<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A No. 1
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For The Fiscal Year Ended February 28, 1997
Commission File Number: 1-10583
ATC GROUP SERVICES INC.
(Exact name of Registrant as specified in its charter)
Delaware 46-0399408
------------------------------- ---------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
104 East 25th Street, 10th Floor
New York, New York 10010
-------------------------------- --------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 353-8280
Securities registered pursuant to Section 12(b)
of the Act:
None
Securities registered pursuant to Section 12(g)
of the Act:
Common Stock, $.01 Par Value
-----------------------------------------------
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No __
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K ( 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of May 28, 1997, was approximately $54,890,000 representing
5,047,362 shares of Common Stock at $10.875 per share, the last reported sales
price for the Registrant's Common Stock on such date.
The number of shares outstanding of the Registrant's Common Stock as of May 28,
1997 was 7,802,987.
<PAGE>
2
Item 11. Executive Compensation.
Summary Compensation Table - The following table provides information
with respect to the compensation of ATC's Chief Executive Officer (CEO) and its
executive officers, other than the CEO, who where serving as executive officers
at the end of fiscal 1997 whose total annual salary and bonus, if any, exceeded
$100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------- ----------------------------------- ---------
Long Term Compensation
Annual Compensation Awards Payouts
- ----------------------------------------------------------------------------------- ------------------------- --------- ---------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Secur- All
Other ities Other
Year Annual Restricted Under- Com-
Name and Ended Compen Stock lying LTIP pen-
Principal February Salary Bonus sation Award(s) Options Payouts sation
Position 28 (29) ($) ($) ($) ($) (#) ($) ($)
- ------------------------------ ------------ ----------------- ---------- ---------- ------------- ----------- --------- ---------
Morry F. Rubin, 1997 268,750 259,943 -0- -0- -0- -0- -0-
President and 1996 225,000 141,774 -0- -0- -0- -0- -0-
(2)
Chief Executive Officer 1995 225,000 132,500 -0- -0- -0- -0- -0-
- ------------------------------ ------------ ----------------- ---------- ---------- ------------- ----------- --------- ---------
George Rubin, 1997 268,750 259,943 -0- -0- -0- -0- -0-
Chairman of the Board 1996 225,000 141,774 -0- -0- -0- -0- -0-
(3)
and Secretary 1995 225,000 132,500 -0- -0- -0- -0- -0-
- ------------------------------ ------------ ----------------- ---------- ---------- ------------- ----------- --------- ---------
Christopher P. Vincze, 1997 170,000 100,000 6,000 (1) -0- 37,500 -0- -0-
Senior 1996 142,308 -0- 6,000 (1) -0- 30,000 -0- -0-
Vice President 1995 105,385 86,500 5,550 (1) -0- 17,500 -0- -0-
- ------------------------------ ------------ ----------------- ---------- ---------- ------------- ----------- --------- ---------
Nicholas J. Malino, 1997 170,000 100,000 -0- -0- 57,500 -0- -0-
Senior 1996 142,308 -0- -0- -0- 30,000 -0- -0-
Vice President 1995 105,385 86,500 -0- -0- 37,500 -0- -0-
- ------------------------------ ------------ ----------------- ---------- ---------- ------------- ----------- --------- ---------
- ------------------------------ ------------ ----------------- ---------- ---------- ------------- ----------- --------- ---------
John J. Goodwin 1997 140,000 51,335 -0- -0- -0- -0- -0-
President and Director 1996 140,000 -0- -0- -0- -0- -0- -0-
ATC InSys Technology Inc. 1995 70,000 N/A -0- -0- -0- -0- -0-
(4)
- ------------------------------ ------------ ----------------- ---------- ---------- ------------- ----------- --------- ---------
- ------------
</TABLE>
(1) Represents compensation relating to a car allowance.
(2) Does not include options to purchase 81,750 shares of ATC Common Stock
issued in replacement of previously held options of Aurora
Environmental Inc. ("Aurora"), ATC's former parent company which was
merged into ATC in June, 1995, with ATC the surviving corporation.
