<PAGE> 1
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- --- ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 1999
OR
- --- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ________ TO ________
COMMISSION FILE NUMBER 1-7427
VERITAS DGC INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 76-0343152
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification No.)
organization)
3701 KIRBY DRIVE, SUITE #112
HOUSTON, TEXAS 77098
(Address of principal executive offices) (Zip Code)
</TABLE>
(713) 512-8300
(Registrant's telephone number, including area code)
NO CHANGES
(Former name, former address and former fiscal year,
if changed 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 such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
The number of shares of the Company's common stock (the "Common Stock"), $.01
par value, outstanding at November 30, 1999 was 25,561,058 (including 3,450,534
Veritas Energy Services Inc. exchangeable which are identical to the Common
Stock in all material respects).
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<PAGE> 2
VERITAS DGC INC. AND SUBSIDIARIES
FORM 10-Q
INDEX
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<TABLE>
<CAPTION>
Page Number
-----------
<S> <C> <C>
PART I. Financial Information
Item 1. Financial Statements 1
Consolidated Statements of Income and Comprehensive Income -
For the Three Months Ended October 31, 1999 and 1998 1
Consolidated Balance Sheets - October 31, 1999 and July 31, 1999 2
Consolidated Statements of Cash Flows -
For the Three Months Ended October 31, 1999 and 1998 3
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 10
PART II. Other Information
Item 2. Changes in Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 16
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VERITAS DGC INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS ENDED
OCTOBER 31,
----------------------------------------
1999 1998
------------------ -------------------
(In thousands, except per share amounts)
<S> <C> <C>
REVENUES $ 68,677 $ 146,799
COSTS AND EXPENSES:
Cost of services
Operating expenses 42,741 101,767
Research and development 1,962 1,744
Depreciation and amortization 18,378 16,850
Selling, general & administrative 3,443 4,556
Interest expense 3,491 2,052
Other (income) expense (979) 227
--------- ---------
Total costs and expenses 69,036 127,196
--------- ---------
Income (loss) before provision for income taxes and equity in
loss of joint venture (359) 19,603
Provision (benefit) for income taxes (15) 5,882
Equity in loss of joint venture 236 99
--------- ---------
Net income (loss) before extraordinary charge (580) 13,622
Extraordinary loss on debt repurchase (net of tax, $95) 187
--------- ---------
Net income (loss) $ (767) $ 13,622
Other comprehensive income (loss) (net of tax - $0 in both periods)
Foreign currency translation adjustments 572 (355)
Unrealized loss on investments - available for sale (1,347)
--------- ---------
Comprehensive income (loss) $ (1,542) $ 13,267
========= =========
PER SHARE:
BASIC
Net income (loss) per common share before extraordinary item $ (.02) $ .60
Net (loss) per common share from extraordinary item (.01)
--------- ---------
Net income (loss) per common share $ (.03) $ .60
========= =========
Weighted average common shares 23,633 22,697
========= =========
DILUTED
Net income (loss) per common share before extraordinary item $ (.02) $ .60
Net (loss) per common share from extraordinary item (.01)
--------- ---------
Net income (loss) per common share $ (.03) $ 60
========= =========
Weighted average common shares 24,183 22,873
========= =========
</TABLE>
See Notes to Consolidated Financial Statements
1
<PAGE> 4
VERITAS DGC INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
UNAUDITED
<TABLE>
<CAPTION>
OCTOBER 31, JULY 31,
1999 1999
----------- ---------
(In thousands)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 32,431 $ 73,447
Restricted cash investments 710 300
Accounts and notes receivable (net of allowance for doubtful accounts:
October $2,943; July $3,038) 122,201 113,761
Materials and supplies inventory 4,969 4,417
Prepayments and other 11,659 8,259
Investments - available for sale 2,926 3,671
--------- ---------
Total current assets 174,896 203,855
Property and equipment 381,242 357,397
Less accumulated depreciation 218,744 201,026
--------- ---------
Property and equipment - net 162,498 156,371
Multi-client data library 174,235 138,753
Investment in and advances to joint venture 2,404 2,640
Goodwill (net of accumulated amortization: October $5,504; July $3,683) 7,825 2,159
Deferred tax asset 24,938 23,120
Long term notes receivable (net of allowance: $1,000) 3,696 3,696
Other assets 8,715 11,252
--------- ---------
Total $ 559,207 $ 541,846
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 286 $ 240
Accounts payable - trade 24,184 26,243
Accrued interest 281 4,010
Other accrued liabilities 52,967 48,640
Income taxes payable 310 5,472
--------- ---------
Total current liabilities 78,028 84,605
Non-current liabilities:
Long-term debt - less current maturities 129,542 135,011
Other non-current liabilities 10,815 6,672
--------- ---------
Total non-current liabilities 140,357 141,683
Stockholders' equity:
Preferred stock, $.01 par value; authorized: 1,000,000 shares; none issued
Common stock, $.01 par value; authorized: 40,000,000 shares; issued: 21,525,643
shares at October and 21,470,938 shares at July (excluding exchangeable
shares of 3,942,922 at October and 1,505,595 at July) 215 214
Additional paid-in capital 235,087 208,749
Accumulated earnings (from August 1, 1991 with respect to Digicon Inc.) 113,885 114,652
Accumulated comprehensive income
Cumulative foreign currency translation adjustment (3,450) (4,352)
Unrealized loss on investments - available for sale (1,904) (557)
Unearned compensation (584) (602)
Treasury stock, at cost; 143,068 shares at October and 150,068 shares at July (2,427) (2,546)
--------- ---------
Total stockholders' equity 340,822 315,558
--------- ---------
Total $ 559,207 $ 541,846
========= =========
</TABLE>
See Notes to Consolidated Financial Statements
2
<PAGE> 5
VERITAS DGC INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS ENDED
OCTOBER 31,
--------------------------
1999 1998
--------- --------
(In thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ (767) $ 13,622
Non-cash items included in net income:
Depreciation and amortization 18,378 16,850
Net loss on disposition of property and equipment (2) 298
Equity in loss of joint venture 236 99
Amortization of multi-client data library 239 336
Deferred taxes (1,818) 3,709
Amortization of unearned compensation 153 84
Change in operating assets/liabilities:
Accounts and notes receivable (2,612) (23,391)
Materials and supplies inventory (515) (1,250)
Prepayments and other (4,153) 3,470
Multi-client data library (34,311) (18,764)
Other 4,669 (515)
Accounts payable and other accrued liabilities (7,283) 4,691
Income taxes payable (4,898) (3,186)
Other non-current liabilities 4,225 (14)
-------- --------
Total cash used in operating activities (28,459) (3,961)
FINANCING ACTIVITIES:
Payments of long-term debt (5,679) (75)
Borrowings from senior notes 60,000
Senior notes issue costs (25) (1,597)
Net proceeds from sale of common stock 686 620
Purchase of treasury stock (2,287)
-------- --------
Total cash (used in) provided by financing activities (5,018) 56,661
INVESTING ACTIVITIES:
Increase in restricted cash investments (410) (2)
Decrease in investment in and advances to joint venture 686
Cash received for purchase of Enertec Resource Services Inc. 448
Purchase of property and equipment (9,238) (16,345)
Sale of property and equipment 1,757
-------- --------
Total cash used in investing activities (7,443) (15,661)
Currency loss on foreign cash (96) (355)
-------- --------
Change in cash and cash equivalents (41,016) 36,684
Beginning cash and cash equivalents balance 73,447 40,089
-------- --------
Ending cash and cash equivalents balance $ 32,431 $ 76,773
======== ========
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE> 6
VERITAS DGC INC. AND SUBSIDIARIES
SUPPLEMENTARY SCHEDULES TO CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS ENDED
OCTOBER 31,
---------------------
1999 1998
-------- ---------
(In thousands)
<S> <C> <C>
SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Increase in property and equipment for accounts payable - trade $ 1,053 $ 1,278
Utilization of net operating loss carryforwards existing prior to the
quasi-reorganization resulting in an increase (decrease) in:
Deferred tax asset valuation allowance (2,887)
Additional paid-in capital 2,887
Restricted stock issued for future services resulting in an increase in additional
paid-in capital and unearned compensation 42
Treasury stock issued for future services resulting in an increase in
Additional paid-in-capital 17
Unearned compensation 135
Stock and options issued for purchase of Enertec Resource Services Inc. (net of cash
received) 25,189
Settlement of interest payments from investments-available for sale 602
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid (received) for:
Interest -
Senior notes 6,827 3,656
Equipment purchase obligations 1 12
Other 392 110
Income taxes (6,969) 5,332
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE> 7
VERITAS DGC INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION
Veritas DGC Inc. ("Veritas DGC") provides seismic data acquisition, data
processing, multi-client data sales and exploration and development information
services to the petroleum industry in selected markets worldwide. The
accompanying consolidated financial statements include the accounts of Veritas
DGC and all majority-owned domestic and foreign subsidiaries. Investment in a
joint venture is accounted for on the equity method. All material intercompany
balances and transactions have been eliminated. All material adjustments
consisting only of normal recurring adjustments that, in the opinion of
management are necessary for a fair statement of the results for the interim
periods, have been reflected. These interim financial statements should be read
in conjunction with the annual consolidated financial statements of Veritas DGC.
USE OF 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 disclosure 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.
NEW ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This standard requires companies to record
derivative financial instruments on the balance sheet as assets or liabilities,
as appropriate, at fair value. Gains or losses resulting from changes in the
fair values of those derivatives are accounted for depending on the use of the
derivative and whether it qualifies for hedge accounting. Veritas DGC will be
required to implement this statement in its first quarter of fiscal year 2001.
Veritas DGC believes that the implementation of this standard will not have a
material effect on its consolidated financial position, results of operations or
liquidity.
2. PURCHASE OF ENERTEC RESOURCE SERVICES INC.
On September 30, 1999, Veritas DGC, Veritas Energy Services Inc. ("VESI") and
Enertec Resource Services Inc. ("Enertec"), a Canadian company, consummated a
business combination (the "Combination") whereby Enertec became a wholly owned
subsidiary of VESI. As a result of the Combination, each share of Enertec stock
was converted into the right to receive VESI Class A Exchangeable Series 1 stock
(the "Exchangeable" shares) at an exchange ratio of 0.345 of a share of the
Exchangeable stock for each share of Enertec. All of the holders of Enertec
common shares became holders of Exchangeable shares and accordingly, 2,437,527
shares of Exchangeable stock were issued. Each Exchangeable share is
convertible, at the option of the shareholder, into one share of Veritas DGC's
common stock. Outstanding options to purchase shares of Enertec stock were
converted into options to purchase approximately 236,000 shares of Veritas DGC's
common stock at the exchange ratio of 0.345 of a Veritas DGC stock option for
each Enertec option.
The total purchase price of Enertec is approximately $26.7 million, which is
comprised of approximately $24.8 million of stock, $0.9 million of Veritas DGC
options and $1.0 million of business combination costs. The acquisition is
accounted for as a purchase with the preliminary allocation of purchase price,
in accordance with APB 16, yielding approximately $5.9 million of current
assets, $17.2 million of property and long-term assets, $2.2 million of
liabilities and $5.8 million of goodwill. Goodwill will be amortized over no
more than ten years. This allocation is subject to adjustment over the current
fiscal year.
5
<PAGE> 8
VERITAS DGC INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
UNAUDITED
Pro forma revenue, net income before extraordinary item, net income and earnings
per share of the Combination, presented as if the acquisition of Enertec had
occurred on August 1, 1999 and 1998, is shown below. This pro forma financial
information is not necessarily indicative of the actual results that would have
been achieved had the Combination occurred at the beginning of the periods
presented.
<TABLE>
<CAPTION>
Three months ended
October 31,
1999 1998
------ -------
(In thousands)
<S> <C> <C>
Revenue 74,046 155,542
Net income (loss) before extraordinary item (347) 13,169
Net income (534) 13,169
Earnings per share:
Basic
Net income (loss) per common share before extraordinary item (0.01) (0.52)
Net income (loss) per common share (0.02) (0.52)
Diluted
Net income (loss) per common share before extraordinary item (0.01) (0.52)
Net income (loss) per common share (0.02) (0.52)
</TABLE>
3. INVESTMENT IN INDONESIAN JOINT VENTURE
Veritas DGC owns 80% of an Indonesian joint venture (P.T. Digicon Mega Pratama).
The joint venture is accounted for under the equity method due to provisions in
the joint venture agreement that gives minority shareholders the right to
exercise control. Summarized financial information is as follows:
<TABLE>
<CAPTION>
October 31, July 31,
1999 1999
----------- --------
(In thousands)
<S> <C> <C>
Current assets $ 1,190 $ 1,380
Property and equipment, net 244 314
-------- --------
Total assets $ 1,434 $ 1,694
======== ========
Current liabilities $ 112 438
Advances from affiliates 12,814 12,479
Stockholders' deficit:
Common stock 2,576 2,576
Accumulated deficit (14,068) (13,799)
-------- --------
Total stockholders' deficit (11,492) (11,223)
-------- --------
Total liabilities and stockholders' deficit $ 1,434 $ 1,694
======== ========
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended
October 31,
-----------------------
1999 1998
-------- ---------
(In thousands)
<S> <C> <C>
Revenues $ 108 $ 398
Cost and expenses:
Cost of services 274 325
Depreciation and amortization 87 86
Other (income) expense (17) 86
-------- --------
Total costs and expenses 344 497
-------- --------
Net (loss) $ (236) $ (99)
======== ========
</TABLE>
6
<PAGE> 9
VERITAS DGC INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
UNAUDITED
4. LONG-TERM DEBT
Long-term debt is as follows:
<TABLE>
<CAPTION>
October 31, July 31,
1999 1999
----------- ----------
(In thousands)
<S> <C> <C>
Senior notes due October 2003, at 9 3/4% $ 129,460 $ 135,000
Equipment purchase obligations maturing through
September 2000, at a weighted average rate of 10% 195 251
Equipment purchase obligations maturing through
July 2001, at 10% 173 --
--------- ---------
Total $ 129,828 135,251
Less current maturities 286 240
--------- ---------
Due after one year $ 129,542 $ 135,011
========= =========
</TABLE>
The senior notes are due in October 2003 with interest payable semi-annually at
9 3/4% per annum. The senior notes are unsecured and are effectively
subordinated to secured debt of Veritas DGC with respect to the assets securing
such debt and to all debt of its subsidiaries whether secured or unsecured. The
indenture relating to the senior notes contains certain covenants that limit
Veritas DGC's ability to, among other things, incur additional debt, pay
dividends and complete mergers, acquisitions and sales of assets. Upon a change
in control of Veritas DGC, as defined in the indenture, the holders of the
senior notes have the right to require Veritas DGC to purchase all or a portion
of such holder's senior note at a price equal to 101% of the aggregate principal
amount. Veritas DGC has the right to redeem the senior notes, in whole or part,
on or after October 15, 2000. On September 24, 1999, Veritas DGC repurchased
$5.5 million of 9 3/4% senior notes on the open market at a price of $5.7
million, resulting in an extraordinary loss of $187 thousand, net of tax.
Veritas DGC maintains a revolving credit agreement due July 2001 with commercial
lenders that provides advances up to $50.0 million. Advances are limited by a
borrowing base, which is in excess of the credit limit at October 31, 1999 (when
calculated in accordance with the new credit agreement effective November 1,
1999) and bear interest, at Veritas DGC's election, at LIBOR or prime rate plus
a margin based on certain financial ratios maintained by Veritas DGC. Advances
are secured by certain accounts receivable. Covenants in the agreement limit,
among other things, Veritas DGC's right to take certain actions, including
creating indebtedness. In addition, the agreement requires Veritas DGC to
maintain certain financial ratios. No advances were outstanding at October 31,
1999 and July 31, 1999 under the credit agreement, although $5.8 million in
letters of credit had been issued under the facility.
Veritas DGC's equipment purchase obligations represent installment loans and
capitalized lease obligations primarily related to computer and seismic
equipment.
5. OTHER ACCRUED LIABILITIES
Other accrued liabilities include the following:
<TABLE>
<CAPTION>
October 31, July 31,
1999 1999
---------- ----------
(In thousands)
<S> <C> <C>
Accrued payroll and benefits $ 7,456 $ 5,518
Deferred revenues $ 12,429 $ 10,717
Accrued taxes other than income $ 13,310 $ 12,086
</TABLE>
7
<PAGE> 10
VERITAS DGC INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
UNAUDITED
6. OTHER (INCOME) AND EXPENSE
Other (income) and expense consists of the following:
<TABLE>
<CAPTION>
Three Months Ended
October 31,
------------------------
1999 1998
--------- -------
(In thousands)
<S> <C> <C>
Interest income $ (1,045) $ (277)
Net (gain) loss on disposition of property and equipment (2) 298
Net foreign currency exchange losses 68 172
Other 34
--------- -------
Total $ (979) $ 227
========= =======
</TABLE>
7. EARNINGS PER COMMON SHARE
Earnings (losses) per common share - basic and diluted are computed as follows:
<TABLE>
<CAPTION>
Three Months Ended
October 31,
---------------------------------------
1999 1998
-------- --------
(In thousands, except per share amounts)
<S> <C> <C>
Net income (loss) before extraordinary item $ (580) $ 13,622
Extraordinary loss on debt repurchase 187
-------- --------
Net income (loss) $ (767) $ 13,622
======== ========
Weighted average common shares 23,633 22,697
======== ========
Basic
Net income (loss) per common share before extraordinary item $ (.02) $ .60
Net income (loss) per common share from extraordinary item (.01)
-------- --------
Net income (loss) per common share $ (.03) $ .60
======== ========
Weighted average common shares - assuming dilution:
Weighted average common shares 23,633 22,697
Shares issuable from assumed conversion of:
Options 550 176
Warrants
-------- --------
Total 24,183 22,873
======== ========
Diluted
Net income (loss) per common share before extraordinary item $ (.02) $ .60
Net income (loss) per common share from extraordinary item (.01)
-------- --------
Net income (loss) per common share $ (.03) $ .60
======== ========
</TABLE>
VESI exchangeable shares, which were issued in business combinations and may be
exchanged for Veritas DGC's common stock and are identical to Veritas DGC's
common stock in all material respects, is included in both computations.
8
<PAGE> 11
VERITAS DGC INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
UNAUDITED
The following options to purchase common shares have been excluded from the
computation assuming dilution because the options' exercise prices exceeded the
average market price of the underlying common shares.
Three Months Ended
October 31,
----------------------------------------
1999 1998
------------------ ------------------
Number of options 811,327 139,931
Exercise price range $19 3/8 - $55 1/8 $20 1/4 - $56 1/2
Expiring through November 2008 August 2008
8. UNREALIZED LOSS ON INVESTMENTS-AVAILABLE FOR SALE
In April 1999, Veritas DGC exchanged a $4.7 million account receivable from
Miller Exploration Company ("Miller"), a publicly traded company, for a long
term note receivable paying 18% interest. Interest is paid in common stock
warrants, with an exercise price of $0.01 per share, in advance, at six month
intervals. The common stock underlying these warrants was registered with the
SEC in August 1999. In addition, Veritas DGC exchanged a $3.8 million account
receivable from Brigham Exploration Company ("Brigham"), a publicly traded
company, for 1,122,415 shares of Brigham common stock. The cost basis of the
investments available for sale is determined by the fair market value on the
date received.
<TABLE>
<CAPTION>
October 31, 1999 July 31, 1999
---------------------------------- -----------------------------------
Unrealized Unrealized
Cost Basis (Loss)/Gain Fair Value Cost Basis (Loss)/Gain Fair Value
---------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Brigham common stock $ 3,809 $(1,845) $ 1,964 $ 3,809 $(1,143) $ 2,666
Miller Warrants 1,021 (59) 962 419 586 1,005
------- ------- ------- ------- ------- -------
$ 4,830 $(1,904) $ 2,926 $ 4,228 $ (557) $ 3,671
======= ======= ======= ======= ======= =======
</TABLE>
9. INCOME TAXES
Income taxes decreased from a provision of $5.9 million in the first quarter of
fiscal 1999 to a benefit of $15 thousand in the current quarter as a result of
Veritas DGC's current loss. The decrease in the effective tax rate is primarily
attributable to the amounts recorded for differences between Veritas DGC's prior
taxable income estimates and taxable income as currently expected to be reported
on its tax return.
9
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This report contains forward-looking statements that involve risks and
uncertainties. Veritas DGC's actual results could differ materially from those
anticipated in the forward-looking statements as a result of certain factors
which are more fully described in other reports filed with the Securities and
Exchange Commission and which include changes in market conditions in the oil
and gas industry as well as declines in prices of oil and gas.
RESULTS OF OPERATIONS
THREE MONTHS ENDED OCTOBER 31, 1999 COMPARED WITH THREE MONTHS ENDED OCTOBER 31,
1998
Revenues. Revenues decreased 53%, from $146.8 million to $68.7 million,
comparing the current quarter to the same quarter one year ago. Multi-client
revenue decreased 36%, from $52.7 million to $33.5 million, while contract
revenue decreased 63%, from $94.1 million to $35.2 million. The decrease is due
to the continuing downturn in exploration spending which began in the second
quarter of fiscal year 1999 . This has resulted in lower levels of activity and
lower pre-funding levels on multi-client surveys.
Cost of services. Cost of services decreased 57%, from $103.5 million to $44.7
million. However, cost of services as a percent of revenues decreased from 71%
to 65%. This is due to the relatively smaller decline in the more profitable
multi-client business as compared to the contract business.
Depreciation and amortization. Depreciation and amortization expense increased
by 8%, from $16.9 million to $18.4 million, due to capital spending and the
Enertec acquisition. Gross property and equipment increased by $40.3 million, or
12%, between the comparative income statement period ending dates.
Selling, general and administrative. Selling, general and administrative expense
decreased by 24%, from $4.6 million to $3.4 million. The termination of a
process improvement project during the third fiscal quarter of 1999 and lower
property tax accruals in the current quarter, among other items, generated the
reduction.
Interest expense. Interest expense increased from $2.0 million to $3.5 million
due to the addition of $60.0 million of 9 3/4% senior notes at the end of
October 1998.
Other (income) expense. Other (income) expense increased from an expense of $0.2
million to income of $1.0 million. Interest income in the current period was
$1.0 million, versus $0.2 million last year, due to an increase in cash between
the comparative period ending dates. A loss on the disposal of fixed assets of
$0.3 million in the prior year contributed most of the remaining difference.
Income taxes. Income taxes decreased from a provision of $5.9 million to a
benefit of $15 thousand as a result of Veritas DGC's loss in the current
quarter. The decrease in the effective tax rate is primarily attributable to the
amounts recorded for differences between Veritas DGC's prior taxable income
estimates and taxable income as currently expected to be reported on its tax
return.
Equity in loss. Equity in loss is related to the Indonesian joint venture.
Decrease in marine contract work accounts for the decreased profitability in the
current quarter.
Extraordinary loss on debt repurchase. On September 24, 1999, Veritas DGC
repurchased $5.5 million of its 9 3/4% senior notes on the open market at a
price of $5.7 million. The excess of purchase price over face value and the
write off of the pro rata debt issuance costs associated with the notes are
reported as an extraordinary item, net of tax.
10
<PAGE> 13
LIQUIDITY AND CAPITAL RESOURCES
SOURCES AND USES
Veritas DGC's internal sources of liquidity are cash, cash equivalents and cash
flow from operations. External sources include public and private financing, the
unutilized portion of a revolving credit facility, equipment financing and trade
credit.
As of October 31, 1999, Veritas DGC had approximately $129.5 million in senior
notes outstanding due in October 2003. Veritas DGC also has a revolving credit
facility due July 2001 from commercial lenders that provides advances up to
$50.0 million. Advances are limited by a borrowing base, which is in excess of
the credit limit at October 31, 1999 (when calculated in accordance with the new
credit agreement effective November 1, 1999) and bear interest, at Veritas DGC's
election, at LIBOR or prime rate plus a margin based on certain financial ratios
maintained by Veritas DGC. Advances are secured by certain accounts receivable.
As of October 31, 1999, there are no outstanding advances under the credit
facility, but $5.8 million of the credit facility has been utilized for letters
of credit, therefore, $44.2 million is available for borrowings.
Veritas DGC requires significant amounts of working capital to support its
operations and fund capital spending and research and development programs.
Veritas DGC's capital expenditure budget for fiscal 2000 is approximately $84.0
million, which includes expenditures of approximately $25.0 million to maintain
or replace current operating equipment. Research and development expenditures
for fiscal 2000 are budgeted at $8.3 million. Veritas DGC has also increased its
multi-client activity and significantly expanded its multi-client data library.
Because of the elapsed time between survey execution, sale and ultimate cash
receipt, multi-client work generally requires greater amounts of working capital
than contract work. Depending upon the timing of the sales of the multi-client
surveys and the contract terms relating to the collection of the proceeds from
such sales, Veritas DGC's liquidity may be affected. Veritas DGC seeks
pre-funding commitments from customers for a portion of the cost of these
surveys. However, because of market conditions, purchase commitment levels are
currently much lower than in past years. Veritas DGC believes that these
multi-client surveys have good long-term sales, earnings and cash flow
potential, but there is no assurance that Veritas DGC will recover the costs of
these surveys. In addition to the capital expenditure budget, the planned net
investment in the multi-client data library (the change in the balance sheet
account) for fiscal 2000 is $81.0 million.
Veritas DGC will require substantial cash flow to continue operations on a
satisfactory basis, complete its capital expenditure and research and
development programs and meet its principal and interest obligations with
respect to outstanding indebtedness. While management believes that Veritas DGC
has adequate sources of funds to meet its liquidity needs, its ability to meet
its obligations depends on its future performance, which, in turn, is subject to
general economic conditions, business and other factors beyond Veritas DGC's
control. Key factors affecting future results will include utilization levels of
acquisition and processing assets and the level of multi-client data library
sales, all of which are driven by exploration spending and, ultimately, by
underlying commodity prices.
If Veritas DGC is unable to generate sufficient cash flow from operations or
otherwise to comply with the terms of its revolving credit facility or
indentures, it may be required to refinance all or a portion of its existing
debt or obtain additional financing. Veritas DGC cannot make any assurances that
it would be able to obtain such refinancing or financing, or any refinancing or
financing would result in a level of net proceeds required.
To ensure that Veritas DGC has available as many financing options as possible,
it has filed a shelf registration allowing the issuance of up to $200 million in
debt, preferred stock or common stock. On October 26, 1999 Veritas DGC filed a
prospectus supplement relating to the sale of up to 2.0 million shares of
Veritas DGC common stock, from time to time through ordinary brokerage
transactions, under the currently effective shelf registration.
11
<PAGE> 14
YEAR 2000
Year 2000 Issue. Some software applications, hardware, equipment and embedded
chip systems identify dates using only the last two digits of the year. These
products may be unable to distinguish between dates in the year 2000 and dates
in the year 1900. That inability (referred to as the "Year 2000" issue), if not
addressed, could cause applications, equipment or systems to fail or provide
incorrect information after December 31, 1999, or when using dates after
December 31, 1999. This in turn could have an adverse effect on Veritas DGC,
because it directly depends on its own applications, equipment and systems and
indirectly depends on those of other entities with which Veritas DGC interacts.
Compliance Program. Veritas DGC has prepared a formal plan to address Year 2000
issues as they relate to Veritas DGC's business and its operations. In
accordance with that plan, Veritas DGC has evaluated all internal hardware and
software used in its operations, including those used to support Veritas DGC's
activities, such as geophysical data acquisition and processing equipment and
accounting and payroll systems.
Veritas DGC's State of Readiness. In the ordinary course of business, Veritas
DGC has replaced a significant amount of its hardware and software with Year
2000 compliant systems. Veritas DGC has also identified all external
relationships, mainly suppliers and customers, and mailed each entity an
internally prepared questionnaire regarding Year 2000 issues. Responses returned
indicate a state of readiness, and non-responses do not pertain to critical
systems. Currently, Veritas DGC has completed the remedial actions required on
all critical systems and has completed its contingency planning.
Contingency Planning. As part of the Year 2000 project, Veritas DGC has
determined which of its business activities may be vulnerable to a Year 2000
disruption. An ongoing monitoring program and contingency procedures have been
established in the event of unanticipated non-compliance problems.
Costs to Address Year 2000 Compliance Issues. Cost of compliance to date
approximates $125,000, and Veritas DGC is not aware of any material
contingencies or costs that will be incurred in the future.
Risk of Non-Compliance. While Veritas DGC believes that its Year 2000 compliance
program has substantially reduced the risks associated with the Year 2000 issue,
there can be no assurance that each and every remedial action will be
successful. Due to the general uncertainty inherent in the Year 2000 issues,
Veritas DGC cannot conclude that its failure or the failure of third parties to
achieve Year 2000 compliance will not adversely affect its financial position,
results of operations or cash flows.
OTHER
Since Veritas DGC's quasi-reorganization with respect to Digicon Inc. on July
31, 1991, the tax benefits of net operating loss carryforwards existing at the
date of the quasi-reorganization have been recognized through a direct addition
to paid-in capital, when realization is more likely than not. Additionally, the
utilization of the net operating loss carryforwards existing at the date of the
quasi-reorganization is subject to certain limitations. During the three months
ended October 31, 1999, Veritas DGC did not recognize any of these benefits, due
to decreased profitability of Veritas DGC's U.K. operations.
Veritas DGC maintains operations in Europe, which are predominately conducted
from its U.K. offices. Although the U.K. has not currently elected to convert to
the new "euro" currency, Veritas DGC does have transactions with companies in
countries that have adopted the new currency. Veritas DGC has made a preliminary
assessment and does not anticipate any material effect to the consolidated
financial statements as a result of the new currency.
See Note 1 of Notes to Consolidated Financial Statements regarding new
accounting pronouncements not yet adopted.
12
<PAGE> 15
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
On September 21, 1999 the Veritas DGC Restated Certificate of Incorporation was
amended to designate a new series of special voting stock and to delete a
restriction which prohibits the Veritas DGC Board from designating a new series
of ordinary shares without the unanimous approval of all the outstanding
ordinary shares. (See Item 4 and Exhibit 3-D.)
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On September 21, 1999 the shareholders of Veritas DGC held a special meeting and
approved a proposal to amend Veritas DGC's Restated Certificate of Incorporation
to authorize a new series of special voting stock and to eliminate provisions
that restrict the issuance of a new series of ordinary shares, both required to
complete the acquisition of Enertec Resource Services Inc. The votes on the
amendments were as follows: For - 12,404,041, Against - 4,031,980, Abstaining
21,017.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) EXHIBITS FILED WITH THIS REPORT:
Exhibit
-------
3-A) Restated Certificate of Incorporation with amendments of
Digicon Inc. dated August 30, 1996. (Exhibit 3.1 to Veritas
DGC Inc.'s Current Report on Form 8-K dated September 16, 1996
is incorporated herein by reference.)
3-B) Certificate of Ownership and Merger of New Digicon Inc. and
Digicon Inc. (Exhibit 3-B to Digicon Inc.'s Registration
Statement No. 33-43873 dated November 12, 1991 is incorporated
herein by reference.)
3-C) By-laws of New Digicon Inc. dated June 24, 1991. (Exhibit 3-C
to Digicon Inc.'s Registration Statement No. 33-43873 dated
November 12, 1991 is incorporated herein by reference.)
3-D) Certificate of Amendment to Restated Certificate of
Incorporation of Veritas DGC Inc. dated September 30, 1999.
(Exhibit 3-D to Veritas DGC Inc.'s Form 10-K for the year
ended July 31, 1999 is incorporated herein by reference.)
4-A) Specimen certificate for Senior Notes (Series A). (Included as
part of Section 2.2 Exhibit 4-B to Veritas DGC Inc.'s
Registration Statement No. 333-12481 dated September 20, 1996
is incorporated herein by reference.)
4-B) Form of Trust Indenture relating to the 9 3/4% Senior Notes
due 2003 of Veritas DGC Inc. between Veritas DGC Inc. and
Fleet National Bank, as trustee. (Exhibit 4-B to Veritas DGC
Inc.'s Registration Statement No. 333-12481 dated September
20, 1996 is incorporated herein by reference.)
4-C) Specimen Veritas DGC Inc. Common Stock certificate. (Exhibit
4-C to Veritas DGC Inc.'s Form 10-K for the year ended July
31, 1996 is incorporated herein by reference.)
4-D) Rights Agreement between Veritas DGC Inc. and ChaseMellon
Shareholder Services, L.L.C. dated May 15, 1997. (Exhibit 4.1
to Veritas DGC Inc.'s Current Report on Form 8-K dated May 27,
1997 is incorporated herein by reference.)
13
<PAGE> 16
4-E) Form of Restricted Stock Grant Agreement. (Exhibit 4.8 to
Veritas DGC Inc.'s Registration Statement No. 333-48953 dated
March 31, 1998 is incorporated herein by reference.)
4-F) Restricted Stock Plan as Amended and Restated September 14,
1999. (Exhibit 4.8 to Veritas DGC Inc.'s Registration
Statement No. 333-87223 dated September 16, 1999 is
incorporated herein by reference.)
4-G) Key Contributor Incentive Plan as Amended and Restated dated
March 9, 1999. (Exhibit 4.9 to Veritas DGC Inc.'s Registration
Statement No. 333-74305 dated March 12, 1999 is incorporated
herein by reference.)
4-H) Specimen for Senior Notes (Series C). (Exhibit 4-K to Veritas
DGC Inc.'s Form 10-Q for the quarter ended January 31, 1999 is
incorporated herein by reference.)
4-I) Indentures relating to the 9 3/4% Senior Notes due 2003,
Series B and Series C of Veritas DGC Inc. between Veritas DGC
Inc. and State Street Bank and Trust Company dated October 28,
1998. (Exhibit 4.3 to Veritas DGC Inc.'s Current Report on
Form 8-K dated November 12, 1998 is incorporated herein by
reference.)
9-A) Voting and Exchange Trust Agreement dated August 30, 1996
among Digicon Inc., Veritas Energy Services Inc. and the R-M
Trust Company dated August 30, 1996. (Exhibit 9.1 to Veritas
DGC Inc.'s Current Report on Form 8-K dated September 16, 1996
is incorporated herein by reference.)
9-B) Voting and Exchange Trust Agreement dated September 30, 1999
among Veritas DGC Inc., Veritas Energy Services Inc. and the
CIBC Mellon Trust Company. (Exhibit 9-B to Veritas DGC Inc.'s
Form 10-K for the year ended July 31, 1999 is incorporated
herein by reference.)
10-A) Support Agreement between Digicon Inc. and Veritas Energy
Services Inc. dated August 30, 1996. (Exhibit 10.1 to Veritas
DGC Inc.'s Current Report on Form 8-K dated August 30, 1996 is
incorporated herein by reference.)
10-B) Second Amended and Restated 1992 Non-Employee Director Stock
Option Plan as Amended and Restated dated December 9, 1998.
(Exhibit 10-B to Veritas DGC Inc.'s Form 10-Q for the quarter
ended October 31, 1998 is incorporated herein by reference.)
10-C) Fifth Amended and Restated 1992 Employee Nonqualified Stock
Option Plan. (Exhibit 10-C to Veritas DGC Inc.'s Form 10-K for
the year ended July 31, 1999 is incorporated herein by
reference.)
10-D) 1997 Employee Stock Purchase Plan. (Exhibit 4.1 to Veritas DGC
Inc.'s Registration Statement No. 333-38377 dated October 21,
1997 is incorporated herein by reference.)
10-E) Restricted Stock Agreement between Veritas DGC Inc. and
Anthony Tripodo dated April 1, 1997. (Exhibit 10-O to Veritas
DGC Inc.'s Form 10-Q for the year ended July 31, 1997 is
incorporated herein by reference.)
10-F) Employment Agreement executed by David B. Robson.
(Exhibit 10-L to Veritas DGC Inc.'s Form 10-K for the year
ended July 31, 1997 is incorporated herein by reference.)
10-G) Employment Agreement executed by Stephen J. Ludlow.
(Exhibit 10-B to Veritas DGC Inc.'s Form 10-Q for the quarter
ended April 30, 1997 is incorporated herein by reference.)
10-H) Employment Agreement executed by Anthony Tripodo.
(Refer to Exhibit 10-I to Veritas DGC Inc.'s Form 10-Q for the
quarter ended April 30, 1997 is incorporated herein by
reference.)
14
<PAGE> 17
10-I) Employment Agreement executed by Rene M.J. VandenBrand.
(Exhibit 10-N to Veritas DGC Inc.'s Form 10-K for the year
ended July 31, 1997 is incorporated herein by reference.)
10-J) Employment Agreement executed by Timothy L. Wells.
(Exhibit 10-J to Veritas DGC Inc.'s Form 10-K for the year
ended July 31, 1999 is incorporated herein by reference.)
10-K) Credit Agreement among Veritas DGC Inc., as borrower, and Bank
One, Texas, N.A., as issuing bank, as a bank and as agent for
the banks, and the banks named therein dated July 27, 1998.
(Exhibit 10-K to Veritas DGC Inc.'s Form 10-K for the year
ended July 31, 1998 is incorporated herein by reference.)
10-L) First Amendment to Credit Agreement among Veritas DGC Inc., as
borrower, and Bank One, Texas, N.A., as issuing bank, as a
bank and as agent for the banks, and the banks named therein
dated October 23, 1998. (Exhibit 10-L to Veritas DGC Inc.'s
Form 10-Q for the quarter ended October 31, 1998 is
incorporated herein by reference.)
10-M) Second Amendment to Credit Agreement among Veritas DGC Inc.,
as borrower, and Bank One, Texas, N.A., as issuing bank, as a
bank and as agent for the banks, and the banks named therein
dated November 20, 1998. (Exhibit 10-M to Veritas DGC Inc.'s
Form 10-Q for the quarter ended October 31, 1998 is
incorporated herein by reference.)
*10-N) Credit Agreement among Veritas DGC Inc., as borrower, and Bank
One, Texas, N.A., as issuing bank, as a bank and agent for the
banks, and the banks therein named dated November 1, 1999.
10-O) Sales agency agreement between Veritas DGC Inc. and
PaineWebber Incorporated, dated October 26, 1999. (Exhibit 1.1
to Veritas DGC Inc.'s Form 8-K filed on October 26, 1999 is
incorporated herein by reference.)
*10-P) Form of Indemnity Agreement between Veritas DGC Inc. and its
executive officers and directors.
*27) Financial Data Schedule
*99) Audit Committee Charter of Veritas DGC Inc., approved by the
Board of Directors on December 7, 1999.
* Filed herewith
B) REPORTS ON FORM 8-K
Veritas DGC filed a Form 8-K on October 26, 1999 with respect to its sales
agency agreement related to its registered offering of up to 2.0 million shares
of common stock, from time to time through ordinary brokerage transactions.
15
<PAGE> 18
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, on the 15th day of December, 1999.
VERITAS DGC INC.
By: /s/ David B. Robson
--------------------------------------------------
DAVID B. ROBSON
Chairman of the Board and Chief Executive Officer
/s/ Anthony Tripodo
--------------------------------------------------
ANTHONY TRIPODO
Executive Vice President, Chief Financial Officer
and Treasurer
16
<PAGE> 19
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
3-A) Restated Certificate of Incorporation with amendments of
Digicon Inc. dated August 30, 1996. (Exhibit 3.1 to Veritas
DGC Inc.'s Current Report on Form 8-K dated September 16, 1996
is incorporated herein by reference.)
3-B) Certificate of Ownership and Merger of New Digicon Inc. and
Digicon Inc. (Exhibit 3-B to Digicon Inc.'s Registration
Statement No. 33-43873 dated November 12, 1991 is incorporated
herein by reference.)
3-C) By-laws of New Digicon Inc. dated June 24, 1991. (Exhibit 3-C
to Digicon Inc.'s Registration Statement No. 33-43873 dated
November 12, 1991 is incorporated herein by reference.)
3-D) Certificate of Amendment to Restated Certificate of
Incorporation of Veritas DGC Inc. dated September 30, 1999.
(Exhibit 3-D to Veritas DGC Inc.'s Form 10-K for the year
ended July 31, 1999 is incorporated herein by reference.)
4-A) Specimen certificate for Senior Notes (Series A). (Included as
part of Section 2.2 Exhibit 4-B to Veritas DGC Inc.'s
Registration Statement No. 333-12481 dated September 20, 1996
is incorporated herein by reference.)
4-B) Form of Trust Indenture relating to the 9 3/4% Senior Notes
due 2003 of Veritas DGC Inc. between Veritas DGC Inc. and
Fleet National Bank, as trustee. (Exhibit 4-B to Veritas DGC
Inc.'s Registration Statement No. 333-12481 dated September
20, 1996 is incorporated herein by reference.)
4-C) Specimen Veritas DGC Inc. Common Stock certificate. (Exhibit
4-C to Veritas DGC Inc.'s Form 10-K for the year ended July
31, 1996 is incorporated herein by reference.)
4-D) Rights Agreement between Veritas DGC Inc. and ChaseMellon
Shareholder Services, L.L.C. dated May 15, 1997. (Exhibit 4.1
to Veritas DGC Inc.'s Current Report on Form 8-K dated May 27,
1997 is incorporated herein by reference.)
4-E) Form of Restricted Stock Grant Agreement. (Exhibit 4.8 to
Veritas DGC Inc.'s Registration Statement No. 333-48953 dated
March 31, 1998 is incorporated herein by reference.)
4-F) Restricted Stock Plan as Amended and Restated September 14,
1999. (Exhibit 4.8 to Veritas DGC Inc.'s Registration
Statement No. 333-87223 dated September 16, 1999 is
incorporated herein by reference.)
4-G) Key Contributor Incentive Plan as Amended and Restated dated
March 9, 1999. (Exhibit 4.9 to Veritas DGC Inc.'s Registration
Statement No. 333-74305 dated March 12, 1999 is incorporated
herein by reference.)
4-H) Specimen for Senior Notes (Series C). (Exhibit 4-K to Veritas
DGC Inc.'s Form 10-Q for the quarter ended January 31, 1999 is
incorporated herein by reference.)
4-I) Indentures relating to the 9 3/4% Senior Notes due 2003,
Series B and Series C of Veritas DGC Inc. between Veritas DGC
Inc. and State Street Bank and Trust Company dated October 28,
1998. (Exhibit 4.3 to Veritas DGC Inc.'s Current Report on
Form 8-K dated November 12, 1998 is incorporated herein by
reference.)
9-A) Voting and Exchange Trust Agreement dated August 30, 1996
among Digicon Inc., Veritas Energy Services Inc. and the R-M
Trust Company dated August 30, 1996. (Exhibit 9.1 to Veritas
DGC Inc.'s Current Report on Form 8-K dated September 16, 1996
is incorporated herein by reference.)
9-B) Voting and Exchange Trust Agreement dated September 30, 1999
among Veritas DGC Inc., Veritas Energy Services Inc. and the
CIBC Mellon Trust Company. (Exhibit 9-B to Veritas DGC Inc.'s
Form 10-K for the year ended July 31, 1999 is incorporated
herein by reference.)
10-A) Support Agreement between Digicon Inc. and Veritas Energy
Services Inc. dated August 30, 1996. (Exhibit 10.1 to Veritas
DGC Inc.'s Current Report on Form 8-K dated August 30, 1996 is
incorporated herein by reference.)
10-B) Second Amended and Restated 1992 Non-Employee Director Stock
Option Plan as Amended and Restated dated December 9, 1998.
(Exhibit 10-B to Veritas DGC Inc.'s Form 10-Q for the quarter
ended October 31, 1998 is incorporated herein by reference.)
10-C) Fifth Amended and Restated 1992 Employee Nonqualified Stock
Option Plan. (Exhibit 10-C to Veritas DGC Inc.'s Form 10-K for
the year ended July 31, 1999 is incorporated herein by
reference.)
10-D) 1997 Employee Stock Purchase Plan. (Exhibit 4.1 to Veritas DGC
Inc.'s Registration Statement No. 333-38377 dated October 21,
1997 is incorporated herein by reference.)
10-E) Restricted Stock Agreement between Veritas DGC Inc. and
Anthony Tripodo dated April 1, 1997. (Exhibit 10-O to Veritas
DGC Inc.'s Form 10-Q for the year ended July 31, 1997 is
incorporated herein by reference.)
10-F) Employment Agreement executed by David B. Robson.
(Exhibit 10-L to Veritas DGC Inc.'s Form 10-K for the year
ended July 31, 1997 is incorporated herein by reference.)
10-G) Employment Agreement executed by Stephen J. Ludlow.
(Exhibit 10-B to Veritas DGC Inc.'s Form 10-Q for the quarter
ended April 30, 1997 is incorporated herein by reference.)
10-H) Employment Agreement executed by Anthony Tripodo.
(Refer to Exhibit 10-I to Veritas DGC Inc.'s Form 10-Q for the
quarter ended April 30, 1997 is incorporated herein by
reference.)
10-I) Employment Agreement executed by Rene M.J. VandenBrand.
(Exhibit 10-N to Veritas DGC Inc.'s Form 10-K for the year
ended July 31, 1997 is incorporated herein by reference.)
10-J) Employment Agreement executed by Timothy L. Wells.
(Exhibit 10-J to Veritas DGC Inc.'s Form 10-K for the year
ended July 31, 1999 is incorporated herein by reference.)
10-K) Credit Agreement among Veritas DGC Inc., as borrower, and Bank
One, Texas, N.A., as issuing bank, as a bank and as agent for
the banks, and the banks named therein dated July 27, 1998.
(Exhibit 10-K to Veritas DGC Inc.'s Form 10-K for the year
ended July 31, 1998 is incorporated herein by reference.)
10-L) First Amendment to Credit Agreement among Veritas DGC Inc., as
borrower, and Bank One, Texas, N.A., as issuing bank, as a
bank and as agent for the banks, and the banks named therein
dated October 23, 1998. (Exhibit 10-L to Veritas DGC Inc.'s
Form 10-Q for the quarter ended October 31, 1998 is
incorporated herein by reference.)
10-M) Second Amendment to Credit Agreement among Veritas DGC Inc.,
as borrower, and Bank One, Texas, N.A., as issuing bank, as a
bank and as agent for the banks, and the banks named therein
dated November 20, 1998. (Exhibit 10-M to Veritas DGC Inc.'s
Form 10-Q for the quarter ended October 31, 1998 is
incorporated herein by reference.)
*10-N) Credit Agreement among Veritas DGC Inc., as borrower, and Bank
One, Texas, N.A., as issuing bank, as a bank and agent for the
banks, and the banks therein named dated November 1, 1999.
10-O) Sales agency agreement between Veritas DGC Inc. and
PaineWebber Incorporated, dated October 26, 1999. (Exhibit 1.1
to Veritas DGC Inc.'s Form 8-K filed on October 26, 1999 is
incorporated herein by reference.)
*10-P) Form of Indemnity Agreement between Veritas DGC Inc. and its
executive officers and directors.
*27) Financial Data Schedule
*99) Audit Committee Charter of Veritas DGC Inc., approved by the
Board of Directors on December 7, 1999.
*Filed herewith
</TABLE>
<PAGE> 1
EXHIBIT 10-N
================================================================================
CREDIT AGREEMENT
dated as of November 1, 1999
among
VERITAS DGC INC.
as Borrower
and
================================================================================
BANK ONE, TEXAS, N.A.
as Issuing Bank, as a Bank
and as Agent for the Banks
and
the Banks
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I. DEFINITIONS............................................................................7
Section 1.1. Definitions...................................................................7
Section 1.2. Other Definitional Provisions................................................36
ARTICLE II. ADVANCES-A AND LETTERS OF CREDIT-A....................................................36
Section 2.1. Revolving Credit Commitments-A...............................................36
Section 2.2. The Revolving Credit Notes-A.................................................36
Section 2.3. Repayment of Advances-A......................................................36
Section 2.4. Interest.....................................................................36
Section 2.5. Use of Proceeds..............................................................37
Section 2.6. Revolving Credit Commitment-A Fee............................................37
Section 2.7. Reduction or Termination of Revolving Credit Commitment-A....................37
Section 2.8. Letters of Credit-A..........................................................38
Section 2.9. Payments Constitute Advances-A...............................................38
ARTICLE III. ADVANCES-B; LETTERS OF CREDIT-B AND BANK GUARANTIES...................................38
Section 3.1. Revolving Credit Commitments-B...............................................39
Section 3.2. The Revolving Credit Notes-B.................................................39
Section 3.3. Repayment of Advances-B......................................................39
Section 3.4. Interest.....................................................................39
Section 3.5. Use of Proceeds..............................................................40
Section 3.6. Revolving Credit Commitment-B Fee............................................40
Section 3.7. Reduction or Termination of Revolving Credit Commitment-B....................40
Section 3.8. Letters of Credit-B; Bank Guaranties.........................................40
Section 3.9. Payments Constitute Advances-B...............................................41
ARTICLE IV. BORROWING PROCEDURE; PAYMENTS; FACILITIES FEES;
MATTERS RELATED TO LETTERS OF CREDIT;
MATTERS RELATED TO ADVANCES; DESIGNATION OF
ADDITIONAL GUARANTORS.................................................................41
Section 4.1. Borrowing Procedure..........................................................41
Section 4.2. Method of Payment............................................................42
Section 4.3. Voluntary Prepayment.........................................................43
Section 4.4. Mandatory Prepayment.........................................................43
Section 4.5. Pro Rata Treatment...........................................................43
Section 4.6. Non-Receipt of Funds by the Agent............................................44
Section 4.7. Withholding Tax Exemption....................................................44
Section 4.8. Computation of Interest......................................................45
Section 4.9. Conversions and Continuation.................................................45
Section 4.10. Limitation on Guarantors, Liability for the Obligations......................45
Section 4.11. Application of Payments......................................................45
</TABLE>
2
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<TABLE>
<S> <C> <C>
Section 4.12. Letter of Credit Procedure...................................................46
Section 4.13. Amendments to Letters of Credit..............................................46
Section 4.14. Letter of Credit Fees........................................................46
Section 4.15. Participation by Banks.......................................................47
Section 4.16. Obligations Absolute.........................................................47
Section 4.17. Limitation of Liability......................................................48
Section 4.18. Letter of Credit Agreements..................................................48
Section 4.19. Replacement of the Issuing Bank..............................................48
Section 4.20. No Advances..................................................................48
Section 4.21. Designation of Additional Guarantors; Revocation of Designation..............48
ARTICLE V. YIELD PROTECTION AND ILLEGALITY.......................................................50
Section 5.1. Capital Adequacy.............................................................50
Section 5.2. Additional Costs.............................................................50
Section 5.3. Limitation on LIBOR Advances.................................................51
Section 5.4. Illegality...................................................................52
Section 5.5. Treatment of Certain LIBOR Advances..........................................52
Section 5.6. Compensation.................................................................53
ARTICLE VI. SECURITY..............................................................................54
Section 6.1. Collateral...................................................................54
Section 6.2. Setoff.......................................................................54
Section 6.3. Special Provisions Regarding Security Interests and Security Agreements......55
ARTICLE VII. CONDITIONS PRECEDENT..................................................................55
Section 7.1. Conditions to Advances-A.....................................................55
Section 7.2. Conditions to Advances-B.....................................................57
Section 7.3. All Advances.................................................................58
ARTICLE VIII. REPRESENTATIONS AND WARRANTIES........................................................59
Section 8.1. Corporate Existence..........................................................59
Section 8.2. Financial Statements.........................................................59
Section 8.3. Corporate Action: No Breach..................................................60
Section 8.4. Operation of Business........................................................60
Section 8.5. Litigation and Judgments.....................................................60
Section 8.6. Rights in Properties: Liens..................................................60
Section 8.7. Enforceability...............................................................61
Section 8.8. Approvals....................................................................61
Section 8.9. Debt.........................................................................61
Section 8.10. Taxes........................................................................61
Section 8.11. Use of Proceeds: Margin Securities...........................................61
Section 8.12. ERISA........................................................................62
Section 8.13. Disclosure...................................................................62
Section 8.14. Subsidiaries.................................................................62
Section 8.15. Agreements; Indenture Defaults...............................................62
Section 8.16. Compliance with Laws.........................................................63
Section 8.17. Inventory....................................................................63
Section 8.18. Investment Company Act.......................................................63
Section 8.19. Public Utility Holding Company Act...........................................63
Section 8.20. Environmental Matters........................................................63
</TABLE>
3
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<TABLE>
<S> <C> <C>
Section 8.21. Year 2000....................................................................65
Section 8.22. Guarantors...................................................................66
ARTICLE IX. AFFIRMATIVE COVENANTS.................................................................66
Section 9.1. Reporting Requirements.......................................................66
Section 9.2. Maintenance of Existence: Conduct of Business................................70
Section 9.3. Maintenance of Properties....................................................70
Section 9.4. Taxes and Claims.............................................................71
Section 9.5. Insurance....................................................................71
Section 9.6. Inspection Rights............................................................71
Section 9.7. Keeping Books and Records....................................................71
Section 9.8. Compliance with Laws.........................................................71
Section 9.9. Compliance with Agreements...................................................72
Section 9.10. Further Assurances...........................................................72
Section 9.11. ERISA........................................................................72
Section 9.12. Contracts....................................................................72
Section 9.13. Additional Material Subsidiaries as Guarantors; Execution of Additional
Security Agreements-Guarantors...............................................73
Section 9.14. Continuity of Operations.....................................................73
Section 9.14. Year 2000....................................................................73
ARTICLE X. NEGATIVE COVENANTS....................................................................74
Section 10.1. Debt.........................................................................74
Section 10.2. Limitation on Liens..........................................................75
Section 10.3. Mergers, Dissolutions, Etc...................................................76
Section 10.4. Loans and Investments........................................................77
Section 10.5. Transactions With Affiliates.................................................78
Section 10.6. Disposition of Assets........................................................79
Section 10.7. Sale and Leaseback...........................................................79
Section 10.8. Nature of Business...........................................................79
Section 10.9. Environmental Protection.....................................................79
Section 10.10. Accounting...................................................................79
Section 10.11. Contracts....................................................................80
ARTICLE XI. FINANCIAL COVENANTS...................................................................80
Section 11.1. Consolidated Tangible Net Worth..............................................80
Section 11.2. Fixed Charge Coverage Ratio..................................................80
Section 11.3. Funded Debt to Capitalization Ratio..........................................80
Section 11.4. Total Funded Debt to Capitalization Ratio....................................81
Section 11.5. Current Ratio................................................................81
Section 11.6. Funded Debt to EBITDA Ratio..................................................81
Section 11.7. Total Funded Debt to EBITDA Ratio............................................81
Section 11.8. Senior Funded Debt to EBITDA Ratio...........................................81
ARTICLE XII. DEFAULT...............................................................................82
Section 12.1. Events of Default............................................................82
Section 12.2. Remedies Upon Default........................................................84
Section 12.3. Letters of Credit............................................................84
Section 12.4. Performance by the Agent.....................................................84
</TABLE>
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<PAGE> 5
<TABLE>
<S> <C> <C>
ARTICLE XIII. THE AGENT.............................................................................85
Section 13.1. Appointment, Powers and Immunities...........................................85
Section 13.2. Rights of Agent as a Bank....................................................87
Section 13.3. Sharing of Payments, Etc.....................................................87
Section 13.4. Indemnification..............................................................88
Section 13.5. Independent Credit Decisions.................................................88
Section 13.6. Several Commitments..........................................................89
Section 13.7. Successor Agent..............................................................89
ARTICLE XIV. MISCELLANEOUS.........................................................................90
Section 14.1. Expenses.....................................................................90
SECTION 14.2. Indemnification..............................................................90
Section 14.3. Limitation of Liability......................................................91
Section 14.4. No Duty......................................................................91
Section 14.5. Bank Not Fiduciary...........................................................91
Section 14.6. Equitable Relief.............................................................92
Section 14.7. No Waiver: Cumulative Remedies...............................................92
Section 14.8. Successors and Assigns.......................................................92
Section 14.9. Survival.....................................................................95
Section 14.10. ENTIRE AGREEMENT; AMENDMENTS.................................................95
Section 14.11. Maximum Interest Rate........................................................96
Section 14.12. Notices......................................................................96
Section 14.13. Governing Law; Venue; Service of Process.....................................97
Section 14.14. Counterparts.................................................................97
Section 14.15. Severability.................................................................97
Section 14.16. Headings.....................................................................97
Section 14.17. Non-Application of Chapter 15 of Texas Credit Code...........................98
Section 14.18. Construction.................................................................98
Section 14.19. Independence of Covenants....................................................98
Section 14.20. Arbitration..................................................................98
Section 14.21. Waiver of Trial By Jury......................................................98
</TABLE>
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<PAGE> 6
INDEX TO SCHEDULES
<TABLE>
<CAPTION>
Schedule Description of Schedule Section
-------- ----------------------- -------
<S> <C> <C>
1.1.A. Pricing Schedule. 1.1
1.1.B. Guarantors 1.1
1.1.C. Restricted Subsidiaries 1.1
8.5 Existing Litigation 8.5
8.14 List of Subsidiaries 8.14
8.20 Environmental Matters 8.20
10.1 Existing Debt 10.1
10.2 Existing Liens 10.2
</TABLE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description of Exhibit Section/
------- ---------------------- Appendix
--------
<S> <C> <C>
"A-1" Form of Revolving Credit Note-A 2.2
"A-2" Form of Revolving Credit Note-B 3.2
"B" Security Agreement-Borrower 6.1
"C-1" Form of Security Agreement-Guarantor
(Domestic corporate Guarantors) 6.1
"C-2" Security Agreement-Guarantor
(Partnership) 6.1
"C-3" Charge Debenture (Malaysia) 6.1
"C-4" Charge Debenture (U.K.) 6.1
"D-1" Form of Guaranty-Domestic 7.1
"D-2" Form of Guaranty-Foreign 7.1
"E-1" Advance Request Form-A 7.2(a)
"E-2" Advance Request Form-B 7.2(a)
"F" Compliance Certificate 9.1(c)
"G-1" Borrowing Base Report-A 7.2(q)
"G-2" Borrowing Base Report-B 7.2(q)
</TABLE>
6
<PAGE> 7
EXHIBIT 10-N
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of November 1, 1999 (this "Agreement"),
is among VERITAS DGC INC., a Delaware corporation ("Borrower"), each of the
banks or other lending institutions which is or which may from time to time
become a signatory hereto or any successor or assignee thereof (individually, a
"Bank" and, collectively, the "Banks") and BANK ONE, TEXAS, N.A., a national
banking association as issuing bank (in such capacity, together with its
successors in such capacity, the "Issuing Bank") and as agent for itself, the
Issuing Bank and the other Banks (in such capacity, together with its successors
in such capacity, the "Agent").
R E C I T A L S :
Borrower, the Banks and the Agent entered into that certain Credit
Agreement dated July 27, 1998, as amended by First Amendment to Credit Agreement
dated October 23, 1998 and Second Amendment to Credit Agreement dated November
20, 1998 (the "Prior Credit Agreement"). This Agreement is in restatement and
replacement of the Prior Credit Agreement.
The Borrower has requested the Banks to extend credit in the form of
(a) a revolving credit facility not to exceed $40,000,000.00 outstanding at any
time under which the Borrower may request (i) advances and (ii) letters of
credit (subject to a $20,000,000.00 sublimit), and (b) a revolving credit
facility not to exceed $10,000,000.00 outstanding at any time under which the
Borrower may request (i) advances and (ii) letters of credit (subject to a
$5,000,000.00 sublimit). The Banks are willing to make such credit facilities
available to the Borrower upon the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I.
Definitions
Section I.1. Definitions. As used in this Agreement, the following
terms have the following meanings:
"AAA" has the meaning given to such term in Section 14.20 of
this Agreement.
"Additional Costs" has the meaning given to such term in
Section 5.2.
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<PAGE> 8
"Adjusted LIBOR Rate" means, for any LIBOR Advance for any
Interest Period therefor, the rate per annum determined by the Agent to
be equal to the LIBOR Rate for such LIBOR Advance for such Interest
Period divided by 1 minus the Reserve Requirement for such LIBOR
Advance for such Interest Period.
"Advance" means an Advance-A or an Advance-B, and "Advances"
means the Advances-A and/or the Advances-B.
"Advance-A" means an advance of funds by the Agent on behalf
of the Banks to the Borrower pursuant to Article II and includes, as
applicable, a Prime Rate Advance or a LIBOR Advance.
"Advance-B" means an advance of funds by the Agent on behalf
of the Banks to the Borrower pursuant to Article III and includes, as
applicable, a Prime Rate Advance or a LIBOR Advance.
"Advance Request Form" means an Advance Request Form-A or an
Advance-Request Form-B.
"Advance Request Form-A" means a certificate, in substantially
the form attached hereto as Exhibit "E-1", properly completed and
signed by an Authorized Representative requesting an Advance-A.
"Advance Request Form-B" means a certificate, in substantially
the form attached hereto as Exhibit "E-2", properly completed and
signed by an Authorized Representative requesting an Advance-B.
"Affiliate" means, as to any Person, any other Person (a) that
directly or indirectly, through one or more intermediaries, controls or
is controlled by, or is under common control with, such Person; (b)
that directly or indirectly beneficially owns or holds twenty five
percent (25%) or more of any class of voting stock of such Person; or
(c) twenty five percent (25%) or more of the voting stock of which is
directly or indirectly beneficially owned or held by the Person in
question. The term "control" means the possession, directly or
indirectly, of the power to direct or cause direction of the management
and policies of a Person, whether through the ownership of voting
securities, by contract, or otherwise; provided, however, in no event
shall any of the Agent, the Issuing Bank and the Banks be deemed an
Affiliate of Borrower or any of its Subsidiaries.
"Agent" has the meaning given to such term in the first
paragraph of this Agreement.
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<PAGE> 9
"Applicable Lending Office" means for each Bank and each Type
of Advance, the Lending Office of such Bank (or of an Affiliate of such
Bank) designated for such Type of Advance below its name on the
signature pages hereof or such other office of the Bank (or of an
Affiliate of such Bank) as such Bank may from time to time specify to
Borrower as the office by which its Advances of such Type are to be
made and maintained.
"Applicable Rate" means (a) during the period that an Advance
is a Prime Rate Advance, the sum of the Prime Rate plus the Prime Rate
Margin from time to time in effect; and (b) during the period that an
Advance is a LIBOR Advance, the sum of the Adjusted LIBOR Rate plus the
LIBOR Margin from time to time in effect.
"Asia Pacific" means Veritas DGC Asia Pacific, Ltd., a
Delaware corporation, and its successors and assigns.
"Assignee" has the meaning given to such term in Section
14.8(b).
"Authorized Representative" means any officer or employee of
the Borrower who has been designated in writing by the Borrower to the
Agent to be an Authorized Representative.
"Bank" has the meaning given to such term in the first
paragraph of this Agreement.
"Bank Guaranty" means any guaranty or similar instrument which
may be issued by Bank Guarantor for the benefit of the Borrower or any
Foreign Guarantor to support performance bonds or for another purpose
approved by Bank Guarantor.
"Bank Guarantor" means Bank One, Texas, N.A. or its Affiliate.
"Basle Accord" means the proposals for risk-based capital
framework described by the Basle Committee on Banking Regulations and
Supervisory Practices in its paper entitled "International Convergence
of Capital Measurement and Capital Standards" dated July 1988, as
amended, supplemented and otherwise modified and in effect from time to
time, or any replacement thereof.
"Borrower" has the meaning given to such term in the first
paragraph of this Agreement.
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<PAGE> 10
"Borrowing Base-A" means, at any particular time, an amount
equal to the sum of (a) eighty percent (80%) of Eligible
Domestic/Domestic Accounts, plus (b) seventy-five percent (75%) of
Eligible Domestic/Domestic Unbilled Receivables-180, plus (c)
sixty-five percent (65%) of Eligible Domestic/Domestic Unbilled
Receivables-365, plus (d) seventy percent (70%) of Eligible
Domestic/Foreign Accounts, plus (e) sixty-five percent (65%) of
Eligible Domestic/Foreign Unbilled Receivables-180, plus (f) fifty-five
percent (55%) of Eligible Domestic/Foreign Unbilled Receivables-365;
provided, however, that the sum of the amounts calculated pursuant to
clauses (c) and (f) shall not exceed $8,000,000.00; and provided,
further, that all accounts not payable in Dollars shall be calculated
at the applicable Exchange Rate.
