the extent applicable, (a) conflict with
any provision of such Borrower's articles of incorporation or
bylaws, (b) violate any order of any court or governmental
authority or (c) conflict with or result in a breach or constitute
a default or require any consent under, or result in the creation
of any lien, charge or encumbrance upon any of such Borrower's
property or assets (other than that created pursuant to the
Settlement Documents) or result in the acceleration of such
Borrower's indebtedness pursuant to any agreement, instrument or
indenture to which such Borrower is a party or by which such
Borrower or any of such Borrower's properties may be bound or
affected. No consent, approval, authorization or order of, and no
notice to or filing with, any court or governmental authority or
third party is required in connection with the execution of,
delivery by or performance by any of the Borrowers under this
Agreement and the other Settlement Documents to which such
Borrower is a party, or to consummate any of the transactions
contemplated by this Agreement and the other Settlement Documents
to which such Borrower is a party.
Section 4.04 No Bankruptcy. Except as set forth on
Schedule 4.04 attached hereto, none of the Borrowers has made an
assignment for the benefit of creditors, or filed or intends to
file a petition in bankruptcy, or been adjudicated insolvent or
bankrupt, or petitioned a court for the appointment of any
receiver or custodian of or trustee for it or any substantial part
of its property, or commenced any proceeding relating to any of
the Borrowers under any reorganization, rearrangement,
readjustment of debt, dissolution, rehabilitation or liquidation
law or statute of any jurisdiction, nor do any of the Borrowers
contemplate so doing.
Section 4.05 Insolvency Litigation. Except as set forth on
Schedule 4.05 attached hereto, no proceeding of the nature
described in Section 4.04 has been threatened, commenced or is
pending against any of the Borrowers nor has any order for relief
been entered with respect to any of the Borrowers under the
Federal Bankruptcy Code or any state insolvency laws.
Section 4.06 Litigation. Except as set forth on
Schedule 4.06 attached hereto, there are no pending, threatened or
reasonably anticipated actions, suits or proceedings before or by
any court or administrative agency that (a) question the validity
of this Agreement or any of the other Settlement Documents,
(b) seek to restrain or prohibit or obtain damages or a discovery
order in respect of this Agreement or the consummation of the
transactions contemplated hereby, (c) pertain to any of (i) the
Real Property or the existence on or release from the Real
Property of any Hazardous Substances as hereinafter defined, or
(ii) any other the other Collateral or (d) are likely in any case
or in the aggregate to affect the consummation or the
effectiveness of the transactions contemplated hereby or to have
or result in a material adverse change in the business,
operations, prospects, properties, assets or condition (financial
or otherwise) of any Borrower (with respect to such Borrower, a
"Material Adverse Effect").
Section 4.07 Title. Each of the Borrowers owns good, clear,
record and marketable title in fee simple to such Borrower's
properties and assets constituting Collateral and such properties
and assets are free and clear of any and all material liens,
encumbrances or other interests, except as set forth on
Schedule 4.07 attached hereto and except as set forth in the title
insurance commitment issued to NationsBank in connection with the
Real Property, if any, owned by such Borrower.
Section 4.08 Eminent Domain. No condemnation or eminent
domain proceeding has been commenced or is threatened that would
involve or result in the taking of any portion of the Properties
and none of the Borrowers is aware of any contemplated
condemnation or eminent domain proceeding which might affect all
or any portion of the Properties.
Section 4.09 Bills and Expenses. The unpaid bills and
expenses listed on Schedule 4.09 attached hereto, are (a) the only
outstanding obligations relating to the Real Property as of the
Closing Date in excess of $10,000 in the aggregate with respect to
any Person, all of which obligations shall be paid in full on the
Closing Date, and (b) to the best of the Borrowers' knowledge
after due inquiry, the only outstanding obligations relating to
the other Properties as of the Closing Date in excess of $10,000.
Section 4.10 Mechanics' Liens. No action has been taken,
suffered or permitted that would establish, cause or permit the
imposition, inception or priority of any mechanics' or
materialmen's lien (statutory, constitutional or otherwise) upon
the Real Property or any part thereof or interest therein relating
to outstanding obligations owing to any Person in excess of
$10,000 in the aggregate with respect to any Person, except as
described on Schedule 4.10 attached hereto.
Section 4.11 Environmental Compliance. To the best of the
Borrowers' knowledge:
(a) none of the Borrowers or any operator of the
Properties or any operations thereon is in violation, or alleged
violation, of any judgment, decree, order, law, license, rule or
regulation pertaining to environmental matters, including without
limitation, those arising under the Resource Conservation and
Recovery Act ("RCRA"), the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 as amended ("CERCLA"), the
Superfund Amendments and Reauthorization Act of 1986 ("SARA"), the
Federal Clean Water Act, the Federal Clean Air Act, the Toxic
Substances Control Act, or any state or local statute, regulation,
ordinance, order or decree relating to health, safety or the
environment (hereinafter "Environmental Laws"), which violation
would have a material adverse effect on the environment or the
business, assets or financial condition of any of the Borrowers;
(b) none of the Borrowers has received notice from any
third party including, without limitation: any federal, state or
local governmental authority, (i) that any one of them has been
identified by the United States Environmental Protection Agency
("EPA") as a potentially responsible party under CERCLA with
respect to a site listed on the National Priorities List, 40
C.F.R. part 300 Appendix B (1986); (ii) that any hazardous waste,
as defined by 42 U.S.C. Section 9601(5), any hazardous substances
as defined by 42 U.S.C. Section 9601(14), any pollutant or
contaminant as defined by 42 U.S.C. Section 9601(33) and any toxic
substances, oil or hazardous materials or other chemicals or
substances regulated by any Environmental Laws ("Hazardous
Substances") which any one of them has generated, transported or
disposed of has been found at any site at which a federal, state
or local agency or other third party has conducted or has ordered
that any Borrower conduct a remedial investigation, removal or
other response action pursuant to any Environmental Law; or
(iii) that it is or shall be a named party to any claim, action,
cause of action, complaint, or legal or administrative proceeding
(in each case, contingent or otherwise) arising out of any third
party's incurrence or costs, expenses, losses or damages of any
kind whatsoever in connection with the release of Hazardous
Substances;
(c)(i) no portion of the Properties has been used for the
handling, processing, storage or disposal of Hazardous Substances
except in accordance with applicable Environmental Laws; and no
underground tank or other underground storage receptacle for
Hazardous Substances is located on any portion of the Properties;
(ii) in the course of any activities conducted by the Borrowers or
operators of their properties, no Hazardous Substances have been
generated or are being used on any portion of the Properties
except in accordance with applicable Environmental Laws;
(iii) there have been no releases (i.e. any past or present
releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, disposing or dumping)
or threatened releases of Hazardous Substances on, upon, into or
from the properties of the Borrowers, which releases would have a
material adverse effect on the value of any of the Properties or
adjacent properties or the environment; (iv) there have been no
releases on, upon, from or into any real property in the vicinity
of any of the Properties which, through soil or groundwater
contamination, may have come to be located on, and which would
have a material adverse effect on the value of, the Properties;
and (v) in addition, any Hazardous Substances that have been
generated on any of the Properties have been transported offsite
only by carriers having an identification number issued by the
EPA, treated or disposed of only by treatment or disposal
facilities maintaining valid permits as required under applicable
Environmental Laws, which transporters and facilities have been
and are operating in compliance with such permits and applicable
Environmental Laws; and
(d) None of the Borrowers or any of the Properties is
subject to any applicable environmental law requiring the
performance of Hazardous Substances site assessments, or the
removal or remediation of Hazardous Substances, or the giving of
notice to any governmental agency or the recording or delivery to
other Persons of an environmental disclosure document or statement
by virtue of the transactions set forth herein and contemplated
hereby, or as a condition to the recording of any Deed of Trust or
to the effectiveness of any other transactions contemplated
hereby.
Section 4.12 Compliance with Law and Permits. To the best
of the Borrowers' knowledge, the Properties and each of the
buildings or other improvements located thereon, as presently
existing, do not violate any applicable federal or state law or
governmental regulation, or any local ordinance, order or
regulation, or any permit or authorization issued thereunder,
including but not limited to laws, regulations or ordinances
relating to zoning, building use and occupancy, subdivision
control, fire protection, wetlands protection and protection of
the environment. All permits and approvals required by all
governmental requirements applicable to the Properties, including,
without limitation, all necessary building permits or permits of
occupancy, have been or will be, prior to the commencement of work
requiring such permits or approvals, issued by the appropriate
governmental authorities and the improvements.
Section 4.13 Taxes. Except as otherwise set forth on
Schedule 4.13 attached hereto, each of the Borrowers has filed or
caused to be filed all Federal, state and local income, excise,
property and other tax returns and informational reports which are
required to be filed, all such returns and reports are true and
correct, and each of the Borrowers has paid or has caused to be
paid all taxes as shown on such returns or on any assessment
received by any of them, to the extent that such taxes have become
due, including, but not limited to, all F.I.C.A. payments.
Section 4.14 Complete Disclosure. There are no undisclosed
facts or circumstances of which any of the Borrowers has knowledge
that could in any way have a material adverse effect on any of the
Collateral or its value.
Section 4.15 Financial Statements. The audited financial
statements of each of the Borrowers for the fiscal year ending
July 31, 1996 submitted to the Lenders are true, complete and
correct, fairly represent the financial condition of such Person
and, as applicable, the results of operations and changes in
financial position for the respective periods indicated, have been
prepared in accordance with, in the case of the Borrowers,
generally accepted accounting principles or, in the case of the
Partnerships, prepared on an income tax basis, which preparation,
in either case, shall be applied on a basis consistent with prior
periods, and fairly state the assets and liabilities of such
Person. As of the date of such financial statements, there are no
liabilities, direct or indirect, fixed or contingent, matured or
unmatured, of such Person which are not reflected therein. There
has been no Material Adverse Effect with respect to any Borrower
since the date of such financial statements.
Section 4.16 No Defaults. Except as set forth on
Schedule 4.16 attached hereto, none of the Borrowers is in default
under any contract, agreement, commitment or other instrument
which default could have a Material Adverse Effect with respect to
such Borrower, or in the performance of any covenants or
conditions respecting any of such Borrower's indebtedness.
Section 4.17 Utilities. Electric, gas, water, storm and
sanitary sewer, telephone lines and other utility facilities and
services are available and adequate to serve the Properties.
Section 4.18 No Wetlands. No portion of the Properties is
categorized as "wetlands" subject to restrictions under the Clean
Water Act, 33 U.S.C. Section Section 1251 et seq. As used herein,
the term "wetlands" means those areas that are inundated or
saturated by surface or ground water at a frequency and duration
sufficient to support, and that under normal circumstances, do
support a prevalence of vegetation typically adapted for life in
saturated soil conditions. Wetlands generally include swamps,
marshes, bogs and similar areas.
Section 4.19 True and Correct. All information and
documents furnished and to be furnished to the Lender pursuant to
this Agreement are true, accurate and complete in all material
respects. No representation or warranty by any of the Borrowers
contained in this Agreement or in any of the Settlement Documents,
contains any untrue statement of a material fact, or omits any
material fact or statement necessary to make the facts or
statements contained herein or therein not false or misleading.
Section 4.20 Capitalization of WII. The authorized capital
stock of WII will, on and as of the Closing Date, consists of
10,000,000 shares of Common Stock. A description of the Common
Stock and of the voting powers, rights and privileges thereof is
stated in WII's Articles of Incorporation, a true and correct copy
of which as of the date hereof and as of the Closing Date is
attached as Schedule 4.20 hereto.
Section 4.21 Authorization of the Issuance of the Debentures
and the Debenture Shares. WII has duly and property authorized
(a) the issuance to the Lenders of (a) the Debentures and (b) the
shares of Common Stock issuable by WII in the event of the
conversion of the NB Debenture and the FDIC Debenture (the
"Debenture Shares"). The Debentures have been issued in
compliance with the Securities Act of 1933, as amended (the
"Securities Act") and any applicable state securities laws and the
rules and regulations promulgated thereunder.
ARTICLE V
COVENANTS
The Borrowers covenant and agree that from the date here
until all of the Continuing Obligations are paid and performed in
full, the Borrowers will continue to comply in all respects with
the terms of the Settlement Documents and the Surviving Documents
and, in addition, the Borrowers will:
Section 5.01 Records. Maintain proper records and books of
account, in which complete entries are made in accordance with
generally accepted accounting principles, and permit the Lenders
and their duly authorized agents or representatives access, upon
request therefor and during normal business hours, to such books,
records, receipts and other data relating to the Borrowers and the
Collateral and to make extracts therefrom.
Section 5.02 Insurance. Maintain in full force and effect
the policies of insurance required to be maintained, in such
amounts and containing such provisions as are required under the
Deeds of Trust, the Baltimore Deed of Trust and the Dallas Parcel
2 Deed of Trust.
Section 5.03 Indebtedness. Pay all indebtedness or
obligations promptly and in accordance with their terms as the
same now exist or may be amended from time to time and pay and
discharge promptly all taxes, assessments and governmental fees,
charges or levies imposed upon each Borrower or such Borrower's
income or profits or upon such Borrower's properties or any part
thereof, before the same shall be in default, as well as all
lawful claims which, if unpaid, might become a lien or charge upon
such properties or any part thereof.
Section 5.04 Environmental Compliance. Any building
materials or other items located in or around the Properties which
qualify as Hazardous Substances or are otherwise unacceptable to
NationsBank in its reasonable judgment shall immediately be
removed from the Properties at the cost and expense of the
Borrowers. NationsBank shall have no obligation to inspect for or
discover such building materials or other items. The Borrowers
hereby agree on a joint and several basis to indemnify and hold
NationsBank harmless from and against any liability, loss or
expense (including reasonable attorneys' fees and disbursements)
which it may incur or sustain in connection with the existence or
removal of such Hazardous Substances relating to the Properties.
Section 5.05 Notices. Notify the Lenders promptly after
learning of (a) any action, suit or proceeding at law or in equity
or by or before any governmental authority involving any of the
Borrowers or any of the Collateral; (b) any condition or event
that constitutes, or with notice or lapse of time or both would
constitute, a Default; and (c) any material adverse change in the
condition (financial or otherwise) of any of the Borrowers. In
addition, the Borrowers will give the Lenders prior written notice
in the event that any of the Borrowers, regardless of whether it
is an Operating Borrower, shall (i) apply for or consent to the
appointment of a receiver, trustee or liquidator of such Borrower
or any of such Borrower's property or assets; (ii) be unable, or
admit in writing such Borrower's inability, generally to pay such
Borrower's debts as they mature; (iii) make a general assignment
for the benefit of creditors; or (iv) file a voluntary petition of
bankruptcy, or a petition or an answer seeking reorganization or
an arrangement with creditors or take advantage of any law or
statute pertaining to bankruptcy, reorganization, insolvency,
readjustment of debt, dissolution or liquidation, or similar
statute analogous in purpose and effect.
Section 5.06 Assurances; Expenses. At the request of
NationsBank, execute and deliver such financing statements,
documents and instruments, and perform all other acts as
NationsBank reasonably deems necessary or desirable, and pay, upon
demand, all costs and expenses (including reasonable attorneys'
fees and disbursements) incurred by the Lenders, in connection
with the administration or interpretation of any of the Settlement
Documents or the Surviving Documents, any amendments,
modifications, approvals, consents or waivers hereto, thereto,
hereunder or thereunder, the maintenance of any lien on any
collateral granted to NationsBank pursuant to any of the
Settlement Documents or the Surviving Documents, or the
enforcement of or preservation of rights under this Agreement or
any of the other Settlement Documents or the Surviving Documents
against any of the Borrowers. The liability of the Borrowers
under this Section 5.06 shall be joint and several.
