<PAGE> 1
================================================================================
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 AND EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-9654
OHM CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
OHIO 34-1503050
(State of Incorporation) (I.R.S. Employer Identification Number)
16406 U.S. ROUTE 224 EAST, FINDLAY, OH 45840
(Address of principal executive offices) (Zip Code)
</TABLE>
(419) 423-3529
(Registrant's telephone number, including area code)
Indicate by check 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
requirement for the past 90 days.
Yes X No
--- ---
The number of shares of Common Stock, par value $0.10 per share,
outstanding on October 31, 1997 was 27,367,417.
================================================================================
<PAGE> 2
OHM CORPORATION
INDEX TO QUARTERLY REPORT
ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1997
PART I
FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C> <C>
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 1997 (Unaudited) and December
31, 1996................................................................... 1
Consolidated Statements of Operations (Unaudited) for the Three and Nine
Months Ended September 30, 1997 and 1996................................... 2
Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended
September 30, 1997 and 1996................................................ 3
Notes to Consolidated Financial Statements (Unaudited)....................... 4
Independent Accountants' Review Report....................................... 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations................................................................. 8
PART II
OTHER INFORMATION
Item 1. Legal Proceedings............................................................ 13
Item 6. Exhibits and Reports on Form 8-K............................................. 13
Signatures.............................................................................. 14
</TABLE>
<PAGE> 3
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OHM CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents........................................ $ 8,544 $ 14,002
Accounts receivable.............................................. 76,281 85,461
Costs and estimated earnings on contracts in process in excess of
billings...................................................... 49,661 56,303
Materials and supply inventory, at cost.......................... 14,037 13,899
Prepaid expenses and other assets................................ 9,734 17,274
Deferred income taxes............................................ 21,840 10,513
Refundable income taxes.......................................... 159 493
-------- --------
180,256 197,945
-------- --------
Property and Equipment, net........................................ 59,816 70,521
-------- --------
Other Noncurrent Assets:
Investments in affiliated company................................ 8,421 23,185
Intangible assets relating to acquired businesses, net........... 45,444 33,534
Deferred debt issuance and financing costs....................... 1,219 1,412
Deferred income taxes............................................ 6,086 3,563
Other assets..................................................... 7,777 6,377
-------- --------
68,947 68,071
-------- --------
Total Assets.................................................. $ 309,019 $336,537
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable................................................. $ 66,750 $ 69,230
Billings on contracts in process in excess of costs and estimated
earnings...................................................... 1,289 897
Accrued compensation and related taxes........................... 5,550 6,528
Federal, state and local taxes................................... 142 150
Other accrued liabilities........................................ 22,427 21,477
Current portion of noncurrent liabilities........................ 7,400 5,321
-------- --------
103,558 103,603
-------- --------
Noncurrent Liabilities:
Long-term debt................................................... 49,248 52,972
Deferred gain from sale leaseback of equipment................... 3,450 4,484
Capital leases................................................... 74 32
Pension agreement................................................ 860 874
-------- --------
53,632 58,362
-------- --------
Commitments and Contingencies...................................... -- --
Shareholders' Equity:
Preferred stock, $10.00 par value, 2,000,000 shares authorized;
None issued and outstanding................................... -- --
Common stock, $.10 par value, 50,000,000 shares authorized;
Shares issued: 1997 -- 27,302,115; 1996 -- 26,992,140......... 2,730 2,699
Additional paid-in capital....................................... 141,470 138,989
Retained earnings................................................ 7,629 32,884
-------- --------
151,829 174,572
-------- --------
Total Liabilities and Shareholders' Equity.................... $ 309,019 $336,537
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
1
<PAGE> 4
OHM CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------- ---------------------
1997 1996 1997 1996
-------- -------- -------- --------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Revenue........................................ $143,656 $158,272 $381,467 $406,412
Cost of services............................. 122,747 137,634 328,833 353,184
-------- -------- -------- --------
Gross Profit................................... 20,909 20,638 52,634 53,228
Claims settlement costs and other............ -- -- 37,877 --
Selling, general and administrative
expenses.................................. 11,972 13,124 33,872 36,243
-------- -------- -------- --------
Operating Income (Loss)........................ 8,937 7,514 (19,115) 16,985
-------- -------- -------- --------
Other (Income) Expenses:
Investment income............................ (102) (97) (154) (112)
Interest expense............................. 1,226 1,780 3,779 5,658
Equity in net earnings of affiliate.......... -- (183) (185) (632)
Write-down of investment in NSC
Corporation............................... -- -- 14,949 --
Miscellaneous expense, net................... 9 (54) 232 489
-------- -------- -------- --------
1,133 1,446 18,621 5,403
-------- -------- -------- --------
Income (Loss) Before Income Taxes.............. 7,804 6,068 (37,736) 11,582
Income taxes (benefit)....................... 2,890 2,072 (12,479) 3,877
-------- -------- -------- --------
Net Income (Loss).............................. $ 4,914 $ 3,996 $(25,257) $ 7,705
======== ======== ======== ========
Net Income (Loss) Per Share.................... $ 0.18 $ 0.15 $ (0.93) $ 0.29
======== ======== ======== ========
Weighted average number of common and
equivalent shares outstanding................ 27,301 26,862 27,151 26,787
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE> 5
OHM CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------
1997 1996
--------- ---------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income.................................................... $ (25,257) $ 7,705
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization...................................... 10,717 13,025
Amortization of other noncurrent assets............................ 2,345 2,855
Deferred income taxes.............................................. (13,224) 3,177
Loss (gain) on sale of property and equipment...................... (285) 381
Equity in net earnings of affiliate................................ (185) (632)
Writedown of investment in affiliated company...................... 14,949 --
Deferred translation adjustments and other......................... 74 37
Changes in current assets and liabilities:
Accounts receivable................................................ 13,330 9,088
Costs and estimated earnings on contracts in process in excess of
billings........................................................ 6,642 (4,792)
Materials and supply inventory, at cost............................ (138) (451)
Prepaid expenses and other assets.................................. 7,540 1,813
Refundable income taxes and other adjustments...................... 334 66
Accounts payable................................................... (9,997) (4,432)
Billings on contracts in process in excess of costs and estimated
earnings........................................................ 392 (1,022)
Accrued compensation and related taxes............................. (1,458) (755)
Federal, state and local income taxes.............................. (8) (160)
Other accrued liabilities.......................................... (1,056) (6,911)
-------- --------
Net cash flows provided by operating activities................. 4,715 18,992
-------- --------
Cash flows from investing activities:
Purchases of property and equipment................................ (14,547) (15,263)
Proceeds from sale of property and equipment....................... 585 2,222
Proceeds from sale and leaseback of equipment...................... 17,900 --
Purchase of stock of business less cash acquired................... (7,092) --
Decrease in receivable from affiliated company..................... -- 15,000
Increase in other noncurrent assets................................ (2,755) (1,057)
-------- --------
Net cash (used in) provided by investing activities............. (5,909) 902
-------- --------
Cash flows from financing activities:
Payments on long-term debt and capital leases...................... (6,690) (5,379)
Proceeds from borrowing under revolving credit agreement and term
loan............................................................ 151,864 154,000
Payments on revolving credit agreement and term loan............... (151,864) (174,700)
Payments on pension agreement...................................... (86) (95)
Common stock issued for 401(k) funding and stock options........... 2,512 1,901
-------- --------
Net cash used in financing activities........................... (4,264) (24,273)
-------- --------
Net decrease in cash and cash equivalents....................... (5,458) (4,379)
Cash and cash equivalents at beginning of period..................... 14,002 11,205
-------- --------
Cash and cash equivalents at end of period........................... $ 8,544 $ 6,826
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 6
OHM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(UNAUDITED)
NOTE 1 -- BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared by OHM Corporation (the "Company") and reflect all adjustments of a
normal recurring nature which are, in the opinion of management, necessary for a
fair presentation of financial results for the three and nine months ended
September 30, 1997 and 1996, in accordance with generally accepted accounting
principles for interim financial reporting and pursuant to Article 10 of
Regulation S-X. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. These interim consolidated financial statements should be read in
conjunction with the Company's Annual Report on Form 10-K for the year ended
December 31, 1996. The results of operations for the three and nine months ended
September 30, 1997 and 1996 are not necessarily indicative of the results for
the full year.
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings per Share, which is required to be adopted on December 31,
1997. At that time, the Company will be required to change the method currently
used to compute earnings per share and to restate all prior periods. Under the
new requirements for calculating basic earnings per share, the dilutive effect
of stock options will be excluded. The impact on the calculation of earnings per
share for the three and nine months ended September 30, 1997 and 1996 is not
expected to be material.
The unaudited consolidated financial statements include the accounts of the
Company and its subsidiaries. The Company's 40% owned asbestos abatement
affiliate, NSC Corporation ("NSC"), has been accounted for as an asset held for
sale. See "Note 7 -- Special Charges" regarding the Company's plans to divest
its ownership of NSC and the related reduction of its carrying value. All
material intercompany transactions and balances have been eliminated in
consolidation.
The consolidated financial statements at September 30, 1997, and for the
three and nine months then ended, have been reviewed by Ernst & Young LLP, the
Company's independent accountants, and their report is included herein.
NOTE 2 -- SUPPLEMENTARY CASH FLOW INFORMATION
Cash paid for interest was $3,520,000 and $5,253,000 and cash paid for
income taxes was $39,000 and $389,000 for the nine months ended September 30,
1997 and 1996, respectively.
NOTE 3 -- ACQUISITION
Effective June 1, 1997, the Company acquired all of the outstanding stock
of Beneco Enterprises, Inc., a Utah corporation ("Beneco"), for an aggregate
purchase price of $14,700,000. The purchase price was paid as follows: (i)
$9,700,000 in cash and (ii) unsecured promissory notes in the aggregate of
$5,000,000, bearing interest at 7.25%, due and payable June 17, 1998. The
Company has agreed to make an additional payment in the year 2000 contingent
upon the achievement of certain operating results and other contractual
conditions. Beneco is a provider of project, program and construction management
services to the Department of Defense and other government agencies throughout
the United States.
The acquisition of Beneco has been accounted for using the purchase method
and, accordingly, the acquired assets and assumed liabilities, including
goodwill, have been recorded at their estimated fair values as of June 1, 1997.
The Company's consolidated financial statements for the three and nine month
periods ended September 30, 1997 include the results of Beneco since June 1,
1997. The following table sets forth the unaudited
4
<PAGE> 7
combined pro forma results of operations of the Company for the nine months
ended September 30, 1997 and 1996, giving effect to the acquisition of Beneco as
if such acquisition had occurred on January 1, 1996.
<TABLE>
<CAPTION>
PRO FORMA
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------
1997 1996
-------- --------
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
<S> <C> <C>
Gross revenue................................................ $410,047 $452,193
Net (loss) income............................................ $(25,156) $ 8,178
Net (loss) income per share.................................. $ (0.93) $ 0.31
</TABLE>
The combined pro forma results of operations for the nine months ended
September 30, 1997 and 1996 are based upon certain assumptions and estimates
which the Company believes are reasonable. The combined pro forma results of
operations may not be indicative of the operating results that actually would
have been reported had the transaction been consummated on January 1, 1996, nor
are they necessarily indicative of results which will be reported in the future.
The estimated fair value of the assets acquired and liabilities assumed at
the date of acquisition are as follows (in thousands):
<TABLE>
<S> <C>
Current assets............................................................ $ 6,042
Property and equipment.................................................... 895
Goodwill.................................................................. 11,934
Current liabilities....................................................... 5,205
</TABLE>
NOTE 4 -- INCOME TAXES
The reasons for differences between the provisions for income taxes and the
amount computed by applying the statutory federal income tax rate to income
before income taxes are as follows:
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------- -------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Federal statutory rate.............................. 34.0% 34.0% 34.0% 34.0%
Add (deduct):
State income taxes, net of federal benefit........ 6.0 4.9 6.0 4.8
Goodwill.......................................... 1.5 2.5 (0.7) 2.1
Research and development tax credits.............. (4.6) (5.9) 1.8 (5.9)
Write-down of investment in NSC Corporation....... -- -- (5.9) --
Equity in net earnings of affiliate............... -- (0.8) 0.1 (1.5)
Other, net........................................ 0.1 (0.6) (2.2) --
---- ---- ---- ----
37.0% 34.1% 33.1% 33.5%
==== ==== ==== ====
</TABLE>
NOTE 5 -- SEASONALITY
The timing of revenue recognition is dependent on the Company's backlog,
contract awards and the performance requirements of each contract. The Company's
revenue is also affected by the timing of its clients' planned contract work
which generally increases during the third and fourth quarters. Because of this
variability in demand, the Company's quarterly revenue can fluctuate, and
revenue for the first and second quarters of each year can normally be expected
to be lower than the third and fourth quarters. Although the Company believes
that the historical trend in quarterly revenue for the third and fourth quarters
of each year are generally higher than the first and second quarters, there can
be no assurance that this will occur in future periods. Accordingly, quarterly
or other interim results should not be considered indicative of results to be
expected for any quarter or for the full year.