"Borrowing Base-B" means, at any particular time, an amount
equal to the sum of (a) fifty percent (50%) of Eligible Foreign/Foreign
Accounts, plus (b) forty-five percent (45%) of Eligible Foreign/Foreign
Unbilled Receivables-180, plus (c) the lesser of (i) forty percent
(40%) of Eligible Foreign/Foreign Unbilled Receivables-365 and (ii)
$2,000,000.00; provided that all accounts not payable in Dollars shall
be calculated at the applicable Exchange Rate.
"Borrowing Base Report-A" means a report, in substantially the
form of Exhibit "G-1" hereto, properly completed and delivered or to be
delivered to the Agent pursuant to this Agreement.
"Borrowing Base Report-B" means a report, in substantially the
form of Exhibit "G-2" hereto, properly completed and delivered or to be
delivered to the Agent pursuant to this Agreement.
"Business Day" means (a) any day on which commercial banks are
not authorized or required to close in Houston, Texas, and (b) with
respect to all borrowings, payments, Conversions, Continuations,
Interest Periods, and notices in connection with LIBOR Advances, any
day which is a Business Day described in clause (a) above and which is
also a day on which dealings in Dollar deposits are carried out in the
London interbank market.
"Calculation Period" means, as of the last day of any Fiscal
Quarter, the period of four Fiscal Quarters ended as of such date or,
if a calculation is performed on a date other than the last day of any
Fiscal Quarter, the period of twelve months ending on such date.
"Capital Expenditures" means, for any Person, all expenditures
for assets which, in accordance with GAAP, are
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<PAGE> 11
properly classified as equipment, real property, improvements, fixed
assets or a similar type of capitalized asset and which would be
required to be capitalized and shown on the balance sheet of such
Person.
"Capital Lease Obligations" means, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease
of (or other agreement conveying the right to use) real and/or personal
property, which obligations are required to be classified and accounted
for as a capital lease on a balance sheet of such Person under GAAP.
For purposes of this Agreement, the amount of such Capital Lease
Obligations shall be the capitalized amount thereof, determined in
accordance with GAAP.
"Cash Equivalent Investment" means, at any time, (a) any
evidence of Debt, maturing not more than one year after such time,
issued or guaranteed by the United States government or any agency
thereof, (b) commercial paper, maturing not more than one year from the
date of issue, corporate demand notes or other debt securities having a
maturity or tender right less than one year from the date of issuance
thereof, in each case (unless issued by a Bank or its holding company)
rated in one of the two highest rating categories by Standard & Poor's
Ratings Group or Moody's Investors Service, Inc., (c) any certificate
of deposit (or time deposits represented by such certificates of
deposit) or bankers acceptance, maturing not more than one year after
such time, or overnight Federal Funds transactions that are issued or
sold by a commercial banking institution that is a member of the
Federal Reserve System and has a combined capital and surplus and
undivided profits of not less than $500,000,000.00, (d) any repurchase
agreement entered into with any Bank (or other commercial banking
institution of the stature referred to in clause (c)) which (i) is
secured by a fully perfected security interest in any obligation of the
type described in any of clauses (a) through (c) and (ii) has a market
value at the time such repurchase agreement is entered into of not less
than 100% of the repurchase obligation of such Bank (or other
commercial banking institution) thereunder and (e) investments in
short-term asset management accounts offered by any Bank for the
purpose of investing in loans to any corporation (other than the
Borrower or an Affiliate of the Borrower), state or municipality, in
each case organized under the laws of any state of the United States or
of the District of Columbia.
"Cash Reserves" means for any Person amounts held by such
Person in Cash or Cash Equivalent Investments.
"Cash Taxes" means, for any Person, the sum of all cash income
taxes paid or required to be paid during the period in
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<PAGE> 12
question, as determined in accordance with GAAP applied consistently.
"Charge Debenture (Malaysia)" means a charge debenture of
Digicon (Malaysia) in favor of the Agent, in substantially the form of
Exhibit "C-3" attached hereto, as the same may be amended, supplemented
or modified from time to time.
"Charge Debenture (U.K.)" means a charge debenture of
Geophysical Limited in favor of the Agent, in substantially the form of
Exhibit "C-4" attached hereto with appropriate completions, as the same
may be amended, supplemented or modified from time to time.
"Code" means the Internal Revenue Code of 1986, as amended,
and the regulations promulgated and rulings issued thereunder.
"Collateral" has the meaning given to such term in Section
6.1.
"Commitment" means, as applicable, the Revolving Credit
Commitments.
"Compliance Certificate" means a certificate, in substantially
the form of Exhibit "F" attached hereto, properly completed and signed
by the Borrower in connection with Section 9.1(c).
"Consolidated Current Assets" means, at any particular time,
all amounts which, in conformity with GAAP, would be included as
current assets on a consolidated balance sheet of the Borrower and its
Subsidiaries.
"Consolidated Current Liabilities" means, at any particular
time, all amounts which, in conformity with GAAP, would be included as
current liabilities on a consolidated balance sheet of the Borrower and
its Subsidiaries.
"Consolidated Liabilities" means, at any particular time, all
amounts which, in conformity with GAAP, would be included as
liabilities on a consolidated balance sheet of the Borrower and its
Subsidiaries.
"Consolidated Net Income" means, for any period, the
consolidated net income (or loss) after income and franchise taxes
determined in conformity with GAAP of the Borrower and its
Subsidiaries.
"Consolidated Net Tangible Assets" means, at any date, the
aggregate amount of assets included on the most recent consolidated
balance sheet of the Borrower and its Restricted
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<PAGE> 13
Subsidiaries, less (a) without duplication, applicable reserves and
other properly deductible items and goodwill, trade names, trademarks,
patents, unamortized debt discount and expense and other like
intangibles and (b) Consolidated Current Liabilities (other than
current liabilities constituting Indebtedness for borrowed money).
"Consolidated Tangible Net Worth" means, at any particular
time, all amounts which, in conformity with GAAP, would be included as
Stockholders' Equity on a consolidated balance sheet of the Borrower
and its Subsidiaries; provided, however, there shall be excluded
therefrom intangible assets (other than the Data Library), including:
(a) any amount at which shares of capital stock of the Borrower appear
as an asset on the Borrower's balance sheet, (b) goodwill, including
any amounts, however designated, that represent the excess of the
purchase price paid for assets or stock over the value assigned
thereto, and (c) loans (to the extent that such are not fully secured)
to any stockholder, director, officer, or employee of the Borrower or
any Affiliate of the Borrower.
"Contingent Liabilities" means, as applied to any Person,
those direct or indirect liabilities of that Person which in conformity
with GAAP, would be included as liabilities of that Person on a
consolidated balance sheet of the Borrower and its Subsidiaries, with
respect to any Debt, lease, dividend, letter of credit or other
obligation (the "primary obligations") of another Person (the "primary
obligor"), including, without limitation, any obligation of such
Person, whether or not contingent, (a) to purchase, repurchase or
otherwise acquire such primary obligations or any property constituting
direct or indirect security therefor, or (b) to advance or provide
funds (i) for the payment or discharge of any such primary obligation,
or (ii) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency or any
balance sheet item, level of income or financial condition of the
primary obligor, or (c) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of
such primary obligation, or (d) otherwise to assure or hold harmless
the owner of any such primary obligation against loss in respect
thereof. The amount of any Contingent Liabilities shall be deemed to be
an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Contingent Liabilities are made or,
if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by the Borrower in good
faith.
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<PAGE> 14
"Continue," "Continuation," and "Continued" shall refer to the
continuation pursuant to Section 4.9 of a LIBOR Advance as a LIBOR
Advance from one Interest Period to the next Interest Period.
"Convert," "Conversion," and "Converted" shall refer to a
conversion pursuant to Section 4.9 or Article V of one Type of Advance
into another Type of Advance.
"Credit Request" has the meaning in Section 3.2 hereof.
"Current Maturities" means as to any Person, at any date, the
current maturities of Funded Debt (other than the Advances) determined
in accordance with GAAP applied consistently.
"Current Ratio" means, at any particular time, the ratio of
Consolidated Current Assets to Consolidated Current Liabilities.
"Data Library" means all of each of Borrower's and the
Guarantors' library of proprietary seismic reports and other data.
"Debt" means as to any Person at any time (without duplication
as to such Person and as to such Person's Subsidiaries): (a) all
obligations of such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, notes, debentures, or other similar
instruments, (c) all obligations of such Person to pay the deferred
purchase price of property or services, except trade accounts payable
of such Person arising in the ordinary course of business that are not
past due by more than one hundred twenty (120) days or which are being
contested in good faith and for which adequate reserves have been
established, (d) all Capital Lease Obligations of such Person, (e) all
obligations secured by a Lien existing on property owned by such
Person, whether or not the obligations secured thereby have been
assumed by such Person or are non-recourse to the credit of such
Person, (f) all reimbursement obligations of such Person (whether
contingent or otherwise) in respect of letters of credit, bankers'
acceptances, surety or other bonds and similar instruments, (g) all
liabilities of such Person in respect of unfunded vested benefits under
any Plan, and (h) all Contingent Liabilities.
"Default" means an Event of Default or the occurrence of an
event or condition which with notice or lapse of time or both would
become an Event of Default.
"Default Rate" means the lesser of (a) the Applicable Rate
plus three percent (3%) and (b) the Maximum Rate.
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<PAGE> 15
"Digicon (Malaysia)" means Veritas DGC (Malaysia) Sdn. Bhd., a
company organized under the laws of the Federation of Malaysia, and its
successors and assigns.
"Disputes" has the meaning given to such term in Section 16.20
of this Agreement.
"Dividends" means as to any Person, for any period, dividends
or other payments or distributions (in cash, property or obligations)
paid or made, as applicable, on account of the capital stock of such
Person, determined in accordance with GAAP applied consistently to any
Person other than Digicon (Malaysia) or one of its Subsidiaries.
"Dollars" and "$" mean lawful money of the United States of
America.
"Domestic Guarantors" means (a) all the Material Subsidiaries
which are Domestic Subsidiaries, and (b) all other Domestic
Subsidiaries which have been designated by the Borrower to be Domestic
Guarantors pursuant to Section 4.21(a), and "Domestic Guarantor" means
any one of the Domestic Guarantors. The Domestic Guarantors as of
November 1, 1999, are listed on Schedule 1.1.B.
"Domestic Subsidiary" means any Subsidiary of the Borrower
which is organized and existing under the laws of the United States of
America or any state thereof.
"EBITDA" means as to any Person, for any period, the sum of
Consolidated Net Income for such period plus Interest Expense, Tax
Expense and Non-Cash Charges to the extent deducted from Consolidated
Net Income in such period.
"Effective Date" the date on which all the conditions
precedent set forth in Section 7.1 have been satisfied or waived in
writing by the Agent and the Banks.
"Eligible Assignee" means any commercial bank, savings and
loan association; savings bank, finance company, insurance company,
pension fund, mutual fund, or other financial institution (whether a
corporation, partnership, or other entity) acceptable to the Agent, and
having combined capital and surplus of at least $500,000,000.
"Eligible Domestic/Domestic Accounts" means, at any time, all
aggregate trade accounts and trade accounts receivable of the Borrower
and the Domestic Guarantors that are created in the ordinary course of
business and satisfy the following minimum conditions:
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<PAGE> 16
(a) The account complies with all applicable laws,
rules, and regulations, including, without limitation, usury
laws, the Federal Truth in Lending Act, and Regulation Z of
the Board of Governors of the Federal Reserve System;
(b) The account has not been outstanding for more
than ninety (90) days past the original due date of the
related invoice and one hundred twenty (120) days have not
expired since the date of the related invoice;
(c) The account was created in connection with (i)
the sale of goods by such Person in the ordinary course of
business and such sale has been consummated and such goods
have been shipped and delivered to and received by the account
debtor, or (ii) the performance of services by such Person in
the ordinary course of business and such services have been
completed and accepted by the account debtor;
(d) The account arises from an enforceable contract,
the performance of which either (i) has been completed by such
Person, or (ii) has been partially completed with respect to
accounts which give rise to progress payments; provided that
only that portion of such account for which performance has
been completed is eligible;
(e) The account does not arise from the sale of any
goods that is on a bill-and-hold, guaranteed sale,
sale-or-return, sale on approval, consignment, or any other
repurchase or return basis;
(f) Such Person has good and indefeasible title to
the account and the account is not subject to any Lien except
(as provided in Section 6.3) perfected first priority Liens in
favor of the Agent;
(g) The account is not subject to any "contra-
account", setoff, counterclaim, defense, dispute, recoupment,
or adjustment other than normal discounts for prompt payment;
provided, however, that so long as the account debtor is not
refusing or failing timely to pay the balance of the amounts
owed by it to such Person with respect to the subject account,
then there shall be excluded from eligibility only that
portion of the subject account that is the subject of such
"contra-account," set off, counterclaim, defense, dispute,
recoupment or adjustment;
(h) The account debtor is not insolvent or the
subject of any bankruptcy or insolvency proceeding and
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has not made an assignment for the benefit of creditors,
suspended normal business operations, dissolved, liquidated,
terminated its existence, ceased to pay its debts as they
become due, or suffered a receiver or trustee to be appointed
for any of its assets or affairs;
(i) The account is not evidenced by chattel paper or
an instrument;
(j) The account debtor has not retained or refused to
retain, or otherwise notified such Person of any dispute
concerning, or claimed nonconformity of, any of the goods from
the sale of which the account arose; provided, however, that
so long as the account debtor is not refusing or failing
timely to pay the balance of the amounts owed by it to such
Person with respect to the subject account or other accounts,
then there shall be excluded from eligibility only that
portion of the subject account that is subject of such
retention, refusal, notice or claim;
(k) The account is not owed by an Affiliate of such
Person or any employee of such Person or of any such
Affiliate;
(l) The account is payable in Dollars by the account
debtor;
(m) The account shall be ineligible if more than
twenty-five percent (25%) of the aggregate balances then
outstanding on accounts owed by such account debtor and its
Affiliates to such Person are more than one hundred twenty
(120) days past due from the due dates of their original
invoices or if more than one hundred fifty (150) days have
expired from the dates of the original invoices;
(n) The account shall be ineligible if the account
debtor is the United States of America, any state or
municipality, or any department, agency, or instrumentality of
the foregoing;
(o) The account shall be ineligible if the account is
owed by an account debtor not a resident of the United States
of America;
(p) That portion of the aggregate amount of accounts
owed by any one account debtor which is in excess of twenty
percent (20%) of the then aggregate amount of all Eligible
Domestic/Domestic Accounts, Eligible Domestic/Foreign
Accounts, Eligible
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Foreign/Foreign Accounts, Eligible Domestic/Domestic Unbilled
Receivables, Eligible Domestic/Foreign Unbilled Receivables
and Eligible Foreign/Foreign Unbilled Receivables shall be
ineligible;
(q) Accounts which arise out of or are bill and
holds, retentions and prebillings shall be ineligible;
(r) The account has not been otherwise determined by
the Agent in its reasonable discretion to be ineligible
because of the credit worthiness of the account debtor;
(s) If an Event of Default has occurred, the account
is subject to a first priority Lien in favor of the Agent,
subject to the provisions of Section 6.3; and
(t) The account does not constitute an Unbilled
Receivable.
"Eligible Domestic/Domestic Unbilled Receivables" means, at
any time, the aggregate of all Unbilled Receivables of the Borrower and
the Domestic Guarantors which would constitute Eligible
Domestic/Domestic Accounts according to the definition thereof but for
(a) the requirement set forth at paragraph (b) of such definition with
respect to the payment status of such accounts and (b) the requirement
set forth at paragraph (t) of such definition that such accounts are
not Unbilled Receivables; provided, however, that if the accounts
receivable of any Person (who is an account debtor of Borrower or any
Domestic Guarantor) and its Affiliates are excluded from Eligible
Domestic/Domestic Accounts pursuant to clause (m) of the definition of
Eligible Domestic/Domestic Accounts, the Unbilled Receivables of such
Person and its Affiliates owed to Borrower or any Domestic Guarantor
shall not constitute Eligible Domestic/Domestic Unbilled Receivables.
"Eligible Domestic/Domestic Unbilled Receivables-180" means,
as of any date, Eligible Domestic/Domestic Unbilled Receivables which
are billable within not more than one hundred eighty (180) days from
such date.
"Eligible Domestic/Domestic Unbilled Receivables-365" means,
as of any date, Eligible Domestic/Domestic Unbilled Receivables which
are billable within one hundred eighty-one (181) to three hundred
sixty-five (365) days from such date.
"Eligible Domestic/Foreign Accounts" means, at any time, all
aggregate accounts of the Borrower and the Domestic Guarantors that (a)
are created in the ordinary course of
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<PAGE> 19
business and which would constitute Eligible Domestic/Domestic Accounts
according to the definition thereof but for either of the requirements
set forth at paragraph (o) of such definition that such account is not
eligible if it is owed by an account debtor not resident in the United
States or at paragraph (l) of such definition that such account is not
eligible if it is not payable in Dollars, and (b) if such accounts are
governed by the law of a jurisdiction other than one of the states of
the United States, (i) are not subject to contractual restrictions of
the rights to payment thereunder, or (ii) the Borrower or the
applicable Domestic Guarantor has obtained written consent to its
assignment of the rights to payment thereunder from the account debtor
and has provided a copy thereof to the Agent, or (iii) the Agent has
received satisfactory legal advice that such restrictions are
unenforceable.
"Eligible Domestic/Foreign Unbilled Receivables" means, at any
time, the aggregate of all Unbilled Receivables of the Borrower and the
Domestic Guarantors which would constitute Eligible Domestic/Foreign
Accounts according to the definition thereof but for (a) the
requirement set forth at paragraph (b) of the definition of Eligible
Domestic/Domestic Accounts with respect to the payment status of such
accounts and (b) the requirement set forth at paragraph (t) of the
definition of Eligible Domestic/Domestic Accounts that such accounts
are not Unbilled Receivables; provided, however, that if the accounts
receivable of any Person (who is an account debtor of Borrower or any
Domestic Guarantor) and its Affiliates are excluded from Eligible
Domestic/Foreign Accounts pursuant to clause (m) of the definition of
Eligible Domestic/Domestic Accounts, the Unbilled Receivables of such
Person and its Affiliates owed to Borrower or any Domestic Guarantor
shall not constitute Eligible Domestic/Foreign Unbilled Receivables.
"Eligible Domestic/Foreign Unbilled Receivables-180" means, as
of any date, Eligible Domestic/Foreign Unbilled Receivables which are
billable within not more than one hundred eighty (180) days from such
date.
"Eligible Domestic/Foreign Unbilled Receivables-365" means, as
of any date, Eligible Domestic/Foreign Unbilled Receivables which are
billable within one hundred eighty-one (181) to three hundred
sixty-five (365) days from such date.
"Eligible Foreign/Foreign Accounts" means, at any time, all
aggregate accounts of the Foreign Guarantors that (a) are created in
the ordinary course of business and which would constitute Eligible
Domestic/Domestic Accounts according to the definition thereof set
forth in this Section 1.01 but for any or all of the requirements that
(i) the account be owed
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<PAGE> 20
to the Borrower or a Domestic Guarantor (and not to a Foreign
Guarantor), (ii) the account be payable in Dollars, (iii) the account
be owed by an account debtor resident in the United States of America,
and (b) if such accounts are governed by the law of a jurisdiction
other than one of the States of the United States or England (i) are
not subject to contractual restrictions on the rights to payment
thereunder, or (ii) the applicable Foreign Guarantor has obtained
written consent to the assignment of the rights to payment thereunder
from the account debtor and has provided the Agent with a copy thereof,
or (iii) the Agent has received satisfactory legal advice that such
restrictions are unenforceable.
"Eligible Foreign/Foreign Unbilled Receivables" means, at any
time, the aggregate of all Unbilled Receivables of the Foreign
Guarantors which would constitute Eligible Foreign/Foreign Accounts
according to the definition thereof but for (a) the requirement set
forth at paragraph (b) of the definition of Eligible Domestic/Domestic
Accounts with respect to the payment status of such accounts and (b)
the requirement set forth at paragraph (t) of the definition of
Eligible Domestic/Domestic Accounts that such accounts are not Unbilled
Receivables; provided, however, that if the accounts receivable of any
Person (who is an account debtor of Borrower or any Foreign Guarantor)
and its Affiliates are excluded from Eligible Foreign/Foreign Accounts
pursuant to clause (m) of the definition of Eligible Domestic/Domestic
Accounts, the Unbilled Receivables of such Person and its Affiliates
owed to any Foreign Guarantor shall not constitute Eligible
Foreign/Foreign Unbilled Receivables.
"Eligible Foreign/Foreign Unbilled Receivables-180" means, as
of any date, Eligible Foreign/Foreign Unbilled Receivables which are
billable within not more than one hundred eighty (180) days from such
date.
"Eligible Foreign/Foreign Unbilled Receivables-365" means, as
of any date, Eligible Foreign/Foreign Unbilled Receivables which are
billable within one hundred eighty-one (181) to three hundred
sixty-five (365) days from such date.
"Environmental Law" means any and all foreign, federal, state,
and local laws, regulations, and requirements pertaining to health,
safety, or the environment, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, 42 U.S.C. 9601 et seq., the Resource Conservation and Recovery
Act of 1976, 42 U.S.C. 6901 et seq., the Occupational Safety and Health
Act, 29 U.S.C. 651 et seq., the Clean Air Act, 42 U.S.C. 7401 et seq.,
the Clean Water Act, 33 U.S.C. 1251 et seq., and the Toxic Substances
Control Act, 15 U.S.C. 2601 et seq., as such laws, regulations, and
requirements may be amended or supplemented from time to time.
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"Environmental Liabilities" means, as to any Person, all
liabilities, obligations, responsibilities, Remedial Actions, losses,
damages, punitive damages, consequential damages, treble damages,
costs, and expenses, (including, without limitation, all reasonable
fees, disbursements and expenses of counsel, expert and consulting fees
and costs of investigation and feasibility studies), fines, penalties,
sanctions, and interest incurred as a result of any claim or demand, by
any Person, whether based in contract, tort, implied or express
warranty, strict liability, criminal or civil statute, including any
Environmental Law, permit, order or agreement with any Governmental
Authority or other Person, arising from environmental, health or safety
conditions or the Release or threatened Release of a Hazardous Material
into the environment, resulting from the past, present, or future
operations of such Person or its Affiliates.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations and published
interpretations thereunder.
"ERISA Affiliate" means any corporation or trade or business
which is or has been a member of the same controlled group of
corporations (within the meaning of Section 414(b) of the Code) as the
Borrower or is or has been under common control (within the meaning of
Section 414(c) of the Code) with the Borrower.
"Euroseis" means Euroseis, Inc., a Delaware corporation, and
its successors and assigns.
"Event of Default" has the meaning specified in Section 12.1.
"Excess Cash" means, at any time, (a) cash, Cash Equivalent
Investments and Marketable Securities owned by the Borrower and its
Subsidiaries at such time, minus (b) $30,000,000.00.
"Exchange Rate" means and refers to the nominal rate of
exchange available to the Agent in a chosen foreign exchange market for
the purchase by the Agent at 11:00 A.M., Houston, Texas time, three (3)
Business Days prior to any date of determination, expressed as the
number of units of such currency per one Dollar.
"Federal Funds Rate" means, for any day, the rate per annum,
(rounded upwards, if necessary, to the nearest 1/16 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions
with members of the Federal
21
<PAGE> 22
Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (a) if the day for which such
rate is to be determined is not a Business Day, the Federal Funds Rate
for such day shall be such rate on such transactions on the next
preceding Business Day as so published on the next succeeding Business
Day, and (b) if such rate is not so published on such next succeeding
Business Day, the Federal Funds Rate for any day shall be the average
rate charged to the Agent on such day on such transactions as
determined by the Agent.
"Fiscal Quarter" means a fiscal quarter of a Fiscal Year.
"Fiscal Year" means the fiscal year of the Borrower and its
Subsidiaries, which period is the twelve (12) month period ending on
July 31 of each year.
"Fixed Charge Coverage Ratio" means as to any Person, at any
date (a) EBITDA for the Calculation Period (i) minus Cash Taxes for the
Calculation Period, and (ii) plus Cash Reserves as of such date,
divided by (b) the sum of (i) Current Maturities as of such date, (ii)
Interest Expense for the Calculation Period, and (iii) non-financed
Capital Expenditures incurred by Borrower and its Subsidiaries during
the Calculation Period.
"Foreign Guarantors" means (a) all of the Material
Subsidiaries which are Foreign Subsidiaries, and (b) all other Foreign
Subsidiaries which have been designated by the Borrower to be Foreign
Guarantors pursuant to Section 4.21(b) (and such designation has not
been revoked pursuant to Section 4.21(c)), and "Foreign Guarantor"
means any one of the Foreign Guarantors. The Foreign Guarantors as of
November 1, 1999, are listed on Schedule 1.1.B.
"Foreign Subsidiary" means any Subsidiary of the Borrower
which is organized and existing under the laws of a jurisdiction other
than the United States of America or any state thereof.
"Funded Debt" means, at any time, the aggregate obligations of
the Borrower and its Subsidiaries (determined on a consolidated basis)
for Debt for borrowed money, including, without limitation, Capital
Lease Obligations.
"Funded Debt to Capitalization Ratio" means, at any time, (a)
Funded Debt (other than Subordinated Debt) divided by (b) the sum of
(i) Funded Debt plus (ii) Stockholders Equity plus (iii) Subordinated
Debt.
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<PAGE> 23
"Funded Debt to EBITDA Ratio" means, at any time, (a) Funded
Debt divided by (b) EBITDA for the Calculation Period.
"GAAP" means generally accepted accounting principles, applied
on a consistent basis, as set forth in Opinions of the Accounting
Principles Board of the American Institute of Certified Public
Accountants and/or in statements of the Financial Accounting Standards
Board and/or their respective successors and which are applicable in
the circumstances as of the date in question. Accounting principles are
applied on a "consistent basis" when the accounting principles applied
in a current period are comparable in all material respects to those
accounting principles applied in a preceding period.
"Geophysical Corp." means Digicon Geophysical Corp., a
Delaware corporation, and its successors and assigns.
"Geophysical Limited" means Veritas DGC, Ltd., a company
organized under the laws of England and Wales, and its successors and
assigns.
"Governmental Authority" means any nation or government, any
state or political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory, or administrative
functions of or pertaining to government.
"Guarantors" means the Domestic Guarantors and the Foreign
Guarantors.
"Guaranty Agreement" means a Guaranty Agreement-Domestic or a
Guaranty Agreement-Foreign, and "Guaranty Agreements" means the
Guaranty Agreements-Domestic and the Guaranty Agreements-Foreign.
"Guaranty Agreement-Domestic" means a General Continuing
Guaranty executed by a Domestic Guarantor in favor of the Agent, in
substantially the form attached hereto as Exhibit "D-1" with
appropriate completions, as the same may be amended, supplemented, or
modified from time to time, and "Guaranty Agreements-Domestic" means
more than one Guaranty Agreement-Domestic.
"Guaranty Agreement-Foreign" means a General Continuing
Guaranty executed by a Foreign Guarantor in favor of the Agent, in
substantially the form attached hereto as Exhibit "D-2" with
appropriate completions, as the same may be amended, supplemented, or
modified from time to time, and "Guaranty Agreements-Foreign" means
more than one Guaranty Agreement-Foreign.
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<PAGE> 24
"Hazardous Material" means any substance, product, waste,
pollutant, material, chemical, contaminant, constituent, or other
material which is or becomes listed, regulated, or addressed under any
Environmental Law, including, without limitation, asbestos, petroleum,
and polychlorinated biphenyls.
"Indenture" means, as applicable, (a) the Indenture dated
October 23, 1996 between Borrower and Fleet National Bank, a national
banking association, as such Indenture existed on October 23, 1996,
without taking into account any amendments, modifications, thereof or
supplements thereto, unless such amendment, modification or supplement
has the effect of increasing the Maximum Bank Credit Amount, increasing
the Permitted Subsidiary Indebtedness, or eliminating or reducing the
restrictions contained in the Indenture with respect to incurring
Indebtedness to the Banks or securing such Indebtedness to the Banks,
or (b) the Indenture dated October 28, 1998, between the Borrower and
State Street Bank and Trust Company, a Massachusetts trust company, as
such Indenture existed on October 28, 1998, without taking into account
any amendments, thereof or supplements thereto, unless such amendment,
modification or supplement has the effect of increasing the Maximum
Bank Credit Amount, increasing the Permitted Subsidiary Indebtedness,
or eliminating or reducing the restrictions contained in the Indenture
with respect to incurring Indebtedness to the Banks or securing such
Indebtedness to the Banks.
"Indebtedness" shall have the meaning given to such term in
the Indenture.
"Interest Expense" means the sum of all cash interest expense
paid or required by its terms to be paid during the period in question,
as determined in accordance with GAAP applied consistently, with
respect to (a) the Funded Debt of a Person or any portion thereof if
calculated prior to the Subordinated Debt Incurrence Date, or (b) the
Total Funded Debt of a Person or any portion thereof if calculated on
or after the Subordinated Debt Incurrence Date.
"Interest Period" means, with respect to LIBOR Advances, each
period commencing on the date such Advances are made or Converted from
Advances of another Type or, in the case of each subsequent, successive
Interest Period applicable to a LIBOR Advance, the last day of the next
preceding Interest Period with respect to such Advance, and ending on
that day which is thirty (30), sixty (60) or ninety (90) days
thereafter, as the Borrower may select as provided in Section 4.1 or
4.9 hereof. Notwithstanding the foregoing: (a) each Interest Period
which would otherwise end on a day
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<PAGE> 25
which is not a Business Day shall end on the next succeeding Business
Day; (b) any Interest Period which would otherwise extend beyond the
Revolving Credit Termination Date shall end on the Revolving Credit
Termination Date; (c) no more than three Interest Periods for each
LIBOR Advance shall be in effect at the same time; and (d) no Interest
Period for any LIBOR Advances shall have a duration of less than thirty
(30) days and, if the Interest Period for any LIBOR Advance would
otherwise be a shorter period, such Advance shall be a Prime Rate
Advance.
"Issuing Bank" is defined in the Preamble to this Agreement.
"Land" means Veritas DGC Land Inc., a Delaware corporation,
and its successors and assigns.
"Letter of Credit" means a Letter of Credit-A or a Letter of
Credit "B", and "Letters of Credit" means the Letters of Credit-A and
the Letters of Credit-B.
"Letter of Credit-A" means a standby Letter of Credit issued
pursuant to Article II of this Agreement and "Letters of Credit-A"
means more than one Letter of Credit-A.
"Letter of Credit-B" means a standby Letter of Credit issued
pursuant to Article III of this Agreement and "Letters of Credit-B"
means more than one Letter of Credit-B.
"Letter of Credit Agreements" means the application and letter
of credit agreements and other documents, if any, then required by the
Issuing Bank now or hereafter executed by the Borrower, such agreements
to be on the Issuing Bank's standard form (with such changes thereto as
the Borrower and the Issuing Bank may agree from time to time) and
completed in form and substance satisfactory to the Issuing Bank.
"Letter of Credit Liabilities" means the Letter of Credit
Liabilities-A and the Letter of Credit Liabilities-B.
"Letter of Credit Liabilities-A" means, at any time, the
aggregate undrawn face amounts of all outstanding Letters of Credit-A
in Dollars calculated at the applicable Exchange Rate.
"Letter of Credit Liabilities-B" means, at any time, the sum
of (a) the aggregate undrawn face amounts of all outstanding Letters of
Credit-B plus (b) the outstanding amount of all Bank Guaranties, all in
Dollars calculated at the applicable Exchange Rate.
"LIBOR Advances" means Advances the interest rates on
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<PAGE> 26
which are determined on the basis of the rates referred to in the
definition of "Adjusted LIBOR Rate".
"LIBOR Margin" has the meaning given to such term in Schedule
1.1.A.
"LIBOR Rate" means, for any LIBOR Advance for any Interest
Period therefor, the rate per annum offered for Dollar deposits of not
less than $1,000,000.00 for a period of time equal to such Interest
Period as of 11:00 A.M. City of London, England time two (2) London
Business Days prior to the first date of such Interest Period as shown
on the display designated as "British Bankers Assoc. Interest
Settlement Rates" on the Telerate System ("Telerate"), Page 3750 or
Page 3740, or such other page or pages as may replace such pages on
Telerate for the purpose of displaying such rate; provided, however,
that if such rate is not available on Telerate then such offered rate
shall be otherwise independently determined by the Agent from an
alternate, substantially similar independent source available to the
Agent or shall be calculated by the Agent by a substantially similar
methodology as that theretofore used to determine such offered rate in
Telerate.
"License Agreement" means any General Non-Exclusive Data
License Agreement and any supplements thereto, or any similar agreement
as supplemented, between the Borrower or any Guarantor and any other
Person, which provides for the sale and licensing of a portion of the
Borrower's or such Guarantor's data library.
"Lien" means any lien, mortgage, security interest, tax lien,
financing statement, pledge, charge, hypothecation, assignment,
preference, priority, or other encumbrance of any kind or nature
whatsoever (including, without limitation, any conditional sale or
title retention agreement), whether arising by contract, operation of
law, or otherwise.
"Loan Documents" means this Agreement and all promissory
notes, security agreements, deeds of trust, assignments, guaranties,
and other instruments, documents, and agreements executed and delivered
pursuant to or in connection with this Agreement, as such instruments,
documents, and agreements may be amended, modified, renewed, extended,
or supplemented from time to time.
"London Business Day" means any day other than a Saturday,
Sunday or a day on which banking institutions are generally authorized
or obligated by law or executive order to close in the City of London,
England.
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<PAGE> 27
"Marketable Securities" means (a) direct obligations issued or
unconditionally guaranteed by the United States of America or issued by
an agency thereof and fully backed by the full faith and credit of the
United States of America owned by the Borrower or any Subsidiary which
are not subject to any Lien, except for Liens created by operation of
law, and (b) securities (as defined in Section 8.102 of the Texas
Business and Commerce Code) that are listed and traded on the New York
Stock Exchange, the American Stock Exchange or the NASDAQ - National
Market System owned by the Borrower or any Subsidiary which are not
subject to any Lien, except for Liens created by operation of law.
"Material Adverse Effect" means (a) a material adverse effect
on (i) the business, operations, property, condition (financial or
otherwise) or prospects of the Borrower and its Subsidiaries, taken as
a whole, (ii) the ability of the Borrower and its Subsidiaries, taken
as a whole, to perform their respective obligations under this
Agreement or any of the other Loan Documents, or (iii) the validity or
enforceability of this Agreement or any of the other Loan Documents, or
the rights or remedies of the Agent, the Banks or the Issuing Bank
hereunder or thereunder or (b) civil or criminal liability for the
Agent or the Banks under Environmental Laws.
"Material Subsidiary" means any Subsidiary whose total assets
have a value (determined in accordance with GAAP) which exceeds
$25,000,000.00 for a period of ninety (90) consecutive days or more.
"Maximum Bank Credit Amount" has the meaning given to such
term in the Indenture.
"Maximum Rate" means, with respect to any Bank and the holder
of any Revolving Credit Note, the maximum nonusurious interest rate, if
any, that at any time, or from time to time, may be contracted for,
taken, reserved, charged or received on the indebtedness created under
this Agreement, the Revolving Credit Notes or any other Loan Document
under the laws which are presently in effect in the United States and
the State of Texas applicable to the Banks, such holders and such
indebtedness or, to the extent permitted by law, under such applicable
laws of the United States and the State of Texas which may hereafter be
in effect and which allow a higher maximum nonusurious interest rate
than applicable laws now allow. To the extent that Chapter 303 of the
Texas Finance Code (the "Code"), is relevant to any Bank or any holder
of any Revolving Credit Note for the purposes of determining the
Maximum Rate, each such Person shall determine such applicable legal
rate under the Code pursuant to the "weekly ceiling," from time to time
in effect, as referred to and defined in Chapter 303 of the Code;
subject,
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<PAGE> 28
however, to the limitations on such applicable ceiling referred to and
defined in Chapter 303 of the Code, and further subject to any right
such Person may have subsequently, under applicable law, to change the
method of determining the Maximum Rate. If no Maximum Rate is
established by applicable law, then the Maximum Rate shall be equal to
eighteen percent (18%).
"Multiemployer Plan" means a multiemployer plan defined as
such in Section 3(37) of ERISA to which contributions have been made by
the Borrower or any predecessor thereto or any ERISA Affiliate and
which is covered by Title IV of ERISA.
"Non-Cash Charges" means as to any Person, for any period,
depreciation, amortization and other non-cash charges (including
amortization of the capitalized balance of the Data Library),
determined in accordance with GAAP applied consistently.
"Obligated Party" means each Guarantor or any other Person who
is or becomes party to any agreement pursuant to which such Person
guarantees or secures payment and performance of the Obligations or any
part thereof.
"Obligations" means all obligations, indebtedness and
liabilities of the Borrower to the Agent, the Issuing Banks and the
Banks, or any or some of them, arising pursuant to this Agreement or
any of the Loan Documents, now existing or hereafter arising, whether
direct, indirect, related, unrelated, fixed, contingent, liquidated,
unliquidated, joint, several, or joint and several, including, without
limitation, the Obligations-A and the Obligations-B.
"Obligations-A" means all obligations, indebtedness and
liabilities of the Borrower to the Agent, the Issuing Banks and the
Banks, or any or some of them, arising from or in connection with (a)
the Advances-A, the Revolving Credit Notes-A or Article II of this
Agreement, (b) Borrower's contingent reimbursement obligations in
respect of Letters of Credit-A, (c) all interest accruing on the items
described in clauses (a) and (b) of this definition, and (d) all
attorneys' fees and other expenses incurred in the enforcement of
collection of the items described in clauses (a), (b) and (c) of this
definition.
"Obligations-B" means all obligations, indebtedness and
liabilities of the Borrower to the Agent, the Issuing Banks and the
Banks, or any or some of them, arising from or in connection with (a)
the Advances-B, the Revolving Credit Notes-B or Article III of this
Agreement, (b) Borrower's contingent reimbursement obligations in
respect of Letters of Credit-B and Bank Guaranties, (c) all interest
accruing on
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the items described in clauses (a) and (b) of this definition, and (d)
all attorneys' fees and other expenses incurred in the enforcement of
collection of the items described in clauses (a), (b) and (c) of this
definition.
"Parties" has the meaning given to such term in Section 14.20.
"Partnership" means Veritas Energy Services Partnership, an
Alberta general partnership, and its successors and assigns.
"Payment Date" means, (a) in the case of Prime Rate Advances,
the last day of each March, June, September and December, commencing
September 30, 1998, (b) in the case of LIBOR Advances the last day of
each Interest Period therefor, and (c) in the case of all Advances, the
Revolving Credit Termination Date.
"Payor" has the meaning given to such term in Section 4.6.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to all or any of its functions under ERISA.
"Percentage" means at any time with respect to any Bank, such
Bank's portion, expressed as a percentage, of the aggregate Revolving
Credit Commitments.
"Permitted Liens" has the meaning assigned to it in Section
10.2.
"Permitted Subsidiary Indebtedness" means, with respect to
Restricted Subsidiaries, Indebtedness in an aggregate principal amount
outstanding up to the amount, if any, by which (a) ten percent (10%) of
Consolidated Net Tangible Assets exceeds (b) the greater of (i)
$20,000,000.00 or (ii) the aggregate principal amount of outstanding
Indebtedness of Borrower incurred pursuant to Section 10.11(a) of the
Indenture which is secured as permitted by the Indenture.
"Person" means any individual, corporation, business trust,
association, company, partnership, joint venture, Governmental
Authority, or other entity.
"Plan" means any employee benefit or other plan established or
maintained by the Borrower or any ERISA Affiliate.
"Prime Rate" means, at any time, the rate of interest per
annum then most recently published in The Wall Street
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Journal (or any successor publication if The Wall Street Journal is no
longer published) in the "Money Rates" section (or such successor
section) as the "Prime Rate." If a range of prime interest rates per
annum is so published, "Prime Rate" shall mean the highest rate per
annum in such published range. If the definition of "Prime Rate" is no
longer published in The Wall Street Journal (or any successor
publication), "Prime Rate" shall mean, at any time, the rate of
interest per annum then most recently established by the Agent as its
prime rate or equivalent base rate. Each change in any interest rate
provided for herein based upon the Prime Rate resulting from a change
in the Prime Rate shall take effect without notice to the Borrower or
any Guarantor at the time of such change in the Prime Rate.
"Prime Rate Advances" means Advances that bear interest at
rates based upon the Prime Rate.
"Prime Rate Margin" see Schedule 1.1.A.
"Principal Office" means the respective principal office of
the Agent, the Issuing Banks and the Banks, presently located for such
Persons at the addresses shown under the signature line of such Persons
in this Agreement.
"Prohibited Transaction" means any transaction set forth in
Section 406 of ERISA or Section 4975 of the Code.
"Quarterly Fee Payment Date" means the last day of each March,
June, September, and December of each year, the first of which shall be
December 31, 1999.
"Register" has the meaning assigned to it in Section 14.8(d).
"Regulation D" means Regulation D of the Board of Governors of
the Federal Reserve System as the same may be amended or supplemented
from time to time.
"Regulatory Change" means, with respect to a Bank, any change
after the date of this Agreement in United States federal, state, or
foreign laws or regulations (including Regulation D) or the adoption or
making after such date of any interpretations, directives, or requests
applying to a class of banks including such Bank of or under any United
States federal or state, or any foreign, laws or regulations (whether
or not having the force of law) by any court or governmental or
monetary authority charged with the interpretation or administration
thereof.
"Release" means, as to any Person, any release, spill,
emission, leaking, pumping, injection, deposit, disposal,
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disbursement, leaching, or migration of Hazardous Materials into the
indoor or outdoor environment or into or out of property owned by such
Person, including, without limitation, the movement of Hazardous
Materials through or in the air, soil, surface water, ground water, or
property.
"Remedial Action" means all actions required to (a) clean up,
remove, treat, or otherwise address Hazardous Materials in the indoor
or outdoor environment, (b) prevent the Release or threat of Release or
minimize the further Release of Hazardous Materials so that they do not
migrate or endanger or threaten to endanger public health or welfare or
the indoor or outdoor environment, or (c) perform pre-remedial studies
and investigations in post-remedial monitoring and care.
"Reportable Event" means any of the events set forth in
Section 4043 of ERISA.
"Required Banks" means Banks having Percentages aggregating
sixty six and two thirds percent (66?%) or more, but not less than two
Banks.
"Reserve Requirement" means, for any LIBOR Advance for any
Interest Period therefor, the average maximum rate at which reserves
(including any marginal, supplemental or emergency reserves) are
required to be maintained during such Interest Period under Regulation
D by member banks of the Federal Reserve System in New York City with
deposits exceeding one billion Dollars against "Eurocurrency
Liabilities" as such term is used in Regulation D. Without limiting the
effect of the foregoing, the Reserve Requirement shall reflect any
other reserves required to be maintained by such member banks by reason
of any Regulatory Change against (i) any category of liabilities which
includes deposits by reference to which the Adjusted LIBOR Rate is to
be determined, or (ii) any category of extensions of credit or other
assets which include LIBOR Advances.
"Restricted Subsidiary" has the meaning given to such term in
the Indenture. The Restricted Subsidiaries as of the Effective Date as
listed on Schedule 1.1.C.
"Revolving Credit Commitment-A" means as to each Bank, the
obligation of such Bank to make (a) Advances-A and (b) subject to
applicable sublimits, to purchase participations in Letters of Credit-A
pursuant to Section 4.15, in an aggregate principal amount at any one
time outstanding up to but not exceeding the amount set forth opposite
the name of such Bank on the signature pages hereto or to the most
recent amendment hereto under the heading "Revolving Credit
Commitment-A," or on the signature pages of an Assignment and
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Acceptance, as the case may be, as such amount may be reduced pursuant
to Section 2.7 or terminated pursuant to Section 2.7 or Section 12.2.
"Revolving Credit Commitment-B" means as to each Bank, the
obligation of such Bank to make (a) Advances-B and (b) subject to
applicable sublimits, to purchase participations in Letters of Credit-B
pursuant to Section 4.15, in an aggregate principal amount at any one
time outstanding up to but not exceeding the amount set forth opposite
the name of such Bank on the signature pages hereto or to the most
recent amendment hereto under the heading "Revolving Credit
Commitment-B," or on the signature pages of an Assignment and
Acceptance, as the case may be, as such amount may be reduced pursuant
to Section 3.7 or terminated pursuant to Section 3.7 or Section 12.2.
"Revolving Credit Commitments" means the Revolving Credit
Commitment-A and the Revolving Credit Commitment-B.
"Revolving Credit Notes" means the Revolving Credit Notes-A
and the Revolving Credit Notes-B.
"Revolving Credit Notes-A" means the promissory notes of the
Borrower payable to the order of the Banks, in substantially the form
attached hereto as Exhibit "A-1" with appropriate completions, and all
extensions, renewals, replacements, modifications, supplements or
rearrangements thereof from time to time, and "Revolving Credit Note-A"
means any one of the Revolving Credit Notes-A.
"Revolving Credit Notes-B" means the promissory notes of the
Borrower payable to the order of the Banks, in substantially the form
attached hereto as Exhibit "A-2" with appropriate completions, and all
extensions, renewals, replacements, modifications, supplements or
rearrangements thereof from time to time, and "Revolving Credit Note-B"
means any one of the Revolving Credit Notes-B.
"Revolving Credit Termination Date" means 11:00 A.M. Houston,
Texas time on July 27, 2001, or such earlier date and time on which the
Revolving Credit Commitment terminates as provided in this Agreement.
"RICO" means the Racketeer Influenced and Corrupt Organization
Act of 1970, as amended from time to time.
"Secured Obligations" means (a) while the Indenture is in
effect, the Obligations other than that portion of principal amount of
the Obligations which exceeds, at the time of the determination
thereof, the greater of (i) the greater of (A) ten percent (10%) of
Consolidated Net Tangible
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Assets, or (B) the Maximum Bank Credit Amount and (ii) any less
restrictive prohibition as may be found in the Indenture as a result of
an amendment to the Indenture that would constitute an amendment to the
Indenture under the definition of Indenture found in this Agreement and
(b) after the termination of the Indenture, or after the elimination of
the applicable restrictions therein contained regarding the granting of
Liens by Restricted Subsidiaries to secure Indebtedness to the Banks
and the incurrence of Indebtedness to the Banks, the Obligations.
"Security Agreement-Borrower" means a security agreement
executed by the Borrower in favor of the Agent in substantially the
form attached hereto as Exhibit "B" with appropriate completions, as
the same may be amended, supplemented, or modified from time to time.
"Security Agreement-Guarantor" means (a) with respect to each
Domestic Guarantor, a security agreement executed by such Domestic
Guarantor in favor of the Agent in substantially the form attached
hereto as Exhibit "C-1", (b) with respect to the Partnership, a
security agreement executed by the Partnership in favor of Agent in
substantially the form of Exhibit "C-2", (c) with respect to Digicon
(Malaysia) the Charge Debenture (Malaysia), (d) with respect to
Geophysical Limited, the Charge Debenture (U.K.) and (e) with respect
to any other Foreign Guarantor a security agreement or other instrument
having the same effect, securing the Obligations-B, in form and
substance satisfactory to the Agent, executed by such Foreign Guarantor
in favor of the Agent, all with appropriate completions, as the same
may be amended, supplemented or modified from time to time, and
"Security Agreements-Guarantors" means more than one Security
Agreement-Guarantor.
"Senior Debt" means the Debt evidenced by the Senior Notes.
"Senior Funded Debt" means (a) Total Funded Debt minus (b)
Subordinated Debt.
"Senior Funded Debt to EBITDA Ratio" means, at any time, (a)
Senior Funded Debt at such time, divided by (b) EBITDA for the
Calculation Period.
"Senior Notes" means (a) the Senior Notes due 2003 in the
original aggregate principal amount of $75,000,000, issued by the
Borrower pursuant to the Indenture dated October 23, 1996, and (b) the
Senior Notes due 2003 in the original principal amount of $60,000,000
issued by the Borrower pursuant to the Indenture dated October 28,
1998.
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"Stockholders Equity" has the meaning given to such term under
GAAP.
"Subordinated Debt" means (a) Debt of a Person which has been
subordinated to the Obligations in form and substance and upon terms
satisfactory to the Agent, (b) publicly issued subordinated fixed rate
debt securities which are issued on then existing market terms, or (c)
privately issued subordinated fixed rate debt securities which are
issued on then existing market terms, including, without limitation,
any such debt securities issued under Rule 144A or Regulation S;
provided, however, with respect to subordinated debt securities issued
pursuant to clauses (b) or (c) above, such securities shall provide (i)
for a maturity date thereof which is not less than six months after the
Revolving Credit Termination Date, (ii) that no principal shall be
payable thereon until that date which is six months after the Revolving
Credit Termination Date, (iii) that no principal may be optionally
prepaid, and, except for redemption upon a Change of Control (as
defined in the trust indenture pursuant to which such securities are
issued) as provided in the trust indenture pursuant to which such
securities are issued, such securities shall not be subject to
redemption until that date which is six months after the Revolving
Credit Termination Date, and (iv) no principal or interest shall be
payable thereon if an Event of Default shall have occurred and be
continuing under Section 12.1(a), (e) or (f).
"Subordinated Debt Incurrence Date" means the date on which
the Borrower incurs at least $75,000,000.00 of Subordinated Debt;
provided, however, that the Subordinated Debt Incurrence Date shall
occur not later than April 30, 2000; provided, however, that if the
Subordinated Debt Incurrence Date does not occur by April 30, 2000, all
provisions of this Agreement related to the Subordinated Debt
Incurrence Date, including all changes in covenants and pricing which
occur upon the Subordinated Debt Incurrence Date, shall become
ineffective and void.
"Subsidiary" means any Person of which or in which the
Borrower and its other Subsidiaries own or control, directly or
indirectly, fifty percent (50%) or more of (a) the combined voting
power of all classes having general voting power under ordinary
circumstances to elect a majority of the directors or equivalent body
of such Person, if it is a corporation, (b) the capital interest or
profits interest of such Person, if it is a partnership, limited
liability company, joint venture or similar entity, or (c) the
beneficial interest of such Person, if it is a trust, association or
other unincorporated association or organization.
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"Systems" shall have the meaning given to such term in Section
8.21.
"Tax Expense" means, for any period, all expenses incurred
during such period by the Borrower and its Subsidiaries, on a
consolidated basis, in connection with income tax obligations, all as
determined in accordance with GAAP applied consistently.
"Telerate" shall have the meaning given to such term in the
definition of the term "LIBOR Rate".
"Total Funded Debt" means, at any time, (a) the aggregate
obligations of the Borrower and its Subsidiaries (determined on a
consolidated basis) for Debt for borrowed money, including, without
limitation, the Letter of Credit Liabilities and Capital Lease
Obligations, minus (b) Excess Cash.
"Total Funded Debt to Capitalization Ratio" means, at any
time, (a) Total Funded Debt, divided by (b) the sum of (i) Total Funded
Debt plus (ii) Stockholders Equity.
"Total Funded Debt to EBITDA Ratio" means, at any time, (a)
Total Funded Debt at such time, divided by (b) EBITDA for the
Calculation Period.
"Type" means any type of Advance (i.e. Prime Rate Advance or
LIBOR Advance).
"UCC" means the Uniform Commercial Code as in effect in the
State of Texas from time to time.
"Unbilled Receivables" means accounts receivable arising from
sales of the Borrower's or any Guarantor's data library, with respect
to which work has been performed by the Borrower or such Guarantor,
goods have been shipped by the Borrower or such Guarantor and such
goods have been delivered to and received by the account debtor, but
which, as provided by the payment schedule contained in the related
License Agreement, cannot be billed to the account debtor until a
future date, and which (a) as of any date, are billable within 365 days
from such date, (b) are accounted for by the Borrower or such Guarantor
under GAAP as Unbilled Receivables, and (c) are included in the
accounts receivable of the Borrower or such Guarantor.
"Year 2000 Compliant" shall have the meaning given to such
term in Section 8.21.
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Section I.2. Other Definitional Provisions. All definitions contained
in this Agreement are equally applicable to the singular and plural forms of the
terms defined. The words "hereof", "herein", and "hereunder" and words of
similar import referring to this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement. Unless otherwise
specified, all Article and Section references pertain to this Agreement. All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP. Terms used herein that are defined in the UCC, unless
otherwise defined herein, shall have the meanings specified in the UCC.
ARTICLE II.
Advances-A and Letters of Credit-A
Section II.1. Revolving Credit Commitments-A. Subject to the terms and
conditions of this Agreement, each Bank severally agrees to make one or more
Advances-A to the Borrower from time to time from the date hereof to and
including the Revolving Credit Termination Date in an aggregate principal amount
at any time outstanding up to but not exceeding the amount of such Bank's
Revolving Credit Commitment-A, provided that the aggregate amount of all
Advances-A at any time outstanding shall not exceed the lesser of (a) the
aggregate of the Revolving Credit Commitments-A minus the outstanding Letter of
Credit Liabilities-A and (b) the Borrowing Base-A minus the outstanding Letter
of Credit Liabilities-A. Subject to the foregoing limitations, and the other
terms and provisions of this Agreement, the Borrower may borrow, repay, and
reborrow hereunder the aggregate amount of the Revolving Credit Commitments-A by
means of Advances-A. Each Advance-A made by each Bank shall be made and
maintained at such Bank's Principal Office.
Section II.2. The Revolving Credit Notes-A. The obligation of the
Borrower to repay the Advances-A and interest thereon shall be evidenced by a
Revolving Credit Note-A executed by the Borrower, payable to the order of each
Bank, in the principal amount of such Bank's Revolving Credit Commitment-A as
originally in effect and dated the date hereof or such later date as may be
required with respect to transactions contemplated by Section 14.8.
Section II.3. Repayment of Advances-A. The Borrower shall repay the
unpaid principal amount of all Advances-A on the Revolving Credit Termination
Date.
Section II.4. Interest. The unpaid principal amount of the Advances-A
shall bear interest prior to maturity at a varying rate per annum equal from day
to day to the lesser of (a) the Maximum Rate, and (b) the Applicable Rate. If at
any time the Applicable Rate for any Advance-A shall exceed the Maximum Rate,
thereby causing the interest accruing on such Advance-A to be limited to
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the Maximum Rate, then any subsequent reduction in the Applicable Rate for such
Advance-A shall not reduce the rate of interest on such Advance-A below the
Maximum Rate until the aggregate amount of interest accrued on such Advance-A
equals the aggregate amount of interest which would have accrued on such
Advance-A if the Applicable Rate had at all times been in effect. Accrued and
unpaid interest on the Advances-A shall be due and payable as follows:
(i) on each Payment Date; and
(ii) on the Revolving Credit Termination Date.
Notwithstanding the foregoing, any outstanding principal of any Advance-A and
(to the fullest extent permitted by law) any other amount payable by the
Borrower under this Agreement or any other Loan Document that is not paid in
full when due (whether at stated maturity, by acceleration, or otherwise) shall
bear interest at the Default Rate for the period from and including the due date
thereof to but excluding the date the same is paid in full. Interest payable at
the Default Rate shall be payable from time to time on demand.
Section II.5. Use of Proceeds. The proceeds of Advances-A shall be used
by the Borrower to refinance existing debt and for general corporate purposes
(including the purchase of fixed assets) in the ordinary course of business.
Section II.6. Revolving Credit Commitment-A Fee. The Borrower agrees to
pay to the Agent for the account of each Bank a commitment fee on the daily
average unused amount of such Bank's Revolving Credit Commitment-A for the
period from and including the date of this Agreement to and including the
Revolving Credit Termination Date at the rate per annum set forth on Schedule
1.1.A. under "Rate for Non-Use Fee" based on a 360 day year and the actual
number of days elapsed. Accrued commitment fee shall be payable in arrears on
each Quarterly Fee Payment Date and on the Revolving Credit Termination Date.
Section II.7. Reduction or Termination of Revolving Credit
Commitment-A. The Borrower shall have the right to terminate in whole or reduce
in part the unused portion of the Revolving Credit Commitments-A upon at least
three Business Days prior notice (which notice shall be irrevocable) to the
Agent specifying the effective date thereof, whether a termination or reduction
is being made, and the amount of any partial reduction, provided, however, that
the Revolving Credit Commitments-A shall never be reduced below an amount equal
to the aggregate outstanding Letter of Credit Liabilities-A. Each partial
reduction shall be in the amount of $1,000,000 or an integral multiple thereof
and the Borrower shall simultaneously prepay the Advances-A by the amount by
which the unpaid principal amount of the Advances-A plus the
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Letter of Credit Liabilities-A exceeds the Revolving Credit Commitments-A (after
giving effect to such notice) plus accrued and unpaid interest on the principal
amount so prepaid. The Revolving Credit Commitments-A may not be reinstated
after they have been terminated or reduced.
Section II.8. Letters of Credit-A. (a) Subject to, and upon the terms,
conditions, covenants and agreements contained herein and in the Letter of
Credit Agreements, prior to the Revolving Credit Termination Date, the Issuing
Bank agrees to issue irrevocable standby letters of credit ("Letters of
Credit-A"), in form satisfactory to the Issuing Bank, for the account of the
Borrower or any Domestic Guarantor; provided, however, that the outstanding
Letter of Credit Liabilities-A shall not at any time exceed the least of (i)
$20,000,000.00, (ii) an amount equal to the aggregate amount of the Revolving
Credit Commitments-A minus the outstanding Advances-A, and (iii) the Borrowing
Base-A minus the outstanding Advances-A. In the event of an actual conflict
between the terms and conditions of this Agreement and the terms and conditions
of any Letter of Credit Agreement, then the terms and conditions of this
Agreement shall prevail. Letters of Credit-A shall expire no later than ten (10)
days prior to the Revolving Credit Termination Date, must be satisfactory in
form to the Issuing Bank, and must be issued pursuant to a Letter of Credit
Agreement. No Letter of Credit-A shall require any payment by the Issuing Bank
to the beneficiary thereof pursuant to a drawing prior to the third Business Day
following presentment of a draft and any related documents to the Issuing Bank.
(b) On or before the Revolving Credit Termination Date, the Borrower
agrees to deposit with and pledge to the Agent cash or cash equivalent
investments in an amount equal to all outstanding Letter of Credit
Liabilities-A.
Section II.9. Payments Constitute Advances-A. Each payment by the
Issuing Bank pursuant to a drawing under a Letter of Credit-A shall constitute
and be deemed an Advance-A by each Bank in its Percentage of the aggregate
Revolving Credit Commitments-A to the Borrower under such Bank's Revolving
Credit Note-A and this Agreement as of the day and time such payment is made by
the Issuing Bank and in the Dollar equivalent at the applicable Exchange Rate of
the aggregate amount of such payment.
ARTICLE III.
Advances-B; Letters of Credit-B and Bank Guaranties
Section III.1. Revolving Credit Commitments-B. Subject to the terms and
conditions of this Agreement, each Bank severally agrees to make one or more
Advances-B to the Borrower from time to time from the date hereof to and
including the Revolving Credit
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Termination Date in an aggregate principal amount at any time outstanding up to
but not exceeding the amount of such Bank's Revolving Credit Commitment-B,
provided that the aggregate amount of all Advances-B at any time outstanding
shall not exceed the lesser of (i) the aggregate of the Revolving Credit
Commitments-B minus the outstanding Letter of Credit Liabilities-B and (ii) the
Borrowing Base-B minus the outstanding Letter of Credit Liabilities-B. Subject
to the foregoing limitations, and the other terms and provisions of this
Agreement, the Borrower may borrow, repay, and reborrow hereunder the aggregate
amount of the Revolving Credit Commitments-B by means of Advances-B. Each
Advance-B made by each Bank shall be made and maintained at such Bank's
Principal Office.
Section III.2. The Revolving Credit Notes-B. The obligation of the
Borrower to repay the Advances-B and interest thereon shall be evidenced by a
Revolving Credit Note-B executed by the Borrower, payable to the order of each
Bank, in the principal amount of such Bank's Revolving Credit Commitment-B as
originally in effect and dated the date hereof or such later date as may be
required with respect to transactions contemplated by Section 14.8.
Section III.3. Repayment of Advances-B. The Borrower shall repay the
unpaid principal amount of all Advances-B on the Revolving Credit Termination
Date.
Section III.4. Interest. The unpaid principal amount of the Advances-B
shall bear interest prior to maturity at a varying rate per annum equal from day
to day to the lesser of (a) the Maximum Rate, and (b) the Applicable Rate. If at
any time the Applicable Rate for any Advance-B shall exceed the Maximum Rate,
thereby causing the interest accruing on such Advance-B to be limited to the
Maximum Rate, then any subsequent reduction in the Applicable Rate for such
Advance-B shall not reduce the rate of interest on such Advance below the
Maximum Rate until the aggregate amount of interest accrued on such Advance-B
equals the aggregate amount of interest which would have accrued on such
Advance-B if the Applicable Rate had at all times been in effect. Accrued and
unpaid interest on the Advances-B shall be due and payable as follows:
(a) on each Payment Date; and
(b) on the Revolving Credit Termination Date.
Notwithstanding the foregoing, any outstanding principal of any Advance-B and
(to the fullest extent permitted by law) any other amount payable by the
Borrower under this Agreement or any other Loan Document that is not paid in
full when due (whether at stated maturity, by acceleration, or otherwise) shall
bear interest at the Default Rate for the period from and including the due date
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thereof to but excluding the date the same is paid in full. Interest payable at
the Default Rate shall be payable from time to time on demand.
Section III.5. Use of Proceeds. The proceeds of Advances-B shall be
used by the Borrower for general corporate purposes (including the purchase of
fixed assets) in the ordinary course of business.
Section III.6. Revolving Credit Commitment-B Fee. The Borrower agrees
to pay to the Agent for the account of each Bank a commitment fee on the daily
average unused amount of such Bank's Revolving Credit Commitment-B for the
period from and including the date of the Third Amendment to Loan Agreement
amending this Agreement, to and including the Revolving Credit Termination Date
at the rate per annum set forth on Schedule 1.1.A. under "Rate for Non-Use Fee"
based on a 360 day year and the actual number of days elapsed. Accrued
commitment fee shall be payable in arrears on each Quarterly Fee Payment Date
and on the Revolving Credit Termination Date.
Section III.7. Reduction or Termination of Revolving Credit
Commitment-B. The Borrower shall have the right to terminate in whole or reduce
in part the unused portion of the Revolving Credit Commitments-B upon at least
three Business Days prior notice (which notice shall be irrevocable) to the
Agent specifying the effective date thereof, whether a termination or reduction
is being made, and the amount of any partial reduction, provided, however, that
the Revolving Credit Commitments-B shall never be reduced below an amount equal
to the aggregate outstanding Letter of Credit Liabilities-B. Each partial
reduction shall be in the amount of $1,000,000 or an integral multiple thereof
and the Borrower shall simultaneously prepay the Advances-B by the amount by
which the unpaid principal amount of the Advances-B plus the Letter of Credit
Liabilities-B exceeds the Revolving Credit Commitments-B (after giving effect to
such notice) plus accrued and unpaid interest on the principal amount so
prepaid. The Revolving Credit Commitments-B may not be reinstated after they
have been terminated or reduced.
Section III.8. Letters of Credit-B; Bank Guaranties. (a) Subject to,
and upon the terms, conditions, covenants and agreements contained herein and in
the Letter of Credit Agreements, prior to the Revolving Credit Termination Date,
the Issuing Bank agrees to issue irrevocable standby letters of credit ("Letters
of Credit-B"), in form satisfactory to the Issuing Bank, for the account of the
Borrower or any Foreign Guarantor; provided, however, that the outstanding
Letter of Credit Liabilities-B shall not at any time exceed the least of (i)
$5,000,000.00, (ii) an amount equal to the aggregate amount of the Revolving
Credit Commitments-B minus the outstanding Advances-B, and (iii) the Borrowing
Base-B minus the outstanding Advances-B.