Section 5.07 No Sale or Lien on Equity. Not sell, assign,
transfer, convey or encumber any interest held by any Borrower in
any of the Borrowers, without the prior written consent of
NationsBank.
Section 5.08 Compliance with Law and Permits. Ensure that
(a) the Properties and each of the buildings or other improvements
located thereon do not violate any applicable federal or state law
or governmental regulation, or any local ordinance, order or
regulation, or any permit or authorization issued thereunder,
including but not limited to laws, regulations or ordinances
relating to zoning, building use and occupancy, subdivision
control, fire protection, wetlands protection and protection of
the environment, of which they have knowledge and (b) all permits
and approvals required by all governmental requirements applicable
to the Properties, including, without limitation, all necessary
building permits or permits of occupancy, are or will be issued,
prior to the commencement of work requiring such permits or
approvals, by the appropriate governmental authorities and the
improvements.
Section 5.09 Certain Debenture Share Matters. WII covenants
and agrees as follows:
(a) If and when issued pursuant to the terms of the NB
Debenture or the FDIC Debenture, as applicable, the Debenture
Shares so issued will (i) be duly authorized, validly issued,
fully paid and non-assessable, (ii) be issued free from violation
of any preemptive or other right and (iii) be issued in compliance
with the Securities Act and any applicable state securities laws
and the rules and regulations promulgated thereunder. At the time
that any Debenture Shares are issued, WII will transfer to the
applicable Lender valid and indefeasible title to such Debenture
Shares free and clear of all liens and encumbrances.
(b) WII shall at all times keep reserved for issuance
such number of authorized shares of Common Stock constituting the
Debenture Shares as may be required to be issued upon any
conversion of the NB Debenture or the FDIC Debenture.
Section 5.10 UCC Searches. The Borrowers shall promptly,
and in any event within forty-five (45) days after the Closing
Date, deliver to the Agent copies of UCC searches conducted with
respect to the Collateral in all relevant jurisdictions to the
extent not delivered to the Agent on or before the Closing Date.
Section 5.11 Financial Covenants.
(a) Minimum Net Worth. Each of the Borrowers covenants
and agrees to cause WII's consolidated net worth to be not less
than One Million Dollars ($1,000,000) at all times.
(b) Current Ratio. Each of the Borrowers covenants and
agrees to cause the ratio of (a) the aggregate amount of WII's
consolidated cash, accounts receivable (net of allowances for
doubtful accounts), to the extent not already included in the
calculation of accounts receivable, costs and estimated earnings
in excess of billings on uncompleted contracts, and inventory to
(b) the aggregate amount of WII's consolidated accounts payable,
notes payable, current maturities of long-term debt (other than
the payments due on December 31, 1997 under the Replacement Notes)
and billings in excess of costs and estimated earnings to be
greater than 1.0:1.0 at all times.
ARTICLE VI
DEFAULTS
Section 6.01 Defaults. The occurrence of any one or more of
the following events shall constitute a "Default" hereunder:
(a) Any Borrower shall fail to pay, when due, any
principal, interest or any other sum payable hereunder, under
either Replacement Note, any Debenture, any other Settlement
Document or any Surviving Document (whether upon maturity thereof,
upon any installment payment date, upon any mandatory prepayment
date, upon acceleration or otherwise).
(b) Any representation or warranty of any Borrower made
herein or in any other Settlement Document shall prove to have
been incorrect in any material respect on or as of the date made
or deemed to have been made.
(c) Any Borrower shall fail to observe, satisfy or
perform any other term, covenant or agreement contained in this
Agreement, in any other Settlement Documents or in any Surviving
Document, and such failure shall continue unremedied for any grace
period applicable thereto.
(d) Any Borrower shall default beyond any applicable
grace period with respect to any indebtedness or contingent
obligations owing by such Borrower to any Lender or any third
party, including, without limitation, CIT, and involving an amount
in any such case of $25,000 or more.
(e) Any Operating Borrower (other than WEI) shall:
(i) apply for or consent to the appointment of a receiver, trustee
or liquidator of such Borrower or any of such Borrower's property
or assets; (ii) be unable, or admit in writing such Borrower's
inability, generally to pay such Borrower's debts as they mature;
(iii) make a general assignment for the benefit of creditors;
(iv) file a voluntary petition of bankruptcy, or a petition or an
answer seeking reorganization or an arrangement with creditors or
take advantage of any law or statute pertaining to bankruptcy,
reorganization, insolvency, readjustment of debt, dissolution or
liquidation, or similar statute analogous in purpose and effect or
(v) any action shall be commenced seeking an order for relief
against any Operating Borrower, or seeking reorganization,
arrangement or composition of such Borrower or such Borrower's
debts under any law or statute pertaining to bankruptcy,
reorganization, insolvency, readjustment of debt, dissolution or
liquidation, or similar statute analogous in purpose and effect.
(f) The issuance of any attachment or garnishment against
any Borrower as the debtor, which is not discharged within thirty
(30) days thereafter.
(g) One or more judgments or decrees in excess of $50,000
in any such case shall be entered against any Operating Borrower
(other than WEI) and shall not have been vacated, discharged,
stayed or bonded pending appeal within thirty (30) days from the
entry thereof.
(h) Any Borrower shall revoke or attempt to revoke any
Settlement Document or any Surviving Document.
Section 6.02 Remedies. Upon the occurrence and during the
continuance of any Default, then in each and in every such case,
the applicable Lender may, at any time thereafter, at the same or
different times, exercise and/or enforce any one or more of the
following remedies and/or rights either individually, in
combination, or cumulatively:
(a) Declare the Replacement Notes or the Debenture held
by such Lender to be due and payable, whereupon such Notes or
Debenture shall become immediately due and payable, as to both
principal and accrued and unpaid interest, and all fees and
expenses, without presentment, demand, protest or any other notice
of any kind, all of which are hereby expressly waived.
(b) Set-off, without notice to any Borrower, any and all
deposits (whether evidenced by passbook, certificate of deposit or
otherwise) and any other credits, indebtedness, claims or other
sums at any time held or owing by such Lender to or for the credit
of such Borrower against any amount due by such Borrower to such
Lender hereunder or under any other Settlement Document or under
any Surviving Document.
(c) Take any or all actions or exercise any or all of its
rights permitted under any or all of the Settlement Documents or
Surviving Documents.
(d) Take any or all other actions permitted at law or at
equity or by other appropriate proceedings whether to collect any
amounts due such Lender under the Settlement Documents or the
Surviving Documents, for specific performance, for any injunction,
or in aid of the exercise or execution of any right, remedy or
power granted herein or by law or equity, including, without
limitation, in the case of NationsBank, any right, remedy or power
to foreclose upon or otherwise liquidate all or any portion of the
Collateral.
Notwithstanding the foregoing, in the event a Default pursuant to
Section 6.01(e) shall occur, each of the Replacement Notes and the
Debentures shall automatically become due and payable.
Section 6.03 Remedies Cumulative. Each right, power and
remedy of the respective Lenders as provided for herein or in each
other Settlement Document and each Surviving Document, and now or
hereafter existing at law or in equity or by statute or otherwise
shall be cumulative and concurrent and shall be in addition to
every other right, power or remedy, and the exercise or beginning
of the exercise by a Lender of any one or more of such rights,
powers or remedies shall not preclude the simultaneous or later
exercise by either Lender of any or all such other rights, powers
or remedies.
Section 6.04 Waivers. To the extent permitted by law, each
of the Borrowers hereby (a) waives presentment, demand, protest
and notice of presentment, notice of protest and notice of
dishonor of any of the indebtedness under this Agreement, either
Replacement Note, any Debenture, any of the other Settlement
Documents or any Surviving Document and each and every notice of
any kind respecting this Agreement, either Replacement Note, any
Debenture, any of the other Settlement Documents or any Surviving
Document (except for notices of Default as may be provided herein
or therein), (b) agrees that the applicable Lender, at any time or
times, without notice to such Borrower or such Borrower's consent,
may grant extensions of time, without limit as to number or the
aggregate period of such extensions, for the payment of any
principal or interest due on either Replacement Note or a
Debenture, and (c) to the extent not prohibited by law and
specifically excluding federal bankruptcy law, waives the benefit
of any law or rule of law intended for such Borrower's advantage
or protection as a Borrower hereunder or providing for such
Borrower's release or discharge from liability hereon, in whole or
in part, on account of any facts or circumstances other than full
or complete payment of all amounts due under this Agreement, the
Replacement Notes, the Debentures, the other Settlement Documents
and the Surviving Documents. No renewal or extension of this
Agreement, either Replacement Note, any Debenture, any of the
other Settlement Documents or any of the Surviving Documents, no
release of any collateral, including all or any of the Collateral,
securing repayment of any obligations under either Replacement
Note, any Debenture, any of the other Settlement Documents or any
of the Surviving Documents, and no delay in enforcement of this
Agreement, either Replacement Note, any Debenture, any of the
other Settlement Documents or any of the Surviving Documents or in
exercising any right, power or remedy hereunder or under any of
the other Settlement Documents or any of the Surviving Documents,
provided by applicable law, or otherwise shall affect the
liability of any Borrower.
ARTICLE VII
RELEASES
Section 7.01 Release of Lenders. Effective as of the
Closing Date, the Borrowers, jointly and severally, on behalf of
themselves and all of their respective heirs, successors and
assigns, (a) do hereby remise, release, acquit, satisfy and
forever discharge each of the Lenders and their respective
parents, subsidiaries, affiliated corporations and real estate
investment trusts of the Lenders, and all of their respective
past, present and future officers, directors, shareholders,
employees, agents, attorneys, representatives, participants,
heirs, successors and assigns (collectively, the "Lender
Affiliates"), from any and all manner of debts, accountings,
bonds, warranties, representations, covenants, promises,
contracts, controversies, agreements, liabilities, obligations,
expenses, damages, judgments, executions, actions, claims, demands
and causes of action of any nature whatsoever, whether at law or
in equity, either now accrued or hereafter maturing, which any of
the Borrowers now has or hereafter can, shall or may have by
reason of any matter, cause or thing, from the beginning of the
world to and including the date of this Agreement with respect to
any matters, transactions, occurrences, agreements, actions or
events arising out of, in connection with or relating to (i) any
of the Bank Group Obligations or the NB Obligations, including,
but not limited to, the administration or funding by any Lender of
any of the loans or any other transaction giving rise to any of
such Obligations, or (ii) any of the Bank Group Loan Documents or
the NB Loan Documents (but specifically excluding the Settlement
Documents) and the transactions described therein or the
indebtedness or obligations evidenced and secured thereby; and
(b) do hereby covenant and agree never to institute or cause to be
instituted or continue prosecution of any suit or other form of
action or proceeding of any kind or nature whatsoever against any
of the Lender Affiliates, by reason of or in connection with any
of the foregoing matters, claims or causes of action; provided,
however, that the foregoing release and covenant not to sue shall
not apply to any claims arising after the Closing Date with
respect to acts, occurrences or events occurring after the Closing
Date.
Section 7.02 Release of Agent. The FDIC, on behalf of
itself and all of its heirs, successors and assigns, (a) does
hereby remise, release, acquit, satisfy and forever discharge the
Agent and its parents, subsidiaries, affiliated corporations and
real estate investment trusts of the Agent, and all of their
respective past, present and future officers, directors,
shareholders, employees, agents, attorneys, representatives,
participants, heirs, successors and assigns (collectively, the
"Agent Affiliates"), from any and all manner of debts,
accountings, bonds, warranties, representations, covenants,
promises, contracts, controversies, agreements, liabilities,
obligations, expenses, damages, judgments, executions, actions,
claims, demands and causes of action of any nature whatsoever,
whether at law or in equity, either now accrued or hereafter
maturing, which the FDIC now has or hereafter can, shall or may
have by reason of any matter, cause or thing, from the beginning
of the world to and including the date of this Agreement with
respect to any matters, transactions, occurrences, agreements,
actions or events arising out of, in connection with or relating
to any act or failure to act by the Agent in respect of (i) any of
the Bank Group Obligations or any portion of the Collateral and
(ii) any of the Bank Group Loan Documents; and (b) do hereby
covenant and agree never to institute or cause to be instituted or
continue prosecution of any suit or other form of action or
proceeding of any kind or nature whatsoever against any of the
Agent Affiliates, by reason of or in connection with any of the
foregoing matters, claims or causes of action; provided, however,
that the foregoing release and covenant not to sue shall not apply
to any claims arising after the Closing Date with respect to acts,
occurrences or events occurring after the Closing Date.
Section 7.03 Mutual Releases. At the request of either
Lender after the Borrowers' payment in full of all amounts owing
to and performance in full of all obligations for the benefit of
such Lender pursuant to the Settlement Documents and, in the case
of NationsBank, the Surviving Documents, the Borrowers and such
Lender shall enter into a mutual release substantially in the form
of Exhibit F hereto.
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Recitals. All of the statements and facts
recited in the Recitals to this Agreement are true and correct as
of the Closing Date, and are incorporated by reference herein.
Section 8.02 Entire Agreement. This Agreement, the other
Settlement Documents and the Surviving Documents set forth the
entire understanding between the parties hereto relating to the
Settlement Documents and the Surviving Documents, and no
modification or amendment of or supplement to this Agreement, the
other Settlement Documents or the Surviving Documents shall be
valid or effective unless the same is in writing and signed by the
party against which enforcement of such is sought.
Section 8.03 Survival of Agreements; Cumulative Nature. All
representations, warranties, covenants, indemnities and agreements
in this Agreement shall survive the execution and delivery of this
Agreement and the execution of the other Settlement Documents
until thirteen (13) months from the date all of the Continuing
Obligations are paid in full. All covenants and agreements of
each of the Borrowers contained in any certificate or other
instrument delivered to the Lender pursuant to any of the
Settlement Documents or the Surviving Documents shall be deemed
agreements and covenants of such Borrower under this Agreement.
All representations and warranties of each of the Borrowers
contained in any other certificate or instrument delivered to the
Lender pursuant to any of the Settlement Documents or the
Surviving Documents shall be deemed to be representations and
warranties of such Borrower under this Agreement. The
representations, warranties, and covenants made in any of the
Settlement Documents, and the rights, powers, and privileges
granted to the Lender in any of the Settlement Documents, are
cumulative, and none of the Settlement Documents shall be
construed in the context of another to diminish, nullify, or
otherwise reduce the benefit to the Lender of any such
representation, warranty, covenant, right, power or privilege.
Section 8.04 Modifications and Waivers. No delay on the
part of the Lender in exercising any right, power or privilege
hereunder or under any of the other Settlement Documents shall
operate as a waiver thereof, nor as any waiver of any other
rights, power or privilege hereunder or thereunder. No single or
partial exercise of any right, power or privilege hereunder or
under any of the other Settlement Documents shall preclude any
other or further exercise thereof, or the exercise of any other
right, power or privilege hereunder or thereunder. All rights and
remedies provided herein and in the other Settlement Documents and
the Surviving Documents are cumulative and are not exclusive of
any rights or remedies that the parties hereto may otherwise have
at law or in equity, other than as expressly provided herein or
therein. Each Lender shall have the right to waive any of the
conditions precedent to its obligations under this Agreement or
under any of the other Settlement Documents. No waiver or
modification, discharge or amendment of this Agreement or of any
other Settlement Document will be valid in the absence of the
written and signed consent of the party against which enforcement
of such is sought. Each reference in any of the Settlement
Documents or any of the Surviving Documents to any of the other
Settlement Documents or Surviving Documents shall be deemed to
include all amendments, modifications or replacements thereof,
supplements thereto and substitutions therefor.