(3) Does not include 490,500 warrants to purchase ATC Common Stock issued
in replacement of previously held warrants of Aurora Environmental
Inc. ("Aurora").
(4) John J. Goodwin commenced employment September 1, 1994.
<PAGE>
Options Grants Table - The following table provides information with
respect to individual grants of stock options by ATC during fiscal 1997 to each
of the executive officers named in the preceding summary compensation table.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
- ----------------------------------------------------------------------------------------------- ---------------------------------
Potential
Realized Value at
Assumed Annual
Rates of Stock Price
Appreciation
for Option Term
Individual Grants (2)
- ----------------------------------------------------------------------------------------------- ---------------------------------
- --------------------------- --------------- ----------------- -------------- ------------------ ----------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
(a) (b) (c) (d) (e) (f) (g)
% of
Number of Total
Securities Options
Underlying Granted to
Options Employees Exercise
Granted in Fiscal Price Expiration
Name (#) Year (1) ($/Sh) Date 5% ($) 10% ($)
- --------------------------- --------------- ----------------- -------------- ------------------ ----------------- ---------------
Morry F. Rubin -0- -0- N/A N/A -0- -0-
- --------------------------- --------------- ----------------- -------------- ------------------ ----------------- ---------------
George Rubin -0- -0- N/A N/A -0- -0-
- --------------------------- --------------- ----------------- -------------- ------------------ ----------------- ---------------
7,500 (3) 2.1% 7.50 02-06-2007 (4) 35,375 89,648
20,000 (3) 5.7% 7.50 02-06-2007 (4) 94,334 239,061
Christopher P. Vincze 10,000 (3) 2.8% 7.50 02-06-2007 (4) 47,167 119,531
- --------------------------- --------------- ----------------- -------------- ------------------ ----------------- ---------------
27,500 (3) 7.8% 7.50 02-06-2007 (4) 129,710 328,709
20,000 (3) 5.7% 7.50 02-06-2007 (4) 94,334 239,061
Nicholas J. Malino 10,000 (3) 2.8% 7.50 02-06-2007 (4) 47,167 119,531
- --------------------------- --------------- ----------------- -------------- ------------------ ----------------- ---------------
John J. Goodwin -0- -0- N/A N/A -0- -0-
- --------------------------- --------------- ----------------- -------------- ------------------ ----------------- ---------------
</TABLE>
N/A - not applicable
- ------------
(1) The "% of Total Options Granted to Employees in Fiscal Year" (Column
(c)) is based upon options granted to ATC employees only and excludes
options granted to non-employees.
(2) The potential realizable value of each grant of options assumes that
the market price of ATC's Common Stock appreciates in value from the
date of grant to the end of the option term at annualized rates of 5%
and 10%, respectively, after subtracting out the applicable exercise
price.
(3) The options granted in fiscal 1997 represent replacement options of
previous grants.
(4) The options granted to Messrs. Vincze and Malino are in replacement of
prior grants which terminated. At the date of grant, the number of
options which were exercisable under the original grant became
exercisable under the replacement grant with the remaining options
vesting at varying dates over two to three years and expire within ten
years.