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In the event of an actual conflict between the terms and conditions of this
Agreement and the terms and conditions of any Letter of Credit Agreement, then
the terms and conditions of this Agreement shall prevail. Letters of Credit-B
shall expire no later than ten (10) days prior to the Revolving Credit
Termination Date, must be satisfactory in form to the Issuing Bank, and must be
issued pursuant to a Letter of Credit Agreement. No Letter of Credit-B shall
require any payment by the Issuing Bank to the beneficiary thereof pursuant to a
drawing prior to the third Business Day following presentment of a draft and any
related documents to the Issuing Bank.
(b) At the sole discretion of Bank Guarantor, and subject to, and upon
the terms, conditions, covenants and agreements contained herein, prior to the
Revolving Credit Termination Date, Bank Guarantor may issue Bank Guaranties for
the account of the Borrower or any Foreign Guarantor in form acceptable to Bank
Guarantor in its sole discretion; provided, however, that Bank Guarantor shall
have no obligation to issue any Bank Guaranty; and provided, further, that the
outstanding Letter of Credit Liabilities-B shall not at any time exceed the
least of (i) $5,000,000.00, (ii) an amount equal to the aggregate amount of the
Revolving Credit Commitments-B minus the outstanding Advances-B, and (iii) the
Borrowing Base-B minus the outstanding Advances-B.
(c) On or before the Revolving Credit Termination Date, the Borrower
agrees to deposit with and pledge to the Agent cash or cash equivalent
investments in an amount equal to all outstanding Letter of Credit
Liabilities-B.
Section III.9. Payments Constitute Advances-B. Each payment by the
Issuing Bank pursuant to a drawing under a Letter of Credit-B and each payment
by Bank Guarantor under a Bank Guaranty shall constitute and be deemed an
Advance-B by each Bank in its Percentage of the aggregate Revolving Credit
Commitments-B to the Borrower under such Bank's Revolving Credit Note-B and this
Agreement as of the day and time such payment is made by the Issuing Bank or the
Bank Guarantor and in the Dollar equivalent at the applicable Exchange Rate of
the aggregate amount of such payment.
ARTICLE IV.
Borrowing Procedure; Payments; Facilities Fees;
Matters Related to Letters of Credit;
Matters Related to Advances; Designation of Additional Guarantors
Section IV.1. Borrowing Procedure. Borrower shall give the Agent notice
by means of an Advance Request Form-A of each requested Advance-A and by means
of an Advance Request Form-B of each Requested Advance-B at least one Business
Day before the
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requested date of a Prime Rate Advance, and at least three (3) days before the
requested date of a LIBOR Advance, specifying: (a) the requested date of such
Advance (which shall be a Business Day), (b) the amount of such Advance, (c) the
Type of the Advance, and (d) in the case of a LIBOR Advance, the duration of the
Interest Period for such Advance. The Agent at its option may accept telephonic
requests for Advances, provided that such acceptance shall not constitute a
waiver of the Agent's right to delivery of the appropriate Advance Request Form
in connection with subsequent Advances. Any telephonic request for an Advance by
the Borrower shall be promptly continued by submission of a properly completed
Advance Request Form to the Agent. Each Advance shall be in a minimum principal
amount of $500,000.00 or an integral multiple thereof. The Agent shall notify
each Bank of the contents of each such notice. Not later than 11:00 A.M.
Houston, Texas time on the date specified for each Advance hereunder, each Bank
will make available to the Agent at the Principal Office in immediately
available funds, for the account of the Borrower, its Percentage of each
Advance. After the Agent's receipt of such funds and subject to the other terms
and conditions of this Agreement, the Agent will make each Advance available to
the Borrower by depositing the same, in immediately available funds, in an
account of the Borrower (designated by the Borrower) maintained with the Agent
at the Agent's Principal Office. All notices under this Section shall be
irrevocable and shall be given not later than 11:00 A.M. Houston, Texas, time on
the day which is not less than the number of Business Days specified above for
such notice.
Section IV.2. Method of Payment. All payments of principal, interest,
and other amounts to be made by the Borrower under this Agreement and the other
Loan Documents shall be made to the Agent at its Principal Office for the
account of each Bank's Principal Office in Dollars and in immediately available
funds, without setoff, deduction, or counterclaim, not later than 11:00 A.M.,
Houston, Texas time on the date on which such payment shall become due (each
such payment made after such time on such due date to be deemed to have been
made on the next succeeding Business Day). The Borrower shall, at the time of
making each such payment, specify to the Agent the sums payable by the Borrower
under this Agreement and the other Loan Documents to which such payment is to be
applied (and in the event that the Borrower fails to so specify, or if an Event
of Default has occurred and is continuing, the Agent may apply such payment to
the Obligations in such order and manner as it may elect in its sole discretion,
subject to Section 4.5 hereof). Each payment received by the Agent under this
Agreement or any other Loan Document for the account of a Bank shall be paid
promptly to such Bank, in immediately available funds, for the account of such
Bank's Principal Office. Whenever any payment under this Agreement or any other
Loan Document shall be stated to be due on a day that is not a Business Day,
such payment may be made on the
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next succeeding Business Day, and such extension of time shall in such case be
included in the computation of the payment of interest and commitment fee, as
the case may be.
Section IV.3. Voluntary Prepayment. The Borrower may prepay the
Advances in whole at any time or from time to time in part without premium or
penalty; provided that each partial prepayment shall be in the principal amount
of $500,000.00 or an integral multiple thereof and provided further that no such
prepayment shall relieve the Borrower of its obligations under Section 5.2 or
5.6 hereof.
Section IV.4. Mandatory Prepayment. (a) If at any time the sum of the
outstanding Advances-A plus the outstanding Letter of Credit Liabilities-A
exceeds the Borrowing Base-A, the Borrower shall promptly (and in any event
within fifteen (15) Business Days after the earlier of (i) the discovery of such
excess by the Borrower and (ii) the delivery by the Borrower of the Borrowing
Base Report-A indicating such excess) prepay the outstanding Advances-A by the
amount of the excess plus accrued and unpaid interest on the amount so prepaid
or, if no Advances-A are outstanding (either before or after such prepayments),
the Borrower shall immediately pledge to the Agent for the benefit of itself,
the Issuing Bank, and the Banks, cash or cash equivalent investments in an
amount equal to the excess as security for the Obligations-A.
(b) If at any time the sum of the outstanding Advances-B plus the
outstanding Letter of Credit Liabilities-B exceeds the Borrowing Base-B, the
Borrower shall promptly (and in any event within fifteen (15) Business Days
after the earlier of (i) the discovery of such excess by the Borrower and (ii)
the delivery by the Borrower of the Borrowing Base Report-B indicating such
excess) prepay the outstanding Advances-B by the amount of the excess plus
accrued and unpaid interest on the amount so prepaid or, if no Advances-B are
outstanding (either before or after such prepayments), the Borrower shall
immediately pledge to the Agent for the benefit of itself, the Issuing Bank, and
the Banks, cash or cash equivalent investments in an amount equal to the excess
as security for the Obligations-B.
Section IV.5. Pro Rata Treatment. Except to the extent otherwise
provided herein: (a) each Advance shall be made by the Banks under Section 2.1
or 3.1 or deemed made by the Banks under Section 2.9 or 3.9 pro rata in
accordance with their respective Percentages, (b) each payment of fees under
Section 2.6 and letter of credit fees under Section 4.14 shall be made for the
account of the Banks pro rata in accordance with their respective Percentages,
(c) each termination or reduction of the Revolving Credit Commitments under
Section 2.7 or 3.7 shall be applied to the Revolving Credit Commitments-A or the
Revolving Credit Commitments-B, as applicable, pro rata according to the
respective
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unused Revolving Credit Commitments-A or Revolving Credit Commitments-B, (d)
each Letter of Credit and Bank Guaranty shall be deemed participated in by the
Banks, pro rata in accordance with their respective Percentages; and (e) each
payment and prepayment of principal of or interest on the Advances-A or the
Advances-B by the Borrower shall be made to the Agent for the account of the
Banks pro rata in accordance with the respective unpaid principal amounts of the
Advances-A or the Advances-B held by such Banks.
Section IV.6. Non-Receipt of Funds by the Agent. Unless the Agent shall
have been notified by a Bank or the Borrower (the "Payor") prior to the date on
which such Bank is to make payment to the Agent of the proceeds of an Advance to
be made or participated in as applicable, by it hereunder or the Borrower is to
make a payment to the Agent for the account of one or more of the Banks, as the
case may be (such payment being herein called the "Required Payment"), which
notice shall be effective upon receipt, that the Payor does not intend to make
the Required Payment to the Agent, the Agent may assume that the Required
Payment has been made and may, in reliance upon such assumption (but shall not
be required to), make the amount thereof available to the intended recipient on
such date and, if the Payor has not in fact made the Required Payment to the
Agent, the recipient of such payment shall, on demand, pay to the Agent the
amount made available to it together with interest thereon in respect of the
period commencing on the date such amount was so made available by the Agent
until the date the Agent recovers such amount at a rate per annum equal to the
Federal Funds Rate for such period.
Section IV.7. Withholding Tax Exemption. Each Bank that is not
incorporated under the laws of the United States of America or a state thereof
agrees that it will deliver to the Borrower and the Agent two duly completed
copies of Form 1001 or 4224, certifying in either case that such Bank is
entitled to receive payments from the Borrower under any Loan Document without
deduction or withholding of any United States federal income taxes. Each Bank
which so delivers a Form 1001 or 4224 further undertakes to deliver to the
Borrower and the Agent two additional copies of such form (or a successor form)
on or before the date such form expires or becomes obsolete or after the
occurrence of any event requiring a change in the most recent form so delivered
by it, and such amendments thereto or extensions or renewals thereof as may be
reasonably requested by the Borrower or the Agent, in each case certifying that
such Bank is entitled to receive payments from the Borrower under any Loan
Document without deduction or withholding of any United States federal income
taxes, unless an event (including without limitation any change in treaty, law
or regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such Bank from duly completing and delivering any such form with respect
to it and
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such Bank advises the Borrower and the Agent that it is not capable of receiving
such payments without any deduction or withholding of United States federal
income tax.
Section IV.8. Computation of Interest. Interest on the Advances and all
other amounts payable by the Borrower hereunder shall be computed on the basis
of a year of 360 days and the actual number of days elapsed (including the first
day but excluding the last day) unless such calculation would result in a
usurious rate, in which case interest shall be calculated on the basis of a year
of 365 or 366 days, as the case may be.
Section IV.9. Conversions and Continuation. The Borrower shall have the
right from time to time to Convert all or part of an Advance of one Type into an
Advance of another Type or to Continue LIBOR Advances of one Type as Advances of
the same Type by giving the Agent written notice at least one (1) Business Day
before Conversion into a Prime Rate Advance, and at least three (3) Business
Days before Conversion into or Continuation of a LIBOR Advance, specifying: (a)
the Conversion or Continuation date, (b) the amount of the Advance to be
Converted or Continued, (c) in the case of Conversions, the Type of Advance to
be Converted into, and (d) in the case of a Continuation of or Conversion into a
LIBOR Advance, the duration of the Interest Period applicable thereto; provided
that (i) LIBOR Advances may only be Converted on the last day of the applicable
Interest Period, and (ii) except for Conversions into Prime Rate Advances, no
Conversions shall be made while a Default or an Event of Default has occurred
and is continuing. All notices under this Section shall be irrevocable and shall
be given not later than 11:00 A.M. Houston, Texas time on the day which is not
less than the number of Business Days specified above for such notice. If the
Borrower shall fail to give the Agent the notice as specified above for
Continuation or Conversion of a LIBOR Advance prior to the end of the Interest
Period with respect thereto, such LIBOR Advance shall be Converted automatically
into a Prime Rate Advance on the last day of the then current Interest Period
for such LIBOR Advance.
Section IV.10. Limitation on Guarantors, Liability for the Obligations.
Notwithstanding any provision of this Agreement or any other Loan Documents to
the contrary, no Guarantor shall be liable for any Obligations in excess of the
sum of (a) the Secured Obligations plus (b) Permitted Subsidiary Indebtedness.
Section IV.11. Application of Payments. If an Event of Default has
occurred, all principal payments shall first be applied to that principal
portion of the Obligations that does not constitute Secured Obligations, but
neither the Agent nor any Bank shall be required to keep any separate records in
respect thereof, and this agreement regarding application shall apply
automatically.
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Section IV.12. Letter of Credit Procedure. Each Letter of Credit shall
be issued upon receipt by the Issuing Bank of a written request of the Borrower
(a "Credit Request"), together with a duly executed Letter of Credit Agreement,
not later than 11:00 A.M., (Houston, Texas time) three Business Days prior to
the date set for the issuance of such Letter of Credit. Each Credit Request
shall contain or specify, among other things:
(a) the proposed date of the issuance of the Letter of Credit,
which shall be a Business Day;
(b) the stated amount of the Letter of Credit;
(c) the date of expiration of the Letter of Credit;
(d) the name and address of the beneficiary of the Letter of
Credit;
(e) the documents to be presented by the beneficiary of the
Letter of Credit in case of any drawing thereunder;
(f) the full text of any certificate to be presented by the
beneficiary in case of any drawing thereunder;
(g) the purpose of the Letter of Credit; and
(h) the aggregate amount of Letter of Credit Liabilities-A or
Letter of Credit Liabilities-B, as applicable, (including the requested
Letter of Credit) to be existing on the date of issuance of such
requested Letter of Credit.
Section IV.13. Amendments to Letters of Credit. Any request for
amendment to or extension of the expiry date of any previously issued Letter of
Credit shall be submitted pursuant to a Credit Request by the Borrower to the
Issuing Bank not later than three Business Days prior to the date of the
proposed amendment or extension. The Issuing Bank shall not amend or extend the
expiry date of any Letter of Credit if the issuance of a new Letter of Credit
having the same terms and conditions as such Letter of Credit as so amended or
extended would be prohibited by any provision of this Agreement.
Section IV.14. Letter of Credit Fees. The Borrower agrees in all
instances, to pay to the Issuing Bank a letter of credit fee for the account of
the Banks that is equal to the rate per annum set forth on schedule 1.1.A. under
"Rate For Letters of Credit" of the Dollar equivalent at the applicable Exchange
Rate of the face amount of each Letter of Credit (with a $400.00 minimum letter
of credit fee per Letter of Credit issued), each computed from the date of
issuance until the stated expiry date
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based on the initial face amount of such Letter of Credit, and payable in
advance, non-refundable, and based on a year of 360 days.
Section IV.15. Participation by Banks. By the issuance of any Letter of
Credit or Bank Guaranty and without any further action on the part of the
Issuing Bank or any of the Banks in respect thereof, the Issuing Bank (in the
case of a Letter of Credit) or Bank Guarantor (in the case of a Bank Guaranty)
hereby grants to each Bank and each Bank hereby agrees to acquire from the
Issuing Bank or the Bank Guarantor a participation in each such Letter of Credit
or Bank Guaranty and the related Letter of Credit Liabilities, effective upon
the issuance thereof without recourse or warranty, equal to such Bank's
Percentage of such Letter of Credit or Bank Guaranty and Letter of Credit
Liabilities. The Issuing Bank shall provide a copy of each Letter of Credit and
Bank Guaranty to each other Bank promptly after issuance. This agreement to
grant and acquire participations is an agreement between the Issuing Bank, the
Bank Guarantor and the Banks, and neither the Borrower nor any beneficiary of a
Letter of Credit or Bank Guaranty shall be entitled to rely thereon. The
Borrower agrees that each Bank purchasing a participation from the Issuing Bank
pursuant to this Section 4.15 may exercise all its rights to payment against the
Borrower including the right of setoff, with respect to such participation as
fully as if such Bank were the direct creditor of the Borrower in the amount of
such participation.
Section IV.16. Obligations Absolute. The obligations of the Borrower
under this Agreement and the other Loan Documents (including without limitation
the obligation of the Borrower to reimburse the Issuing Bank for draws under any
Letter of Credit) shall be joint and several, absolute, unconditional, and
irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement and the other Loan Documents under all circumstances whatsoever,
including without limitation the following circumstances:
(a) Any lack of validity or enforceability of any Letter of
Credit or any other Loan Document;
(b) Any amendment or waiver of or any consent to departure
from any Loan Document;
(c) The existence of any claim, set-off, counterclaim, defense
or other rights which Borrower, any Obligated Party, or any other
Person may have at any time against any beneficiary of any Letter of
Credit, the Issuing Bank, or any other Person, whether in connection
with this Agreement or any other Loan Document or any unrelated
transaction; or
(d) Any statement, draft, or other document presented
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under any Letter of Credit proving to be forged, fraudulent, invalid,
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect whatsoever.
Section IV.17. Limitation of Liability. The Borrower assumes all risks
of the acts or omissions of any beneficiary of any Letter of Credit with respect
to its use of such Letter of Credit. Neither the Issuing Bank, the Agent, any
Bank nor any of their officers or directors shall have any responsibility or
liability to the Borrower or any other Person for: (a) errors, omissions,
interruptions, or delays in transmission or delivery of any messages, or (b) the
validity, sufficiency, or genuineness of any draft or other document, or any
endorsement(s) thereon, even if any such draft, document or endorsement should
in fact prove to be in any and all respects invalid, insufficient, fraudulent,
or forged or any statement therein is untrue or inaccurate in any respect,
provided that in each case such actions taken or omitted by the Issuing Bank,
the Agent or any Bank are done or omitted in the absence of gross negligence or
willful misconduct. The Issuing Bank may accept documents that appear on their
face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary.
Section IV.18. Letter of Credit Agreements. Certain additional
provisions regarding the obligations, liabilities, rights, remedies and
agreements of the Borrower and the Issuing Bank relative to the Letters of
Credit shall be set forth in the Letter of Credit Agreements.
Section IV.19. Replacement of the Issuing Bank. The Borrower may, with
the approval of the Required Banks, appoint a successor Issuing Bank hereunder
upon the condition precedent that such successor Issuing Bank shall become a
party to this Agreement and expressly agree to be bound by the terms and
conditions contained in this Agreement pertaining to the Issuing Bank. Upon the
appointment of a successor Issuing Bank, the Issuing Bank replaced by such
successor Issuing Bank shall cease to issue Letters of Credit but shall continue
to carry out its obligations hereunder and shall continue to have the benefit of
this Agreement and the other Loan Documents with respect to the outstanding
Letters of Credit issued by it until all such Letters of Credit have expired and
any drawings thereunder have been reimbursed in full.
Section IV.20. No Advances. Neither the Agent nor any Bank shall have
any obligation to make any Advance if an Event of Default has occurred and is
continuing.
Section IV.21. Designation of Additional Guarantors; Revocation of
Designation. (a) The Borrower may designate any Domestic Subsidiary which is not
a Guarantor to be a Domestic Guarantor by (i) causing such Domestic Subsidiary
to execute a
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Guaranty Agreement-Domestic and a Security Agreement-Guarantor in substantially
the form attached hereto as Exhibit "C-1", (ii) preparing a Borrowing Base
Report-A which includes such Domestic Subsidiary and which evidences that the
outstanding Advances-A plus the Letter of Credit Liabilities-A do not exceed the
lesser of the Borrowing Base-A (with such Domestic Subsidiary included) or the
Revolving Credit Commitments-A, and (iii) delivering to the Agent notice that
such Domestic Subsidiary is to be a Domestic Guarantor together with the
Guaranty Agreement-Domestic, the Security Agreement-Guarantor and the Borrowing
Base Report-A described above. Any such Domestic Subsidiary shall be deemed a
Domestic Guarantor five (5) Business Days following the date on which the
Borrower delivers the documents described in clause (iii) of the preceding
sentence to the Agent.
(b) The Borrower may designate any Foreign Subsidiary which is not a
Guarantor to be a Foreign Guarantor by (i) causing such Foreign Subsidiary to
execute a Guaranty Agreement-Foreign and a Security Agreement-Guarantor in the
form described in clause (e) of the definition of the term "Security
Agreement-Guarantor", (ii) preparing a Borrowing Base Report-B which includes
such Foreign Subsidiary and which evidences that the outstanding Advances-B plus
the Letter of Credit Liabilities-B do not exceed the lesser of the Borrowing
Base-B (with such Foreign Subsidiary included) or the Revolving Credit
Commitments-B, and (iii) delivering to the Agent notice that such Foreign
Subsidiary is to be a Foreign Guarantor together with the Guaranty
Agreement-Foreign, the Security Agreement-Guarantor and the Borrowing Base
Report-B described above. Any such Foreign Subsidiary shall be deemed a Foreign
Guarantor five (5) Business Days following the date on which the Borrower
delivers the documents described in clause (iii) of the preceding sentence to
the Agent.
(c) The Borrower may determine that any Foreign Subsidiary which has
been designated to be a Foreign Guarantor pursuant to Section 4.21(b) shall
cease to be a Foreign Guarantor by delivering to the Agent (i) a Borrowing Base
Report-B which does not include such Foreign Guarantor and which evidences that
the outstanding Advances-B plus the Letter of Credit Liabilities-B do not exceed
the lesser of the Borrowing Base-B (without such Foreign Guarantor) or the
Revolving Credit Commitments-B, (ii) evidence satisfactory to the Agent that
such Foreign Guarantor is not a Material Subsidiary, and (iii) notice that such
Foreign Guarantor is no longer to be a Foreign Guarantor. Five (5) Business Days
following the date on which the Borrower delivers the documents described in the
preceding sentence to the Agent any such Foreign Guarantor shall cease to be a
Guarantor and such Person's Guaranty Agreement-Foreign and Security
Agreement-Guarantor shall be null and void.
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ARTICLE V.
Yield Protection and Illegality
Section V.1. Capital Adequacy. If after the date hereof, any adoption
or implementation of any applicable law, rule, or regulation regarding capital
adequacy (including, without limitation, any law, rule, or regulation
implementing the Basle Accord), or any change therein, or any change in the
interpretation or administration thereof by any central bank or other
Governmental Authority charged with the interpretation or administration
thereof, or compliance by such Bank (or its parent) with any guideline, request,
or directive regarding capital adequacy (whether or not having the force of law)
of any such central bank or other Governmental Authority (including, without
limitation, any guideline or other requirement implementing the Basle Accord),
has or would have the effect of reducing the rate of return on such Bank's (or
its parent's) capital as a consequence of its obligations hereunder or the
transactions contemplated hereby to a level below that which such Bank (or its
parent) could have achieved but for such adoption, implementation, change, or
compliance (taking into consideration such Bank's policies with respect to
capital adequacy) by an amount deemed by such Bank to be material, then from
time to time, within ten (10) Business Days after demand by the such Bank (with
a copy to the Agent), the Borrower agrees to pay to such Bank (or its parent)
such additional amount or amounts as will compensate such Bank for such
reduction. Any such demand shall be accompanied by a certificate of such Bank
claiming compensation under this Section and setting forth in reasonable detail
the calculation of the additional amount or amounts to be paid to it hereunder
shall be conclusive (absent manifest error), provided that the determination
thereof is made on a reasonable basis. In determining such amount or amounts,
such Bank may use any reasonable averaging and attribution methods.
Section V.2. Additional Costs. The Borrower shall pay (without
duplication of amounts owing under other Sections of this Article V) directly to
each Bank from time to time such amounts as such Bank may determine to be
necessary to compensate it for any costs incurred by such Bank which the Bank
determines are attributable to its making or maintaining of any LIBOR Advances
hereunder or its obligation to make any of such Advances hereunder, or any
reduction in any amount receivable by such Bank hereunder in respect of any such
Advances or such obligation (such increases in costs and reductions in amounts
receivable being herein called "Additional Costs"), resulting from any
Regulatory Change which:
(a) changes the basis of taxation of any amounts payable to
such Bank under this Agreement or its Revolving Credit Note in respect
of any of such Advances (other than
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taxes imposed on the overall net income of such Bank or its Applicable
Lending Office for any of such Advances by the jurisdiction in which
such Bank has its principal office or such Applicable Lending Office);
(b) imposes or modifies any reserve, special deposit, minimum
capital, capital ratio, or similar requirement relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities or commitments of, the Bank (including any of such Advances
or any deposits referred to in the definition of "LIBOR Rate" in
Section 1.1; or
(c) imposes any other condition affecting this Agreement or
the Revolving Credit Notes or any of such extensions of credit or
liabilities or commitments.
Each Bank will notify the Borrower of any event occurring after the date of this
Agreement which will entitle such Bank to compensation pursuant to this Section
5.2 as promptly as practicable after it obtains knowledge thereof and determines
to request such compensation, and will designate a different Applicable Lending
Office for the Advances affected by such event if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
sole opinion of such Bank, violate any law, rule, or regulation or be in any way
disadvantageous to such Bank, provided that such Bank shall have no obligation
to so designate an Applicable Lending Office located in the United States of
America. Each Bank will furnish the Borrower with a certificate setting forth in
reasonable detail the basis and the amount of each request of such Bank for
compensation under this Section 5.2, and the Borrower shall not be obligated to
pay under this Section 5.2 prior to receipt of such certificate. If a Bank
requests compensation from the Borrower under this Section 5.2, the Borrower
may, by notice to such Bank and the Agent suspend the obligation of such Bank to
make or Continue making, or Convert Advances into, Advances of the Type with
respect to which such compensation is requested until the Regulatory Change
giving rise to such request ceases to be in effect (in which case the provisions
of Section 5.5 hereof shall be applicable). Determinations and allocations by a
Bank for purposes of this Section 5.2 of the effect of any Regulatory Change on
its costs of maintaining its obligations to make Advances or of making or
maintaining Advances or on amounts receivable by it in respect of Advances, and
of the additional amounts required to compensate such Bank in respect of any
Additional Costs, shall be conclusive absent manifest error, provided that such
determinations and allocations are made on a reasonable basis and in good faith.
Section V.3. Limitation on LIBOR Advances. Anything herein to the
contrary notwithstanding, if with respect to any LIBOR Advances for any Interest
Period therefor:
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(a) The Agent determines (which determination shall be
conclusive absent manifest error) that quotations of interest rates for
the relevant deposits referred to in the definition of "LIBOR Rate" in
Section 1.1 hereto are not being provided in the relative amounts or
for the relative maturities for purposes of determining the rate of
interest for such Advances as provided in this Agreement; or
(b) A Bank determines (which determination shall be conclusive
absent manifest error) that the relevant rates of interest referred to
in the definition of "LIBOR Rate" in Section 1.1 hereto on the basis of
which the rate of interest for such Advances for such Interest Period
is to be determined do not accurately reflect the cost to such Bank of
making or maintaining such Advances for such Interest Period;
then such Bank shall give the Borrower prompt notice thereof and the relevant
amounts or periods, and so long as such condition remains in effect, such Bank
shall be under no obligation to make additional LIBOR Advances or to Convert
Prime Rate Advances into LIBOR Advances and the Borrower shall, on the last
day(s) of the then current Interest Period(s) for the outstanding LIBOR
Advances, either prepay such Advances or Convert such Advances into Prime Rate
Advances in accordance with the terms of this Agreement.
Section V.4. Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for a Bank or its Applicable
Lending Office to (a) honor its obligation to make LIBOR Advances hereunder or
(b) maintain LIBOR Advances hereunder, then such Bank shall promptly notify the
Borrower thereof and such Bank's obligation to make or maintain LIBOR Advances
and to Convert Prime Rate Advances into LIBOR Advances hereunder shall be
suspended until such time as such Bank may again make and maintain LIBOR
Advances (in which case the provisions of Section 5.5 hereof shall be
applicable).
Section V.5. Treatment of Certain LIBOR Advances. If the LIBOR Advances
of a Bank are to be Converted pursuant to Section 5.2, 5.3 or 5.4 hereof, such
Bank's LIBOR Advances shall be automatically Converted into Prime Rate Advances
on the last day(s) of the then current Interest Period(s) for the LIBOR Advances
(or, in the case of a Conversion required by Section 5.4 hereof, on such earlier
date as such Bank may specify to the Borrower, such earlier date to be not
earlier than the date the Bank gives notice thereof to the Borrower) and, unless
and until such Bank gives notice as provided below that the circumstances
specified in Section 5.2, 5.3 or 5.4 hereof which gave rise to such Conversion
no longer exist:
(a) To the extent that the Bank's LIBOR Advances have
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been so Converted, all payments and prepayments of principal which
would otherwise be applied to such Bank's LIBOR Advances shall be
applied instead to its Prime Rate Advances; and
(b) All Advances which would otherwise be made or Continued by
a Bank as LIBOR Advances shall be made as or Converted into Prime Rate
Advances and all Advances of such Bank which would otherwise be
Converted into LIBOR Advances shall be Converted instead into (or shall
remain as) Prime Rate Advances.
If a Bank gives notice to the Borrower that the circumstances specified in
Section 5.2, 5.3 or 5.4 hereof which gave rise to the Conversion of such Bank's
LIBOR Advances pursuant to this Section 5.5 no longer exist (which such Bank
agrees to do promptly upon such circumstances ceasing to exist) at a time when
any LIBOR Advances are outstanding, the Bank's Prime Rate Advances shall be
automatically Converted to LIBOR Advances, on the first day(s) of the next
succeeding Interest Period(s) for such outstanding LIBOR Advances to the extent
necessary so that, after giving effect thereto, all Advances held by the Bank
holding LIBOR Advances and by such Banks are held pro rata (as to principal
amounts, Types, and Interest Periods) in accordance with their respective
Commitments.
Section V.6. Compensation. The Borrower shall pay (without duplication
of amounts owing under other Sections of this Article V) to the Banks, upon the
request of the Agent, such amount or amounts as shall be sufficient (in the
reasonable opinion of the Agent) to compensate the Banks for any actual loss,
cost, or expense incurred by them as a result of:
(a) Any payment, prepayment or Conversion of a LIBOR Advance
for any reason (including, without limitation, the acceleration of the
outstanding Advances pursuant to Section 12.2) on a date other than the
last day of an Interest Period for such Advance; or
(b) Any failure by the Borrower for any reason (including,
without limitation, the failure of any conditions precedent specified
in Article VII to be satisfied) to borrow, Convert, or prepay a LIBOR
Advance on the date for such borrowing, Conversion, or prepayment,
specified in the relevant notice of borrowing, prepayment, or
Conversion under this Agreement.
The Agent shall furnish the Borrower with a certificate setting forth in
reasonable detail the basis and amount of each request for compensation under
this Section 5.6, and the Borrower shall not be obligated to pay under this
Section 5.6 prior to receipt of such certificate.
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ARTICLE VI.
Security
Section VI.1. Collateral. To secure full and complete payment and
performance of the Secured Obligations, the Borrower shall execute and deliver
or cause to be executed and delivered the documents described below covering the
property and collateral described in this Section 6.1 each in form and substance
satisfactory to the Agent, (which, together with any other property and
collateral which may now or hereafter secure the Secured Obligations or any part
thereof, is sometimes herein called the "Collateral"):
(a) The Borrower and the Guarantors shall respectively execute
the Security Agreement-Borrower and the Security Agreements-Guarantors
pursuant to which such Persons shall, subject to the provisions of
Section 6.3, grant to the Agent for the benefit of the Banks a first
priority security interest in all of their respective domestic, and as
applicable, foreign, trade accounts and accounts receivable whether now
owned or hereafter acquired, and all products and proceeds thereto.
(b) The Borrower and the Guarantors shall execute and cause to
be executed, subject to the provisions of Section 6.3, such further
documents and instruments, including without limitation, as applicable,
financing statements under the Uniform Commercial Code and the laws of
the applicable Provinces of Canada, as the Agent, in its sole
discretion, deems necessary or desirable to create, preserve, evidence,
and perfect its liens and security interests in the Collateral.
Section VI.2. Setoff. If an Event of Default shall have occurred and is
continuing, the Agent, the Issuing Bank and each Bank are hereby authorized at
any time and from time to time, without notice to Borrower (any such notice
being hereby expressly waived by the Borrower), to set off and apply any and all
deposits (general, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by the Issuing Bank, the Agent or such Bank
to or for the credit or the account of the Borrower against any and all of the
obligations of the Borrower now or hereafter existing under this Agreement, the
Revolving Credit Notes, or any other Loan Document, irrespective of whether or
not the Agent, the Issuing Bank or such Bank shall have made any demand under
this Agreement, the Revolving Credit Notes or any other Loan Document and
although such Obligations may be unmatured. The Issuing Bank, the Agent and each
Bank agree promptly to notify the Borrower (with a copy to the Agent) after
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any such setoff and application, provided that the failure to give such notice
shall not affect the validity of such setoff and application. The rights and
remedies of the Issuing Bank, the Agent and each Bank hereunder are in addition
to other rights and remedies (including, without limitation, other rights of
setoff) which the Issuing Bank, the Agent and such Bank may have.
SECTION VI.3. SPECIAL PROVISIONS REGARDING SECURITY INTERESTS AND
SECURITY AGREEMENTS. NOTWITHSTANDING ANY PROVISION OF THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT TO THE CONTRARY, (a) THE LIENS CREATED BY THE SECURITY
AGREEMENT-BORROWER AND THE SECURITY AGREEMENTS-GUARANTORS SHALL NOT COVER OR
APPLY TO ANY OBLIGATIONS WHICH ARE NOT SECURED OBLIGATIONS, (b) THE LIENS
CREATED BY THE SECURITY AGREEMENT-BORROWER AND THE SECURITY
AGREEMENTS-GUARANTORS SHALL NOT BECOME EFFECTIVE UNLESS AND UNTIL AN EVENT OF
DEFAULT OCCURS; HOWEVER, UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, THE LIENS
CREATED BY THE SECURITY AGREEMENT-BORROWER AND THE SECURITY
AGREEMENTS-GUARANTORS SHALL IMMEDIATELY AND AUTOMATICALLY BECOME EFFECTIVE
WITHOUT ANY FURTHER ACT OF ANY KIND BY THE AGENT OR ANY BANK AND WITHOUT NOTICE
TO OR CONSENT FROM THE BORROWER, ANY GUARANTOR OR ANY OTHER PERSON, AND (c)
EXCEPT AS OTHERWISE AGREED BETWEEN THE BORROWER AND THE AGENT, THE AGENT SHALL
NOT FILE OR RECORD ANY FINANCING STATEMENTS OR OTHER DOCUMENTS EVIDENCING THE
LIENS CREATED BY THE SECURITY AGREEMENT-BORROWER OR THE SECURITY
AGREEMENTS-GUARANTORS UNLESS AND UNTIL AN EVENT OF DEFAULT HAS OCCURRED; HOWEVER
UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, THE AGENT MAY FILE OR RECORD ALL
SUCH DOCUMENTS WITHOUT NOTICE TO OR CONSENT FROM THE BORROWER, ANY GUARANTOR OR
ANY OTHER PERSON.
ARTICLE VII.
Conditions Precedent
Section VII.1. Conditions to Advances-A. This Agreement is not
effective, and the obligation of each Bank to make any initial Advance-A and of
the Issuing Bank to issue any Letter of Credit-A is subject to the condition
precedent that the Agent shall have received (or waived or postponed in writing
the requirement that it receive) on or before the day of such Advance-A or
Letter of Credit-A issuance all of the items set forth below in form and
substance satisfactory to the Agent.
(a) Certificate - Borrower. A certificate of the Secretary or
an Assistant Secretary of the Borrower certifying (i) resolutions of
the Board of Directors of the Borrower which authorize the execution,
delivery and performance by the Borrower of this Agreement and the
other Loan Documents to which the Borrower is or is to be a party
hereunder, and (ii) the names and signatures of the officers of the
Borrower authorized to sign this Agreement and each of
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the other Loan Documents to which the Borrower is or is to be a party
hereunder.
(b) Certificate - Domestic Guarantors. A certificate of the
Secretary or an Assistant Secretary of each Domestic Guarantor
certifying (i) resolutions of the Board of Directors of such Domestic
Guarantor which authorize the execution, delivery and performance by
such Domestic Guarantor of the Loan Documents to which such Domestic
Guarantor is or is to be a party hereunder, and (ii) the names and
signatures of the officers of such Domestic Guarantor authorized to
sign the Loan Documents to which such Domestic Guarantor is or is to be
a party hereunder.
(c) Articles of Incorporation - Borrower and Domestic
Guarantors. The articles of incorporation of Borrower and each Domestic
Guarantor certified by the Secretary of State of state of incorporation
of such Person.
(d) Bylaws - Borrower and Domestic Guarantors. The bylaws of
the Borrower and each Domestic Guarantor, certified by the Secretary or
an Assistant Secretary of such Person.
(e) Governmental Certificates - Borrower. Certificates of the
appropriate government officials of the state of organization of
Borrower as to the existence and good standing of Borrower.
(f) Governmental Certificates - Domestic Guarantors.
Certificates of the appropriate government officials of the
jurisdiction of organization of each Domestic Guarantor as to the
existence and good standing of such Domestic Guarantor.
(g) Revolving Credit Notes. The Revolving Credit Notes-A and
the Revolving Credit Notes-B executed by the Borrower.
(h) Security Agreement-Borrower. The Security
Agreement-Borrower executed by Borrower.
(i) Security Agreements-Domestic Guarantors. A Security
Agreement-Guarantor executed, as applicable, by each of the Domestic
Guarantors.
(j) Financing Statements. Uniform Commercial Code or other
applicable financing statements executed by the Borrower and the
Domestic Guarantors and covering the Collateral.
(k) Guaranty Agreements - Domestic Guarantors. A Guaranty
Agreement-Domestic executed by each Domestic Guarantor.
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(l) Fees. A fee in the amount of $25,000.00.
(m) UCC Searches. Uniform Commercial Code searches showing all
financing statements on file against Borrower and the Domestic
Guarantors in the offices of the Secretary of State of Texas and
Delaware.
(n) Opinion of Counsel. A favorable opinion of legal counsel
to the Borrower and the Domestic Guarantors in such form as the Agent
may request.
Section VII.2. Conditions to Advances-B. The obligation of each Bank to
make any initial Advance-B and of the Issuing Bank to issue any Letter of
Credit-B is subject to the condition precedent that the Agent shall have
received (or waived or postponed in writing the requirement that it receive) on
or before the day of such Advance-B or Letter of Credit-B issuance all of the
items set forth below in form and substance satisfactory to the Agent.
(a) Conditions to Advances-A Satisfied. Each of the conditions
to making the initial Advance-A or issuing the initial Letter of
Credit-A set forth in Section 7.1 shall have been satisfied.
(b) Certificate - Foreign Guarantors. A certificate of the
Secretary, an Assistant Secretary or other appropriate officer of each
Foreign Guarantor certifying (i) resolutions of the Board of Directors
or other appropriate governing body of such Foreign Guarantor which
authorize the execution, delivery and performance by such Foreign
Guarantor of the Loan Documents to which such Foreign Guarantor is or
is to be a party hereunder, and (ii) the names and signatures of the
officers of such Foreign Guarantor authorized to sign the Loan
Documents to which such Foreign Guarantor is or is to be a party
hereunder.
(c) Organizational Documents - Foreign Guarantors. The
organizational documents of each Foreign Guarantor and the general
partners of the Partnership, certified by the appropriate governmental
official of the jurisdiction of organization of such Person.
(d) Governing Documents - Foreign Guarantors. The bylaws or,
as applicable, other similar governing documents of each Foreign
Guarantor and the general partners of the Partnership, certified by the
Secretary, an Assistant Secretary or other applicable officer of such
Person.
(e) Partnership Agreement. The partnership agreement of the
Partnership certified by all of the partners of the Partnership.
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(f) Governmental Certificates - Foreign Guarantors.
Certificates of the appropriate government officials of the
jurisdiction of organization of each Foreign Guarantor (other than the
Partnership) and the partners of the Partnership as to the existence
and good standing of each such Person.
(g) Security Agreements-Foreign Guarantors. A Security
Agreement-Guarantor executed by the Partnership, the Charge Debenture
(Malaysia) executed by Digicon (Malaysia), and the Charge Debenture
(U.K.) executed by Geophysical Limited, together with any other
documents which may be required by the jurisdiction of organization of
any such Person in order to perfect the Agent's Liens with respect to
the Collateral in such jurisdiction.
(h) Evidence of Filing or Other Perfection. Evidence that the
Charge Debenture (U.K.) executed by Geophysical Limited and the Charge
Debenture (Malaysia) executed by Digicon (Malaysia) have been recorded
or filed as necessary to perfect the Liens created thereby in favor of
the Agent.
(i) Guaranty Agreements - Foreign Guarantors. A Guaranty
Agreement-Foreign executed by each Foreign Guarantor.
(j) Canadian Searches. Uniform Commercial Code or other
applicable search showing all financing statements and other documents
or instruments on file against the Partnership in the Province of
Alberta, Canada, and evidencing that there are no Liens against the
accounts receivable of the Partnership, except Liens in favor of the
Agent.
(k) Other Foreign Searches. A company registry search for
Geophysical Limited in England and Wales and Digicon (Malaysia) in the
Federation of Malaysia evidencing that there are no Liens against the
accounts receivable of such Foreign Guarantors, except Liens in favor
of the Agent.
(l) Opinion of Counsel. A favorable opinion of legal counsel
to the Borrower and the Guarantors in such form as the Agent may
request.
Section VII.3. All Advances. The obligation of each Bank to make any
Advance and of the Issuing Bank to issue any Letter of Credit is subject to the
additional conditions precedent set forth below.
(a) Items Required by Agreement. The Agent shall have received
the items required by Section 4.1 and 4.12, as applicable.
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(b) No Default. No Default shall have occurred and be
continuing, or would result from such Advance and/or Letter of Credit
issuance, as applicable.
(c) Representations and Warranties. All of the representations
and warranties contained in Article VIII hereof and in the other Loan
Documents shall be true and correct on and as of the date of such
Advance and/or Letter of Credit issuance, as applicable with the same
force and effect as if such representations and warranties had been
made on and as of such date.
(d) Additional Documentation. The Agent shall have received
such additional approvals, opinions, or documents as the Agent or its
legal counsel may request.
ARTICLE VIII.
Representations and Warranties
To induce the Agent, the Issuing Bank and the Banks to enter into this
Agreement, the Borrower represents and warrants to each such Person that:
Section VIII.1. Corporate Existence. The Borrower and each Subsidiary
(a) is a corporation or partnership duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its incorporation or
organization; (b) has all requisite corporate and partnership, as applicable,
power and authority to own its assets and carry on its business as now being or
as proposed to be conducted; and (c) is qualified to do business in all
jurisdictions in which the nature of its business makes such qualification
necessary and where failure to so qualify would have a material adverse effect
on its business, condition (financial or otherwise), operations, prospects, or
properties. The Borrower and each Guarantor has the corporate or partnership, as
applicable, power and authority to execute, deliver and perform its obligations
under this Agreement and the other Loan Documents to which it is or may become a
party.
Section VIII.2. Financial Statements. The Borrower has delivered to the
Agent audited consolidated financial statements of the Borrower and its
Subsidiaries as at and for the fiscal year ended July 31, 1999. Such financial
statements have been prepared in accordance with GAAP, and fairly and accurately
present, on a consolidated basis, the financial condition of the Borrower and
its Subsidiaries as of the respective dates indicated therein and the results of
operations for the respective periods indicated therein. Neither the Borrower
nor any of its Subsidiaries has any material contingent liabilities, liabilities
for taxes, unusual
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forward or long-term commitments, or unrealized or anticipated losses from any
unfavorable commitments except as referred to or reflected on such financial
statements. There has been no material adverse change in the business, condition
(financial or otherwise), operations, prospects, or properties of the Borrower
or any of its Subsidiaries since the effective date of the most recent financial
statements referred to in this Section.
Section VIII.3. Corporate Action: No Breach. The execution, delivery,
and performance by the Borrower of this Agreement and the other Loan Documents
to which the Borrower is or may become a party and compliance with the terms and
provisions hereof and thereof have been duly authorized by all requisite
corporate action on the part of the Borrower and do not and will not (a) violate
or conflict with, or result in a breach of, or require any consent under (i) the
articles of incorporation or bylaws or other organizational documents of the
Borrower or any of its Subsidiaries, (ii) any applicable law, rule, or
regulation or any order, writ, injunction, or decree of any Governmental
Authority or arbitrator, or (iii) any agreement or instrument to which the
Borrower or any of its Subsidiaries is a party or by which any of them or any of
their property is bound or subject, or (b) constitute a default under any such
agreement or instrument, or result in the creation or imposition of any Lien
(except as provided in Article VI) upon any of the revenues or assets of the
Borrower or any Subsidiary.
Section VIII.4. Operation of Business. The Borrower and each of its
Subsidiaries possess all licenses, permits, franchises, patents, copyrights,
trademarks, and tradenames, or rights thereto, necessary to conduct their
respective businesses substantially as now conducted and as presently proposed
to be conducted, and the Borrower and each of its Subsidiaries are not in
violation of any valid rights of others with respect to any of the foregoing in
any respect that could reasonably be expected to have a Material Adverse Effect.
Section VIII.5. Litigation and Judgments. Except as disclosed on
Schedule 8.5 hereto, there is no action, suit, investigation, or proceeding
before or by any Governmental Authority or arbitrator pending (in respect of
which process has been served on Borrower or any of its Subsidiaries), or to the
knowledge of the Borrower, threatened against or affecting the Borrower or any
Subsidiary, that would, if adversely determined, have a Material Adverse Effect.
There are no outstanding judgments against the Borrower or any Subsidiary,
except as disclosed on Schedule 8.5 hereto.
Section VIII.6. Rights in Properties: Liens. The Borrower and each
Subsidiary have good and indefeasible title to or valid leasehold interests in
all material respects in their respective properties and assets, real and
personal, including the
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properties, assets and leasehold interests reflected in the financial statements
described in Section 8.2, and none of the properties, assets or leasehold
interests of the Borrower or any Subsidiary is subject to any Lien, except as
permitted by Section 10.2.
Section VIII.7. Enforceability. This Agreement constitutes, and the
other Loan Documents to which the Borrower is party, when delivered, and subject
to Section 6.3, shall constitute legal, valid, and binding obligations of the
Borrower, enforceable against the Borrower in accordance with their respective
terms, except as limited by bankruptcy, insolvency, or other laws of general
application relating to the enforcement of creditors' rights and by general
equitable principles.
Section VIII.8. Approvals. No authorization, approval, or consent of,
and no filing or registration with, any Governmental Authority or third party is
or will be necessary for the execution, delivery, or performance by the Borrower
of this Agreement and the other Loan Documents to which the Borrower is or may
become a party or the validity or enforceability thereof, except for (a) and
subject to Section 6.3, filings and recordings in respect of the Liens created
pursuant to Loan Documents, (b) those which have been obtained or made prior to
the date hereof, and (c) authorizations, approvals, consents, filings and
registrations to be made in the ordinary course of business in connection with
the Borrower's performance of its obligations hereunder.
Section VIII.9. Debt. The Borrower and its Subsidiaries have no Debt,
except Debt permitted by Section 10.1.
Section VIII.10. Taxes. The Borrower and each Subsidiary have filed all
tax returns (federal, state, local and foreign) required to be filed, including
all income, franchise, employment, property, and sales tax returns, and have
paid all of their respective liabilities for taxes, assessments, governmental
charges and other levies that are due and payable. The Borrower knows of no
pending investigation of the Borrower or any Subsidiary by any taxing authority
or of any pending but unassessed tax liability of the Borrower or any
Subsidiary.
Section VIII.11. Use of Proceeds: Margin Securities. Neither the
Borrower nor any Subsidiary is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulations G, T, U, or X of the
Board of Governors of the Federal Reserve System), and no part of the proceeds
of any Advance will be used to purchase or carry any margin stock or to extend
credit to others for the purpose of purchasing or carrying margin stock.
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Section VIII.12. ERISA. The Borrower and each Subsidiary are in
compliance in all material respects with all applicable provisions of ERISA and
the applicable provisions of the Code relating thereto. No Reportable Event
which is required to be reported to the PBGC pursuant to Section 4043(b) of
ERISA or Prohibited Transaction which could reasonably be expected to have a
Material Adverse Effect has occurred and is continuing with respect to any Plan.
No notice of intent to terminate a Plan has been filed, nor has any Plan been
terminated. No circumstances exist which constitute grounds entitling the PBGC
to institute proceedings to terminate, or appoint a trustee to administer, a
Plan, nor has the PBGC instituted any such proceedings. Neither the Borrower nor
any ERISA Affiliate (nor any predecessor to the Borrower or any ERISA Affiliate)
has completely or partially withdrawn from a Multiemployer Plan. The Borrower
and each ERISA Affiliate have met their minimum funding requirements under ERISA
with respect to all of their Plans, and the present value of all vested benefits
under each Plan do not exceed the fair market value of all Plan assets allocable
to such benefits, as determined on the most recent valuation date of the Plan
and in accordance with ERISA. Neither the Borrower nor any ERISA Affiliate has
incurred any liability to the PBGC under ERISA.
Section VIII.13. Disclosure. No statement, information, report,
representation, or warranty made by the Borrower in this Agreement or in any
other Loan Document or furnished to the Agent or any Bank in connection with
this Agreement or any of the transactions contemplated hereby (but excluding all
projections and proforma financial statements which shall have been prepared in
good faith and based upon reasonable assumptions) contains any untrue statement
of a material fact and all such statements, information, reports,
representations and warranties, taken as a whole, do not omit to state any
material fact necessary to make the statements herein or therein not misleading.
There is no fact known to the Borrower which has a Material Adverse Effect, or
which could reasonably be expected to have, in the reasonable judgment of the
Borrower, in the future a Material Adverse Effect, that has not been disclosed
in writing to the Agent.
Section VIII.14. Subsidiaries. The Borrower has no Subsidiaries other
than those listed on Schedule 8.14 hereto, and Schedule 8.14 sets forth the
jurisdiction of organization or incorporation of each Subsidiary and the
percentage of the Borrower and its Subsidiaries ownership of the outstanding
voting stock of each such Subsidiary. All of the outstanding capital stock of
each Subsidiary has been validly issued, is fully paid, and is nonassessable.
Section VIII.15. Agreements; Indenture Defaults. (a) Neither the
Borrower nor any Guarantor is a party to any indenture, loan, or credit
agreement, or to any lease or other agreement or instrument, or subject to any
charter or corporate
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restriction which could reasonably be expected to have a Material Adverse
Effect. Neither the Borrower nor any Guarantor is in default in any respect in
the performance, observance, or fulfillment of any of the obligations,
covenants, or conditions contained in any agreement or instrument material to
its business to which it is a party where such default or the effect thereof
could reasonably be expected to result in a Material Adverse Effect.
(b) Neither the making of any Advance nor the issuance of any Letter of
Credit will constitute or result in the creation of a Default or an Event of
Default (as defined in the Indenture) under the terms and provisions of the
Indenture. No Default or Event of Default (as defined in the Indenture) exists
under the terms and provisions of the Indenture.
Section VIII.16. Compliance with Laws. Neither the Borrower nor any
Subsidiary is in violation of any law, rule, regulation, order, or decree of any
Governmental Authority or arbitrator except where such Person's failure to do so
could not reasonably be expected to result in a Material Adverse Effect.
Section VIII.17. Inventory. All inventory that is produced by the
Borrower and its Subsidiaries has been and will hereafter be produced in
compliance with all applicable laws, rules, regulations, and governmental
standards, domestic and foreign, including, without limitation, the minimum wage
and overtime provisions of the Fair Labor Standards Act, as amended (29 U.S.C.
201-219), and the regulations promulgated thereunder except where such Person's
failure to do so could not reasonably be expected to result in a Material
Adverse Effect and except as disclosed on Schedule 8.5 hereto.
Section VIII.18. Investment Company Act. Neither the Borrower nor any
Subsidiary is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
Section VIII.19. Public Utility Holding Company Act. Neither the
Borrower nor any Subsidiary is a "holding company" or a "subsidiary company" of
a "holding company" or an "affiliate" of a "holding company" or a "public
utility" within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
Section VIII.20. Environmental Matters. Except as disclosed on Schedule
8.20 hereto:
(a) The Borrower, each Subsidiary, and all of their respective
properties, assets, and operations are in full compliance with all
Environmental Laws, except for occurrences of noncompliance which could
not individually, or in the aggregate, reasonably be expected to have a
Material Adverse Effect. The Borrower is not aware of, nor has the
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Borrower received notice of, any past, present, or future conditions,
events, activities, practices, or incidents which may interfere with or
prevent the compliance or continued compliance of the Borrower and its
Subsidiaries with all Environmental Laws, except for occurrences of
noncompliance which could not individually, or in the aggregate,
reasonably be expected to have a Material Adverse Effect;
(b) The Borrower and each Subsidiary have obtained all
permits, licenses, and authorizations that are required under
applicable Environmental Laws, and all such permits are in good
standing and the Borrower and its Subsidiaries are in compliance with
all of the terms and conditions of such permits, except where failure
to obtain or comply with such permits, licenses or authorizations could
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect;
(c) No Hazardous Materials exist on, about, or within or have
been used, generated, stored, transported, disposed of on, or Released
from any of the properties or assets of the Borrower or any Subsidiary
except (i) in amounts that, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect and (ii) for
dynamite and other explosives for which such Person possesses all
licenses and permits necessary to comply with all Environmental Laws
and other federal, state, local and foreign laws, regulations and
requirements pertaining to the use, possession, disposal, storage or
sale thereof, and such use, possession, disposal, storage or sale
thereof is in compliance with Environmental Laws and such other laws,
regulations and requirements except where failure to obtain or comply
with such licenses or permits or to comply with such laws, regulations
or requirements could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect. The use which the
Borrower and its Subsidiaries make and intend to make of their
respective properties and assets will not result in the use,
generation, storage, transportation, accumulation, disposal, or Release
of any Hazardous Material on, in, or from any of their properties or
assets except (i) in amounts that, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect and
(ii) for dynamite and other explosives for which such Person possesses
all licenses and permits necessary to comply with all Environmental
Laws and other federal, state, local and foreign laws, regulations and
requirements pertaining to the use, possession, disposal, storage or
sale thereof, and such use, possession, disposal, storage or sale
thereof is in compliance with Environmental Laws and such other laws,
regulations and requirements, except where failure to comply with such
laws, regulations or requirements could not,
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individually or in the aggregate reasonably be expected to have a
Materially Adverse Effect;
(d) Neither the Borrower nor any of its Subsidiaries nor any
of their respective currently or previously owned or leased properties
or operations is subject to any outstanding or, to the best of its
knowledge, threatened order from or agreement with any Governmental
Authority or other Person or subject to any judicial or docketed
administrative proceeding with respect to (i) failure to comply with
Environmental Laws, (ii) Remedial Action, or (iii) any Environmental
Liabilities arising from a Release or threatened Release, which,
individually or in the aggregate, could reasonably be expected to have
a Material Adverse Effect;
(e) There are no conditions or circumstances associated with
the currently or previously owned or leased properties or operations of
the Borrower or any of its Subsidiaries that could reasonably be
expected to have a Material Adverse Effect;
(f) Neither the Borrower nor any of its Subsidiaries is a
treatment, storage, or disposal facility requiting a permit under the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq.,
regulations thereunder or any comparable provision of state law. The
Borrower and its Subsidiaries are in compliance with all applicable
financial responsibility requirements of all Environmental Laws except
where failure to be in such compliance could not reasonably be expected
to have a Material Adverse Effect;
(g) Neither the Borrower nor any of its Subsidiaries has filed
or failed to file any notice required under applicable Environmental
Law reporting a Release, which Release or any aggregation thereof, or
failure to file, could reasonably be expected to have a Material
Adverse Effect; and
(h) To the best of the Borrower's knowledge, no Lien arising
under any Environmental Law has attached to any property or revenues of
the Borrower or its Subsidiaries.
Section VIII.21. Year 2000. (a) All devices, systems, machinery,
information technology, computer software and hardware, and other date sensitive
technology owned or controlled by the Borrower or its Subsidiaries (jointly and
severally, the "Systems") necessary for the Borrower and its Subsidiaries to
carry on their business as presently conducted and as contemplated to be
conducted in the future are Year 2000 Compliant or will be Year 2000 Compliant
within a period of time calculated to result in no material disruption of any of
the Borrower's or any Subsidiary's business operations. For purposes of these
provisions, "Year 2000 Compliant" means that the Systems are
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designed to be used prior to, during and after the Gregorian calendar year 2000
A.D. and will operate during each such time period without error relating to
date data, specifically including any error relating to, or the product of, date
data which represents or references different centuries or more that one
century.
(b) The Borrower has (i) undertaken a detailed inventory, review and
assessment of all areas within its and its Subsidiaries' businesses and
operations that could be adversely affected by the failure of the Borrower or
any Subsidiary to be Year 2000 Compliant on a timely basis, (ii) developed a
detailed plan and time line for becoming Year 2000 Compliant on a timely basis
and (iii) to date, implemented that plan in accordance with that timetable in
all material respects.
(c) The Borrower has made, and has caused each Subsidiary to make,
written inquiry of each of its key suppliers, vendors and customers, and has
obtained, and has caused each Subsidiary to obtain, in writing confirmations
from all such Persons as to whether such Persons have initiated programs to
become Year 2000 Compliant. On the basis of such confirmations, the Borrower
reasonably believes that all of such Persons will be or become so compliant. For
purposes hereof, "key suppliers, vendors and customers" refers to those
suppliers, vendors and customers of the Borrower and its Subsidiaries whose
business failure would, with reasonable probability, result in a Material
Adverse Effect.
Section 8.22. Guarantors. The assets of each Subsidiary which is not a
Guarantor as of the Effective Date have a value (determined in accordance with
GAAP) of less than $20,000,000.00. The assets of all the Subsidiaries which are
not Guarantors as of the Effective Date have an aggregate value (determined in
accordance with GAAP), as of the Effective Date, which is not more than sixteen
percent (16%) of the aggregate value (determined in accordance with GAAP) of the
assets of Borrower and all its Subsidiaries.
ARTICLE IX.
Affirmative Covenants
The Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or any Bank has any Commitment hereunder or the
Issuing Bank has any obligation to issue any Letter of Credit hereunder or any
Letter of Credit Liabilities exist, the Borrower will perform and observe the
following positive covenants:
Section IX.1. Reporting Requirements. The Borrower will furnish the
items set forth below to the Agent, the Issuing Bank and the Banks.
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(a) Annual Financial Statements. As soon as available, and in
any event within five (5) days after the filing deadline therefor, a
copy of the Form 10-K Annual Report of the Borrower filed with the
Securities and Exchange Commission or any successor agency; provided,
however that the financial statements contained in such report shall be
audited by independent certified public accountants acceptable to the
Agent.
(b) Quarterly 10-Q of the Borrower. As soon as available, and
in any event within five (5) days after the filing deadline therefor, a
copy of the Form 10-Q Quarterly Reports of the Borrower filed with the
Securities and Exchange Commission or any successor agency.
(c) Compliance Certificate. Concurrently with the delivery of
each of the Form 10-K's or Form 10-Q's, as applicable, referred to in
subsections 9.1(a) and 9.1(b), and on the Subordinated Debt Incurrence
Date, a Compliance Certificate of the chief financial officer, the
chief accounting officer, the treasurer or the assistant treasurer of
the Borrower or another officer of the Borrower acceptable to the Agent
(i) stating, among other things, that no Default or Event of Default
has occurred and is continuing, or if a Default or Event of Default has
occurred and is continuing, a statement as to the nature thereof and
the action which is proposed to be taken with respect thereto, and (ii)
showing in reasonable detail the calculations demonstrating compliance
with Article XI; provided, however, that the Compliance Certificate
delivered on the Subordinated Debt Incurrence Date (A) shall only show
calculations demonstrating compliance with Sections 11.4, 11.7 and 11.8
and (B) shall be based upon the most current available financial
statements and information of the Borrower, provided, however, that
such financial statements and information shall have an effective date
which is not more than sixty (60) days prior to the Subordinated Debt
Incurrence Date.
(d) Annual Projected Financial Statements and Capital
Expenditure Projections. Concurrently with the delivery of the Form
10-K's referred to in subsection 9.1(a) above, projected financial
statements for the upcoming fiscal year of the Borrower and its
Subsidiaries, including projected capital expenditures, in form and
detail satisfactory to the Agent and prepared under the supervision of
the chief financial officer or the chief accounting officer of the
Borrower or another officer of the Borrower acceptable to the Agent.
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(e) Monthly Borrowing Base Report/Agings/Unbilled Receivables.
(i) Upon the request of the Agent or if at the end of any month there
are outstanding Advances-A or Letter of Credit Liabilities-A, as soon
as available, and in any event within forty-five (45) days after the
end of such month, a Borrowing Base Report-A in form and detail
satisfactory to the Agent, including, without limitation, (A) a
reconciliation of accounts receivable including a calculation and
description of all accounts which are not or should not be included in
the definition of "Eligible Domestic/Domestic Accounts", "Eligible
Domestic/Foreign Accounts", "Eligible Domestic/Domestic Unbilled
Receivables" and "Eligible Domestic/Foreign Unbilled Receivables", (B)
detailed agings of accounts receivable (with respect to all domestic
accounts receivable) and accounts payable, and (C) a detailed
prospective monthly billing schedule for the next twelve (12) months
for all Eligible Domestic/Domestic Unbilled Receivables and all
Domestic/Foreign Unbilled Receivables, all certified by the chief
financial officer, the chief accounting officer or the treasurer of the
Borrower; and (ii) upon the request of the Agent or if at the end of
any month there are outstanding Advances-B or Letter of Credit
Liabilities-B, as soon as available, and in any event within forty-five
(45) days after the end of such month, a Borrowing Base Report-B in
form and detail satisfactory to the Agent, including, without
limitation, (A) a reconciliation of accounts receivable including a
calculation and description of all accounts which are not or should not
be included in the definition of "Eligible Foreign/Foreign Accounts",
(B) detailed agings of accounts receivable (with respect to all foreign
accounts receivable) and accounts payable, and (C) a detailed
prospective monthly billing schedule for the next twelve (12) months
for all Eligible Foreign/Foreign Unbilled Receivables, all certified by
the chief financial officer, the chief accounting officer, the
treasurer or the assistant treasurer of the Borrower or another officer
of the Borrower acceptable to the Agent.
(f) Address List for Account Debtors. Within fifteen (15) days
after the request therefor by the Agent, an address list for all of the
Borrower's and the Guarantors' account debtors in form and detail
satisfactory to the Agent.
(g) Management Letters. Promptly upon receipt thereof by the
chief financial officer, the chief accounting officer, the treasurer or
the assistant treasurer of the Borrower, a copy of any management
letter or written report submitted to the Borrower by independent
certified public accountants with respect to the business, condition
(financial or otherwise), operations, prospects, or properties of the
Borrower and its Subsidiaries.
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(h) Additional Restricted Subsidiaries. Not less than
forty-five (45) days after the end of each Fiscal Quarter the names of
any Subsidiaries which became Restricted Subsidiaries during such
Fiscal Quarter and any Subsidiaries which ceased to be Restricted
Subsidiaries during such Fiscal Quarter.
(i) Notice of Litigation. Promptly after the service of
process or notice thereof, notice of all actions, suits, and
proceedings before any Governmental Authority or arbitrator affecting
the Borrower or any Subsidiary which could, in the opinion of the
management of the Borrower, reasonably be expected to have a Material
Adverse Effect.
(j) Notice of Default. As soon as possible and in any event
within fifteen (15) days after any of the chief executive officer, the
chief financial officer, the chief accounting officer, the treasurer or
any other employee serving in a comparable capacity (regardless of
title) of the Borrower or any Guarantor obtains any knowledge, becomes
aware or should have known through the exercise of prudent business
judgment of the occurrence of any Default, a written notice setting
forth the details of such Default and the action that the Borrower has
taken and proposes to take with respect thereto.
(k) ERISA Reports. Upon the request of the Agent from time to
time copies of all reports, including annual reports, and notices which
the Borrower or any Subsidiary files with or receives from the PBGC,
the U.S. Department of Labor under ERISA or the Internal Revenue
Service under the Code; and as soon as possible and in any event within
five days after the Borrower or any Subsidiary knows or has reason to
know that any Reportable Event which is required to be reported to the
PBGC pursuant to Section 4043 (b) of ERISA or Prohibited Transaction
which could be reasonably expected to have a Material Adverse Effect
has occurred with respect to any Plan or that the PBGC or the Borrower
or any Subsidiary has instituted or will institute proceedings under
Title IV of ERISA to terminate any Plan, a certificate of the chief
financial officer of the Borrower setting forth the details as to such
Reportable Event or Prohibited Transaction or Plan termination and the
action that the Borrower proposes to take with respect thereto.