Section 8.05 Notices. All notices, requests, consents,
demands and other communications required or permitted under any
of the Settlement Documents or the Surviving Documents shall be in
writing and, unless otherwise specifically provided in any
Settlement Document or Surviving Document, shall be deemed
sufficiently given or furnished if delivered by a recognized,
national, overnight delivery service, prepaid, at the numbers and
addresses specified below (unless changed by similar notice in
writing given by the particular Person whose address is to be
changed). Any such notice or communication shall be effective
upon receipt and shall be deemed to have been received not later
than the day after deposit with such delivery service.
If to NationsBank: NationsBank, N.A.
Suite 800
8300 Greensboro Drive
McLean, VA 22102
Attention: Mr. Cy Clark, Vice President
Telecopier: (703) XXX-XXXX
With a copy to: Peter D. Schellie, Esq.
Bingham, Dana & Gould LLP
1200 19th Street, N.W, Suite 400
Washington, DC 20036
Telecopier: (202) XXX-XXXX
If to the FDIC: Federal Deposit Insurance
Corporation
5080 Spectrum Drive
Dallas, Texas 75248
Attention:
Telecopier:
If to the Borrowers: c/o Williams Industries, Inc.
2849 Meadow View Road
Falls Church, VA 22042
Attention: Mr. Frank E. Williams, III
Telecopier (703) XXX-XXXX
Section 8.06 SEAL; GOVERNING LAW. THIS AGREEMENT IS
INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT. THIS AGREEMENT
AND EACH OF THE SETTLEMENT DOCUMENTS SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS (EXCEPT RULES
REGARDING CONFLICT OR CHOICE OF LAWS) OF THE COMMONWEALTH OF
VIRGINIA AND THE LAWS OF THE UNITED STATES OF AMERICA.
Section 8.07 Arbitration. Any controversy or claim between
or among the parties hereto including but not limited to those
arising out of this Agreement, ANY OTHER SETTLEMENT DOCUMENT OR
ANY SURVIVING DOCUMENT, or instruments, including any claim based
on or arising from an alleged tort, shall be determined by binding
Arbitration in accordance with the Federal Arbitration Act (or if
not applicable, the applicable state law), the rules of practice
and procedure for Arbitration of commercial disputes of
J.A.M.S./Endispute or any successor thereof (J.A.M.S.) and the
"Special Rules" set forth below. In the event of any
inconsistency, the Special Rules shall control. Judgment upon any
Arbitration award may be entered in any court having jurisdiction.
Any party to this Agreement, ANY OTHER SETTLEMENT DOCUMENT OR ANY
SURVIVING DOCUMENT may bring any action, including a summary or
expedited proceeding, to compel arbitration of any controversy or
claim to which this Agreement, ANY OTHER SETTLEMENT DOCUMENT OR
ANY SURVIVING DOCUMENT applies in any court having jurisdiction
over such action.
(A) Special Rules. The Arbitration shall be conducted in
the county of any borrower's domicile or in the county where ANY
collateral is located at the time of this Agreement's execution,
and administered by J.A.M.S. who will appoint an Arbitrator; if
J.A.M.S. is unable or legally precluded from administering the
Arbitration, then the American Arbitration Association will serve.
All Arbitration hearings will be commenced within NINETY (90) days
of the Demand for Arbitration; further, the Arbitrator shall only,
upon a showing of cause, be permitted to extend the commencement
of such hearing for an additional SIXTY (60) days.
(B) Reservation of Rights. Nothing in this Agreement,
ANY OTHER SETTLEMENT DOCUMENT OR ANY SURVIVING DOCUMENT shall be
deemed to (I) limit the applicability of any otherwise applicable
statutes of limitation or repose and any waivers contained in this
Agreement, ANY OTHER SETTLEMENT DOCUMENT OR ANY SURVIVING
DOCUMENT; or (II) be a waiver by EITHER LENDER of the protection
afforded to it by 12 U.S.C. Section 91 or any substantially
equivalent state law; or (III) limit the right of THE AGENT OR
EITHER LENDER (A) to exercise self help remedies such as (but not
limited to) setoff, or (B) to foreclose against any real or
personal property collateral, or (C) to obtain from a court
provisional or ancillary remedies such as (but not limited to)
injunctive relief, writ of possession or the appointment of a
receiver. THE AGENT OR, TO THE EXTENT APPLICABLE, EITHER LENDER
may exercise such self help rights, foreclose upon such property,
or obtain such provisional or ancillary remedies before, during or
after the pendency of any arbitration proceeding brought pursuant
to this Agreement, ANY OTHER SETTLEMENT DOCUMENT OR ANY SURVIVING
DOCUMENT. Neither the exercise of self help remedies nor the
institution or maintenance of any action for foreclosure or for
provisional or ancillary remedies shall constitute a waiver of the
right of any party, including the claimant in such action, to
arbitrate the merits of the controversy or claim occasioning
resort to such remedies.
(C) NO ARBITRATION INVOLVING THE FDIC. NOTWITHSTANDING
ANY PROVISION CONTAINED IN THIS SECTION 8.07 TO THE CONTRARY, NO
CONTROVERSY OR CLAIM INVOLVING THE FDIC SHALL BE REQUIRED TO BE
DETERMINED BY BINDING ARBITRATION AS OTHERWISE PROVIDED IN THIS
SECTION 8.07.
Section 8.08 Consent to Jurisdiction and Service; WAIVER OF
JURY TRIAL. In the event that any controversy or claim is unable
to be or legally precluded from being or has the FDIC as a party
thereto and is therefore not required to be determined by binding
arbitration in accordance with the provisions of Section 8.07,
then in such instance(s) and only in such instance(s), each of the
Borrowers absolutely and irrevocably consents and submits to the
jurisdiction of the courts of the District of Columbia and the
Commonwealth of Virginia located in the Eastern District thereof
and of any federal court located in the District of Columbia or
the Eastern District of the Commonwealth of Virginia in connection
with any actions or proceedings in which a Lender is or could be a
party brought by any of the parties or against any of them arising
out of or relating to this Agreement, the other Settlement
Documents or the Surviving Documents. IN ANY SUCH ACTION OR
PROCEEDING, EACH OF THE PARTIES HEREBY ABSOLUTELY AND IRREVOCABLY
WAIVES (a) personal service of any summons, complaint, declaration
or other process and hereby and absolutely agrees that the service
thereof may be made by certified or registered first-class mail
directed to such party at the address specified in Section 8.05
hereof, and (b) SUCH PARTY'S RIGHT TO A JURY TRIAL (AND NONE OF
THE PARTIES HERETO WILL SEEK A JURY TRIAL) IN ANY LAWSUIT,
COUNTERCLAIM OR ANY OTHER PROCEEDING BASED ON OR ARISING OUT OF
THIS AGREEMENT, ANY OTHER SETTLEMENT DOCUMENT, ANY SURVIVING
DOCUMENT OR ANY RELATED INSTRUMENT OR AGREEMENT AND WILL NOT IN
ANY WAY SEEK OR SUFFER THE CONSOLIDATION OF ANY SUCH PROCEEDING
WITH AN ACTION IN WHICH A JURY TRIAL HAS NOT BEEN WAIVED. Each of
the parties hereby agrees that it will appear or answer any such
summons, complaint, declaration or other process so served upon it
within the period provided by law. Should any party, having been
so served, fail to appear or answer within the said period, such
party shall be deemed to be in default and judgment may be
rendered against such party for such amount as may have been
demanded in the summons, complaint, declaration or other process
so served. Nothing contained herein shall be viewed as limiting
the right of a Lender to sue any of the Borrowers in the courts of
any country, state or other jurisdiction of the United States of
America or place where any of the parties or any of their property
or assets may be found or in any other appropriate jurisdiction or
the right of the Lender to accomplish service of process in any
other manner permitted by law.
Section 8.09 Acknowledgments of Certain Matters. (a) The
relationship between the Lenders and the Borrowers is limited to
that of creditor/secured party, on the one hand, and borrower or
guarantor/debtor, on the other hand and nothing contained in this
Agreement shall be construed as permitting or obligating either
Lender to act as a financial or business advisor or consultant to
any of the Borrowers, as permitting or obligating either Lender to
control any of the Borrowers or to conduct any of the Borrowers'
operations, as creating any fiduciary obligation on the part of
either Lender to any of the Borrowers, or as creating any joint
venture, agency or other relationship between the parties other
than as explicitly and specifically stated in this Agreement, the
other Settlement Documents and the Surviving Documents. Each of
the Borrowers acknowledge that such Borrower has had the
opportunity to review and analyze this Agreement and each of the
other Settlement Documents and Surviving Documents for a
sufficient period of time before the execution and delivery of
this Agreement and each of the other Settlement Documents to which
such Borrower is a party and has had the opportunity to obtain the
advice of experienced counsel of its own choosing in connection
with the negotiation and execution of this Agreement and the other
Settlement Documents to which such Borrower is a party and to
obtain the advice of such counsel with respect to all matters
contained herein and therein, including without limitation, the
provisions of Article VI relating to the release of the Lenders
from certain liability and Section 7.07 relating to the waiver of
trial by jury. Each of the Borrowers further acknowledges that
such Borrower is experienced with respect to financial and credit
matters and has made its own independent decision to execute and
deliver this Agreement and the other Settlement Documents to which
such Borrower is a party and to effect the transactions
contemplated hereby and thereby.
(b) Each of the parties hereto acknowledges and agrees
that as of the Closing Date, the FDIC shall no longer be a
"Lender" under the Surviving Documents and all references to
"Lender" or "Lenders" contained therein shall be deemed to be a
reference solely to NationsBank.
Section 8.10 Survival of Surviving Documents; Certain
Confirmations. (a) All the terms and conditions of the Surviving
Documents are hereby ratified and confirmed and shall remain in
full force and effect as modified by the Settlement Documents.
(b) WRMI hereby acknowledges, confirms and agrees that on
and as of November 27, 1996, WRMI became and remains a "Borrower"
under the Credit Agreement and each of the other Surviving
Documents for all purposes thereof, and as such is and remains
jointly and severally liable with each of the other Borrowers with
respect to the Continuing BG Obligations and became jointly and
severally liable with WII and each of the NB Guarantors with
respect to the Continuing NB Obligations. Without in any way
implying any limitation on any of the provisions of this
Agreement, any of the other Settlement Documents or any of the
Surviving Documents, to secure the due and prompt payment and
performance by WRMI of the Continuing Obligations, WRMI hereby
assigns, pledges and grants to the Agent for the benefit of
NationsBank, and agrees that the Agent and NationsBank shall have
a first priority, perfected and continuing security interest in,
and lien on, (i) all of the Collateral to the extent of WRMI's
interest, whether now owned or existing or hereafter acquired or
arising, including, without limitation, any and all chattel paper,
contract rights, documents, instruments, fixtures, accounts and
business records of WRMI, (ii) all returned, rejected or
repossessed goods, the sale or lease of which shall have given or
shall give rise to any Collateral, (iii) all insurance policies
relating to any of the foregoing, (iv) 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 or
process the information contained in those books and records and
(v) all cash and non-cash proceeds and products of the foregoing.
WRMI agrees that the Agent, for the benefit of NationsBank 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 under the Settlement Documents and the Surviving
Documents and under applicable laws.
(c) Each of the Borrowers (other than WRMI which is dealt
with in Section 8.10(b) hereof) hereby ratifies and confirms the
Agent's security interest in the Collateral (other than the
Released Collateral) held by such Borrower, including, without
limitation, the Specified Collateral held by such Borrower and,
without in any way limiting the foregoing, to secure the due and
prompt payment and performance by each of such Borrowers of the
Continuing BG Obligations. Without in any way implying any
limitation on any of the provisions of this Agreement, any of the
other Settlement Documents or any of the Surviving Documents, to
secure the due and prompt payment and performance by each of the
Borrowers (other than WRMI which is dealt with in Section 8.10(b)
hereof) of the Continuing Obligations (including, without
limitation, the Continuing NB Obligations), each such Borrower
hereby assigns, pledges and grants to the Agent for the benefit of
NationsBank, and agrees that the Agent and NationsBank shall have
a first priority, perfected and continuing security interest in,
and lien on, (i) all of the Collateral (other than the Released
Collateral) to the extent of such Borrower's interest, whether now
owned or existing or hereafter acquired or arising, including,
without limitation, any and all chattel paper, contract rights,
documents, instruments, fixtures, accounts and business records of
such Borrower, (ii) all returned, rejected or repossessed goods,
the sale or lease of which shall have given or shall give rise to
any Collateral, (iii) all insurance policies relating to any of
the foregoing, (iv) 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 or process the
information contained in those books and records and (v) all cash
and non-cash proceeds and products of the foregoing; and such
Borrower agrees that the Agent, for the benefit of NationsBank
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 under the Settlement Documents and the Surviving
Documents and under applicable laws.
(d) Each of the NB Guarantors hereby ratifies and
confirms such NB Guarantor's guaranty of the repayment of the
indebtedness evidenced by the Second Replacement Note in
accordance with the terms of the NB Obligations Guaranties to
which it is a party.
(e) Each of the Borrowers hereby acknowledges, agrees and
confirms that the Agent shall not be required to marshal any
present or future security for (including but not limited to the
Collateral subject to the security interest created or ratified
and confirmed hereby), or guarantees of, the Continuing
Obligations or any of them, or to resort to such security or
guarantees in any particular order; and all of its rights
hereunder and in respect of such securities and guaranties shall
be cumulative and in addition to all other rights, however
existing or arising. To the extent that it lawfully may, each of
the Borrowers hereby agrees that it will not invoke any law
relating to the marshaling of collateral which might cause delay
in or impede the enforcement of the Agent's rights under this
Agreement, any of the other Settlement Documents or any of the
Surviving Documents or under any other instrument evidencing any
of the Continuing Obligations or under which any of the Continuing
Obligations is outstanding or by which any of the Continuing
Obligations is secured or guaranteed, and to the extent that it
lawfully may do so each of the Borrowers hereby irrevocably waives
the benefits of all such laws. Except as otherwise provided by
applicable law, the Agent shall have no duty as to the collection
or protection of the Collateral or any income thereon, nor as to
the preservation of rights against prior parties, nor as to the
preservation of any rights pertaining thereto beyond the sole
custody thereof.
Section 8.11 Severability. In the event that one or more of
the provisions (or any part of any provision) contained in any
Settlement Document or Surviving Document shall for any reason be
held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any
other provision (or a remaining part of the affected provision) of
such Settlement Document or Surviving Document, but such
Settlement Document or Surviving Document shall be construed to
effect the purposes of such Settlement Document or Surviving
Document as if such invalid, illegal or unenforceable provision
had never been contained therein and to that extent, the
provisions of the Settlement Documents and the Surviving Documents
are severable.
Section 8.12 Further Cooperation; Power of Attorney.
(a) Each of the Borrowers agrees to (i) execute and
deliver to the Lenders such further agreements, instruments,
documents and other writings as either Lender may reasonably
request from time to time to effectuate the purposes of this
Agreement, the other Settlement Documents and the Surviving
Documents and to consummate the transactions contemplated hereby
and thereby, and (ii) cooperate fully with NationsBank in ensuring
that NationsBank has and maintains all rights and benefits of the
Collateral (other than the Released Collateral).