5
<PAGE> 8
NOTE 6 -- LITIGATION AND CONTINGENCIES
The Company is subject to a number of claims and litigation. These matters
include the following items which were disclosed in the consolidated financial
statements in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996.
The Company is in litigation in the U.S. District Court for the Western
District of New York with Occidental Chemical Corporation ("Occidental")
relating to the Durez Inlet Project performed in 1993 and 1994 for Occidental in
North Tonawanda, New York. The Company's account receivables at September 30,
1997 include a claim receivable of $8,653,000 related to this matter. The
Company's work was substantially delayed and its costs of performance were
substantially increased as a result of conditions at the site that the Company
believes were materially different than as represented by Occidental.
Occidental's amended complaint seeks $8,806,000 in damages primarily for alleged
costs incurred as a result of project delays and added volumes of incinerated
waste. The Company's counterclaim seeks an amount in excess of $9,200,000 for
damages arising from Occidental's breach of contract, misrepresentation and
failure to pay outstanding contract amounts. The Company has established
additional reserves for a portion of the receivables related to this matter (see
"Note 7 -- Special Charges"). Management believes that it has established
adequate reserves should the resolution of the above matter be lower than the
amounts recorded.
As a result of an arbitration proceeding between the Company and Separation
and Recovery Systems, Inc. ("SRS") arising out of the Company's termination of
SRS' subcontract for the performance of thermal desorption services at the
Hilton-Davis Project in Cincinnati, Ohio, SRS was awarded $2,400,000 in damages
from the Company. The Company has established a $2,400,000 reserve for the
arbitration award and has reduced the receivables relating to SRS' subcontract
performance (see "Note 7 -- Special Charges"). The Company filed a motion in
federal court to overturn the award and SRS has filed a motion to confirm the
award. The U.S. District Court for the Southern District of Ohio has denied the
Company's motion and confirmed the award.
In addition to the above, the Company is subject to a number of claims and
lawsuits in the ordinary course of its business. In the opinion of management,
the outcome of these actions, which are not clearly determinable at the present
time, are either adequately covered by insurance or other reserves, or if not
insured or reserved, will not, in the aggregate, have a material adverse impact
upon the Company's consolidated future results of operations or financial
condition.
In the course of the Company's business there is always risk and
uncertainty in pursuing and defending claims, litigation and arbitration
proceedings and, notwithstanding the reserves currently established, adverse
future results in litigation or other proceedings could have a material adverse
impact upon the Company's consolidated future results of operations or financial
condition.
NOTE 7 -- SPECIAL CHARGES
During June 1997, the Company settled litigation that was pending involving
Citgo Petroleum Corporation ("Citgo") and Occidental relating to a remediation
project which was performed by the Company for Citgo at its Lake Charles,
Louisiana refinery during 1993 and 1994. Under the terms of the settlement with
Citgo and Occidental, the Company received a cash payment of $14,346,000. In
addition, as a result of an unfavorable binding arbitration decision on the
dispute between the Company and SRS arising out of the Company's termination of
SRS' subcontract for services at a project in Cincinnati, Ohio, the Company must
pay SRS $2,400,000 in damages. The settlement and write-down of the
aforementioned claims and litigation, together with other receivables and the
establishment of reserves for the consolidation of certain laboratory and
operational functions resulted in the Company recording a $37,877,000 pre-tax,
$22,726,000 after-tax or $0.83 per share, charge during the second quarter of
1997.
The Company plans to divest its 40% share of NSC Corporation. As a result,
the Company recorded, in addition to the charge described above, a $14,949,000
pre-tax, $12,089,000 after tax or $0.45 per share, charge during the second
quarter of 1997, to reduce the carrying value of its NSC investment to reflect
the likely value to be realized given the Company's current intentions.
6
<PAGE> 9
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
Board of Directors and Shareholders
OHM Corporation
We have reviewed the accompanying consolidated balance sheet of OHM
Corporation as of September 30, 1997, and the related consolidated statements of
operations for the three and nine month periods ended September 30, 1997 and
1996 and the consolidated statements of cash flows for the nine month periods
ended September 30, 1997 and 1996. These financial statements are the
responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, which will be performed
for the full year with the objective of expressing an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying consolidated financial statements referred to
above for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of OHM Corporation as of December 31,
1996, and the related consolidated statements of operations, changes in
shareholders' equity, and cash flows for the year then ended, not present
herein, and in our report dated February 7, 1997, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying consolidated balance sheet as of
December 31, 1996, is fairly stated, in all material respects, in relation to
the consolidated balance sheet from which it has been derived.
/s/ ERNST & YOUNG LLP
Columbus, Ohio
October 29, 1997
7
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
The Company is a diversified services firm for government and private
sector clients and provides a broad range of outsourced services including
environmental remediation and project, program and construction management
services. The timing of the Company's revenue is dependent on its backlog,
contract awards and the performance requirements of each contract. The Company's
revenue is also affected by the timing of its clients' planned contract
activities which generally increase during the third and fourth quarters.
Because of this change in demand, the Company's quarterly revenue can fluctuate,
and revenue for the first and second quarters of each year have historically
been lower than for the third and fourth quarters, although there can be no
assurance that this will occur in future years. Accordingly, quarterly or other
interim results should not be considered indicative of results to be expected
for any quarter or full fiscal year.
Effective June 1, 1997, the Company acquired all of the outstanding stock
of Beneco Enterprises, Inc., a Utah corporation ("Beneco"), for an aggregate
purchase price of $14,700,000. The purchase price was paid as follows: (i)
$9,700,000 in cash and (ii) unsecured promissory notes in the aggregate of
$5,000,000. The Company has agreed to make an additional payment in the year
2000 contingent upon the achievement of certain operating results and other
contractual conditions. Beneco is a provider of project, program and
construction management services to the Department of Defense ("DOD") and other
government agencies throughout the United States. The acquisition of Beneco has
been accounted for using the purchase method and, accordingly, the acquired
assets and assumed liabilities, including goodwill, have been recorded at their
estimated fair values as of June 1, 1997. The Company's consolidated statements
of operations include the results of Beneco since June 1, 1997. See "Note 3 to
the Consolidated Financial Statements."
RESULTS OF OPERATIONS
REVENUE. The following table sets forth the Company's revenue by client
type for the three and nine months ended September 30, 1997 and 1996 (in
thousands, except percentages):
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------------------- ---------------------------------
1997 1996 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Federal, State, and
Local Government..... $110,879 77% $117,754 74% $308,036 81% $305,128 75%
Industrial............. 32,777 23% 40,518 26% 73,431 19% 101,284 25%
-------- --- -------- --- -------- --- -------- ---
Total Revenue..... $143,656 100% $158,272 100% $381,467 100% $406,412 100%
======== === ======== === ======== === ======== ===
</TABLE>
Revenue decreased $14,616,000 or 9% and $24,945,000 or 6% for the three and
nine months ended September 30, 1997, respectively, when compared to the same
time period in 1996. Such decrease in revenue is primarily due to decreased
environmental remediation revenues from government and industrial sector
clients, partially offset by revenue from Beneco which was acquired effective
June 1, 1997 and has been included in the results of operations for the entire
third quarter of 1997.
Revenue from government agencies for the three months ended September 30,
1997 decreased $6,875,000 or 6% and increased $2,908,000 or 1% for the nine
months ended September 30, 1997, when compared to the same periods in 1996. The
improvement for the nine months ended September 30, 1997 is primarily due to the
inclusion of revenue from Beneco which was acquired effective June 1, 1997,
partially offset by a decrease in revenue from government contracts in the
Company's environmental remediation services business. Beneco's revenue is
primarily derived from program and construction management services provided
under term contracts with the various DOD agencies and state and local
governments. The environmental remediation business experienced a decrease in
revenue from the Company's term contracts with the various DOD agencies, which
was partially offset by an increase in revenue from the Environmental Protection
Agency as well as from state and local governments, during the three and nine
months ended September 30, 1997 when compared to the same periods in 1996. In
addition, the Company has experienced a decrease in revenue from its site
specific thermal
8
<PAGE> 11
incineration project in Holbrook, Massachusetts with the United States Army
Corps of Engineers as such project nears its completion. The Company expects to
continue to receive funding under its federal contracts in the foreseeable
future and is experiencing a significant amount of proposal activity for new
contracts with the various DOD agencies, as well as the Department of Energy.
However, reductions by Congress in future environmental remediation budgets of
government agencies may have a material adverse impact upon future revenue from
such agencies and the funding of the Company's government term contracts
included in contract backlog.
The Company experienced a decrease in revenue from industrial clients of
$7,741,000 or 19% and $27,853,000 or 27% for the three months and nine months
ended September 30, 1997, respectively, when compared to the same periods in
1996. The Company believes that demand for its services from the industrial
sector has been negatively impacted due to anticipated changes in the Superfund
law pending its reauthorization as well as current economic conditions in
certain industry and geographic sectors. Although the Company cannot predict the
impact upon the environmental industry of the failure of Congress to reauthorize
the Superfund law, further delays in Superfund reauthorization will continue to
have a material adverse impact upon the demand for the Company's services in the
form of project delays as clients and potential clients wait for and anticipate
changes in these regulations. The result of decreased demand from the industrial
sector has increased the competitive pressures on the contracts available for
bid from the industrial market. The Company has been very selective in bidding
industrial contracts and has established specific minimum criteria on
profitability and risk in determining whether or not to compete for any given
contract. The Company expects the current market conditions to continue in the
industrial sector into the foreseeable future.
COST OF SERVICES AND GROSS PROFIT. Cost of services decreased for the
three and nine months ended September 30, 1997 when compared to the same periods
in 1996. The decrease is due primarily to the decrease in revenue. Gross profit
increased slightly for the three months ended September 30 1997 and decreased
slightly for the nine months ended September 30, 1997 when compared to the same
periods in 1996. The Company's gross profit as a percentage of revenue increased
for the three and nine months ended September 30, 1997 when compared to the same
periods in 1996 due to an increase in the margin percent on the Company's
government projects and increased selectivity in bidding industrial contracts.
CLAIMS SETTLEMENT COSTS AND OTHER. During June 1997, the Company settled
litigation that was pending involving Citgo Petroleum Corporation ("Citgo"), Oxy
USA Inc., and Occidental Oil & Gas (collectively "Oxy") relating to a
remediation project which was performed by the Company for Citgo at its Lake
Charles, Louisiana refinery during 1993 and 1994. Under the terms of the
settlement with Citgo and Oxy, the Company received a cash payment of
$14,346,000. In addition, as a result of an unfavorable binding arbitration
decision on the dispute between the Company and Separation and Recovery Systems,
Inc. ("SRS") arising out of the Company's termination of SRS' subcontract for
services at a project in Cincinnati, Ohio, SRS was awarded $2,400,000 in
damages. The settlement and write-down of the aforementioned claims and
litigation, together with other receivables and the establishment of reserves
for the consolidation of certain laboratory and operational functions, resulted
in the Company recording a $37,877,000 pre-tax, $22,726,000 after-tax or $0.83
per share, charge during the second quarter of 1997. See "Note 7 to the
Consolidated Financial Statements."
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative ("SGA") expenses decreased $1,152,000 or 9% and $2,371,000 or 7%,
for the three and nine months ended September 30, 1997, respectively, when
compared to the same periods in 1996. SGA expense as a percentage of revenue was
8% for the three months ended September 30, 1997 and 1996 and 9% for the nine
months ended September 30, 1997 and 1996. SGA expense has decreased primarily as
a result of decreased revenue and reductions made to overhead expenses in light
of such decreased revenue.