(l) Notice of Material Adverse Change. As soon as possible and
in any event within fifteen (15) days after any of the chief executive
officer, the chief financial officer, the chief accounting officer, the
treasurer or any other employee serving in a comparable capacity
(regardless of title) of the Borrower or any Guarantor obtains any
knowledge, becomes aware or should have known through the
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exercise of prudent business judgment of the occurrence thereof,
written notice of any matter that could reasonably be expected to have
a Material Adverse Effect.
(m) Proxy Statements, Etc. As soon as available, one copy of
each financial statement, report, notice or proxy statement sent by the
Borrower or any Subsidiary to its stockholders generally and one copy
of each regular, periodic or special report, registration statement, or
prospectus, including, without limitation, each 8-K Current Report,
filed by the Borrower or any Subsidiary with the Securities and
Exchange Commission or any successor agency or with any securities
exchange.
(n) Notice of Actual or Contingent Liabilities. As soon as
possible, and in any event within five (5) Business Days after any of
the chief executive officer, the chief financial officer, the chief
accounting officer, the treasurer or any other employee serving in a
comparable capacity (regardless of title) of the Borrower or any
Guarantor obtains any knowledge, becomes aware or should have known
through the exercise of prudent business judgment of the occurrence
thereof, written notice of any actual or contingent liabilities which,
if resolved adversely to such Person could reasonably be expected to
have a Material Adverse Effect.
(o) General Information. Within such a time period as Agent
may reasonably request, such additional information and statements,
lists of assets and liabilities, tax returns, financial statements,
reporting statements and any other reports with respect to the
Borrower's or any Subsidiary's financial condition, business operations
and properties as the Agent may reasonably request from time to time.
Section IX.2. Maintenance of Existence: Conduct of Business. Except as
provided in Section 10.3, the Borrower will preserve and maintain, and will
cause each Guarantor to preserve and maintain, its corporate existence and all
of its leases, privileges, licenses, permits, franchises, qualifications, and
rights that are necessary or desirable in the ordinary conduct of its business,
except if (a) in the reasonable business judgment of the Borrower or such
Guarantor, as applicable, it is in the best economic interest not to preserve
and maintain such rights and franchises, and (b) such failure to preserve and
maintain such leases, privileges, licenses, permits, franchises, qualifications
and rights could not reasonably be expected to have a Material Adverse Effect.
The Borrower will conduct, and will cause each Subsidiary to conduct, its
businesses in an orderly and efficient manner in accordance with good business
practices.
Section IX.3. Maintenance of Properties. The Borrower will
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maintain, keep, and preserve, and cause each Subsidiary to maintain, keep, and
preserve, in all material respects, all of its properties (tangible and
intangible) necessary in the proper conduct of its business in good working
order and condition.
Section IX.4. Taxes and Claims. The Borrower will pay or discharge, and
will cause each Subsidiary to pay or discharge, at or before maturity or before
becoming delinquent all taxes, levies, assessments, and governmental charges
imposed on it or its income or profits or any of its property; provided,
however, that neither the Borrower nor any Subsidiary shall be required to pay
or discharge any tax, levy, assessment, or governmental charge which is being
contested in good faith by appropriate proceedings diligently pursued, and for
which adequate reserves have been established.
Section IX.5. Insurance. The Borrower will maintain, and will cause
each Subsidiary to maintain, insurance with financially sound and reputable
insurance companies in such amounts and covering such risks as is usually
carried by corporations engaged in similar businesses and owning similar
properties in the same general areas in which the Borrower and its Subsidiaries
operate, provided that in any event each Borrower will maintain and will cause
each Subsidiary to maintain workmen's compensation insurance, property
insurance, comprehensive general liability insurance, and business interruption
insurance with respect to processing centers in accordance with Borrower's and
such Subsidiaries' current practices reasonably satisfactory to the Agent.
Section IX.6. Inspection Rights. At any reasonable time during business
hours and from time to time, the Borrower will permit, and will cause each
Subsidiary to permit, representatives of the Agent, the Banks and the Issuing
Bank to examine, copy, and make extracts from its books and records, to visit
and inspect its properties, and to discuss its business, operations, and
financial condition with its officers, employees, and independent certified
public accountants.
Section IX.7. Keeping Books and Records. The Borrower will maintain,
and will cause each Subsidiary to maintain, proper books of record and account
in which full, true, and correct entries in conformity with GAAP shall be made
of all dealings and transactions in relation to its business and activities.
Section IX.8. Compliance with Laws. The Borrower will comply, and will
cause each Subsidiary to comply with all applicable laws, rules, regulations,
orders, and decrees of any Governmental Authority or arbitrator if its failure
to comply could reasonably be expected to result in a Material Adverse Effect.
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Section IX.9. Compliance with Agreements. The Borrower will comply, and
will cause each Subsidiary to comply with all agreements, contracts, and
instruments binding on it or affecting its properties or business if its failure
to comply could reasonably be expected to result in a Material Adverse Effect.
Section IX.10. Further Assurances. The Borrower will, and will cause
each Subsidiary to, execute and deliver such further agreements and instruments
and take such further action as may be requested by the Agent or any Bank to
carry out the provisions and purposes of this Agreement and the other Loan
Documents and, when applicable as provided in Section 6.3, to create, preserve,
and perfect the Liens of the Agent in the Collateral.
Section IX.11. ERISA. The Borrower will comply, and will cause each
Subsidiary to comply, with all minimum funding requirements, and all other
material requirements of ERISA and the applicable provisions of the Code
relating thereto, if applicable, so as not to give rise to any liability
thereunder if its failure to comply could reasonably be expected to result in a
Material Adverse Effect.
Section IX.12. Contracts. (a) The Borrower shall disclose to the Agent
in writing any express rights of offset arising under geophysical or seismic
service contracts of the Borrower or any of the Guarantors and under amendments,
modifications, addenda, or supplements thereto.
(b) The Borrower shall disclose to the Agent each geophysical or
seismic service contract to which the Borrower or any Guarantor shall hereafter
become a party, and each amendment, supplement, addendum, or modification
hereafter made to any existing geophysical or seismic service contract, that
contains an express provision that restricts such Person from freely assigning
its rights to payment under such contract.
(c) To the extent practicable, the Borrower will use reasonable efforts
to select, and shall cause each Guarantor to use reasonable efforts to select,
as the choice of law to govern future geophysical or seismic service contracts
to which such Person is a party, the law of a state of the United States, a
province of Canada, England, or a foreign jurisdiction that permits free
transferability of the rights to payment under such contracts.
(d) Within fifteen (15) days after the request by the Agent the
Borrower shall provide the Agent with true and complete copies of all existing
geophysical and seismic service contracts to which the Borrower or any Guarantor
is a party and that provide for aggregate consideration payable to such Person
in excess of $1,000,000.00, and all future amendments, supplements, addenda, or
modifications to any such existing or future geophysical or seismic service
contract.
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Section IX.13. Additional Material Subsidiaries as Guarantors;
Execution of Additional Security Agreements-Guarantors. (a) The Borrower will
cause each Material Subsidiary created or acquired after the Effective Date to
execute a Guaranty Agreement-Foreign if such Material Subsidiary is a Foreign
Subsidiary or to execute a Guaranty Agreement-Domestic if such Material
Subsidiary is a Domestic Subsidiary. The Borrower will cause each such Material
Subsidiary to deliver such Guaranty Agreement to the Agent.
(b) If any Subsidiary which was not determined to be a Material
Subsidiary on the Effective Date or upon its creation or acquisition becomes a
Material Subsidiary, the Borrower will promptly give the Agent notice of such
event and will cause such Material Subsidiary to execute and deliver to the
Agent a Guaranty Agreement-Foreign (if such Material Subsidiary is a Foreign
Subsidiary) or a Guaranty Agreement-Domestic (if such Material Subsidiary is a
Domestic Subsidiary), unless the Required Banks determine that such Material
Subsidiary is not to be a Guarantor.
(c) Contemporaneously with the delivery by any Material Subsidiary of a
Guaranty Agreement pursuant to paragraphs (a) or (b) of this Section 9.13, such
Material Subsidiary will execute and deliver to the Agent (a) a Security
Agreement-Guarantor pursuant to which such Material Subsidiary will grant to the
Agent a security interest in its accounts receivable, and (b) uniform commercial
code or other applicable financing statements or documents with respect to such
security interest; provided, that the grant of such security interests, the
Security Agreements-Guarantors, financing statements all other documents or acts
related thereto shall be subject to the provisions of Sections 4.10 and 6.3.
Section IX.14. Continuity of Operations. The Borrower will continue to
conduct, and will cause each of the Guarantors to continue to conduct, its
primary businesses as conducted as of the Effective Date and to continue its
operations in such businesses.
Section 9.14. Year 2000. The Borrower will (a) furnish such additional
information, statements and other reports with respect to the Borrower's and its
Subsidiaries' activities, course of action and progress towards becoming Year
2000 Compliant as the Agent may request from time to time, (b) promptly notify
the Agent of any change in circumstances that causes or would likely cause the
Borrower's representations contained in Section 8.21 to no longer be true and
the details thereof, and (c) permit the Agent or its representatives, at the
expense of the Agent, upon reasonable notice during business hours, to inspect
and test the Systems of the Borrower and its Subsidiaries to determine if they
are Year 2000 Compliant.
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ARTICLE X.
Negative Covenants
The Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or any Bank has any Commitment hereunder or the
Issuing Bank has any obligation to issue any Letter of Credit hereunder or any
Letter of Credit Liabilities exist, the Borrower will observe the following
covenants:
Section X.1. Debt. The Borrower will not incur, create, assume, or
permit to exist, and will not permit any Subsidiary to incur, create, assume, or
permit to exist, any Debt, except:
(a) Debt and Contingent Liabilities to the Agent, the Banks
and the Issuing Bank pursuant to the Loan Documents;
(b) the Senior Debt;
(c) Existing Debt and Contingent Liabilities described on
Schedule 10.1 hereto;
(d) Extensions, renewals, amendments or replacements of Debt
permitted by clauses (b) and (c) above provided that no such extension,
renewal or replacement shall (i) if such Debt is Subordinated Debt,
amend or modify any subordination provisions, if any, contained in the
original Debt so that the Debt, as extended, renewed or replaced, is no
longer Subordinated Debt, or (ii) shorten the fixed maturity or
increase the principal amount of, or increase the rate of interest to a
rate greater than the current market rate at the time of the extension,
renewal or replacement of the original Debt;
(e) Subordinated Debt;
(f) Additional unsecured and purchase money Debt and secured
Debt assumed in connection with a transaction permitted by Section
10.3(c)(iv)(A) in an aggregate principal amount not to exceed
$60,000,000.00 at any time outstanding; provided, however, that the
collateral for any such Debt which is secured shall not consist of
assets of a nature described in clause (d) of the definition of
Permitted Liens contained in the Indenture.
(g) Unsecured Debt of the Borrower or any Subsidiary which
represents all or part of the purchase price payable in connection with
transactions permitted by Section 10.3(c)(iv)(A), provided, that the
sum of the aggregate
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principal amount of all such unsecured Debt plus cash expended by such
Person in connection with transactions permitted by Section
10.3(c)(iv)(A) shall not at any time exceed $100,000,000;
(h) Debt of the Borrower to a Guarantor or of a Guarantor to
the Borrower or another Guarantor, as applicable; and
(i) Debt of the Borrower or any Subsidiary incurred in
connection with foreign exchange transactions undertaken by the
Borrower or any Subsidiary.
Section X.2. Limitation on Liens. Borrower will not incur, create,
assume, or permit to exist, and will not permit any Subsidiary to incur, create,
assume, or permit to exist, any Lien upon any of their respective properties,
assets, or revenues, whether now owned or hereafter acquired, except the
following (herein referred to as "Permitted Liens"):
(a) Liens disclosed on Schedule 10.2 hereto;
(b) Liens in favor of the Agent for the benefit of the Banks
and the Issuing Bank;
(c) Encumbrances consisting of minor easements, zoning
restrictions, or other restrictions on the use of property that do not
(individually or in the aggregate) materially affect the value of the
assets encumbered thereby or materially impair the ability of the
Borrower or its Subsidiaries to use such assets in their respective
businesses, and none of which is violated in any material respect by
existing or proposed structures or land use;
(d) Liens for taxes, assessments, or other governmental
charges which are not delinquent for longer than ninety (90) days or
which are being contested in good faith and for which adequate reserves
have been established;
(e) Liens of landlords, tenants, vendors, mechanics,
materialmen, warehousemen, carriers, or other similar statutory Liens
securing obligations that are not delinquent for longer than ninety
(90) days and are incurred in the ordinary course of business or which
are being contested in good faith and for which adequate reserves have
been established;
(f) Liens resulting from good faith deposits to secure
payments of workmen's compensation or other social security programs or
to secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, or contracts (other than for payment of Debt), or
leases made in the ordinary course of business;
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(g) Liens on property securing purchase money Debt or assumed
Debt permitted pursuant to Section 10.1(f) incurred solely for the
purpose of financing the acquisition of such property; and
(h) Licenses of surveys or portions thereof in the Data
Library to others in the ordinary course of business.
Section X.3. Mergers, Dissolutions, Etc. The Borrower will not, and
will not permit any Subsidiary to, be a party to any merger or consolidation, or
purchase or otherwise acquire all or substantially all of the assets or any
stock of any class of, or any partnership or joint venture interest in, any
other Person, or sell, transfer, convey or lease all or any substantial part of
its assets, or sell or assign with or without recourse any receivables, except
for the following:
(a) any such merger or consolidation, sale, transfer,
conveyance, lease or assignment of or by any Affiliate of Borrower into
the Borrower or into, with or to any other Affiliate of Borrower;
provided that (i) if such event involves the Borrower, the Borrower
shall be the surviving corporation, and (ii) if such event involves a
Guarantor, a Guarantor shall be the surviving corporation;
(b) any such purchase or other acquisition by the Borrower of
the assets or stock of any Guarantor or any Affiliate of Borrower, or
by any Guarantor or any Affiliate of Borrower of the assets or stock of
any Affiliate of Borrower; and
(c) any such merger or consolidation of Borrower or an
Affiliate of Borrower into, with or to any other Person or any such
purchase or other acquisition by the Borrower or any Affiliate of
Borrower of the assets or stock of any other Person where (i)
immediately before and immediately after giving effect to such
transaction, no Default or Event of Default shall have occurred and be
continuing; (ii) the Borrower and its Subsidiaries are in pro forma
compliance with all the financial covenants set forth in Article XI
taking into account such purchase or acquisition; (iii) such Person (or
its board of directors or similar body) has approved such acquisition
or other purchase; and (iv) taking into account and including all such
transactions since the Effective Date, (A) the aggregate consideration
to be paid in cash or Funded Debt incurred (or assumed) by Borrower and
its Subsidiaries in connection with such purchase or acquisition is not
greater than $100,000,000.00 and (B) the aggregate consideration to be
paid by the Borrower and its Subsidiaries in the form of stock or other
securities issued by the
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Borrower in connection with such purchase or other acquisition is not
greater than $200,000,000.00.
Section X.4. Loans and Investments. The Borrower will not make, and
will not permit any Subsidiary to make, any advance, loan, extension of credit,
or capital contribution to or investment in, or purchase, or permit any
Subsidiary to purchase, any stock, bonds, notes, debentures or other securities
of, any Person, except:
(a) advances or loans to, or investments in, Subsidiaries
(other than the Borrower and the Guarantors) not to exceed
$5,000,000.00 in the aggregate at any time outstanding (net of
repayments of advances and loans by such Subsidiaries taken as a group
and of returns on such investments);
(b) the non-cash allocation of overhead by the Borrower to its
various Subsidiaries in accordance with its historical practices;
(c) investments in and loans and advances by the Borrower or
one Guarantor to the Borrower or another Guarantor, as applicable;
(d) extensions of credit to customers in the ordinary course
of business;
(e) stocks, bonds, notes, debentures and other securities
accepted from customers in connection with good faith workouts of past
due receivables or in bankruptcy, insolvency or similar proceedings;
(f) loans and advances to employees of the Borrower or any
Subsidiary for travel, entertainment and relocation expenses incurred
in the ordinary course of business;
(g) any bonds or other obligations of the United States of
America which, as to principal and interest, constitute direct
obligations or are guaranteed by the United States of America;
(h) any bonds, debentures, participation certificates, notes
or other obligations of any agency or corporation or instrumentality of
the United States of America, the obligations of which are
unconditionally guaranteed by the United States of America;
(i) obligations of a state, territory or possession of the
United States, the interest on which is excluded from gross income for
federal income taxation purposes and which bear a rating in one of the
two highest rating categories by
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Standard & Poor's Corporation or Moody's Investors Service;
(j) interest bearing accounts, interest bearing deposits,
eurodollar investments, or certificates of deposit issued by or bankers
acceptances drawn or accepted by, banks or trust companies, including
the Agent, organized under the laws of the United States or any state
thereof, but only with institutions whose capital and surplus is in
excess of $50,000,000.00;
(k) commercial paper, floating rate notes or master notes
rated A-2 or better by Standard & Poor's Corporation or P-2 or better
by Moody's Investors Service;
(l) repurchase agreements collateralized by obligations issued
or guaranteed as to the payment of principal and interest by the full
faith and credit of the United States;
(m) units of taxable money market mutual funds comprised of
obligations described in (g) through (l) above;
(n) the making or acquisition of beneficial interests in, or
the making of loans, advances or capital contributions to, one or more
joint ventures as to which the Borrower or any Subsidiary is a
venturer, so long as such joint ventures are formed for the purpose of
operating seismic data acquisition or processing businesses, in an
aggregate principal amount not to exceed $50,000,000.00 at any time
outstanding;
(o) loans, advances, extensions of credit, capital
contributions to or investments in, or purchases of stocks, bonds,
notes, debentures, or other securities in an aggregate principal amount
not to exceed $5,000,000.00 at any time outstanding;
(p) purchases of up to 1,250,000.00 shares of stock of
Borrower; and
(q) purchases of the Senior Notes; provided, however, that
prior to the Subordinated Debt Incurrence Date the Borrower shall not
purchase Senior Notes for an aggregate purchase price which exceeds
$20,000,000.00.
Section X.5. Transactions With Affiliates. The Borrower will not enter
into, and will not permit any Guarantor to enter into, any transaction,
including, without limitation, the purchase, sale, or exchange of property or
the rendering of any service, with any Affiliate of the Borrower or any
Guarantor, except in the ordinary course of and pursuant to the reasonable
requirements of the Borrower's or such Guarantor's business and
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upon fair and reasonable terms no less favorable to the Borrower or such
Guarantor's than would be obtained in a comparable arm's-length transaction with
a Person not an Affiliate of the Borrower or such Guarantor; provided that the
foregoing shall not prohibit the Borrower or the Guarantors from entering into
management contracts with Affiliates upon fair and reasonable terms in the
ordinary course of business or from entering into transactions permitted by this
Agreement.
Section X.6. Disposition of Assets. The Borrower will not sell, lease,
assign, transfer, or otherwise dispose of any of its assets, nor permit any
Subsidiary to do so with any of its assets, except (a) licensing of surveys in
the Data Library in the ordinary course of business, (b) dispositions of
inventory in the ordinary course of business, and, (c) dispositions of tangible
personal property of the Borrower and the Subsidiaries made in the best business
judgment of the Borrower, if (i) no Event of Default has occurred and is
continuing and (ii) no Event of Default would arise as a result of any such
disposition.
Section X.7. Sale and Leaseback. The Borrower will not enter into, and
will not permit any Guarantor to enter into, any arrangement with any Person
pursuant to which any of them leases from such Person real or personal property
that has been or is to be sold or transferred, directly or indirectly, by any of
them to such Person, except that the Borrower and the Guarantors may enter into
such arrangements as financing techniques affecting assets acquired after the
date hereof to the extent permitted by Section 10.1 hereof.
Section X.8. Nature of Business. The Borrower will not, and will not
permit any Guarantor to, engage in any business other than the businesses in
which they are engaged as of the date hereof and other businesses reasonably
related thereto.
Section X.9. Environmental Protection. If, as a result thereof, a
Material Adverse Effect could be reasonably be expected to result therefrom, the
Borrower will not, and will not permit any Subsidiary to, (a) use (or permit any
tenant to use) any of their respective properties or assets for the handling,
processing, storage, transportation, or disposal of any Hazardous Material
except in compliance with Environmental Law, (b) generate any Hazardous Material
except in compliance with Environmental Law, (c) conduct any activity that is
likely to cause a Release or threatened Release of any Hazardous Material, or
(d) otherwise conduct any activity or use any of their respective properties or
assets in any manner that is likely to violate any Environmental Law or create
any Environmental Liabilities for which the Borrower or any of its Subsidiaries
would be responsible.
Section X.10. Accounting. The Borrower will not, and will not permit
any of its Subsidiaries to, change its fiscal year or
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make any change (a) in accounting treatment or reporting practices, except as
permitted by GAAP, or (b) in tax reporting treatment, except as permitted by
law.
Section X.11. Contracts. The Borrower will not and will not permit any
Guarantor to, assign the rights to payment under a geophysical or seismic
service contract to any Person, other than to the Agent.
ARTICLE XI.
Financial Covenants
The Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or any Bank has any Commitment hereunder or the
Issuing Bank has any obligation to issue Letters of Credit hereunder or any
Letter of Credit Liabilities exist, the Borrower will observe and perform the
following financial covenants:
Section XI.1. Consolidated Tangible Net Worth. The Borrower will at all
times maintain Consolidated Tangible Net Worth in an amount which is not less
than the sum of (a) eighty percent (80%) of Consolidated Tangible Net Worth as
of July 31, 1998, plus (b) fifty percent (50%) of Consolidated Net Income during
the period beginning on the Effective Date and ending on the date on which such
calculation is made, plus (c) one hundred percent (100%) of the sum of (i) the
net proceeds of any equity issued by the Borrower or any of its Subsidiaries (on
a consolidated basis) after the Effective Date and (ii) equity contributed to
the Borrower or any of its Subsidiaries (on a consolidated basis) after the
Effective Date in connection with the purchase or other acquisition by the
Borrower or any Subsidiary of the assets or stock of any other Person.
Consolidated Tangible Net Worth shall be calculated and tested quarterly as of
the last day of each Fiscal Quarter.
Section XI.2. Fixed Charge Coverage Ratio. The Borrower and its
Subsidiaries will at all times maintain, on a consolidated basis, a Fixed Charge
Coverage Ratio of not less than 1.20 to 1.00. The Fixed Charge Coverage Ratio
shall be calculated and tested quarterly as of the last day of each Fiscal
Quarter for the Calculation Period ending on the last day of such Fiscal
Quarter.
Section XI.3. Funded Debt to Capitalization Ratio. The Borrower and its
Subsidiaries will maintain at all times prior to the Subordinated Debt
Incurrence Date, on a consolidated basis, a Funded Debt to Capitalization Ratio
of not greater than 0.40 to 1.00. The Funded Debt to Capitalization Ratio shall
be calculated and tested quarterly as of the last day of each Fiscal Quarter.
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Section XI.4. Total Funded Debt to Capitalization Ratio. The Borrower
and its Subsidiaries will maintain, on the Subordinated Debt Incurrence Date and
at all times thereafter, on a consolidated basis, a Total Funded Debt to
Capitalization Ratio of not greater than 0.45 to 1.00. The Total Funded Debt to
Capitalization Ratio shall be calculated and tested on the Subordinated Debt
Incurrence Date and thereafter quarterly as of the last day of each Fiscal
Quarter. The calculation on the Subordinated Debt Incurrence Date shall be based
on the most current available financial statements and information of the
Borrower, provided, however that such financial statements and information shall
have an effective date which is not more than sixty (60) days prior to the
Subordinated Debt Incurrence Date.
Section XI.5. Current Ratio. The Borrower and its Subsidiaries will at
all times maintain a Current Ratio of not less than 1.50 to 1.00. The Current
Ratio shall be calculated and tested quarterly as of the last day of each Fiscal
Quarter.
Section XI.6. Funded Debt to EBITDA Ratio. The Borrower and its
Subsidiaries will maintain at all times prior to the Subordinated Debt
Incurrence Date, on a consolidated basis, a Funded Debt to EBITDA Ratio of not
greater than 1.65 to 1.00. The Funded Debt to EBITDA Ratio shall be calculated
and tested quarterly as of the last day of each Fiscal Quarter for the
Calculation Period ending on the last day of such Fiscal Quarter.
Section XI.7. Total Funded Debt to EBITDA Ratio. The Borrower and its
Subsidiaries will maintain, on the Subordinated Debt Incurrence Date and at all
time thereafter, on a consolidated basis, a Total Funded Debt to EBITDA Ratio of
not greater than (a) 2.25 to 1.00 through July 31, 2000, and (b) 2.00 to 1.00
commencing August 1, 2000 throughout the remainder of the term of this
Agreement. The Total Funded Debt to EBITDA Ratio shall be calculated and tested
on the Subordinated Debt Incurrence Date and thereafter quarterly as of the last
day of each Fiscal Quarter for the Calculation Period ending on the last day of
such Fiscal Quarter. The calculation on the Subordinated Debt Incurrence Date
shall be based on the most current available financial statements and
information of the Borrower, provided, however that such financial statements
and information shall have an effective date which is not more than sixty (60)
days prior to the Subordinated Debt Incurrence Date.
Section XI.8. Senior Funded Debt to EBITDA Ratio. The Borrower and its
Subsidiaries will maintain, on the Subordinated Debt Incurrence Date and at all
times thereafter, on a consolidated basis, a Senior Funded Debt to EBITDA Ratio
of not greater than (a) 1.25 to 1.00 through July 31, 2000, and (b) 1.00 to 1.00
commencing August 1, 2000 throughout the remainder of the term of this
Agreement. The Senior Funded Debt to EBITDA Ratio shall be calculated and tested
on the Subordinated Debt Incurrence
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Date and thereafter quarterly as of the last day of each Fiscal Quarter for the
Calculation Period ending on the last day of such Fiscal Quarter. The
calculation on the Subordinated Debt Incurrence Date shall be based on the most
current available financial statements and information of Borrower, provided,
however that such financial statements and information shall have an effective
date which is not more than sixty (60) days prior to the Subordinated Debt
Incurrence Date.
ARTICLE XII.
Default
Section XII.1. Events of Default. Each of the following shall be deemed
an "Event of Default":
(a) The Borrower shall fail to pay (i) any interest or
principal portion of the Obligations when due or (ii) any other portion
of the Obligations within five (5) days after notice from the Agent or
any Bank.
(b) Any representation or warranty made or deemed made by the
Borrower or any Obligated Party (or any of their respective officers)
in any Loan Document or in any certificate, report, notice, or
financial statement furnished at any time in connection with this
Agreement shall be false, misleading, or erroneous in any material
respect when made or deemed to have been made.
(c) The Borrower or any Obligated Party shall fail to perform,
observe, or comply with any covenant, agreement, or term contained in
Section 9.1(i), Article X or Article XI of this Agreement.
(d) The Borrower or any Obligated Party shall fail to perform,
observe, or comply with any covenant, agreement, or term contained in
this Agreement (other than the covenants, agreements and terms the
subject of Sections 12.1(a) or 12.1(c) above) or any other Loan
Document and such failure shall continue unremedied for a period ended
on the earlier to occur of (i) 15 days after notice from the Agent or
any Bank and (ii) the chief executive officer, the chief financial
officer, the chief accounting officer, the treasurer or any other
employee serving in a comparable capacity (regardless of title) of the
Borrower or any Guarantor obtains knowledge thereof.
(e) The Borrower or any Obligated Party shall commence a
voluntary proceeding seeking liquidation, reorganization, or other
relief with respect to itself or its debts under any bankruptcy,
insolvency, or other similar law now or hereafter
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in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian, or other similar official of it or a substantial
part of its property or shall consent to any such relief or to the
appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it or shall make
a general assignment for the benefit of creditors or shall generally
fail to pay its debts as they become due or shall take any corporate
action to authorize any of the foregoing.
(f) An involuntary proceeding shall be commenced against the
Borrower or any Obligated Party seeking liquidation, reorganization, or
other relief with respect to it or its debts under any bankruptcy,
insolvency, or other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator, custodian, or other
similar official for it or a substantial part of its property, and such
involuntary proceeding shall remain undismissed and unstayed for a
period of sixty (60) days.
(g) The Borrower or any Obligated Party Shall fail to
discharge within a period of thirty (30) days after the commencement
thereof any attachment, sequestration, or similar proceeding or
proceedings involving an aggregate amount in excess of $1,000,000.00
against any of its assets or properties.
(h) A final judgment or judgments for the payment of money in
excess of $1,000,000.00 in the aggregate shall be rendered by a court
or courts against the Borrower, any of its Subsidiaries, or any
Obligated Party and the same shall not be discharged (or provision
shall not be made for such discharge), or a stay of execution thereof
shall not be procured, within thirty (30) days from the date of entry
thereof and the Borrower or the relevant Subsidiary or Obligated Party
shall not, within said period of thirty (30) days, or such longer
period during which execution of the same shall have been stayed,
appeal therefrom and cause the execution thereof to be stayed during
such appeal.
(i) The Borrower, any Subsidiary, or any Obligated Party shall
fail to pay when due any principal of or interest on any Debt (other
than the Obligations), or the maturity of any such Debt shall have been
accelerated or any such Debt shall have been required to be prepaid
prior to the stated maturity thereof.
(j) This Agreement or any other Loan Document shall cease to
be in full force and effect or shall be declared null and void or the
validity or enforceability thereof shall be contested or challenged by
the Borrower, any Subsidiary, any Obligated Party or any of their
respective shareholders,
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or the Borrower or any Obligated Party shall deny that it has any
further liability or obligation under any of the Loan Documents, or,
subject to the provisions of Section 6.3, any lien or security interest
created by the Loan Documents shall for any reason cease to be a valid,
first priority perfected security interest in and lien upon any of the
Collateral purported to be covered thereby.
(k) The Borrower, any of its Subsidiaries, or any Obligated
Party, or any of their properties, revenues, or assets, shall become
subject to an order of forfeiture, seizure, or divestiture (whether
under RICO or otherwise) and the same shall not have been discharged
within thirty (30) days from the date of entry thereof.
(l) A Change of Control shall have occurred, either (i) as
such term is defined in the Indenture if the Indenture is in effect, or
(ii) as such term is defined in the trust indenture under which any
Subordinated Debt was issued if any such trust indenture is in effect.
Section XII.2. Remedies Upon Default. If any Event of Default shall
occur and be continuing, the Agent may (and if directed by Required Banks,
shall) without notice terminate the Revolving Credit Commitments and declare the
Obligations or any part thereof to be immediately due and payable, and the same
shall thereupon become immediately due and payable, without notice, demand,
presentment, notice of dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, protest, or other formalities of any
kind, all of which are hereby expressly waived by the Borrower; provided,
however, that upon the occurrence of an Event of Default under Section 12.1(e)
or Section 12.1(f), the Revolving Credit Commitments shall automatically
terminate, and the Obligations shall become immediately due and payable without
notice, demand, presentment, notice of dishonor, notice of acceleration, notice
of intent to accelerate, notice of intent to demand, protest, or other
formalities of any kind, all of which are hereby expressly waived by the
Borrower. Except as otherwise expressly set forth herein, if any Event of
Default shall occur and be continuing, the Agent may take the actions authorized
by Section 6.3 and exercise all rights and remedies available to it in law or in
equity, under the Loan Documents, or otherwise.
Section XII.3. Letters of Credit. If any Event of Default shall occur
and be continuing, the Borrower shall, if requested by the Agent, immediately
deposit with and pledge to the Agent cash or cash equivalent investments in an
amount equal to outstanding Letter of Credit Liabilities.
Section XII.4. Performance by the Agent. If the Borrower shall fail to
perform any covenant or agreement contained in any
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of the Loan Documents, the Agent may, at the direction of the Required Banks,
perform or attempt to perform such covenant or agreement on behalf of the
Borrower. In such event, the Borrower shall, at the request of the Agent,
promptly pay any amount expended by the Agent or the Banks in connection with
such performance or attempted performance to the Agent, together with interest
thereon at the Default Rate from and including the date of such expenditure to
but excluding the date such expenditure is paid in full. Notwithstanding the
foregoing, it is expressly agreed that neither the Agent, the Issuing Bank nor
any Bank shall have any liability or responsibility for the performance of any
obligation of the Borrower under this Agreement or any other Loan Document.
ARTICLE XIII.
The Agent
Section XIII.1. Appointment, Powers and Immunities. In order to
expedite the various transactions contemplated by this Agreement, the Banks and
the Issuing Bank hereby irrevocably appoint and authorize Agent to act as their
Agent hereunder and under each of the other Loan Documents. The Agent consents
to such appointment and agrees to perform the duties of the Agent as specified
herein. The Banks and the Issuing Bank authorize and direct the Agent to take
such action in their name and on their behalf under the terms and provisions of
the Loan Documents and to exercise such rights and powers thereunder as are
specifically delegated to or required of the Agent for the Banks and the Issuing
Bank, together with such rights and powers as are reasonably incidental thereto.
The Agent is hereby expressly authorized to act as the Agent on behalf of
itself, the other Banks and the Issuing Bank:
(a) To receive on behalf of each of the Banks, the Issuing
Bank and the Agent any payment of principal, interest, fees or other
amounts paid pursuant to this Agreement and the Revolving Credit Notes
and to distribute to each Bank, the Issuing Bank and the Agent, or any
or some of them its share of all payments so received as provided in
this Agreement;
(b) To receive all documents and items to be furnished under
the Loan Documents;
(c) To act as nominee for and on behalf of the Banks, the
Issuing Bank and the Agent in and under the Loan Documents;
(d) To arrange for the means whereby the funds of the Banks
are to be made available to the Borrower;
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(e) To distribute to the Banks and the Issuing Bank
information, requests, notices, payments, prepayments, documents and
other items received from the Borrower, the other Obligated Parties,
and other Persons;
(f) To execute and deliver to the Borrower, the other
Obligated Parties, and other Persons, all requests, demands, approvals,
notices, and consents received from the Banks and the Issuing Bank;
(g) To the extent permitted by the Loan Documents, to exercise
on behalf of itself, each Bank and the Issuing Bank all rights and
remedies of Banks upon the occurrence of any Event of Default;
(h) To accept, execute, and deliver any security documents as
the secured party, including, without limitation all financing
statements; and
(i) To take such other actions as may be requested by Required
Banks.
Neither the Agent nor any of its Affiliates, officers, directors,
employees, attorneys, or agents shall be liable for any action taken or omitted
to be taken by any of them hereunder or otherwise in connection with this
Agreement or any of the other Loan Documents except for its or their own gross
negligence or willful misconduct. Without limiting the generality of the
preceding sentence, the Agent (i) may treat the payee of any Revolving Credit
Note as the holder thereof until the Agent receives written notice of the
assignment or transfer thereof signed by such payee and in form satisfactory to
the Agent; (ii) shall have no duties or responsibilities except those expressly
set forth in this Agreement and the other Loan Documents, and shall not by
reason of this Agreement or any other Loan Document be a trustee or fiduciary
for any Bank or the Issuing Bank; (iii) shall not be required to initiate any
litigation or collection proceedings hereunder or under any other Loan Document
except to the extent requested by the Required Banks; (iv) shall not be
responsible to the Banks or the Issuing Bank for any recitals, statements,
representations or warranties contained in this Agreement or any other Loan
Document, or any certificate or other document referred to or provided for in,
or received by any of them under, this Agreement or any other Loan Document, or
for the value, validity, effectiveness, enforceability, or sufficiency of this
Agreement or any other Loan Document or any other document referred to or
provided for herein or therein or for any failure by any Person to perform any
of its obligations hereunder or thereunder; (v) may consult with legal counsel
(including counsel for the Borrower), independent public accountants, and other
experts selected by it and shall not be liable for any action
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taken or omitted to be taken in good faith by it in accordance with the advice
of such counsel, accountants, or experts; and (vi) shall incur no liability
under or in respect of any Loan Document by acting upon any notice, consent,
certificate, or other instrument or writing believed by it to be genuine and
signed or sent by the proper party or parties. As to any matters not expressly
provided for by this Agreement, the Agent shall in all cases be fully protected
in acting, or in refraining from acting, hereunder in accordance with
instructions signed by the Required Banks, and such instructions of the Required
Banks and any action taken or failure to act pursuant thereto shall be binding
on all of the Banks; provided, however, that the Agent shall not be required to
take any action which exposes the Agent to personal liability or which is
contrary to this Agreement or any other Loan Document or applicable law.
Section XIII.2. Rights of Agent as a Bank. With respect to its
Commitment, the Advances made by it and the Revolving Credit Notes issued to it,
the Agent in its capacity as a Bank hereunder shall have the same rights and
powers hereunder as any other Bank and may exercise the same as though it were
not acting as the Agent or the Issuing Bank and the term "Bank" or "Banks"
shall, unless the context otherwise indicates, include the Agent in its
individual capacity. The Agent and its Affiliates may (without having to account
therefor to any Banks or the Issuing Bank) accept deposits from, lend money to,
act as trustee under indentures of, provide merchant banking services to, and
generally engage in any kind of business with the Borrower, any of its
Subsidiaries, any other Obligated Party, and any other Person who may do
business with or own securities of the Borrower, any Subsidiary, or any other
Obligated Party, all as if it were not acting as the Agent and without any duty
to account therefor to the Banks or the Issuing Bank.
Section XIII.3. Sharing of Payments, Etc. If any Bank shall obtain any
payment of any principal of or interest on any Advance made by it under this
Agreement or payment of any other obligation under the Loan Documents then owed
by the Borrower or any other Obligated Party to such Bank, whether voluntary,
involuntary, through the exercise of any right of setoff, banker's lien,
counterclaim or similar right, or otherwise, in excess of its pro rata share,
such Bank shall promptly purchase from the other Banks participations in the
Advances held by them hereunder in such amounts, and make such other adjustments
from time to time as shall be necessary to cause such purchasing Bank to share
the excess payment ratably with each of the other Banks in accordance with its
pro rata portion thereof. To such end, all of the Banks shall make appropriate
adjustments among themselves (by the resale of participations sold or otherwise)
if all or any portion of such excess payment is thereafter rescinded or must
otherwise be restored. The Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that any Bank so
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purchasing a participation in the Advances made by the other Banks may exercise
all rights of setoff, banker's lien, counterclaim, or similar rights with
respect to such participation as fully as if such Bank were a direct holder of
Advances to the Borrower in the amount of such participation. Nothing contained
herein shall require any Bank to exercise any such right or shall affect the
right of any Bank to exercise, and retain the benefits of exercising, any such
right with respect to any other indebtedness or obligation of the Borrower.
Section XIII.4. INDEMNIFICATION. THE BANKS HEREBY AGREE TO INDEMNIFY
THE AGENT FROM AND HOLD THE AGENT AND THE ISSUING BANK HARMLESS AGAINST (TO THE
EXTENT NOT REIMBURSED UNDER SECTIONS 14.1 AND 14.2, BUT WITHOUT LIMITING THE
OBLIGATIONS OF THE BORROWER UNDER SECTIONS 14.1 AND 14.2), RATABLY IN ACCORDANCE
WITH THEIR RESPECTIVE COMMITMENTS, ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS, EXPENSES
(INCLUDING ATTORNEYS' FEES), AND DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER
WHICH MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THE AGENT OR THE
ISSUING BANK IN ANY WAY RELATING TO OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS
OR ANY ACTION TAKEN OR OMITTED TO BE TAKEN BY THE AGENT OR THE ISSUING BANK
UNDER OR IN RESPECT OF ANY OF THE LOAN DOCUMENTS; PROVIDED, THAT NO BANK SHALL
BE LIABLE FOR ANY PORTION OF THE FOREGOING TO THE EXTENT CAUSED BY THE AGENT'S
OR THE ISSUING BANK'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT LIMITATION
OF THE FOREGOING, IT IS THE EXPRESS INTENTION OF THE BANKS THAT THE AGENT AND
THE ISSUING BANK SHALL BE INDEMNIFIED HEREUNDER FROM AND HELD HARMLESS AGAINST
ALL OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING ATTORNEYS' FEES), AND
DISBURSEMENTS OF ANY KIND OR NATURE DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF THE AGENT OR THE ISSUING
BANK. WITHOUT LIMITING ANY OTHER PROVISION OF THIS SECTION, EACH BANK AGREES TO
REIMBURSE THE AGENT AND THE ISSUING BANK PROMPTLY UPON DEMAND FOR ITS PRO RATA
SHARE (CALCULATED ON THE BASIS OF THE COMMITMENTS) OF ANY AND ALL OUT-OF-POCKET
EXPENSES (INCLUDING ATTORNEYS' FEES) INCURRED BY THE AGENT OR THE ISSUING BANK
IN CONNECTION WITH THE PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION,
MODIFICATION, AMENDMENT OR ENFORCEMENT (WHETHER THROUGH NEGOTIATIONS, LEGAL
PROCEEDINGS, OR OTHERWISE) OF, OR LEGAL ADVICE IN RESPECT OF RIGHTS OR
RESPONSIBILITIES UNDER, THE LOAN DOCUMENTS, TO THE EXTENT THAT THE AGENT OR THE
ISSUING BANK IS NOT REIMBURSED FOR SUCH EXPENSES BY THE BORROWER.
Section XIII.5. Independent Credit Decisions. Each Bank agrees that it
has independently and without reliance on the Agent, the Issuing Bank, or any
other Bank, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrower and the Obligated
Parties and decision to enter into this Agreement and that it will,
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independently and without reliance upon the Agent, the Issuing Bank, or any
other Bank, and based upon such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement or any of the other Loan
Documents. The Agent shall not be required to keep itself informed as to the
performance or observance by the Borrower or any Obligated Party of this
Agreement or any other Loan Document or to inspect the properties or books of
the Borrower or any Obligated Party. Except for notices, reports and other
documents and information expressly required to be furnished to the Banks by the
Agent hereunder or under the other Loan Documents, the Agent shall not have any
duty or responsibility to provide the Issuing Bank or any Bank with any credit
or other financial information concerning the affairs, financial condition or
business of the Borrower or any Obligated Party (or any of their Affiliates)
which may come into the possession of the Agent or any of its Affiliates.
Section XIII.6. Several Commitments. The Commitments and other
obligations of the Banks under this Agreement are several. The default by any
Bank in making an Advance in accordance with its' Commitment shall not relieve
the other Banks of their obligations under this Agreement. In the event of any
default by any Bank in making any Advance, each nondefaulting Bank shall be
obligated to make its Advance but shall not be obligated to advance the amount
which the defaulting Bank was required to advance hereunder. In no event shall
any Bank be required to advance an amount or amounts which shall in the
aggregate exceed such Bank's Commitment. No Bank shall be responsible for any
act or omission of any other Bank.
Section XIII.7. Successor Agent. Subject to the appointment and
acceptance of a successor Agent as provided below, the Agent may resign at any
time by giving notice thereof to the Banks and the Borrower and the Agent may be
removed at any time with or without cause by the Required Banks. Upon any such
resignation or removal, the Required Banks (with the consent of the Borrower,
with consent will not be unreasonably withheld) will have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Required Banks and shall have accepted such appointment within thirty (30) days
after the retiring Agent's giving of notice of resignation or the Required
Banks' removal of the retiring Agent, then the retiring Agent may, on behalf of
the Banks, appoint a successor Agent, which shall be a commercial bank organized
under the laws of the United States of America or any State thereof and having
combined capital and surplus of at least $500,000,000.00. Upon the acceptance of
its appointment as successor Agent, such successor Agent shall thereupon succeed
to and become vested with all rights, powers, privileges, immunities, and duties
of the resigning or removed Agent, and the resigning or removed Agent shall be
discharged from its duties and obligations under this Agreement and the other
Loan
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Documents. After any Agent's resignation or removal as Agent, the provisions of
this Article XIII shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was the Agent.
ARTICLE XIV.
Miscellaneous
Section XIV.1. Expenses. The Borrower hereby agrees to pay on demand
(a) all reasonable costs and expenses of the Agent in connection with the
preparation, negotiation, execution, and delivery of this Agreement and the
other Loan Documents and any and all amendments, modifications, renewals,
extensions, and supplements thereof and thereto, including, without limitation,
the reasonable fees and expenses of legal counsel for the Agent, the Issuing
Bank and/or the Banks, (b) all reasonable costs and expenses of the Agent, the
Issuing Bank and/or the Banks in connection with any Default and the enforcement
of this Agreement or any other Loan Document, including, without limitation, the
reasonable fees and expenses of legal counsel for the Agent, the Issuing Bank
and/or the Banks, (c) all transfer, stamp, documentary, or other similar taxes,
assessments, or charges levied by any Governmental Authority in respect of this
Agreement or any of the other Loan Documents, (d) all costs, expenses,
assessments, and other charges incurred in connection with any filing,
registration, recording, or perfection of any security interest or Lien
contemplated by this Agreement or any other Loan Document, and (e) all other
reasonable costs and expenses incurred by the Agent, the Issuing Bank and/or the
Banks in connection with this Agreement or any other Loan Document, including,
without limitation, all costs, expenses, and other charges incurred in
connection with obtaining audit, or appraisal in respect of the Collateral.
SECTION XIV.2. INDEMNIFICATION. THE BORROWER SHALL INDEMNIFY EACH OF
THE AGENT, THE ISSUING BANK, AND THE BANKS AND EACH AFFILIATE THEREOF AND THEIR
RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, AND AGENTS FROM, AND HOLD
EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES,
PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING ATTORNEYS'
FEES) TO WHICH ANY OF THEM MAY BECOME SUBJECT WHICH DIRECTLY OR INDIRECTLY ARISE
FROM OR RELATE TO (A) THE NEGOTIATION, EXECUTION, DELIVERY, PERFORMANCE,
ADMINISTRATION, OR ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS, (B) ANY OF THE
TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS, (C) ANY BREACH BY THE BORROWER
OF ANY REPRESENTATION, WARRANTY, COVENANT, OR OTHER AGREEMENT CONTAINED IN ANY
OF THE LOAN DOCUMENTS, (D) THE PRESENCE, RELEASE, THREATENED RELEASE, DISPOSAL,
REMOVAL, OR CLEANUP OF ANY HAZARDOUS MATERIAL LOCATED ON, ABOUT, WITHIN, OR
AFFECTING ANY OF THE PROPERTIES OR ASSETS OF THE BORROWER OR ANY
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SUBSIDIARY, OR (E) ANY INVESTIGATION, LITIGATION, OR OTHER PROCEEDING,
INCLUDING, WITHOUT LIMITATION, ANY THREATENED INVESTIGATION, LITIGATION, OR
OTHER PROCEEDING, RELATING TO ANY OF THE FOREGOING. WITHOUT LIMITING ANY
PROVISION OF THIS AGREEMENT OR OF ANY OTHER LOAN DOCUMENT, IT IS THE EXPRESS
INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED UNDER THIS
SECTION SHALL BE INDEMNIFIED FROM AND HELD HARMLESS AGAINST ANY AND ALL LOSSES,
LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND
EXPENSES (INCLUDING ATTORNEYS' FEES) ARISING OUT OF OR RESULTING FROM THE SOLE
OR CONTRIBUTORY NEGLIGENCE OF SUCH PERSON, BUT NOT SUCH PERSON'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT.
Section XIV.3. Limitation of Liability. Neither the Agent, the Issuing
Bank or the Banks nor any Affiliate, officer, director, employee, attorney, or
agent of the Agent, the Issuing Bank or the Banks shall have any liability with
respect to, and the Borrower hereby waives, releases, and agrees not to sue any
of them upon, any claim for any special, indirect, incidental, or consequential
damages suffered or incurred by the Borrower in connection with, arising out of,
or in any way related to, this Agreement or any of the other Loan Documents, or
any of the transactions contemplated by this Agreement or any of the other Loan
Documents. The Borrower hereby waives, releases, and agrees not to sue the
Agent, the Issuing Bank or the Banks or any of such Person's Affiliates,
officers, directors, employees, attorneys, or agents for punitive damages in
respect of any claim in connection with, arising out of, or in any way related
to, this Agreement or any of the other Loan Documents, or any of the
transactions contemplated by this Agreement or any of the other Loan Documents.
Nothing contained in this Section shall affect the rights of the Borrower to
collect actual damages awarded to them against any of the Agents, the Issuing
Bank, the Banks or any Affiliate of any of the foregoing Persons.
Section XIV.4. No Duty. All attorneys, accountants, appraisers, and
other professional Persons and consultants retained by any of the Agent, the
Issuing Bank or the Banks shall have the right to act exclusively in the
interest of such Persons and shall have no duty of disclosure, duty of loyalty,
duty of care, or other duty or obligation of any type or nature whatsoever to
the Borrower or any of the Borrower's shareholders or any other Person.
Section XIV.5. Bank Not Fiduciary. The relationship between the
Borrower, on one hand, and the Agent, the Issuing Bank and the Banks, on the
other hand, is solely that of debtor and creditor, and no such Person has any
fiduciary or other special relationship with the Borrower, and no term or
condition of any of the Loan Documents shall be construed so as to deem the
relationship between the Borrower and such Persons to be other than that of
debtor and creditor.
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<PAGE> 92
Section XIV.6. Equitable Relief. The Borrower recognizes that in the
event the Borrower fails to pay, perform, observe, or discharge any or all of
the Obligations, any remedy at law may prove to be inadequate relief to the
Agent, the Issuing Bank and the Banks. The Borrower therefore agrees that the
Agent, the Issuing Bank and the Banks, if any of such Persons so requests, shall
be entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages.
Section XIV.7. No Waiver: Cumulative Remedies. No failure on the part
of any of the Agent, the Issuing Bank or the Banks to exercise and no delay in
exercising, and no course of dealing with respect to, any right, power, or
privilege under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power, or privilege under this
Agreement preclude any other or further exercise thereof or the exercise of any
other right, power, or privilege. The rights and remedies provided for in this
Agreement and the other Loan Documents are cumulative and not exclusive of any
rights and remedies provided by law.
Section XIV.8. Successors and Assigns. (a) This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns. The Borrower may not assign or transfer any of its
rights or obligations hereunder without the prior written consent of the Agent
and all of the Banks. Any Bank may sell participations to one or more banks or
other institutions in or to all or a portion of its rights and obligations under
this Agreement and the other Loan Documents (including, without limitation, all
or a portion of its Revolving Credit Commitments and the Advances owing to it);
provided, however, that (i) such Bank's obligations under this Agreement and the
other Loan Documents (including, without limitation, its Revolving Credit
Commitments) shall remain unchanged, (ii) such Bank shall remain solely
responsible to the Borrower for the performance of such obligations, (iii) such
Bank shall remain the holder of its Revolving Credit Notes for all purposes of
this Agreement, (iv) the Borrower shall continue to deal solely and directly
with such Bank in connection with such Bank's rights and obligations under this
Agreement and the other Loan Documents, and (v) such Bank shall not sell a
participation that conveys to the participant the right to vote or give or
withhold consents under this Agreement or any other Loan Document.
(b) The Borrower and each of the Banks agree that any Bank (the
"Assigning Bank") may, with the Agent's consent and unless an Event of Default
has occurred, the Borrower's consent, which consent of the Borrower shall not be
unreasonably withheld or delayed, at any time assign to one or more Eligible
Assignees all, or a proportionate part of all, of its rights and obligations
under this Agreement and the other Loan Documents (including,
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<PAGE> 93
without limitation, its Revolving Credit Commitments and Advances) (each an
"Assignee"); provided, however, that (i) each such assignment shall be of a
consistent, and not a varying, percentage of all of the Assigning Bank's
Commitments, rights and obligations under this Agreement and the other Loan
Documents, (ii) except in the case of an assignment of all of a Bank's rights
and obligations under this Agreement and the other Loan Documents, the amount of
the Revolving Credit Commitments of the Assigning Bank being assigned pursuant
to each assignment (determined as of the date of the Assignment and Acceptance
with respect to such assignment) shall in no event be less than $5,000,000.00,
and (iii) the parties to each such assignment shall execute and deliver to the
Agent for its acceptance and recording in the Register (as defined below), an
Assignment and Acceptance, together with the Revolving Credit Notes subject to
such assignment, and a processing and recordation fee of $3,500.00 to be paid by
the Assignee. Upon such execution, delivery, acceptance, and recording, from and
after the effective date specified in each Assignment and Acceptance, which
effective date shall be at least five (5) Business Days after the execution
thereof, or, if so specified in such Assignment and Acceptance, the date of
acceptance thereof by the Agent, (x) the assignee thereunder shall be a party
hereto as a "Bank" and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment and Acceptance, have the rights
and obligations of a Bank hereunder and under the Loan Documents and (y) the
Bank that is an assignor thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under
this Agreement and the other Loan Documents (and, in the case of an Assignment
and Acceptance covering all or the remaining portion of a Bank's rights and
obligations under the Loan Documents, such Bank shall cease to be a party
thereto).
(c) By executing and delivering an Assignment and Acceptance, the Bank
that is an assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such Assigning Bank makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties, or representations made in or in connection with the
Loan Documents or the execution, legality, validity, and enforceability,
genuineness, sufficiency, or value of the Loan Documents or any other instrument
or document furnished pursuant thereto; (ii) such Assigning Bank makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or any Obligated Party or the performance or
observance by the Borrower or any Obligated Party of its obligations under the
Loan Documents; (iii) such assignee confirms that it has received a copy of the
other Loan Documents, together with copies of the
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<PAGE> 94
current financial statements dated a date acceptable to such assignee and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance; (iv)
such assignee will, independently and without reliance upon the Agent or such
assignor and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement and the other Loan Documents; (v) such
assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints
and authorizes the Agent to take such action as agent on its behalf and exercise
such powers under the Loan Documents as are delegated to the Agent by the terms
thereof, together with such powers as are reasonably incidental thereto; and
(vii) such assignee agrees that it will perform in accordance with their terms
all of the obligations which by the terms of the Loan Documents are required to
be performed by it as a Bank.
(d) The Agent shall maintain at its Principal Office a copy of each
Assignment and Acceptance delivered to and accepted by it and a register for the
recordation of the names and addresses of the Banks and the Revolving Credit
Commitments of, and principal amount of the Advances owing to, each Bank from
time to time (the "Register"). The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and the Borrower, the
Agent, the Issuing Bank and the Banks may treat each Person whose name is
recorded in the Register as a Bank hereunder for all purposes under the Loan
Documents. The Register shall be available for inspection by the Borrower, the
Issuing Bank or any Bank at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
Assigning Bank and assignee representing that it is an Eligible Assignee,
together with any Revolving Credit Note subject to such assignment, the Agent
shall, if such Assignment and Acceptance has been completed and is in the form
satisfactory to the Agent in its sole discretion, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register, and
(iii) give prompt written notice thereof to the Borrower. Within five (5)
Business Days after its receipt of such notice, the Borrower, at its expense,
shall execute and deliver to the Agent in exchange for the surrendered the
Revolving Credit Notes, new Revolving Credit Notes to the order of such Eligible
Assignee in an amount equal to the Revolving Credit Commitments assumed by it
pursuant to such Assignment and Acceptance and, if the Assigning Bank has
retained a portion of its Revolving Credit Commitments, new Revolving Credit
Notes to the order of the Assigning Bank in an amount equal to the Revolving
Credit Commitments retained by it hereunder (each such promissory note shall
constitute a "Revolving Credit Note" for purposes of the Loan Documents). Such
new Revolving Credit Notes shall be in an
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<PAGE> 95
aggregate principal amount of the surrendered Revolving Credit Notes, shall be
dated the last interest payment date prior to the effective date of such
Assignment and Acceptance, and shall otherwise be in substantially the form of
the appropriate Revolving Credit Notes initially issued pursuant hereto with
appropriate changes.
(f) Any Bank may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section, disclose to the
assignee or participant or proposed assignee or participant, any information
relating to the Borrower or its Subsidiaries furnished to such Bank by or on
behalf of the Borrower or its Subsidiaries.
Section XIV.9. Survival. All representations and warranties made in
this Agreement or any other Loan Document or in any document, statement, or
certificate furnished in connection with this Agreement shall survive the
execution and delivery of this Agreement and the other Loan Documents, and no
investigation by any of the Agent, the Issuing Bank or the Banks or any closing
shall affect the representations and warranties or the right of any such Person
to rely upon them. Without prejudice to the survival of any other obligation of
the Borrower hereunder, the obligations of the Borrower under Article V and
Sections 14.1 and 14.2 shall survive repayment of the Revolving Credit Notes and
termination of the Commitments.
SECTION XIV.10. ENTIRE AGREEMENT; AMENDMENTS. THIS AGREEMENT, THE
REVOLVING CREDIT NOTES, AND THE OTHER LOAN DOCUMENTS REFERRED TO HEREIN EMBODY
THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL
PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER
WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE
CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS
AMONG THE PARTIES HERETO. THE PROVISIONS OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS TO WHICH ANY OF THE BORROWER IS A PARTY MAY BE AMENDED OR WAIVED ONLY
BY AN INSTRUMENT IN WRITING SIGNED BY THE PARTIES HERETO. NO AMENDMENT,
MODIFICATION OR WAIVER OF, OR CONSENT WITH RESPECT TO, ANY PROVISION OF THIS
AGREEMENT OR THE NOTES SHALL IN ANY EVENT BE EFFECTIVE UNLESS THE SAME SHALL BE
IN WRITING AND SIGNED AND DELIVERED BY BANKS HAVING AN AGGREGATE PERCENTAGE OF
NOT LESS THAN THE AGGREGATE PERCENTAGE EXPRESSLY DESIGNATED HEREIN WITH RESPECT
THERETO OR, IN THE ABSENCE OF SUCH DESIGNATION AS TO ANY PROVISION OF THIS
AGREEMENT OR THE NOTES, BY THE REQUIRED BANKS, AND THEN ANY SUCH AMENDMENT,
MODIFICATION, WAIVER OR CONSENT SHALL BE EFFECTIVE ONLY IN THE SPECIFIC INSTANCE
AND FOR THE SPECIFIC PURPOSE FOR WHICH GIVEN. NO AMENDMENT, MODIFICATION, WAIVER
OR CONSENT SHALL CHANGE THE PERCENTAGE OF ANY BANK WITHOUT THE CONSENT OF SUCH
BANK. NO AMENDMENT, MODIFICATION, WAIVER OR CONSENT SHALL (a) EXTEND OR INCREASE
THE AMOUNT OF THE
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<PAGE> 96
COMMITMENTS, (b) EXTEND THE DATE FOR PAYMENT OF ANY PRINCIPAL OF OR INTEREST ON
THE ADVANCES OR ANY FEES OR OTHER AMOUNTS PAYABLE HEREUNDER, (c) REDUCE THE
PRINCIPAL AMOUNT OF ANY ADVANCES, THE RATE OF INTEREST THEREON OR ANY FEES OR
OTHER AMOUNTS PAYABLE HEREUNDER, (d) RELEASE A GUARANTY AGREEMENT (OTHER THAN
WITH RESPECT TO A GUARANTOR WHICH CEASES TO BE A MATERIAL SUBSIDIARY AS A RESULT
OF A TRANSACTION PERMITTED HEREUNDER) OR ALL OR SUBSTANTIALLY ALL OF THE
COLLATERAL OR (e) REDUCE THE AGGREGATE PERCENTAGE REQUIRED TO EFFECT AN
AMENDMENT, MODIFICATION, WAIVER OR CONSENT WITHOUT, IN EACH CASE, THE CONSENT OF
ALL BANKS. NO PROVISIONS OF ARTICLE XIII OR OTHER PROVISION OF THIS AGREEMENT
AFFECTING THE AGENT IN ITS CAPACITY AS SUCH SHALL BE AMENDED, MODIFIED OR WAIVED
WITHOUT THE CONSENT OF THE AGENT. NO PROVISION OF THIS AGREEMENT RELATING TO THE
RIGHTS OR DUTIES OF AN ISSUING BANK IN ITS CAPACITY AS SUCH SHALL BE AMENDED,
MODIFIED OR WAIVED WITHOUT THE CONSENT OF SUCH ISSUING BANK.
Section XIV.11. Maximum Interest Rate. No provision of this Agreement
or any other Loan Document shall require the payment or the collection of
interest in excess of the maximum amount permitted by applicable law. If any
excess of interest in such respect is hereby provided for, or shall be
adjudicated to be so provided, in any Loan Document or otherwise in connection
with this loan transaction, the provisions of this Section shall govern and
prevail and neither the Borrower nor the sureties, guarantors, successors, or
assigns of the Borrower shall be obligated to pay the excess amount of such
interest or any other excess sum paid for the use, forbearance, or detention of
sums loaned pursuant hereto. In the event any of the Agent, the Issuing Bank or
the Banks ever receives, collects, or applies as interest any such sum, such
amount which would be in excess of the maximum amount permitted by applicable
law shall be applied as a payment and reduction of the principal of the
indebtedness evidenced by the Revolving Credit Notes; and, if the principal of
the Revolving Credit Notes has been paid in full, any remaining excess shall
forthwith be paid to the Borrower. In determining whether or not the interest
paid or payable exceeds the Maximum Rate, the Borrower and the Agent, the
Issuing Bank and the Banks shall, to the extent permitted by applicable law, (a)
characterize any non-principal payment as an expense, fee, or premium rather
than as interest, (b) exclude voluntary prepayments and the effects thereof, and
(c) amortize, prorate, allocate, and spread in equal or unequal parts the total
amount of interest throughout the entire contemplated term of the indebtedness
evidenced by the Revolving Credit Notes so that interest for the entire term
does not exceed the Maximum Rate.
Section XIV.12. Notices. All notices and other communications provided
for in this Agreement and the other Loan Documents to which the Borrower is a
party shall be in writing and may be telecopied (faxed), mailed by certified
mail return receipt requested, or delivered to the intended recipient at the
"Address
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for Notices" specified below its name on the signature pages hereof; or, as to
any party at such other address as shall be designated by such party in a notice
to the other party given in accordance with this Section. Except as otherwise
provided in this Agreement, all such communications shall be deemed to have been
duly given when transmitted by telecopy, subject to telephone confirmation of
receipt, or when personally delivered or, in the case of a mailed notice, when
duly deposited in the mails, in each case given or addressed as aforesaid;
provided, however, notices to the Agent pursuant to Articles II, III and IV
shall not be effective until received by the Agent.
SECTION XIV.13. GOVERNING LAW; VENUE; SERVICE OF PROCESS. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS
AGREEMENT HAS BEEN ENTERED INTO IN HARRIS COUNTY, TEXAS, AND IT SHALL BE
PERFORMABLE FOR ALL PURPOSES IN HARRIS COUNTY, TEXAS. SUBJECT TO SECTION 14.20,
ANY ACTION OR PROCEEDING AGAINST THE BORROWER UNDER OR IN CONNECTION WITH ANY OF
THE LOAN DOCUMENTS MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT IN HARRIS
COUNTY, TEXAS. THE BORROWER HEREBY IRREVOCABLY (A) SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF SUCH COURTS, AND (B) WAIVES ANY OBJECTION IT MAY NOW OR
HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT OR THAT ANY SUCH COURT IS AN INCONVENIENT FORUM. THE BORROWER AGREES
THAT SERVICE OF PROCESS UPON IT MAY BE MADE BY CERTIFIED OR REGISTERED MAIL,
RETURN RECEIPT REQUESTED, AT ITS ADDRESS SPECIFIED OR DETERMINED IN ACCORDANCE
WITH THE PROVISIONS OF SECTION 14.12. NOTHING HEREIN OR IN ANY OF THE OTHER LOAN
DOCUMENTS SHALL AFFECT THE RIGHT OF THE AGENT, THE ISSUING BANK OR THE BANKS TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR, SUBJECT TO SECTION 14.20,
SHALL LIMIT THE RIGHT OF SUCH PERSONS TO BRING ANY ACTION OR PROCEEDING AGAINST
THE BORROWER OR WITH RESPECT TO ANY OF ITS PROPERTY IN COURTS IN OTHER
JURISDICTIONS. SUBJECT TO SECTION 14.20, ANY ACTION OR PROCEEDING BY THE
BORROWER AGAINST ANY OF THE AGENT, THE ISSUING BANK OR THE BANKS SHALL BE
BROUGHT ONLY IN A COURT LOCATED IN HARRIS COUNTY, TEXAS.