(b) Each of the Borrowers hereby irrevocably designates,
makes, constitutes and appoints each of the Lenders and any
officer or agent thereof, with full power of substitution, as such
Borrower's true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of such Borrower and in
the name of such Borrower or in such Lender's own name for the
purpose of carrying out the terms of this Agreement, the other
Settlement Documents and the Surviving Documents to which such
Borrower is a party, after the occurrence and during the
continuance of a Default, upon the failure or refusal of such
Borrower to perform an act or take any action required under this
Agreement or under any other Settlement Document or any Surviving
Document to which such Borrower is a party, to take any and all
appropriate action and to execute any and all documents that may
be necessary or desirable, in such Lender's determination, to
accomplish the purposes of this Agreement or such other Settlement
Document or Surviving Document.
Section 8.13 Time of the Essence. Time is of the essence of
this Agreement, the other Settlement Documents and the Surviving
Documents, with respect both to the closing of the transactions
contemplated hereby and to the performance of the obligations of
the parties hereto and thereto.
Section 8.14 Integration of Exhibits and Schedules. All
Exhibits and Schedules referred to herein are hereby incorporated
into and made a part of this Agreement as if set forth in full
herein.
Section 8.15 Construction of Agreement. Each party hereto
acknowledges that such party has participated in the negotiation
of this Agreement and the other Settlement Documents, and no
provision of this Agreement or the other Settlement Documents
shall be construed against or interpreted to the disadvantage of
any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have
structured, dictated or drafted such provision.
Section 8.16 Headings. The headings and captions to the
various paragraphs and sections of each of the Settlement
Documents and the Surviving Documents are for convenience only and
shall not be deemed to be a part of such Settlement Document or
Surviving Document.
Section 8.17 Binding Effect; Assignment. This Agreement,
the other Settlement Documents and the Surviving Documents shall
be binding upon and inure to the benefit of the parties hereto and
thereto and their respective successors and assigns; provided,
however, that none of the Borrowers may assign or delegate any of
their rights or obligations hereunder or under the other
Settlement Documents or the Surviving Documents without the
express prior written consent of the Lenders benefited thereby.
Section 8.18 Counterparts. This Agreement may be executed
in any number of counterparts, but all of such counterparts shall
together constitute but one agreement. In making proof of this
Agreement, it shall not be necessary to account for or produce
more than one counterpart signed by each of the parties hereto.
Section 8.19 Expenses. In addition to any payment
obligations that the Borrowers may have pursuant to the Surviving
Documents, the Borrowers shall pay to the Lenders promptly upon
demand therefor any and all reasonable out-of-pocket costs or
expenses (including reasonable legal fees and disbursements)
incurred or sustained by the Lenders in connection with the
preservation or enforcement of any rights of the Lenders under
this Agreement, any of the other Settlement Documents, any of the
Surviving Documents or in respect of any of the other obligations
of the Borrowers to the Lenders. The Borrowers' liability under
this Section 8.19 shall be joint and several.
Section 8.20 Indemnification. The Borrowers agree to
indemnify and hold harmless the Lenders from and against any and
all claims, actions and suits whether groundless or otherwise, and
from and against any and all liabilities, losses, damages and
expenses of every nature and character arising out of this
Agreement, any of the other Settlement Documents, any of the
Surviving Documents or the transactions contemplated hereby and
thereby, including, without limitation, (a) any of the Borrowers'
entering into or performing this Agreement, any of the other
Settlement Documents or any of the Surviving Documents or (b) with
respect to the Borrowers and their properties and assets, the
violation of any Environmental Law, the presence, disposal,
escape, seepage, leakage, spillage, discharge, emission, release
or threatened release of any Hazardous Substances or any action,
suit, proceeding or investigation brought or threatened with
respect to any Hazardous Substances (including, but not limited
to, claims with respect to wrongful death, personal injury or
damage to property), in each case including, without limitation,
the reasonable fees and disbursements of counsel and allocated
costs of internal counsel incurred in connection with any such
investigation, litigation or other proceeding. In litigation, or
the preparation therefor, the Lenders shall be entitled to select
their own counsel and, in addition to the foregoing indemnity, the
Borrowers agree to pay promptly the reasonable fees and expenses
of such counsel. If, and to the extent that the obligations of
the Borrowers under this Section 8.20 are unenforceable for any
reason, the Borrowers hereby agree to make the maximum
contribution to the payment in satisfaction of such obligations
which is permissible under applicable law. The covenants
contained in this Section 8.20 shall survive payment or
satisfaction in full of all other obligations of the Borrowers
under the Settlement Documents and the Surviving Documents. The
Borrowers' liability under this Section 8.20 shall be joint and
several.
Section 8.21 Obligations of JFBCC and BCC Unaffected Pending
Bankruptcy Court Approval. Each of the parties hereto
acknowledges and agrees that JFBCC's and BCC's obligations
hereunder and under the other Settlement Documents to which it is
a party are contingent upon its receipt of bankruptcy court
approval of its execution, delivery and performance of its
obligations hereunder and thereunder in form and substance
satisfactory to NationsBank (the "Bankruptcy Court Approval") and
that each of JFBCC and BCC hereby covenants and agrees to promptly
seek to obtain the Bankruptcy Court Approval. Notwithstanding the
foregoing, each of the parties hereto acknowledges and agrees that
unless and until the Bankruptcy Court Approval has been obtained,
the obligations of each of JFBCC and BCC in respect of the
Continuing BG Obligations shall in no way be affected by the
execution, delivery and performance by the other parties of their
respective obligations under the Settlements Documents and each of
the other Borrowers further acknowledges and agrees that the fact
that the Bankruptcy Court Approval has not been obtained shall in
no way affect such Borrower's obligations, duties and liabilities
under this Agreement, the other Settlement Documents and the
Surviving Documents. Each of the parties hereto further
acknowledges and agrees that any amounts that NationsBank may
recover from each of JFBCC's and BCC's bankruptcy estate in
connection with its liability in respect of the Continuing BG
Obligations, net of all reasonable costs and expenses of
NationsBank in recovering same, shall be applied to reduce the
Continuing Obligations in such order as NationsBank in its sole
and absolute discretion shall determine.
ARTICLE VIII
DEFINITIONS AND RULES OF INTERPRETATION
Section 9.01 Definitions. The following terms shall have
the meanings set forth in this Section 9.01 or elsewhere in the
provisions of this Agreement referred to below:
Additional NB Lease Assignment. See Recitals.
Agent. See Preamble.
Agent Affiliates. See Section 7.02.
Agreement. See Preamble.
APCI. See Preamble
Assumption Agreements. See Section 3.01.
Baltimore Deed of Trust. See Recitals.
Baltimore Property. See Recitals.
Bank Group Letter of Credit Facility. See Recitals.
Bank Group Loan Documents. See Recitals.
Bank Group Note and Bank Group Notes. See Recitals.
Bank Group Obligations. See Recitals.
Bankruptcy Court Approval. See Section 8.21.
BCC. See Preamble.
BEC. See Preamble.
Bedford County Deed of Trust. See Recitals.
Bedford County Property. See Recitals.
Bedford Recording Office. See Recitals.
Borrower and Borrowers. See Preamble.
Carve-Out Note. See Section 2.04.
CEI. See Preamble.
CERCLA. See Section 4.11.
CII. See Preamble.
CIT. See Section 3.01.
Closing Date. See Article I.
Closing Documents. See Section 3.01.
Collateral. See Recitals.
Consolidated or consolidated. With reference to any term
used herein, shall mean that term as applied to the accounts of
WII and its subsidiaries, consolidated in accordance with
generally accepted accounting principles.
Continuing BG Obligations. See Article II.
Continuing Obligations. See Article II.
Continuing NB Obligations. See Article II.
Credit Agreement. See Recitals.
CSI. See Preamble.
CTCI. See Preamble.
CUI. See Preamble.
Dallas Parcel 2 Deed of Trust. See Recitals.
Deeds of Trust. See Section 6.01.
Default. See Section 6.01.
DCC. See Preamble.
DCC Deed of Trust. See Recitals.
DCC Loan. See Recitals.
DCC Loan Documents. See Recitals.
DCC Note. See Recitals.
DCC Security Agreement. See Recitals.
Debenture Shares. See Section 4.21.
Debentures. See Section 1.01.
Default. See Section 6.01.
Deeds of Trust. See Section 3.01.
DVEI. See Preamble.
Environmental Laws. See Section 4.11.
EPA. See Section 4.11.
Fairfax Recording Office. See Recitals.
Falls Church Deed of Trust. See Recitals.
Falls Church Property. See Recitals.
FDIC. See Preamble.
FDIC Debenture. See Section 1.02.
FDIC Debenture Guaranty. See Section 1.02.
First Replacement Note. See Section 1.01.
GC. See Preamble.
Generally accepted accounting principles. Means principles
that are (i) consistent with the principles promulgated or adopted
by the Financial Accounting Standards Board and its predecessors,
as in effect from time to time, and (ii) consistently applied with
past financial statements of the Person adopting the same
principles, provided that in each case referred to in this
definition of "generally accepted accounting principles" a
certified public accountant would, insofar as the use of such
accounting principles is pertinent, be in a position to deliver an
unqualified opinion (other than a qualification regarding changes
in generally accepted accounting principles) as to financial
statements in which such principles have been properly applied.
Guarantors. See Preamble.
Hazardous Substances. See Section 4.11.
HIWI. See Preamble.
HSEI. See Preamble.
IAFI. See Preamble.
IHHC. See Preamble.
JFBCC. See Preamble.
Lender. See Preamble.
Lender Affiliates. See Section 7.01.
Lenders. See Preamble.
Letter of Credit. See Recitals.
Letter of Credit Notes. See Recitals.
Letter of Credit Obligations. See Recitals.
Letters of Credit. See Recitals.
Manassas Deed of Trust. See Recitals.
Manassas Property. See Recitals.
Material Adverse Effect. See Section 4.06.
NationsBank. See Preamble.
NationsBank/ASB. See Preamble.
NationsBank/ASB Letter of Credit Note. See Recitals.
Nations Bank/ASB Revolving Credit Note. See Recitals.
NationsBank/ASB Term Note. See Recitals.
NationsBank/Virginia. See Preamble.
NationsBank/Virginia Letter of Credit Note. See Recitals.
Nations Bank/Virginia Revolving Credit Note. See Recitals.
NationsBank/Virginia Term Note. See Recitals.
NB Debenture. See Section 1.01.
NB Debenture Guaranty. See Section 1.01.
NB Deed of Trust. See Recitals.
NB Guarantors. See Recitals.
NB Lease Assignment. See Recitals.
NB Loan Documents. See Recitals.
NB Obligations. See Recitals.
NB Obligations Guaranties. See Recitals.
NB Real Estate Note. See Recitals.
NB Restructuring Agreement. See Recitals.
NBW. See Preamble.
Operating Borrowers. Collectively, WII, WEI, WEC, WSECI,
IAFI, PMPI, GC, WESI, WEVI, WIIT, WBC and WRMI.
Parcel 1 Bedford Property. See Recitals.
Parcel 2 Bedford Property. See Recitals.
Person. Any individual, corporation, partnership, trust,
unincorporated association, business, or other legal entity, and
any government or any governmental agency or political subdivision
thereof.
PMPI. See Preamble.
Prince William Recording Office. See Recitals.
Properties. See Recitals.
RCRA. See Section 4.11.
Real Property. See Section 3.01.
Registration Rights Agreement. See Section 1.01.
Released Collateral. See Section 1.01.
Replacement Notes. See Section 1.01.
Revolving Credit Loan. See Recitals.
Revolving Credit Loans. See Recitals.
Revolving Credit Notes. See Recitals.
SARA. See Section 4.11.
Second Dallas Property. See Recitals.
Second Replacement Note. See Section 1.01.
Securities Act. See Section 4.21.
Settlement. See Article I, Section 1.03
Settlement Documents. See Section 1.03.
Specified Collateral. See Recitals.
Surviving Documents. Collectively, the Credit Agreement, the
Falls Church Deed of Trust, the Manassas Deed of Trust, the
Baltimore Deed of Trust, the Dallas Parcel 2 Deed of Trust, the
DCC Loan Documents, the NB Deed of Trust, the NB Lease Assignment,
the Additional NB Lease Assignment, the NB Obligations Guaranties
and any related UCC filings, as the foregoing may be amended or
modified by the Settlement Documents or otherwise from time to
time.
Term Notes. See Recitals.
Title Company. See Section 3.01.
Title Policies. See Section 3.01.
TWB. See Preamble.
TWB Revolving Credit Note. See Recitals.
TWB Term Note. See Recitals.
UIWC. See Preamble.
WBC. See Preamble.
Wetlands. See Section 7.21.
WEC. See Preamble.
WEI. See Preamble.
WESI. See Preamble.
WEVI. See Preamble.
WII. See Preamble.
WII Common Stock. See Section 1.01.
WIIT. See Preamble.
WMAHI. See Preamble.
WMECI. See Preamble.
WMMG. See Recitals.
WRMI. See Preamble.
WRMI UCC's. See Section 3.01.
WSECI. See Preamble
Section 9.02 Rules of Interpretation. (a) A reference to
any document or agreement shall include such document or agreement
as amended, modified or supplemented from time to time in
accordance with its terms and the terms of this Agreement.
(b) The singular includes the plural and the plural
includes the singular.
(c) A reference to any law includes any amendment or
modification to such law.
(d) A reference to any Person includes its permitted
successors and permitted assigns.
(e) Accounting terms not otherwise defined herein have
the meanings assigned to them by generally accepted accounting
principles applied on a consistent basis by the accounting entity
to which they refer.
(f) The words "include", "includes" and "including" are
not limiting.
(g) All terms not specifically defined herein or by
generally accepted accounting principles, which terms are defined
in the Uniform Commercial Code as in effect in the Commonwealth of
Virginia, have the meanings assigned to them therein.
(h) Reference to a particular "Section" refers to that
section of this Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words
of like import shall refer to this Agreement as a whole and not to
any particular section or subdivision of this Agreement.
IN WITNESS WHEREOF, this Agreement is executed and sealed as
of the date first written above.
WITNESS/ATTEST: WILLIAMS INDUSTRIES, INC.
______________________ By:________________________(SEAL)
Name: Frank E. Williams, III
Title: Chairman
WITNESS/ATTEST: WILLIAMS ENTERPRISES, INC.
______________________ By:________________________(SEAL)
Name: Frank E. Williams, III
Title: Chairman
WITNESS/ATTEST: WILLIAMS EQUIPMENT CORPORATION
______________________ By:________________________(SEAL)
Name: Frank E. Williams, III
Title: Chairman
WITNESS/ATTEST: ARTHUR PHILLIPS & COMPANY,
INCORPORATED
______________________ By:________________________(SEAL)
Name: Frank E. Williams, III
Title: Chairman
WITNESS:
______________________ ________________________________(SEAL)
Frank E. Williams, Jr., in his capacity
as trustee for the Arthur Phillips &
Company, Incorporated
WITNESS:
______________________ ________________________________(SEAL)
Leonard Faircloth, in his capacity
as trustee for the Arthur Phillips &
Company, Incorporated
WITNESS/ATTEST: WILLIAMS STEEL ERECTION
COMPANY, INC.
______________________ By:________________________(SEAL)
Name: Frank E. Williams, III
Title: Chairman
WITNESS/ATTEST: UNION IRON WORKS COMPANY
______________________ By:________________________(SEAL)
Name: Frank E. Williams, Jr.
Title: Chairman
WITNESS/ATTEST: IAF TRANSFER CORPORATION
______________________ By:________________________(SEAL)
Name: Frank E. Williams, III
Title: Chairman
WITNESS/ATTEST: CRANES UNLIMITED, INC.
______________________ By:________________________(SEAL)
Name: Frank E. Williams, Jr.
Title: Chairman
WITNESS/ATTEST: PIEDMONT METAL PRODUCTS, INC.