<PAGE>
Aggregated Option Exercises and Fiscal Year-End Option Table - The
following table provides information with respect to each exercise of stock
options during fiscal 1997 by each of the executive officers named in the
preceding summary compensation table and the fiscal year-end value of
unexercised options.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR - END OPTION VALUES
- --------------------------- ------------------------- ------------------------ ------------------------- -------------------------
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options
Shares FY-End (#) at FY-End ($)
Acquired on Value
Exercise Realized (1) Exercisable/ Exercisable/
Name (#) ($) Unexercisable (1) Unexercisable (1)
- --------------------------- ------------------------- ------------------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
Morry F. Rubin -0- -0- 161,750 701,128
/ -0- / -0-
- --------------------------- ------------------------- ------------------------ ------------------------- -------------------------
George Rubin -0- -0- 490,500 3,184,625
/ -0- / -0-
- --------------------------- ------------------------- ------------------------ ------------------------- -------------------------
Christopher P. Vincze -0- $28,750 40,000 / 123,563 /
25,000 21,750
- --------------------------- ------------------------- ------------------------ ------------------------- -------------------------
Nicholas J. Malino -0- -0- 36,100 / 32,775 /
33,400 28,350
- --------------------------- ------------------------- ------------------------ ------------------------- -------------------------
John J. Goodwin -0- -0- -0- -0-
/ -0- / -0-
- --------------------------- ------------------------- ------------------------ ------------------------- -------------------------
</TABLE>
- ------------
(1) The aggregate dollar values in column (c) and (e) are calculated by
determining the difference between the fair market value of the Common
Stock underlying the options and the exercise price of the options at
exercise or fiscal year end, respectively. ATC's last sale price at the
close of business on February 28, 1997 was $8.25. Stock options and
warrants of Aurora converted into ATC options and warrants pursuant to
the terms of the Merger Agreement are included above.
<PAGE>
Ten-Year Option Repricing - The following table provides information
with respect to adjustments or amendments to previously awarded stock options to
the executive officers named in the preceding summary compensation table.
<TABLE>
<CAPTION>
TEN-YEAR OPTION REPRICINGS
- --------------------------------- ----------- ---------------- ---------------- ---------------- --------------- ----------------
(a) (b) (c) (d) (e) (f) (g)
Number Market Exercise Length of
of Price of Price Original
Securities Stock at at Option Term
Underlying Time time Remaining
Options of of at Date of
Repriced Repricing Repricing New Repricing
or or Amendment or Exercise or Amendment
Amended ($) Amendment ($) Price (1)
Name Date (#) ($)
- --------------------------------- ----------- ---------------- ---------------- ---------------- --------------- ----------------
- --------------------------------- ----------- ---------------- ---------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Morry F. Rubin
President and
Chief Executive Officer N/A N/A N/A N/A N/A N/A
- --------------------------------- ----------- ---------------- ---------------- ---------------- --------------- ----------------
George Rubin,
Chairman of the Board and
Secretary N/A N/A N/A N/A N/A N/A
- --------------------------------- ----------- ---------------- ---------------- ---------------- --------------- ----------------
Christopher P. Vincze 2/7/97 7,500 (2) 7.50 9.50 7.50 30.7
Senior 2/7/97 20,000 (2) 7.50 13.43 7.50 40.4
Vice President 2/7/97 10,000 (2) 7.50 11.50 7.50 45.4
- --------------------------------- ----------- ---------------- ---------------- ---------------- --------------- ----------------
Nicholas J. Malino, 2/7/97 27,500 (2) 7.50 9.50 7.50 30.7
Senior 2/7/97 20,000 (2) 7.50 13.43 7.50 40.4
Vice President 2/7/97 10,000 (2) 7.50 11.50 7.50 45.4
- --------------------------------- ----------- ---------------- ---------------- ---------------- --------------- ----------------
John J. Goodwin
President and Director
ATC InSys Technology Inc. N/A N/A N/A N/A N/A N/A
- --------------------------------- ----------- ---------------- ---------------- ---------------- --------------- ----------------
</TABLE>
- ------------
(1) The length of original option term remaining represents the number of
months determined as of February 28, 1997.
(2) The Company's Board of Directors determined the replacement grants
appropriate in order to compensate the individual for their
performance, as more fully described in the Report on Executive
Compensation which follows. The replacement option price represents the
fair market price based on the average of the high and low sales prices
on the date of the grant.
Compensation Committee Report on Executive Compensation
The Compensation Committee of ATC is composed of three members, namely,
Morry F. Rubin, Chief Executive Officer ("CEO"), and outside directors, Julia S.
Heckman and Richard S. Greenberg. The Compensation Committee is responsible for
reviewing and determining the annual salary, bonuses, stock option grants and
other compensation of the executive officers of ATC.