Section XIV.14. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section XIV.15. Severability. Any provision of this Agreement held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Agreement and the effect thereof shall be
confined to the provision held to be invalid or illegal.
Section XIV.16. Headings. The headings, captions, and arrangements used
in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.
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Section XIV.17. Non-Application of Chapter 15 of Texas Credit Code. The
provisions of Chapter 15 of the Texas Credit Code (Vernon's Texas Civil
Statutes, Article 5069-15) are specifically declared by the parties hereto not
to be applicable to this Agreement or any of the other Loan Documents or to the
transactions contemplated hereby.
Section XIV.18. Construction. The Borrower, the Agent, the Issuing Bank
and the Banks acknowledge that each of them has had the benefit of legal counsel
of its own choice and has been afforded an opportunity to review this Agreement
and the other Loan Documents with its legal counsel and that this Agreement and
the other Loan Documents shall be construed as if jointly drafted by the
Borrower, the Agent, the Issuing Bank and the Banks.
Section XIV.19. Independence of Covenants. All covenants hereunder
shall be given independent effect so that if a particular action or condition is
not permitted by any of such covenants, the fact that it would be permitted by
an exception to, or be otherwise within the limitations of, another covenant
shall not avoid the occurrence of a Default if such action is taken or such
condition exists.
Section XIV.20. Arbitration. The Borrower, the Agent, the Issuing Bank
and the Banks (the "Parties") agree that upon the written demand of any Party,
whether made before or after the institution of any legal proceedings, but prior
to the rendering of any judgment in that proceeding, all disputes, claims and
controversies between them, whether individual, joint, or class in nature,
arising from this Agreement or any other Loan Document or otherwise, including
without limitation contract disputes and tort claims, shall be resolved by
binding arbitration pursuant to the Commercial Rules of the American Arbitration
Association ("AAA"). Any arbitration proceeding held pursuant to this
arbitration provision shall be conducted in the city nearest the Borrower's
address having an AAA regional office, or at any other place selected by mutual
agreement of the Parties. Judgment upon any award rendered by any arbitrator may
be entered in any court having jurisdiction. The statute of limitations,
estoppel, waiver, laches and similar doctrines which would otherwise be
applicable in an action brought by a Party shall be applicable in any
arbitration proceeding, and the commencement of an arbitration proceeding shall
be deemed the commencement of any action for these purposes. The Federal
Arbitration Act (Title 9 of the United States Code) shall apply to the
construction, interpretation, and enforcement of this arbitration provision.
Section XIV.21. Waiver of Trial By Jury. To the fullest extent
permitted, by applicable law, the Borrower hereby voluntarily, knowingly,
irrevocably and unconditionally waives any right to have a jury participate in
resolving any dispute (whether
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based upon contract, tort or otherwise) between or among the Borrower and any
other Party to this Agreement arising out of or in any way related to this
Agreement, any other Loan Documents, or any relationship between any other Party
to this Agreement and the Borrower. This provision is a material inducement to
the Banks to provide the financing described in this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BORROWER:
VERITAS DGC INC.,
a Delaware corporation
By:
---------------------------------------------
Anthony Tripodo
Executive Vice President and
Chief Financial Officer
Address for Notices:
3701 Kirby Drive, Suite 112
Houston, Texas 77098
Fax No.: 713-512-8701
Telephone No.: 713-512-8300
Attention: Chief Financial Officer
AGENT:
BANK ONE, TEXAS, N.A.
By:
---------------------------------------------
Philip C. Lauinger, III
Vice President
Address for Notices:
910 Travis
Houston, Texas 77002
Fax No.: 713-751-6199
Telephone No.: 713-751-6921
Attention: Philip C. Lauinger, III
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ISSUING BANK:
BANK ONE, TEXAS, N.A.
By:
---------------------------------------------
Philip C. Lauinger, III
Vice President
Address for Notices:
910 Travis
Houston, Texas 77002
Fax No.: 713-751-6199
Telephone No.: 713-751-6921
Attention: Philip C. Lauinger, III
BANKS:
BANK ONE, TEXAS, N.A.
By:
---------------------------------------------
Philip C. Lauinger, III
Vice President
Address for Notices:
910 Travis
Houston, Texas 77002
Fax No.: 713-751-6199
Telephone No.: 713-751-6921
Attention: Philip C. Lauinger, III
Applicable Lending Office:
910 Travis
Houston, Texas 77002
Fax No.: 713-751-6199
Telephone No.: 713-751-6921
Attention: Philip C. Lauinger, III
Revolving Credit Commitment-A:
$24,000,000.00
Revolving Credit Commitment-B:
$6,000,000.00
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COMERICA BANK
By:
---------------------------------------------
Mark Grover
Vice President
Address for Notices:
4100 Spring Valley
Dallas, Texas 75244
Fax No.: 972-361-2550
Telephone No.: 972-361-2652
Attention: Mark Grover
Applicable Lending Office:
4100 Spring Valley
Dallas, Texas 75244
Fax No.: 972-361-2550
Telephone No.: 972-361-2652
Attention: Mark Grover
Revolving Credit Commitment-A:
$8,000,000.00
Revolving Credit Commitment-B:
$2,000,000.00
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BANQUE NATIONALE DE PARIS
By:
---------------------------------------------
Warren Ross
Vice President
Address for Notices:
333 Clay Street, Suite 3400
Houston, Texas 77002
Fax No.: 713-659-1414
Telephone No.: 713-951-1224
Attention: Warren Ross
Applicable Lending Office:
333 Clay Street, Suite 3400
Houston, Texas 77002
Fax No.: 713-659-1414
Telephone No.: 713-951-1224
Attention: Warren Ross
Revolving Credit Commitment-A:
$8,000,000.00
Revolving Credit Commitment-B:
$2,000,000.00
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SCHEDULE 1.1.A
Pricing Schedule
The Prime Rate Margin, the LIBOR Margin, the rate per annum applicable
for non-use fees and the rate per annum applicable for letter of credit fees,
respectively, shall be determined in accordance with the table below and the
other provisions of this Schedule 1.1.A.
PRIOR TO THE SUBORDINATED DEBT INCURRENCE DATE:
<TABLE>
<CAPTION>
==========================================================================================================================
LEVEL I LEVEL II LEVEL III LEVEL IV
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Rate for Non-Use
Fee 0.200% 0.250% 0.375% 0.375%
- --------------------------------------------------------------------------------------------------------------------------
LIBOR Margin 0.625% 0.875% 1.125% 1.375%
- --------------------------------------------------------------------------------------------------------------------------
Prime Rate Margin 0.000% 0.000% 0.000% 0.000%
- --------------------------------------------------------------------------------------------------------------------------
Rate for Letters
of Credit 0.625% 0.875% 1.125% 1.375%
==========================================================================================================================
</TABLE>
Level I applies when the Funded Debt to EBITDA Ratio is less than 1.00
to 1.00.
Level II applies when the Funded Debt to EBITDA Ratio is equal to or
greater than 1.00 to 1.00 but less than 1.25 to 1.00.
Level III applies when the Funded Debt to EBITDA Ratio is equal to or
greater than 1.25 to 1.00 but less than 1.50 to 1.00.
Level IV applies when the Funded Debt to EBITDA Ratio is equal to or
greater than 1.50 to 1.00.
The applicable Level shall be adjusted, to the extent applicable,
effective as of the date of receipt by the Agent of the financial statements
described in Sections 9.1(a) and 9.1(b), based on the Funded Debt to EBITDA
Ratio as of the last day of the Fiscal Quarter or Fiscal Year covered by such
financial statements; provided that if the Borrower fails to deliver the
financial statements required by Section 9.1(a) or 9.1(b), as applicable, and
the related Compliance Certificate required by Section 9.1(c) by the date when
due, effective on such date, Level IV shall apply until such financial
statements are delivered. Notwithstanding the foregoing, the applicable Level
shall be Level III at all times prior to the earlier of the receipt of the
financial statements to be delivered pursuant to Section 9.1(b) as of October
31, 1999, or the Subordinated Debt Incurrence Date, and the related Compliance
Certificate.
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ON AND AFTER THE SUBORDINATED DEBT INCURRENCE DATE:
<TABLE>
<CAPTION>
==================================================================================================================================
LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V LEVEL VI
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Rate for Non-Use Fee 0.250% 0.375% 0.375% 0.375% 0.500% 0.500%
- ----------------------------------------------------------------------------------------------------------------------------------
LIBOR Margin 1.000% 1.250% 1.500% 1.750% 2.000% 2.250%
- ----------------------------------------------------------------------------------------------------------------------------------
Prime Rate Margin 0.000% 0.000% 0.000% 0.250% 0.500% 0.750%
- ----------------------------------------------------------------------------------------------------------------------------------
Rate for Letters
of Credit 1.000% 1.250% 1.500% 1.750% 2.000% 2.250%
==================================================================================================================================
</TABLE>
Level I applies when the Total Funded Debt to EBITDA Ratio is less than
1.00 to 1.00.
Level II applies when the Total Funded Debt to EBITDA Ratio is equal to
or greater than 1.00 to 1.00 but less than 1.25 to 1.00.
Level III applies when the Total Funded Debt to EBITDA Ratio is equal
to or greater than 1.25 to 1.00 but less than 1.50 to 1.00.
Level IV applies when the Total Funded Debt to EBITDA Ratio is equal to
or greater than 1.50 to 1.00 but less than 1.75 to 1.00.
Level V applies when the Total Funded Debt to EBITDA Ratio is equal to
or greater than 1.75 to 1.00 but less than 2.00 to 1.00.
Level VI applies when the Total Funded Debt to EBITDA Ratio is equal to
or greater than 2.00 to 1.00.
The applicable Level shall be adjusted on the Subordinated Debt
Incurrence Date and, thereafter to the extent applicable, effective as of the
date of receipt by the Agent of the financial statements described in Sections
9.1(a) and 9.1(b), based on the Total Funded Debt to EBITDA Ratio on the
Subordinated Debt Incurrence Date and thereafter as of the last day of the
Fiscal Quarter or Fiscal Year covered by such financial statements; provided
that if the Borrower fails to deliver financial statements on the Subordinated
Debt Incurrence Date or the financial statements required by Section 9.1(a) or
9.1(b), as applicable, and the related Compliance Certificate required by
Section 9.1(c) by the date when due, effective as of such date, Level VI shall
apply until such financial statements and Compliance Certificate are delivered.
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SCHEDULE 1.1.B
List of Domestic Guarantors
Addresses for Notices
Digicon Geophysical Corp.
3701 Kirby Drive, Suite 112
Houston, Texas 77098
Fax No.: 713-512-8701
Telephone No.: 713-512-8300
Attention: Chief Financial Officer
Euroseis, Inc.
3701 Kirby Drive, Suite 112
Houston, Texas 77098
Fax No.: 713-512-8701
Telephone No.: 713-512-8300
Attention: Chief Financial Officer
Veritas DGC Asia Pacific, Ltd.
3701 Kirby Drive, Suite 112
Houston, Texas 77098
Fax No.: 713-512-8701
Telephone No.: 713-512-8300
Attention: Chief Financial Officer
Veritas DGC Land Inc.
3701 Kirby Drive, Suite 112
Houston, Texas 77098
Fax No.: 713-512-8701
Telephone No.: 713-512-8300
Attention: Chief Financial Officer
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List of Foreign Guarantors
Addresses for Notices
Veritas DGC, Ltd.
Digicon Centre, Crompton Way
Crawley, Sussex, RH10 2QR
England
Fax No.: 011-44-1293-443010
Telephone No.: 011-44-1293-443000
Attention: Martin Sambrook
Veritas Energy Services Partnership
2200, 715 - 5th Avenue SW
Calgary, Alberta T2P 5A2
Fax No.: 403-205-6040
Telephone No.: 403-205-6000
Attention: Barb Exner
Veritas DGC (Malaysia) Sdn. Bhd.
Room 107, Lanka Building
Khoo Hun Yeang Stsreet
93000 Kuching Sarawak, East Malaysia
Telephone No.: 65-258-1221
Attention: Nirmal Singh
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SCHEDULE 1.1.C
Restricted Subsidiaries
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EXHIBIT "A-1"
REVOLVING CREDIT NOTE-A
$_____________ Houston, Texas ____________
FOR VALUE RECEIVED, the undersigned, VERITAS DGC INC., a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of
__________________________ (the "Bank"), at the Agent's office located at 910
Travis, Houston, Texas 77002 or such other office as may be designated by the
Agent, for the account of the Applicable Lending Office of the Bank, in lawful
money of the United States of America and in immediately available funds, the
principal amount of _____________________ and No/100 Dollars ($_______________)
or such lesser amount as shall equal the aggregate unpaid principal amount of
the Advances-A made by the Bank to the Borrower under the Credit Agreement
referred to below, on the dates and in the principal amounts provided in the
Credit Agreement, and to pay interest on the amount of each such Advance-A, at
such office, in like money and funds, for the period commencing on the date of
such Advance-A until such Advance-A shall be paid in full, at the rates per
annum and on the dates provided in the Credit Agreement.
This Note is one of the Revolving Credit Notes-A referred to in the Credit
Agreement dated as of November 1, 1999, among the Borrower, the Bank and certain
other banks parties thereto and Bank One, Texas, N.A., as Agent for the Bank and
certain other banks (such Credit Agreement, as the same may be amended,
modified, or supplemented from time to time, is referred to herein as the
"Credit Agreement"), and contains the terms and provisions related to Advances-A
made by the Bank thereunder. The Credit Agreement, among other things, contains
provisions for acceleration of the maturity of this Note upon the happening of
certain stated events and also for prepayments of Advances-A prior to the
maturity of this Note upon the terms and conditions specified in the Credit
Agreement. Capitalized terms used in this Note have the respective meanings
assigned to them in the Credit Agreement.
Notwithstanding anything to the contrary contained herein, no provision of
this Note shall require the payment or permit the collection of interest in
excess of the Maximum Rate. If any excess of interest in such respect is herein
provided for, or shall be adjudicated to be so provided, in this Note or
otherwise in connection with this loan transaction, the provisions of this
paragraph shall govern and prevail, and neither the Borrower nor the sureties,
guarantors, successors or assigns of the Borrower shall be obligated to pay the
excess amount of such interest, or any other excess sum paid for the use,
forbearance or detention of sums loaned pursuant hereto. If for any reason
interest in excess of the Maximum Rate shall be deemed charged, required or
permitted
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by any court of competent jurisdiction, any such excess shall be applied as a
payment and reduction of the principal of indebtedness evidenced by this Note;
and, if the principal amount hereof has been paid in full, any remaining excess
shall forthwith be paid to the Borrower. In determining whether or not the
interest paid or payable exceeds the Maximum Rate, the Borrower and the Bank
shall, to the extent permitted by applicable law, (i) characterize any
non-principal payment as an expense, fee, or premium rather than as interest,
(ii) exclude voluntary prepayments and the effects thereof, and (iii) amortize,
prorate, allocate, and spread in equal or unequal parts the total amount of
interest throughout the entire contemplated term of the indebtedness evidenced
by this Note so that the interest for the entire term does not exceed the
Maximum Rate.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF TEXAS AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS
NOTE IS PERFORMABLE IN HARRIS COUNTY, TEXAS.
The Borrower and each surety, guarantor, endorser, and other party ever
liable for payment of any sums of money payable on this Note jointly and
severally waive notice, presentment, demand for payment, protest, notice of
protest and non-payment or dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, diligence in collecting, and all other
formalities of any kind, and consent to all extensions without notice for any
period or periods of time and partial payments, before or after maturity, and
any impairment of any collateral securing this Note, all without prejudice to
the holder. The holder shall similarly have the right to deal in any way, at any
time, with one or more of the foregoing parties without notice to any other
party, and to grant any such party any extensions of time for payment of any of
said indebtedness, or to release or substitute part or all of the collateral
securing this Note, or to grant any other indulgences or forbearances
whatsoever, without notice to any other party and without in any way affecting
the personal liability of any party hereunder.
The Borrower hereby authorizes the Bank to maintain in its business records
the amount of Advances-A made to the Borrower by the Bank and payments of
principal in respect of such Advances-A, which records shall, in the absence of
manifest error, be conclusive as to the outstanding principal amount of all such
Advances-A; provided, however, that the failure to maintain such records shall
not limit or otherwise affect the obligations of the Borrower under the Credit
Agreement or this Note.
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This Note is secured as provided in the Credit Agreement and is entitled to
all the benefits of the Credit Agreement and all other Loan Documents.
This Note is in partial renewal and extension of, but not in discharge or
novation of, that certain promissory note in the original principal amount of
$_____________ dated July 27, 1998, executed by the Borrower and payable to the
order of the Bank.
VERITAS DGC INC.
By: _________________________________
Anthony Tripodo
Executive Vice President and
Chief Financial Officer
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EXHIBIT "A-2"
REVOLVING CREDIT NOTE-B
$_____________ Houston, Texas ____________
FOR VALUE RECEIVED, the undersigned, VERITAS DGC INC., a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of
__________________________ (the "Bank"), at the Agent's office located at 910
Travis, Houston, Texas 77002 or such other office as may be designated by the
Agent, for the account of the Applicable Lending Office of the Bank, in lawful
money of the United States of America and in immediately available funds, the
principal amount of _____________________ and No/100 Dollars ($_______________)
or such lesser amount as shall equal the aggregate unpaid principal amount of
the Advances-B made by the Bank to the Borrower under the Credit Agreement
referred to below, on the dates and in the principal amounts provided in the
Credit Agreement, and to pay interest on the amount of each such Advance-B, at
such office, in like money and funds, for the period commencing on the date of
such Advance-B until such Advance-B shall be paid in full, at the rates per
annum and on the dates provided in the Credit Agreement.
This Note is one of the Revolving Credit Notes-B referred to in the Credit
Agreement dated as of November 1, 1999, among the Borrower, the Bank and certain
other banks parties thereto and Bank One, Texas, N.A., as Agent for the Bank and
certain other banks (such Credit Agreement, as amended and as the same may be
further amended, modified, or supplemented from time to time, is referred to
herein as the "Credit Agreement"), and contains the terms and provisions related
to Advances-B made by the Bank thereunder. The Credit Agreement, among other
things, contains provisions for acceleration of the maturity of this Note upon
the happening of certain stated events and also for prepayments of Advances-B
prior to the maturity of this Note upon the terms and conditions specified in
the Credit Agreement. Capitalized terms used in this Note have the respective
meanings assigned to them in the Credit Agreement.
Notwithstanding anything to the contrary contained herein, no provision of
this Note shall require the payment or permit the collection of interest in
excess of the Maximum Rate. If any excess of interest in such respect is herein
provided for, or shall be adjudicated to be so provided, in this Note or
otherwise in connection with this loan transaction, the provisions of this
paragraph shall govern and prevail, and neither the Borrower nor the sureties,
guarantors, successors or assigns of the Borrower shall be obligated to pay the
excess amount of such interest, or any other excess sum paid for the use,
forbearance or detention of sums loaned pursuant hereto. If for any reason
interest in excess of the Maximum Rate shall be deemed charged, required or
permitted
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by any court of competent jurisdiction, any such excess shall be applied as a
payment and reduction of the principal of indebtedness evidenced by this Note;
and, if the principal amount hereof has been paid in full, any remaining excess
shall forthwith be paid to the Borrower. In determining whether or not the
interest paid or payable exceeds the Maximum Rate, the Borrower and the Bank
shall, to the extent permitted by applicable law, (i) characterize any
non-principal payment as an expense, fee, or premium rather than as interest,
(ii) exclude voluntary prepayments and the effects thereof, and (iii) amortize,
prorate, allocate, and spread in equal or unequal parts the total amount of
interest throughout the entire contemplated term of the indebtedness evidenced
by this Note so that the interest for the entire term does not exceed the
Maximum Rate.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF TEXAS AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS
NOTE IS PERFORMABLE IN HARRIS COUNTY, TEXAS.
The Borrower and each surety, guarantor, endorser, and other party ever
liable for payment of any sums of money payable on this Note jointly and
severally waive notice, presentment, demand for payment, protest, notice of
protest and non-payment or dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, diligence in collecting, and all other
formalities of any kind, and consent to all extensions without notice for any
period or periods of time and partial payments, before or after maturity, and
any impairment of any collateral securing this Note, all without prejudice to
the holder. The holder shall similarly have the right to deal in any way, at any
time, with one or more of the foregoing parties without notice to any other
party, and to grant any such party any extensions of time for payment of any of
said indebtedness, or to release or substitute part or all of the collateral
securing this Note, or to grant any other indulgences or forbearances
whatsoever, without notice to any other party and without in any way affecting
the personal liability of any party hereunder.
The Borrower hereby authorizes the Bank to maintain in its business records
the amount of Advances-B made to the Borrower by the Bank and payments of
principal in respect of such Advances-B, which records shall, in the absence of
manifest error, be conclusive as to the outstanding principal amount of all such
Advances-B; provided, however, that the failure to maintain such records shall
not limit or otherwise affect the obligations of the Borrower under the Credit
Agreement or this Note.
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This Note is secured as provided in the Credit Agreement and is entitled to
all the benefits of the Credit Agreement and all other Loan Documents.
This Note is in partial renewal and extension of, but not in discharge or
novation of, that certain promissory note in the original principal amount of
$_____________ dated July 27, 1998, executed by the Borrower and payable to the
order of the Bank.
VERITAS DGC INC.
By: _________________________________
Anthony Tripodo
Executive Vice President and
Chief Financial Officer
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EXHIBIT "B"
[Borrower]
SECURITY AGREEMENT
This SECURITY AGREEMENT dated as of November 1, 1999 (this
"Agreement"), is by and between VERITAS DGC INC., a Delaware corporation (the
"Debtor"), and BANK ONE, TEXAS, N.A., a national banking association, as Agent
(the "Secured Party") for itself, the Banks and the Issuing Bank.
RECITALS:
A. Debtor, on the one hand and the Secured Party, the Banks and the
Issuing Bank, on the other hand, have entered into that certain Credit Agreement
dated as of November 1, 1999 (such Credit Agreement, as the same may be amended,
supplemented, modified or restated from time to time, is hereinafter referred to
as the "Credit Agreement").
B. The Secured Party, the Banks and the Issuing Bank have conditioned
their obligations under the Credit Agreement upon the execution and delivery of
this Agreement by the Debtor.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
I.
I.1 Definitions. As used in this Agreement, the following terms have
the following meanings:
"Accounts" means any "account", as such term is defined in
Section 9.106 of the UCC, now owned or hereafter acquired by the
Debtor, and, in any event, shall include, without limitation, each of
the following, whether now owned or hereafter acquired by the Debtor:
(a) all rights of the Debtor to payment for goods sold or leased or
services rendered, whether or not earned by performance, (b) all
accounts receivable of the Debtor, (c) all security pledged, assigned,
or granted to or held by the Debtor to secure any of the foregoing, (d)
all guaranties of, or indemnifications with respect to, any of the
foregoing, and (e) all rights of the Debtor as an unpaid seller of
goods or services, including, but not limited to, all rights of
stoppage in transit, replevin, reclamation, and resale.
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"Banks" collectively means each of the banks or other lending
institutions which is or may from time to time become a signatory to
the Credit Agreement and any successor thereto, and individually "Bank"
means any one of the Banks.
"Collateral" has the meaning specified in Section 2.1 of this
Agreement.
"Permitted Liens" has the meaning given to such term in the
Credit Agreement.
"Proceeds" means any "proceeds", as such term is defined in
Section 9.306 of the UCC and, in any event, shall include, but not be
limited to, (a) any and all proceeds of any insurance, indemnity,
warranty, or guaranty payable to the Debtor from time to time with
respect to any of the Collateral, (b) any and all payments (in any form
whatsoever) made or due and payable to the Debtor from time to time in
connection with any requisition, confiscation, condemnation, seizure,
or forfeiture of all or any part of the Collateral by any Governmental
Authority (or any person acting under color of Governmental Authority),
and (c) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral.
"Secured Obligations" has the meaning given to such term in
the Credit Agreement.
"UCC" means the Uniform Commercial Code as in effect in the
State of Texas or, if so required with respect to any particular
Collateral by mandatory provisions of applicable law, as in effect in
the jurisdiction in which such Collateral is located.
I.2 Terms Defined in Credit Agreement. All capitalized terms used and
not otherwise defined herein shall have their respective meanings as specified
in the Credit Agreement.
II.
Security Interest
II.1 Security Interest. As collateral security for the prompt payment
and performance in full when due of the Secured Obligations (whether at stated
maturity, by acceleration, or otherwise), the Debtor hereby grants to the
Secured Party a Lien on and security interest in all of the Debtor's right,
title, and interest in and to all Accounts and all Proceeds and products of any
Accounts, whether now owned or hereafter arising or acquired and wherever
located (collectively, the "Collateral").
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II.2 Debtor Remains Liable. Notwithstanding anything to the contrary
contained herein, (a) the Debtor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (b) the exercise by the Secured Party of any of
its rights hereunder shall not release the Debtor from any of its duties or
obligations under the contracts and agreements included in the Collateral, and
(c) the Secured Party shall not have any obligation or liability under any of
the contracts and agreements included in the Collateral by reason of this
Agreement nor shall the Secured Party be obligated to perform any of the
obligations or duties of the Debtor thereunder or to take any action to collect
or enforce any claim for payment assigned hereunder.
III.
Representations and Warranties
To induce the Secured Party to enter into this Agreement and the Credit
Agreement, the Debtor represents and warrants to the Secured Party that:
III.1 Title. The Debtor is, and with respect to Collateral acquired
after the date hereof the Debtor will be, the owner of the Collateral free and
clear of any Lien, except Permitted Liens.
III.2 Accounts. Unless the Debtor has given the Secured Party written
notice to the contrary, whenever the security interest granted hereunder
attaches to an Account which is included as Eligible Domestic/Domestic Accounts,
Eligible Domestic/Foreign Accounts or Eligible Foreign/Foreign Accounts in a
Borrowing Base Report or Advance Request Form, the Debtor shall be deemed to
have represented and warranted to the Secured Party as to each and all of such
Accounts that such Accounts satisfy the conditions set forth in the definitions
of Eligible Domestic/Domestic Accounts, Eligible Domestic/Foreign Accounts or
Eligible Foreign/Foreign Accounts, as applicable, in the Credit Agreement.
III.3 Financing Statements. No financing statement covering all or any
part of the Collateral is on file in any public office, except as may have been
filed in favor of the Secured Party pursuant to this Agreement or with respect
to any other Permitted Liens and other financing statements which have been
disclosed in writing to Secured Party prior to the date hereof. Except as
reflected in the closing documents delivered to Secured Party on or before the
date hereof, the Debtor has not within the past five years done business under
any name or trade name other than its legal name set forth at the beginning of
this Agreement.
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III.4 Principal Place of Business. The principal place of business and
chief executive office of the Debtor are located at the addresses of the Debtor
shown at the signature pages of the Credit Agreement.
IV.
Covenants
The Debtor covenants and agrees with the Secured Party that until the
Secured Obligations are paid and performed in full and all commitments of the
Secured Party to the Debtor have terminated that it will comply with the
provisions of the Credit Agreement applicable to it and in addition:
IV.1 Further Assurances. At any time and from time to time, upon the
request of the Secured Party, and at the sole expense of the Debtor, the Debtor
shall promptly execute and deliver all such further instruments, agreements, and
documents and take such further action as the Secured Party may deem necessary
or desirable to preserve and perfect its security interest in the Collateral and
carry out the provisions and purposes of this Agreement. Without limiting the
generality of the foregoing, the Debtor shall (a) execute and deliver to the
Secured Party such financing statements as the Secured Party may from time to
time require; and (b) execute and deliver to the Secured Party such other
documents, instruments, and agreements as the Secured Party may reasonably
require to perfect and maintain the validity, effectiveness, and priority of the
Loan Documents and the Liens intended to be created thereby. The Debtor
authorizes the Secured Party to file one or more financing or continuation
statements, and amendments thereto, relating to all or any part of the
Collateral without the signature of the Debtor where permitted by law. A carbon,
photographic, or other reproduction of this Agreement or of any financing
statement covering the Collateral or any part thereof shall be sufficient as a
financing statement and may be filed as a financing statement.
IV.2 Risk of Loss. The Debtor shall be responsible for any loss or
damage to the Collateral.
IV.3 Collection of Accounts. In connection with collections, after the
occurrence and during the continuance of an Event of Default, the Debtor shall
take such actions as the Secured Party may deem necessary or advisable to
enforce collection of the Accounts. In addition to the foregoing, after the
occurrence and during the continuance of an Event of Default, the Debtor agrees
that if any Proceeds of any Collateral (including payments made in respect of
Accounts) shall be received by the Debtor, the Debtor shall promptly deliver
such Proceeds to the Secured Party with any necessary endorsements. Until such
Proceeds are delivered to the Secured Party, such Proceeds shall
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be held in trust by the Debtor for the benefit of the Secured Party and shall
not be commingled with any other funds or property of the Debtor.
V.
Rights of the Secured Party
V.1 Power of Attorney. The Debtor hereby irrevocably constitutes and
appoints the Secured Party and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the name of the Debtor or in its own name, effective as
of the occurrence and during the continuance of an Event of Default, to take any
and all action and to execute any and all documents and instruments which the
Debtor is unable or unwilling to take or execute, as applicable, and which the
Secured Party at any time and from time to time deems necessary or desirable to
accomplish the purposes of this Agreement and, without limiting the generality
of the foregoing, upon the occurrence and during the continuance of an Event of
Default, the Debtor hereby gives the Secured Party the power and right on behalf
of the Debtor and in its own name to do any of the following, without the
consent of the Debtor:
(a) to demand, sue for, collect, or receive in the name of the
Debtor or in its own name, any money or property at any time payable or
receivable on account of or in exchange for any of the Collateral and,
in connection therewith, endorse checks, notes, drafts, acceptances,
money orders, documents of title, or any other instruments for the
payment of money under the Collateral or any policy of insurance;
(b) to pay or discharge taxes or Liens levied or placed on or
threatened against the Collateral;
(c) to notify post office authorities to change the address
for delivery of mail of the Debtor to an address designated by the
Secured Party and to receive, open, and dispose of mail addressed to
the Debtor;
(d) (i) to direct account debtors and any other parties liable
for any payment under any of the Collateral to make payment of any and
all monies due and to become due thereunder directly to the Secured
Party or as the Secured Party shall direct; (ii) to receive payment of
and receipt for any and all monies, claims, and other amounts due and
to become due at any time in respect of or arising out of any
Collateral; (iii) to sign and endorse any invoices, freight or express
bills, bills of lading, storage or warehouse
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receipts, drafts against debtors, assignments, proxies, stock powers,
verifications, and notices in connection with accounts and other
documents relating to the Collateral; (iv) to commence and prosecute
any suit, action, or proceeding at law or in equity in any court of
competent jurisdiction to collect the Collateral or any part thereof
and to enforce any other right in respect of any Collateral; (v) to
defend any suit, action, or proceeding brought against the Debtor with
respect to any Collateral: (vi) to settle, compromise, or adjust any
suit, action, or proceeding described above and in connection
therewith, to give such discharges or releases as the Secured Party may
deem appropriate; (vii) to exchange any of the Collateral for other
property upon any merger, consolidation, reorganization,
recapitalization, or other readjustment of the issuer thereof and, in
connection therewith, deposit any of the Collateral with any committee,
depositary, transfer agent, registrar, or other designated agency upon
such terms as the Secured Party may determine; (viii) to add or release
any guarantor, indorser, surety, or other party, to any of the
Collateral; (ix) to renew, extend, or otherwise change the terms and
conditions of any of the Collateral; (x) to make, settle, compromise,
or adjust claims under any insurance policy covering any of the
Collateral; and (xi) to sell, transfer, pledge, make any agreement with
respect to or otherwise deal with any of the Collateral as fully and
completely as though the Secured Party were the absolute owner thereof
for all purposes, and to do, at the Secured Party's option and the
Debtor's expense, at any time, or from time to time, all commercially
reasonable acts and things which the Secured Party deems necessary to
protect, preserve, or realize upon the Collateral and the Secured
Party's security interest therein.
This power of attorney is a power coupled with an interest and shall be
irrevocable until the Secured Obligations have been irrevocably paid and
performed in full and the Secured Party, the Banks and the Issuing Bank have no
Revolving Credit Commitments. The Secured Party shall be under no duty to
exercise or withhold the exercise of any of the rights, powers, privileges, and
options expressly or implicitly granted to the Secured Party in this Agreement,
and shall not be liable for any failure to do so or any delay in doing so. The
Secured Party shall not be liable for any act or omission or for any error of
judgment or any mistake of fact or law in its individual capacity or in its
capacity as attorney-in-fact except acts or omissions resulting from its gross
negligence or willful misconduct. This power of attorney is conferred on the
Secured Party solely to protect, preserve, and realize upon its security
interest in the Collateral. The Secured Party will exercise its best efforts to
notify Debtor in advance of any action to be taken by Secured Party in its
capacity, as attorney-in-fact pursuant to this Section, but in any event,
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promptly after such action is taken provided that any failure by Secured Party
to so notify Debtor shall not impose any liability upon Secured Party or affect
its rights and remedies hereunder, at law or in equity. The Secured Party shall
not be responsible for any decline in the value of the Collateral and shall not
be required to take any steps to preserve rights against prior parties or to
protect, preserve, or maintain any security interest or Lien given to secure the
Collateral.
VI.
Default
VI.1 Rights and Remedies. If an Event of Default shall have occurred
and be continuing, the Secured Party shall have the following rights and
remedies:
(a) In addition to all other rights and remedies granted to
the Secured Party in this Agreement or in any other Loan Document or by
applicable law, the Secured Party shall have all of the rights and
remedies of a secured party under the UCC (whether or not the UCC
applies to the affected Collateral). Without limiting the generality of
the foregoing, the Secured Party, may (i) without demand or notice to
the Debtor, collect, receive, or take possession of the Collateral or
any part thereof and for that purpose the Secured Party may enter upon
any premises on which the Collateral is located and remove the
Collateral therefrom or render it inoperable, and/or (ii) sell, lease,
or otherwise dispose of the Collateral, or any part thereof, in one or
more parcels at public or private sale or sales, at the Secured Party's
offices or elsewhere, for cash on credit or for future delivery, and
upon such other terms as the Secured Party may deem commercially
reasonable. The Secured Party shall have the right at any public sale
or sales, and, to the extent permitted by applicable law, at any
private sale or sales, to bid and become a purchaser of the Collateral
or any part thereof (to the extent permitted by law) free of any right
or equity of redemption on the part of the Debtor, which right or
equity of redemption is hereby expressly waived and released by the
Debtor (to the extent permitted by law). Upon the request of the
Secured Party, the Debtor shall assemble the Collateral and make it
available to the Secured Party at any place designated by the Secured
Party that is reasonably convenient to the Debtor and the Secured
Party. The Debtor agrees that the Secured Party shall not be obligated
to give more than 15 days written notice of the time and place of any
public sale or of the time after which any private sale may take place
and that such notice shall constitute reasonable notice of such
matters. The Secured Party shall not be obligated to make any sale of
Collateral
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if it shall determine not to do so, regardless of the fact that notice
of sale of Collateral may have been given. The Secured Party may,
without notice or publication, adjourn any public or private sale or
cause the same to be adjourned from time to time by announcement at the
time and place fixed for sale, and such sale may, without further
notice, be made at the time and place to which the same was so
adjourned. The Debtor shall be liable for all reasonable expenses of
retaking, holding, preparing for sale, or the like, and all reasonable
attorneys' fees, legal expenses, and all other costs and expenses
incurred by the Secured Party in connection with the collection of the
Secured Obligations and the enforcement of the Secured Party's rights
under this Agreement. The Debtor shall remain liable for any deficiency
if the Proceeds of any sale or other disposition of the Collateral are
insufficient to pay the Secured Obligations in full. The Secured Party
may apply the Collateral against the Secured Obligations in such order
and manner as the Secured Party may elect in its sole discretion. The
Debtor waives all rights of marshalling, valuation, and appraisal in
respect of the Collateral.
(b) The Secured Party may cause any or all of the Collateral
held by it to be transferred into the name of the Secured Party or the
name or names of the Secured Party's nominee or nominees.
(c) The Secured Party may collect or receive all money or
property at any time payable or receivable on account of or in exchange
for any of the Collateral, but shall be under no obligation to do so.
(d) On any sale of the Collateral, the Secured Party is hereby
authorized to comply with any limitation or restriction with which
compliance is necessary, in the view of the Secured Party's counsel, in
order to avoid any violation of applicable law or in order to obtain
any required approval of the purchaser or purchasers by any applicable
Governmental Authority.
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VII.
Miscellaneous
VII.1 No Waiver: Cumulative Remedies. No failure on the part of the
Secured Party to exercise and no delay in exercising, and no course of dealing
with respect to, any right, power, or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power, or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power, or privilege. The
rights and remedies provided for in this Agreement are cumulative and not
exclusive of any rights and remedies provided by law.
VII.2 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Debtor and the Secured Party and their respective
heirs, successors, and assigns, except that the Debtor may not assign any of its
rights or obligations under this Agreement without the prior written consent of
the Secured Party.
VII.3 ENTIRE AGREEMENT; AMENDMENT; CONTROLLING AGREEMENT. THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT AMONG
THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR
OR CONTEMPORANEOUS ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE
ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO. The provisions of this
Agreement may be amended or waived only by an instrument in writing signed by
the parties hereto. In the event any term or provision of this Agreement
expressly conflicts with any term or provision of the Credit Agreement, the
terms and provisions of the Credit Agreement shall govern and control.
VII.4 Notices. All notices and other communications provided for in
this Agreement shall be given or made in accordance with the terms of the Credit
Agreement.
VII.5 GOVERNING LAW: VENUE: SERVICE OF PROCESS. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND
THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS AGREEMENT HAS BEEN
ENTERED INTO IN HARRIS COUNTY, TEXAS, AND IT SHALL BE PERFORMABLE FOR ALL
PURPOSES IN HARRIS COUNTY, TEXAS. SUBJECT TO SECTION 7.11, ANY ACTION OR
PROCEEDING AGAINST DEBTOR UNDER OR IN CONNECTION WITH ANY OF THE LOAN DOCUMENTS
MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT IN HARRIS COUNTY, TEXAS. DEBTOR
HEREBY IRREVOCABLY (A) SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURTS,
AND (B) WAIVES ANY
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OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT OR THAT ANY SUCH COURT IS AN INCONVENIENT
FORUM. DEBTOR AGREES THAT SERVICE OF PROCESS UPON IT MAY BE MADE BY CERTIFIED OR
REGISTERED MAIL, RETURN RECEIPT REQUESTED, AT ITS ADDRESS SPECIFIED OR
DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 7.4. NOTHING HEREIN OR
IN ANY OF THE OTHER LOAN DOCUMENTS SHALL AFFECT THE RIGHT OF THE LENDER TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR, SUBJECT TO SECTION 7.11, SHALL
LIMIT THE RIGHT OF SECURED PARTY TO BRING ANY ACTION OR PROCEEDING AGAINST
DEBTOR OR WITH RESPECT TO ANY OF ITS PROPERTY IN COURTS IN OTHER JURISDICTIONS.
SUBJECT TO SECTION 7.11, ANY ACTION OR PROCEEDING BY DEBTOR AGAINST THE LENDER
SHALL BE BROUGHT ONLY IN A COURT LOCATED IN HARRIS COUNTY, TEXAS.
VII.6 Headings. The headings, captions, and arrangements used in this
Agreement are for convenience only and shall not affect the interpretation of
this Agreement.
VII.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
VII.8 Waiver of Bond. In the event the Secured Party seeks to take
possession of any or all of the Collateral by judicial process, the Debtor
hereby irrevocably waives any bonds and any surety or security relating thereto
that may be required by applicable law as an incident to such possession, and
waives any demand for possession prior to the commencement of any such suit or
action.
VII.9 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
VII.10 Termination. If all of the Secured Obligations shall have been
paid and performed in full and all Revolving Credit Commitments of the Secured
Party to the Debtor shall have expired or terminated, the Secured Party shall,
upon the written request of the Debtor, execute and deliver to the Debtor a
proper instrument or instruments acknowledging the release and termination of
the security interests created by this Agreement, and shall duly assign and
deliver to the Debtor (without recourse and without any representation or
warranty) such of the Collateral as may be in the possession of the Secured
Party and has not previously been sold or otherwise applied pursuant to this
Agreement.
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VII.11 ARBITRATION. THE PARTIES AGREE TO BE BOUND BY THE TERMS AND
CONDITIONS OF THE ARBITRATION PROVISIONS DESCRIBED IN SECTION 14.20 OF THE
CREDIT AGREEMENT, PURSUANT TO WHICH ANY AND ALL DISPUTES REGARDING THIS
AGREEMENT SHALL BE RESOLVED BY MANDATORY BINDING ARBITRATION UPON THE REQUEST OF
ANY PARTY.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first written above.
DEBTOR:
VERITAS DGC INC.
By:
---------------------------
Anthony Tripodo
Executive Vice President
and Chief Financial Officer
Address for Notices:
3701 Kirby Drive, Suite 112
Houston, Texas 77098
Telephone No.: 713-512-8300
Fax No.: 713-512-8701
Attention: Chief Financial
Officer
SECURED PARTY:
BANK ONE (TEXAS), N.A.
By:
---------------------------
Philip C. Lauinger, III
Vice President
Address for Notices:
910 Travis
Houston, Texas 77002
Fax No.: 713-751-6199
Telephone No.: 713-751-3644
Attention: Philip C. Lauinger, III
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EXHIBIT "C-1"
[Domestic]
FORM OF SECURITY AGREEMENT
This SECURITY AGREEMENT dated as of November 1, 1999 (this
"Agreement"), is by and between ___________________, a ____________ corporation
(the "Debtor"), and BANK ONE, TEXAS, N.A., a national banking association, as
Agent (the "Secured Party") for itself, the Banks and the Issuing Bank.
R E C I T A L S:
A. Veritas DGC Inc., a Delaware corporation (the "Borrower"), on the
one hand and the Secured Party, the Banks and the Issuing Bank, on the other
hand, have entered into that certain Credit Agreement dated as of November 1,
1999 (such Credit Agreement, as the same may be amended, supplemented, modified
or restated from time to time, is hereinafter referred to as the "Credit
Agreement").
B. The Debtor has executed that certain General Continuing Guaranty
dated as of November 1, 1999 (the "Guaranty") pursuant to which, and subject to
the terms and conditions thereof and the terms and conditions of the Credit
Agreement, the Debtor has guaranteed payment of certain of the obligations of
the Borrower under the Credit Agreement.
C. The Secured Party, the Banks and the Issuing Bank have conditioned
their obligations under the Credit Agreement upon the execution and delivery of
this Agreement by the Debtor.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
I.
I.1 Definitions. As used in this Agreement, the following terms have
the following meanings:
"Accounts" means any "account", as such term is defined in
Section 9.106 of the UCC, now owned or hereafter acquired by the
Debtor, and, in any event, shall include, without limitation, each of
the following, whether now owned or hereafter acquired by the Debtor:
(a) all rights of the Debtor to payment for goods sold or leased or
services rendered, whether or not earned by performance, (b) all
accounts receivable of the Debtor, (c) all security pledged,
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assigned, or granted to or held by the Debtor to secure any of the
foregoing, (d) all guaranties of, or indemnifications with respect to,
any of the foregoing, and (e) all rights of the Debtor as an unpaid
seller of goods or services, including, but not limited to, all rights
of stoppage in transit, replevin, reclamation, and resale.
"Banks" collectively means each of the banks or other lending
institutions which is or may from time to time become a signatory to
the Credit Agreement and any successor thereto, and individually "Bank"
means any one of the Banks.
"Collateral" has the meaning specified in Section 2.1 of this
Agreement.
"Permitted Liens" has the meaning given to such term in the
Credit Agreement.
"Proceeds" means any "proceeds", as such term is defined in
Section 9.306 of the UCC and, in any event, shall include, but not be
limited to, (a) any and all proceeds of any insurance, indemnity,
warranty, or guaranty payable to the Debtor from time to time with
respect to any of the Collateral, (b) any and all payments (in any form
whatsoever) made or due and payable to the Debtor from time to time in
connection with any requisition, confiscation, condemnation, seizure,
or forfeiture of all or any part of the Collateral by any Governmental
Authority (or any person acting under color of Governmental Authority),
and (c) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral.
"Secured Obligations" has the meaning given to such term in
the Credit Agreement.
"UCC" means the Uniform Commercial Code as in effect in the
State of Texas or, if so required with respect to any particular
Collateral by mandatory provisions of applicable law, as in effect in
the jurisdiction in which such Collateral is located.
I.2 Terms Defined in Credit Agreement. All capitalized terms used and
not otherwise defined herein shall have their respective meanings as specified
in the Credit Agreement.
II.
Security Interest
II.1 Security Interest. As collateral security for the prompt payment
and performance in full when due of (a) the Secured
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Obligations (whether at stated maturity, by acceleration, or otherwise) and (b)
the obligations of the Debtor under the Guaranty to the extent such obligations
may be secured under the provisions of the Credit Agreement and the Indenture
(as such term is defined in the Credit Agreement), the Debtor hereby grants to
the Secured Party a Lien on and security interest in all of the Debtor's right,
title, and interest in and to all Accounts and all Proceeds and products of any
Accounts, whether now owned or hereafter arising or acquired and wherever
located (collectively, the "Collateral").
II.2 Debtor Remains Liable. Notwithstanding anything to the contrary
contained herein, (a) the Debtor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (b) the exercise by the Secured Party of any of
its rights hereunder shall not release the Debtor from any of its duties or
obligations under the contracts and agreements included in the Collateral, and
(c) the Secured Party shall not have any obligation or liability under any of
the contracts and agreements included in the Collateral by reason of this
Agreement nor shall the Secured Party be obligated to perform any of the
obligations or duties of the Debtor thereunder or to take any action to collect
or enforce any claim for payment assigned hereunder.
III.
Representations and Warranties
To induce the Secured Party to enter into this Agreement and the Credit
Agreement, the Debtor represents and warrants to the Secured Party that:
III.1 Title. The Debtor is, and with respect to Collateral acquired
after the date hereof the Debtor will be, the owner of the Collateral free and
clear of any Lien, except Permitted Liens.
III.2 Accounts. Unless the Debtor has given the Secured Party written
notice to the contrary, whenever the security interest granted hereunder
attaches to an Account which is included as Eligible Domestic/Domestic Accounts,
Eligible Domestic/Foreign Accounts or Eligible Foreign/Foreign Accounts in a
Borrowing Base Report or Advance Request Form, the Debtor shall be deemed to
have represented and warranted to the Secured Party as to each and all of such
Accounts that such Accounts satisfy the conditions set forth in the definitions
of Eligible Domestic/Domestic Accounts, Eligible Domestic/Foreign Accounts or
Eligible Foreign/Foreign Accounts, as applicable, in the Credit Agreement.
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III.3 Financing Statements. No financing statement covering all or any
part of the Collateral is on file in any public office, except as may have been
filed in favor of the Secured Party pursuant to this Agreement or with respect
to any other Permitted Liens and other financing statements which have been
disclosed in writing to Secured Party prior to the date hereof. Except as
reflected in the closing documents delivered to Secured Party on or before the
date hereof, the Debtor has not within the past five years done business under
any name or trade name other than its legal name set forth at the beginning of
this Agreement.
III.4 Principal Place of Business. The principal place of business and
chief executive office of the Debtor are located at the addresses of the Debtor
shown at the signature pages of the Credit Agreement.
IV.
Covenants
The Debtor covenants and agrees with the Secured Party that until the
Secured Obligations are paid and performed in full, Debtor has no further
secured obligation under the Guaranty, and all commitments of the Secured Party
to the Debtor have terminated that it will comply with the provisions of the
Credit Agreement applicable to it and in addition:
IV.1 Further Assurances. At any time and from time to time, upon the
request of the Secured Party, and at the sole expense of the Debtor, the Debtor
shall promptly execute and deliver all such further instruments, agreements, and
documents and take such further action as the Secured Party may deem necessary
or desirable to preserve and perfect its security interest in the Collateral and
carry out the provisions and purposes of this Agreement. Without limiting the
generality of the foregoing, the Debtor shall (a) execute and deliver to the
Secured Party such financing statements as the Secured Party may from time to
time require; and (b) execute and deliver to the Secured Party such other
documents, instruments, and agreements as the Secured Party may reasonably
require to perfect and maintain the validity, effectiveness, and priority of the
Loan Documents and the Liens intended to be created thereby. The Debtor
authorizes the Secured Party to file one or more financing or continuation
statements, and amendments thereto, relating to all or any part of the
Collateral without the signature of the Debtor where permitted by law. A carbon,
photographic, or other reproduction of this Agreement or of any financing
statement covering the Collateral or any part thereof shall be sufficient as a
financing statement and may be filed as a financing statement.
IV.2 Risk of Loss. The Debtor shall be responsible for any loss or
damage to the Collateral.
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IV.3 Collection of Accounts. In connection with collections, after the
occurrence and during the continuance of an Event of Default, the Debtor shall
take such actions as the Secured Party may deem necessary or advisable to
enforce collection of the Accounts. In addition to the foregoing, after the
occurrence and during the continuance of an Event of Default, the Debtor agrees
that if any Proceeds of any Collateral (including payments made in respect of
Accounts) shall be received by the Debtor, the Debtor shall promptly deliver
such Proceeds to the Secured Party with any necessary endorsements. Until such
Proceeds are delivered to the Secured Party, such Proceeds shall be held in
trust by the Debtor for the benefit of the Secured Party and shall not be
commingled with any other funds or property of the Debtor.
V.
Rights of the Secured Party
V.1 Power of Attorney. The Debtor hereby irrevocably constitutes and
appoints the Secured Party and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the name of the Debtor or in its own name, effective as
of the occurrence and during the continuance of an Event of Default, to take any
and all action and to execute any and all documents and instruments which the
Debtor is unable or unwilling to take or execute, as applicable, and which the
Secured Party at any time and from time to time deems necessary or desirable to
accomplish the purposes of this Agreement and, without limiting the generality
of the foregoing, upon the occurrence and during the continuance of an Event of
Default, the Debtor hereby gives the Secured Party the power and right on behalf
of the Debtor and in its own name to do any of the following, without the
consent of the Debtor:
(a) to demand, sue for, collect, or receive in the name of the
Debtor or in its own name, any money or property at any time payable or
receivable on account of or in exchange for any of the Collateral and,
in connection therewith, endorse checks, notes, drafts, acceptances,
money orders, documents of title, or any other instruments for the
payment of money under the Collateral or any policy of insurance;
(b) to pay or discharge taxes or Liens levied or placed on or
threatened against the Collateral;
(c) to notify post office authorities to change the
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address for delivery of mail of the Debtor to an address designated by
the Secured Party and to receive, open, and dispose of mail addressed
to the Debtor;
(d) (i) to direct account debtors and any other parties liable
for any payment under any of the Collateral to make payment of any and
all monies due and to become due thereunder directly to the Secured
Party or as the Secured Party shall direct; (ii) to receive payment of
and receipt for any and all monies, claims, and other amounts due and
to become due at any time in respect of or arising out of any
Collateral; (iii) to sign and endorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, drafts against
debtors, assignments, proxies, stock powers, verifications, and notices
in connection with accounts and other documents relating to the
Collateral; (iv) to commence and prosecute any suit, action, or
proceeding at law or in equity in any court of competent jurisdiction
to collect the Collateral or any part thereof and to enforce any other
right in respect of any Collateral; (v) to defend any suit, action, or
proceeding brought against the Debtor with respect to any Collateral:
(vi) to settle, compromise, or adjust any suit, action, or proceeding
described above and in connection therewith, to give such discharges or
releases as the Secured Party may deem appropriate; (vii) to exchange
any of the Collateral for other property upon any merger,
consolidation, reorganization, recapitalization, or other readjustment
of the issuer thereof and, in connection therewith, deposit any of the
Collateral with any committee, depositary, transfer agent, registrar,
or other designated agency upon such terms as the Secured Party may
determine; (viii) to add or release any guarantor, indorser, surety, or
other party, to any of the Collateral; (ix) to renew, extend, or
otherwise change the terms and conditions of any of the Collateral; (x)
to make, settle, compromise, or adjust claims under any insurance
policy covering any of the Collateral; and (xi) to sell, transfer,
pledge, make any agreement with respect to or otherwise deal with any
of the Collateral as fully and completely as though the Secured Party
were the absolute owner thereof for all purposes, and to do, at the
Secured Party's option and the Debtor's expense, at any time, or from
time to time, all commercially reasonable acts and things which the
Secured Party deems necessary to protect, preserve, or realize upon the
Collateral and the Secured Party's security interest therein.
This power of attorney is a power coupled with an interest and shall be
irrevocable until the Secured Obligations have been irrevocably paid and
performed in full, Debtor has no further secured obligations under the Guaranty,
and the Secured Party, the Banks and the Issuing Bank have no Revolving Credit
Commitments.
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The Secured Party shall be under no duty to exercise or withhold the exercise of
any of the rights, powers, privileges, and options expressly or implicitly
granted to the Secured Party in this Agreement, and shall not be liable for any
failure to do so or any delay in doing so. The Secured Party shall not be liable
for any act or omission or for any error of judgment or any mistake of fact or
law in its individual capacity or in its capacity as attorney-in-fact except
acts or omissions resulting from its gross negligence or willful misconduct.
This power of attorney is conferred on the Secured Party solely to protect,
preserve, and realize upon its security interest in the Collateral. The Secured
Party will exercise its best efforts to notify Debtor in advance of any action
to be taken by Secured Party in its capacity, as attorney-in-fact pursuant to
this Section, but in any event, promptly after such action is taken provided
that any failure by Secured Party to so notify Debtor shall not impose any
liability upon Secured Party or affect its rights and remedies hereunder, at law
or in equity. The Secured Party shall not be responsible for any decline in the
value of the Collateral and shall not be required to take any steps to preserve
rights against prior parties or to protect, preserve, or maintain any security
interest or Lien given to secure the Collateral.
VI.
Default
VI.1 Rights and Remedies. If an Event of Default shall have occurred
and be continuing, the Secured Party shall have the following rights and
remedies:
(a) In addition to all other rights and remedies granted to
the Secured Party in this Agreement or in any other Loan Document or by
applicable law, the Secured Party shall have all of the rights and
remedies of a secured party under the UCC (whether or not the UCC
applies to the affected Collateral). Without limiting the generality of
the foregoing, the Secured Party, may (i) without demand or notice to
the Debtor, collect, receive, or take possession of the Collateral or
any part thereof and for that purpose the Secured Party may enter upon
any premises on which the Collateral is located and remove the
Collateral therefrom or render it inoperable, and/or (ii) sell, lease,
or otherwise dispose of the Collateral, or any part thereof, in one or
more parcels at public or private sale or sales, at the Secured Party's
offices or elsewhere, for cash on credit or for future delivery, and
upon such other terms as the Secured Party may deem commercially
reasonable. The Secured Party shall have the right at any public sale
or sales, and, to the extent permitted by applicable law, at any
private sale or sales, to bid and become a purchaser of the Collateral
or any
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part thereof (to the extent permitted by law) free of any right or
equity of redemption on the part of the Debtor, which right or equity
of redemption is hereby expressly waived and released by the Debtor
(to the extent permitted by law). Upon the request of the Secured
Party, the Debtor shall assemble the Collateral and make it available
to the Secured Party at any place designated by the Secured Party that
is reasonably convenient to the Debtor and the Secured Party. The
Debtor agrees that the Secured Party shall not be obligated to give
more than 15 days written notice of the time and place of any public
sale or of the time after which any private sale may take place and
that such notice shall constitute reasonable notice of such matters.
The Secured Party shall not be obligated to make any sale of
Collateral if it shall determine not to do so, regardless of the fact
that notice of sale of Collateral may have been given. The Secured
Party may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the
same was so adjourned. The Debtor shall be liable for all reasonable
expenses of retaking, holding, preparing for sale, or the like, and
all reasonable attorneys' fees, legal expenses, and all other costs
and expenses incurred by the Secured Party in connection with the
collection of the Secured Obligations and the enforcement of the
Secured Party's rights under this Agreement. The Debtor shall remain
liable for any deficiency if the Proceeds of any sale or other
disposition of the Collateral are insufficient to pay the Secured
Obligations in full. The Secured Party may apply the Collateral
against the Secured Obligations in such order and manner as the
Secured Party may elect in its sole discretion. The Debtor waives all
rights of marshalling, valuation, and appraisal in respect of the
Collateral.
(b) The Secured Party may cause any or all of the Collateral
held by it to be transferred into the name of the Secured Party or the
name or names of the Secured Party's nominee or nominees.
(c) The Secured Party may collect or receive all money or
property at any time payable or receivable on account of or in exchange
for any of the Collateral, but shall be under no obligation to do so.
(d) On any sale of the Collateral, the Secured Party is hereby
authorized to comply with any limitation or restriction with which
compliance is necessary, in the view of the Secured Party's counsel, in
order to avoid any violation of applicable law or in order to obtain
any
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required approval of the purchaser or purchasers by any applicable
Governmental Authority.
VII.
Miscellaneous
VII.1 No Waiver: Cumulative Remedies. No failure on the part of the
Secured Party to exercise and no delay in exercising, and no course of dealing
with respect to, any right, power, or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power, or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power, or privilege. The
rights and remedies provided for in this Agreement are cumulative and not
exclusive of any rights and remedies provided by law.
VII.2 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Debtor and the Secured Party and their respective
heirs, successors, and assigns, except that the Debtor may not assign any of its
rights or obligations under this Agreement without the prior written consent of
the Secured Party.
VII.3 ENTIRE AGREEMENT; AMENDMENT; CONTROLLING AGREEMENT. THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT AMONG
THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR
OR CONTEMPORANEOUS ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE
ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO. The provisions of this
Agreement may be amended or waived only by an instrument in writing signed by
the parties hereto. In the event any term or provision of this Agreement
expressly conflicts with any term or provision of the Credit Agreement, the
terms and provisions of the Credit Agreement shall govern and control.
VII.4 Notices. All notices and other communications provided for in
this Agreement shall be in writing and may be telecopied (faxed), mailed by
certified mail return receipt requested, or delivered to the intended recipient
at the "Address for Notices" specified below its name on the signature pages
hereof; or, as to any party at such other address as shall be designated by such
party in a notice to the other party given in accordance with this Section.
Except as otherwise provided in this Agreement, all such communications shall be
deemed to have been duly given when transmitted by telecopy, subject to
telephone confirmation of receipt, or when personally delivered or, in the case
of a mailed
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notice, when duly deposited in the mails, in each case given or addressed as
aforesaid.
VII.5 GOVERNING LAW: VENUE: SERVICE OF PROCESS. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND
THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS AGREEMENT HAS BEEN
ENTERED INTO IN HARRIS COUNTY, TEXAS, AND IT SHALL BE PERFORMABLE FOR ALL
PURPOSES IN HARRIS COUNTY, TEXAS. SUBJECT TO SECTION 7.11, ANY ACTION OR
PROCEEDING AGAINST DEBTOR UNDER OR IN CONNECTION WITH ANY OF THE LOAN DOCUMENTS
MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT IN HARRIS COUNTY, TEXAS. DEBTOR
HEREBY IRREVOCABLY (A) SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURTS,
AND (B) WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY
SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT OR THAT ANY SUCH COURT IS AN
INCONVENIENT FORUM. DEBTOR AGREES THAT SERVICE OF PROCESS UPON IT MAY BE MADE BY
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, AT ITS ADDRESS SPECIFIED
OR DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 7.4. NOTHING HEREIN
OR IN ANY OF THE OTHER LOAN DOCUMENTS SHALL AFFECT THE RIGHT OF THE LENDER TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR, SUBJECT TO SECTION 7.11,
SHALL LIMIT THE RIGHT OF SECURED PARTY TO BRING ANY ACTION OR PROCEEDING AGAINST
DEBTOR OR WITH RESPECT TO ANY OF ITS PROPERTY IN COURTS IN OTHER JURISDICTIONS.
SUBJECT TO SECTION 7.11, ANY ACTION OR PROCEEDING BY DEBTOR AGAINST THE LENDER
SHALL BE BROUGHT ONLY IN A COURT LOCATED IN HARRIS COUNTY, TEXAS.
VII.6 Headings. The headings, captions, and arrangements used in this
Agreement are for convenience only and shall not affect the interpretation of
this Agreement.
VII.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
VII.8 Waiver of Bond. In the event the Secured Party seeks to take
possession of any or all of the Collateral by judicial process, the Debtor
hereby irrevocably waives any bonds and any surety or security relating thereto
that may be required by applicable law as an incident to such possession, and
waives any demand for possession prior to the commencement of any such suit or
action.
VII.9 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
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VII.10 Termination. If all of the Secured Obligations shall have been
paid and performed in full, the Debtor shall have no further secured obligations
under the Guaranty and all Revolving Credit Commitments of the Secured Party to
the Debtor shall have expired or terminated, the Secured Party shall, upon the
written request of the Debtor, execute and deliver to the Debtor a proper
instrument or instruments acknowledging the release and termination of the
security interests created by this Agreement, and shall duly assign and deliver
to the Debtor (without recourse and without any representation or warranty) such
of the Collateral as may be in the possession of the Secured Party and has not
previously been sold or otherwise applied pursuant to this Agreement.
VII.11 ARBITRATION. THE DEBTOR AND THE SECURED PARTY (THE "PARTIES")
AGREE THAT UPON THE WRITTEN DEMAND OF ANY PARTY, WHETHER MADE BEFORE OR AFTER
THE INSTITUTION OF ANY LEGAL PROCEEDINGS, BUT PRIOR TO THE RENDERING OF ANY
JUDGMENT IN THAT PROCEEDING, ALL DISPUTES, CLAIMS AND CONTROVERSIES BETWEEN
THEM, WHETHER INDIVIDUAL, JOINT, OR CLASS IN NATURE, ARISING FROM THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT (AS DEFINED IN THE CREDIT AGREEMENT) OR OTHERWISE,
INCLUDING WITHOUT LIMITATION CONTRACT DISPUTES AND TORT CLAIMS, SHALL BE
RESOLVED BY BINDING ARBITRATION PURSUANT TO THE COMMERCIAL RULES OF THE AMERICAN
ARBITRATION ASSOCIATION ("AAA"). ANY ARBITRATION PROCEEDING HELD PURSUANT TO
THIS ARBITRATION PROVISION SHALL BE CONDUCTED IN THE CITY NEAREST THE DEBTOR'S
ADDRESS HAVING AN AAA REGIONAL OFFICE, OR AT ANY OTHER PLACE SELECTED BY MUTUAL
AGREEMENT OF THE PARTIES.JUDGMENT UPON ANY AWARD RENDERED BY ANY ARBITRATOR MAY
BE ENTERED IN ANY COURT HAVING JURISDICTION. THE STATUTE OF LIMITATIONS,
ESTOPPEL, WAIVER, LACHES AND SIMILAR DOCTRINES WHICH WOULD OTHERWISE BE
APPLICABLE IN AN ACTION BROUGHT BY A PARTY SHALL BE APPLICABLE IN ANY
ARBITRATION PROCEEDING, AND THE COMMENCEMENT OF AN ARBITRATION PROCEEDING SHALL
BE DEEMED THE COMMENCEMENT OF ANY ACTION FOR THESE PURPOSES. THE FEDERAL
ARBITRATION ACT (TITLE 9 OF THE UNITED STATES CODE) SHALL APPLY TO THE
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT OF THIS ARBITRATION PROVISION.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first written above.