______________________ By:________________________(SEAL)
Name: Frank E. Williams, III
Title: Chairman
WITNESS/ATTEST: WILLIAMS MID-ATLANTIC
HOLDINGS, INC.
______________________ By:________________________(SEAL)
Name: Frank E. Williams, Jr.
Title: Chairman
WITNESS/ATTEST: CAPITOL TOWER CRANES, INC.
______________________ By:________________________(SEAL)
Name: Frank E. Williams, Jr.
Title: Chairman
WITNESS/ATTEST: GREENWAY CORPORATION
______________________ By:________________________(SEAL)
Name: Frank E. Williams, III
Title: Chairman
WITNESS/ATTEST: JOHN F. BEASLEY CONSTRUCTION
COMPANY, debtor and debtor in
possession
______________________ By:________________________(SEAL)
Name: Frank E. Williams, III
Title: Chairman
WITNESS/ATTEST: HARBOR STEEL ERECTORS,
INCORPORATED
______________________ By:________________________(SEAL)
Name: Frank E. Williams, Jr.
Title: Chairman
WITNESS/ATTEST: WILLIAMS ENVIRONMENTAL
SERVICES, INC.
______________________ By:________________________(SEAL)
Name: Frank E. Williams, III
Title: Chairman
WITNESS/ATTEST: WILLIAMS ENTERPRISES OF
VIRGINIA, INC.
______________________ By:________________________(SEAL)
Name: Frank E. Williams, III
Title: Chairman
WITNESS/ATTEST: WILLIAMS INDUSTRIES INSURANCE
TRUST
______________________ By:________________________(SEAL)
Name: Frank E. Williams, III
Title: Trustee & Authorized Agent
WITNESS/ATTEST: WILLIAMS BRIDGE COMPANY
______________________ By:________________________(SEAL)
Name: Frank E. Williams, III
Title: Chairman
WITNESS/ATTEST: INTER-HARBOR HOLDING COMPANY,
INC.
______________________ By:________________________(SEAL)
Name: Frank E. Williams, Jr.
Title: Chairman
WITNESS/ATTEST: HARBOR IRON WORKS, INC.
______________________ By:________________________(SEAL)
Name: Frank E. Williams, Jr.
Title: Chairman
WITNESS/ATTEST: CREATIVE IRON, INC.
______________________ By:________________________(SEAL)
Name: Frank E. Williams, III
Title: Authorized Agent
WITNESS/ATTEST: BEASLEY ENGINEERING COMPANY
______________________ By:________________________(SEAL)
Name: Frank E. Williams, III
Title: President
WITNESS/ATTEST: BEASLEY CONSTRUCTION COMPANY,
as debtor and debtor in possession
______________________ By:________________________(SEAL)
Name: Frank E. Williams, III
Title: President
WITNESS/ATTEST: WII REALTY MANAGEMENT, INC.
______________________ By:________________________(SEAL)
Name: Frank E. Williams, III
Title: Chairman
WITNESS: NATIONSBANK, N.A.
______________________ By:________________________(SEAL)
Name: Cy Clark
Title: Vice President
WITNESS: NATIONSBANK, N.A.
as Agent
______________________ By:________________________(SEAL)
Name: Cy Clark
Title: Vice President
WITNESS: FEDERAL DEPOSIT INSURANCE
CORPORATION, in its capacity as
Receiver for the National Bank of
Washington
______________________ By:________________________(SEAL)
Name:
Title:
WITNESS: FEDERAL DEPOSIT INSURANCE
CORPORATION, in its capacity
as Receiver for The Washington
Bank of Virginia
______________________ By:________________________(SEAL)
Name:
Title:
SCHEDULES AND EXHIBITS (OMITTED)
SCHEDULES
Schedule 4.04 Bankruptcy Events
Schedule 4.05 Insolvency Litigation
Schedule 4.06 Litigation
Schedule 4.07 Title Exceptions
Schedule 4.09 Outstanding Items
Schedule 4.10 Mechanics' Liens
Schedule 4.13 Taxes
Schedule 4.16 Defaults
Schedule 4.20 WII's Articles of Incorporation
EXHIBITS
Exhibit A-1 Form of First Replacement Note
Exhibit A-2 Form of Second Replacement Note
Exhibit B Form of Debenture
Exhibit C Form of Guaranty
Exhibit D Form of Registration Rights Agreement
Exhibit E-1 Form of Second Amendment to Commercial Deed
of Trust and Assumption Agreement (Falls
Church)
Exhibit E-2 Form of Second Amendment to Commercial Deed
of Trust and Assumption Agreement (Manassas)
Exhibit E-3 Form of Second Amendment to Commercial Deed
of Trust and Assumption Agreement (Bedford)
Exhibit E-4 Form of Third Modification to Deed of Trust and
Assumption Agreement (NB Deed of Trust)
Exhibit F Form of Mutual Release
LOAN AND SECURITY AGREEMENT
This Agreement is between the undersigned Borrower and the
undersigned Lender concerning loans and other credit
accommodations to be made by Lender to Borrower.
SECTION 1. PARTIES
1.1 The "Borrower" is the person, firm, corporation or
other entity, identified as the Borrower in Section 10.6(c) and
its successors and assigns. If more than one Borrower is
specified in Section 10.6(c), all references to Borrower shall
mean each of them, jointly and severally, individually and
collectively, and the successors and assigns of each.
1.2 The "Lender" is The CIT Group/Credit Finance, Inc. and
its successors and assigns.
SECTION 2. LOANS AND OTHER CREDIT ACCOMMODATIONS
2.1 Revolving Loans. Lender shall, subject to the terms and
conditions contained herein, make revolving loans to Borrower
("Revolving Loans") in amounts requested by Borrower from time
to time, but not in excess of the Net Availability existing
immediately prior to the making of the requested loan and
provided the requested loan would not cause the outstanding
Obligations to exceed the Maximum Credit.
(a) The "Maximum Credit" is set forth in Section 10.1(a)
hereof.
(b) The "Gross Availability" to the extent applicable,
shall be calculated at any time as (i) the product obtained by
multiplying the outstanding amount of Eligible Accounts, net of
all taxes, discounts, allowances and credits given or claimed,
by the Eligible Accounts Percentage set forth in Section
10.1(b), plus: (ii) the product(s) obtained by multiplying the
applicable Eligible Inventory Percentage(s), if any, set forth
in Section 10.1(b) by the values (as determined by Lender based
on the lower of cost or market) of Eligible Inventory, but the
amount so added shall not exceed any sublimits set forth in
Section 10.1(c),
(c) The "Net Availability" to the extent applicable, shall
be calculated at any time as an amount equal to the Gross
Availability minus the aggregate amount of all then-outstanding
Obligations to Lender other than the then outstanding principal
balance of the Term Loan, if any.
(d) "Eligible Accounts" are accounts created by Borrower in
the ordinary course of its business which are and remain
acceptable to Lender for lending purposes. General criteria for
Eligible Accounts are set forth below but may be revised from time
to time by Lender, in its sole judgment, on fifteen (15) days'
prior written notice to Borrower. Lender shall, in general, deem
accounts to be Eligible Accounts if: (1) such accounts arise from
bona fide completed transactions and have not remained unpaid for
more than the number of days after the invoice date set forth in
Section 10.1(d); (2) the amounts of the accounts reported to
Lender are absolutely owing to Borrower and do not arise from
sales on consignment, guaranteed sale or other terms under which
payment by the account debtors may be conditional or contingent;
(3) the account debtor's chief executive office or principal place
of business is located in the United States; (4) such accounts do
not arise from progress billings retainages or bill and hold
sales; (5) there are no contra relationships, setoffs,
counterclaims or disputes existing with respect thereto and there
are no other facts existing or threatened which would impair or
delay the collectibility of all or any portion thereof; (6) the
goods giving rise thereto were not at the time of the sale subject
to any liens except those permitted in this Agreement; (7) such
accounts are not accounts with respect to which the account debtor
or any officer or employee thereof is an officer, employee or
agent of or is affiliated with Borrower, directly or indirectly,
whether by virtue of family membership, ownership, control,
management or otherwise; (8) such accounts are not accounts with
respect to which the account debtor is the United States or any
State or political subdivision thereof or any department, agency
or instrumentality of the United States, any State or political
subdivision, unless there has been compliance with the Assignment
of Claims Act or any similar State or local law, if applicable;
(9) Borrower has delivered to Lender or Lender's representative
such documents as Lender may have requested pursuant to Section
5.8 hereof in connection with such accounts and Lender shall have
received a verification of such account, satisfactory to it, if
sent to the account debtor or any other obligor or any bailee
pursuant to Section 5.4 hereof; (10) there are no facts existing
or threatened which might result in any adverse change in the
account debtor's financial condition; (11) such accounts owed by a
single account debtor or its affiliates do not represent more than
twenty percent (20%) of all otherwise Eligible Accounts (accounts
excluded from Eligible Accounts solely by reason of this
subsection (11) shall nevertheless be considered Eligible Accounts
to the extent of the amount of such accounts which does not exceed
twenty percent (20%) of all otherwise Eligible Accounts); (12)
such accounts are not owed by an account debtor who is or whose
affiliates are past due upon other accounts owed to Borrower
comprising more than fifty percent (50%) of the accounts of such
account debtor or its affiliates owed to Borrower; (13) such
accounts are owed by account debtors whose total indebtedness to
Borrower does not exceed the amount of any customer credit limits
as established, and changed, from time to time by Lender on notice
to Borrower (accounts excluded from Eligible Accounts solely by
reason of this subsection (13) shall nevertheless be considered
Eligible Accounts to the extent the amount of such accounts does
not exceed such customer credit limit); and (14) such accounts are
owed by account debtors deemed creditworthy at all times by
Lender.
(e) "Eligible Inventory" is inventory owned by Borrower which
is and remains acceptable to Lender for lending purposes and is
located at one of the addresses set forth in Section 10.6(e).
(f) Lender shall have a continuing right to deduct reserves
in determining the Gross Availability ("Reserves"), and to
increase and decrease such Reserves from time to time, if and to
the extent that, in Lender's sole judgment, such Reserves are
necessary to protect Lender against any state of facts which does,
or would, with notice or passage of time or both, constitute an
Event of Default or have an adverse effect on any Collateral.
Lender may, at its option, implement Reserves by designating as
ineligible a sufficient amount of equipment or inventory which
would otherwise be Eligible Inventory or Eligible Equipment so as
to reduce Gross Availability by the amount of the intended
Reserve. In particular, and not by way of limitation, Lender has
informed Borrower and Borrower has agreed, that Lender shall
establish Reserves in the amount of $75,000.00
(g) Subject to the terms and conditions hereof, including but
not limited to the existence of sufficient Gross and Net
Availability, Borrower agrees to borrow sufficient amounts from
time to time so that the outstanding Revolving Loan or the Term
Loan, shall at all times equal or exceed the principal amount set
forth in Section 10.1(d) as the Minimum Borrowing; provided, that
if Borrower fails to do so, interest shall nevertheless accrue on
the Obligations as if Borrower had all times borrowed such amounts
as would have been sufficient to maintain the outstanding
Revolving Loans and Term Loan at an amount equal to the Minimum
Borrowing (and Lender shall have the right to charge Borrower's
loan account for such additional interest), and provided further
that such accrual shall not impose upon Lender any obligation to
make loans to Borrower to increase the outstanding Revolving Loans
or Term Loan to such Minimum Borrowing. Borrower will maintain
Gross Net Availability at all times in amounts sufficient to
permit Borrower to comply with the Minimum Borrowing requirement.
2.2 Term Loan. Lender shall, subject to the terms and
conditions contained herein, make a $2,985,844.00 equipment loan
("Term Loan") to Borrower.
(a) Borrower shall repay $2,500,000.00 of the
principal of the Term Loan in thirty-four (34) consecutive equal
monthly installments of $34,750.00 each, commencing on May 1,
1997, provided that the final (35th) installment shall be in an
amount that will result in the full repayment of the Term Loan.
(b) Upon the termination of this Agreement whether
for default, non-renewal after the expiration of the original term
hereunder, or for any other reason whatsoever, prior to the full
payment of the installments provided for in sub-section (a) above,
then the entire unpaid balance of the Term Loan shall be fully due
and payable upon such expiration, default or other termination.
(c) Interest on the Term Loan shall be the Prime
Rate (as hereinafter defined) plus 2.5% per annum.
2.3 Accommodations.
(a) Lender may, in its sole discretion, issue or cause to be
issued, from time to time at Borrower's request and on terms and
conditions and for purposes satisfactory to Lender, credit
accommodations consisting of letters of credit, bankers'
acceptances, merchandise purchase guaranties or other guaranties
or indemnities for Borrower's account ("Accommodations").
Borrower shall execute and perform additional agreements relating
to the Accommodations in form and substance acceptable to Lender
and the issuer of any Accommodations, all of which shall
supplement the rights and remedies granted herein. Any payments
made by Lender or any affiliate of Lender in connection with the
Accommodations shall constitute additional Revolving Loans to
Borrower.
(b) In addition to the fees and costs of any issuer in
connection with issuing or administering Accommodations, Borrower
shall pay monthly to Lender, on the first day of each month, a
charge on open Accommodations at the rate per annum set forth in
Section 10.3(a) (the "Accommodation Charges").
(c) No Accommodation will be issued unless the full amount of
the Accommodation requested, plus fees and costs for issuance, is
less than the Net Availability existing immediately prior to the
issuance of the requested Accommodation, or if the requested
Accommodation would cause the outstanding Obligations to exceed
the Maximum Credit, or cause the open amount of Accommodations to
exceed, at any time, the Accommodation sublimit set forth in
Section 10.3(b).
(d) All indebtedness, liabilities and obligations of any sort
whatsoever, however arising, whether present or future, fixed or
contingent, secured or unsecured, due or to become due, paid or
incurred, arising or incurred in connection with any Accommodation
shall be included in the term "Obligations", as defined herein,
and shall include, without limitation, (i) all amounts due or
which may become due under any Accommodation; (ii) all amounts
charged or chargeable to Borrower or to Lender by any bank, other
financial institution or correspondent bank which opens, issues or
is involved with such Accommodations; (iii) Lender's Accommodation
Charges and all fees, costs and other charges of any issuer of any
Accommodation; and (iv) all duties, freight, taxes, costs,
insurance and all such other charges and expenses which may
pertain directly or indirectly to any Obligations or
Accommodations or to the goods or documents relating thereto.
(e) Borrower unconditionally agrees to indemnify and hold
Lender harmless from any and all loss, claim or liability
(including reasonable attorneys' fees) arising from any
transactions or occurrences relating to any Accommodation
established or opened for Borrower's account, the Collateral
relating thereto and any drafts or acceptances thereunder,
including any such loss or claim due to any action taken by an
issuer of any Accommodation. Borrower further agrees to indemnify
and hold Lender harmless for any errors or omissions in connection
with the Accommodations, whether caused by Lender, by the issuer
of any Accommodation or otherwise. Borrower's unconditional
obligation to indemnify and hold Lender harmless under this
provision shall not be modified or diminished for any reason or in
any manner whatsoever, except for Lender's willful misconduct.
Borrower agrees that any charges made to Lender by any issuer of
any Accommodation shall be conclusive on Borrower and may be
charged to Borrower's account.
(f) Lender shall not be responsible for: the conformity of
any goods to the documents presented; the validity or genuineness
of any documents; delay, default, or fraud by the Borrower or
shipper and/or anyone else in connection with the Accommodations
or any underlying transaction.