<PAGE>
This report describes the policies and rationales of the Compensation
Committee in establishing the principal components of executive compensation in
fiscal 1997. The Compensation Committee's review and determination of executive
compensation includes consideration of the following factors: (a) compensation
surveys of similar size companies, (b) past and future performance contributions
of each executive officer and (c) the performance of ATC, both separately and
relative to similar size companies.
Under the direction of the Compensation Committee, ATC has developed a
compensation strategy designed to compensate its executives on a performance
basis. The strategy is intended to (a) reward executives for long-term strategic
management and the enhancement of Stockholder value, (b) facilitate ATC's short
and long-term planning process and (c) attract and retain key executives
critical to the long-term success of ATC.
Compensation for the CEO and other Named Executives consists of a fixed
base salary and variable components, including both short- and long-term
incentive compensation in the form of bonuses and stock option grants. In
evaluating the performance and setting the incentive compensation of executive
management, the Compensation Committee considered the factors described above
and that ATC completed various acquisitions and experienced growth in revenues
and earnings during the past three fiscal years.
Based on the foregoing, the Compensation Committee believes that ATC's
executive management is dedicated to its corporate objectives of achieving
significant improvements in long-term financial and operating performance. The
executive compensation program outlined below is designed to implement this
strategy by rewarding management for achieving these objectives.
Base Salary. ATC's base salary is designed to recognize the sustained
and cumulative effect on long-term results that its executives have
demonstrated. The base salary is a remuneration for services provided and is
generally fixed at levels which are competitive with amounts paid to executives
at comparable companies.
Short-Term Incentives. Short-term incentives in the form of bonuses are
paid to each of the Executives named in the summary compensation table to
recognize performance that is related to the achievement of key financial and
operating objectives that have been established for a fiscal year. Since
short-term incentives should generally reflect one year contributions, the size
of the payments may vary considerably from year to year, depending on the
performance of ATC, the executive, his individual activities and terms of any
employment.
Long-Term Incentives. The Compensation Committee recognizes that
long-term incentive compensation is a substantial component of the total pay
package linking executive pay and corporate performance, At ATC, long-term
incentive compensation in the form of equity based compensation is intended to
link the interests of its executives with the interests of ATC's Stockholders by
rewarding executives with stock options for both past and anticipated
achievements of the Executive.
Chief Executive Officer's Fiscal 1997 Compensation. As more
specifically set forth in the Summary Compensation Table, during fiscal 1997,
Mr. Morry F. Rubin earned an annual salary of $268,750 and an annual bonus equal
to 2-1/2 % of ATC's consolidated pre-tax profits. At June 1997, Mr. Rubin's
salary is $300,000 per annum.
In determining Mr. Rubin's 1997 compensation, the Compensation
Committee considered the factors applied to the compensation of all executive
officers as discussed above. The Compensation Committee decided that, based on
these criteria, ATC's performance based on the creation of Stockholder value,
cash flow, and net income and that his annual compensation is generally less
than that paid to CEO's of similar companies.
The foregoing report has been approved by all members of the
Compensation Committee.
Morry F. Rubin
Julia S. Heckman
Richard S. Greenberg
<PAGE>
Comparative Performance by ATC
ATC is presenting a chart comparing the cumulative total stockholder
return on its Common Stock with the cumulative Stockholder return of (1) a broad
equity market index, and (2) a published industry index or peer group for the
past five years. Such chart compares the performance of the ATC's Common Stock
with (1) the NASDAQ Stock Market Index and (2) a group of public companies each
of whom are listed in the peer group sanitary and other services and assumes an
investment of $100 in ATC's Common Stock and on March 1, 1992 an investment of
$100 in each of the stock comprising the NASDAQ Stock Market Index and the
stocks of the peer group sanitary and other services.
COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR
ATC ENVIRONMENTAL INC.