INTEREST EXPENSE. Interest expense decreased 31% and 33% during the three
and nine months ended September 30, 1997, respectively, when compared to the
same periods in 1996. The decrease in interest expense was a result of a
decrease in the average borrowings outstanding under the Company's revolving
credit agreement during such periods in 1997 when compared to the same periods
in 1996.
9
<PAGE> 12
WRITE-DOWN OF INVESTMENT IN NSC CORPORATION. The Company has written down
to expected net realizable value and plans to divest its 40% share of NSC
Corporation. As a result, the Company recorded a $14,949,000 pre-tax,
$12,089,000 after tax or $0.45 per share, charge during the second quarter of
1997, to reduce the carrying value of its NSC investment and to account for it
as an asset held for sale.
NET INCOME (LOSS). Net income for the three months ended September 30,
1997 was $4,914,000 or $0.18 per share compared to $3,996,000 or $0.15 per share
for the same period in 1996. For the nine months ended September 30, 1997, net
loss was $(25,257,000) or $(0.93) per share compared to net income of $7,705,000
or $0.29 per share for the same period in 1996. Such losses were a result of the
aforementioned charges recorded during the second quarter of 1997. Without such
charges, net income would have been $9,558,000 or $0.35 per share, for the nine
months ended September 30, 1997.
The effective income tax rate was 37% and 34% for the three months ended
September 30, 1997 and 1996, respectively. For the nine month period ending
September 30, 1997 and 1996, the effective income tax rate was 33% and 34%,
respectively. See "Note 4 to the Consolidated Financial Statements" for a
reconciliation of the statutory federal income tax rate to the effective income
tax rate.
LIQUIDITY AND CAPITAL RESOURCES
On May 31, 1995, the Company entered into a $150,000,000 revolving credit
agreement with a group of banks (the "Bank Group") to provide letters of credit
and cash borrowings. The agreement has a five year term and is scheduled to
expire on May 30, 2000. Waste Management, Inc. ("WMX") has issued a guarantee of
up to $62,000,000 outstanding under the credit agreement in favor of the Bank
Group. Under the terms of the agreement the entire credit facility can be used
for either cash borrowings or letters of credit. Cash borrowings bear interest
at either the prime rate plus a percentage up to 0.625% or, at the Company's
option, the Eurodollar market rate plus a percentage ranging from 0.325% to
1.625%. The percentage over the prime rate or the Eurodollar market rate is
based on the aggregate amount borrowed under the facility, the presence of the
guarantee, and the Company's financial performance as measured by an interest
coverage ratio and a total funded debt ratio. The agreement provides the
participating banks with a security interest in the Company's equipment,
inventories, accounts receivable, general intangibles and in the Company's
investment in the common stock of NSC as well as the Company's other
subsidiaries. The agreement also imposes, among other covenants, a minimum
tangible net worth covenant, a restriction on all of the Company's retained
earnings including the declaration and payment of cash dividends and a
restriction on the ratio of total funded debt to earnings before income taxes,
depreciation and amortization. There were no amounts outstanding for cash
borrowing under the revolving credit facility at September 30, 1997 or December
31, 1996. Aggregate letters of credit outstanding at September 30, 1997 and
December 31, 1996 were $14,108,000 and $12,223,000, respectively.
Capital expenditures for the nine months ended September 30, 1997 and 1996,
were $14,547,000 and $15,263,000, respectively. The Company's capital
expenditures are primarily related to the installation of computer systems and
related equipment, the purchase of heavy equipment and the fabrication of custom
equipment by the Company for the execution of remediation projects. Capital
expenditures for the entire fiscal year 1997 are expected to range between
$18,000,000 and $22,000,000. The Company's long-term capital expenditure
requirements are dependent upon the type and size of future remediation projects
awarded to the Company.
The Company believes that the government sector will continue to be its
primary source of revenue for the foreseeable future in light of its contract
backlog with federal government agencies. Revenue from government agencies
historically has required greater working capital, the major component of which
is accounts receivable, than revenue from industrial sector clients. In
addition, the Company is bidding on a number of large, long-term contract
opportunities which, if awarded to the Company, would also increase working
capital needs and capital expenditures. The Company believes it will be able to
finance its working capital needs and capital expenditures in the short term
through a combination of cash flows from operations, borrowing under its
revolving credit facility, proceeds from permitted asset sales and other
external sources.
10
<PAGE> 13
The Company, from time to time, evaluates potential acquisitions of
companies in the environmental remediation industry and industries related to
the core skills of the Company. The Company cannot predict whether it will be
successful in pursuing such acquisition opportunities or what the consequences
of any such acquisition would be. Future acquisitions may involve the
expenditure of significant funds and management time. Depending upon the nature,
size and timing of future acquisitions, the Company may be required to raise
additional capital through financings, including public or private equity or
debt offerings or additional bank financings. There is no assurance that such
additional financing will be available to the Company, or if available, will be
on acceptable terms.
The Company's identified long-term capital needs consist of payments due
upon the maturity of the Company's Revolving Credit Facility in 2000 and sinking
fund payments which commenced in 1996 of 7.5% of the principal amount as well as
payments due upon maturity of its Convertible Debentures in 2006. The Company
has purchased and retired $10,736,000 of the outstanding Convertible Debentures
during 1995 and 1996, sufficient to meet its annual sinking fund obligations
through October 1, 1997, as well as a portion of the sinking fund obligation due
October 1, 1998. The Company believes that it will be able to refinance the
remaining indebtedness as necessary.
ENVIRONMENTAL MATTERS AND GOVERNMENT CONTRACTING
Although the Company believes that it generally benefits from increased
environmental regulations and from enforcement of those regulations, increased
regulation and enforcement also create significant risks for the Company. The
assessment, remediation, analysis, handling and management of hazardous
substances necessarily involve significant risks, including the possibility of
damages or injuries caused by the escape of hazardous materials into the
environment, and the possibility of fines, penalties or other regulatory action.
These risks include potentially large civil and criminal liabilities for
violations of environmental laws and regulations, and liabilities to customers
and to third parties for damages arising from performing services for clients,
which could have a material adverse effect on the Company.
The Company does not believe there are currently any material environmental
liabilities which should be recorded or disclosed in its financial statements.
The Company anticipates that its compliance with various laws and regulations
relating to the protection of the environment will not have a material effect on
its capital expenditures, future earnings or competitive position.
Because of its dependence on government contracts, the Company also faces
the risks associated with such contracting, which could include civil and
criminal fines and penalties. As a result of its government contracting
business, the Company has been, is, and may in the future be subject to audits
and investigations by government agencies. The fines and penalties which could
result from noncompliance with the Company's government contracts or appropriate
standards and regulations, or the Company's suspension or debarment from future
government contracting, could have a material adverse effect on the Company's
business.
FORWARD-LOOKING STATEMENTS
All statements, other than statements of historical facts, included in this
Form 10-Q that address activities, events or developments that the Company
expects, believes or anticipates will or may occur in the future, including such
matters as future capital expenditures, including the amount and nature thereof,
potential acquisitions by the Company, trends affecting the Company's financial
condition or results of operations, and the Company's business and growth
strategies are forward-looking statements. Such statements are subject to a
number of risks and uncertainties, including risks and uncertainties identified
in this Form 10-Q, and in "Business -- Environmental Contractor Risks,"
"Business -- Regulation," "-- Results of Operations" "-- Environmental Matters
and Government Contracting," and "Note 1 to Consolidated Financial Statements"
of the Company's Annual Report on Form 10-K for the year ended December 31,
1996, which sections are incorporated herein by reference, and other general
economic and business conditions, the business opportunities (or lack thereof)
that may be presented to and pursued by the Company, changes in laws or
regulations affecting the Company's operations and other factors, many of which
are beyond the control of the Company. In addition, these risks and
uncertainties include, without limitation, (i) the potential for fluctuations in
funding of backlog,
11
<PAGE> 14
(ii) weather conditions affecting or delaying the Company's ability to perform
or complete the services required by its contracts, (iii) the Company's ability
to be awarded new contracts in its target markets or its ability to expand
existing contracts, (iv) other industry-wide market factors, including the
timing of client's planned remediation activities and (v) interpretation or
enforcement by federal, state or local regulators of existing environmental
regulations. Also, there is always risk and uncertainty in pursuing and
defending litigation, arbitration proceedings and claims in the course of the
Company's business. All of these risks and uncertainties could cause actual
results to differ materially from those assumed in the forward-looking
statements. These forward-looking statements reflect management's analysis,
judgment, belief or expectation only as of the date of this Form 10-Q. The
Company undertakes no obligations to publicly revise these forward-looking
statements to reflect events or circumstances that arise after the date hereof.
In addition to the disclosure contained herein, readers should carefully review
risks and uncertainties contained in other documents the Company files or has
filed from time to time with the Securities and Exchange Commission pursuant to
the Securities and Exchange Act of 1934, including, without limitation, the
Company's Annual Report on Form 10-K for the year ended December 31, 1996.
12
<PAGE> 15
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Note 6 to Consolidated Financial Statements for a discussion of legal
proceedings.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<S> <C> <C>
(a) Exhibits
10.40 Amendment No. 2 and Waiver, dated as of August 12, 1997, to the
Revolving Credit Agreement, dated as of May 31, 1995, by and among OHM
Corporation and OHM Remediation Services Corp., and the banks named
therein, Citicorp USA, Inc., as Administrative Agent and Bank of America
National Trust and Savings Association (successor by merger to Bank of
America Illinois), as Issuing and Paying Agent and Co-Agent.
10.41 Third Amendment, dated as of August 12, 1997, to Security Agreement,
dated as of May 11, 1993, by and among OHM Corporation, OHM Remediation
Services Corp., Beneco Enterprises, Inc., Citicorp USA, Inc. as
Administrative Agent and Bank of America National Trust and Savings
Association (successor by merger to Bank of America Illinois) as Issuing
and Paying Agent and Co-Agent.
10.42 Second Amendment, dated as of August 12, 1997, to Pledge Agreement,
dated as of May 11, 1993, by and between OHM Corporation and Bank of
American National Trust and Savings Association (successor by merger to
Bank of America Illinois), as Issuing and Paying Agent.
10.43 Guaranty, dated as of August 12, 1997, by Beneco Enterprises, Inc., in
favor of the banks under the Revolving Credit Agreement, as amended as
of August 12, 1997 by and among OHM Corporation and OHM Remediation
Services Corp., and the banks named therein, Citicorp USA, Inc., as
Administrative Agent and Bank of America National Trust and Savings
association (successor by merger to bank of American Illinois), as
Issuing and Paying Agent and Co-Agent.
11 Statement Re Computation of Per Share Earnings
15 Letter Re Unaudited Financial Information
27 Financial Data Schedule
(b) Reports on Form 8-K
On July 2, 1997, the Company filed a Current Report on Form 8-K in connection
with the acquisition of all of the issued and outstanding capital stock of Beneco
Enterprises, Inc., a Utah corporation ("Beneco").
On August 22, 1997, the Company filed an amendment to the Current Report on Form
8-K, dated July 2, 1997.
</TABLE>
13
<PAGE> 16
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.
OHM CORPORATION
Date: November 14, 1997 By: /s/ JAMES L. KIRK
------------------------------------
James L. Kirk
Chairman of the Board
President and Chief Executive
Officer
(Duly Authorized Officer)
By: /s/ PHILIP O. STRAWBRIDGE
------------------------------------
Philip O. Strawbridge
Vice President and Chief Financial
and Administrative Officer
(Principal Financial Officer)
By: /s/ KRIS E. HANSEL
------------------------------------
Kris E. Hansel
Vice President and Controller
(Principal Accounting Officer)
14
<PAGE> 17
EXHIBIT INDEX
Exhibit Exhibit
Number Description
- ------ -----------
10.40 Amendment No. 2 and Waiver, dated as of August 12, 1997, to
the Revolving Credit Agreement, dated as of May 31, 1995, by
and among OHM Corporation and OHM Remediation Services Corp.,
and the banks named therein, Citicorp USA, Inc., as
Administrative Agent and Bank of America National Trust and
Savings Association (successor by merger to Bank of America
Illinois), as Issuing and Paying Agent and Co-Agent.
10.41 Third Amendment, dated as of August 12, 1997, to Security
Agreement, dated as of May 11, 1993, by and among OHM
Corporation, OHM Remediation Services Corp., Beneco
Enterprises, Inc., Citicorp USA, Inc. as
Administrative Agent and Bank of America National
Trust and Savings Association (successor by merger to
Bank of America Illinois) as Issuing and Paying Agent
and Co-Agent.