(g) Borrower agrees that any action taken by Lender, if taken
in good faith, or any action taken by an issuer of any
Accommodation, under or in connection with any Accommodation,
shall be binding on Borrower and shall not create any resulting
liability to Lender. In furtherance thereof, Lender shall have
the full right and authority to clear and resolve any questions of
non-compliance of documents; to give any instructions as to
acceptance or rejection of any documents or goods; to execute for
Borrower's account any and all applications for steamship or
airway guarantees, indemnities or delivery orders; to grant any
extensions of the maturity of, time of payment for, or time of
presentation of, any drafts, acceptances, or documents; and to
agree to any amendments, renewals, extensions, modifications,
changes or cancellations of any of the terms or conditions of any
of the applications or Accommodations. All of the foregoing
actions may be taken in Lender's sole name, and the issuer thereof
shall be entitled to comply with and honor any and all such
documents or instruments executed by or received solely from
Lender, all without any notice to or any consent from Borrower.
None of the foregoing actions described in this subsection (g) may
be taken by Borrower without Lender's express written consent.
2.4 Certain Amounts Due Without Demand. Lender may, in its
sole discretion, make or permit Revolving Loans, Accommodations or
other Obligations in excess of the Maximum Credit, Gross or Net
Availability or applicable formulas or sublimits. All or any
portion of such excess(es) shall be immediately due and payable
without Lender's demand.
SECTION 3. INTEREST AND FEES
3.1 Interest. (a) Interest on the Revolving Loans and Term Loans
shall be payable by Borrower on the first day of each month,
calculated upon the closing daily balances in the loan account of
Borrower for each day during the immediately preceding month, at
the per annum rate set forth as the Interest Rate in Section
10.4(a). The Interest Rate shall increase or decrease by an amount
equal to each increase or decrease, respectively, in the Prime
Rate (as defined below), effective as of the date of each such
change. On and after any Event of Default or termination or non-
renewal hereof, interest on all unpaid Obligations shall accrue at
a rate equal to two percent (2%) per annum in excess of the
Interest Rate otherwise payable until such time as all Obligations
are indefeasibly paid in full (notwithstanding entry of any
judgment against Borrower or the exercise of any other right or
remedy by Lender), and all such interest shall be payable on
demand. Interest shall, on a per annum basis, not be less than
the Interest Rate multiplied by the Minimum Loan. In no event
shall charges constituting interest exceed the rate permitted
under any applicable law or regulation, and if any provision of
this Agreement is in contravention of any such law or regulation,
such provision shall be deemed amended to conform thereto.
(b) The "Prime Rate" is the rate of interest publicly
announced by the Chase Manhattan Bank in New York, New York, or
its successors, and assigns from time to time as its prime rate
(the prime rate is not intended to be the lowest rate of interest
charged by Chase Manhattan Bank to its borrowers).
3.2 Facility Fee. Borrower shall pay Lender the Facility Fee
in the amounts and on the dates set forth in Section 10.4( c).
3.3 Account Servicing Collateral Handling Fee. If and when
applicable, Borrower shall pay Lender monthly, on the first day of
each month an Account Servicing Fee for the immediately preceding
month (or part thereof) in the amount set forth in Section
10.4(c).
3.4 Charges to Loan Account. At Lender's option, all
payments of principal, interest, fees, costs, expenses and other
charges provided for in this Agreement, or in any other agreement
now or hereafter existing between Lender and Borrower, may be
charged on the date when due, as principal to any loan account of
Borrower maintained by Lender. Interest, fees for Accommodations,
the Unused Line Fee and any other amounts payable by Borrower to
Lender based on a per annum rate shall be calculated on the basis
of actual days elapsed over a 360-day year.
SECTION 4. GRANT OF SECURITY INTEREST
4.1 Grant of Security Interest. To secure the payment and
performance in full of all Obligations, Borrower hereby grants to
Lender a continuing security interest in and lien upon, and a
right of setoff against, and Borrower hereby assigns and pledges
to Lender, all of the Collateral, including any Collateral not
deemed eligible for lending purposes.
4.2 "Obligations" shall mean any and all Revolving Loans,
Term Loans, Accommodations and all other indebtedness, liabilities
and obligations (including amounts owed by one, some or all of the
entities designated as "Borrower") of every kind, nature and
description owing by Borrower to Lender and/or its affiliates,
including principal, interest, charges, fees and expenses, however
evidenced, whether as principal, surety, endorser, guarantor or
otherwise, whether arising under this Agreement or otherwise,
whether now existing or hereafter arising, whether arising before,
during or after the initial or any renewal Term or after the
commencement of any case with respect to Borrower under the United
States Bankruptcy Code or any similar statute, whether direct or
indirect, absolute or contingent, joint or several, due or not
due, primary or secondary, liquidated or unliquidated, secured or
unsecured, original, renewed or extended and whether arising
directly or howsoever acquired by Lender including from any other
entity outright, conditionally or as collateral security, by
assignment, merger with any other entity, participations or
interests of Lender in the obligations of Borrower to others,
assumption, operation of law, subrogation or otherwise and shall
also include all amounts chargeable to Borrower under this
Agreement or in connection with any of the foregoing. Each entity
defined as "Borrower" hereby waives all notices and suretyship
defenses with respect to all other entities defined as "Borrower",
and Lender may grant extensions and other indulgences, may release
Collateral or the liability of another Borrower or of any
guarantor for Borrower without releasing any Borrower or impairing
Lender's rights against Borrower hereunder or under law.
4.3 "Collateral" shall mean all of the following property of
Borrower:
All now owned and hereafter acquired right, title and interest of
Borrower in, to and in respect of all: accounts, interests in
goods represented by accounts, returned, reclaimed or repossessed
goods with respect thereto and rights as an unpaid vendor;
contract rights; chattel paper; investment property; general
intangibles (including, but not limited to, tax and duty refunds,
registered and unregistered patents, trademarks, service marks,
copyrights, trade names, applications for the foregoing, trade
secrets, goodwill, processes, drawings, blueprints, customer
lists, licenses, whether as licensor or licensee, choses in action
and other claims, and existing and future leasehold interests in
equipment and fixtures); documents; instruments; letters of
credit, bankers' acceptances or guaranties; cash monies, deposits,
securities, bank accounts, deposit accounts, credits and other
property now or hereafter held in any capacity by Lender, its
affiliates or any entity which, at any time, participates in
Lender's financing of Borrower or at any other depository or other
institution; agreements or property securing or relating to any of
the items referred to above;
All now owned and hereafter acquired right, title and interest of
Borrower in, to and in respect of goods, including, but not
limited to:
All inventory, wherever located, whether now owned or hereafter
acquired, of whatever kind, nature or description, including all
raw materials, work-in-process, finished goods, and materials to
be used or consumed in Borrower's business; and all names or marks
affixed to or to be affixed thereto for purposes of selling same
by the seller, manufacturer, lessor or licensor thereof;
All equipment and fixtures, wherever located, whether now owned or
hereafter acquired, including, without limitation, all machinery,
equipment, motor vehicles, furniture and fixtures, the equipment
described on Schedule A, attached hereto and incorporated herein,
and any and all additions, substitutions, replacements (including
spare parts), and accessions thereof and thereto;
All consumer goods, farm products, crops, timber, minerals or the
like (including oil and gas), wherever located, whether now owned
or hereafter acquired, of whatever kind, nature or description;
All now owned and hereafter acquired right, title and interests of
Borrower in, to and in respect of any personal property in or upon
which Lender has or may hereafter have a security interest, lien
or right of setoff;
All present and future books and records relating to any of the
above including, without limitation, all computer programs,
printed output and computer readable data in the possession or
control of the Borrower, any computer service bureau or other
third party;
All products and proceeds of the foregoing in whatever form and
wherever located, including, without limitation, all insurance
proceeds and all claims against third parties for loss or
destruction of or damage to any of the foregoing;
SECTION 5. COLLECTION AND ADMINISTRATION
5.1 Collections. Upon the occurrence of an Event of Default,
Borrower shall, at Borrower's expense and in the manner requested
by Lender from time to time, direct that remittances and all other
proceeds of accounts and other Collateral shall be sent to a
blocked or Lender bank account designated by and/or maintained in
the name of Lender, and deposited into a bank account now or
hereafter selected by Lender and maintained in the name of Lender
under arrangements with the depository bank under which all funds
deposited to such bank account are required to be transferred
solely to Lender. Borrower shall bear all risk of loss of any
funds deposited into such account. In connection therewith,
Borrower shall execute such bank account agreements as Lender
shall specify. Any collections or other proceeds received by
Borrower shall be held in trust for Lender and immediately
remitted to Lender in kind.
5.2 Payments. All Obligations shall be payable at Lender's
office set forth below or at Lender's bank designated in Section
10.6(b) or at such other bank or place as Lender may expressly
designate from time to time for purposes of this Section. Lender
shall apply all proceeds of accounts or other Collateral received
by Lender and all other payments in respect of the Obligations to
the Revolving Loans whether or not then due or to any other
Obligations then due, in whatever order or manner Lender shall
determine. For purposes of determining Gross and Net Availability
and for the calculation of Minimum Borrowings, remittances and
other payments with respect to the Collateral and Obligations will
be treated as credited to the loan account of Borrower maintained
by Lender and Collateral balances to which they relate, upon the
date of Lender's receipt of advice from Lender's bank that such
remittances or other payments have been credited to Lender's
account or in the case of remittances or other payments received
directly in kind by Lender, upon the date of Lender's deposit
thereof at Lender's bank, subject to final payment and collection.
In computing interest charges, the loan account of Borrower
maintained by Lender will be credited with remittances and other
payments three (3) Business Days after the day Lender has received
advice of receipt of remittances in Lender's account at Lender's
Bank. For purposes of this Agreement, "Business Day" shall mean
any day other than a Saturday, Sunday or any other day on which
banks located in states where Lender has its offices, are
authorized to close.
5.3 Loan Account Statements. Lender shall render to Borrower
monthly a loan account statement. Each statement shall be
considered correct and binding upon Borrower as an account stated,
except to the extent that Lender receives, within sixty (60) days
after the mailing of such statement, written notice from Borrower
of any specific exceptions by Borrower to that statement.
5.4 Direct Collections. Lender may, without notice to or
assent of Borrower, (a) after an Event of Default has occurred,
notify any account debtor that the accounts and other Collateral
which includes a monetary obligation have been assigned to Lender
by Borrower and that payment thereof is to be made to the order of
and directly to Lender, (b) send, or cause to be sent by its
designee, requests (which may identify the sender by a pseudonym)
for verification of accounts and other Collateral directly to any
account debtor or any other obligor or any bailee with respect
thereto, and (c) after an Event of Default has occurred, demand,
collect or enforce payment of any accounts or such other
Collateral, but without any duty to do so, and Lender shall not be
liable for any failure to collect or enforce payment thereof.
5.5 Attorney-in-Fact. Borrower hereby appoints Lender and
any designee of Lender as Borrower's attorney-in-fact and
authorizes Lender or such designee, at Borrower's sole expense, to
exercise at any times in Lender's or such designee's discretion
all or any of the following powers, which powers of attorney,
being coupled with an interest, shall be irrevocable until all
Obligations have been paid in full: (a) receive, take, endorse,
assign, deliver, accept and deposit, in the name of Lender or
Borrower, any and all cash, checks, commercial paper, drafts,
remittances and other instruments and documents relating to the
Collateral or the proceeds thereof, (b) transmit to account
debtors, other obligors or any bailees notice of the interest of
Lender in the Collateral or request from account debtors or such
other obligors or bailees at any time, in the name of Borrower or
Lender or any designee of Lender, information concerning the
Collateral and any amounts owing with respect thereto, (c) after
an Event of Default notify account debtors or other obligors to
make payment directly to Lender, or notify bailees as to the
disposition of Collateral, (d) take or bring, in the name of
Lender or Borrower, all steps, actions, suits or proceedings
deemed by Lender necessary or desirable to effect collection of or
other realization upon the accounts and other Collateral, (e)
after an Event of Default, change the address for delivery of mail
to Borrower and to receive and open mail addressed to Borrower,
(f) after an Event of Default, extend the time of payment of,
compromise or settle for cash, credit, return of merchandise, and
upon any terms or conditions, any and all accounts or other
Collateral which includes a monetary obligation and discharge or
release the account debtor or other obligor, without affecting any
of the Obligations, and (g) execute in the name of Borrower and
file against Borrower in favor of Lender financing statements or
amendments with respect to the Collateral.
5.6 Liability. Borrower hereby releases and exculpates
Lender, its officers, employees and designees, from any liability
arising from any acts under this Agreement or in furtherance
thereof, whether as attorney-in-fact or otherwise, whether of
omission or commission, and whether based upon any error of
judgment or mistake of law or fact, except for willful misconduct.
In no event will Lender have any liability to Borrower for lost
profits or other special or consequential damages.
5.7 Administration of Accounts. After an Event of Default,
Borrower shall not, without the prior written consent of Lender in
each instance, (a) grant any extension of time of payment of any
of the accounts or any other Collateral which includes a monetary
obligation, (b) compromise or settle any of the accounts or any
such other Collateral for less than the full amount thereof, (c)
release in whole or in part any account debtor or other person
liable for the payment of any of the accounts or any such other
Collateral, or (d) grant any credits, discounts, allowances,
deductions, return authorizations or the like with respect to any
of the accounts or any such other Collateral.
5.8 Documents. At such times as Lender may request and in
the manner specified by Lender, Borrower shall deliver to Lender
or Lender's representative, as Lender shall designate, copies or
original invoices, agreements, proofs of rendition of services and
delivery of goods and other documents evidencing or relating to
the transactions which gave rise to accounts or other Collateral,
together with customer statements, schedules describing the
accounts or other Collateral and/or statements of account and
confirmatory assignments to Lender of the accounts or other
Collateral, in form and substance satisfactory to Lender and duly
executed by Borrower. Without limiting the provisions of Section
5.7, Borrower's granting of credits, discounts, allowances,
deductions, return authorizations or the like will be promptly
reported to Lender in writing. In no event shall any such schedule
or confirmatory assignment (or the absence thereof or omission of
any of the accounts or other Collateral therefrom) limit or in any
way be construed as a waiver, limitation or modification of the
security interests or rights of Lender or the warranties,
representations and covenants of Borrower under this Agreement.
Any documents, schedules, invoices or other paper delivered to
Lender by Borrower may be destroyed or otherwise disposed of by
Lender six (6) months after receipt by Lender, unless Borrower
requests their return in writing in advance and makes prior
arrangements for their return at Borrower's expense.
5.9 Access. From time to time as requested by Lender, at the
sole expense of Borrower, Lender or its designee shall have
access, prior to an Event of Default during reasonable business
hours and on or after an Event of Default at any time, to all of
the premises where Collateral is located for the purposes of
inspecting the Collateral, and all Borrower's books and records,
and Borrower shall permit Lender or its designee to make such
copies of such books and records or extracts therefrom as Lender
may request. Without expense to Lender, Lender may use such of
Borrower's personnel, equipment, including computer equipment,
programs, printed output and computer readable media, supplies and
premises for the collection of accounts and realization on other
Collateral as Lender, in its sole discretion, deems appropriate.
To the extent permitted by law and in compliance therewith,
Borrower hereby irrevocably authorizes all accountants and third
parties to disclose and deliver to Lender at Borrower's expense
all financial information, books and records, work papers,
management reports and other information in their possession
regarding Borrower.
5.10 Environmental Audits. From time to time, as requested by
Lender, at the sole expense of Borrower, Borrower shall provide
Lender, or its designee, complete access to all of Borrower's
facilities for the purpose of conducting an environmental audit of
such facilities as Lender or its designees may deem necessary.