Prepared by the Center for Research in Security Prices
Produced on 06/04/97 including data to 02/28/97
Date Company Market Market Peer Peer
Index Index Count Index Count
02/28/92, 100.000, 100.000, 3956, 100.000, 34
03/31/92, 91.071, 95.280, 3968, 83.041, 36
04/30/92, 80.357, 91.195, 3967, 72.965, 35
05/29/92, 76.786, 92.379, 3955, 73.113, 35
06/30/92, 71.429, 88.768, 3935, 68.455, 35
07/31/92, 92.857, 91.912, 3899, 67.447, 34
08/31/92, 75.000, 89.103, 3880, 63.925, 34
09/30/92, 76.786, 92.415, 3878, 63.433, 34
10/30/92, 64.286, 96.055, 3890, 61.283, 34
11/30/92, 125.000, 103.699, 3906, 64.795, 34
12/31/92, 132.143, 107.516, 3930, 62.644, 36
01/29/93, 117.857, 110.577, 3918, 65.465, 35
02/26/93, 114.286, 106.452, 3949, 64.355, 35
03/31/93, 105.357, 109.532, 3973, 63.571, 35
04/30/93, 87.500, 104.858, 4007, 58.415, 35
05/28/93, 126.786, 111.122, 4035, 58.091, 34
06/30/93, 162.500, 111.636, 4071, 55.098, 34
07/30/93, 178.572, 111.767, 4103, 55.871, 32
08/31/93, 145.536, 117.545, 4138, 53.027, 31
09/30/93, 171.429, 121.045, 4173, 53.430, 31
10/29/93, 192.857, 123.766, 4221, 53.579, 32
11/30/93, 217.857, 120.075, 4304, 53.355, 32
12/31/93, 203.572, 123.422, 4376, 52.352, 32
01/31/94, 192.857, 127.168, 4400, 54.973, 33
02/28/94, 196.429, 125.982, 4439, 53.893, 33
03/31/94, 242.857, 118.234, 4491, 49.629, 33
04/29/94, 285.714, 116.701, 4520, 46.261, 33
05/31/94, 332.143, 116.985, 4562, 43.911, 33
06/30/94, 303.572, 112.708, 4576, 42.199, 30
07/29/94, 300.000, 115.019, 4594, 40.696, 30
08/31/94, 271.429, 122.352, 4612, 41.005, 30
09/30/94, 285.714, 122.039, 4615, 43.044, 31
10/31/94, 389.286, 124.437, 4637, 44.147, 31
11/30/94, 492.858, 120.310, 4653, 42.222, 32
12/30/94, 464.286, 120.647, 4658, 43.038, 32
01/31/95, 416.072, 121.323, 4648, 43.292, 32
02/28/95, 378.572, 127.739, 4650, 42.526, 31
03/31/95, 403.572, 131.525, 4644, 42.349, 32
04/28/95, 496.429, 135.666, 4655, 43.838, 32
05/31/95, 428.572, 139.164, 4654, 52.546, 32
06/30/95, 428.572, 150.442, 4671, 55.994, 32
07/31/95, 460.715, 161.500, 4690, 66.420, 32
08/31/95, 428.572, 164.773, 4713, 66.467, 32
09/29/95, 428.572, 168.562, 4709, 69.357, 33
10/31/95, 392.857, 167.596, 4746, 66.808, 32
11/30/95, 357.143, 171.531, 4778, 73.412, 33
12/29/95, 335.715, 170.618, 4818, 82.598, 33
01/31/96, 364.286, 171.452, 4808, 79.912, 33
02/29/96, 350.000, 177.987, 4838, 78.788, 33
03/29/96, 357.143, 178.578, 4877, 82.207, 34
04/30/96, 360.715, 193.395, 4922, 86.209, 34
05/31/96, 435.715, 202.277, 4980, 115.643, 32
06/28/96, 375.000, 193.156, 5033, 125.759, 32
07/31/96, 407.143, 175.952, 5065, 102.635, 32
08/30/96, 367.857, 185.809, 5089, 112.108, 33
09/30/96, 367.857, 200.021, 5095, 124.898, 33
10/31/96, 310.715, 197.811, 5137, 129.359, 33
11/29/96, 300.000, 210.044, 5177, 135.417, 31
12/31/96, 264.286, 209.825, 5174, 130.770, 30
01/31/97, 225.000, 224.697, 5159, 163.711, 29
02/28/97, 235.714, 212.304, 5169, 144.099, 29
<PAGE>
Compensation Committee Interlocks and Insider Participation
The Board of Directors of ATC is composed of five members, namely,
George Rubin, Chairman of the Board, Morry F. Rubin, ATC's Chief Executive
Officer ("CEO"), Richard L. Pruitt, Vice President, Principal Accounting
Officer, Julia S. Heckman, Managing Director with Rodman and Renshaw, Inc.'s.