10.42 Second Amendment, dated as of August 12, 1997, to Pledge
Agreement, dated as of May 11, 1993, by and between
OHM Corporation and Bank of American National Trust
and Savings Association (successor by merger to Bank
of America Illinois), as Issuing and Paying Agent.
10.43 Guaranty, dated as of August 12, 1997, by Beneco
Enterprises, Inc., in favor of the banks under the
Revolving Credit Agreement, as amended as of August
12, 1997 by and among OHM Corporation and OHM
Remediation Services Corp., and the banks named
therein, Citicorp USA, Inc., as Administrative Agent
and Bank of America National Trust and Savings
association (successor by merger to bank of American
Illinois), as Issuing and Paying Agent and Co-Agent.
11 Statement Re Computation of Per Share Earnings
15 Letter Re Unaudited Financial Information
27 Financial Data Schedule
<PAGE> 1
Exhibit 10.40
-------------
AMENDMENT NO. 2 and WAIVER
Dated as of August 12, 1997
to
REVOLVING CREDIT AGREEMENT
Dated as of May 31, 1995
THIS AMENDMENT NO. 2 and WAIVER dated as of August 12, 1997
(this "Amendment") is entered into by and among OHM Corporation ("OHM"), OHM
Remediation Services Corp. ("Remediation", and together with OHM, the
"Borrowers"), the financial institutions listed on the signature pages hereto
(collectively, the "Banks"), Citicorp USA, Inc., as administrative agent (in
such capacity, the "Administrative Agent") and Bank of America National Trust
and Savings Association (successor by merger to Bank of America Illinois), as
issuing and paying agent and as co-agent (in such capacity, the "Issuing and
Paying Agent").
PRELIMINARY STATEMENT
---------------------
A. The Borrowers, the Banks, the Administrative Agent and the
Issuing and Paying Agent have entered into that certain Revolving Credit
Agreement dated as of May 31, 1995 (as amended, the "Credit Agreement";
capitalized terms used and not otherwise defined herein shall have the meanings
ascribed to them in the Credit Agreement as amended by this Amendment No. 2),
pursuant to which, among other things, the Banks have agreed to make certain
loans, issue certain letters of credit and make certain other financial
accommodations to the Borrowers upon the terms and conditions set forth therein.
B. Subject to the terms and conditions set forth below, the
Borrowers, the Banks, the Administrative Agent and the Issuing and Paying Agent
have, among other things, agreed to amend the Credit Agreement as hereinafter
set forth.
NOW, THEREFORE, in consideration of the premises set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. AMENDMENT TO THE CREDIT AGREEMENT. Subject to the
satisfaction of the conditions precedent set forth in SECTION 2 below, the
Credit Agreement shall be amended as follows:
1.01. The following definitions are added to SECTION 1.01 of
the Credit Agreement, to be inserted therein in alphabetical order:
"BENECO" means Beneco Enterprises Inc., a Utah corporation.
<PAGE> 2
"BENECO ACQUISITION" means the acquisition by OHM of all of
the capital stock of Beneco on or about June 18, 1997 for an aggregate
consideration of $15,000,000.
"JUNE 1997 CHARGE" means the charges taken by the Borrowers in
the fiscal quarter ending June 30, 1997 in the aggregate amount of
$37,877,000, in connection with (a) the settlement of certain
litigation between the Borrowers and Citgo Petroleum Company, discussed
in OHM's Form 10-K for its fiscal year ended December 31, 1996 filed
with the Securities Exchange Commission (the "1997 10-K"), (b) the
write-down of certain receivables, including the receivables from
Separation and Recovery Systems, Inc. and Occidental Chemical
Corporation, also discussed in the 1997 10-K, (c) the write-down of
certain laboratory facilities and consolidation of regional offices,
and (d) to the extent included in selling, general and administrative
expense, the charge in the amount of $14,949,000 taken with respect to
OHM's investment in the NSC Companies.
"PERMITTED ACQUISITIONS" means the acquisition by either
Borrower of all of the capital stock or other equity interests of any
Person, or the acquisition of assets on an ongoing concern basis from
any Person, provided that:
(a) both immediately prior and after giving effect to
such acquisition, no Default or Event of Default is or would
be outstanding;
(b) after giving effect to such acquisition, the
Borrowers would satisfy the covenants set forth in SECTIONS
5.02(e) and 5.02(m) through 5.02(o), determined as of the end
of the most recently ended quarter on a pro forma basis after
giving effect to such acquisition; and with respect to any
acquisition or series of related acquisitions for which the
aggregate consideration to be paid will be greater than
$5,000,000, audited financial statements (or unaudited
financial statements reasonably acceptable to the
Administrative Agent) for the most recently ended fiscal year
with respect to the acquired Person or assets shall be
available so that determination of such pro forma compliance
can be made on the basis of such audited financial statements,
and subsequent unaudited quarterly financial statements, if
applicable;
(c) as of the date of such acquisition, (i) such
acquired Person or assets are in compliance in all material
respects with all Environmental Laws and health and safety
statutes and regulations, (ii) there are no material
governmental investigations of the environmental matters of
such Person or assets, (iii) there are no contingent
liabilities or pending or threatened litigation with respect
to such Person or assets which could reasonably be expected to
have a material adverse effect on the financial condition or
operations of the Borrowers taken as a whole, and (iv) the
proposed acquisition shall not subject the Administrative
Agent, the Issuing and Paying Agent, the Banks, any Issuing
Bank or any of their respective Affiliates or properties to
any Environmental Law (including without limitation, any
clean-up responsibility law or restrictive transfer law or
regulation);
-2-
<PAGE> 3
(d) after giving effect to the acquisition of such
Person or assets, such Person or assets would constitute
either a division or a wholly owned Subsidiary of a Borrower
or of a wholly owned Subsidiary of a Borrower;
(e) such acquisition is consensual and shall have
been approved by the board of directors, shareholders, members
or partners, as applicable, of the Person whose stock or
assets are being acquired prior to the consummation of such
acquisition;
(f) the Borrowers shall have delivered to the
Administrative Agent and the Issuing and Paying Agent an
officer's certificate certifying that the conditions set forth
in clauses (1) through (5) above are satisfied with respect to
such acquisition, and that such acquisition is being made for
consideration which in the opinion of management of the
Borrowers is not in excess of fair value for the business,
property and/or assets acquired in such acquisition.
"PERMITTED OTHER INDEBTEDNESS" means purchase money
Indebtedness (or refinancings thereof secured by the same assets) and
Long Term Lease Obligations of a Borrower or a Subsidiary, other than
Indebtedness described in SECTIONS 5.02(j)(iv) or (vii), which at the
time of incurrence of any such purchase money Indebtedness (or the
refinancings thereof) or Long Term Lease Obligations (and after giving
effect to such incurrence), would not in the aggregate exceed (a)
$30,000,000 during any Facility B Level 5 Period, Facility B Level 4
Period or Facility B Level 3 Period, (b) twenty-five percent (25%) of
Net Worth during any Facility B Level 2 Period, or (c) thirty percent
(30%) of Net Worth during any Facility B Level 1 Period. "Permitted
Other Indebtedness" includes any such purchase money Indebtedness or
Long Term Lease Obligations of a Subsidiary acquired as part of a
Permitted Acquisition, or any such purchase money Indebtedness or Long
Term Lease Obligations assumed by a Borrower or a wholly owned
Subsidiary of a Borrower in a Permitted Acquisition, and the date of
the initial incurrence of such purchase money Indebtedness or Long Term
Lease Obligation for the purposes of this Agreement shall be the date
of such Permitted Acquisition.
1.02. The definition of "EBITDA" is amended by adding the
following immediately preceding the period at the end of that definition:
"PLUS, in the case of any period which includes the fiscal
quarter ending June 30, 1997, the amount of the June 1997
Charge."
1.03. The definition of "Indebtedness" is amended by striking
"or" before clause (c) thereof, and inserting the following after the end of
clause (c);
"or (d) obligations to make earn out payments with respect to
the Beneco Acquisition or any Permitted Acquisition"
-3-
<PAGE> 4
1.04. SECTION 2.03 is amended by deleting the reference
therein to "11:00 A.M." (with respect to the time for requesting a Borrowing)
and substituting "1:00 P.M." therefor, and by deleting the existing reference
therein to "1:00 P.M." (with respect to the time for each Bank's making
available its Contractual Percentage of a Requested Borrowing) and substituting
"3:00 P.M." therefor.
1.05. SECTION 2.11 is amended by deleting the reference
therein to "11:00 A.M." (with respect to the time for making payments under the
Credit Agreement) and substituting "1:00 P.M." therefor.
1.06. SECTION 5.02(a)(xiii) is deleted and replaced by the
phrase "This Section Intentionally Left Blank".
1.07. SECTION 5.02(b) is amended by deleting clause (ii) (but
not the proviso in SECTION 5.02(b)), and substituting the following therefor:
"(ii) as part of a Permitted Acquisition, any Person may merge
with or into or so transfer its assets to OHM or a wholly
owned Subsidiary thereof;"
1.08. SECTION 5.02(c)(v) is amended and restated as follows:
"(v) the sale by OHM of shares of the common stock of NSC
Corporation currently owned by OHM; PROVIDED, HOWEVER, that
prior to the date of any such proposed sale, an Authorized
Officer of OHM shall have delivered a certificate to the
Administrative Agent and the Issuing and Paying Agent
certifying that the sale price was at or above the fair value
of the stock being sold in the reasonable determination of
OHM's management and that the board of directors of OHM has
approved such sale;"
1.09. SECTION 5.02(e) is amended and restated as follows:
"(e) Materially change the nature of its business from
providing (i) environmental remediation services, including
comprehensive on-site treatment of toxic materials and
hazardous wastes for the government and private sector, as
well as site assessment, engineering, remedial design and
analytical testing for such remediation services and projects
and (ii) operations, management, testing, training,
maintenance, engineering, construction and related outsourcing
services for the government and private sector."
1.10. SECTION 5.02(h)(iii) is amended and restated as follows:
"(iii) Remediation may make loans to OHM, and either
Remediation or OHM may make loans to a wholly owned
Subsidiary, which loans are evidenced in the books and records
of each such Person, provided that any such loan to a wholly
owned Subsidiary shall be on terms and subject to
documentation reasonably acceptable to the Administrative
Agent and the Issuing and Paying Agent, and
-4-
<PAGE> 5
shall be assigned to the Issuing and Paying Agent, for the
benefit of the Banks, as security for the Obligations;"
1.11. SECTION 5.02 (i)(iv) is amended and restated as follows:
"(iv) Investments in wholly owned Subsidiaries of either
Borrower, each which Investment shall be specifically related
to a project directly related to the Borrowers' general line
of business as set forth in SECTION 5.02(e), undertaken or to
be undertaken by the applicable wholly owned Subsidiary;"
1.12. SECTION 5.02(i)(vii) is amended and restated as follows:
"(vii) loans to OHM or a wholly owned Subsidiary of OHM or
Remediation permitted by SECTION 5.02(h)(iii);"
1.13. The word "and" is stricken at the end of SECTION
5.02(i)(viii), the period is stricken at the end of SECTION 5.02(i)(ix), and
replaced by "; and ", and the following is added as SECTION 5.02(i)(x):
"(x) Permitted Acquisitions."
1.14. SECTION 5.02(j)(ix) is amended and restated as follows:
"(ix) Permitted Other Indebtedness; and"
1.15. SECTION 5.02(1) is amended by inserting "(other than
Permitted Acquisitions, to the extent any Permitted Acquisition might constitute
a capital expenditure)" after the first reference to "capital expenditures" in
such Section.
1.16. SECTION 5.02(O) is amended and restated as follows:
"(o) MAXIMUM FUNDED DEBT TO EBITDA RATIO. Permit the Funded
Debt to EBITDA Ratio to exceed 3.0 to 1.0 as of the last day
of any fiscal quarter of the Borrowers."
SECTION 2. WAIVER. On or about June 18, 1997, OHM acquired the
stock of Beneco Enterprises Inc. ("Beneco") for an aggregate consideration of
$15,000,000. the Administrative Agent, the Issuing and Paying Agent and the
Banks waive the violation of SECTION 5.02(i) which resulted from such
acquisition, and agree that such acquisition will be treated as a Permitted
Acquisition.