DEBTOR:
-------------------------------
By:
----------------------------
Anthony Tripodo
Vice President
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Address for Notices:
3701 Kirby Drive, Suite 112
Houston, Texas 77098
Telephone No.: 713-512-8300
Fax No.: 713-512-8701
Attention: Chief Financial Officer
SECURED PARTY:
BANK ONE, TEXAS, N.A.
By:
----------------------------
Philip C. Lauinger, III
Vice President
Address for Notices:
910 Travis
Houston, Texas 77002
Fax No.: 713-751-6199
Telephone No.: 713-751-3644
Attention: Philip C. Lauinger, III
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EXHIBIT "C-2"
[Partnership]
SECURITY AGREEMENT
Dated as of the 1st day of November, 1999.
BETWEEN:
VERITAS ENERGY SERVICES PARTNERSHIP, a general partnership
formed under the laws of the Province of Alberta, (the
"Debtor")
- and -
BANK ONE, TEXAS, N.A., a national banking association formed
under the laws of the United States on behalf of itself and as
agent for the Banks, as herein defined (collectively, the
"Secured Party")
1. SECURITY INTEREST
(a) For valuable consideration, the Debtor hereby grants, assigns,
transfers, mortgages and charges to the Secured Party, as and
by way of a fixed and specific mortgage and charge, and grants
to the Secured Party a security interest in, all of the
Debtor's present and after-acquired Accounts now owned or
hereafter acquired by or on behalf of the Debtor (and all
rights and interests now or hereafter held by or on behalf of
the Debtor with respect to any of the foregoing) and all
Proceeds of any of the foregoing including without limitation
all Chattel Paper, Documents of Title, Instruments,
Intangibles, Money and Securities arising from such Accounts;
(all of the property and assets described in this paragraph
(a) is herein collectively called the "Collateral")
(b) The grants, assignments, transfers, mortgages, charges and
security interests to and in favor of the Secured Party herein
created are collectively called the "Security Interest ".
(c) The terms "Accounts", "Chattel Paper", "Documents of Title",
"Instruments", "Intangibles", "Money", "Proceeds", and
"Securities", including any singular or plural variation
thereof whenever used herein shall be
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interpreted pursuant to the respective meanings given to such
words in the Personal Property Security Act (Alberta), as
amended from time to time, which Act, including amendments
thereto and any Act substituted therefor and amendments
thereto is herein referred to as the "PPSA".
(d) In this Security Agreement:
(i) Credit Agreement means the Credit Agreement dated
as of November 1, 1999 among Veritas DGC Inc., the
Borrower, Bank One, Texas, N.A. and each of the
other banks or lending institutions which is or
may from time to time become a signatory thereto,
together with any amendment or modification
thereto or any supplement, restatement or
replacement thereof;
(ii) Guaranty Agreement means that certain General
Continuing Guaranty dated as of November 1, 1999
executed by the Debtor in favor of the Secured
Party, as the same may be modified or amended from
time to time.
(iii) All capitalized terms used and not otherwise
defined herein shall have their respective
meanings as specified in the Credit Agreement.
(e) This Security Agreement is executed by the Debtor in favor of
Bank One, Texas, N.A. on behalf of itself and in its capacity
as agent for and on behalf of the Banks and all of the
covenants, representations, warranties, rights, benefits and
security interests made or given by the Debtor hereunder are
for the joint and several benefit of Bank One, Texas, N.A. and
all of the Banks. All references in this Security Agreement to
the Secured Party shall be deemed to constitute a reference to
Bank One, Texas, N.A. and the Banks or any of them.
(f) Any reference hereinafter to the "Collateral" shall, unless
the context otherwise requires, be deemed a reference to the
"Collateral or any part thereof".
2. INDEBTEDNESS SECURED
The Security Interest granted hereby secures payment and satisfaction
of (a) the Obligations-B (as defined in the Credit Agreement) to the extent the
Obligations-B constitute Secured Obligations (as defined in the Credit
Agreement) and (b) the obligations of Debtor under the Guaranty to the extent
such obligations may be secured under the provisions of the Credit
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Agreement and the Indenture (as such term is defined in the Credit Agreement)
(hereinafter collectively called the "Indebtedness"). If the Security Interest
in the Collateral is not sufficient, in the event of default, to satisfy all
Indebtedness of the Debtor, the Debtor acknowledges and agrees that, subject to
the terms and provisions of the Guaranty, the Credit Agreement and the
Indenture, the Debtor shall continue to be liable for any Indebtedness remaining
outstanding and the Secured Party shall be entitled to pursue full payment
thereof.
3. REPRESENTATIONS AND WARRANTIES OF THE DEBTOR
The Debtor represents and warrants and so long as this Security
Agreement remains in effect shall be deemed to continuously represent and
warrant that:
(a) the Collateral is owned by the Debtor free of all security
interests, mortgages, liens, claims, charges or other
encumbrances (hereinafter collectively called "Encumbrances"),
except for the Security Interest and those Encumbrances shown
on Schedule "A" or as permitted by the Credit Agreement or
hereafter approved in writing by the Secured Party prior to
their creation or assumption;
(b) each Account, Chattel Paper and Instrument forming part of the
Collateral is enforceable in accordance with its terms against
the party obligated to pay the same (the "Account Debtor"),
and no Account Debtor will have any defense, set off, claim or
counterclaim against the Debtor which can be asserted against
the Secured Party, whether in any proceeding to enforce the
Collateral or otherwise;
(c) the locations specified in Schedule "B" as to business
operations and records are accurate and complete;
(d) the name of the Debtor has not changed since the date of its
formation;
(e) the partners of the Debtor are:
(i) Veritas Geophysical Ltd.;
(ii) Veritas Seismic (1987) Ltd.;
(iii) Canex Information Services Ltd.; and
(f) the chief executive office of the Debtor is located in the
Province of Alberta.
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4. COVENANTS OF THE DEBTOR
So long as this Security Agreement remains in effect the Debtor
covenants and agrees:
(a) to defend the Collateral against the claims and demands of all
other parties claiming the same or an interest therein; to
keep the Collateral free from all Encumbrances, except for the
Security Interest and those shown on Schedule "A" or as
permitted by the Credit Agreement or hereafter approved in
writing by the Secured Party prior to their creation or
assumption and not to sell, exchange, transfer, assign, lease,
or otherwise dispose of the Collateral or any interest therein
without the prior written consent of the Secured Party;
provided always that, until default, the Debtor may, in the
ordinary course of the Debtor's business, subject to Clause 7
hereof, use Money available to the Debtor;
(b) to notify the Secured Party promptly of:
(i) any change in the information contained herein or
in the Schedules hereto relating to the Debtor,
the Debtor's business or the Collateral including
without limitation:
(A) any change in the name of the Debtor;
(B) any change in the place of business of the
Debtor or, if the Debtor has more than one
place of business, in the chief executive
office of the Debtor; and
(C) any change in the location of the
Collateral;
(ii) the details of any material claims or litigation
affecting the Debtor or the Collateral;
(c) to do, execute, acknowledge and deliver such financing
statements and further assignments, transfers, documents,
acts, matters and things as may be reasonably requested by the
Secured Party of or with respect to the Collateral in order to
give effect to this Security Agreement and to pay all costs
for searches and filings in connection therewith; and the
Debtor hereby appoints the Secured Party or any officer or
manager from time to time of the Secured Party or any branch
of the Secured Party the irrevocable attorney of the Debtor
(with full power of substitution and delegation) to sign all
documents and take such action as may be required to give
effect to this provision;
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(d) to pay all taxes, rates, levies, assessments and other charges
of every nature which may be lawfully levied, assessed or
imposed against or in respect of the Debtor or the Collateral
as and when the same become due and payable;
(e) to carry on and conduct the business of the Debtor in a proper
and efficient manner and so as to protect and preserve the
Collateral and to keep, in accordance with generally accepted
accounting principles, consistently applied, proper books of
account for the Debtor's business as well as accurate and
complete records concerning the Collateral, and mark any and
all such records and the Collateral at the Secured Party's
request so as to indicate the Security Interest; and
(f) to deliver to the Secured Party from time to time promptly
upon request:
(i) any Documents of Title, Instruments, Securities
and Chattel Paper constituting, representing or
relating to the Collateral;
(ii) all books of account and all records, ledgers,
reports, correspondence, schedules, documents,
statements, lists and other writings, relating to
the Collateral for the purpose of inspecting,
auditing or copying the same:
(iii) all financial statements prepared by or for the
Debtor regarding the Debtor's business; and
(iv) such information concerning the Collateral, the
Debtor and the Debtor's business and affairs as
the Secured Party may reasonably request.
5. VERIFICATION OF COLLATERAL
The Secured Party shall have the right at any time and from time to
time to verify the existence and state of the Collateral in any manner the
Secured Party may consider appropriate and the Debtor agrees to furnish all
assistance and information and to perform all such acts as the Secured Party may
reasonably request in connection therewith and for such purpose to grant to the
Secured Party or its agents access to all places where the Collateral may be
located and to all premises occupied by the Debtor.
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6. COLLECTION OF ACCOUNTS
Before or after default under this Security Agreement, the Secured
Party may notify all or any Account Debtors of the Security Interest and may
also after default direct such Account Debtors to make all payments on Accounts,
Chattel Paper and Instruments forming part of the Collateral to the Secured
Party. The Debtor acknowledges that any payments on Accounts, Chattel Paper and
Instruments forming part of the Collateral or other Proceeds of the Collateral
received by the Debtor from Account Debtors or other parties, whether before or
after notification of this Security Interest to Account Debtors but after
default under this Security Agreement, shall be received and held by the Debtor
in trust for the Secured Party and shall be turned over to the Secured Party
upon request.
7. DISPOSITION OF AMOUNTS
Subject to any applicable requirements of the PPSA and to the rights of
the Secured Party or any Receiver under this Security Agreement or the PPSA or
other provisions of law to make deductions in respect of costs, charges and
expenses or to apply costs, charges and expenses as a first or prior charge on
the proceeds of realization, collection or disposition of the Collateral, all
amounts collected or received by the Secured Party or any Receiver pursuant to
or in exercise of any right it possesses with respect to the Collateral shall be
applied on account of the Indebtedness in such manner as the Secured Party deems
best or, at the option of the Secured Party, may be held unappropriated in a
collateral account or released to the Debtor, all without prejudice to the
liability of the Debtor or the rights of the Secured Party or any Receiver
hereunder, and any surplus shall be accounted for as required by law.
8. EVENTS OF DEFAULT
The happening of an Event of Default (as defined in the Credit
Agreement) shall constitute default hereunder and is herein referred to as
"default".
9. ACCELERATION
Upon default or at any time thereafter, the Secured Party, in its sole
discretion, shall have all the rights and remedies granted to the Secured Party
in the Credit Agreement. The provisions of this Security Agreement are not
intended in any way to and shall not affect any rights of the Secured Party with
respect to any Indebtedness which may now or hereafter be payable on demand.
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10. REMEDIES
(a) Upon default or at any time thereafter, the Secured Party may
appoint or reappoint by instrument in writing, any person or
persons, whether an officer or officers or an employee or
employees of the Secured Party or not, to be a receiver or
receivers (hereinafter called a "Receiver", which term when
used herein shall include a receiver and manager) of the
Collateral (including any interest, income or profits
therefrom) and may remove any Receiver so appointed and
appoint another in his stead. Any such Receiver shall, so far
as concerns responsibility for his acts, be deemed the agent
of the Debtor and not the Secured Party, and the Secured Party
shall not be in any way responsible for any misconduct,
negligence, or nonfeasance on the part of any such Receiver,
his servants, agents or employees. The Secured Party may from
time to time fix the Receiver's remuneration. Subject to the
provisions of the instrument appointing him, any such Receiver
shall have power to take possession of the Collateral, to
preserve the Collateral or its value, to carry on or concur in
carrying on all or any part of the business of the Debtor and
to sell, lease or otherwise dispose of or concur in selling,
leasing or otherwise disposing of the Collateral (in its
existing condition or after any repair, processing or
preparation for disposition) in such manner, at such time or
times and place or places, for such consideration and upon
such terms and conditions as to the Receiver may seem
reasonable including terms for deferred payment. To facilitate
the foregoing powers, any such Receiver may, to the exclusion
of all others, including the Debtor, enter upon, use and
occupy all premises owned or occupied by the Debtor wherein
the Collateral may be situate, maintain Collateral upon such
premises, borrow money on a secured or unsecured basis and use
the Collate directly in carrying on the Debtor's business or
as security for loans or advances or other credit to enable
him to carry on the Debtor's business or otherwise, as such
Receiver shall, in his discretion, determine. Except as may be
otherwise directed by the Secured Party, all amounts received
from time to time by such Receiver in carrying out his
appointment shall be received in trust for and paid over to
the Secured Party. Every such Receiver may, in the discretion
of the Secured Party, be vested with all or any of the rights
and powers of the Secured Party.
(b) Upon default or at any time thereafter, the Secured Party may
make application to a court of competent jurisdiction for the
appointment of a Receiver.
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(c) Upon default or at any time thereafter, the Secured Party may,
either directly or through its agents or nominees, exercise
any or all of the powers and rights which could be available
to a Receiver appointed pursuant to the foregoing subclause
(a).
(d) The Secured Party may take possession of, collect, demand, sue
on, enforce, recover and receive the Collateral and give valid
and binding receipts and discharges therefor and in respect
thereof and, upon default or at any time thereafter, the
Secured Party may sell, or otherwise dispose of the Collateral
in such manner, at such time or times and place or places, for
such consideration and upon such terms and conditions as to
the Secured Party may seem reasonable including terms for
deferred payment.
(e) In addition to those rights granted herein and in any other
agreement now or hereafter in effect between the Debtor and
the Secured Party and in addition to any other rights the
Secured Party or any Receiver may have at law or in equity,
the Secured Party shall have, both before and after default,
all rights and remedies of a secured party under the PPSA and
the Receiver shall have all rights and remedies of a secured
party under and to the extent provided in the PPSA. Provided
always, that the Secured Party or any Receiver shall not be
liable or accountable for any failure to exercise its
remedies, take possession of, collect, enforce, realize, sell,
or otherwise dispose of the Collateral or to institute any
proceedings for such purposes. Furthermore, neither the
Secured Party nor any Receiver shall have any obligation to
take any steps to preserve rights against other parties to any
Security, Instrument or Chattel Paper whether the Collateral
or Proceeds and whether or not in the Secured Party's or
Receiver's possession and shall not be liable or accountable
for failure to do so.
(f) The Debtor agrees to pay all costs, charges and expenses
reasonably incurred by the Secured Party or any Receiver
whether directly or for services rendered (including
reasonable solicitors and auditors costs and other legal
expenses and Receiver remuneration), in operating any accounts
of the Debtor with the Secured Party, in discharging or
satisfying any Encumbrances, borrowings, taxes and other
outgoings affecting the Collateral, in keeping in good
standing any Encumbrances on the Collateral ranking in
priority to
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any Security Interest created by this Security Agreement, in
preparing or enforcing this Security Agreement, in taking
custody of, holding, preserving, repairing, processing,
preparing for sale, lease or other disposition and selling,
leasing or otherwise disposing of the Collateral, in carrying
on the business of the Debtor and in enforcing or collecting
the Indebtedness; and the Debtor further agrees that all such
costs, charges and expenses, together with any amounts owing
as a result of any borrowing by the Secured Party or any
Receiver, as permitted hereby, shall be a first and prior
charge on the proceeds of realization, collection or
disposition of the Collateral and shall be secured hereby.
(g) The Secured Party will give the Debtor such notice or notices,
if any, with respect to the disposition of the Collateral as
may be required by the PPSA.
(h) The Receiver or the Secured Party shall have power to make any
sale, lease or other disposition of the Collateral as
contemplated above in the name and on behalf of the Debtor or
otherwise and the Receiver or any officer or manager from time
to time of the Secured Party, or any branch of the Secured
Party is hereby appointed the irrevocable attorney of the
Debtor (with full powers of substitution and delegation) for
the purpose of making any such sale, lease or other
disposition and of executing agreements or documents and
taking such action required to complete the same.
11. MISCELLANEOUS
(a) The Debtor hereby authorizes the Secured Party to file such
financing statements and other documents and do such acts,
matters and things from time to time (including completing and
adding or supplementing schedules hereto identifying the
Collateral or any permitted Encumbrances affecting the
Collateral or identifying the locations at which the Debtor's
business is carried on and the Collateral and records relating
thereto are situate) as the Secured Party may deem appropriate
to perfect and continue the Security Interest, to protect and
preserve the Collateral and to realize upon the Security
Interest and the Debtor hereby irrevocably constitutes and
appoints any officer or manager from time to time of the
Secured Party or any branch of the Secured Party the true and
lawful attorney of the Debtor, with full power of substitution
and delegation, to do any of the foregoing in the name of the
Debtor whenever and wherever it may be deemed necessary or
expedient.
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(b) Without limiting any other right of the Secured Party,
whenever the Indebtedness is immediately due and payable or
the Secured Party has the right to declare the Indebtedness to
be immediately due and payable (whether or not it has so
declared), the Secured Party may, in its sole discretion, set
off against Indebtedness any and all amounts then owed to the
Debtor by the Secured Party in any capacity, whether or not
due, and the Secured Party shall be deemed to have exercised
such right to set off immediately at the time of making its
decision to do so even though any charge therefor is made or
entered on the Secured Party's records subsequent thereto.
(c) Upon the Debtor's failure to perform any of its obligations
hereunder, the Secured Party may, but shall not be obligated
to, perform any or all of such obligations, and the Debtor
shall pay to the Secured Party, forthwith upon written demand
therefor, an amount equal to the expense incurred by the
Secured Party in so doing plus interest thereon from the date
such expense is incurred until it is paid at the Default Rate
(as defined in the Credit Agreement) which amount and interest
thereon shall be included in the Indebtedness secured hereby.
(d) The Secured Party may grant extensions of time and other
indulgences, take and give up security, accept compositions,
compound, compromises, settle, grant releases and discharges
and otherwise deal with the Debtor, debtors of the Debtor
sureties and others and with the Collateral and other security
as the Secured Party may see fit without prejudice to the
liability of the Debtor or the Secured Party's right to hold
and realize the Security Interest. Furthermore, the Secured
Party may demand, collect and sue on the Collateral in either
the Debtor's or the Secured Party's name, at the Secured
Party's option, and may endorse the Debtor's name on any and
all cheques, commercial paper, and any other Instruments
pertaining to or constituting the Collateral.
(e) No delay or omission by the Secured Party in exercising any
right or remedy hereunder or with respect to any Indebtedness
shall operate as a waiver thereof or of any other right or
remedy, and no single or partial exercise thereof shall
preclude any other or further exercise thereof or the exercise
of any other right or remedy. Furthermore, the Secured Party
may remedy any
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default by the Debtor hereunder or with respect to any
Indebtedness in any reasonable manner without waiving the
default remedied and without waiving any other prior or
subsequent default by the Debtor. No remedy herein conferred
upon or reserved to the Secured Party is intended to be
exclusive of any other remedy, but each and every such remedy
shall be cumulative and shall be in addition to every other
right and remedy given hereunder or now existing or hereafter
to exist at law, in equity or by statute or pursuant to any
other agreement or instrument between the Debtor and the
Secured Party that may be in effect from time to time.
(f) The Debtor waives protest of any Instrument constituting
Collateral at any time held by the Secured Party on which the
Debtor is in any way liable and, subject to Clause 10(g)
hereof, notice of any other action taken by the Secured Party.
(g) In any action brought by an assignee of any interest of the
Secured Party in this Security Agreement and the Security
Interest or any part thereof to enforce any rights hereunder,
the Debtor shall not assert against the assignee any set-off,
claim or defence which the Debtor now has or hereafter may
have against the Secured Party.
(h) Except for any supplements to Schedule B hereto or other
schedules which may be added hereto pursuant to the provisions
hereof, no modification, variation or amendment of any
provision of this Security Agreement shall be made except by a
written Agreement executed by the parties hereto and no waiver
of any provision hereof shall be effective unless in writing.
(i) Subject to the requirements of Clause 10(g) hereof, whenever
either party hereto is required or entitled to notify or
direct the other or to make a demand or request upon the
other, such notice, direction, demand or request shall be in
writing and shall be sufficiently given if delivered to the
party for whom it is intended at the principal address of such
party set forth on the first page hereof or as changed
pursuant hereto or if sent by prepaid registered mail
addressed to the party for whom it is intended at the
principal address of such party set forth on the first page
hereof or as changed pursuant hereto. Either party may notify
the other pursuant hereto of any change in such party's
principal address to be used for the purposes hereof.
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(j) This Security Agreement and the Security Interest created
hereby are in addition to and not in substitution for any
other security now or hereafter held by the Secured Party and
is, and is intended to be a continuing Security Agreement and
Security Interest.
(k) This Security Agreement shall not merge in any subsequent
security or be taken to be a substitute for any security of
any nature whatsoever held by the Secured Party from the
Debtor. It is further agreed that the taking of this Security
Agreement shall not operate as a merger of the remedies of the
Secured Party for payment, satisfaction or performance of the
Indebtedness or of the remedies of the Secured Party under any
other agreement and notwithstanding this Security Agreement
and anything herein contained the said remedies shall remain
available and be capable of enforcement against the Debtor and
all other persons liable in respect thereof in the same manner
and to the same extent as if this Security Agreement had not
been made.
(l) The headings used in this Security Agreement are for
convenience only and are not to be considered as part of this
Security Agreement and do not in any way limit or amplify the
terms and provisions of this Security Agreement.
(m) When the context so requires, the singular number shall be
read as if the plural were expressed and vice versa and any
reference to gender shall include the masculine, feminine, and
neuter gender.
(n) In the event any provisions of this Security Agreement, as
amended from time to time, shall be deemed invalid or void, in
whole or in part, by any Court of competent jurisdiction, the
remaining terms and provisions of this Security Agreement
shall remain in full force and effect.
(o) Nothing herein contained shall in any way obligate the Secured
Party to grant, continue, renew, extend time for payment of or
accept anything which constitutes or would constitute
Indebtedness or to make any advance to or to provide any
credit accommodation for the Debtor.
(p) The Security Interest created hereby is intended to attach (i)
to existing Collateral when this Security Agreement is signed
by the Debtor and delivered to the Secured Party, and (ii) to
Collateral subsequently
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acquired by the Debtor immediately upon the Debtor acquiring
any rights in such Collateral. The Debtor and the Secured
Party do not intend to postpone the attachment of any Security
Interest created by this Security Agreement.
(q) This Security Agreement and the transactions evidenced hereby
shall be governed by and construed in accordance with the laws
of the Province of Alberta as the same may from time to time
be in effect, including, where applicable, the PPSA.
(r) Time shall be of the essence of this Security Agreement.
(s) This Security Agreement shall enure to the benefit of and be
binding upon the Secured Party and the Debtor and their
respective heirs, executors, administrators, successors and
assigns; provided the Debtor will not assign this Security
Agreement without the Secured Party's prior written consent.
(t) Notwithstanding anything herein to the contrary, to the extent
that the provisions of the PPSA impose obligations upon or
restrict the rights or remedies herein contained operating in
favor of the Secured Party, and which have been waived or
varied by the Debtor herein, whether expressly or by
implication, but which are by the provisions of the PPSA
incapable of waiver or variance by the Debtor, the provisions
of the PPSA shall govern and the affected provisions hereof
shall be deemed to be amended to the extent necessary to give
effect to the said provisions of the PPSA without in any way
affecting any other provision or provisions herein.
(u) The Debtor hereby acknowledges receipt of a copy of this
Security Agreement.
(v) The Debtor hereby waives its right under the PPSA to receive a
printed copy of any financing statement or financing change
statement relating to this Security Agreement or any
verification statement or other statement used by the Registry
(as defined in the PPSA) to confirm the registration of any
such financing statement or financing change statement.
12. NOTICES
All notices and other communications provided for in this Agreement
shall be in writing and may be telecopied (faxed),
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mailed by certified mail return receipt requested, or delivered to the intended
recipient at the "Address for Notices" specified below its name on the signature
pages hereof; or, as to any party at such other address as shall be designated
by such party in a notice to the other party given in accordance with this
Section. Except as otherwise provided in this Agreement, all such communications
shall be deemed to have been duly given when transmitted by telecopy, subject to
telephone confirmation of receipt, or when personally delivered or, in the case
of a mailed notice, when duly deposited in the mails, in each case given or
addressed as aforesaid.
13. ARBITRATION
THE DEBTOR AND THE SECURED PARTY (THE "PARTIES") AGREE THAT UPON THE
WRITTEN DEMAND OF ANY PARTY, WHETHER MADE BEFORE OR AFTER THE INSTITUTION OF ANY
LEGAL PROCEEDINGS, BUT PRIOR TO THE RENDERING OF ANY JUDGMENT IN THAT
PROCEEDING, ALL DISPUTES, CLAIMS AND CONTROVERSIES BETWEEN THEM, WHETHER
INDIVIDUAL, JOINT, OR CLASS IN NATURE, ARISING FROM THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT (AS DEFINED IN THE CREDIT AGREEMENT) OR OTHERWISE, INCLUDING
WITHOUT LIMITATION CONTRACT DISPUTES AND TORT CLAIMS, SHALL BE RESOLVED BY
BINDING ARBITRATION PURSUANT TO THE COMMERCIAL RULES OF THE AMERICAN ARBITRATION
ASSOCIATION ("AAA"). ANY ARBITRATION PROCEEDING HELD PURSUANT TO THIS
ARBITRATION PROVISION SHALL BE CONDUCTED IN THE CITY NEAREST THE DEBTOR'S
ADDRESS HAVING AN AAA REGIONAL OFFICE, OR AT ANY OTHER PLACE SELECTED BY MUTUAL
AGREEMENT OF THE PARTIES. JUDGMENT UPON ANY AWARD RENDERED BY ANY ARBITRATOR MAY
BE ENTERED IN ANY COURT HAVING JURISDICTION. THE STATUTE OF LIMITATIONS,
ESTOPPEL, WAIVER, LACHES AND SIMILAR DOCTRINES WHICH WOULD OTHERWISE BE
APPLICABLE IN AN ACTION BROUGHT BY A PARTY SHALL BE APPLICABLE IN ANY
ARBITRATION PROCEEDING, AND THE COMMENCEMENT OF AN ARBITRATION PROCEEDING SHALL
BE DEEMED THE COMMENCEMENT OF ANY ACTION FOR THESE PURPOSES. THE FEDERAL
ARBITRATION ACT (TITLE 9 OF THE UNITED STATES CODE) SHALL APPLY TO THE
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT OF THIS ARBITRATION PROVISION.
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IN WITNESS WHEREOF the Debtor has executed this Security Agreement as
of the date first above written.
VERITAS ENERGY SERVICES PARTNERSHIP,
by its partners:
VERITAS DGC LAND LTD.
Per:
--------------------------------
Name:
-------------------------------
Title:
------------------------------
VERITAS GEOSERVICES LTD.
Per:
--------------------------------
Name:
-------------------------------
Title:
------------------------------
CANEX INFORMATION SERVICE LTD.
Per:
--------------------------------
Name:
-------------------------------
Title:
------------------------------
Address for Notices:
2200, 715 - 5th avenue SW
Calgary, Alberta T2P 5A2
Attention: Barb Exner
Telephone No.: 403-205-6000
Fax No.: 403-205-6040
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SCHEDULE "A"
(ENCUMBRANCES AFFECTING COLLATERAL)
None
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SCHEDULE "B"
1. Locations of Debtor's Places of Business.
Suite 2200, 715-5 Avenue S.W.
Calgary, Alberta
T2P 5A2
If the Debtor has more than one place of business also specify
location of its chief executive office:
2. Locations of Records relating to Collateral.
Suite 2200, 715-5 Avenue S.W.
Calgary, Alberta
T2P 5A2
3. Locations of Collateral.
Suite 2200, 715-5 Avenue S.W.
Calgary, Alberta
T2P 5A2
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EXHIBIT "C-3"
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FIXED AND FLOATING CHARGE DEBENTURE
dated __________________, 1999
created by
VERITAS DGC (MALAYSIA) SDN. BHD.
(Formerly known as Digicon (Malaysia) Sdn. Bhd.)
(Company No. 36058M)
in favour of
BANK ONE, TEXAS, N.A.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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THIS DEED OF DEBENTURE is made on __________________, 1999 BETWEEN
(1) VERITAS DGC (MALAYSIA) SDN. BHD. (formerly known as Digicon (Malaysia) Sdn.
Bhd.), a company incorporated in Malaysia (Company No. 36058M) having its
registered office at Room 107, Lanka Building, Khoo Hun Yeang Street, 93000
Kuching, Sarawak, East Malaysia (the "Company"); and
(2) BANK ONE, TEXAS, N.A., a United States national banking association acting
through its offices at 910 Travis, Houston, Texas 77002 (the "Agent", which
expression includes its successors and assigns):
Background
(A) The Agent is the agent under the Credit Agreement (as the same may be
amended, supplemented, modified and/or restated from time to time, the "Credit
Agreement") dated as of November 1, 1999 among the Agent acting for itself and
the other banks or other lending institutions which are or may be from time to
time become a signatory, to the Credit Agreement, together with their successors
and assigns (collectively the "Banks" and each a "Bank"), itself as the issuing
bank for letters of credit (the "Issuing Bank"), on the one hand, and Veritas
DGC Inc. (the "Borrower"), on the other hand, and the Banks and the Issuing Bank
are willing to make certain loan and letter of credit facilities available to
the Borrower on the terms and subject to the conditions set out in the Credit
Agreement. One of those conditions is that the Company enters into this
Debenture.
(B) The Board of Directors of the Company is satisfied that entering into this
Debenture is for the purposes and to the benefit of the Company and its
business.
NOW THIS DEBENTURE WITNESSES and IT IS AGREED as follows:
1. INTERPRETATION
A. Definitions: In this Debenture, except to the extent that the context
requires otherwise:
"Assets" means business, undertaking, property, assets, revenues,
Rights and uncalled capital wherever situated.
"Book Debts" means balances now or hereafter standing to the credit of
any current, deposit or other accounts now or hereafter held by the
Company with any Person (including the Agent, the Banks and the
Issuing Bank) and all other book and other debts of any nature
whatsoever now or hereafter due or owing to the Company and the
benefit of all negotiable instruments, Rights, Security, guarantees
and indemnities of any nature whatsoever now or at any time hereafter
enjoyed or held by it in relation thereto.
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"Charged Assets" means, subject to Clause 8(B), Assets from time to
time subject, or expressed to be subject, to the Charges or any part
of those Assets.
"Charges" means all or any of the Security created, or which may at
any time be created, by or pursuant to this Debenture.
"Currency of Account" means the currency in which the relevant
indebtedness is denominated or, if different, is payable.
"Default Rate" has the meaning ascribed to it in the Credit Agreement.
"Delegate" means a delegate or sub-delegate appointed, directly or
indirectly, pursuant to Clause 9(B).
"Enforcement Event" has the meaning given to it in Clause 7(B).
"Guaranty" means the General Continuing Guaranty dated as of even date
herewith, made by the Company in favour of the Agent, as the same may
be modified or amended from time to time.
"Liabilities" means (a) all of the Obligations-B (as defined in the
Credit Agreement) to the extent the Obligations-B constitute Secured
Obligations (as such term is defined in the Credit Agreement) and (b)
the obligations of the Company under the Guaranty to the extent such
obligations may be secured under the provisions of the Credit
Agreement and the Indenture (as such term is defined in the Credit
Agreement).
"MCA" means the Malaysian Companies Act 1965, as amended, and any
successor statutes.
"Permitted Liens" means any permitted lien as defined in Section 10.2
of the Credit Agreement.
"Person" includes any individual, company, corporation, firm,
partnership, joint venture, association, organization, trust, state or
agency of a state (in each case whether or not having separate legal
personality).
"Receiver" means a receiver and manager or other receiver appointed in
respect of the Charged Assets (whether appointed pursuant to this
Debenture, pursuant to any statute, by a court or otherwise).
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"Rights" means rights, authorities, discretion, remedies, liberties,
powers, easements, quasi-easements and appurtenances (in each case, of
any nature whatsoever).
"Security" includes any mortgage, pledge, lien, hypothecation,
security interest or other charge or encumbrance and any other
agreement or arrangement having substantially the same economic effect
(including any "hold-back" or "flawed asset" arrangement).
"Security Documents" means:
(a) this Debenture; and
(b) the Guaranty.
"Subsidiary" has the meaning ascribed to it by the MCA.
"Tax(es)" includes any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever
called, by whomsoever, on whomsoever and wherever imposed, levied,
collected, withheld or assessed.
"the Winding-up" of a Person also includes the dissolution or
liquidation of that Person, and any equivalent or analogous procedure
under the law of any Jurisdiction (and references to the commencement
of any of the foregoing include a reference to the presentation of a
petition to a court of competent jurisdiction or the passing of a
valid resolution for or with a view to any of the foregoing).
B. References to this Debenture and Other Documents: Except to the extent
that the context requires otherwise, any reference in this Debenture to this
Debenture or any other agreement or document is a reference to this Debenture
or, as the case may be, the relevant agreement or document as from time to time
amended, supplemented or novated and includes a reference to any document which
amends, supplements, novates or is entered into, made or given pursuant to or in
accordance with any of the terms of, this Debenture or, as the case may be, the
relevant agreement or document.
C. References to Statutes: Except where otherwise stated, any reference in
this Debenture to any Act of Parliament or any Section of or other provision of
an Act of Parliament shall be construed, at any particular time, as including
reference to any modification, extension or re-enactment thereof then in force
and instruments, orders and regulations then in force and made under or deriving
validity from the relevant Act.
D. Headings: Headings shall be ignored in construing this Debenture.
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2. UNDERTAKING TO PAY
The Company shall discharge each Liability under the Security Documents
when due in accordance therewith.
3. SECURITY
A. Charging Provision: The Company as beneficial owner and as security for
the payment and discharge of all Liabilities hereby charges in favour of
the Agent:
(1) by way of first fixed charge, all Book Debts; and
(2) by way of first floating charge over accounts into which Book
Debts are or will be paid and all related documents and records.
B. Ranking: The floating Charge created by Clause 3(A)(2) shall rank behind
all the fixed Charges created by or pursuant to this Debenture but shall
rank in priority to any other Security hereafter created by the Company
except for Security permitted by Clause 4(A)(3) and except for Security
ranking in priority in accordance with Clause 8(C)(4).
C. Conversion of Floating Charge: The Agent may by notice to the Company
convert the floating Charge created by Clause 3(A)(2) into a fixed charge
as regards such Charged Assets as shall be specified (whether generally or
specifically) in that notice (1) if it reasonably considers that it would
be desirable to do so in order to protect, preserve or supplement the
Charges over those Charged Assets or the priority of those Charges and/or
(2) on or at any time following the occurrence and during the continuation
of an Enforcement Event. If, without the prior consent in writing of the
Agent, the Company creates any Security other than a Permitted Lien over
any of the Charged Assets not expressed to be subject to a fixed Charge
under this Debenture, or attempts to do so, or if any Person levies or
attempts to levy any distress, attachment, execution or other legal process
against any of such Charged Assets, the floating Charge created by this
Debenture over the Charged Assets the subject of such Security or process
shall automatically, without notice, be converted into a fixed Charge
instantly such event occurs.
D. Delivery of Documents: If the Agent so requires by notice to the
Company, the Company shall, immediately deliver to the Agent copies of the
documents relating to all or any Book Debts.
E. Further Security: The Company shall, promptly upon the Agent so
requiring by notice to the Company, execute and deliver (or procure the
execution and delivery of) to the Agent (in such form as the Agent shall
reasonably require) in favour of the Agent securing the Liabilities such
other Security over such of the Company's other present or future Assets as
are expressed to be subject to a fixed Charge as shall be specified in the
relevant notice
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(whether generally or specifically and whether for the purpose of obtaining
legal title to the relevant Assets, creating Security which is effective
under the laws of a foreign jurisdiction or otherwise).
F. Further Assurance: The Company shall promptly execute and do all such
assurances, acts and things as the Agent may reasonably require for
perfecting or protecting the Charges or the priority of the Charges or for
facilitating the realization of the Charged Assets or the exercise of any
Rights vested in the Agent, any Receiver or any Delegate and shall in
particular (without prejudice to the generality of the foregoing) execute
all transfers, conveyances, assignments and assurances of the Charged
Assets (whether to the Agent or to its nominees or otherwise) and give all
notices, orders and directions which the Agent may reasonably request.
4. RESTRICTIONS ON DEALING
A. Security: The Company shall not create any Security on, over or with
respect to any of its present or future Assets except for:
(1) the Permitted Liens;
(2) the Charges; and
(3) liens arising solely by operation of law (or by an agreement
evidencing the same) in the ordinary course of the Company's business
in respect of indebtedness which either (a) has been due for less than
7 days or (b) is being contested in good faith and by appropriate
means.
B. Disposal: The Company shall not sell, factor, discount, transfer,
assign, lease or hire out, lend or otherwise dispose of any of its present
or future Assets nor agree to do any of the foregoing except that, until
the floating Charge crystallizes, the Charges become enforceable and the
Agent takes any step to enforce the Charges the Company may take such
actions with respect to its Assets as are permitted by the terms of the
Credit Agreement. Except upon the occurrence and during the continuance of
an Enforcement Event, the Company may use the proceeds of its Book Debts in
the ordinary course of its business.
5. BOOK DEBTS
A. Collection: The Company shall promptly collect all Book Debts and, until
payment into an account with the Agent as provided in Clause 5(B), shall
receive and hold the proceeds of collection on trust for the Agent.
B. Payment into Designated Account: To the extent reasonably practicable,
the
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Company shall immediately pay all moneys received or receivable by it from
any source (including all proceeds of collection of Book Debts) into such
account as the Agent shall from time to time designate or as otherwise
acceptable to the Agent for the purpose of receiving the relevant moneys.
The Agent may designate different accounts for different moneys.
C. Withdrawals: Upon the occurrence and during the continuance of an
Enforcement Event the Company shall not be entitled to withdraw all or any
part of the balance standing to the credit of any account with the Agent
except to such extent (if any) as the Agent may from time to time permit.
Permitting any particular withdrawal shall not commit the Agent to
permitting any other withdrawal. If the Agent debits any amount to or from
any account of the Company with the Agent then, on the relevant debit being
made, the relevant amount shall be automatically released from the fixed
Charge thereon created by or pursuant to this Debenture. However, if and to
the extent that all or part of that amount is paid into another account of
the Company (whether with the same or another financial institution) which
is in credit or becomes in credit as a result, it shall thereupon
automatically become subject to the fixed Charge on the credit balance in
the other account.
D. Other Restrictions on Dealing, with Book Debts: Without prejudice and in
addition to Clauses 3(D), 3(E), 4(A) and 4(B):
(1) except for the Charges, the Company shall not create or have
outstanding any Security over all or any part of any of the Book
Debts;
(2) except as required by (4) below, the Company shall not sell,
factor, discount, transfer, assign, lend or otherwise dispose of all
or any part of any of the Book Debts;
(3) if called upon to do so by the Agent, the Company shall
immediately deliver to the Agent such documents relating to such of
the Book Debts as the Agent may designate (either generally or
specifically); and
(4) if called upon to do so by the Agent, the Company shall
immediately execute and deliver to the Agent (in such form as the
Agent may reasonably require) a legal assignment of all the Company's
right, title and interest in and to such of the Book Debts as the
Agent may designate (either generally or specifically).
6. GENERAL UNDERTAKINGS, REPRESENTATIONS AND WARRANTIES
A. The Company undertakes as set out in Articles IX and X of the Credit
Agreement as if it were a party thereto.
B. The Company represents and warrants as set out in Article VIII of the
Credit Agreement as if it were a party thereto.
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7. ENFORCEMENT
A. Exercise of Rights: The Charges shall be enforceable, and the powers
conferred by applicable law as varied and extended by this Debenture shall
be exercisable, upon and at any time after the occurrence of an Enforcement
Event.
B. Enforcement Events: The occurrence and continuance at any time of an
Event of Default (as defined in the Credit Agreement) or for any reason,
whether within or beyond the control of any party to this Debenture, of any
of the following events shall constitute an Enforcement Event:
(1) Liquidation/Receiver: Any step is taken by any Person with a view
to liquidation and/or receivership of the Company.
(2) Arrangements with Creditors: The directors of the Company make any
proposal, or the Company proposes or makes any agreement for the
deferral, rescheduling or other readjustment (or proposes or makes a
general assignment or an arrangement or composition with or for the
benefit of the relevant creditors) of all of (or all of a particular
type of) its debts (or of any part which it will or might otherwise be
unable to pay when due), or a moratorium is agreed or declared in
respect of or affecting all or a material part of (or of a particular
type of) the debts of the Company.
(3) Security Enforceable: Any Security on or over the Assets of the
Company becomes enforceable and any step (including the taking of
possession or the appointment of a receiver, manager or similar
Person) taken to enforce that Security.
8. APPOINTMENT AND RIGHTS OF RECEIVERS
A. Appointment of Receivers: Either if so requested by the Company or at
any time after an Enforcement Event (whether or not the Agent shall have
taken possession of the Charged Assets), without any notice or further
notice, the Agent may by deed, or writing signed by any officer or manager
of the Agent or any Person authorized for this purpose by the Agent,
appoint any Person to be Receiver of the Charged Assets and may similarly
remove any Receiver and appoint any Person instead of any Receiver. If the
Agent appoints more than one Person as Receiver of any Charged Assets, the
Agent may give the relevant Persons power to act either jointly or
severally.
B. Scope of Appointment: Any Receiver may be appointed either Receiver of
all of the Charged Assets or Receiver of such part thereof as may be
specified in the appointment. In the latter case, the Rights conferred on a
Receiver by Clause 8(C) shall have effect as
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though every reference in that Clause to the "Charged Assets" were a
reference to the part of such Assets so specified or any part thereof.
C. Rights of Receivers: Any Receiver appointed pursuant to this Clause 8
shall have the Right, either in his own name or in the name of the Company
or otherwise and in such manner and upon such terms and condition as the
Receiver thinks fit:
(1) Deal with Charged Assets: To sell, transfer, assign, and otherwise
dispose of or realize the Charged Assets and to execute all agreements
and documents for these purposes and for consideration and so that
(without limitation) he may do any of these things for a consideration
consisting of cash, or other valuable consideration of any kind and
any such consideration may be payable or delivered a lump sum or by
installments spread over such period as he may think fit.
(2) Claims: To settle, adjust, refer to arbitration, compromise and
arrange any claims, accounts, disputes, questions and demands with or
by any Person who is or claims to be a creditor of the Company or
relating in any way to the Charged Assets.
(3) Legal Actions: To bring, prosecute, enforce, defend and abandon
actions, suits and proceedings in relation to the Charged Assets or
any of the businesses of the Company.
(4) Redemption of Security: To redeem any Security (whether or not
having priority to the Charges) over the Charged Assets and to settle
the accounts of encumbrances.
(5) Employees etc: To appoint, hire and employ officers, employees,
contractors, agents and advisors of all kinds and to discharge any
such Persons and any such Persons appointed, hired or employed by the
Company.
(6) Other Powers: To do all such other acts and things he may consider
necessary or expedient for the realization of the Charged Assets or
incidental to the exercise of any of the Rights conferred on the
Receiver under or by virtue of this Debenture.
D. Agent of Company: Any Receiver shall be the agent of the Company for all
purposes and the Company alone shall be responsible for his contracts,
engagements, acts, omissions, defaults and losses and for liabilities
incurred by him in the absence of gross negligence or wilful misconduct.
E. Remuneration: The Agent may from time to time in its reasonable
discretion determine the remuneration of any Receiver and direct payment of
such remuneration out of moneys accruing to him as Receiver but the Company
alone shall be liable for the payment
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of such remuneration and for all other reasonable costs, charges and
expenses of the Receiver.
F. Directions of Agent: Any Receiver shall in the exercise of his Rights
conform to any reasonable regulations, restrictions and directions from
time to time made or given by the Agent.
9. AGENT'S RIGHTS
A. Rights of Receiver: Any Rights conferred by this Debenture (either
expressly or impliedly) upon a Receiver may be exercised by the Agent after
the Charges become enforceable, irrespective of whether the Agent shall
have taken possession or appointed a Receiver of the Charged Assets.
B. Delegation: The Agent may delegate in any manner to any Person any of
the Rights which are for the time being exercisable by the Agent under this
Debenture. Any such delegation may be made upon such reasonable terms and
conditions (including power to sub-delegate) as the Agent may think fit.
C. Continuation of Accounts: At any time following the Agent receiving
notice (either actual or otherwise) of any subsequent Security, other than
Permitted Liens, affecting the Charged Assets or the commencement of the
Winding-up of the Company, the Agent may open a new account in the name of
the Company with the Agent (whether or not it permits any existing account
to continue). If the Agent does not open such a new account, it shall
nevertheless be treated as if it had done so at the time, as the case may
be, when the notice was received or was deemed to have been received of the
subsequent Security or the Winding-up commenced. No moneys thereafter paid
into any account, whether new or continuing, shall discharge or reduce the
amount recoverable pursuant to this Debenture.
D. Set-Off: The Company authorizes the Agent to apply (without prior
notice) any credit balance (whether or not then due) to which the Company
is at any time beneficially entitled on any account at, any sum held to its
order by and/or any liability of, any office of the Agent in or towards
satisfaction of all or any part of the Liabilities then due, as provided in
the Credit Agreement.
10. LIABILITY OF AGENT, RECEIVERS AND DELEGATES
A. Possession: If the Agent, any Receiver or any Delegate shall take
possession of the Charged Assets, he may at any time relinquish such
possession. The Agent shall not become liable as a mortgagee in possession
by reason of viewing the state of repair of, or repairing any of, the
Company's present or future Assets.
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B. Agent's Liability: None of the Agent, the Banks or the Issuing Bank
shall in any circumstances (either by reason of taking possession of the
Charged Assets or for any other reason whatsoever and whether as mortgagee
in possession or on any other basis whatsoever) be liable to the Company or
any other Person for any costs, charges, losses, damages, liabilities or
expenses arising from or connected with any realization of the Charged
Assets or from any act, default, omission or misconduct of such Person, its
officers, employees or agents in relation to the Charged Assets or in
connection with the Security Documents except to the extent that they shall
be caused by such Person's own fraud, gross negligence or willful
misconduct or that of its officers or employees.
None of the Agent, the Banks or the Issuing Bank shall by virtue of this
Clause 10(B) owe any duty of care or other duty to any Person which it
would not owe in the absence of this Clause 10(B).
C. Other's Liability to Account: All the provisions of Clause 10(B) shall
apply, mutatis mutandis, in respect of the liability of any Receiver or
Delegate or any officer, employee or agent of the Agent, any Bank, the
Issuing Bank, any Receiver or Delegate.
11. POWER OF ATTORNEY
A. Appointment: Upon the occurrence and during the continuance of an
Enforcement Event the Company hereby by way of security irrevocably
appoints the Agent, every Receiver and every Delegate severally its
attorney (with full power of substitution), on its behalf and in its name
or otherwise, at such time and in such manner as the attorney may think
fit:
(1) to do anything which the Company is obliged to do (but has not
done) under this Debenture including, without limitation, to execute
charges over, transfers or assignments of, and other instruments
relating to, the Charged Assets, and
(2) generally to exercise all or any of the Rights conferred on the
Agent, any Receiver or any Delegate in relation to the Charged Assets
or under this Debenture, the MCA or all other applicable laws.
B. Ratification: The Company hereby ratifies and confirms and agrees to
ratify and confirms whatever any such attorney shall do or purport to do in
the exercise or purported exercise of the power of attorney in Clause
11(A).
12. PROTECTION OF THIRD PARTIES
No Person dealing with the Agent, any Receiver or any Delegate shall
be concerned to inquire whether any event has happened upon which any of
the Rights conferred by or pursuant to this Debenture are or may be
exercisable, whether any consents, regulations,
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restrictions or directions relating to such Rights have been obtained or
complied with or otherwise as to the propriety or regularity of acts
purporting or intended to be in exercise of any such Rights or as to the
application of any money borrowed or raised. All the protection to
purchasers provided for in law or contained in any other legislation for
the time being in force shall apply to any Person purchasing from or
dealing with the Agent, any Receiver or any Delegate.
13. DEMANDS AND PAYMENTS
A. Demands: Any demand for payment made by the Agent shall be valid and
effective for all purposes of this Debenture notwithstanding that the
demand contains no statement of the relevant Liabilities or that it
inadvertently contains an inaccurate or incomplete statement of them.
B. Payments: All payments under or pursuant to this Debenture (including
damages for its breach) shall be made in the Currency of Account and in
such funds, to such account, with such financial institution and in such
other manner as may be agreed between the parties and, if not so agreed, as
the Agent may reasonably direct.
C. Receipts by the Agent and Receivers: All amounts from time to time
received or recovered by the Agent or any Receiver or Delegate in exercise
of their Rights under or in respect of this Debenture shall, subject to the
discharge of any liabilities having priority to the Liabilities, be applied
as follows:
(1) in or towards the payment of all costs, charges, losses,
liabilities and expenses of and incidental to the appointment of any
Receiver and the exercise of any of his Rights including his
remuneration and all outgoings paid by him
(2) in or towards the payment of such of the Liabilities in such order
as the Agent in its absolute discretion may from time to time
determine (save that the Agent may credit the same to, and require the
same to be paid to it for crediting to, an interest bearing suspense
account for so long and in such manner as the Agent may determine and
save that the Receiver may retain the same for so long and in such
manner as he and the Agent may reasonably determine)
(3) in payment of any surplus to the Company or other Person entitled
to it.
D. Avoidance of Payments: The Company shall on demand indemnify the Agent,
the Banks and the Issuing Bank against any funding or other cost, charge,
loss, liability or expense (including loss of profit) expended, paid,
incurred or debited in account by such Person as a result of the such
Person being required for any reason to refund all or part of any amount
received by it in respect of any of the Liabilities or any liability the
discharge of which is, directly or indirectly, guaranteed or otherwise
secured by the Company.
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E. Subrogation: For so long as any Charge remains outstanding:
(1) any Rights of the Company, by reason of the performance of any of
its obligations under this Debenture, the enforcement of any of the
Charges or any action taken pursuant to any Rights conferred by or in
connection with this Debenture, to be indemnified by any Person, to
prove in respect at any liability in the Winding-up of any Person or
to take the benefit of or enforce any Security, guarantees or
indemnities, shall be exercised and enforced only in such manner and
on such terms, as the Agent may reasonably require, and
(2) any amount received or recovered by the Company as a result of any
exercise of any such Rights shall be held in trust for and immediately
paid to the Agent.
14. DISCHARGE OF SECURITY
A. Continuing Security: Subject to Clause 5 and this Clause 14, the Charges
shall remain in full force and effect by way of continuing security and
shall not be affected in any way by any settlement of account (whether or
not any Liabilities remain outstanding thereafter) or other matter or thing
whatsoever and shall be in addition to any other Security, guarantee or
indemnity now or hereafter held by the Agent, any Bank, the Issuing Bank or
any other Person in respect of the Liabilities.
B. Security Unaffected: Without prejudice to the generality of Clause
14(A), neither the Charges nor the Liabilities shall be affected in any way
by:
(1) any other Security, guarantee or indemnity now or hereafter held
by the Agent, any Bank, the Issuing Bank or any other Person,
(2) (except to the extent of the relevant release) the release of any
Security, guarantee or indemnity (including this Debenture),
(3) (except to the extent of the relevant amendment or change) any
amendment to or change in any Security, guarantee or indemnity
(including this Debenture), the terms of any Liability or liability
the discharge of which is, directly or indirectly, guaranteed or
otherwise secured by the Company or any agreement or document relating
to any of the foregoing,
(4) the enforcement or absence of enforcement of any Security,
guarantee or indemnity (including this Debenture),
(5) any time, indulgence, concession, waiver or consent given to the
Company
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or any other Person, whether by the Agent, any Bank, the Issuing Bank
or any other Person,
(6) the making or absence of any demand for payment of any Liabilities
on the Company or any other Person, whether by the Agent, any Bank,
the Issuing Bank or any other Person,
(7) the receivership or Winding-up of the Company or any other Person,
or any step being taken for any such receivership or Winding-up, or
(8) the illegality, invalidity, or unenforceability of, or any defect
in, any provision of any agreement or document relating to the
Liabilities or any Security, guarantee or indemnity (including this
Debenture) or any of the Rights or obligations of any of the parties
under or in connection with any such document or any Security,
guarantee or indemnity (including this Debenture), whether on the
grounds of ultra vires, not being in the interests of the Company or
any other Person, not having been duly authorized, executed or
delivered by the Company or any other Person or for any other reason
whatsoever.
C. Final Redemption: Subject and without prejudice to Clause 14(D), upon
proof being given to the reasonable satisfaction of the Agent that all the
Liabilities have been discharged in full or that provision acceptable to
the Agent for such discharge has been made, and that all facilities which
might give rise to Liabilities have terminated, the Agent shall at the
request and cost of the Company execute and do all such deeds, acts and
things as may be necessary to release the Charged Assets from the Charges.
D. Avoidance of Payments: No assurance, Security, guarantee or payment
which may be avoided under any law relating to bankruptcy, insolvency,
receivership or Winding-up and no release, settlement, discharge or
arrangement given or made by the Agent, any Bank or the Issuing Bank on the
faith of any such assurance, Security, guarantee or payment, shall
prejudice or affect the right of the Agent to enforce the Charges to the
full extent of the Liabilities or any other Rights which the Agent, any
Bank or the Issuing Bank may have in respect of the Liabilities or any part
thereof. The Company agrees that in such circumstances the Charges and this
Debenture shall be deemed to have remained in full force and effect
notwithstanding any such assurance, Security, guarantee, payment, release,
settlement, discharge or arrangement.
15. RIGHTS AMENDMENTS, WAIVERS, CONSENTS AND DETERMINATIONS
A. Rights Additional: The Rights conferred by or pursuant to this Debenture
shall be in addition to and not in substitution for the Rights conferred on
mortgagees or Receivers by law, which shall apply to the Charges except
insofar (if at all) as they are expressly excluded. Where there is any
ambiguity or conflict between the Rights conferred by law
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and those conferred by or pursuant to this Debenture, the terms of this
Debenture shall prevail.
B. Exercise of Rights: Except as otherwise provided in this Debenture, all
Rights of the Agent or any Receiver hereunder may be exercised at any time
and from time to time at the absolute discretion of the Agent or, as the
case may be, Receiver. No failure on the part of the Agent or Receiver to
exercise, and no delay on its part in exercising, any Right under this
Debenture will operate as a waiver thereof, nor will any single or partial
exercise of any Right preclude any other or further exercise thereof or the
exercise of any other Right.
C. Amendments, Waivers and Consents: Any provision of this Debenture may be
amended, supplemented or novated only if the Company and the Agent so agree
in writing. Any waiver of, and any consent or approval by the Agent under,
any provision of this Debenture shall not be effective unless it is in
writing, and may be given subject to any conditions thought fit by the
Agent, and shall be effective only in the instance and for the purpose for
which it is given.
16. PARTIAL INVALIDITY
The illegality, invalidity or unenforceability of any provision of
this Debenture under the law of any jurisdiction shall not affect its
legality, validity or enforceability under the law of any other
jurisdiction nor the legality, validity or enforceability of any other
provision.
17. COMMUNICATIONS
A. Addresses: All notices and other communications provided for in this
Debenture shall be given or made by telex, telegraph, telecopy, cable or in
writing and telexed, telecopied, telegraphed, cabled, mailed by certified
mail return receipt requested, or delivered to the intended recipient at
the address specified below, or, as to any party at such other address as
shall be designated by such party in a notice to the other party given in
accordance with this Clause.
If to Agent: Bank One, Texas, N.A.
910 Travis
Houston, Texas 77002
Attention: Philip C. Lauinger, III
Telephone No.: 713-751-6199
Fax No.: 713-751-3644
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<PAGE> 169
with a copy to: Nathan Sommers Lippman Jacobs & Gorman
2800 Post Oak Boulevard, 61st Floor
Houston, Texas 77056
Attention: Ann C. Jacobs, Esq.
Telephone No.: 713-892-4878
Fax No.: 713-892-4800
If to Company: Veritas DGC (Malaysia) SDN. BHD.
Level 4, Block A, Lot 63
Taman Sri Sarawak Mall,
Jalan, Borneo, Kuching
Sarawak, East Malaysia
With a copy to: Veritas DGC (Malaysia) SDN. BHD.
c/o Veritas DGC Asia Pacific, Ltd.
Union Industrial Bldg. #06-01, 37
Jalan Pemimpin
Singapore 577177
Attention: Nirmal Singh
Telephone No.: 65-359-3212
Fax No.: 65-259-1336
with a copy to: Veritas DGC Inc.
3701 Kirby Drive, Suite 112
Houston, Texas 77098
Attention: Larry L. Worden
Telephone No.: 713-512-8300
Fax No.: 713-512-8701
B. Deemed Delivery: Except as otherwise provided in this Debenture,
communications shall be deemed to have been duly given when transmitted by
telex or telecopy, subject to telephone confirmation of receipt, or
delivered to the telegraph or cable office, subject to telephone
confirmation of receipt, or when personally delivered or, in the case of a
mailed notice, when duly deposited in the mails, in each case given or
addressed as aforesaid.
18. GOVERNING LAW
This Debenture shall be governed by and construed in accordance with
the laws of Malaysia.
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19. WITHHOLDING
A. Payments to be free and clear: All sums payable by the Company under
this Debenture shall be paid free of any restriction or conditions and free
and clear of and (except to the extent required by law) without any
deduction or withholding, whether for or on account of Tax, by way of
set-off or withholding or otherwise.
B. Grossing-up of Payments:
(1) If the Company or any other Person must at any time deduct or
withhold any Tax or other amount from any sum paid or payable by, or
received or receivable from, the Company under this Debenture, the
Company shall pay such additional amount as is necessary to ensure
that the Agent receives on the due date and retains (free from any
liability other than Tax on its own Overall Net Income) a net sum
equal to what it would have received and so retained had no such
deduction or withholding been required or made.
(2) If the Company or any other person must at any time pay any Tax or
other amount on, or calculated by reference to, any sum received or
receivable by the Agent under this Debenture (except for a payment by
the Agent or Tax on its own Overall Net Income), the Company shall pay
or procure the payment of that Tax or other amount before any interest
or penalty becomes payable or, if that Tax or other amount is payable
and paid by the Agent, shall reimburse it on demand for the amount
paid by it.
(3) Within 30 days after paying any sum from which it is required by
law to make any deduction or withholding, and within 30 days after the
due date of payment of any Tax or other amount which it is required by
paragraph (2) above to pay, the Company shall deliver to the Agent
evidence satisfactory to the Agent of that deduction, withholding or
payment and (where remittance is required) of the remittance thereof
to the relevant taxing or other authorities.
(4) In this Clause "Tax on Overall Net Income" of a Person shall be
construed as a reference to Tax (other than Tax deducted or withheld
from any payment) imposed on that Person by the jurisdiction in which
its principal office (and/or, in the case of the Agent, its office
through which it is acting in connection with this Debenture) is
located on (a) the net income, profits or gains of that Person
worldwide or (b) such of its net income, profits or gains as arise in
or relate to that jurisdiction.
20. CURRENCY INDEMNITY
A. The Currency of Account is the sole currency of account and Payment for
all sums payable by the Company under or in connection with this Debenture,
including damages.
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B. Any amount received or recovered in a currency other than the Currency
of Account (whether as a result of, or of the enforcement of, a judgment or
order of a court of any jurisdiction, in the Winding-up of the Company or
otherwise) by the Agent, any Bank or the Issuing Bank, as applicable, in
respect of any Liability shall only constitute a discharge to the Company
to the extent of the amount in the Currency of Account which such Person is
able, in accordance with its usual practice, to purchase with the amount so
received or recovered in that other currency on the date of that receipt or
recovery (or, if it is not practicable to make that purchase on that date,
on the first date on which it is practicable to do so). Any amount received
upon conversion which is greater than the amount of the liability in the
Currency of Account shall be refunded to the Company upon the payment of
all the Liabilities through its account that have been designated by the
Agent.
C. If that amount in the Currency of Account is less than the amount of the
Liability in the Currency of Account the Company shall indemnify the Agent,
the Banks and the Issuing Bank against any loss sustained by it as a
result. In any event, the Company shall indemnify the Agent against the
cost of making any such purchase. For the purpose of this Clause 20(C), it
will be sufficient for such Person to demonstrate that it would have
suffered a loss had an actual exchange or purchase been made.
D. The above indemnity constitutes a separate and independent obligation
from the other obligations in this Debenture, shall give rise to a separate
and independent cause of action, shall apply irrespective of any indulgence
granted by any of the Agent, the Banks or the Issuing Bank and shall
continue in full force and effect despite any Judgment, order, claim or
proof for a liquidated amount in respect of any Liability or any other
judgment or order.
21. The signature or sealing of this document by or on behalf of a party shall
constitute an authority to the solicitors, or an agent or employee of the
solicitors, acting for that party in connection with this document to deliver it
as a deed on behalf of that party.
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IN WITNESS whereof this Debenture has been duly executed as a deed the day
and year first above written.
The common Seal of
VERITAS DGC (MALAYSIA) SDN. BHD.
(Formerly known as Digicon (Malaysia)
Sdn. Bhd.)
was hereto affixed
in the presence of
- ----------------------------
------------------------------------
Director
------------------------------------
Director/Secretary
Signed by
and on behalf of
BANK ONE, TEXAS, N.A.
in the presence of
- ----------------------------
------------------------------------
Vice President
I, ____________________, (Notary Public) officiating at __________ hereby
certify that on this _____ day of _____________, 1999 the common seal of Veritas
DGC (Malaysia) Sdn. Bhd. (formerly known as Digicon (Malaysia) Sdn. Bhd.) was
duly affixed to the above written instrument in my presence in accordance with
the regulations of the said Company.
Witness my hand and seal this _____ day of _______________, 1999.
------------------------------------
Notary Public
My Commission Expires:
--------------
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EXHIBIT "C-4"
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FIXED AND FLOATING CHARGE DEBENTURE
dated November 1, 1999
created by
VERITAS DGC, LTD.
(registered no. 1082778)
in favour of
BANK ONE, TEXAS, N.A.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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THIS DEED OF DEBENTURE is made on November 1, 1999 BETWEEN
(1) VERITAS DGC, LTD., a company incorporated in England and Wales
(Registered No. 1082778) having its registered office at Digicon
Centre, Crompton Way, Crawley, Sussex, RH10 2QR, England (the
"Company"); and
(2) BANK ONE, TEXAS, N.A., a United States national banking association
acting through its offices at 910 Travis, Houston, Texas 77002 (the
"Agent", which expression includes its successors and assigns):
Background
(A) The Agent is the agent under the Credit Agreement (as the same may be
amended, supplemented, modified and/or restated from time to time, the "Credit
Agreement") dated as of November 1, 1999 among the Agent for itself and the
other banks or other lending institutions which are or may be from time to time
become a signatory, to the Credit Agreement, together with their successors and
assigns (collectively the "Banks" and each a "Bank") and itself as the issuing
bank for letters of credit (the "Issuing Bank") on the one hand, and Veritas DGC
Inc. (the "Borrower"), on the other hand, and the Banks and the Issuing Bank are
willing to make certain loan and letter of credit facilities available to the
Borrower on the terms and subject to the conditions set out in the Credit
Agreement. One of those conditions is that the Company enters into this
Debenture.
(B) The Board of Directors of the Company is satisfied that entering into this
Debenture is for the purposes and to the benefit of the Company and its
business.
NOW THIS DEBENTURE WITNESSES and IT IS AGREED as follows:
1. INTERPRETATION
A. Definitions: In this Debenture, except to the extent that the
context requires otherwise:
"Administration" means administration under Part II of the
Insolvency Act.
"Assets" means business, undertaking, property, assets,
revenues, Rights and uncalled capital wherever situated.
"Book Debts" means balances now or hereafter standing to the
credit of any current, deposit or other accounts now or
hereafter held by the Company with any Person (including the
Agent, the Banks and the Issuing Bank) and all other book and
other debts of any nature
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whatsoever now or hereafter due or owing to the Company and
the benefit of all negotiable instruments, Rights, Security,
guarantees and indemnities of any nature whatsoever now or at
any time hereafter enjoyed or held by it in relation thereto.