Borrower agrees to cooperate with Lender with respect to any
environmental audit conducted by Lender or its designee pursuant
to this Section 5.10.
SECTION 6. ADDITIONAL REPRESENTATIONS, WARRANTIES AND
COVENANTS
Borrower hereby represents, warrants and covenants to Lender the
following, the truth and accuracy of which, and compliance with
which, shall be continuing conditions of the making of loans or
other credit accommodations by Lender to Borrower:
6.1 Financial and Other Reports. Borrower shall keep and
maintain its books and records in accordance with generally
accepted accounting principles, consistently applied. Borrower
shall, at its expense, deliver to Lender: (a) on or before the
fifteenth (15th) day of each month (i) true and complete monthly
agings of its accounts receivable, accounts payable and notes
payable and (ii) inventory reports; (b) on or before the twenty-
fifth (25th) day of each month, monthly internally prepared
interim financial statements; and (c) on or before the thirtieth
(30th) day following each fiscal quarter, consolidated and
consolidating financial statements of all Borrowers and Guarantor
certified by an officer of Borrower, and; (d) audited financial
statements of Borrower accompanied by the report and opinion
thereon of independent certified public accountants acceptable to
Lender, as soon as available, but in no event later than ninety
(90) days after the end of Borrower's fiscal year. All of the
foregoing shall be in such form and together with such information
with respect to the business of Borrower or any Guarantor, as
Lender may in each case request.
6.2 Trade Names. Borrower may from time to time render
invoices to account debtors under its trade names set forth in
Section 10.6(g) after Lender has received prior written notice
from Borrower of the use of such trade names and as to which,
Borrower agrees that: (a) each trade name does not refer to
another corporation or other legal entity, (b) all accounts and
proceeds thereof (including any returned merchandise) invoiced
under any such trade names are owned exclusively by Borrower and
are subject to the security interest of Lender and the other terms
of this Agreement, and (c) all schedules of accounts and
confirmatory assignments including any sales made or services
rendered using the trade name shall show Borrower's name as
assignor and Lender is authorized to receive, endorse and deposit
to any loan account of Borrower maintained by Lender all checks or
other remittances made payable to any trade name of Borrower
representing payment with respect to such sales or services.
6.3 Losses. Borrower shall promptly notify Lender in writing
of any loss, damage, investigation, action, suit, proceeding or
claim relating to a material portion of the Collateral or which
may result in any material adverse change in Borrower's business,
assets, liabilities or condition, financial or otherwise.
6.4 Books and Records. Borrower's books and records
concerning accounts and its chief executive office are and shall
be maintained only at the address set forth in Section 10.6(d).
Borrower's only other places of business and the only other
locations of Collateral, if any, are and shall be the addresses
set forth in Section 10.6 hereof, except Borrower may change such
locations or open a new place of business after thirty (30) days
prior written notice to Lender. Prior to any change in location or
opening of any new place of business, Borrower shall execute and
deliver or cause to be executed and delivered to Lender such
financing statements, financing documents and security and other
agreements as Lender may reasonably require, including, without
limitation, those described in Section 6.14.
6.5 Title. Borrower has and at all times will continue to
have good and marketable title to all of the Collateral, free and
clear of all liens, security interests, claims or encumbrances of
any kind except in favor of Lender and except, if any, those set
forth on Schedule B hereto.
6.6 Disposition of Assets. Borrower shall not, outside of
the ordinary course of Borrower's business and without the prior
written consent of Lender, which consent may be withheld in
Lender's sole discretion, directly or indirectly: (a) sell, lease,
transfer, assign, abandon or otherwise dispose of any part of the
Collateral or any material portion of its other assets (other than
equipment rental or sales of inventory to buyers in the ordinary
course of business) or (b) consolidate with or merge with or into
any other entity, or permit any other entity to consolidate with
or merge with or into Borrower or (c) form or acquire any interest
in any firm, corporation or other entity. The proceeds of any
such dispositions or sale shall go to the Lender.
6.7 Insurance. Borrower shall at all times maintain, with
financially sound and reputable insurers, insurance with respect
to the Collateral and other assets. All such insurance policies
shall be in such form, substance, amounts and coverage as may be
satisfactory to Lender and shall provide for thirty (30) days'
prior written notice to Lender of cancellation or reduction of
coverage. Borrower hereby irrevocably appoints Lender and any
designee of Lender as attorney-in-fact for Borrower to obtain at
Borrower's expense, any such insurance should Borrower fail to do
so and, after an Event of Default, to adjust or settle any claim
or other matter under or arising pursuant to such insurance or to
amend or cancel such insurance. Borrower shall deliver to Lender
evidence of such insurance and a lender's loss payable endorsement
satisfactory to Lender as to all existing and future insurance
policies with respect to the Collateral. Borrower shall deliver to
Lender, in kind, all instruments representing proceeds of
insurance received by Borrower. Lender may apply any insurance
proceeds received at any time to the cost of repairs to or
replacement of any portion of the Collateral and/or, at Lender's
option, to payment of or as security for any of the Obligations,
whether or not due, in any order or manner as Lender determines.
6.8 Compliance With Laws. Borrower is and at all times will
continue to be in compliance with the requirements of all material
laws, rules, regulations and orders of any governmental authority
relating to its business (including laws, rules, regulations and
orders relating to taxes, payment and withholding of payroll
taxes, employer and employee contributions and similar items,
securities, employee retirement and welfare benefits, employee
health and safety, or environmental matters) and all material
agreements or other instruments binding on Borrower or its
property. All of Borrower's inventory shall be produced in
accordance with the requirements of the Federal Fair Labor
Standards Act of 1938, as amended and all rules, regulations and
orders related thereto. Borrower shall pay and discharge all
taxes, assessments and governmental charges against Borrower or
any Collateral prior to the date on which penalties are imposed or
liens attach with respect thereto, unless the same are being
contested in good faith and, at Lender's option, Reserves are
established for the amount contested and penalties which may
accrue thereon.
6.9 Accounts. With respect to each account deemed an Eligible
Account, except as reported in writing to Lender, Borrower has no
knowledge that any of the criteria for eligibility are not or are
no longer satisfied. As to each account, except as disclosed in
writing to Lender at the time such account arises, (a) each is
valid and legally enforceable and represents and undisputed bona
fide indebtedness incurred by the account debtor for the sum
reported to Lender, (b) each arises from an absolute and
unconditional sale of goods, without any right of return or
consignment, or from a completed rendition of services, (c) each
is not, at the time such account arises, subject to any defense,
offset, dispute, contra relationship, counterclaim, or any given
or claimed credit, allowance or discount, and (d) all statements
made and all unpaid balances and other information appearing in
the invoices, agreements, proofs of rendition of services and
delivery of goods and other documentation relating to the
accounts, and all confirmatory assignments, schedules, statements
of account and books and records with respect thereto, are true
and correct and in all respects what they purport to be.
6.10 Equipment. With respect to Borrower's equipment, Borrower
shall keep the equipment in good order and repair, and in running
and marketable condition, ordinary wear and tear excepted.
Borrower shall provide Lender, on a monthly basis or more
frequently upon request of Lender, reports advising Lender as to
the present use and location of all equipment. Said reports shall
include, but not be limited to the name and address of the owner
of any site other than Borrower's where said equipment may be
located and the name and address of any subcontractor using said
equipment. With respect to leases of equipment which are for a
term of thirty (30) days or longer, Borrower must obtain Lender's
prior written consent to same. Each said subcontractor and
property owner or lessor shall be required to waive any right to
lien Borrower's equipment and acknowledge Lender's first perfected
security interest therein. Borrower may sell an item of equipment
provided that the following conditions are met: (i) There are no
existing Events of Default hereunder; (ii) Borrower has not
sustained a loss in excess of $500,000.00 cumulative from closing;
(iii) an event of default would not occur from the sale and (iv)
Lender consents in writing to the release of its security interest
in the item of equipment, and to the sale price of the item of
equipment before the sale of the item of equipment. If the
foregoing conditions are satisfied and sale price is in excess of
Lender's original advance against such equipment (based on 75% of
auction value), Lender shall be repaid its advance against such
equipment and any excess moneys shall be remitted back to
Borrower.
6.11 Financial Covenants. Borrower shall at all times maintain
working capital and net worth (each as determined in accordance
with generally accepted accounting principles, in effect on the
date hereof, consistently applied) in the amounts set forth in
Section 10.5(a) and (b) and Borrower shall not, directly or
indirectly, expend or commit to expend, for fixed or capital
assets (including capital lease obligations) an amount in excess
of the capital expenditure limit set forth in Section 10.5(c) in
any fiscal year of Borrower.
6.12 Payments Under Subordinated Debt. Borrower may not make any
advances (including any loans, dividends or other accommodations)
except that Borrower shall be permitted to repay its existing debt
during the term of the financing provided that, (i) there are no
outstanding events of default under the financing agreements; (ii)
Net Availability is at least $450,000 after the payment to the
affiliate; and (iii) The payments are to the extent of the
Borrower's positive cash flow agreed by Lender and Borrower to be
defined as Net Income (Loss) plus Depreciation and Amortization
plus Capital Contributions less Debt Service less Capital
Expenditures.
6.13 Affiliated Transactions. Except as noted below, Borrower
will not, directly or indirectly: (a) lend or advance money or
property to, guarantee or assume indebtedness of, or invest (by
capital contribution or otherwise) in any person, firm,
corporation or other entity; or (b) make any redemption or other
distribution on account of any shares of any class of stock of
Borrower now or hereafter outstanding; or (c) make any payment of
the principal amount of or interest on any indebtedness owing to
any officer, director, shareholder, or affiliate of Borrower; or
(d) make any loans or advances to any officer, director, employee,
shareholder or affiliate of Borrower, (e) enter into any sale,
lease or other transaction with any officer, director, employee,
shareholder or affiliate of Borrower on terms that are less
favorable to Borrower than those which might be obtained at the
time from persons who are not an officer, director, employee,
shareholder or affiliate of Borrower. Despite the foregoing
language, Borrower may make payments under current obligations as
set forth on Schedule B hereto provided there is no Event of
Default and same are in the ordinary course of Borrowers' business
and do not exceed on a monthly basis $150,000,00 in the aggregate.
6.14 Fees and Expenses. Borrower shall pay, on Lender's demand,
all costs, expenses, filing fees and taxes payable in connection
with the preparation, execution, delivery, recording,
administration, collection, liquidation, enforcement and defense
of the Obligations, Lender's rights in the Collateral, this
Agreement and all other existing and future agreements or
documents contemplated herein or related hereto, including any
amendments, waivers, supplements or consents which may hereafter
be made or entered into in respect hereof, or in any way involving
claims or defense asserted by Lender or claims or defense against
Lender asserted by Borrower, any guarantor or any third party
directly or indirectly arising out of or related to the
relationship between Borrower and Lender or any guarantor and
Lender, including, but not limited to the following, whether
incurred before, during or after the initial or any renewal Term
or after the commencement of any case with respect to Borrower or
any guarantor under the United States Bankruptcy Code or any
similar statute: (a) all costs and expenses of filing or recording
(including Uniform Commercial Code financing statement filing
taxes and fees, documentary taxes, intangibles taxes and mortgage
recording taxes and fees, if applicable); (b) all title insurance
and other insurance premiums, appraisal fees, fees incurred in
connection with any environmental report, audit or survey and
search fees; (c) all fees as then in effect relating to the wire
transfer of loan proceeds and other funds and fees then in effect
for returned checks and credit reports; (d) all expenses and costs
heretofore and from time to time hereafter incurred by Lender
during the course of periodic field examinations of the Collateral
and Borrower's operations, plus a per diem charge at the rate set
forth in Section 10.4(g) for Lender's examiners in the field and
office; and (e) the costs, fees and disbursements of in-house and
outside counsel to Lender, including but not limited to such fees
and disbursements incurred as a result of: (i ) documenting and
closing the transaction contemplated hereby; and (ii) any
subsequent litigation between the parties hereto, any third party
and in any appeals arising therefrom.
6.15 Further Assurances. At the request of Lender, at any time
and from time to time, at Borrower's sole expense, Borrower shall
execute and deliver or cause to be executed and delivered to
Lender, such agreements, documents and instruments, including
waivers, consents and subordination agreements from mortgagees or
other holders of security interests or liens, landlords or
bailees, and do or cause to be done such further acts as Lender,
in its discretion, deems necessary or desirable to create,
preserve, perfect or validate any security interest of Lender or
the priority thereof in the Collateral and otherwise to effectuate
the provisions and purposes of this Agreement. Borrower hereby
authorizes Lender to file financing statements or amendments
against Borrower in favor of Lender with respect to the
Collateral, without Borrower's signature and to file as financing
statements any carbon, photographic or other reproductions of this
Agreement or any financing statements signed by Borrower.
6.16 Revolving Loan. The Revolving Loan will not at any time
exceed the Net Availability unless Lender has consented.
6.17 Environmental Condition. None of Borrower's properties or
assets has ever been designated or identified in any manner
pursuant to any environmental protection statute as a hazardous
waste or hazardous substance disposal site, or a candidate for
closure pursuant to any environmental protection statute. No lien
arising under any environmental protection statute has attached to
any revenues or to any real or personal property owned by
Borrower. Borrower has not received a summons, citation, notice,
or directive from the Environmental Protection Agency or any other
federal or state governmental agency any action or omission by
Borrower resulting in the releasing, or otherwise exposing of
hazardous waste or hazardous substances into the environment.
Borrower is in compliance (in all material respects) with all
statutes, regulations, ordinances and other legal requirements
pertaining to the production, storage, handling, treatment,
release, transportation or disposal of any hazardous waste or
hazardous substance.
SECTION 7. EVENTS OF DEFAULT AND REMEDIES
7.1 Events of Default. All Obligations shall be immediately due
and payable, without notice or demand, and any provisions of this
Agreement as to future loans and credit accommodations by Lender
shall terminate automatically, upon the termination or non-renewal
of this Agreement or, at Lender's option, upon or at any time
after the occurrence or existence of any one or more of the
following "Events of Default":
(a) Borrower fails to pay when due any of the Obligations (or
any portion thereof) or fails to perform any of the terms of this
Agreement or any other existing or future financing, security or
other agreement between Borrower and Lender or any affiliate of
Lender;
(b) Any representation, warranty or statement of fact made by
Borrower to Lender in this Agreement or any other agreement,
schedule, confirmatory assignment or otherwise, or to any
affiliate of Lender, shall prove inaccurate or misleading;
(c) Any guarantor revokes, terminates, attempts to revoke or
terminate, or fails to perform any of the terms of any guaranty,
endorsement or other agreement of such party in favor of Lender or
any affiliate of Lender;
(d) Any judgment or judgments aggregating in excess of
$25,000 or any injunction or attachment is obtained against
Borrower or any guarantor which remains unstayed for a period of
ten (10) days or is enforced;
(e) Borrower or any guarantor or a general partner of a
guarantor or Borrower (which is a partnership), being a natural
person, dies, or Borrower or any guarantor which is a partnership
or corporation, is dissolved, or Borrower or any guarantor which
is a corporation fails to maintain its corporate existence in good
standing, or the usual business of Borrower or any guarantor
ceases or is suspended;
(f) Any change in the chief executive officer or chief
operating officer, chief financial officer of Guarantor or
controlling ownership of Borrower;
(g) Borrower or any guarantor becomes insolvent, makes an
assignment for the benefit of creditors, makes or sends notice of
a bulk transfer or calls a general meeting of its creditors or
principal creditors;
(h) Any petition or application for any relief under the
bankruptcy laws of the United States now or hereafter in effect or
under any insolvency, reorganization, receivership, readjustment
of debt, dissolution or liquidation law or statute of any
jurisdiction now or hereafter in effect (whether at law or in
equity) is filed by or against Borrower or any guarantor;
(i) The indictment or threatened indictment of Borrower or
any guarantor under any criminal statute, or commencement or
threatened commencement of criminal or civil proceedings against
Borrower or any guarantor, pursuant to which statute or
proceedings the penalties or remedies sought or available include
forfeiture of any of the property of Borrower or such guarantor;
(j) Any default or event of default occurs on the part of
Borrower under any agreement, document or instrument to which
Borrower is a party or by which Borrower or any of its property is
bound, creating or relating to any indebtedness of Borrower to any
person or entity other than Lender in an amount exceeding
$25,000.00, if the effect of such default is to accelerate, or to
permit the acceleration of, the maturity of all or any part of
such indebtedness, or all or any part of any such indebtedness
shall be declared to be due and payable or required to be prepaid
or any other reason, in either event prior to the stated maturity
thereof;
(k) Lender in good faith believes that either (i) the
prospect of payment or performance of the Obligations is impaired
or (ii) the Collateral is not sufficient to secure fully the
Obligations;
(l) Any material change occurs in the nature or conduct of
Borrower's business;
(m) Borrower's losses, cumulative from the date hereof through
termination of the Revolving and Term Loans established hereunder,
exceed Five Hundred Thousand Dollars ($500,000.00). Lender shall
not, in calculating said loss, include a loss attributable to a
change in LIFO reserves; or
(n) Borrower fails to provide Lender with any notice or waiver
required by Section 6.10 hereof.