SECTION 3. CONDITIONS PRECEDENT. This Amendment shall become
effective upon the first Business Day upon which the Administrative Agent shall
have received, on or before such date:
-5-
<PAGE> 6
(i) 12 original counterparts of this Amendment, executed by
each of the Borrowers, each of the Banks, the Issuing and Paying Agent
and the Administrative Agent;
(ii) 12 original counterparts of an amendment to the Security
Agreement executed by each of the Borrowers, adding Beneco as a party
to the Security Agreement and including the grant of a security
interest by Beneco in substantially all of its personal property;
(iii) 12 original counterparts of a guaranty of the
Obligations, executed by Beneco in favor of the Issuing and Paying
Agent for the benefit of the Banks;
(iv) 12 original counterparts of an amendment to the Pledge
Agreement previously executed by OHM, adding the stock of Beneco to the
stock previously pledged thereunder, together with stock certificates
representing all outstanding shares of stock of Beneco and undated
stock powers executed in blank covering such certificates;
(v) A certificate of the Secretary or an Assistant Secretary
of each Borrower certifying (a) the names and true signatures of the
officers of such Person authorized to sign this Amendment and the other
documents or certificates to be delivered pursuant to this Amendment
and (b) copies attached thereto of the by-laws of such Person, or, to
the extent applicable, that such by-laws of such Person have not been
amended, supplemented or otherwise since May 11, 1993;
(vi) Articles/Certificate of Incorporation for Beneco,
certified by the Secretary of State of the State in which Beneco is
incorporated;
(vii) Requests for Information (form UCC-11) and such other
search reports (including, without limitation, tax lien and judgment
searches) regarding Beneco from such jurisdictions as the
Administrative Agent deems appropriate; and
(viii) Such other agreements, documents and instruments as shall be
reasonably requested by the Administrative Agent or the Issuing and
Paying Agent.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BORROWER;
REAFFIRMATION OF COVENANTS. Each of the Borrowers hereby represents and warrants
that this Amendment has been duly authorized by all necessary corporate action
on the part of such Borrower and constitutes a legal, valid and binding
obligation of such Borrower, enforceable against it in accordance with its
terms.
Each of the Borrowers hereby reaffirms all representations,
warranties and covenants made by it in the Credit Agreement, as amended hereby,
except to the extent any of such representations or warranties expressly speak
as of a prior date, and hereby agrees that, subject to the terms hereof, all
such representations, warranties and covenants shall be deemed to have been
re-made as of the effective date of this Amendment.
-6-
<PAGE> 7
SECTION 5. EFFECT ON THE CREDIT AGREEMENT.
-------------------------------
5.1. Upon the effectiveness of this Amendment, each reference
in the Credit Agreement and in each of the other Transaction Documents to "this
Agreement," "hereunder," "hereof," "herein," or words of like import shall mean
and be a reference to the Credit Agreement as amended hereby, and each reference
to the Credit Agreement in any other document, instrument or agreement executed
and/or delivered in connection with the Credit Agreement shall mean and be a
reference to the Credit Agreement as amended hereby.
5.2. Except as specifically set forth herein, the Credit
Agreement, each of the other Transaction Documents and all other documents,
amendments, instruments and agreements executed and/or delivered in connection
therewith shall remain in full force and effect and are hereby ratified and
confirmed.
5.3. The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or remedy of any of
the Banks, the Issuing and Paying Agent or the Administrative Agent under the
Credit Agreement or any other document, instrument or agreement executed in
connection therewith, nor constitute a waiver of any provision contained
therein, except as specifically set forth herein.
SECTION 6. COST, EXPENSES, FEES. Each of the Borrowers hereby
jointly and severally agrees to pay, on demand, all costs, fees and expenses
(including, without limitation, attorneys' fees, court costs, filing charges and
taxes) incurred by, or required to be paid by the Administrative Agent in
connection with the preparation, negotiation, execution, delivery and
administration of this Amendment and all other instruments, documents and
agreements executed and/or delivered pursuant to or in connection herewith.
SECTION 7. EXECUTION IN COUNTERPARTS. This Amendment may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which taken
together shall constitute but one and the same instrument.
SECTION 8. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICT
OF LAWS PROVISIONS) OF THE STATE OF NEW YORK.
SECTION 9. SECTION TITLES. Section titles in this Amendment
are included herein for convenience of reference only and shall not affect in
any way the interpretation of any of the provisions hereof.
-7-
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly authorized
as of the day and year first written above.
BORROWERS:
OHM Corporation
Attest: By /s/ Pamela K.M. Beall
----------------------------------
Title:
/s/ Steven E. Harbour
- --------------------------
Secretary
OHM Remediation Services Corp.
By /s/ Pamela K.M. Beall
----------------------------------
Title:
BANKS:
Citicorp USA, Inc., Individually and as
Administrative Agent
By /s/ Majorie Futornick
----------------------------------
Title: Senior Vice President
Bank of America National Trust and Savings
Association (successor by merger to Bank of
America Illinois), Individually
By /s/ Jay McKeown
----------------------------------
Title: Assistant Vice President
Bank of America National Trust and Savings
Association (successor by merger to Bank of
America Illinois), as Issuing and Paying
Agent
By /s/ Timothy Tepowski
----------------------------------
Title:
-8-
<PAGE> 9
NBD Bank
By /s/ Janet Cerca
------------------------------------
Title: Vice President
BankBoston, N.A.
By /s/ Lindsey McSweeney
------------------------------------
Title: Vice President
National City Bank
By /s/ Terri Cable
------------------------------------
Title: Vice President
Comerica Bank
By /s/ Lee Santiona
------------------------------------
Title: First Vice President
BHF Bank
By /s/ John Sykes
------------------------------------
Title: Assistant Vice President
BHF Bank
By /s/ Thomas Scifo
------------------------------------
Title:
Bank One, N.A.
By /s/ Ty Koing
------------------------------------
Title: Vice President
-9-
<PAGE> 1
Exhibit 10.41
-------------
THIRD AMENDMENT
Dated as of August 12, 1997
to
SECURITY AGREEMENT
Dated as of May 11, 1993
This THIRD AMENDMENT TO SECURITY AGREEMENT dated as of August
12, 1997 (this "Amendment") is entered into by and among OHM Corporation
("OHM"), OHM Remediation Services Corp. ("Remediation", and together with OHM,
the "Borrowers"), Beneco Enterprises Inc. ("Beneco"), Citicorp USA, Inc., as
administrative agent (in such capacity, the "Administrative Agent") and Bank of
America National Trust and Savings Association (successor by merger to Bank of
America Illinois), as issuing and paying agent and as co-agent (in such
capacity, the "Issuing and Paying Agent") on behalf of the "Banks" parties to
the "Credit Agreement" referred to below. Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings ascribed to such
terms in the Credit Agreement referred to below.
PRELIMINARY STATEMENT
--------------------
A. The Borrowers entered into that certain Revolving Credit
Agreement dated as of May 31, 1995 with the financial institutions from time to
time party thereto (the "Banks"), the Administrative Agent and the Issuing and
Paying Agent (as such Revolving Credit Agreement has been or may hereafter be
amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement").
B. The Borrowers and Analytical Services Corp., an affiliate
of the Borrowers, executed that certain Security Agreement dated as of May 11,
1993 (as such Security Agreement has previously been amended, the "Security
Agreement") in favor of the Issuing and Paying Agent. Pursuant to the Second
Amendment to the Security Agreement dated as of May 31, 1995, Analytical
Services Corp. was removed as a party to the Security Agreement.
C. On or about June 18, 1997, OHM acquired the stock of Beneco
Enterprises Inc. ("Beneco") for an aggregate consideration of $15,000,000.
D. Pursuant to SECTION 5.01(g) of the Credit Agreement, Beneco
is required to grant a secured guaranty to secure the Obligations.
NOW, THEREFORE, in consideration of the premises set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
<PAGE> 2
SECTION 1. AMENDMENTS TO THE SECURITY AGREEMENT. The Security
Agreement is hereby amended as follows:
(a) Each reference in the Security Agreement to the Grantors
is hereby amended to add and include Beneco.
(b) The Schedule to the Security Agreement is hereby amended
and restated in its entirety as set forth in ANNEX I hereto.
(c) Clause (iii) in Section 3 of the Security Agreement (up to
but not including the parenthetical following clause (iii)) is amended and
restated as follows:
"(iii) in the case of Beneco, all obligations under the
Guaranty dated August 12, 1997 executed by Beneco in favor of the
Issuing and Paying Agent and the Administrative Agent for the benefit
of the Banks"
SECTION 2. ASSUMPTION OF OBLIGATIONS BY BENECO. Beneco hereby
(i) expressly assumes each of the liabilities, and agrees to be bound by the
obligations, of a Grantor under the Security Agreement, (ii) expressly makes
each warranty and representation of a Grantor set forth in the Security
Agreement except that with respect to the representation under SECTION 5(d) of
the Security Agreement, the security interest granted under the Security
Agreement in the assets of Beneco is subject to a prior blanket lien in favor of
West One Bank, Utah as evidenced by financing statement file no. 218443 filed
with the State of Utah Division of Corporations and Commercial Code on September
12, 1989 (as amended and continued), and (iii) expressly grants, pledges and
assigns to the Issuing and Paying Agent, for its benefit and the ratable benefit
of the Banks, the Issuing Banks and the Administrative Agent, a continuing
security interest in, lien on, assignment of, and right of set-off against, all
of its right, title and interest in and to any property, whether now owned or
hereafter acquired or arising and wheresoever located, which is of a type
described in Section 2 of the Security Agreement (all of which shall thereby be
and become Collateral for all purposes).
SECTION 3. REAFFIRMATION AND EFFECT ON THE SECURITY AGREEMENT.
---------------------------------------------------
3.1 The Borrowers hereby reaffirm their obligations under the
Security Agreement, which, except to the extent expressly amended hereby,
remains in full force and effect.
3.2 Upon the effectiveness of this Amendment, each reference
in the Security Agreement to "this Agreement," "hereunder," "hereof," "herein,"
or words of like import shall mean and be a reference to the Security Agreement
as amended hereby, and each reference to the Security Agreement in any of the
Transaction Documents and any other document, instrument or
- 2 -
<PAGE> 3
agreement executed and/or delivered in connection with the Security Agreement
shall mean and be a reference to the Security Agreement as amended hereby.
3.3 Except as specifically set forth herein, the Security
Agreement, each of the other Transaction Documents and all other documents,
amendments, instruments and agreements executed and/or delivered in connection
therewith shall remain in full force and effect and are hereby ratified and
confirmed.
3.4 The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or remedy of the
Issuing and Paying Agent under the Security Agreement or any other document,
instrument or agreement executed in connection therewith, nor constitute a
waiver of any provision contained therein, except as specifically set forth
herein.
SECTION 4. EXECUTION IN COUNTERPARTS. This Amendment may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which taken
together shall constitute but one and the same instrument.
SECTION 5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICT
OF LAWS PROVISIONS) OF THE STATE OF NEW YORK.
SECTION 6. SECTION TITLES. Section titles in this Amendment
are included herein for convenience of reference only and shall not affect in
any way the interpretation of any of the provisions hereof.
[This space intentionally left blank]
- 3 -
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly authorized
as of the day and year first written above.
OHM CORPORATION
Attest: By Pamela K.M. Beall
-------------------------------------
Title: Treasurer
Steve E. Harbour
- -------------------------
Secretary
OHM REMEDIATION SERVICES CORP.
By Pamela K.M. Beall
-------------------------------------
Title: Treasurer
BENECO ENTERPRISES INC.
By Scott Doxey
-------------------------------------
Title: Treasurer
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION
(successor by merger to Bank of America
Illinois), as Issuing and Paying Agent
By Jay McKeown
-------------------------------------
Title: Vice President
- 4 -
<PAGE> 1
Exhibit 10.42
-------------
SECOND AMENDMENT
Dated as of August 12, 1997
to
PLEDGE AGREEMENT
Dated as of May 11, 1993
This SECOND AMENDMENT TO PLEDGE AGREEMENT dated as of August
12, 1997 (this "Amendment") is entered into by and between OHM Corporation, an
Ohio corporation (the "Pledgor"), and Bank of America National Trust and Savings
Association (successor by merger to Bank of America Illinois) as issuing and
paying agent (in such capacity, the "Issuing and Paying Agent") on behalf of the
"Banks" parties to the "Credit Agreement" referred to below.