Investment Banking Group and Richard S. Greenberg Esq., a director of the
Environmental Management Group at Coopers & Lybrand. The Board of Directors has
an Audit Committee and a Compensation Committee consisting of three directors
including Morry F. Rubin and outside directors Richard S. Greenberg and Julia S.
Heckman. The Audit Committee is responsible, among other things, for approving
any transactions between the Company and any of its directors, officers or
affiliates. Since August 1995, the Compensation Committee is responsible for
setting compensation of the executive officers of the Company and for granting
any further options to purchase Common Stock. Prior to August 1995, the Board
had sole responsibility for reviewing and determining the annual salary,
bonuses, stock option grants and other compensation of the executive officers of
ATC.
George Rubin and Morry F. Rubin are officers and/or directors of
certain ATC's subsidiaries. Morry F. Rubin and George Rubin each receive all of
their respective cash compensation through ATC.
George Rubin is one of two directors of National Diversified Services,
Inc. ("National"). During National's fiscal year ended December 31, 1996, no
cash compensation was paid to any officer of ATC. During the past fiscal year
ATC and their subsidiaries had no business relationship with National.
Employment Contracts and other Compensating Arrangements
As of June 1997, George Rubin, Morry Rubin, Nicholas Malino and
Christopher P. Vincze receive annual salaries of approximately $300,000,
$300,000, $170,000 and $170,000, respectively. Salaries of all executive
officers of ATC (9 persons), currently aggregate approximately $1,404,500. ATC
has no employment contracts with its executive officers. All salaries and
bonuses are at the discretion of the Board of Directors, however, ATC pays
annual bonuses of 2 1/2% of pretax profits to each of George Rubin and Morry F.
Rubin based upon the prior years operating results and to Christopher Vincze and
Nicholas Malino based upon operating income exclusive of ATC's subsidiary, ATC
InSys Technology, Inc. ATC Group Services Inc. pays John J. Goodwin a bonus
based upon a percentage of pretax operating profits of ATC InSys Technology,
Inc. The bonuses to be paid to such officers are not pursuant to any written
agreements.
During fiscal 1990, ATC approved an employee savings plan which allows
voluntary contributions by eligible employees into designated investment funds.
ATC may, at the discretion of its Board of directors, make additional
contributions on behalf of the Plan's participants. No contributions were made
by the Company in fiscal years 1995, 1996, and 1997.
ATC has no other annuity, pension or retirement benefits for its
employees. ATC provides life, dental and health insurance, which is available to
all full-time employees. ATC has not afforded any of its officers or directors
any personal benefits, the value of which exceeds 10% of his salary, which are
not directly related to job performance or provided generally to all salaried
employees. During fiscal 1997, ATC granted replacement options to purchase 7,500
shares and additional options to purchase 7,500 shares to each of Julia S.
Heckman and Richard S. Greenberg, Esq., ATC's two outside directors. No other
compensation was paid to ATC's directors during fiscal 1997 for serving in the
capacity of director and there are no current arrangements for future
compensation of directors. Depending upon the number of meetings and the time
required for ATC's operations, ATC may decide to compensate its directors in the
future.