7.2 Remedies. Upon the occurrence of an Event of Default and
at any time thereafter, Lender shall have all rights and remedies
provided in this Agreement, any other agreements between Borrower
and Lender, the Uniform Commercial Code or other applicable law,
all of which rights and remedies may be exercised without notice
to Borrower, all such notices being hereby waived, except such
notice as is expressly provided for hereunder or is not waivable
under applicable law. All rights and remedies of Lender are
cumulative and not exclusive and are enforceable, in Lender's
discretion, alternatively, successively, or concurrently on any
one or more occasions and in any order Lender may determine.
Without limiting the foregoing, Lender may (a) accelerate the
payment of all Obligations and demand immediate payment thereof to
Lender, (b) with or without judicial process or the aid or
assistance of others, enter upon any premises on or in which any
of the Collateral may be located and take possession of the
Collateral or complete processing, manufacturing and repair of all
or any portion of the Collateral, (c) require Borrower, at
Borrower's expense, to assemble and make available to Lender any
part or all of the Collateral at any place and time designated by
Lender, (d) collect, foreclose, receive, appropriate, setoff and
realize upon any and all Collateral, (e) extend the time of
payment of, compromise or settle for cash, credit, return of
merchandise, and upon any terms or conditions, any and all
accounts or other Collateral which includes a monetary obligation
and discharge or release the account debtor or other obligor,
without affecting any of the Obligations, including, but in no way
limited by, reducing, in the Lender's sole and absolute
discretion, the Gross Availability Formulas set forth in Section
10.1(b) hereof (f) sell, lease, transfer, assign, deliver or
otherwise dispose of any and all Collateral (including, without
limitation, entering into contracts with respect thereto, by
public or private sales at any exchange, broker's board, any
office of Lender or elsewhere) at such prices or terms as Lender
may deem reasonable, for cash, upon credit or for future delivery,
with the Lender having the right to purchase the whole or any part
of the Collateral at any such public sale, all of the foregoing
being free from any right or equity of redemption of Borrower,
which right or equity of redemption is hereby expressly waived and
released by Borrower. If any of the Collateral is sold or leased
by Lender upon credit terms or for future delivery, the
Obligations shall not be reduced as a result thereof until payment
therefor is finally collected by Lender. If notice of disposition
of Collateral is required by law, seven (7) days prior notice by
Lender to Borrower designating the time and place of any public
sale or the time after which any private sale or other intended
disposition of Collateral is to be made, shall be deemed to be
reasonable notice thereof and Borrower waives any other notice. In
the event Lender institutes an action to recover any Collateral or
seeks recovery of any Collateral by way of prejudgment remedy,
Borrower waives the posting of any bond which might otherwise be
required.
7.3 Application of Proceeds. Lender may apply the cash
proceeds of Collateral actually received by Lender from any sale,
lease, foreclosure or other disposition of the Collateral to
payment of any of the Obligations, in whole or in part (including
reasonable attorneys' fees and legal expenses incurred by Lender
with respect thereto or otherwise chargeable to Borrower) and in
such order as Lender may elect, whether or not then due. Borrower
shall remain liable to Lender for the payment of any deficiency
together with interest at the highest rate provided for herein and
all costs and expenses of collection or enforcement, including
reasonable attorneys' fees and legal expenses.
7.4 Lender's Cure of Third Party Agreement Default. Lender
may, at its option, cure any default by Borrower under any
agreement with a third party or pay or bond on appeal any judgment
entered against Borrower, discharge taxes, liens, security
interests or other encumbrances at any time levied on or existing
with respect to the Collateral and pay any amount, incur any
expense or perform any act which, in Lender's sole judgment, is
necessary or appropriate to preserve, protect, insure, maintain,
or realize upon the Collateral. Lender may charge Borrower's loan
account for any amounts so expended, such amounts to be repayable
by Borrower on demand. Lender shall be under no obligation to
effect such cure, payment, bonding or discharge, and shall not, by
doing so, be deemed to have assumed any obligation or liability of
Borrower.
SECTION 8. JURY TRIAL WAIVER; CERTAIN OTHER WAIVERS AND
CONSENTS
8.1 JURY TRIAL WAIVER. BORROWER AND LENDER EACH WAIVE ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INSTITUTED BY
EITHER OF THEM AGAINST THE OTHER WHICH PERTAINS DIRECTLY OR
INDIRECTLY TO THIS AGREEMENT, THE OBLIGATIONS, THE COLLATERAL, ANY
ALLEGED TORTUOUS CONDUCT BY BORROWER OR LENDER, OR, IN ANY WAY,
DIRECTLY OR INDIRECTLY, ARISES OUT OF OR RELATES TO THE
RELATIONSHIP BETWEEN BORROWER AND LENDER. IN NO EVENT WILL LENDER
BE LIABLE FOR LOST PROFITS OR OTHER SPECIAL OR CONSEQUENTIAL
DAMAGES.
8.2 Counterclaims. Borrower waives all rights to interpose any
claims, deductions, setoffs or counterclaims of any kind, nature
or description in any action or proceeding instituted by Lender
with respect to this Agreement, the Obligations, the Collateral or
any matter arising therefrom or relating thereto, except
compulsory counterclaims.
8.3 Jurisdiction. Borrower hereby irrevocably submits and
consents to the nonexclusive jurisdiction of the State and Federal
Courts located in the State in which the office of Lender
designated in Section 10.6(a) is located and any other State where
any Collateral is located with respect to any action or proceeding
arising out of this Agreement, the Obligations, the Collateral or
any matter arising therefrom or relating thereto. In any such
action or proceeding, Borrower waives personal service of the
summons and complaint or other process and papers therein and
agrees that the service thereof may be made by mail directed to
Borrower at its chief executive office set forth herein or other
address thereof of which Lender has received notice as provided
herein, service to be deemed complete five (5) days after mailing,
or as permitted under the rules of either of said Courts. Any such
action or proceeding commenced by Borrower against Lender will be
litigated only in a Federal Court located in the district, or a
State Court in the State and County, in which the office of Lender
designated in Section 10.6(a) is located and Borrower waives any
objection based on forum non conveniens and any objection to venue
in connection therewith.
8.4 No Waiver by Lender. Lender shall not, by any act,
delay, omission or otherwise be deemed to have expressly or
impliedly waived any of its rights or remedies unless such waiver
shall be in writing and signed by an authorized officer of Lender.
A waiver by Lender of any right or remedy on any one occasion
shall not be construed as a bar to or waiver of any such right or
remedy which Lender would otherwise have on any future occasion,
whether similar in kind or otherwise.
SECTION 9. TERM OF AGREEMENT; MISCELLANEOUS
9.1 Term. This Agreement shall only become effective upon
execution and delivery by Borrower and Lender and shall continue
in full force and effect for a term of three (3) years from the
date hereof.
9.2 Early Termination. Borrower may also terminate this
Agreement by giving Lender at least thirty (30) days prior written
notice at any time upon payment in full of all of the Obligations
as provided herein, including the early termination fee provided
below. Lender shall also have the right to terminate this
Agreement at any time upon or after the occurrence of an Event of
Default. If Lender terminates this Agreement upon or after the
occurrence of an Event of Default, or if Borrower shall terminate
this Agreement as permitted herein effective prior to the end of
the then-current Term, in addition to all other Obligations,
Borrower shall pay to Lender, upon the effective date of
termination, in view of the impracticality and extreme difficulty
of ascertaining actual damages and by mutual agreement of the
parties as to a reasonable calculation of Lender's lost profits,
an early termination fee equal to:
(a) five percent (5%) of the Maximum Credit, if the
Termination Date occurs during the first year of the initial Term
of this Agreement, or
(b) two percent (2%) of the Maximum Credit if the Termination
Date occurs during the second year of the initial Term of this
Agreement or at any time thereafter including during any renewal
Term; provided, however, so long as there exists no Event of
Default hereunder, Borrower may pay the Obligations in full during
the final sixty (60) days of the original or any renewal Term
without incurring any early termination fee.
9.3 Additional Cash Collateral. Upon termination of this
Agreement by Borrower, as permitted herein, in addition to payment
of all Obligations which are not contingent, Borrower shall
deposit such amount of cash collateral as Lender determines is
necessary to secure Lender from loss, cost, damage or expense,
including reasonable attorneys' fees, in connection with any open
Accommodations or remittance items or other payments provisionally
credited to the Obligations and/or to which Lender has not yet
received final and indefeasible payment.
9.4 Notices. Except as otherwise provided, all notices,
requests and demands hereunder shall be (a) made to Lender at its
address set forth in Section 10.6(a) and to Borrower at its chief
executive office set forth in Section 10.6(d), or to such other
address as either party may designate by written notice to the
other in accordance with this provision, and (b) deemed to have
been given or made: if by hand, immediately upon delivery; if by
telex, telegram or telecopy (fax), immediately upon receipt; if by
overnight delivery service, one day after dispatch; and if by
first class or certified mail, three (3) days after mailing.
9.5 Severability. If any provision of this Agreement is held
to be invalid or unenforceable, such provision shall not affect
this Agreement as a whole, but this Agreement shall be construed
as though it did not contain the particular provision held to be
invalid or unenforceable.
9.6 Entire Agreement; Amendments; Assignments. This
Agreement contains the entire agreement of the parties as to the
subject matter hereof, all prior commitments, proposals and
negotiations concerning the subject matter hereof being merged
herein. Neither this Agreement nor any provision hereof shall be
amended, modified or discharged orally or by course of conduct,
but only by a written agreement signed by an authorized officer of
Lender. This Agreement shall be binding upon and inure to the
benefit of each of the parties hereto and their respective
successors and assigns, except that any obligation of Lender under
this Agreement shall not be assignable nor inure to the successors
and assigns of Borrower.
9.7 Discharge of Borrower. No termination of this Agreement
shall relieve or discharge Borrower of its Obligations, grants of
Collateral, duties and covenants hereunder or otherwise until such
time as all Obligations to Lender have been indefeasibly paid and
satisfied in full, including, without limitation, the continuation
and survival in full force and effect of all security interests
and liens of Lender in and upon all then existing and thereafter-
arising or acquired Collateral and all warranties and waivers of
Borrower.
9.8 Usage. All terms used herein which are defined in the
Uniform Commercial Code shall have the meanings given therein
unless otherwise defined in this Agreement and all references to
the singular or plural herein shall also mean the plural or
singular, respectively.
9.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State in which the
office of Lender set forth in Section 10.6(a) below is located.
Section 10. Additional Definitions and Terms
10.1 (a) Maximum Credit: $3,000,000.00
(b) Gross Availability Formulas:
Eligible Accounts Percentage: Not Applicable
(c) Sublimits:
(i) Inventory: Not applicable.
(d) Minimum Annual Borrowing:
$2,000,000.00 minimum annual loan balance. If the average annual
loan balance is less than this amount, Borrower shall pay to
Lender an amount calculated pursuant to Section 2.1(g) on the
anniversary date hereof and each anniversary date thereafter.
10.2 Term Loan: $2,985,844.00
10.3 Accommodations: None.
(a) Lender's Charge for
Accommodations: Not Applicable.
(b) Sublimit for
Accommodations: Not Applicable.
10.4 Fees:
(a) Interest Rate: Prime Rate plus 2.50% per annum
(b) Intentionally Omitted.
(c) Facility Fee:
(i) Initial Term. In consideration of Lender's
establishment of the credit facility described herein, Borrower
shall pay to Lender a Facility Fee in the amount of $142,500.00,
all of which is fully earned at the execution hereof, of which
$37,500.00, shall be paid at the execution hereof, $52,500.00
shall be paid on the first anniversary of the execution hereof and
the balance of $52,500.00 shall be paid on the second anniversary
of the execution hereof.
(ii) Renewal Terms. If the Maximum Credit is renewed after
the Initial Term, then Borrower shall pay to Lender an additional
Facility Fee of $105,000.00 for each Renewal Term, which shall be
fully earned on the first day of each such Renewal Term and shall
be payable as follows:
A) A portion of the fee equal to $52,500.00 shall be
payable on the first day of each such Renewal Term; and
B) The remaining portion of the fee equal to $52,500.00
shall be payable on the first anniversary of each such
Renewal Term.
(d) Intentionally Omitted
(e) Appraisal Fee: As incurred.
(f) Lender's Counsel Fee: As incurred.
(g) Field Exams: $650.00 per day.
10.5 Financial Covenants:
(a) Working Capital: Not applicable.
(b) Net Worth: Not applicable.
(c) Capital Expenditures: Borrowers' aggregate
cash capital expenditures shall not exceed
$100,000.00 during any fiscal year.
10.6 (a) Lender's Office:
10 South LaSalle Street
Chicago, IL 60603
Telecopier: (312) XXX-XXXX
(b) Lender's Bank:
Bank of America, Illinois
231 South LaSalle Street
Chicago, IL 60697
(c) Borrower: Greenway Corporation
Williams Bridge Company
Piedmont Metal Products, Inc.
Williams Equipment Corporation
Williams Steel Erection Company, Inc.
(d) Borrowers' Chief Executive Office:
2849 Meadow View Road
Falls Church, Virginia 22042
(e) Locations of Eligible Collateral:
8587 J.D. Reading Drive
Manassas, Virginia 20109
700 East Fourth Street
Richmond, Virginia 23224
915 Orange Street
Bedford, Virginia 24523
7201 Montevideo Road
Jessup, Maryland 20794
317 S. Division Street
Fruitland, Maryland 21826
(f) Borrower's Other Offices and Locations of
Collateral: None.
(g) Borrower's Trade Names for
Invoicing: None.
IN WITNESS WHEREOF, Borrower and Lender have duly executed
this Agreement this 31st day of March, 1997.
Lender: Borrower:
The CIT Group/Credit Finance, Inc. Greenway Corporation
By: ____________________ By:_____________________
Robert P. Handler,
Vice President
Williams Bridge Company
By:_____________________
Piedmont Metal Products, Inc.
By:_____________________
Williams Equipment Corporation
By:_____________________
Williams Steel Erection
Company, Inc.
By:_____________________