PRELIMINARY STATEMENT:
----------------------
A. The Pledgor and OHM Remediation Services Corp., an Ohio
corporation (together with the Pledgor, the "Borrowers"), entered into that
certain Revolving Credit Agreement dated as of May 31, 1995 (as such Revolving
Credit Agreement has been or hereafter may be amended, restated, supplemented or
otherwise modified from time to time, the "Credit Agreement") with the financial
institutions from time to time party thereto (the "Banks"), Citicorp USA, Inc.
as administrative agent thereunder (in its capacity as administrative agent, the
"Administrative Agent"), and the Issuing and Paying Agent.
B. The Pledgor executed that certain Pledge Agreement dated as
of May 11, 1993 (as such Pledge Agreement has previously been amended pursuant
to that certain First Amendment to Pledge Agreement dated as of May 31, 1995,
the "Pledge Agreement") in favor of the Issuing and Paying Agent.
C. On or about June 18, 1997, the Pledgor acquired the stock
of Beneco Enterprises Inc. ("Beneco") for an aggregate consideration of
$15,000,000.
D. The Administrative Agent has requested that the Pledgor
pledge the stock of Beneco to the Issuing and Paying Agent, and pursuant to
Section 5.01(g) of the Credit Agreement, the Pledgor is obligated to pledge such
stock to the Issuing and Paying Agent.
NOW, THEREFORE, in consideration of the premises set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. AMENDMENTS TO THE PLEDGE AGREEMENT.
-----------------------------------
Subject to the satisfaction of the conditions precedent set
forth in SECTION 3 of the Credit Agreement Amendment, the Pledge Agreement is
hereby amended as follows:
<PAGE> 2
1.1 Each reference in the Pledge Agreement to the Corporations
is hereby amended to add and include Beneco.
1.2 Schedule I to the Pledge Agreement is hereby amended and
restated in the form attached to this Amendment.
SECTION 2. REPRESENTATIONS AND WARRANTIES.
-------------------------------
The Pledgor hereby represents and warrants that each of the
representations and warranties set forth in Section 5 of the Pledge Agreement
are true and correct on and as of the date hereof as if made on and as of such
date.
SECTION 3. PLEDGE, REAFFIRMATION AND EFFECT ON THE PLEDGE
----------------------------------------------
AGREEMENT.
----------
3.1 The Pledgor hereby pledges to the Issuing and Paying
Agent, and grants to the Issuing and Paying Agent a security interest in, in
each case, for its benefit and for the benefit of the Administrative Agent, the
Banks and each Issuing Bank, the shares of capital stock of Beneco, now or at
any time or times hereafter owned by the Pledgor, and the certificates
representing any such shares, all options and warrants for the purchase of
shares of stock of Beneco now or hereafter held in the name of Pledgor, all of
which shall be part of the Pledged Stock under the Pledge Agreement, and all
dividends, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of, or in exchange for any of the
foregoing, all of which shall be part of the Pledged Collateral under the Pledge
Agreement. The Pledgor hereby reaffirms its obligations under the Pledge
Agreement, which remains in full force and effect (including, without
limitation, with respect to the "Obligations" of the Borrowers under the Credit
Agreement).
3.2 Upon the effectiveness of this Agreement, each reference
in the Pledge Agreement to "this Agreement," "hereunder," "hereof," "herein," or
words of like import shall mean and be a reference to the Pledge Agreement as
amended hereby, and each reference to the Pledge Agreement in any of the
Transaction Documents and any other document, instrument or agreement executed
and/or delivered in connection with the Pledge Agreement shall mean and be a
reference to the Pledge Agreement as amended hereby.
3.3 Except as specifically set forth herein, the Pledge
Agreement shall remain in full force and effect and is hereby ratified and
confirmed. Without limiting the generality of the foregoing, the Pledgor hereby
acknowledges and agrees that the grant of Liens and security interests contained
in the Pledge Agreement shall run in favor of the Issuing and Paying Agent for
the benefit of itself, the Banks and the Administrative Agent, and shall
constitute security for the prompt payment and performance of the Obligations
under the Credit Agreement and the other Transaction Documents.
3.4 The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or remedy of the
Issuing and Paying Agent under the
- 2 -
<PAGE> 3
Pledge Agreement or any other document, instrument or agreement executed in
connection therewith, nor constitute a waiver of any provision contained
therein, except as specifically set forth herein.
SECTION 4. EXECUTION IN COUNTERPARTS. This Amendment may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which taken
together shall constitute but one and the same instrument.
SECTION 5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS (INCLUDING SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAWS BUT OTHERWISE WITHOUT REGARD TO CONFLICT OF LAWS
PROVISIONS) AND DECISIONS OF THE STATE OF NEW YORK.
SECTION 6. SECTION TITLES. Section titles in this Amendment
are included herein for convenience of reference only and shall not affect in
any way the interpretation of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly authorized
as of the day and year first written above.
- 3 -
<PAGE> 4
OHM CORPORATION
By Pamela K.M. Beall
------------------------------
Title: Treasurer
Attest:
Steven E. Harbour
- ------------------------
Secretary
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
(successor by merger to Bank of
America Illinois),
as Issuing and Paying Agent
By Jay McKeown
------------------------------
Title: Vice President
- 4 -
<PAGE> 1
Exhibit 10.43
-------------
GUARANTY
This GUARANTY ("Guaranty") is made as of the 12th day of
August, 1997, by Beneco Enterprises Inc., a Utah corporation (the "Guarantor"),
in favor of the "Banks" under that certain Revolving Credit Agreement, dated as
of May 31, 1995, by and among OHM Corporation ("OHM") and OHM Remediation
Services Corp.("Remediation", and together with OHM, the "Borrowers"), the
financial institutions from time to time parties thereto (collectively the
"Banks"), Citicorp USA, Inc., in its capacity as administrative agent for the
Banks (in such capacity, the "Administrative Agent"), and Bank of America
National Trust and Savings Association (successor by merger to Bank of America
Illinois) as issuing and paying agent and as co-agent for the Banks (in such
capacity, the "Issuing and Paying Agent"). Such Revolving Credit Agreement, as
it may be amended, restated, supplemented or otherwise modified from time to
time, is hereinafter referred to as the "Credit Agreement". Unless otherwise
defined herein, capitalized terms used herein shall have the meanings ascribed
to them in the Credit Agreement.
1. Guaranty. (i) For value received and in consideration of
any loan, advance or financial accommodation of any kind whatsoever heretofore,
now or hereafter made, given or granted to the Borrower by the Banks, the
Guarantor unconditionally guarantees for the benefit of each of the Banks the
full and prompt payment when due, whether at maturity or earlier, by reason of
acceleration or otherwise, and at all times thereafter, of all of the
Obligations (including, without limitation, interest accruing following the
filing of a bankruptcy petition by or against the Borrower, at the applicable
rate specified in the Credit Agreement, whether or not such interest is allowed
as a claim in bankruptcy). To the extent that any of the outstanding Obligations
consist of letters of credit issued pursuant to the Credit Agreement, the Banks,
the Issuing and Paying Agent and the Administrative Agent may, but shall not be
obligated to, hold a portion of the amounts paid under this Guaranty as cash
collateral for the Borrowers' reimbursement obligations with respect to any such
letter of credit, to be applied against such reimbursement obligations when and
if a draw is made on any such letter of credit, or against any such other
Obligations when the same become due and payable; PROVIDED, that if any such
letter of credit expires undrawn, and the Banks, the Issuing and Paying Agent
and the Administrative Agent have not applied such cash collateral in full to
other Obligations as provided above, then the Banks, the Issuing and Paying
Agent and the Administrative Agent will return such cash collateral to the
Guarantor. Any such cash collateral will be invested by the Administrative Agent
or the Issuing and Paying Agent in overnight funds, and any interest earned will
become part of the cash collateral and will be returned with the cash collateral
to the extent not applied to any other Obligations, when and if the cash
collateral is to be returned to the Guarantor as provided above.
(ii) At any time after the occurrence of an Event of Default,
the Guarantor shall pay to the Issuing and Paying Agent, for the benefit of the
Banks, on demand and in immediately available funds, the full amount of the
Obligations (including any portion thereof which is not yet due and payable).
The Guarantor further agrees to pay to the Issuing and Paying Agent and
reimburse the Issuing and Paying Agent for, on demand and in immediately
available funds, (a) all losses (including, without limitation, lost profits),
fees, costs and expenses (including, without
<PAGE> 2
limitation, all court costs and attorneys' and paralegals' fees, costs and
expenses) paid or incurred by the Administrative Agent, the Issuing and Paying
Agent or any of the Banks in: (1) endeavoring to collect all or any part of the
Obligations from, or in prosecuting any action against, the Borrower or the
Guarantor relating to the Credit Agreement, this Guaranty or the transactions
contemplated thereby; (2) taking any action with respect to any security or
collateral securing the Obligations or the Guarantor's obligations hereunder;
and (3) preserving, protecting or defending the enforceability of, or enforcing,
this Guaranty or their respective rights hereunder (all such costs and expenses
are hereinafter referred to as the "Expenses") and (b) interest on (1) the
Obligations which do not constitute interest, (2) to the extent permitted by
applicable law, the Obligations which constitute interest, and (3) the Expenses,
from the date of demand under this Guaranty until paid in full at the per annum
rate of interest described in SECTION 2.07(c) of the Credit Agreement (the
"Interest Rate"). The Guarantor hereby agrees that this Guaranty is an absolute
guaranty of payment and is not a guaranty of collection.
2. Obligations Unconditional. The Guarantor hereby agrees that
its obligations under this Guaranty shall be unconditional, irrespective of:
(i) the validity, enforceability, avoidance, novation or
subordination of any of the Obligations or any of the Transaction
Documents;
(ii) the absence of any attempt by, or on behalf of, any Bank,
the Issuing and Paying Agent or the Administrative Agent to collect, or
to take any other action to enforce, all or any part of the Obligations
whether from or against the Borrower, any other guarantor of the
Obligations or any other Person;
(iii) the election of any remedy by, or on behalf of, any
Bank, the Issuing and Paying Agent or the Administrative Agent with
respect to all or any part of the Obligations;
(iv) the waiver, consent, extension, forbearance or granting
of any indulgence by, or on behalf of, any Bank, the Issuing and Paying
Agent or the Administrative Agent with respect to any provision of any
of the Transaction Documents;
(v) the failure of the Issuing and Paying Agent to take any
steps to perfect and maintain its security interest in, or to preserve
its rights to, any security or collateral for the Obligations;
(vi) the election by, or on behalf of, any one or more of the
Banks, the Issuing and Paying Agent or the Administrative Agent, in any
proceeding instituted under Chapter 11 of Title 11 of the United States
Code (11 U.S.C. 101 et seq.) (the "Bankruptcy Code"), of the
application of Section 1111(b)(2) of the Bankruptcy Code;
(vii) any borrowing or grant of a security interest by the
Borrower, as debtor-in-possession, under Section 364 of the Bankruptcy
Code;
-2-
<PAGE> 3
(viii) the disallowance, under Section 502 of the Bankruptcy
Code, of all or any portion of the claims of any of the Banks, the
Issuing and Paying Agent or the Administrative Agent for repayment of
all or any part of the Obligations or any Expenses; or
(ix) any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of the Borrower or the
Guarantor.
3. Enforcement; Application of Payments. Upon the occurrence
of an Event of Default, the Issuing and Paying Agent or the Administrative Agent
may proceed directly and at once, without notice, against the Guarantor to
obtain performance of and to collect and recover the full amount, or any
portion, of the Obligations, without first proceeding against the Borrower or
any other Person, or against any security or collateral for the Obligations.
Subject only to the terms and provisions of the Credit Agreement, the
Administrative Agent shall have the exclusive right to determine the application
of payments and credits, if any, from the Guarantor, the Borrower or from any
other Person on account of the Obligations or any other liability of the
Guarantor to any Bank.