ATC Stock Option Plans
On January 12, 1988, the board of directors of ATC adopted a Stock
Option Plan (the "1988 Plan") which was ratified by Stockholders on January 12,
1988. The Plan covers 200,000 shares of Common Stock and was utilized to
strengthen ATC's ability to attract and retain in its employ experienced persons
and to attract other persons to become associated with, and/or to maintain their
association with, ATC and its subsidiaries in various capacities (e.g.
consultants, salespersons) other than that of an employee, by affording such
employees and other persons an opportunity to hold a proprietary interest in
ATC. The Plan authorizes the issuance of the options covered thereby as either
"Incentive Stock Options" within the meaning of the Internal Revenue Code of
1986, as amended, or as "Non-Statutory Options". While any person is eligible to
receive Non-Statutory options, only employees are eligible to receive an
Incentive Option under the provisions of applicable law. The Plan also provided
that no options may be granted after January 11, 1998.
The Plan is administered by ATC's Board of Directors, which has the
authority to determine the persons to whom options shall be an Incentive Option
or a Non-Statutory Option, the number of shares to be covered by each option,
the time or times at which options will be granted or may be exercised and the
other terms and provisions of the options except that the Plan prohibits the
exercise of an Incentive Stock Option unless the Optionee has been continuously
employed by ATC from the date of grant to the date of exercise. Accordingly,
Incentive Stock Options terminate upon termination of the Optionee's employment
with ATC for any reason whatsoever. The Plan also provides that: (i) the
exercise price of options granted thereunder shall not be less than 100% (or in
the case of an Incentive Option, 110% if the optionee owns 10% or more of the
outstanding voting securities of ATC) of the fair market value of such shares on
the date of grant, as determined by the Board, and (ii) no option by its terms
may be exercised more than ten years (five years in the case of an Incentive
Option, where the optionee owns 10% or more of the outstanding voting securities
of ATC) after the date of grant. Any options which are canceled or not exercised
within the option period become available for future grants.
On July 16, 1993, ATC adopted the 1993 Incentive and Non-Qualified
Stock Option Plan covering 200,000 shares (the "1993 Plan"). In 1995 the 1993
Plan was amended to increase the number of shares covered to 500,000 shares. In
1996 the 1993 Plan was amended to increase the number of shares covered to
1,000,000 shares. The 1993 Plan provides no options may be granted after July
15, 2003. The 1993 Plan is similar in all respects to the 1988 Stock Option Plan
described above.
On June 29, 1995 ATC adopted a new stock option plan (the "1995 Plan")
to replace Aurora's 1987 Stock Option Plan, except that the shares covered by
the new plan are limited to 81,750. These options were granted to Morry Rubin,
in replacement of Aurora's options previously held, at an exercise price of
$5.32 per share and expire January 2004.
As of February 28, 1997, ATC has options outstanding to purchase
720,340 shares (under the 1988, 1993 and 1995 Plans and for grants outside of
the Plans) at exercise prices ranging from $1.88 per share to $17.00 per share.
As of February 28, 1997, options to purchase 457,550 shares of ATC's Common
Stock are currently exercisable.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) (3) Exhibits
A list of exhibits required by Item 601 of Regulation S-K is as
follows:
<PAGE>
EXHIBIT INDEX
- -------------------------------------------------------------------------------
Exhibit Description
- ---------- ----------------------------------------------------------------
2 Agreement and Plan of Merger to reincorporate in Delaware
(contained in Exhibits 3(b) and 3(c), (1)
2(a) Agreement and Plan of Merger between ATC Environmental Inc. and
Aurora Environmental Inc. (5)
3(a) Certificate of Incorporation of Registrant (1)
3(b) Certificate of Ownership and Merger of Registrant (Delaware) (1)
3(c) By-Laws (1)
3(d) Certificate of Merger (Aurora Environmental Inc. Merging with and
into ATC Environmental Inc.) (8)
10 Employee Savings (401(k)) Plan (2)
10(a) New York City Lease (3)
10(b) Form of Indemnity Agreement (9)
10(c) Asset Purchase Agreement between ATC Environmental Inc., a
Delaware corporation, and Hill International Inc., a Delaware
corporation, executed on November 10, 1995 (4)
10(d) Six-Month Promissory Note executed and delivered by ATC
Environmental Inc. on November 10, 1995, payable to Hill
International, Inc. in the amount of $300,000 (4)
10(e) Irrevocable Letter of Credit executed by Atlantic Bank of New
York on November 8, 1995, and delivered by ATC Environmental Inc.