"Charged Assets" means subject to Clause 8(B), Assets from
time to time subject, or expressed to be subject, to the
Charges or any part of those Assets.
"Charges" means all or any of the Security created, or which
may at any time be created, by or pursuant to this Debenture.
"Currency of Account" means the currency in which the relevant
indebtedness is denominated or, if different, is payable.
"Default Rate" has the meaning ascribed to it in the Credit
Agreement.
"Delegate" means a delegate or sub-delegate appointed,
directly or indirectly, pursuant to Clause 9(B).
"Enforcement Event" has the meaning given to it in Clause
7(B).
"Guaranty" means the General Continuing Guaranty dated as of
even date herewith, made by the Company in favor of the Agent,
as the same may be modified or amended from time to time.
"LPA" means the Law of Property Act 1925.
"Liabilities" means (a) all of the Obligations-B (as defined
in the Credit Agreement) to the extent the Obligations-B
constitute Secured Obligations (as such term is defined in the
Credit Agreement) and (b) the obligations of the Company under
the Guaranty to the extent such obligations may be secured
under the provisions of the Credit Agreement and the Indenture
(as such term is defined in the Credit Agreement).
"Permitted Liens" means any permitted lien as defined in
Section 10.2 of the Credit Agreement.
"Person" includes any individual, company, corporation, firm,
partnership, joint venture, association, organization, trust,
state or agency of a state (in each case whether or not having
separate legal personality).
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"Receiver" means a receiver and manager or other receiver
appointed in respect of the Charged Assets (whether appointed
pursuant to this Debenture, pursuant to any statute, by a
court or otherwise).
"Rights" means rights, authorities, discretion, remedies,
liberties, powers, easements, quasi-easements and
appurtenances (in each case, of any nature whatsoever).
"Security" includes any mortgage, pledge, lien, hypothecation,
security interest or other charge or encumbrance and any other
agreement or arrangement having substantially the same
economic effect (including any "hold-back" or "flawed asset"
arrangement).
"Security Documents" means:
(a) this Debenture; and
(b) the Guaranty.
"Subsidiary" has the meaning ascribed to it by Section 736 of
the Companies Act 1985.
"Tax(es)" includes any present or future tax, levy, impost,
duty, charge, fee, deduction or withholding of any nature and
whatever called, by whomsoever, on whomsoever and wherever
imposed, levied, collected, withheld or assessed.
"the Winding-up" of a Person also includes the dissolution or
liquidation of that Person, and any equivalent or analogous
procedure under the law of any Jurisdiction (and references to
the commencement of any of the foregoing include a reference
to the presentation of a petition to a court of competent
jurisdiction or the passing of a valid resolution for or with
a view to any of the foregoing).
B. References to this Debenture and Other Documents: Except to the
extent that the context requires otherwise, any reference in this
Debenture to this Debenture or any other agreement or document is a
reference to this Debenture or, as the case may be, the relevant
agreement or document as from time to time amended, supplemented or
novated and includes a reference to any document which amends,
supplements, novates or is entered into, made or given pursuant to or
in accordance with any of the terms of, this Debenture or, as the case
may be, the relevant agreement or document.
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C. References to Statutes: Except where otherwise stated, any
reference in this Debenture to any Act of Parliament or any Section of
or other provision of an Act of Parliament shall be construed, at any
particular time, as including reference to any modification, extension
or re-enactment thereof then in force and instruments, orders and
regulations then in force and made under or deriving validity from the
relevant Act.
D. Headings: Headings shall be ignored in construing this
Debenture.
2. UNDERTAKING TO PAY
The Company shall discharge each Liability under the Security Documents
when due in accordance therewith.
3. SECURITY
A. Charging Provision: The Company as beneficial owner and as
security for the payment and discharge of all Liabilities hereby
charges in favour of the Agent:
(1) by way of first fixed charge, all Book Debts; and
(2) by way of first floating charge over accounts into
which Book Debts are or will be paid and all related documents
and records.
B. Ranking: The floating Charge created by Clause 3(A)(2) shall
rank behind all the fixed Charges created by or pursuant to this
Debenture but shall rank in priority to any other Security hereafter
created by the Company except for Security permitted by Clause 4(A)(3)
and except for Security ranking in priority in accordance with Clause
8(C)(4).
C. Conversion of Floating Charge: The Agent may by notice to the
Company convert the floating Charge created by Clause 3(A)(2) into a
fixed charge as regards such Charged Assets as shall be specified
(whether generally or specifically) in that notice (1) if it reasonably
considers that it would be desirable to do so in order to protect,
preserve or supplement the Charges over those Charged Assets or the
priority of those Charges and/or (2) on or at any time following the
occurrence and during the continuation of an Enforcement Event. If,
without the prior consent in writing of the Agent, the Company creates
any Security other than a Permitted Lien over any of the Charged Assets
not expressed to be subject to a fixed Charge under this Debenture, or
attempts to do so, or if any Person levies or attempts to levy any
distress, attachment, execution or other legal process against any of
such Charged Assets, the floating
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Charge created by this Debenture over the Charged Assets the subject of
such Security or process shall automatically, without notice, be
converted into a fixed Charge instantly such event occurs.
D. Delivery of Documents: If the Agent so requires by notice to
the Company, the Company shall, immediately deliver to the Agent copies
of the documents relating to all or any Book Debts as shall be
specified (whether generally or specifically) in the relevant notice.
E. Further Security: The Company shall, promptly upon the Agent
so requiring by notice to the Company, execute and deliver (or procure
the execution and delivery of) to the Agent (in such form as the Agent
shall reasonably require) in favour of the Agent securing the
Liabilities such other Security over such of the Company's other
present or future Assets as are expressed to be subject to a fixed
Charge as shall be specified in the relevant notice (whether generally
or specifically and whether for the purpose of obtaining legal title to
the relevant Assets, creating Security which is effective under the
laws of a foreign jurisdiction or otherwise).
F. Further Assurance: The Company shall promptly execute and do
all such assurances, acts and things as the Agent may reasonably
require (1) for perfecting or protecting the Charges or the priority of
the Charges or (2) for facilitating the realization of the Charged
Assets or the exercise of any Rights vested in the Agent, any Receiver
or any Delegate and shall in particular (without prejudice to the
generality of the foregoing) execute all transfers, conveyances,
assignments and assurances of the Charged Assets (whether to the Agent
or to its nominees or otherwise) and give all notices, orders and
directions which the Agent may reasonably request.
4. RESTRICTIONS ON DEALING
A. Security: The Company shall not create any Security on, over
or with respect to any of its present or future Assets except for:
(1) the Permitted Liens;
(2) the Charges; and
(3) liens arising solely by operation of law (or by an
agreement evidencing the same) in the ordinary course of the
Company's business in respect of indebtedness which either (a)
has been due for less than 7 days or (b) is being contested in
good faith and by appropriate means.
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B. Disposal: The Company shall not sell, factor, discount,
transfer, assign, lease or hire out, lend or otherwise dispose of any
of its present or future Assets nor agree to do any of the foregoing
except that, until (1) the floating Charge crystallizes, (2) the
Charges become enforceable and the Agent takes any step to enforce the
Charges the Company may take such actions with respect to its Assets as
are permitted by the terms of the Credit Agreement. Except upon the
occurrence and during the continuance of an Enforcement Event, the
Company may use the proceeds of its Book Debts in the ordinary course
of its business but subject to the terms of the Credit Agreement.
5. BOOK DEBTS
A. Collection: The Company shall promptly collect all Book Debts
and, until payment into an account with the Agent as provided in Clause
5(B), shall receive and hold the proceeds of collection on trust for
the Agent.
B. Payment into Designated Account: To the extent reasonably
practicable, the Company shall immediately pay all moneys received or
receivable by it from any source (including all proceeds of collection
of Book Debts) into such account as the Agent shall from time to time
designate or as otherwise acceptable to the Agent for the purpose of
receiving the relevant moneys. The Agent may designate different
accounts for different moneys.
C. Withdrawals: Upon the occurrence and during the continuance of
an Enforcement Event the Company shall not be entitled to withdraw all
or any part of the balance standing to the credit of any account with
the Agent except to such extent (if any) as the Agent may from time to
time permit. Permitting any particular withdrawal shall not commit the
Agent to permitting any other withdrawal. If the Agent debits any
amount to or from any account of the Company with the Agent then, on
the relevant debit being made, the relevant amount shall be
automatically released from the fixed Charge thereon created by or
pursuant to this Debenture. However, if and to the extent that all or
part of that amount is paid into another account of the Company
(whether with the same or another financial institution) which is in
credit or becomes in credit as a result, it shall thereupon
automatically become subject to the fixed Charge on the credit balance
in the other account.
D. Other Restrictions on Dealing, with Book Debts: Without
prejudice and in addition to Clauses 3(D), 3(E), 4(A) and 4(B):
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(1) except for the Charges, the Company shall not create or
have outstanding any Security, over all or any part of any of
the Book Debts;
(2) except as required by (4) below, the Company shall not
sell, factor, discount, transfer, assign, lend or otherwise
dispose of all or any part of any of the Book Debts;
(3) if called upon to do so by, the Agent, the Company shall
immediately deliver to the Agent such documents relating to
such of the Book Debts as the Agent may designate (either
generally or specifically); and
(4) if called upon to do so by the Agent, the Company shall
immediately execute and deliver to the Agent (in such form as
the Agent may reasonably require) a legal assignment of all
the Company's fight, title and interest in and to such of the
Book Debts as the Agent may designate (either generally or
specifically).
6. GENERAL UNDERTAKINGS, REPRESENTATIONS AND WARRANTIES
A. The Company undertakes as set out in Articles IX and X of the
Credit Agreement.
B. The Company represents and warrants as set out in Article VIII
of the Credit Agreement.
7. ENFORCEMENT
A. Exercise of Rights: The Charges shall be enforceable, and the
powers conferred by Section 101 of the LPA as varied and extended by
this Debenture shall be exercisable, upon and at any time after the
occurrence of an Enforcement Event. The Liabilities shall be deemed to
have become due for the purposes of Section 101 of the LPA upon the
occurrence of an Enforcement Event and Section 103 of the LPA shall not
apply to this Debenture.
B. Enforcement Events: The occurrence and continuance at any time
of an Event of Default (as defined in the Credit Agreement) or for any
reason, whether within or beyond the control of any party to this
Debenture, of any of the following events shall constitute an
Enforcement Event:
(1) Administration: Any step is taken by any Person with a
view to Administration of the Company.
(2) Arrangements with Creditors: The directors of the Company
make any proposal under Section 1 of the
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Insolvency Act, or the Company proposes or makes any agreement
for the deferral, rescheduling or other readjustment (or
proposes or makes a general assignment or an arrangement or
composition with or for the benefit of the relevant creditors)
of all of (or all of a particular type of) its debts (or of
any part which it will or might otherwise be unable to pay
when due), or a moratorium is agreed or declared in respect of
or affecting all or a material part of (or of a particular
type of) the debts of the Company.
(3) Security Enforceable: Any Security on or over the Assets
of the Company becomes enforceable and any step (including the
taking of possession or the appointment of a receiver, manager
or similar Person) taken to enforce that Security.
8. APPOINTMENT AND RIGHTS OF RECEIVERS
A. Appointment of Receivers: Either (1) if so requested by the
Company or (2) at any time after an Enforcement Event (whether or not
the Agent shall have taken possession of the Charged Assets), without
any notice or further notice, the Agent may by deed, or writing signed
by any officer or manager of the Agent or any Person authorized for
this purpose by the Agent, appoint any Person to be Receiver of the
Charged Assets and may similarly remove any Receiver and appoint any
Person instead of any Receiver. If the Agent appoints more than one
Person as Receiver of any Charged Assets, the Agent may give the
relevant Persons power to act either jointly or severally.
B. Scope of Appointment: Any Receiver may be appointed either
Receiver of all of the Charged Assets or Receiver of such part thereof
as may be specified in the appointment. In the latter case, the Rights
conferred on a Receiver by Clause 8(C) shall have effect as though
every reference in that Clause to the "Charged Assets" were a reference
to the part of such Assets so specified or any part thereof.
C. Rights of Receivers: Any Receiver appointed pursuant to this
Clause 8 shall have the Right, either in his own name or in the name of
the Company or otherwise and in such manner and upon such terms and
condition as the Receiver thinks fit:
(1) Deal with Charged Assets: To sell, transfer, assign,
otherwise dispose of or realize the Charged Assets and to
execute all agreements and documents for these purposes and
for consideration and so that (without limitation) he may do
any of these things for a consideration consisting of cash, or
other valuable consideration of any kind and any such
consideration
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may be payable or delivered a lump sum or by installments
spread over such period as he may think fit.
(2) Claims: To settle, adjust, refer to arbitration,
compromise and arrange any claims, accounts, disputes,
questions and demands with or by any Person who is or claims
to be a creditor of the Company or relating in any way to the
Charged Assets.
(3) Legal Actions: To bring, prosecute, enforce, defend and
abandon actions, suits and proceedings in relation to the
Charged Assets or any of the businesses of the Company.
(4) Redemption of Security: To redeem any Security (whether or
not having priority to the Charges) over the Charged Assets
and to settle the accounts of encumbrances.
(5) Employees etc: To appoint, hire and employ officers,
employees, contractors, agents and advisors of all kinds and
to discharge any such Persons and any such Persons appointed,
hired or employed by the Company.
(6) Other Powers: To do all such other acts and things he may
consider necessary or expedient for the realization of the
Charged Assets or incidental to the exercise of any of the
Rights conferred on the Receiver under or by virtue of this
Debenture.
D. Agent of Company: Any Receiver shall be the agent of the
Company for all purposes and the Company alone shall be responsible for
his contracts, engagements, acts, omissions, defaults and losses and
for liabilities incurred by him in the absence of gross negligence or
willful misconduct.
E. Remuneration: The Agent may from time to time in its
reasonable discretion determine the remuneration of any Receiver and
direct payment of such remuneration out of moneys accruing to him as
Receiver but the Company alone shall be liable for the payment of such
remuneration and for all other reasonable costs, charges and expenses
of the Receiver.
F. Directions of Agent: Any Receiver shall in the exercise of his
Rights conform to any reasonable regulations, restrictions and
directions from time to time made or given by the Agent.
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9. AGENT'S RIGHTS
A. Rights of Receiver: Any Rights conferred by this Debenture
(either expressly or impliedly) upon a Receiver may be exercised by the
Agent after the Charges become enforceable, irrespective of whether the
Agent shall have taken possession or appointed a Receiver of the
Charged Assets.
B. Delegation: The Agent may delegate in any manner to any Person
any of the Rights which are for the time being exercisable by the Agent
under this Debenture. Any such delegation may be made upon such
reasonable terms and conditions (including power to sub-delegate) as
the Agent may think fit.
C. Continuation of Accounts: At any time following (1) the Agent
receiving notice (either actual or otherwise) of any subsequent
Security, other than Permitted Liens, affecting the Charged Assets or
(2) the commencement of the Winding-up of the Company, the Agent may
open a new account in the name of the Company with the Agent (whether
or not it permits any existing account to continue). If the Agent does
not open such a new account, it shall nevertheless be treated as if it
had done so at the time, as the case may be, when the notice was
received or was deemed to have been received of the subsequent Security
or the Winding-up commenced. No moneys thereafter paid into any
account, whether new or continuing, shall discharge or reduce the
amount recoverable pursuant to this Debenture.
D. Set-Off: The Company authorizes the Agent to apply (without
prior notice) any credit balance (whether or not then due) to which the
Company is at any time beneficially entitled on any account at, any sum
held to its order by and/or any liability of, any office of the Agent
in or towards satisfaction of all or any part of the Liabilities then
due, as provided in the Credit Agreement.
10. LIABILITY OF AGENT, RECEIVERS AND DELEGATES
A. Possession: If the Agent, any Receiver or any Delegate shall
take possession of the Charged Assets, he may at any time relinquish
such possession. The Agent shall not become liable as a mortgagee in
possession by reason of viewing the state of repair of, or repairing
any of, the Company's present or future Assets.
B. Agent's Liability: None of the Agent, the Banks or the Issuing
Bank shall in any circumstances (either by reason of taking possession
of the Charged Assets or for any other reason whatsoever and whether as
mortgagee in possession or on any other basis whatsoever) be liable to
the Company or
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any other Person for any costs, charges, losses, damages, liabilities
or expenses arising from or connected with any realization of the
Charged Assets or from any act, default, omission or misconduct of such
Person, its officers, employees or agents in relation to the Charged
Assets or in connection with the Security Documents except to the
extent that they shall be caused by such Person's own fraud, gross
negligence or willful misconduct or that of its officers or employees.
None of the Agent, the Banks or the Issuing Bank shall by virtue of
this Clause 10(B) owe any duty of care or other duty to any Person
which it would not owe in the absence of this Clause 10(B).
C. Other's Liability to Account: All the provisions of Clause
10(B) shall apply, mutatis mutandis, in respect of the liability of any
Receiver or Delegate or any officer, employee or agent of the Agent,
any Bank, the Issuing Bank, any Receiver or Delegate.
11. POWER OF ATTORNEY
A. Appointment: Upon the occurrence and during the continuance of
an Enforcement Event the Company hereby by way of security irrevocably
appoints the Agent, every Receiver and every Delegate severally its
attorney (with full power of substitution), on its behalf and in its
name or otherwise, at such time and in such manner as the attorney may
think fit:
(1) to do anything which the Company is obliged to do (but has
not done) under this Debenture including, without limitation,
to execute charges over, transfers or assignments of, and
other instruments relating to, the Charged Assets, and
(2) generally to exercise all or any of the Rights conferred
on the Agent, any Receiver or any Delegate in relation to the
Charged Assets or under this Debenture, the LPA or the
Insolvency Act.
B. Ratification: The Company hereby ratifies and confirms and
agrees to ratify and confirm whatever any such attorney shall do or
purport to do in the exercise or purported exercise of the power of
attorney in Clause 11(A).
12. PROTECTION OF THIRD PARTIES
No Person dealing with the Agent, any Receiver or any Delegate
shall be concerned to inquire whether any event has happened upon which
any of the Rights conferred by or pursuant to this Debenture are or may
be exercisable, whether
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any consents, regulations, restrictions or directions relating to such
Rights have been obtained or complied with or otherwise as to the
propriety or regularity of acts purporting or intended to be in
exercise of any such Rights or as to the application of any money
borrowed or raised. All the protection to purchasers contained in
Sections 104 and 107 of the LPA, Section 42(3) of the Insolvency Act or
in any other legislation for the time being in force shall apply to any
Person purchasing from or dealing with the Agent, any Receiver or any
Delegate.
13. DEMANDS AND PAYMENTS
A. Demands: Any demand for payment made by the Agent shall be
valid and effective for all purposes of this Debenture notwithstanding
that the demand contains no statement of the relevant Liabilities or
that it inadvertently contains an inaccurate or incomplete statement of
them.
B. Payments: All payments under or pursuant to this Debenture
(including damages for its breach) shall be made in the Currency of
Account and in such funds, to such account, with such financial
institution and in such other manner as may be agreed between the
parties and, if not so agreed, as the Agent may reasonably direct.
C. Receipts by the Agent and Receivers: All amounts from time to
time received or recovered by the Agent or any Receiver or Delegate in
exercise of their Rights under or in respect of this Debenture shall,
subject to the discharge of any liabilities having priority to the
Liabilities, be applied as follows:
(1) in or towards the payment of all costs, charges, losses,
liabilities and expenses of and incidental to the appointment
of any Receiver and the exercise of any of his Rights
including his remuneration and all outgoings paid by him
(2) in or towards the payment of such of the Liabilities in
such order as the Agent in its absolute discretion may from
time to time determine (save that the Agent may credit the
same to, and require the same to be paid to it for crediting
to, an interest bearing suspense account for so long and in
such manner as the Agent may determine and save that the
Receiver may retain the same for so long and in such manner as
he and the Agent may reasonably determine)
(3) in payment of any surplus to the Company or other Person
entitled to it.
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D. Avoidance of Payments: The Company shall on demand indemnify
the Agent, the Banks and the Issuing Bank against any funding or other
cost, charge, loss, liability or expense (including loss of profit)
expended, paid, incurred or debited in account by such Person as a
result of the such Person being required for any reason to refund all
or part of any amount received by it in respect of any of the
Liabilities or any liability the discharge of which is, directly or
indirectly, guaranteed or otherwise secured by the Company.
E. Subrogation: For so long as any Charge remains outstanding:
(1) any Rights of the Company, by reason of the performance of
any of its obligations under this Debenture, the enforcement
of any of the Charges or any action taken pursuant to any
Rights conferred by or in connection with this Debenture, to
be indemnified by any Person, to prove in respect at any
liability in the Winding-up of any Person or to take the
benefit of or enforce any Security, guarantees or indemnities,
shall be exercised and enforced only in such manner and on
such terms, as the Agent may reasonably require, and
(2) any amount received or recovered by the Company as a
result of any exercise of any such Rights shall be held in
trust for and immediately paid to the Agent.
14. DISCHARGE OF SECURITY
A. Continuing Security: Subject to Clause 5 and this Clause 14,
the Charges shall remain in full force and effect by way of continuing
security and shall not be affected in any way by any settlement of
account (whether or not any Liabilities remain outstanding thereafter)
or other matter or thing whatsoever and shall be in addition to any
other Security, guarantee or indemnity now or hereafter held by the
Agent, any Bank, the Issuing Bank or any other Person in respect of the
Liabilities.
B. Security Unaffected: Without prejudice to the generality of
Clause 14(A), neither the Charges nor the Liabilities shall be affected
in any way by:
(1) any other Security, guarantee or indemnity now or
hereafter held by the Agent, any Bank, the Issuing Bank or any
other Person,
(2) (except to the extent of the relevant release) the release
of any Security, guarantee or indemnity (including this
Debenture),
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(3) (except to the extent of the relevant amendment or change)
any amendment to or change in any Security, guarantee or
indemnity (including this Debenture), the terms of any
Liability or liability the discharge of which is, directly or
indirectly, guaranteed or otherwise secured by the Company or
any agreement or document relating to any of the foregoing,
(4) the enforcement or absence of enforcement of any Security,
guarantee or indemnity (including this Debenture),
(5) any time, indulgence, concession, waiver or consent given
to the Company or any other Person, whether by the Agent, any
Bank, the Issuing Bank or any other Person,
(6) the making or absence of any demand for payment of any
Liabilities on the Company or any other Person, whether by the
Agent, any Bank, the Issuing Bank or any other Person,
(7) the Administration or Winding-up of the Company or any
other Person, or any step being taken for any such
Administration or Winding-up, or
(8) the illegality, invalidity or unenforceability of, or any
defect in, any provision of any agreement or document relating
to the Liabilities or any Security, guarantee or indemnity
(including this Debenture) or any of the Rights or obligations
of any of the parties under or in connection with any such
document or any Security, guarantee or indemnity (including
this Debenture), whether on the grounds of ultra vires, not
being in the interests of the Company or any other Person, not
having been duly authorized, executed or delivered by the
Company or any other Person or for any other reason
whatsoever.
C. Final Redemption: Subject and without prejudice to Clause
14(D), upon proof being given to the reasonable satisfaction of the
Agent that all the Liabilities have been discharged in full or that
provision acceptable to the Agent for such discharge has been made, and
that all facilities which might give rise to Liabilities have
terminated, the Agent shall at the request and cost of the Company
execute and do all such deeds, acts and things as may be necessary to
release the Charged Assets from the Charges.
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D. Avoidance of Payments: No assurance, Security, guarantee or
payment which may be avoided under any law relating to bankruptcy,
insolvency, Administration or Winding-up (including Section 238, 239,
242, 243 or 245 of the Insolvency Act) and no release, settlement,
discharge or arrangement given or made by the Agent, any Bank or the
Issuing Bank on the faith of any such assurance, Security, guarantee or
payment, shall prejudice or affect the right of the Agent to enforce
the Charges to the full extent of the Liabilities or any other Rights
which the Agent, any Bank or the Issuing Bank may have in respect of
the Liabilities or any part thereof. The Company agrees that in such
circumstances the Charges and this Debenture shall be deemed to have
remained in full force and effect notwithstanding any such assurance,
Security, guarantee, payment, release, settlement, discharge or
arrangement.
15. RIGHTS AMENDMENTS, WAIVERS, CONSENTS AND DETERMINATIONS
A. Rights Additional: The Rights conferred by or pursuant to this
Debenture shall be in addition to and not in substitution for the
Rights conferred on mortgagees or Receivers by law, which shall apply
to the Charges except insofar (if at all) as they are expressly
excluded. Where there is any ambiguity or conflict between the Rights
conferred by law and those conferred by or pursuant to this Debenture,
the terms of this Debenture shall prevail.
B. Exercise of Rights: Except as otherwise provided in this
Debenture, all Rights of the Agent or any Receiver hereunder may be
exercised at any time and from time to time at the absolute discretion
of the Agent or, as the case may be, Receiver. No failure on the part
of the Agent or Receiver to exercise, and no delay on its part in
exercising, any Right under this Debenture will operate as a waiver
thereof, nor will any single or partial exercise of any Right preclude
any other or further exercise thereof or the exercise of any other
Right.
C. Amendments, Waivers and Consents: Any provision of this
Debenture may be amended, supplemented or novated only if the Company
and the Agent so agree in writing. Any waiver of, and any consent or
approval by the Agent under, any provision of this Debenture shall not
be effective unless it is in writing, and may be given subject to any
conditions thought fit by the Agent, and shall be effective only in the
instance and for the purpose for which it is given.
16. PARTIAL INVALIDITY
The illegality, invalidity or unenforceability of any
provision of this Debenture under the law of any jurisdiction shall not
affect its legality, validity or enforceability under the law of any
other jurisdiction nor the legality, validity or enforceability of any
other provision.
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17. COMMUNICATIONS
A. Addresses: All notices and other communications provided for
in this Debenture shall be given or made by telex, telegraph, telecopy,
cable or in writing and telexed, telecopied, telegraphed, cabled,
mailed by certified mail return receipt requested, or delivered to the
intended recipient at the address specified below, or, as to any party
at such other address as shall be designated by such party in a notice
to the other party given in accordance with this Clause.
If to Agent: Bank One, Texas, N.A.
910 Travis
Houston, Texas 77002
Attention: Philip C. Lauinger, III
Telephone No.: 713-751-6199
Fax No.: 713-751-3644
with a copy to: Nathan Sommers Lippman Jacobs & Gorman
2800 Post Oak Boulevard, 61st Floor
Houston, Texas 77056
Attention: Ann C. Jacobs, Esq.
Telephone No.: 713-892-4878
Fax No.: 713-892-4800
If to Company: Veritas DGC, Ltd.
Digicon Centre, Crompton Way
Crawley, Sussex, RH10 2QR
England
Attention: Martin Sambrook
Telephone No.: 011-44-1293-443000
Fax No.: 011-44-1293-443010
with a copy to: Veritas DGC Inc.
3701 Kirby Drive, Suite 112
Houston, Texas 77098
Attention: Larry L. Worden
Telephone No.: 713-512-8300
Fax No.: 713-512-8701
B. Deemed Delivery: Except as otherwise provided in this
Debenture, communications shall be deemed to have been duly given when
transmitted by telex or telecopy, subject to telephone confirmation of
receipt, or delivered to the telegraph or cable office, subject to
telephone confirmation of receipt, or when personally delivered or, in
the case of a mailed notice, when duly deposited in the mails, in each
case given or addressed as aforesaid.
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18. GOVERNING LAW
This Debenture shall be governed by and construed in
accordance with the laws of England.
19. WITHHOLDING
A. Payments to be free and clear: All sums payable by the Company
under this Debenture shall be paid free of any restriction or
conditions and free and clear of and (except to the extent required by
law) without any deduction or withholding, whether for or on account of
Tax, by way of set-off or withholding or otherwise.
B. Grossing-up of Payments:
(1) If the Company or any other Person must at any time deduct
or withhold any Tax or other amount from any sum paid or
payable by, or received or receivable from, the Company under
this Debenture, the Company shall pay such additional amount
as is necessary to ensure that the Agent receives on the due
date and retains (free from any liability other than Tax on
its own Overall Net Income) a net sum equal to what it would
have received and so retained had no such deduction or
withholding been required or made.
(2) If the Company or any other person must at any time pay
any Tax or other amount on, or calculated by reference to, any
sum received or receivable by the Agent under this Debenture
(except for a payment by the Agent or Tax on its own Overall
Net Income), the Company shall pay or procure the payment of
that Tax or other amount before any interest or penalty
becomes payable or, if that Tax or other amount is payable and
paid by the Agent, shall reimburse it on demand for the amount
paid by it.
(3) Within 30 days after paying any sum from which it is
required by law to make any deduction or withholding, and
within 30 days after the due date of payment of any Tax or
other amount which it is required by paragraph (2) above to
pay, the Company shall deliver to the Agent evidence
satisfactory to the Agent of that deduction, withholding or
payment and (where remittance is required) of the remittance
thereof to the relevant taxing or other authorities.
(4) In this Clause "Tax on Overall Net Income" of a Person
shall be consumed as a reference to Tax (other than Tax
deducted or withheld from any payment) imposed
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on that Person by the jurisdiction in which its principal
office (and/or, in the case of the Agent, its office through
which it is acting in connection with this Debenture) is
located on (a) the net income, profits or gains of that Person
worldwide or (b) such of its net income, profits or gains as
arise in or relate to that jurisdiction.
20. CURRENCY INDEMNITY
A. The Currency of Account is the sole currency of account and
Payment for all sums payable by the Company under or in connection with
this Debenture, including damages.
B. Any amount received or recovered in a currency other than the
Currency of Account (whether as a result of, or of the enforcement of,
a judgment or order of a court of any jurisdiction, in the Winding-up
of the Company or otherwise) by the Agent, any Bank or the Issuing
Bank, as applicable, in respect of any Liability shall only constitute
a discharge to the Company to the extent of the amount in the Currency
of Account which such Person is able, in accordance with its usual
practice, to purchase with the amount so received or recovered in that
other currency on the date of that receipt or recovery (or, if it is
not practicable to make that purchase on that date, on the first date
on which it is practicable to do so). Any amount received upon
conversion which is greater than the amount of the liability in the
Currency of Account shall be refunded to the Company upon the payment
of all the Liabilities through its account that have been designated by
the Agent.
C. If that amount in the Currency of Account is less than the
amount of the Liability in the Currency of Account the Company shall
indemnify the Agent, the Banks and the Issuing Bank against any loss
sustained by it as a result. In any event, the Company shall indemnify
the Agent against the cost of making any such purchase. For the purpose
of this Clause 20(c), it will be sufficient for such Person to
demonstrate that it would have suffered a loss had an actual exchange
or purchase been made.
D. The above indemnity constitutes a separate and independent
obligation from the other obligations in this Debenture, shall give
rise to a separate and independent cause of action, shall apply
irrespective of any indulgence granted by any of the Agent, the Banks
or the Issuing Bank and shall continue in full force and effect despite
any Judgment, order, claim or proof for a liquidated amount in respect
of any Liability or any other judgment or order.
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21. The signature or sealing of this document by or on behalf of a party
shall constitute an authority to the solicitors, or an agent or
employee of the solicitors, acting for that party in connection with
this document to deliver it as a deed on behalf of that party.
IN WITNESS whereof this Debenture has been duly executed as a deed the
day and year first above written.
Signed as a Deed by
VERITAS DGC, LTD. acting by
__________ a Director
and __________
a Director/Secretary
- ------------------------------------
Director
- ------------------------------------
Director/Secretary
Signed by
and on behalf of
BANK ONE, TEXAS, N.A.
in the presence of
- -----------------------------
- ------------------------------------
Vice President
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EXHIBIT "D-1"
FORM OF GENERAL CONTINUING GUARANTY - DOMESTIC
WHEREAS, the execution of this General Continuing Guaranty (this
"Guaranty Agreement") is a condition to Veritas DGC Inc., a Delaware corporation
(the "Borrower"), borrowing from the Banks (as hereinafter defined), and
obtaining other credit in the amount of the aggregate principal amount of Fifty
Million Dollars ($50,000,000), pursuant to that certain Credit Agreement dated
as of November 1, 1999, among Borrower, Banks, the Issuing Bank (as hereinafter
defined) and Bank One, Texas, N.A., as agent (in such capacity, the "Agent") for
itself, the Banks and the Issuing Bank (such Credit Agreement, and as it may
hereafter be amended or modified from time to time, being hereinafter referred
to as the "Credit Agreement").
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the undersigned, _______________________, a
___________________________, (the "Guarantor"), hereby irrevocably and
unconditionally guarantees the Bank, the Issuing Bank and the Agent the full and
prompt payment and performance of the Guaranteed Indebtedness (hereinafter
defined), this Guaranty Agreement being upon the following terms:
1. (a) The term "Guaranteed Indebtedness" as used herein means all of
the "Obligations", as defined in the Credit Agreement; PROVIDED, HOWEVER THAT
THE GUARANTEED INDEBTEDNESS SHALL NOT EXCEED AN AMOUNT EQUAL TO THE SUM OF THE
"SECURED OBLIGATIONS", AS DEFINED IN THE CREDIT AGREEMENT, PLUS THE "PERMITTED
SUBSIDIARY INDEBTEDNESS", AS DEFINED IN THE CREDIT AGREEMENT. The term
"Guaranteed Indebtedness" shall include any and all postpetition interest and
expenses (including attorneys' fees) whether or not allowed under any
bankruptcy, insolvency, or other similar law.
(b) The term "Banks" and "Issuing Bank", as well as other
capitalized terms not otherwise defined herein, have the respective meanings set
forth in the Credit Agreement.
2. This instrument shall be an absolute, continuing, irrevocable, and
unconditional guaranty of payment and performance, and not a guaranty of
collection, and Guarantor shall remain liable on its obligations hereunder until
the payment and performance in full of the Guaranteed Indebtedness. No set-off,
counterclaim, recoupment, reduction, or diminution of any obligation, or any
defense of any kind or nature which Borrower may have against Guarantor, the
Agent, any Bank, the Issuing Bank or any other party, or which Guarantor may
have against Borrower, the Agent, any Bank, the Issuing Bank, or any other
party, shall be available to, or shall be asserted by, Guarantor against the
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Agent, any Bank, the Issuing Bank or any subsequent holder of the Guaranteed
Indebtedness or any part thereof or against payment of the Guaranteed
Indebtedness or any part thereof.
3. If Guarantor becomes liable for any indebtedness owing by Borrower
to the Agent, any Bank or the Issuing Bank by endorsement or otherwise, other
than under this Guaranty Agreement, such liability shall not be in any manner
impaired or affected hereby, and the rights of such Person hereunder shall be
cumulative of any and all other rights that such Person may ever have against
Guarantor. The exercise by the Agent, any Bank or the Issuing Bank of any right
or remedy hereunder or under any other instrument, or at law or in equity, shall
not preclude the concurrent or subsequent exercise of any other right or remedy.
4. In the event of default by Borrower in payment or performance of the
Guaranteed Indebtedness, or any part thereof, when such Guaranteed Indebtedness
becomes due, whether by its terms, by acceleration, or otherwise, Guarantor
shall promptly pay the amount due without notice or demand in lawful currency of
the United States of America and it shall not be necessary for the Agent, in
order to enforce such payment by Guarantor, first to institute suit or exhaust
its remedies against Borrower or others liable on such Guaranteed Indebtedness,
or to enforce any rights against any collateral which shall ever have been given
to secure such Guaranteed Indebtedness. Notwithstanding anything to the contrary
contained in this Guaranty Agreement, until the Guaranteed Indebtedness is paid
in full and a period of ninety (90) days has passed following such payment,
Guarantor waives any and all rights it may now or hereafter have under any
agreement or at law or in equity (including, without limitation, any law
subrogating Guarantor to the rights of Lender) to assert any claim against or
seek contribution, indemnification or any other form of reimbursement from
Borrower or any other party liable for payment of any or all of the Guaranteed
Indebtedness for any payment made by Guarantor under or in connection with this
Guaranty Agreement or otherwise. Without limiting the foregoing, Guarantor
expressly waives the provisions of Chapter 34 of the Texas Business and Commerce
Code, as amended, and any successor provision.
5. If acceleration of the time for payment of any amount payable by
Borrower under the Guaranteed Indebtedness is stayed upon the insolvency,
bankruptcy, or reorganization of Borrower, all such amounts otherwise subject to
acceleration under the terms of the Guaranteed Indebtedness shall nonetheless be
payable by Guarantor hereunder forthwith on demand by the Agent.
6. Guarantor hereby agrees that its obligations under this Guaranty
Agreement shall not be released, discharged, diminished, impaired, reduced, or
affected for any reason or by the occurrence of any event, including, without
limitation, one or more of the following events, whether or not with notice to
or the consent of
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Guarantor: (a) the taking or accepting of collateral as security for any or all
of the Guaranteed Indebtedness or the release, surrender, exchange, or
subordination of any collateral now or hereafter securing any or all of the
Guaranteed Indebtedness; (b) any partial release of the liability of Guarantor
hereunder, or the full or partial release of any other guarantor from liability
for any or all of the Guaranteed Indebtedness; (c) any disability of Borrower,
or the dissolution, insolvency, or bankruptcy of Borrower, Guarantor, or any
other party at any time liable for the payment of any or all of the Guaranteed
Indebtedness; (d) any renewal, extension, modification, waiver, amendment, or
rearrangement of any or all of the Guaranteed Indebtedness or any instrument,
document, or agreement evidencing, securing, or otherwise relating to any or all
of the Guaranteed Indebtedness; (e) any adjustment, indulgence, forbearance,
waiver, or compromise that may be granted or given by the Agent, any Bank or the
Issuing Bank to Borrower, Guarantor, or any other party ever liable for any or
all of the Guaranteed Indebtedness; (f) any neglect, delay, omission, failure,
or refusal of the Agent to take or prosecute any action for the collection of
any of the Guaranteed Indebtedness or to foreclose or take or prosecute any
action in connection with any instrument, document, or agreement evidencing,
securing, or otherwise relating to any or all of the Guaranteed Indebtedness;
(g) the unenforceability or invalidity of any or all of the Guaranteed
Indebtedness or of any instrument, document, or agreement evidencing, securing,
or otherwise relating to any or all of the Guaranteed Indebtedness; (h) any
payment by Borrower or any other party to the Agent, any Bank on the Issuing
Bank is held to constitute a preference under applicable bankruptcy or
insolvency law or if for any other reason any of the Agent, any Bank or the
Issuing Bank is required to refund any payment or pay the amount thereof to
someone else; (i) the settlement or compromise of any of the Guaranteed
Indebtedness; (j) the non-perfection of any security interest or lien securing
any or all of the Guaranteed Indebtedness; (k) any impairment of any collateral
securing any or all of the Guaranteed Indebtedness; (l) the failure of the Agent
to sell any collateral securing any or all of the Guaranteed Indebtedness in a
commercially reasonable manner or as otherwise required by law; (m) any change
in the corporate existence, structure, or ownership of Borrower; or (n) any
other circumstance which might otherwise constitute a defense available to, or
discharge of, Borrower or Guarantor.
7. Guarantor represents and warrants to the Agent as follows:
(a) Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, is qualified to do business in all jurisdictions in which the
nature of the business conducted by it makes such qualification necessary and
where failure to so qualify, would have a material adverse effect on its
business, financial condition, or operations.
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(b) Guarantor has the corporate power and authority and legal
right to execute, deliver, and perform its obligations under this Guaranty
Agreement and this Guaranty Agreement constitutes the legal, valid, and binding
obligation of Guarantor, enforceable against Guarantor in accordance with its
respective terms, except as limited by bankruptcy, insolvency, or other laws of
general application relating to the enforcement of creditor's rights.
(c) The execution, delivery, and performance by Guarantor of
this Guaranty Agreement have been duly authorized by all requisite action on the
part of Guarantor and do not and will not violate or conflict with the
memorandum of association or articles of association of Guarantor or any law,
rule, or regulation or any order, writ, injunction or decree of any court,
governmental authority or agency, or arbitrator and do not and will not conflict
with, result in a breach of, or constitute a default under, or result in the
imposition of any lien upon any assets of Guarantor pursuant to the provisions
of any indenture, mortgage, deed of trust, security agreement, franchise,
permit, license, or other instrument or agreement to which Guarantor or its
properties is bound.
(d) No authorization, approval, or consent of, and no filing
or registration with, any court, governmental authority, or third party is
necessary for the execution, delivery or performance by Guarantor of this
Guaranty Agreement or the validity or enforceability thereof.
(e) The value of the consideration received and to be received
by Guarantor as a result of Borrower, the Agent, the Banks and the Issuing Bank
entering into the Credit Agreement and Guarantor executing and delivering this
Guaranty Agreement is reasonably worth at least as much as the liability and
obligation of Guarantor hereunder, and such liability and obligation and the
Credit Agreement have benefited and may reasonably be expected to benefit
Guarantor directly or indirectly.
(f) Guarantor has, independently and without reliance upon the
Agent and based upon such documents and information as Guarantor has deemed
appropriate, made its own analysis and decision to enter into this Guaranty
Agreement.
8. Guarantor covenants and agrees that, as long as the Guaranteed
Indebtedness or any part thereof is outstanding or the Agent, any Bank or the
Issuing Bank has any commitment under the Credit Agreement:
(a) Guarantor will furnish promptly to the Agent written
notice of the occurrence of any default under this
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Guaranty Agreement or an Event of Default under the Credit Agreement of which
Guarantor has knowledge;
(b) Guarantor will furnish promptly to the Agent such
additional information concerning Guarantor as the Agent may request; and
(c) Guarantor will obtain at any time and from time to time
all authorizations, licenses, consents or approvals as shall now or hereafter be
necessary or desirable under all applicable laws or regulations or otherwise in
connection with the execution, delivery and performance of this Guaranty
Agreement and will promptly furnish copies thereof to the Agent.
9. (a) Guarantor represents and warrants to the Agent that all devices,
systems, machinery, information technology, computer software and hardware, and
other date sensitive technology (jointly and severally, the "Systems") necessary
for Guarantor and its subsidiaries to carry on their business as presently
conducted and as contemplated to be conducted in the future are Year 2000
Compliant or will be Year 2000 Compliant within a period of time calculated to
result in no material disruption of any of Guarantor's or any subsidiary's
business operations. For purposes of these provisions, "Year 2000 Compliant"
means that the Systems are designed to be used prior to, during and after the
Gregorian Calendar year 2000 A.D. and will operate during each such time prior
without error relating to date data, specifically including any error relating
to, or the product of, date data which represents or references different
centuries or more that one century.
(b) Guarantor represents and warrants to the Agent that Guarantor has
(i) undertaken a detailed inventory, review and assessment of all areas within
its and its subsidiaries' businesses and operations that could be adversely
affected by the failure of Guarantor or any subsidiary to be Year 2000 Compliant
on a timely basis, (ii) developed a detailed plan and time line for becoming
Year 2000 Compliant on a timely basis and (iii) to date, implemented that plan
in accordance with that timetable in all material respects.
(c) Guarantor represents and warrants to the Agent that Guarantor has
made, and has caused each of its subsidiaries to make, written inquiry of each
of its key suppliers, vendors and customers, and has obtained, and has caused
each of its subsidiaries to obtain, in writing confirmations from all such
Persons as to whether such Persons have initiated programs to become Year 2000
Compliant. On the basis of such confirmations, Guarantor reasonably believes
that all of such Persons will be or become so compliant. For purposes hereof,
"key suppliers, vendors and customers" refers to those suppliers, vendors and
customers of Guarantor and its subsidiaries whose business failure would, with
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reasonable probability, result in a Material Adverse Effect (as defined in the
Credit Agreement).
(d) Guarantor will (i) furnish such additional information, statements
and other reports with respect to Guarantor's and its subsidiaries' activities,
course of action and progress towards becoming Year 2000 Compliant as the Agent
may request from time to time, (ii) promptly notify the Agent of any change in
circumstances that causes or would likely cause the Borrower's representations
contained in this Section 9 to no longer be true and the details thereof, and
(iii) permit the Agent or its representatives, at the expense of the Agent, upon
reasonable notice during business hours, to inspect and test the Systems of
Guarantor and its subsidiaries to determine if they are Year 2000 Compliant.
10. The Agent shall have the right to set off and apply against this
Guaranty Agreement or the Guaranteed Indebtedness or both, at any time and
without notice to Guarantor, any and all deposits (general or special, time or
demand, provisional or final) or other sums at any time credited by or owing
from the Agent to Guarantor provided that the Guaranteed Indebtedness is then
due and irrespective of whether or not the Agent shall have made any demand
under this Guaranty Agreement. As security for this Guaranty Agreement and the
Guaranteed Indebtedness, Guarantor hereby grants the Agent a security interest
in all money, instruments, certificates of deposit, and other property of
Guarantor now or hereafter held by the Agent, including without limitation,
property held in safekeeping. In addition to the Agent's right of setoff and as
further security for this Guaranty Agreement and the Guaranteed Indebtedness,
Guarantor hereby grants the Agent a security interest in all deposits (general
or special, time or demand, provisional or final) and all other accounts of
Guarantor now or hereafter on deposit with or held by the Agent and all other
sums at any time credited by or owing from the Agent to Guarantor. The rights
and remedies of the Agent hereunder are in addition to other rights and remedies
(including, without limitation, other rights of setoff) which the Agent may
have.
11. (a) Guarantor hereby agrees that the Subordinated Indebtedness
shall be subordinate and junior in right of payment to the prior payment in full
of all Guaranteed Indebtedness, and Guarantor hereby assigns the Subordinated
Indebtedness to the Agent as security for the Guaranteed Indebtedness. If any
sums shall be paid to Guarantor by Borrower or any other person or entity on
account of the Subordinated indebtedness at any time while an Event of Default
has occurred and is continuing, such sums shall be held in "trust" by Guarantor
for the benefit of the Agent and shall forthwith be paid to the Agent without
affecting the liability of Guarantor under this Guaranty Agreement and may be
applied by the Agent against the Guaranteed Indebtedness in such order and
manner as the Agent may determine in its sole
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discretion. Upon the request of the Agent, Guarantor shall execute, deliver, and
endorse to the Agent such documents and instruments as the Agent may request to
perfect, preserve, and enforce its rights hereunder. For purposes of this
Guaranty Agreement, the term "Subordinated Indebtedness" means all indebtedness,
liabilities, and obligations of Borrower to Guarantor, whether such
indebtedness, liabilities, and obligations now exist or are hereafter incurred
or arise, or whether the obligations of Borrower thereon are direct, indirect,
contingent, primary, secondary, several, joint and several, or otherwise, and
irrespective of whether such indebtedness, liabilities, or obligations are
evidenced by a note, contract, open account, or otherwise, and irrespective of
the person or persons in whose favor such indebtedness, obligations, or
liabilities may, at their inception, have been, or may hereafter be created, or
the manner in which they have been or may hereafter be acquired by Guarantor.
(b) Guarantor agrees that any and all liens, security
interests, judgment liens, charges, or other encumbrances upon any of Borrower's
assets securing payment of any Subordinated Indebtedness shall be and remain
inferior and subordinate to any and all liens, security interests, judgment
liens, charges, or other encumbrances upon Borrower's assets securing payment of
the Guaranteed Indebtedness or any part thereof, regardless of whether such
encumbrances in favor of Guarantor or the Agent presently exist or are hereafter
created or attached. Without the prior written consent of the Agent. Guarantor
shall not (i) file suit against Borrower or exercise or enforce any other
creditor's right it may have against Borrower, or (ii) foreclose, repossess,
sequester, or otherwise take steps or institute any action or proceedings
(judicial or otherwise, including without limitation the commencement of, or
joinder in, any liquidation, bankruptcy, rearrangement, debtor's relief or
insolvency proceeding) to enforce any liens, security interests, collateral
rights, judgments or other encumbrances held by Guarantor on assets of Borrower.
(c) In the event of any receivership, bankruptcy,
reorganization, rearrangement, debtor's relief, or other insolvency proceeding
involving Borrower as debtor, the Agent shall have the right to prove and vote
any claim under the Subordinated Indebtedness and to receive directly from the
receiver, trustee or other court custodian all dividends, distributions, and
payments made in respect of the Subordinated Indebtedness. The Agent may apply
any such dividends, distributions, and payments against the Guaranteed
Indebtedness in such order and manner as the Agent may determine in its sole
discretion.
12. No amendment or waiver of any provision of this Guaranty Agreement
or consent to any departure by the Guarantor therefrom shall in any event be
effective unless the same shall be
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in writing and signed by the Agent and the Guarantor (with respect to
amendments). No failure on the part of the Agent to exercise, and no delay in
exercising, any right, power, or privilege hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power, or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power, or privilege. The remedies herein provided
are cumulative and not exclusive of any remedies provided by law.
13. Any acknowledgment or new promise, whether by payment of principal
or interest or otherwise and whether by Borrower or others (including
Guarantor), with respect to of the Guaranteed Indebtedness shall, if the statute
of limitations in favor of Guarantor against the Agent shall have commenced to
run, toll the running of such statute of limitations and, if the period of such
statute of limitations shall have expired, prevent the operation of such statute
of limitations.
14. This Guaranty Agreement is for the benefit of the Agent, the Banks
and the issuing Bank and their respective successors and assigns, and in the
event of an assignment of the Guaranteed Indebtedness, or any part thereof, the
rights and benefits hereunder, to the extent applicable to the indebtedness so
assigned, may be transferred with such indebtedness. This Guaranty Agreement is
binding not only on Guarantor, but on Guarantor's successors and assigns.
15. Guarantor recognizes that the Agent, the Banks and the Issuing Bank
are relying upon this Guaranty Agreement and the undertakings of Guarantor
hereunder in making extensions of credit to Borrower under the Credit Agreement
and further recognizes that the execution and delivery of this Guaranty
Agreement is a material inducement to such Persons in entering into the Credit
Agreement. Guarantor hereby acknowledges that there are no conditions to the
full effectiveness of this Guaranty Agreement.
16. THIS GUARANTY AGREEMENT IS EXECUTED AND DELIVERED AS AN INCIDENT TO
A LENDING TRANSACTION NEGOTIATED, CONSUMMATED, AND PERFORMABLE IN HARRIS COUNTY,
TEXAS, AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS. SUBJECT TO PARAGRAPH 23 BELOW, ANY ACTION OR PROCEEDING AGAINST
GUARANTOR UNDER OR IN CONNECTION WITH THIS GUARANTY AGREEMENT MAY BE BROUGHT IN
ANY STATE OR FEDERAL COURT IN HARRIS COUNTY, TEXAS. SUBJECT TO PARAGRAPH 23
BELOW, GUARANTOR HEREBY IRREVOCABLY (I) SUBMITS TO THE NONEXCLUSIVE JURISDICTION
OF SUCH COURTS, AND (II) WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO
THE VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN SUCH COURT OR THAT SUCH
COURT IS AN INCONVENIENT FORUM. GUARANTOR AGREES THAT SERVICE OF PROCESS UPON IT
MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, AT ITS
ADDRESS SPECIFIED BELOW. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT TO
SERVE
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PROCESS IN ANY OTHER MATTER PERMITTED BY LAW OR, SUBJECT TO PARAGRAPH 23 BELOW,
SHALL LIMIT THE RIGHT OF THE AGENT TO BRING ANY ACTION OR PROCEEDING AGAINST
GUARANTOR OR WITH RESPECT TO ANY OF GUARANTOR'S PROPERTY IN COURTS IN OTHER
JURISDICTIONS. SUBJECT TO PARAGRAPH 23 BELOW, ANY ACTION OR PROCEEDING BY
GUARANTOR AGAINST THE AGENT SHALL BE BROUGHT ONLY IN A COURT LOCATED IN HARRIS
COUNTY, TEXAS.
17. Guarantor shall pay on demand all reasonable attorneys' fees and
all other reasonable costs and expenses incurred by any of the Agent, the Banks
and the Issuing Bank in connection with the preparation, administration,
enforcement, or collection of this Guaranty Agreement.
18. Guarantor hereby waives promptness, diligence, notice of any
default under the Guaranteed Indebtedness, demand of payment, notice of
acceptance of this Guaranty Agreement, presentment, notice of protest, notice of
dishonor, notice of the incurring by Borrower of additional indebtedness, and
all other notices and demands with respect to the Guaranteed Indebtedness and
this Guaranty Agreement.
19. The Credit Agreement, and all of the terms thereof, are
incorporated herein by reference, the same as if stated verbatim herein, and
Guarantor agrees that the Agent may exercise any and all rights granted to it
under the Credit Agreement and the other Loan Documents (as defined in the Loan
Agreement) without affecting the validity or enforceability of this Guaranty
Agreement.
20. All notices and other communications to Guarantor under this
Guaranty Agreement shall be in writing and may be mailed by certified mail
return receipt requested, or delivered to the Guarantor at the "Address for
Notices" specified below Guarantor's name on the signature page hereof, or at
such other address as shall be designated by Guarantor in a notice to the Agent
given in accordance with this paragraph. Except as otherwise provided in this
Agreement, all such communications shall be deemed to have been duly given when
deposited in the mail or when personally delivered, in each case given or
addressed as aforesaid.
21. Guarantor hereby represents and warrants to the Agent that
Guarantor has adequate means to obtain from Borrower on a continuing basis
information concerning the financial condition and assets of Borrower and that
Guarantor is not relying upon the Agent to provide (and the Agent shall have no
duty to provide) any Such information to Guarantor either now or in the future.
22. THIS GUARANTY AGREEMENT EMBODIES THE FINAL, ENTIRE AGREEMENT OF
GUARANTOR AND THE AGENT WITH RESPECT TO GUARANTOR'S GUARANTY OF THE GUARANTEED
INDEBTEDNESS AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND
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UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF.
THIS GUARANTY AGREEMENT IS INTENDED BY GUARANTOR AND THE AGENT AS A FINAL AND
COMPLETE EXPRESSION OF THE TERMS OF THE GUARANTY AGREEMENT, AND NO COURSE OF
DEALING BETWEEN GUARANTOR AND THE AGENT, NO COURSE OF PERFORMANCE, NO TRADE
PRACTICES, AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY NATURE SHALL BE
USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS GUARANTY
AGREEMENT. THERE ARE NO ORAL AGREEMENTS BETWEEN GUARANTOR AND THE AGENT.
23. Guarantor and the Agent (the "Parties") agree that upon the written
demand of any Party, whether made before or after the institution of any legal
proceedings, but prior to the rendering of any judgment in that proceeding, all
disputes, claims and controversies between them, whether individual, joint, or
class in nature, arising from this Guaranty Agreement or any other Loan Document
(as defined in the Credit Agreement) or otherwise, including without limitation
contract disputes and tort claims, shall be resolved by binding arbitration
pursuant to the Commercial Rules of the American Arbitration Association
("AAA"). Any arbitration proceeding held pursuant to this arbitration provision
shall be conducted in the city nearest the Guarantor's address having an AAA
regional office, or at any other place selected by mutual agreement of the
Parties. Judgment upon any award rendered by any arbitrator may be entered in
any court having jurisdiction. The statute of limitations, estoppel, waiver,
laches and similar doctrines which would otherwise be applicable in an action
brought by a Party shall be applicable in any arbitration proceeding, and the
commencement of an arbitration proceeding shall be deemed the commencement of
any action for these purposes. The Federal Arbitration Act (Title 9 of the
United States Code) shall apply to the construction, interpretation, and
enforcement of this arbitration provision.
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IN WITNESS WHEREOF, this Guaranty Agreement has been duly executed as of
this _______________________________________.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Address for Notices:
------------------------------------
------------------------------------
Attention:
--------------------------
------------------------------------
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EXHIBIT "D-2"
FORM OF GENERAL CONTINUING GUARANTY - FOREIGN
WHEREAS, the execution of this General Continuing Guaranty (this
"Guaranty Agreement") is a condition to Veritas DGC Inc., a Delaware corporation
(the "Borrower"), borrowing from the Banks (as hereinafter defined), and
obtaining other credit in the amount of the aggregate principal amount of Fifty
Million Dollars ($50,000,000), pursuant to that certain Credit Agreement dated
as of November 1, 1999, among Borrower, Banks, the Issuing Bank (as hereinafter
defined) and Bank One, Texas, N.A., as agent (in such capacity, the "Agent") for
itself, the Banks and the Issuing Bank (such Credit Agreement, and as it may
hereafter be amended or modified from time to time, being hereinafter referred
to as the "Credit Agreement").
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the undersigned, _______________________, a
___________________________, (the "Guarantor"), hereby irrevocably and
unconditionally guarantees the Bank, the Issuing Bank and the Agent the full and
prompt payment and performance of the Guaranteed Indebtedness (hereinafter
defined), this Guaranty Agreement being upon the following terms:
1. (a) The term "Guaranteed Indebtedness" as used herein means all of
the "Obligations-B", as defined in the Credit Agreement; PROVIDED, HOWEVER THAT
THE GUARANTEED INDEBTEDNESS SHALL NOT EXCEED AN AMOUNT EQUAL TO THE SUM OF THE
"SECURED OBLIGATIONS", AS DEFINED IN THE CREDIT AGREEMENT, PLUS THE "PERMITTED
SUBSIDIARY INDEBTEDNESS", AS DEFINED IN THE CREDIT AGREEMENT. The term
"Guaranteed Indebtedness" shall include any and all postpetition interest and
expenses (including attorneys' fees) whether or not allowed under any
bankruptcy, insolvency, or other similar law.
(b) The term "Banks" and "Issuing Bank", as well as other
capitalized terms not otherwise defined herein, have the respective meanings set
forth in the Credit Agreement.
2. This instrument shall be an absolute, continuing, irrevocable, and
unconditional guaranty of payment and performance, and not a guaranty of
collection, and Guarantor shall remain liable on its obligations hereunder until
the payment and performance in full of the Guaranteed Indebtedness. No set-off,
counterclaim, recoupment, reduction, or diminution of any obligation, or any
defense of any kind or nature which Borrower may have against Guarantor, the
Agent, any Bank, the Issuing Bank or any other party, or which Guarantor may
have against Borrower, the Agent, any Bank, the Issuing Bank, or any other
party, shall be available to, or shall be asserted by, Guarantor against the
Agent, any Bank, the Issuing Bank or any subsequent holder of the Guaranteed
Indebtedness or any part thereof or against payment of the Guaranteed
Indebtedness or any part thereof.
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3. If Guarantor becomes liable for any indebtedness owing by Borrower
to the Agent, any Bank or the Issuing Bank by endorsement or otherwise, other
than under this Guaranty Agreement, such liability shall not be in any manner
impaired or affected hereby, and the rights of such Person hereunder shall be
cumulative of any and all other rights that such Person may ever have against
Guarantor. The exercise by the Agent, any Bank or the Issuing Bank of any right
or remedy hereunder or under any other instrument, or at law or in equity, shall
not preclude the concurrent or subsequent exercise of any other right or remedy.
4. In the event of default by Borrower in payment or performance of the
Guaranteed Indebtedness, or any part thereof, when such Guaranteed Indebtedness
becomes due, whether by its terms, by acceleration, or otherwise, Guarantor
shall promptly pay the amount due without notice or demand in lawful currency of
the United States of America and it shall not be necessary for the Agent, in
order to enforce such payment by Guarantor, first to institute suit or exhaust
its remedies against Borrower or others liable on such Guaranteed Indebtedness,
or to enforce any rights against any collateral which shall ever have been given
to secure such Guaranteed Indebtedness. Notwithstanding anything to the contrary
contained in this Guaranty Agreement, until the Guaranteed Indebtedness is paid
in full and a period of ninety (90) days has passed following such payment,
Guarantor waives any and all rights it may now or hereafter have under any
agreement or at law or in equity (including, without limitation, any law
subrogating Guarantor to the rights of Lender) to assert any claim against or
seek contribution, indemnification or any other form of reimbursement from
Borrower or any other party liable for payment of any or all of the Guaranteed
Indebtedness for any payment made by Guarantor under or in connection with this
Guaranty Agreement or otherwise. Without limiting the foregoing, Guarantor
expressly waives the provisions of Chapter 34 of the Texas Business and Commerce
Code, as amended, and any successor provision.
5. If acceleration of the time for payment of any amount payable by
Borrower under the Guaranteed Indebtedness is stayed upon the insolvency,
bankruptcy, or reorganization of Borrower, all such amounts otherwise subject to
acceleration under the terms of the Guaranteed Indebtedness shall nonetheless be
payable by Guarantor hereunder forthwith on demand by the Agent.
6. Guarantor hereby agrees that its obligations under this Guaranty
Agreement shall not be released, discharged, diminished, impaired, reduced, or
affected for any reason or by the occurrence of any event, including, without
limitation, one or more of the following events, whether or not with notice to
or the consent of Guarantor: (a) the taking or accepting of collateral as
security for any or all of the Guaranteed Indebtedness or the release,
surrender, exchange, or subordination of any collateral now or hereafter
securing any or all of the Guaranteed Indebtedness; (b)
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any partial release of the liability of Guarantor hereunder, or the full or
partial release of any other guarantor from liability for any or all of the
Guaranteed Indebtedness; (c) any disability of Borrower, or the dissolution,
insolvency, or bankruptcy of Borrower, Guarantor, or any other party at any time
liable for the payment of any or all of the Guaranteed Indebtedness; (d) any
renewal, extension, modification, waiver, amendment, or rearrangement of any or
all of the Guaranteed Indebtedness or any instrument, document, or agreement
evidencing, securing, or otherwise relating to any or all of the Guaranteed
Indebtedness; (e) any adjustment, indulgence, forbearance, waiver, or compromise
that may be granted or given by the Agent, any Bank or the Issuing Bank to
Borrower, Guarantor, or any other party ever liable for any or all of the
Guaranteed Indebtedness; (f) any neglect, delay, omission, failure, or refusal
of the Agent to take or prosecute any action for the collection of any of the
Guaranteed Indebtedness or to foreclose or take or prosecute any action in
connection with any instrument, document, or agreement evidencing, securing, or
otherwise relating to any or all of the Guaranteed Indebtedness; (g) the
unenforceability or invalidity of any or all of the Guaranteed Indebtedness or
of any instrument, document, or agreement evidencing, securing, or otherwise
relating to any or all of the Guaranteed Indebtedness; (h) any payment by
Borrower or any other party to the Agent, any Bank on the Issuing Bank is held
to constitute a preference under applicable bankruptcy or insolvency law or if
for any other reason any of the Agent, any Bank or the Issuing Bank is required
to refund any payment or pay the amount thereof to someone else; (i) the
settlement or compromise of any of the Guaranteed Indebtedness; (j) the
non-perfection of any security interest or lien securing any or all of the
Guaranteed Indebtedness; (k) any impairment of any collateral securing any or
all of the Guaranteed Indebtedness; (l) the failure of the Agent to sell any
collateral securing any or all of the Guaranteed Indebtedness in a commercially
reasonable manner or as otherwise required by law; (m) any change in the
corporate existence, structure, or ownership of Borrower; or (n) any other
circumstance which might otherwise constitute a defense available to, or
discharge of, Borrower or Guarantor.
7. Guarantor represents and warrants to the Agent as follows:
(a) Guarantor is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation, is
qualified to do business in all jurisdictions in which the nature of the
business conducted by it makes such qualification necessary and where failure to
so qualify, would have a material adverse effect on its business, financial
condition, or operations.
(b) Guarantor has the corporate power and authority and legal right
to execute, deliver, and perform its obligations under this Guaranty Agreement
and this Guaranty Agreement constitutes the legal, valid, and binding obligation
of Guarantor,
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enforceable against Guarantor in accordance with its respective terms, except as
limited by bankruptcy, insolvency, or other laws of general application relating
to the enforcement of creditor's rights.
(c) The execution, delivery, and performance by Guarantor of this
Guaranty Agreement have been duly authorized by all requisite action on the part
of Guarantor and do not and will not violate or conflict with the memorandum of
association or articles of association of Guarantor or any law, rule, or
regulation or any order, writ, injunction or decree of any court, governmental
authority or agency, or arbitrator and do not and will not conflict with, result
in a breach of, or constitute a default under, or result in the imposition of
any lien upon any assets of Guarantor pursuant to the provisions of any
indenture, mortgage, deed of trust, security agreement, franchise, permit,
license, or other instrument or agreement to which Guarantor or its properties
is bound.