4. Waivers. (i) The Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
receivership or bankruptcy of the Borrower, protest or notice with respect to
the Obligations, all setoffs and counterclaims and all presentments, demands for
performance, notices of nonperformance, protests, notices of protest, notices of
dishonor and notices of acceptance of this Guaranty, the benefits of all
statutes of limitation, and all other demands whatsoever (and shall not require
that the same be made on the Borrower as a condition precedent to the
Guarantor's obligations hereunder), and covenants that this Guaranty will not be
discharged, except by complete payment (in cash) and performance of the
Obligations and any other obligations contained herein. The Guarantor further
waives all notices of the existence, creation or incurring of new or additional
indebtedness, arising either from additional loans extended to the Borrower or
otherwise, and also waives all notices that the principal amount, or any portion
thereof, and/or any interest on any instrument or document evidencing all or any
part of the Obligations is due, notices of any and all proceedings to collect
from the maker, any endorser or any other guarantor of all or any part of the
Obligations, or from any other Person, and, to the extent permitted by law,
notices of exchange, sale, surrender or other handling of any security or
collateral given to the Issuing and Paying Agent to secure payment of all or any
part of the Obligations.
(ii) The Banks, either themselves or acting through the
Administrative Agent or the Issuing and Paying Agent, are hereby authorized,
without notice or demand and without affecting the liability of the Guarantor
hereunder, from time to time, (a) to renew, extend, accelerate or otherwise
change the time for payment of, or other terms relating to, all or any part of
the Obligations, or to otherwise modify, amend or change the terms of any of the
Transaction Documents; (b) to accept partial payments on all or any part of the
Obligations; (c) to take and hold security or collateral for the payment of all
or any part of the Obligations, this Guaranty, or any other guaranties of all or
any part of the Obligations or other liabilities of the Borrower, (d) to
exchange, enforce, waive and release any such security or collateral; (e) to
apply such security or collateral and direct the order or manner of sale thereof
as in their discretion they may determine;
-3-
<PAGE> 4
(f) to settle, release, exchange, enforce, waive, compromise or collect or
otherwise liquidate all or any part of the Obligations, this Guaranty, any other
guaranty of all or any part of the Obligations, and any security or collateral
for the Obligations or for any such guaranty. Any of the foregoing may be done
in any manner, without affecting or impairing the obligations of the Guarantor
hereunder.
5. Setoff. At any time after all or any part of the
Obligations have become due and payable (by acceleration or otherwise), each
Bank, the Issuing and Paying Agent and the Administrative Agent may, without
notice to the Guarantor and regardless of the acceptance of any security or
collateral for the payment hereof, appropriate and apply toward the payment of
all or any part of the Obligations (i) any indebtedness due or to become due
from such Bank, the Issuing and Paying Agent or the Administrative Agent to the
Guarantor, and (ii) any moneys, credits or other property belonging to the
Guarantor, at any time held by or coming into the possession of such Bank, the
Issuing and Paying Agent or the Administrative Agent or any of their respective
affiliates.
6. Financial Information. The Guarantor hereby assumes
responsibility for keeping itself informed of the financial condition of the
Borrower and any and all endorsers and/or other guarantors of all or any part of
the Obligations, and of all other circumstances bearing upon the risk of
nonpayment of the Obligations, or any part thereof, that diligent inquiry would
reveal, and the Guarantor hereby agrees that none of the Banks, the Issuing and
Paying Agent nor the Administrative Agent shall have any duty to advise the
Guarantor of information known to any of them regarding such condition or any
such circumstances. In the event any Bank, in its sole discretion, undertakes at
any time or from time to time to provide any such information to the Guarantor,
such Bank shall be under no obligation (i) to undertake any investigation not a
part of its regular business routine, (ii) to disclose any information which
such Bank, pursuant to accepted or reasonable commercial finance or banking
practices, wishes to maintain confidential or (iii) to make any other or future
disclosures of such information or any other information to the Guarantor.
7. No Marshalling; Reinstatement. The Guarantor consents and
agrees that none of the Banks, the Issuing and Paying Agent nor the
Administrative Agent nor any Person acting for or on behalf of the Banks, the
Issuing and Paying Agent or the Administrative Agent shall be under any
obligation to marshall any assets in favor of the Guarantor or against or in
payment of any or all of the Obligations. The Guarantor further agrees that, to
the extent that the Borrower, the Guarantor or any other guarantor of all or any
part of the Obligations makes a payment or payments to any Bank, the Issuing and
Paying Agent or the Administrative Agent, or any Bank, the Issuing and Paying
Agent or the Administrative Agent receives any proceeds of Collateral, which
payment or payments or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside and/or required to be repaid to the
Borrower, the Guarantor, such other guarantor or any other Person, or their
respective estates, trustees, receivers or any other party, including, without
limitation, the Guarantor, under any bankruptcy law, state or federal law,
common law or equitable cause, then, to the extent of such payment or repayment,
the part of the Obligations which has been paid, reduced or satisfied by such
amount shall be reinstated and continued in full force and effect as of the time
immediately preceding such initial payment, reduction or satisfaction.
-4-
<PAGE> 5
8. Subrogation. Until the Obligations have been paid in full,
the Guarantor (i) shall have no right of subrogation with respect to such
Obligations and (ii) waives any right to enforce any remedy which the Banks, the
Issuing and Paying Agent or the Administrative Agent (or any of them) now have
or may hereafter have against the Borrower, any endorser or any guarantor of all
or any part of the Obligations or any other Person, and the Guarantor waives any
benefit of, and any right to participate in, any security or collateral given to
the Banks and the Administrative Agent (or any of them) to secure the payment or
performance of all or any part of the Obligations or any other liability of the
Borrower to the Banks.
9. Subordination. The Guarantor agrees that any and all claims
of the Guarantor against the Borrower, any endorser or any other guarantor of
all or any part of the Obligations, or against any of their respective
properties, shall be subordinate and subject in right of payment to the prior
payment, in full and in cash, of all Obligations (including, without limitation,
interest accruing following the filing of a bankruptcy petition by or against
the Borrower, at the applicable rate specified in the Credit Agreement, whether
or not such interest is allowed as a claim in bankruptcy). Notwithstanding any
right of the Guarantor to ask, demand, sue for, take or receive any payment from
the Borrower, all rights, liens and security interests of the Guarantor, whether
now or hereafter arising and howsoever existing, in any assets of the Borrower
(whether constituting part of the security or collateral given to any Bank, the
Issuing and Paying Agent or the Administrative Agent to secure payment of all or
any part of the Obligations or otherwise) shall be and hereby are subordinated
to the rights of the Banks, the Issuing and Paying Agent and the Administrative
Agent in those assets. The Guarantor shall have no right to possession of any
such asset or to foreclose upon any such asset, whether by judicial action or
otherwise, unless and until all of the Obligations shall have been fully paid
and satisfied and all financing arrangements between the Borrower and the Banks
have been terminated. If all or any part of the assets of the Borrower, or the
proceeds thereof, are subject to any distribution, division or application to
the creditors of the Borrower, whether partial or complete, voluntary or
involuntary, and whether by reason of liquidation, bankruptcy, arrangement,
receivership, assignment for the benefit of creditors or any other action or
proceeding, or if the business of the Borrower is dissolved or if substantially
all of the assets of the Borrower are sold, then, and in any such event, any
payment or distribution of any kind or character, either in cash, securities or
other property, which shall be payable or deliverable upon or with respect to
any indebtedness of the Borrower to the Guarantor ("Borrower Indebtedness")
shall be paid or delivered directly to the Administrative Agent or the Issuing
and Paying Agent for application on any of the Obligations, due or to become
due, until such Obligations shall have first been fully paid and satisfied. The
Guarantor irrevocably authorizes and empowers the Administrative Agent or the
Issuing and Paying Agent to demand, sue for, collect and receive every such
payment or distribution and give acquittance therefor and to make and present
for and on behalf of the Guarantor such proofs of claim and take such other
action, in the Administrative Agent's or the Issuing and Paying Agent's own name
or in the name of the Guarantor or otherwise, as the Administrative Agent or the
Issuing and Paying Agent may deem necessary or advisable for the enforcement of
this Guaranty. The Administrative Agent or the Issuing and Paying Agent may vote
such proofs of claim in any such proceeding, receive and
collect any and all dividends or other payments or disbursements made thereon in
whatever form the same may be paid or issued and apply the same on account of
any of the Obligations. Should any payment, distribution, security or instrument
or proceeds thereof be received by the Guarantor upon or with respect to the
Borrower Indebtedness prior to the satisfaction of all of the Obligations
-5-
<PAGE> 6
and the termination of all financing arrangements between the Borrower and the
Banks, the Guarantor shall receive and hold the same in trust, as trustee, for
the benefit of the Banks and shall forthwith deliver the same to the
Administrative Agent or the Issuing and Paying Agent, for the benefit of the
Banks, in precisely the form received (except for the endorsement or assignment
of the Guarantor where necessary), for application to any of the Obligations,
due or not due, and, until so delivered, the same shall be held in trust by the
Guarantor as the property of the Banks. If the Guarantor fails to make any such
endorsement or assignment to the Administrative Agent or the Issuing and Paying
Agent, the Administrative Agent or the Issuing and Paying Agent or any of its
officers or employees are hereby irrevocably authorized to make the same. The
Guarantor agrees that until the Obligations have been paid in full (in cash) and
satisfied and all financing arrangements between the Borrower and the Banks have
been terminated, the Guarantor will not assign or transfer to any Person any
claim the Guarantor has or may have against the Borrower.
10. Enforcement; Amendments; Waivers. No delay on the part of
any of the Banks, the Issuing and Paying Agent or the Administrative Agent in
the exercise of any right or remedy arising under this Guaranty, the Credit
Agreement, any of the other Transaction Documents or otherwise with respect to
all or any part of the Obligations, the Collateral or any other guaranty of or
security for all or any part of the Obligations shall operate as a waiver
thereof, and no single or partial exercise by any such Person of any such right
or remedy shall preclude any further exercise thereof. No modification or waiver
of any of the provisions of this Guaranty shall be binding upon the Banks, the
Issuing and Paying Agent or the Administrative Agent, except as expressly set
forth in a writing duly signed and delivered by the party making such
modification or waiver. Failure by any of the Banks, the Issuing and Paying
Agent or the Administrative Agent at any time or times hereafter to require
strict performance by the Borrower, the Guarantor, any other guarantor of all or
any part of the Obligations or any other Person of any of the provisions,
warranties, terms and conditions contained in any of the Transaction Documents
now or at any time or times hereafter executed by such Persons and delivered to
the Administrative Agent, the Issuing and Paying Agent or any Bank shall not
waive, affect or diminish any right of the Administrative Agent, the Issuing and
Paying Agent or such Bank at any time or times hereafter to demand strict
performance thereof and such right shall not be deemed to have been waived by
any act or knowledge of the Administrative Agent, the Issuing and Paying Agent
or any Bank, or their respective agents, officers or employees, unless such
waiver is contained in an instrument in writing, directed and delivered to the
Borrower or the Guarantor, as applicable, specifying such waiver, and is signed
by the party or parties necessary to give such waiver under the Credit
Agreement. No waiver of any Event of Default by the Administrative Agent, the
Issuing and Paying Agent or any Bank shall operate as a waiver of any other
Event of Default or the same Event of Default on a future occasion, and no
action by the Administrative Agent, the Issuing and Paying Agent or any Bank
permitted hereunder shall in any way affect or impair the Administrative
Agent's, the Issuing and Paying Agent's or any Bank's rights and remedies or the
obligations of the Guarantor under this Guaranty. Any determination by a court
of competent jurisdiction of the amount of any principal and/or interest owing
by the Borrower to any of the Banks shall be conclusive and binding on the
Guarantor irrespective of whether the Guarantor was a party to the suit or
action in which such determination was made.
11. Effectiveness; Termination. This Guaranty shall become
effective upon its execution by the Guarantor and shall continue in full force
and effect and may not be terminated or
-6-
<PAGE> 7
otherwise revoked until the Obligations shall have been fully paid (in cash) and
discharged and the Credit Agreement and all financing arrangements between the
Borrower and the Banks shall have been terminated. If, notwithstanding the
foregoing, the Guarantor shall have any right under applicable law to terminate
or revoke this Guaranty, the Guarantor agrees that such termination or
revocation shall not be effective until a written notice of such revocation or
termination, specifically referring hereto, signed by the Guarantor, is actually
received by the Administrative Agent or the Issuing and Paying Agent. Such
notice shall not affect the right and power of any of the Banks, the Issuing and
Paying Agent or the Administrative Agent to enforce rights arising prior to
receipt thereof by the Administrative Agent or the Issuing and Paying Agent. If
any Bank grants loans or takes other action after the Guarantor terminates or
revokes this Guaranty but before the Administrative Agent or the Issuing and
Paying Agent receives such written notice, the rights of such Bank with respect
thereto shall be the same as if such termination or revocation had not occurred.
12. Successors and Assigns. This Guaranty shall be binding
upon the Guarantor and upon its successors and assigns and shall inure to the
benefit of the Banks, the Issuing and Paying Agent and the Administrative Agent
and their respective successors and assigns; all references herein to the
Borrower and to the Guarantor shall be deemed to include their respective
successors and assigns. The successors and assigns of the Guarantor and the
Borrower shall include, without limitation, their respective receivers, trustees
or debtors-in-possession. All references to the singular shall be deemed to
include the plural where the context so requires.
13. Officer Authority. The Guarantor authorizes its Chairman,
President, and each of its Executive Vice Presidents and Vice Presidents,
respectively, from time to time, severally and not jointly, on behalf and in the
name of the Guarantor from time to time in the discretion of such officer, to
take or omit to take any and all action and to execute and deliver any and all
documents and instruments which such officer may determine to be necessary or
desirable in relation to, and perform any obligations arising in connection
with, this Guaranty and any of the transactions contemplated hereby, and,
without limiting the generality of the foregoing, hereby gives to each such
officer severally the power and right on behalf of the Guarantor, without notice
to or assent by the Guarantor, to do the following: (i) to execute and deliver
any amendment, waiver, consent, supplement, other modification or reaffirmation
of this Guaranty or any document covering any of the security for this Guaranty,
and to perform any obligation arising in connection herewith or therewith; (ii)
to sell, transfer, assign, encumber or otherwise deal in or with the security
for this Guaranty or any part thereof; (iii) to grant liens, security interests
or other encumbrances on or in respect of any property or assets of the
Guarantor, whether now owned or hereafter acquired, in favor of the Banks, the
Issuing and Paying Agent and the Administrative Agent; (iv) to send notices,
directions, orders and other communications to any Person relating to this
Guaranty, or the security for all or any part of the Obligations; (v) to take or
omit to take any other action contemplated by or referred to in this Guaranty or
any document covering any of the security for all or any part of the
Obligations; and (vi) to take or omit to take any action with respect to this
Guaranty, any of the security for all or any part of the Obligations or any
document covering any such security, all as such officer may determine in his or
her sole discretion. The undersigned hereby certifies that he/she has all
necessary authority to grant and execute this Guaranty on behalf of the
Guarantor.
-7-
<PAGE> 8
14. GOVERNING LAW. THIS GUARANTY HAS BEEN EXECUTED AND
DELIVERED BY THE PARTIES HERETO IN NEW YORK, NEW YORK. ANY DISPUTE BETWEEN THE
ISSUING AND PAYING AGENT AND THE GUARANTOR ARISING OUT OF OR RELATED TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS GUARANTY, AND
WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
15. Consent to Jurisdiction; Counterclaims; Forum Non
Conveniens. (a) Exclusive Jurisdiction. Except as provided in subsection (b) of
this Section 15, the Administrative Agent and the Issuing and Paying Agent on
behalf of themselves and the Banks, and the Guarantor agree that all disputes
between them arising out of or related to the relationship established between
them in connection with this Guaranty, whether arising in contract, tort,
equity, or otherwise, shall be resolved only by the federal courts located in
the Northern District of Illinois and the Southern District of New York, or, if
the federal courts lack jurisdiction, then by the state courts located within
Cook County, Illinois and New York County, New York.
(b) Other Jurisdictions. The Administrative Agent, the Issuing
and Paying Agent and the Banks shall have the right to proceed against the
Guarantor or its real or personal property in a court in any location to enable
them to obtain personal jurisdiction over the Guarantor, to realize on the
Collateral or any other security for the Obligations or to enforce a judgment or
other court order entered in favor of the Administrative Agent, the Issuing and
Paying Agent and the Banks. The Guarantor shall not assert any permissive
counterclaims in any proceeding brought by the Administrative Agent, the Issuing
and Paying Agent and the Banks arising out of or relating to this Guaranty.
(c) Venue; Forum Non Conveniens. Each of the Guarantor and the
Administrative Agent, the Issuing and Paying Agent and the Banks waive any
objection that it may have (including, without limitation, any objection to the
laying of venue or based on forum non conveniens) to the location of the court
in which any proceeding is commenced in accordance with this Section 15.
16. Service of Process. The Guarantor hereby waives personal
service of any and all process upon it and consents that all such service of
process may be made by registered mail (return receipt requested) directed to
the Guarantor at its address set forth in Section 20 herein and service so made
shall be deemed to be completed three (3) days after the same shall have been so
deposited in the U.S. mail.
17. WAIVER OF JURY TRIAL. EACH OF THE GUARANTOR AND THE
ADMINISTRATIVE AGENT, THE ISSUING AND PAYING AGENT AND THE BANKS WAIVE ANY RIGHT
TO TRIAL BY JURY IN ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE, BETWEEN THE ADMINISTRATIVE AGENT AND/OR, THE ISSUING AND PAYING AGENT
AND THE GUARANTOR ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY
THIS GUARANTY OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH. EITHER THE GUARANTOR, THE
-8-
<PAGE> 9
ADMINISTRATIVE AGENT OR THE ISSUING AND PAYING AGENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS GUARANTY WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
18. Waiver of Bond. The Guarantor waives the posting of any
bond otherwise required of the Administrative Agent,, the Issuing and Paying
Agent and/or the Banks in connection with any judicial process or proceeding to
realize on the Collateral or any other security for the Obligations, to enforce
any judgment or other court order entered in favor of the Administrative Agent,
the Issuing and Paying Agent and/or the Banks, or to enforce by specific
performance, temporary restraining order, or preliminary or permanent
injunction, this Guaranty or any other agreement or document between the
Administrative Agent and the Guarantor.
19. Advice of Counsel. The Guarantor represents and warrants
that it has consulted with its legal counsel regarding all waivers under this
Guaranty, including without limitation those under Section 4 and Sections 14
through 18 hereof, that it believes that it fully understands all rights that it
is waiving and the effect of such waivers, that it assumes the risk of any
misunderstanding that it may have regarding any of the foregoing, and that it
intends that such waivers shall be a material inducement to the Administrative
Agent, the Issuing and Paying Agent and the Banks to extend the indebtedness
guaranteed hereby.
20. Notices. All notices and other communications required or
desired to be served, given or delivered hereunder shall be in writing or by a
telecommunications device capable of creating a printed record and shall be
addressed to the party to be notified as follows:
if to the Guarantor, at:
OHM Corporation
5445 Triangle Parkway
Suite 400
Norcross, GA 30092
Attention: Steven Harbour
Telecopy: (770) 849-3101
if to the Administrative Agent, at
Citicorp USA, Inc.
c/o Citicorp North America, Inc.
200 South Wacker Drive
31st Floor
Attention: Emily Rosenstock
Vice President
Telecopy: (312) 993-1050
-9-
<PAGE> 10
if to the Issuing and Paying Agent, at
Bank of America National Trust and Savings Association
(successor by merger to Bank of America Illinois)
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Service Industries
Telecopy: (312) 828-1974
or, as to each party, at such other address as designated by such party in a
written notice to the other party. All such notices and communications shall be
deemed to be validly served, given or delivered (i) three (3) days following
deposit in the United States mails, with proper postage prepaid; (ii) upon
delivery thereof if delivered by hand to the party to be notified; (iii) upon
delivery thereof to a reputable overnight courier service, with delivery charges
prepaid; or (iv) upon confirmation of receipt thereof if transmitted by a
telecommunications device.
21. Severability. Wherever possible, each provision of this
Guaranty shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.
22. Collateral. The Guarantor hereby acknowledges and agrees
that its obligations under this Guaranty are secured pursuant to the terms and
provisions of the Security Agreement to which it is a party.
23. Merger. This Guaranty represents the final agreement of
the Guarantor with respect to the matters contained herein and may not be
contradicted by evidence of prior or contemporaneous agreements, or subsequent
oral agreements, between the Guarantor and the Administrative Agent, the Issuing
and Paying Agent or any Bank.
24. Execution in Counterparts. This Guaranty may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
-10-
<PAGE> 11
[This space intentionally left blank]
-11-
<PAGE> 12
IN WITNESS WHEREOF, this Guaranty has been duly executed by
the Guarantor as of the day and year first set forth above.
BENECO ENTERPRISES INC.
By: /s/ Robert Newberry
-------------------------------
Name:
-------------------------
Title: Vice President
Acknowledged and agreed to
as of the ___ day of August, 1997.
CITICORP USA, INC., as Administrative Agent
By: /s/ Rosemary M. Bell
----------------------------
Name:
-------------------------
Title: Attorney-in-Fact
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
(successor by merger to Bank of America Illinois),
as Issuing and Paying Agent
By: /s/ Jay McKeown
-----------------------------------
Name:
------------------------------
Title: Assistant Vice President
-12-
<PAGE> 1
EXHIBIT 11
Statement Re Computation of Per Share Earnings
OHM CORPORATION
COMPUTATION OF PER SHARE EARNINGS
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- -------------------------
1997 1996 1997 1996
--------- --------- --------- --------
PRIMARY:
<S> <C> <C> <C> <C>
Average shares outstanding 27,267 26,862 27,151 26,774
Net effect of dilutive stock options and
warrants--based on the treasury stock method 34 -- -- (1) 13
--------- --------- --------- ---------
Total 27,301 26,862 27,151 26,787
========= ========= ========= =========
Net income (loss) $ 4,914 $ 3,996 $ (25,257) $ 7,705
========= ========= ========= =========
Per share amount $ 0.18 $ 0.15 $ (0.93) $ 0.29
========= ========= ========= =========
FULLY DILUTED:
Average shares outstanding 27,267 26,862 27,151 27,774
Net effect of dilutive stock options and
warrants--based on the treasury stock method 34 (2) 38 (2) -- (1) 38 (2)
--------- --------- --------- ---------
Total 27,301 26,900 27,151 27,812
========= ========= ========= =========
Net income (loss) $ 4,914 $ 3,996 $ (25,257) $ 7,705
========= ========= ========= =========
Per share amount $ 0.18 $ 0.15 $ (0.93) $ 0.29
========= ========= ========= =========
<FN>
(1) Primary and fully diluted earnings per share computations for the nine
months ended September 30, 1997, do not give effect to stock options and
warrants since their inclusion would have the effect of decreasing the net
loss per share.
(2) Fully dilutive effect of stock options and warrants on per share amounts
for the three and nine months ended September 30, 1997, has not been
presented in the statement of operations since any reduction of less than
3% in the aggregate need not be considered as dilution.
</TABLE>
<PAGE> 1
EXHIBIT 15
Letter Re Unaudited Financial Information
Board of Directors and Shareholders
OHM Corporation
We are aware of the incorporation by reference into the Registration Statements
(Form S-8 No. 33-12099, Form S-8 No. 33-28025, Form S-8 No. 33-24953, Form S-8
No. 33-55371, Form S-8 No. 33-55373, Form S-8 No. 33-63233, Form S-8 No.
333-15141 and Form S-8 No. 333-21227) of OHM Corporation of our report dated
October 29, 1997, relating to the unaudited consolidated interim financial
statements of OHM Corporation which are included in its Form 10-Q for the
quarter ended September 30, 1997.
Pursuant to Rule 436(c) of the Securities Act of 1933, our report is not a part
of the registration statement prepared or certified by accountants within the
meaning of Section 7 or 11 of the Securities Act of 1933.
Ernst & Young LLP
Columbus, Ohio
October 29, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENTS OF INCOME AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 8,544
<SECURITIES> 0
<RECEIVABLES> 146,065
<ALLOWANCES> 21,412
<INVENTORY> 14,037
<CURRENT-ASSETS> 180,256
<PP&E> 104,290
<DEPRECIATION> 44,474
<TOTAL-ASSETS> 309,019
<CURRENT-LIABILITIES> 103,558
<BONDS> 49,322
0
0
<COMMON> 2,730
<OTHER-SE> 149,099
<TOTAL-LIABILITY-AND-EQUITY> 309,019
<SALES> 0
<TOTAL-REVENUES> 381,467
<CGS> 0
<TOTAL-COSTS> 328,833
<OTHER-EXPENSES> 86,591
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,779
<INCOME-PRETAX> (37,736)
<INCOME-TAX> (12,479)
<INCOME-CONTINUING> (25,257)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (25,257)
<EPS-PRIMARY> (0.93)
<EPS-DILUTED> (0.93)
</TABLE>