(d) No authorization, approval, or consent of, and no filing or
registration with, any court, governmental authority, or third party is
necessary for the execution, delivery or performance by Guarantor of this
Guaranty Agreement or the validity or enforceability thereof.
(e) The value of the consideration received and to be received by
Guarantor as a result of Borrower, the Agent, the Banks and the Issuing Bank
entering into the Credit Agreement and Guarantor executing and delivering this
Guaranty Agreement is reasonably worth at least as much as the liability and
obligation of Guarantor hereunder, and such liability and obligation and the
Credit Agreement have benefited and may reasonably be expected to benefit
Guarantor directly or indirectly.
(f) Guarantor has, independently and without reliance upon the
Agent and based upon such documents and information as Guarantor has deemed
appropriate, made its own analysis and decision to enter into this Guaranty
Agreement.
8. Guarantor covenants and agrees that, as long as the Guaranteed
Indebtedness or any part thereof is outstanding or the Agent, any Bank or the
Issuing Bank has any commitment under the Credit Agreement:
(a) Guarantor will furnish promptly to the Agent written notice of
the occurrence of any default under this Guaranty Agreement or an Event of
Default under the Credit Agreement of which Guarantor has knowledge;
(b) Guarantor will furnish promptly to the Agent such additional
information concerning Guarantor as the Agent may request; and
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<PAGE> 208
(c) Guarantor will obtain at any time and from time to time all
authorizations, licenses, consents or approvals as shall now or hereafter be
necessary or desirable under all applicable laws or regulations or otherwise in
connection with the execution, delivery and performance of this Guaranty
Agreement and will promptly furnish copies thereof to the Agent.
9. (a) Guarantor represents and warrants to the Agent that all devices,
systems, machinery, information technology, computer software and hardware, and
other date sensitive technology (jointly and severally, the "Systems") necessary
for Guarantor and its subsidiaries to carry on their business as presently
conducted and as contemplated to be conducted in the future are Year 2000
Compliant or will be Year 2000 Compliant within a period of time calculated to
result in no material disruption of any of Guarantor's or any subsidiary's
business operations. For purposes of these provisions, "Year 2000 Compliant"
means that the Systems are designed to be used prior to, during and after the
Gregorian Calendar year 2000 A.D. and will operate during each such time prior
without error relating to date data, specifically including any error relating
to, or the product of, date data which represents or references different
centuries or more than one century.
(b) Guarantor represents and warrants to the Agent that Guarantor has
(i) undertaken a detailed inventory, review and assessment of all areas within
its and its subsidiaries' businesses and operations that could be adversely
affected by the failure of Guarantor or any subsidiary to be Year 2000 Compliant
on a timely basis, (ii) developed a detailed plan and time line for becoming
Year 2000 Compliant on a timely basis and (iii) to date, implemented that plan
in accordance with that timetable in all material respects.
(c) Guarantor represents and warrants to the Agent that Guarantor has
made, and has caused each of its subsidiaries to make, written inquiry of each
of its key suppliers, vendors and customers, and has obtained, and has caused
each of its subsidiaries to obtain, in writing confirmations from all such
Persons as to whether such Persons have initiated programs to become Year 2000
Compliant. On the basis of such confirmations, Guarantor reasonably believes
that all of such Persons will be or become so compliant. For purposes hereof,
"key suppliers, vendors and customers" refers to those suppliers, vendors and
customers of Guarantor and its subsidiaries whose business failure would, with
reasonable probability, result in a Material Adverse Effect (as defined in the
Credit Agreement).
(d) Guarantor will (i) furnish such additional information, statements
and other reports with respect to Guarantor's and its subsidiaries' activities,
course of action and progress towards becoming Year 2000 Compliant as the Agent
may request from time to time, (ii) promptly notify the Agent of any change in
circumstances that causes or would likely cause the Borrower's representations
contained in this Section 9 to no longer be true
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<PAGE> 209
and the details thereof, and (iii) permit the Agent or its representatives, at
the expense of the Agent, upon reasonable notice during business hours, to
inspect and test the Systems of Guarantor and its subsidiaries to determine if
they are Year 2000 Compliant.
10. The Agent shall have the right to set off and apply against this
Guaranty Agreement or the Guaranteed Indebtedness or both, at any time and
without notice to Guarantor, any and all deposits (general or special, time or
demand, provisional or final) or other sums at any time credited by or owing
from the Agent to Guarantor provided that the Guaranteed Indebtedness is then
due and irrespective of whether or not the Agent shall have made any demand
under this Guaranty Agreement. As security for this Guaranty Agreement and the
Guaranteed Indebtedness, Guarantor hereby grants the Agent a security interest
in all money, instruments, certificates of deposit, and other property of
Guarantor now or hereafter held by the Agent, including without limitation,
property held in safekeeping. In addition to the Agent's right of setoff and as
further security for this Guaranty Agreement and the Guaranteed Indebtedness,
Guarantor hereby grants the Agent a security interest in all deposits (general
or special, time or demand, provisional or final) and all other accounts of
Guarantor now or hereafter on deposit with or held by the Agent and all other
sums at any time credited by or owing from the Agent to Guarantor. The rights
and remedies of the Agent hereunder are in addition to other rights and remedies
(including, without limitation, other rights of setoff) which the Agent may
have.
11. (a) Guarantor hereby agrees that the Subordinated Indebtedness
shall be subordinate and junior in right of payment to the prior payment in full
of all Guaranteed Indebtedness, and Guarantor hereby assigns the Subordinated
Indebtedness to the Agent as security for the Guaranteed Indebtedness. If any
sums shall be paid to Guarantor by Borrower or any other person or entity on
account of the Subordinated indebtedness at any time while an Event of Default
has occurred and is continuing, such sums shall be held in "trust" by Guarantor
for the benefit of the Agent and shall forthwith be paid to the Agent without
affecting the liability of Guarantor under this Guaranty Agreement and may be
applied by the Agent against the Guaranteed Indebtedness in such order and
manner as the Agent may determine in its sole discretion. Upon the request of
the Agent, Guarantor shall execute, deliver, and endorse to the Agent such
documents and instruments as the Agent may request to perfect, preserve, and
enforce its rights hereunder. For purposes of this Guaranty Agreement, the term
"Subordinated Indebtedness" means all indebtedness, liabilities, and obligations
of Borrower to Guarantor, whether such indebtedness, liabilities, and
obligations now exist or are hereafter incurred or arise, or whether the
obligations of Borrower thereon are direct, indirect, contingent, primary,
secondary, several, joint and several, or otherwise, and irrespective of whether
such indebtedness, liabilities, or obligations are evidenced by a note,
contract, open account, or
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<PAGE> 210
otherwise, and irrespective of the person or persons in whose favor such
indebtedness, obligations, or liabilities may, at their inception, have been, or
may hereafter be created, or the manner in which they have been or may hereafter
be acquired by Guarantor.
(b) Guarantor agrees that any and all liens, security interests,
judgment liens, charges, or other encumbrances upon any of Borrower's assets
securing payment of any Subordinated Indebtedness shall be and remain inferior
and subordinate to any and all liens, security interests, judgment liens,
charges, or other encumbrances upon Borrower's assets securing payment of the
Guaranteed Indebtedness or any part thereof, regardless of whether such
encumbrances in favor of Guarantor or the Agent presently exist or are hereafter
created or attached. Without the prior written consent of the Agent. Guarantor
shall not (i) file suit against Borrower or exercise or enforce any other
creditor's right it may have against Borrower, or (ii) foreclose, repossess,
sequester, or otherwise take steps or institute any action or proceedings
(judicial or otherwise, including without limitation the commencement of, or
joinder in, any liquidation, bankruptcy, rearrangement, debtor's relief or
insolvency proceeding) to enforce any liens, security interests, collateral
rights, judgments or other encumbrances held by Guarantor on assets of Borrower.
(c) In the event of any receivership, bankruptcy, reorganization,
rearrangement, debtor's relief, or other insolvency proceeding involving
Borrower as debtor, the Agent shall have the right to prove and vote any claim
under the Subordinated Indebtedness and to receive directly from the receiver,
trustee or other court custodian all dividends, distributions, and payments made
in respect of the Subordinated Indebtedness. The Agent may apply any such
dividends, distributions, and payments against the Guaranteed Indebtedness in
such order and manner as the Agent may determine in its sole discretion.
12. No amendment or waiver of any provision of this Guaranty Agreement
or consent to any departure by the Guarantor therefrom shall in any event be
effective unless the same shall be in writing and signed by the Agent and the
Guarantor (with respect to amendments). No failure on the part of the Agent to
exercise, and no delay in exercising, any right, power, or privilege hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, power, or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power, or privilege. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
13. Any acknowledgment or new promise, whether by payment of principal
or interest or otherwise and whether by Borrower or others (including
Guarantor), with respect to of the Guaranteed Indebtedness shall, if the statute
of limitations in favor of
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<PAGE> 211
Guarantor against the Agent shall have commenced to run, toll the running of
such statute of limitations and, if the period of such statute of limitations
shall have expired, prevent the operation of such statute of limitations.
14. This Guaranty Agreement is for the benefit of the Agent, the Banks
and the issuing Bank and their respective successors and assigns, and in the
event of an assignment of the Guaranteed Indebtedness, or any part thereof, the
rights and benefits hereunder, to the extent applicable to the indebtedness so
assigned, may be transferred with such indebtedness. This Guaranty Agreement is
binding not only on Guarantor, but on Guarantor's successors and assigns.
15. Guarantor recognizes that the Agent, the Banks and the Issuing Bank
are relying upon this Guaranty Agreement and the undertakings of Guarantor
hereunder in making extensions of credit to Borrower under the Credit Agreement
and further recognizes that the execution and delivery of this Guaranty
Agreement is a material inducement to such Persons in entering into the Credit
Agreement. Guarantor hereby acknowledges that there are no conditions to the
full effectiveness of this Guaranty Agreement.
16. THIS GUARANTY AGREEMENT IS EXECUTED AND DELIVERED AS AN INCIDENT TO
A LENDING TRANSACTION NEGOTIATED, CONSUMMATED, AND PERFORMABLE IN HARRIS COUNTY,
TEXAS, AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS. SUBJECT TO PARAGRAPH 23 BELOW, ANY ACTION OR PROCEEDING AGAINST
GUARANTOR UNDER OR IN CONNECTION WITH THIS GUARANTY AGREEMENT MAY BE BROUGHT IN
ANY STATE OR FEDERAL COURT IN HARRIS COUNTY, TEXAS. SUBJECT TO PARAGRAPH 23
BELOW, GUARANTOR HEREBY IRREVOCABLY (I) SUBMITS TO THE NONEXCLUSIVE JURISDICTION
OF SUCH COURTS, AND (II) WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO
THE VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN SUCH COURT OR THAT SUCH
COURT IS AN INCONVENIENT FORUM. GUARANTOR AGREES THAT SERVICE OF PROCESS UPON IT
MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, AT ITS
ADDRESS SPECIFIED BELOW. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT TO
SERVE PROCESS IN ANY OTHER MATTER PERMITTED BY LAW OR, SUBJECT TO PARAGRAPH 23
BELOW, SHALL LIMIT THE RIGHT OF THE AGENT TO BRING ANY ACTION OR PROCEEDING
AGAINST GUARANTOR OR WITH RESPECT TO ANY OF GUARANTOR'S PROPERTY IN COURTS IN
OTHER JURISDICTIONS. SUBJECT TO PARAGRAPH 23 BELOW, ANY ACTION OR PROCEEDING BY
GUARANTOR AGAINST THE AGENT SHALL BE BROUGHT ONLY IN A COURT LOCATED IN HARRIS
COUNTY, TEXAS.
17. Guarantor shall pay on demand all reasonable attorneys' fees and
all other reasonable costs and expenses incurred by any of the Agent, the Banks
and the Issuing Bank in connection with the preparation, administration,
enforcement, or collection of this Guaranty Agreement.
18. Guarantor hereby waives promptness, diligence, notice of any
default under the Guaranteed Indebtedness, demand of
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<PAGE> 212
payment, notice of acceptance of this Guaranty Agreement, presentment, notice of
protest, notice of dishonor, notice of the incurring by Borrower of additional
indebtedness, and all other notices and demands with respect to the Guaranteed
Indebtedness and this Guaranty Agreement.
19. The Credit Agreement, and all of the terms thereof, are
incorporated herein by reference, the same as if stated verbatim herein, and
Guarantor agrees that the Agent may exercise any and all rights granted to it
under the Credit Agreement and the other Loan Documents (as defined in the Loan
Agreement) without affecting the validity or enforceability of this Guaranty
Agreement.
20. All notices and other communications to Guarantor under this
Guaranty Agreement shall be in writing and may be mailed by certified mail
return receipt requested, or delivered to the Guarantor at the "Address for
Notices" specified below Guarantor's name on the signature page hereof, or at
such other address as shall be designated by Guarantor in a notice to the Agent
given in accordance with this paragraph. Except as otherwise provided in this
Agreement, all such communications shall be deemed to have been duly given when
deposited in the mail or when personally delivered, in each case given or
addressed as aforesaid.
21. Guarantor hereby represents and warrants to the Agent that
Guarantor has adequate means to obtain from Borrower on a continuing basis
information concerning the financial condition and assets of Borrower and that
Guarantor is not relying upon the Agent to provide (and the Agent shall have no
duty to provide) any Such information to Guarantor either now or in the future.
22. THIS GUARANTY AGREEMENT EMBODIES THE FINAL, ENTIRE AGREEMENT OF
GUARANTOR AND THE AGENT WITH RESPECT TO GUARANTOR'S GUARANTY OF THE GUARANTEED
INDEBTEDNESS AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF. THIS GUARANTY AGREEMENT IS INTENDED BY GUARANTOR AND THE
AGENT AS A FINAL AND COMPLETE EXPRESSION OF THE TERMS OF THE GUARANTY AGREEMENT,
AND NO COURSE OF DEALING BETWEEN GUARANTOR AND THE AGENT, NO COURSE OF
PERFORMANCE, NO TRADE PRACTICES, AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY
NATURE SHALL BE USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS
GUARANTY AGREEMENT. THERE ARE NO ORAL AGREEMENTS BETWEEN GUARANTOR AND THE
AGENT.
23. Guarantor and the Agent (the "Parties") agree that upon the written
demand of any Party, whether made before or after the institution of any legal
proceedings, but prior to the rendering of any judgment in that proceeding, all
disputes, claims and controversies between them, whether individual, joint, or
class in nature, arising from this Guaranty Agreement or any other Loan Document
(as defined in the Credit Agreement) or otherwise,
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<PAGE> 213
including without limitation contract disputes and tort claims, shall be
resolved by binding arbitration pursuant to the Commercial Rules of the American
Arbitration Association ("AAA"). Any arbitration proceeding held pursuant to
this arbitration provision shall be conducted in the city nearest the
Guarantor's address having an AAA regional office, or at any other place
selected by mutual agreement of the Parties. Judgment upon any award rendered by
any arbitrator may be entered in any court having jurisdiction. The statute of
limitations, estoppel, waiver, laches and similar doctrines which would
otherwise be applicable in an action brought by a Party shall be applicable in
any arbitration proceeding, and the commencement of an arbitration proceeding
shall be deemed the commencement of any action for these purposes. The Federal
Arbitration Act (Title 9 of the United States Code) shall apply to the
construction, interpretation, and enforcement of this arbitration provision.
[[24. The signature or sealing of this document by or on behalf of a
party shall constitute authority to the solicitors, or an agent or employee of
the solicitors, acting for that party in connection with this document to
deliver it as a deed on behalf of that party.]]
IN WITNESS WHEREOF, this Guaranty Agreement has been duly executed
[[as a deed]] as of ________________________________.
------------------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Address for Notices:
------------------------------------
------------------------------------
------------------------------------
Attention:
--------------------------
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<PAGE> 214
EXHIBIT "E-1"
ADVANCE REQUEST FORM-A
Date:
-----------------------
TO: BANK ONE, TEXAS, N.A.
Ladies and Gentlemen:
The undersigned Veritas DGC Inc., (the "Borrower") hereby refers to the
Credit Agreement dated as of November 1, 1999 among the Borrower, Bank One,
Texas, N.A., as agent (the "Agent"), and the Banks and the Issuing Bank
signatories thereto, as the same may be amended, modified, supplemented or
restated from time to time (the "Credit Agreement") and gives you irrevocable
notice pursuant to Section 4.1 of the Credit Agreement, of the Advance-A
specified below:
A. ADVANCE-A REQUEST INFORMATION:
1. Revolving Credit Commitment-A $40,000,000.00
2. Borrowing Base-A breakdown by company calculated as of the
last month end:
(a) Veritas DGC Inc.
(i) Eligible Domestic/Domestic
Accounts $
----------
(ii) Eligible Domestic/Foreign
Accounts $
----------
(iii) Eligible Domestic/Domestic
Unbilled Receivables-180 $
----------
(iv) Eligible Domestic/Domestic
Unbilled Receivables-365 $
----------
(v) Eligible Domestic/Foreign
Unbilled Receivables-180 $
----------
(vi) Eligible Domestic/Foreign
Unbilled Receivables-365 $
----------
(b) Digicon Geophysical Corp.
(i) Eligible Domestic/Domestic
Accounts $
----------
(ii) Eligible Domestic/Foreign
Accounts $
----------
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<PAGE> 215
(iii) Eligible Domestic/Domestic
Unbilled Receivables-180 $
----------
(iv) Eligible Domestic/Domestic
Unbilled Receivables-365 $
----------
(v) Eligible Domestic/Foreign
Unbilled Receivables-180 $
----------
(vi) Eligible Domestic/Foreign
Unbilled Receivables-365 $
----------
(c) Veritas DGC Land Inc.
(i) Eligible Domestic/Domestic
Accounts $
----------
(ii) Eligible Domestic/Foreign
Accounts $
----------
(iii) Eligible Domestic/Domestic
Unbilled Receivables-180 $
----------
(iv) Eligible Domestic/Domestic
Unbilled Receivables-365 $
----------
(v) Eligible Domestic/Foreign
Unbilled Receivables-180 $
----------
(vi) Eligible Domestic/Foreign
Unbilled Receivables-365 $
----------
(d) Veritas DGC Asia Pacific, Ltd.
(i) Eligible Domestic/Domestic
Accounts $
----------
(ii) Eligible Domestic/Foreign
Accounts $
----------
(iii) Eligible Domestic/Domestic
Unbilled Receivables-180 $
----------
(iv) Eligible Domestic/Domestic
Unbilled Receivables-365 $
----------
(v) Eligible Domestic/Foreign
Unbilled Receivables-180 $
----------
(vi) Eligible Domestic/Foreign
Unbilled Receivables-365 $
----------
215
<PAGE> 216
[[Add additional Borrowing Base-A entities, if any]]
3. Borrowing Base-A calculation $
----------
(a) Eligible Domestic/Domestic Accounts
(i) Sum of 2(a)(i), 2(b)(i),
2(c)(i) and 2(d)(i) $
----------
(ii) 80% of 3(a)(i) above $
----------
(b) Eligible Domestic/Foreign Accounts
(i) Sum of 2(a)(ii), 2(b)(ii),
2(c)(ii) and 2(d)(ii) $
----------
(ii) 70% of 3(b)(i) above $
----------
(c) Eligible Domestic/Domestic
Unbilled Receivables-180
(i) Sum of 2(a)(iii), 2(b)(iii)
2(c)(iii) and 2(d)(iii) $
----------
(ii) 75% of 3(c)(i) above $
----------
(d) Eligible Domestic/Domestic
Unbilled Receivables-365
(i) Sum of 2(a)(iv), 2(b)(iv),
2(c)(iv) and 2(d)(iv) $
----------
(ii) 65% of 3(d)(i) above $
----------
(e) Eligible Domestic/Foreign
Unbilled Receivables-180
(i) Sum of 2(a)(v), 2(b)(v),
2(c)(v) and 2(d)(v) $
----------
(ii) 65% of 3(e)(i) above $
----------
(f) Eligible Domestic/Foreign
Unbilled Receivables-365
(i) Sum of 2(a)(vi), 2(b)(vi),
2(c)(vi) and 2(d)(vi) $
----------
(ii) 55% of 3(f)(i) above $
----------
(g) Sum of 3(d)(ii) and 3(f)(ii) $
----------
(h) Lesser of 3(g) and $8,000,000.00 $
----------
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<PAGE> 217
(i) Aggregate Borrowing Base-A
(sum of 3(a)(ii), 3(b)(ii), 3(c)(ii),
3(e)(ii) and 3(h) above) $
----------
4. Principal amount outstanding under the
Revolving Credit Note-A prior to Requested
Advance-A. $
----------
5. Letter of Credit Liabilities-A. $
----------
6. Sum of 4 plus 5. $
----------
7. Total amount of Requested Advance-A. $
----------
8. Remaining Availability under Revolving
Credit Commitment-A after Requested
Advance-A. $
----------
9. Amount of Prime Rate Advance-A
requested on __________, ______. $
----------
10. Amount of LIBOR Rate Advance-A with Interest Period of:
(i) 30 days of $__________ requested to be made
on __________, ______.
(ii) 60 days of $__________ requested to be made
on __________, ______.
(iii) 90 days of $__________ requested to be made
on __________, ______.
11. Amount of Secured Obligations
(i) Maximum Bank Credit Amount $
----------
(ii) Amount equal to 10% of
Consolidated Net Tangible
Assets $
----------
(iii) Greater of (i) or (ii) $
----------
(iv) Permitted Subsidiary
Indebtedness $
----------
(v) Sum of (iii) and (iv) $
----------
The Borrower hereby represents, warrants and agrees, pursuant to the
Credit Agreement, that the delivery of this Advance Request Form-A and the
acceptance by the Borrower of the proceeds of the Advance-A constitutes a
representation and warranty by the Borrower that, on the date of such Advance-A,
and before and after
217
<PAGE> 218
giving effect thereto and to the application of proceeds therefrom, all
conditions precedent set forth in Article VII of the Credit Agreement have been
satisfied and that all the representations and warranties of the Borrower set
forth in Article VIII of the Credit Agreement remain true and correct on and as
of the date of such Advance-A with the same force and effect as if such
representations and warranties had been made on and as of such date.
Immediately after the Advance-A to which this Advance Request Form-A
relates, no Default or Event of Default shall have occurred and be continuing.
The proceeds of Advances-A which are the subject of this Advance
Request Form-A will be used for the purposes permitted under the Credit
Agreement.
All capitalized terms not otherwise defined herein shall have the
respective meanings ascribed to them in the Credit Agreement.
VERITAS DGC INC.
By:
--------------------------------
Authorized Signatory for and
on behalf of the Borrower
218
<PAGE> 219
EXHIBIT "E-2"
ADVANCE REQUEST FORM-B
Date:
-------------
TO: BANK ONE, TEXAS, N.A.
Ladies and Gentlemen:
The undersigned Veritas DGC Inc., (the "Borrower") hereby refers to the
Credit Agreement dated as of November 1, 1999 among the Borrower, Bank One,
Texas, N.A., as agent (the "Agent"), and the Banks and the Issuing Bank
signatories thereto, as the same may be amended, modified, supplemented or
restated from time to time (the "Credit Agreement") and gives you irrevocable
notice pursuant to Section 4.1 of the Credit Agreement, of the Advance-B
specified below:
<TABLE>
<S> <C> <C>
A. ADVANCE-B REQUEST INFORMATION:
1. Revolving Credit Commitment-B $10,000,000.00
2. Borrowing Base-B breakdown by company calculated as of the
last month end:
(a) Veritas DGC, Ltd.
(i) Eligible Foreign/Foreign
Accounts $__________
(ii) Eligible Foreign/Foreign
Unbilled Receivables-180 $__________
(iii) Eligible Foreign/Foreign
Unbilled Receivables-365 $__________
(b) Veritas DGC (Malaysia) Sdn. Bhd.
(i) Eligible Foreign/Foreign
Accounts $__________
(ii) Eligible Foreign/Foreign
Unbilled Receivables-180 $__________
(iii) Eligible Foreign/Foreign
Unbilled Receivables-365 $__________
(c) Veritas Energy Services Partnership
(i) Eligible Foreign/Foreign
Accounts $__________
</TABLE>
219
<PAGE> 220
<TABLE>
<S> <C> <C> <C>
(ii) Eligible Foreign/Foreign
Unbilled Receivables-180 $__________
(iii) Eligible Foreign/Foreign
Unbilled Receivables-365 $__________
[[Add additional Borrowing Base-B entities, if any]]
3. Borrowing Base-B calculation $__________
(a) Eligible Foreign/Foreign
Accounts
(i) Sum of 2(a)(i), 2(b)(i)
and 2(c)(i) $__________
(ii) 50% of 3(a)(i) above $__________
(b) Eligible Foreign/Foreign
Unbilled Receivables-180
(i) Sum of 2(a)(ii), 2(b)(ii) and
2(c)(ii) $_________
(ii) 45% of 3(b)(i) above $_________
(c) Eligible Foreign/Foreign
Unbilled Receivables-365
(i) Sum of 2(a)(iii), 2(b)(iii)
and 2(c)(iii) $_________
(ii) 40% of 3(c)(i) above $_________
(d) Lesser of 3(c)(ii) and $2,000,000.00 $_________
(e) Borrowing Base-B
[Sum of 3(a)(ii), 3(b)(ii)
and 3(c)(ii)] above $_________
4. Principal amount outstanding under the
Revolving Credit Note-B prior to Requested
Advance-B. $_________
5. Letter of Credit Liabilities-B. $_________
6. Sum of 4 plus 5. $_________
7. Total amount of Requested Advance-B. $_________
8. Remaining Availability under Revolving
Credit Commitment-B after Requested
Advance-B. $_________
</TABLE>
220
<PAGE> 221
<TABLE>
<S> <C> <C>
9. Amount of Prime Rate Advance-B
requested on __________, ______. $__________
10. Amount of LIBOR Rate Advance-B with Interest Period of:
(i) 30 days of $__________ requested to be
made on __________, ______.
(ii) 60 days of $__________ requested to be
made on __________, ______.
(iii) 90 days of $__________ requested to be
made on __________, ______.
11. Amount of Secured Obligations
(i) Maximum Bank Credit Amount $__________
(ii) Amount equal to 10% of
Consolidated Net Tangible
Assets $__________
(iii) Greater of (i) or (ii) $__________
(iv) Permitted Subsidiary
Indebtedness $__________
(v) Sum of (iii) and (iv) $__________
</TABLE>
The Borrower hereby represents, warrants and agrees, pursuant to the
Credit Agreement, that the delivery of this Advance Request Form-B and the
acceptance by the Borrower of the proceeds of the Advance-B constitutes a
representation and warranty by the Borrower that, on the date of such Advance-B,
and before and after giving effect thereto and to the application of proceeds
therefrom, all conditions precedent set forth in Article VII of the Credit
Agreement have been satisfied and that all the representations and warranties of
the Borrower set forth in Article VIII of the Credit Agreement remain true and
correct on and as of the date of such Advance-B with the same force and effect
as if such representations and warranties had been made on and as of such date.
Immediately after the Advance-B to which this Advance Request Form-B
relates, no Default or Event of Default shall have occurred and be continuing.
The proceeds of Advances-B which are the subject of this Advance
Request Form-B will be used for the purposes permitted under the Credit
Agreement.
All capitalized terms not otherwise defined herein shall have the
respective meanings ascribed to them in the Credit Agreement.
221
<PAGE> 222
VERITAS DGC INC.
By:
---------------------------------
Authorized Signatory for and on
behalf of the Borrower
222
<PAGE> 223
EXHIBIT "F"
COMPLIANCE CERTIFICATE
The undersigned, as ____________ of Veritas DGC Inc., a Delaware
corporation (the "Company"), am familiar with the matters covered by this
Certificate and do hereby execute and deliver this Certificate in connection
with that certain Credit Agreement dated as of November 1, 1999 (the "Credit
Agreement") among the Company, the financial institutions identified as the
Banks in the Credit Agreement, and Bank One, Texas, N.A., as administrative
agent for the Banks. Capitalized terms which are used in this Certificate but
are not defined herein shall have the meaning given to such terms in the Credit
Agreement. The undersigned does further certify that as of the date of this
Certificate:
1. No Default or Event of Default has occurred and is continuing.
2. The Company has Consolidated Tangible Net Worth of
$______________ (the "Actual Amount"), which is not less than
$_________________ (the "Required Amount").
Calculation of the Actual Amount:
2(a) Stockholders' Equity on the consolidated
balance sheet of the Company and its
Subsidiaries ........................... $
----------
2(b) Any amount at which shares of capital
stock of Company appear as an asset on
the Company's balance sheet............. $
----------
2(c) Goodwill, including any amounts that
represent the excess of the purchase
price paid for assets or stock over the
value assigned thereto ................. $
----------
2(d) Loans (to the extent that such are not
fully secured) to any stockholder,
director, officer, or employee of the
Company or its Affiliates .............. $
----------
2(e) Other intangible assets (other than the
Data Library) .......................... $
----------
2(f) Consolidated Tangible Net Worth [Items
2(a) minus 2(b) minus 2(c) minus 2(d)
minus 2(e)] ............................ $
----------
223
<PAGE> 224
Calculation of Required Amount:
2(g) Consolidated Tangible Net Worth as of
July 31, 1998........................... $
----------
2(h) 80% of Item 2(g)........................ $
----------
2(i) Consolidated Net Income for the period
beginning on the Effective Date and
ending on the calculation date.......... $
----------
2(j) 50% of Item 2(i) ....................... $
----------
2(k) Net proceeds of equity issued after the
Effective Date.......................... $
----------
2(l) Equity contributed in connection with
acquisitions since Effective Date ...... $
----------
2(m) Required Consolidated Tangible Net Worth
[Item 2(h) plus 2(j) plus 2(k) plus
2(l)] .................................. $
----------
3. The Company and its Subsidiaries have at all times maintained
a Fixed Charge Coverage Ratio (on a consolidated basis) of at
least 1.20 to 1.00.
Calculation of Fixed Charge Coverage Ratio:
3(a) Consolidated Net Income................. $
----------
3(b) Interest Expense........................ $
----------
3(c) Tax Expense............................. $
----------
3(d) Non-Cash Charges........................ $
----------
3(e) EBITDA [Item 3(a) plus 3(b) plus 3(c)
plus 3(d)] ............................. $
----------
3(f) Cash Taxes.............................. $
----------
3(g) Cash Reserves........................... $
----------
3(h) Subtotal [Item 3(e) minus 3(f) plus
3(g)] .................................. $
----------
3(i) Current Maturities...................... $
----------
3(j) Interest Expense ....................... $
----------
224
<PAGE> 225
3(k) Unfinanced Capital Expenditures......... $
----------
3(l) Subtotal [Item 3(i) plus 3(j) plus
3(k)] .................................. $
----------
3(m) Fixed Charge Coverage Ratio [Item 3(h)
divided by 3(l)] ....................... $
----------
4. IF BEFORE THE SUBORDINATED DEBT INCURRENCE DATE:
The Company and its Subsidiaries have at all times maintained
a Funded Debt to Capitalization Ratio (on a consolidated
basis), calculated on a quarterly basis, of not greater than
0.40 to 1.00.
Calculation of Funded Debt to Capitalization Ratio:
4(a) Funded Debt (other than Subordinated
Debt)................................... $
----------
4(b) Funded Debt............................. $
----------
4(c) Stockholders' Equity ................... $
----------
4(d) Subordinated Debt ...................... $
----------
4(e) Subtotal [Items 4(b) plus 4(c) plus
4(d)]................................... $
----------
4(f) Funded Debt to Capitalization Ratio
[item 4(a) divided by 4(e)]............. $
----------
IF ON OR AFTER THE SUBORDINATED DEBT INCURRENCE DATE:
The Company and its Subsidiaries have, on the Subordinated
Debt Incurrence Date and at all times thereafter, maintained a
Total Funded Debt to Capitalization Ratio (on a consolidated
basis), calculated on a quarterly basis, of not greater than
0.45 to 1.00.
Calculation of Total Funded Debt to Capitalization Ratio:
4(g) Total Funded Debt....................... $
----------
4(h) Stockholders' Equity ................... $
----------
4(i) Subtotal [Items 4(g) plus 4(h)]......... $
----------
4(j) Total Funded Debt to Capitalization
Ratio [Item 4(g) divided by 4(i)]....... $
----------
225
<PAGE> 226
5. The Company and its Subsidiaries have at all times maintained
a Current Ratio (on a consolidated basis), calculated on a
quarterly basis, of at least 1.50 to 1.00.
Calculation of Current Ratio:
5(a) Consolidated Current Assets ............ $
----------
5(b) Consolidated Current Liabilities........ $
----------
5(c) Current Ratio [Item 5(a) divided
by 5(b)]................................ $
----------
6. IF BEFORE THE SUBORDINATED DEBT INCURRENCE DATE:
The Company and its Subsidiaries have at all times maintained
a Funded Debt to EBITDA Ratio (on a consolidated basis),
calculated on a quarterly basis, of not greater than 1.65 to
1.00.
Calculation of Funded Debt to EBITDA Ratio:
6(a) Funded Debt ............................ $
----------
6(b) Consolidated Net Income................. $
----------
6(c) Interest Expense........................ $
----------
6(d) Tax Expense............................. $
----------
6(e) Non-Cash Charges........................ $
----------
6(f) EBITDA [Items 6(b) plus 6(c) plus 6(d)
plus 6(e)].............................. $
----------
6(g) Funded Debt to EBITDA Ratio [Item 6(a)
divided by 6(f)]........................ $
----------
IF ON OR AFTER THE SUBORDINATED DEBT INCURRENCE DATE:
The Company and its Subsidiaries have, on the Subordinated
Debt Incurrence Date and at all times thereafter, maintained a
Total Funded Debt to EBITDA Ratio (on a consolidated basis),
calculated on a quarterly basis, of not greater than (a) 2.25
to 1.00 through July 31, 2000, and (b) 2.00 to 1.00 commencing
August 1, 2000 throughout the remainder of the term.
226
<PAGE> 227
Calculation of Total Funded Debt to EBITDA Ratio:
6(h) Total Funded Debt ...................... $
----------
6(i) Consolidated Net Income................. $
----------
6(j) Interest Expense........................ $
----------
6(k) Tax Expense............................. $
----------
6(l) Non-Cash Charges........................ $
----------
6(m) EBITDA [Items 6(i) plus 6(j) plus 6(k)
plus 6(l)].............................. $
----------
6(n) Total Funded Debt to EBITDA Ratio
[Item 6(h) divided by 6(m)]............. $
----------
7. IF ON OR AFTER THE SUBORDINATED DEBT INCURRENCE DATE:
The Company and its Subsidiaries have on the Subordinated Debt
Incurrence Date and at all times thereafter maintained a
Senior Funded Debt to EBITDA Ratio (on a consolidated basis),
calculated on a quarterly basis, of not greater than (a) 1.25
to 1.00 through July 31, 2000, and (b) 1.00 to 1.00 commencing
August 1, 2000 throughout the remainder of the term.
Calculation of Senior Funded Debt to EBITDA Ratio:
7(a) Senior Funded Debt ..................... $
----------
7(b) Consolidated Net Income................. $
----------
7(c) Interest Expense........................ $
----------
7(d) Tax Expense............................. $
----------
7(e) Non-Cash Charges........................ $
----------
7(f) EBITDA [Items 7(b) plus 7(c) plus 7(d)
plus 7(e)].............................. $
----------
7(g) Senior Funded Debt to EBITDA Ratio
[Item 7(a) divided by 7(f)]............. $
----------
227
<PAGE> 228
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
________________.
VERITAS DGC INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
228
<PAGE> 229
EXHIBIT "G-1"
BORROWING BASE REPORT-A
To: Bank One, Texas, N.A.
910 Travis
Houston, Texas 77002
Attention: Philip C. Lauinger, Vice President
Gentlemen:
This Borrowing Base Report-A ("Report") for the month ending
__________, is executed and delivered by Veritas DGC Inc. ("Borrower") to Bank
One, Texas, N.A. as administrative agent ("Agent") for the banks from time to
time parties thereto ("Banks") pursuant to that certain Credit Agreement dated
as of November 1, 1999 as the same may be amended, supplemented, modified and/or
restated from time to time, the "Credit Agreement"), among Borrower, Banks and
Agent. Capitalized terms which are used in this Report but are not defined
herein shall have the meaning given to such terms in the Credit Agreement.
Borrower represents and warrants to Agent and Banks that all
information contained herein is true, correct, and complete, and that the total
Eligible Domestic/Domestic Accounts, Eligible Domestic/Foreign Accounts,
Eligible Domestic/Domestic Unbilled Receivables and Eligible Domestic/Foreign
Unbilled Receivables qualify for the purposes of determining the Borrowing
Base-A under the Credit Agreement. Borrower further represents and warrants to
Lender that attached hereto as Schedule 1 is a list for Borrower and Geophysical
Corp., Land and Asia Pacific (collectively, the "Borrowing Base-A Guarantors")
of their accounts receivable and accounts payable for the month ending
__________________, showing all domestic accounts receivable and all accounts
payable aged in thirty-day intervals and a prospective monthly billing schedule
for the next twelve (12) months for all Eligible Domestic/Domestic Unbilled
Receivables and all Domestic/Foreign Unbilled Receivables.
ELIGIBLE DOMESTIC/DOMESTIC ACCOUNTS:
<TABLE>
<S> <C> <C>
1. Aggregate accounts receivable of Borrower and the Borrowing Base-A Guarantors
created in the ordinary course of business.................................... $
-----------
2. Accounts receivable of Borrower and Borrowing Base-A Guarantors that
have been outstanding for more than 90 days past the original due
date of the related invoice or 120 days have expired since the date
of the related invoice........................................................ $
-----------
</TABLE>
229
<PAGE> 230
<TABLE>
<S> <C> <C>
3. Accounts receivable of Borrower and Borrowing Base-A Guarantors that are not
payable in Dollars by the account debtor...................................... $
-----------
4. Accounts receivable of Borrower and Borrowing Base-A Guarantors that are owed
by an Affiliate of Borrower or Borrowing Base-A Guarantors or any employee of
Borrower or Borrowing Base-A Guarantors or of any such Affiliate.............. $
-----------
5. Accounts receivable of Borrower and Borrowing Base-A Guarantors of which more
than 25% of the aggregate balances then outstanding owed by such account
debtor and its Affiliates to Borrower and Borrowing Base-A Guarantors are
more than 120 days past due from the due dates of their original invoices or
if more than 150 days have expired from the dates of the original invoices.... $
-----------
6. Accounts receivable of Borrower and Borrowing Base-A Guarantors of which the
account debtor is not a resident of the United States of America.............. $
-----------
7. That portion of the aggregate amount of accounts receivable of Borrower and
Borrowing Base-A Guarantors owed by any one account debtor which is in excess
of 20% of the then aggregate amount of all Eligible Domestic/Domestic
Accounts, Eligible Domestic/Foreign Accounts, Eligible Foreign/Foreign
Accounts, Eligible Domestic/Domestic Unbilled Receivables, Eligible
Domestic/Foreign Unbilled Receivables and Eligible Foreign/Foreign Unbilled
Receivables................................................................... $
-----------
8. Accounts receivable of Borrower and Borrowing Base-A Guarantors that do not
comply with the other requirements set forth in the Credit Agreement
(including, but without duplicate exclusions)................................. $
-----------
9. Eligible Domestic/Domestic Unbilled Receivables............................... $
-----------
10. Ineligible Accounts [sum of line 2 to line 9, inclusive, but without
duplicate exclusion].......................................................... $
-----------
</TABLE>
230
<PAGE> 231
<TABLE>
<S> <C> <C>
11. Eligible Domestic/Domestic Accounts [line 1 minus line 10].................... $
-----------
ELIGIBLE DOMESTIC/FOREIGN ACCOUNTS:
12. Aggregate accounts receivable of Borrower and Borrowing Base-A Guarantors
created in the ordinary course of business.................................... $
-----------
13. Accounts receivable of Borrower and Borrowing Base-A Guarantors that are
included in the calculation of Eligible Domestic/Domestic Accounts............ $
-----------
14. Accounts receivable of Borrower and Borrowing Base-A Guarantors that
have been outstanding for more than 90 days past the original due
date of the related invoice or 120 days have expired since the date
of the related invoice........................................................ $
-----------
15. Accounts receivable of Borrower and Borrowing Base-A Guarantors that are owed
by an Affiliate of Borrower or Borrowing Base-A Guarantors or any employee of
Borrower or Borrowing Base-A Guarantors or of any such Affiliate.............. $
-----------
16. Accounts receivable of Borrower and Borrowing Base-A Guarantors of which more
than 25% of the aggregate balances then outstanding owed by such account
debtor and its Affiliates to Borrower and Borrowing Base-A Guarantors are
more than 120 days past due from the due dates of their original invoices or
if more than 150 days have expired from the dates of the original invoices.... $
-----------
17. That portion of the aggregate amount of accounts receivable of Borrower and
Borrowing Base-A Guarantors owed by any one account debtor which is
in excess of 20% of the then aggregate amount of all Eligible
Domestic/Domestic Accounts, Eligible Domestic/Foreign Accounts and
Eligible Foreign/Foreign Accounts............................................. $
-----------
18. Accounts receivable of Borrower and Borrowing Base-A Guarantors that do not
comply with the other requirements set forth
</TABLE>
231
<PAGE> 232
<TABLE>
<S> <C> <C>
in the Credit Agreement (inclusive, but without duplicate exclusions)......... $
-----------
19. Eligible Domestic/Foreign Unbilled Receivables................................ $
-----------
20. Ineligible Accounts [sum of line 13 to line 19]............................... $
-----------
21. Eligible Domestic/Foreign Accounts [line 12 minus line 20].................... $
-----------
UNBILLED RECEIVABLES:
22. Total Domestic/Domestic Unbilled Receivables.................................. $
-----------
23. Ineligible Domestic/Domestic Unbilled Receivables due to line 5 or line 7..... $
-----------
24. All other ineligible Domestic/Domestic unbilled Receivables................... $
-----------
25. Sum of line 23 and line 24.................................................... $
-----------
26. Total Eligible Domestic/Domestic Unbilled Receivables......................... $
-----------
27. Eligible Domestic/Domestic Unbilled Receivables-180........................... $
-----------
28. Eligible Domestic/Domestic Unbilled Receivables-365........................... $
-----------
29. Total Domestic/Foreign Unbilled Receivables................................... $
-----------
30. Ineligible Domestic/Foreign Unbilled Receivables due to line 5 or line 7...... $
-----------
31. All other ineligible Domestic/Foreign Unbilled Receivables.................... $
-----------
32. Sum of line 30 and line 31.................................................... $
-----------
33. Total Eligible Domestic/Foreign Unbilled Receivables.......................... $
-----------
34. Eligible Domestic/Foreign Unbilled Receivables-180............................ $
-----------
35. Eligible Domestic/Foreign Unbilled Receivables-365............................ $
-----------
</TABLE>
232
<PAGE> 233
<TABLE>
<S> <C> <C>
BORROWING BASE-A:
36. 80% of Eligible Domestic/Domestic Accounts [80% of line 11]................... $
-----------
37. 70% of Eligible Domestic/Foreign Accounts [70% of line 21].................... $
-----------
38. 75% of Eligible Domestic/Domestic Unbilled Receivables-180 [75% of line 27]... $
-----------
39. 65% of Eligible Domestic/Domestic Unbilled Receivables-365 [65% of line 28]... $
-----------
40. 65% of Eligible Domestic/Foreign Unbilled Receivables-180 [65% of line 34].... $
-----------
41. 55% of Eligible Domestic/Foreign Unbilled Receivables-365 [55% of line 35].... $
-----------
42. Sum of line 39 plus line 41................................................... $
-----------
43. Lesser of line 42 or $8,000,000.00............................................ $
-----------
44. Borrowing Base-A [line 36 plus line 37 plus
line 38 plus line 40 plus line 43]............................................ $
-----------
45. Commitments-A................................................................. $40,000,000.
46. Lesser of line 44 or line 45.................................................. $
-----------
47. Outstanding Amount of Advances-A.............................................. $
-----------
48. Letter of Credit Liabilities-A................................................ $
-----------
49. Sum of line 47 plus line 48................................................... $
-----------
50. Available Credit Amount [line 46 minus line 49]............................... $
-----------
</TABLE>
VERITAS DGC INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
233
<PAGE> 234
EXHIBIT "G-2"
BORROWING BASE REPORT-B
To: Bank One, Texas, N.A.
910 Travis
Houston, Texas 77002
Attention: Philip C. Lauinger, Vice President
Gentlemen:
This Borrowing Base Report-B ("Report") for the month ending
__________, is executed and delivered by Veritas DGC Inc. ("Borrower") to Bank
One, Texas, N.A. as administrative agent ("Agent") for the banks from time to
time parties thereto ("Banks") pursuant to that certain Credit Agreement dated
as of November 1, 1999 (as the same may be amended, supplemented, modified
and/or restated from time to time, the "Credit Agreement"), among Borrower,
Banks and Agent. Capitalized terms which are used in this Report but are not
defined herein shall have the meaning given to such terms in the Credit
Agreement.
Borrower represents and warrants to Agent and Banks that all
information contained herein is true, correct, and complete, and that the total
Eligible Foreign/Foreign Accounts and Eligible Foreign/Foreign Unbilled
Receivables qualify for the purposes of determining the Borrowing Base-B under
the Credit Agreement. Borrower further represents and warrants to Lender that
attached hereto as Schedule 1 is a list for Geophysical Limited, the Partnership
and Digicon (Malaysia) (collectively, the "Borrowing Base-B Guarantors") of its
accounts receivable and accounts payable for the month ending __________,
showing all foreign accounts receivable and all accounts payable aged in
thirty-day intervals and a prospective monthly billing schedule for the next
twelve (12) months for all Foreign/Foreign Unbilled Receivables.
ELIGIBLE FOREIGN/FOREIGN ACCOUNTS:
<TABLE>
<S> <C> <C>
1. Aggregate accounts receivable of Partnership created in the ordinary course
of business................................................................... $___________
2. Aggregate accounts receivable of Geophysical Limited created in the ordinary
course of business............................................................ $___________
3. Aggregate accounts receivable of Digicon (Malaysia) created in the ordinary
course of business............................................................ $___________
4. Subtotal of aggregate accounts receivable [sum of line 1 to line 3,
inclusive].................................................................... $___________
5. Accounts receivable of Borrowing Base-B Guarantors that have been outstanding
for more than 90 days past the original due date of the related invoice or
120 days have expired since the date of the related invoice................... $___________
</TABLE>
234
<PAGE> 235
<TABLE>
<S> <C> <C>
6. Accounts receivable of Borrowing Base-B Guarantors that are owed by an
Affiliate of such Person or any employee of such Person or of any such
Affiliate..................................................................... $___________
7. Accounts receivable of Borrowing Base-B Guarantors of which more than 25% of
the aggregate balances then outstanding owed by such account debtor and its
Affiliates to such Person are more than 120 days past due from the due dates
of their original invoices or if more than 150 days have expired from the
dates of the original invoices................................................ $___________
8. That portion of the aggregate amount of accounts receivable of Borrowing
Base-B Guarantors owed by any one account debtor which is in excess of 20% of
the then aggregate amount of all Eligible Domestic/Domestic Accounts,
Eligible Domestic/Foreign Accounts, Eligible Foreign/Foreign Accounts,
Eligible Domestic/Domestic Unbilled Receivables, Eligible Domestic/Foreign
Unbilled Receivables and Eligible Foreign/Foreign Unbilled Receivables........ $___________
9. Accounts receivable of Borrowing Base-B Guarantors that do not comply with
the other requirements set forth in the Credit Agreement (inclusive, but
without duplicate exclusions)................................................. $___________
10. Eligible Foreign/Foreign Unbilled Receivables................................. $___________
11. Ineligible Accounts [sum of line 5 to line 10], inclusive, but without
duplication................................................................... $___________
12. Eligible Foreign/Foreign Accounts [line 4 minus line 11]...................... $___________
UNBILLED RECEIVABLES:
13. Total Foreign/Foreign Unbilled Receivables.................................... $___________
14. Ineligible Foreign/Foreign Unbilled Receivables due to line 7 or line 8....... $___________
15. All other ineligible Foreign/Foreign Unbilled Receivables..................... $___________
16. Sum of line 14 and line 15.................................................... $___________
17. Total Eligible Foreign/Foreign Unbilled Receivables........................... $___________
</TABLE>
235
<PAGE> 236
<TABLE>
<S> <C> <C>
18. Eligible Foreign/Foreign Unbilled Receivables-180............................. $___________
19. Eligible Foreign/Foreign Unbilled Receivables-365............................. $___________
BORROWING BASE-B:
20. 50% of Eligible Foreign/Foreign Accounts [50% of line 12]..................... $___________
21. 45% of Eligible Foreign/Foreign Unbilled Receivables-180 [45% of line 18]..... $___________
22. 40% of Eligible Foreign/Foreign Unbilled Receivables-365 [40% of line 19]..... $___________
23. Lesser of line 22 and $2,000,000.00........................................... $___________
24. Borrowing Base-B [line 20 plus line 21 plus line 23].......................... $___________
25. Commitments-B................................................................. $10,000,000.
26. Lesser of line 24 or line 25.................................................. $___________
27. Outstanding Principal of Advances-B........................................... $___________
28. Letter of Credit Liabilities-B................................................ $___________
29. Sum of line 27 plus line 28................................................... $___________
30. Available Credit Amount [line 26 minus line 29]............................... $___________
</TABLE>
VERITAS DGC INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
236
<PAGE> 1
EXHIBIT 10-P
INDEMNITY AGREEMENT
THIS AGREEMENT made this ___ day of ____, 1998, between Veritas DGC
Inc., a Delaware corporation ("Company"), and __________, ("Indemnitee")
WHEREAS, the Company and Indemnitee desire that Indemnitee continue to
serve as a director and/or executive officer of the Company; and
WHEREAS, the Company desires and intends hereby to provide
indemnification (including advancement of expenses) against any and all
liabilities asserted against Indemnitee to the fullest extent permitted by the
General Corporation Law of the State of Delaware,
NOW, THEREFORE,
W I T N E S S E T H:
THAT for and in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:
1. Continued Service. Indemnitee will continue to serve, at the will of
the Company and under separate contract, if such exists, as a director and/or
executive officer so long as he is duly elected and qualified in accordance with
the Bylaws of the Company or until he tenders his resignation.
2. Indemnification. The Company shall indemnify Indemnitee as follows:
(a) The Company shall indemnify Indemnitee when he is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Company) by reason
of the fact that he is or was a director, executive officer, employee or agent
1
<PAGE> 2
of the Company, or is or was serving at the request of the Company as a
director, executive officer, employee or agent of the Company, or is or was
serving at the request of the Company as a director, executive officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlements actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests of
the Company, and, with respect to any criminal action or proceeding had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that Indemnitee failed to act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.
(b) The Company shall indemnify Indemnitee when he is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Company to procure a judgment in its
favor by reason of the fact that he is or was a director, executive officer,
employee or agent of the Company, or is or was serving at the request of the
Company as a director, executive officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Company and except that no indemnification shall be made
in respect of any claim, issue or matter as to which Indemnitee shall have been
adjudged to be liable to the Company unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all
2
<PAGE> 3
the circumstances of the case, Indemnitee is fairly and reasonably entitled to
indemnification for such expenses which the Court of Chancery or such other
court shall deem proper.
(c) Any indemnification under paragraphs (a) and (b) of this
Section 2 (unless ordered by a court) shall be made by the Company only as
authorized in the specific case upon a determination (in accordance with Section
3 hereof) that indemnification of Indemnitee is proper in the circumstances
because he has met the applicable standard of conduct set forth in paragraphs
(a) and (b) of this Section 2. Such determination shall be made (1) by a
majority vote of the board of directors who were not parties to such action,
suit or proceeding, even though less than a quorum, or (2) if there are no such
directors, or if such directors so direct, by independent legal counsel in a
written opinion, or (3) by the stockholders.
(d) Expenses (including attorneys' fees) incurred by
Indemnitee in defending a civil, criminal, administrative or investigative
action, suit or proceeding shall be paid by the Company in advance of the final
disposition of such action, suit or proceeding as authorized (in accordance with
Section 4 hereof) by the board of directors in the specific case upon receipt of
an undertaking by or on behalf of Indemnitee to repay such amount if it is
ultimately determined that he is not entitled to be indemnified by the Company
under this Agreement or otherwise.
(e) The indemnification and advancement of expenses provided
by this Agreement shall not be deemed exclusive of any other rights to which
Indemnitee may be entitled under any statute, bylaw, insurance policy,
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in his official capacity and as to action in another capacity while
holding such office, and shall continue after Indemnitee has ceased to be a
director, executive officer, employee or agent and shall inure to the benefit of
his heirs, executors and administrators.
3
<PAGE> 4
3. Determination of Right to Indemnification. For purposes of making
the determination in a specific case under paragraph (c) of Section 2 hereof
whether to make indemnification, the board of directors, independent legal
counsel, or stockholders, as the case may be, shall make such determination in
accordance with the following procedure:
(a) Indemnitee may submit to the board of directors a sworn
statement of request for indemnification substantially in the form of Exhibit 1
attached hereto and made a part hereof ("Indemnification Statement") averring
that he has met the applicable standard of conduct set forth in paragraphs (a)
and (b) of Section 2 hereof;
(b) Submission of the Indemnification Statement to the board
of directors shall create a rebuttable presumption that Indemnitee is entitled
to indemnification under this Agreement, and the board of directors, independent
legal counsel, or stockholders, as the case may be, shall within 60 days after
submission of the Indemnification Statement specifically determine that
Indemnitee is so entitled, unless it or they shall possess sufficient evidence
to rebut the presumption that Indemnitee has met the applicable standard of
conduct set forth in paragraph (a) or (b) of Section 2 hereof, which evidence
shall be disclosed to Indemnitee with particularity in a sworn written statement
signed by all persons who participated in the determination and voted to deny
indemnification.
4. Authorization of Advancement of Expenses. For purpose of determining
whether to authorize advancement of expenses in a specific case pursuant to
paragraph (d) of Section 2 hereof, the board of directors shall make such
determination in accordance with the following procedure:
(a) Indemnitee may submit to the board of directors a sworn
statement of request for advancement of expenses substantially in the form of
Exhibit 2 attached hereto and made a part hereof ("Undertaking"), averring that
(i) he has reasonably incurred or will reasonably incur actual
4
<PAGE> 5
expenses in defending a civil or criminal action, suit or proceedings, and (ii)
he undertakes to repay such amount if it is ultimately determined that he is not
entitled to be indemnified by the Company under this Agreement or otherwise;
(b) Upon receipt of the Undertaking the board of directors
shall within 14 days authorize immediate payment of the expenses stated in the
Undertaking.
5. Merger, Consolidation or Change in Control. In the event that the
Company shall be a constituent corporation in a consolidation or merger, whether
the Company is the resulting or surviving corporation or is absorbed, or if
there is a change in control of the Company as defined in Section 6 hereof,
Indemnitee shall stand in the same position under this Agreement with respect to
the resulting, surviving or changed corporation as he would have with respect to
the Company if its separate existence had continued or if there had been no
change in the control of the Company.
6. Certain Definitions. For purposes of this Agreement, the following
definitions apply herein:
"other enterprises" shall include employee benefit plans, and civic,
non-profit, or charitable organizations, whether or not incorporated;
"fines" shall include any excise taxes assessed on Indemnitee with
respect to any employee benefit plan;
"serving at the request of the Company" shall include any service at
the request or with the express or implied authorization of the Company, as a
director, executive officer, employee or agent of the Company which imposes
duties on, or involves services by, Indemnitee with respect to a corporation or
"other enterprises," its participants or beneficiaries; and if Indemnitee acted
in good faith and in a manner he reasonably believed to be in the interest of
the participants and
5
<PAGE> 6
beneficiaries of such "other enterprises," he shall be deemed to have acted in a
manner "not opposed to the best interests of the Company" as referred to in this
Agreement; and
"change of control" shall include any change in the ownership of
a majority of the capital stock of the Company or in the composition of a
majority of the members of the board of directors of the Company.
7. Attorneys' Fees. In the event that Indemnitee institutes any legal
action to enforce his rights under, or to recover damages for breach of this
Agreement, Indemnitee, if he prevails in whole or in part, shall be entitled to
recover from the Company all attorneys' fees and disbursements incurred by him.
8. Severability. If any provision of this Agreement or the application
of any provision hereof to any person or circumstances is held invalid, the
remainder of this Agreement and the application of such provision to other
persons or circumstances shall not be affected.
9. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to its conflict
of laws rules.
10. Modification; Survival. This Agreement contains the entire
agreement of the parties relating to the subject matter hereof. This Agreement
may be modified only by an instrument in writing signed by both parties hereto.
The provisions of this Agreement shall survive the termination of Indemnitee's
service as a director and/or executive officer of the Company.
6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement and the Company has set its seal as of the date first above written.
Veritas DGC Inc.
By:
-----------------------------------------
David B. Robson,Chief Executive Officer
(Corporate Seal)
7
<PAGE> 8
EXHIBIT 1
STATEMENT OF REQUEST FOR INDEMNIFICATION
STATE OF TEXAS )
COUNTY OF HARRIS )
I, _________________, being first duly sworn do depose and say as
follows:
1. This Statement is submitted pursuant to the Indemnity Agreement
dated ________________, between Veritas DGC Inc., a Delaware corporation
("Company"), and the undersigned.
2. I am requesting indemnification against expenses (including
attorneys' fees) and, with respect to any action not by or in the right of the
Company, judgments, fines and amounts paid in settlement, all of which have been
actually and reasonably incurred by me in connection with a certain action, suit
or proceeding to which I am a party or am threatened to be made a party by
reason of the fact that I am or was a director and/or executive officer of the
Company.
3. With respect to all matters related to any such action, suit or
proceeding, I acted in good faith and in a manner I reasonably believed to be or
not opposed to the best interests of the Company, and, with respect to any
criminal action or proceeding, I had no reason to believe that my conduct was
unlawful.
4. I am requesting indemnification against the following liabilities
____________________________________________________.
____________________________________________
Subscribed and sworn to before me this ___ day of _____________, 19__.
---------------------------------------------
Notary Public in and for the State of Texas
My Commission expires:
-----------------------
8
<PAGE> 9
EXHIBIT 2
STATEMENT OF UNDERTAKING
STATE OF TEXAS )
COUNTY OF HARRIS )
I, _______________, being first duly sworn do depose and say as
follows:
1. This Statement is submitted pursuant to the Indemnity Agreement
dated ________________, between Veritas DGC Inc., a Delaware corporation
("Company"), and the undersigned.
2. I am requesting advancement of certain actual expenses which I have
reasonably incurred or will reasonably incur in defending a civil, criminal,
administrative or investigative action, suit or proceeding.
3. I hereby undertake to repay this advancement of expenses if it is
ultimately determined that I am not entitled to be indemnified by the Company.
4. The expenses for which advancement is requested are as follows:
____________________________________________________.
____________________________________________
Subscribed and sworn to before me this ___ day of ___________, 19___.
---------------------------------------------
Notary Public in and for the State of Texas
My Commission expires:
-----------------------
9
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-2000
<PERIOD-START> AUG-01-1999
<PERIOD-END> OCT-31-1999
<CASH> 33,141
<SECURITIES> 2,926
<RECEIVABLES> 122,201
<ALLOWANCES> 2,943
<INVENTORY> 4,969
<CURRENT-ASSETS> 174,896
<PP&E> 381,242
<DEPRECIATION> 218,744
<TOTAL-ASSETS> 559,207
<CURRENT-LIABILITIES> 78,028
<BONDS> 0
0
0
<COMMON> 215
<OTHER-SE> 340,607
<TOTAL-LIABILITY-AND-EQUITY> 340,822
<SALES> 0
<TOTAL-REVENUES> 68,677
<CGS> 0
<TOTAL-COSTS> 44,703
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,491
<INCOME-PRETAX> (359)
<INCOME-TAX> (15)
<INCOME-CONTINUING> (580)
<DISCONTINUED> 0
<EXTRAORDINARY> (187)
<CHANGES> 0
<NET-INCOME> (767)
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<PAGE> 1
EXHIBIT 99
Veritas DGC Inc.
Audit Committee Charter
The audit committee is a committee of the board of directors. Its primary
function is to assist the board in fulfilling its oversight responsibilities by
reviewing the financial information which will be provided to the shareholders
and others, the systems of internal controls which management and the board of
directors have established, and the audit process.
It is RESOLVED, therefore, that the charter and powers of the Audit Committee of
the Board of Directors (the "Audit Committee") shall be:
o Overseeing that management has maintained the reliability and integrity of
the accounting policies and financial reporting and disclosure practices of
the Company;
o Overseeing that management has established and maintained processes to
assure that an adequate system of internal control is functioning within
the Company;
It is RESOLVED, that the Audit Committee shall have the following specific
powers and duties:
1. Holding at least three regular meetings per year and such special meetings
(at least one per year) as may be called by the Chairman of the Audit
Committee or at the request of the independent accountants or the internal
auditors, and including in such meetings members of management to provide
information as needed;
2. Reviewing the performance of the independent accountants and internal
auditors and making recommendations to the Board of Directors regarding the
appointment or termination of the independent accountants and internal
auditors;
3. Conferring with the independent accountants and the internal auditors
concerning the scope of their examinations of the books and records of the
Company and its subsidiaries; reviewing and approving the independent
accountants' annual engagement letter; reviewing and approving the
Company's internal audit plans and reports, annual audit plans and budgets;
directing the special attention of the auditors to specific matters or
areas deemed by the Committee or the auditors to be of special
significance; and authorizing the auditors to perform such supplemental
reviews or audits as the Committee may deem desirable;
4. Reviewing with management, the independent accountants and internal
auditors significant risks and exposures, audit activities and significant
audit findings;
5. Reviewing the range and cost of audit and non-audit services performed by
the independent accountants;
6. Reviewing the Company's audited annual financial statements and the
independent accountants' opinion rendered with respect to such financial
statements, including reviewing the nature and extent of any significant
changes in accounting principles or the application thereof, and providing
for the review of interim financial reports before they are filed with the
SEC or other regulators;
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<PAGE> 2
7. Providing for review of the Company's quarterly earnings releases by the
Chairman, or his designee, and reviewing the Company's annual fiscal year
earnings release in a meeting of the full Audit Committee before such
releases are made public;
8. Through the internal audit process and the independent accountants,
reviewing the adequacy of the Company's systems of internal control;
9. Obtaining from the independent accountants and internal auditors their
recommendations regarding internal controls and other matters relating to
the accounting procedures and the books and records of the Company and its
subsidiaries and reviewing the correction of controls deemed to be
deficient;
10. Providing an independent, direct communication between the Board of
Directors, internal auditors and independent accountants;
11. Reporting through its Chairman to the Board of Directors following the
meetings of the Audit Committee such recommendations as the committee deems
appropriate;
12. Maintaining minutes or other records of meetings and activities of the
Audit Committee;
13. Conducting or authorizing investigations into any matters within the Audit
Committee's scope of responsibilities, including retaining independent
counsel, accountants, or others to assist it in the conduct of any
investigation;
14. Considering such other matters in relation to the financial affairs of the
Company and its accounts, and in relation to the internal and external
audit of the Company as the Audit Committee may, in its discretion,
determine to be advisable;
15. Meeting with the director of internal auditing, the independent accountant,
and management in separate executive sessions to discuss any matters that
the committee or these groups believe should be discussed privately with
the audit committee;
It is RESOLVED, that the membership of the audit committee shall consist of at
least three independent members of the board of directors who shall serve at the
pleasure of the board of directors. Audit committee members and the committee
chairman shall be designated by the full board of directors upon the
recommendation of the nominating committee. Members of the audit committee shall
have a familiarity with basic finance and accounting practices and at least one
member of the committee shall have an accounting or financial management
background.
2