on November 10, 1995, payable on or after May 1, 1996, to Hill
International, Inc. in the amount of $730,625.00 (4)
10(f) Bill of Sale delivered on November 10, 1995, conveying assets
referenced in assets purchase agreement from Hill International,
Inc. to ATC Environmental Inc. (4)
10(g) Non-Competition Agreement of Irvin E. Richter to ATC
Environmental Inc. Delivered on November 10, 1995 (4)
10(h) Non-Competition Agreement of David L. Richter to ATC
Environmental Inc. Delivered on November 10, 1995 (4)
10(i) Agreement for Sale and Purchase of Business Assets on May 24,
1996, among ATC Environmental Inc., American Testing and
Engineering Corporation d/b/a ATEC Associates, Inc. and Gerald D.
Mann. (10)
10(j) Assumption of Liabilities Agreement on May 24, 1996, among ATC
Environmental Inc., American Testing and Engineering Corporation
and Gerald D. Mann. (10)
10(k) Master Equipment Lease Agreement on May 24, 1996, between ATC
Environmental Inc. and American Testing and Engineering
Corporation. (10)
10(l) Master Sublease Agreement on May 24, 1996, between ATC
Environmental Inc. and American Testing and Engineering
Corporation covering premises leases at Indianapolis, IN,
Atlanta, GA and Dallas, TX. (10)
EXHIBIT INDEX (continued)
- -------------------------------------------------------------------------------
<PAGE>
Exhibit Description
- ---------- ----------------------------------------------------------------
10(m) Non-Competition Agreement on May 24, 1996, between ATC
Environmental Inc. and American Testing and Engineering
Corporation. (10)
10(n) Mann Non-Competition Agreement on May 24, 1996, between ATC
Environmental Inc. and Gerald D. Mann. (10)
10(p) Security Agreement on May 24, 1996, among ATC Environmental
Inc., American Testing and Engineering Corporation and Gerald D.
Mann. (10)
10(q) $500,000 Letter of Credit on May 24, 1996, from Chemical Bank,
N.A. against the account of ATC Environmental Inc. in favor of
American Testing and Engineering Corporation. (10)
10(r) Agreement for Sale and Purchase of Business Assets on May 28,
1996, among ATC InSys Technology Inc., 3D Information Services
Inc. and Ciro De Saro. (10)
10(s) Assumption of Liabilities Agreements on May 28, 1996, between
ATC InSys Technology Inc., 3D Information Services Inc. and Ciro
De Saro. (10)
10(t) Stockholders Non-Competition Agreement on May 28, 1996, between
ATC InSys Technology Inc. and the stockholders of 3D Information
Services Inc. (10)
10(u) Three-year, $2,500,000 Promissory Note on May 29, 1996, from ATC
Environmental Inc. to 3D Information Services Inc. (10)
10(v) Employment Agreement on May 29, 1996, between ATC Environmental
Inc. and Ciro De Saro. (10)
11 Statements re: Computation of per share earnings (**)
21 Subsidiaries of Registrant (**)
23 Independent Auditors' Consent-Deloitte & Touche LLP (**)
27 Financial Data Schedule (**)
99 1988 Stock Option Plan (6)
99(a) 1993 Stock Option Plan (7)
99(b) Amendment to 1993 Stock Option Plan (**)
99(c) 1995 Stock Option Plan (*)
99(d) Note Agreement, ATC Group Services Inc. $32,500,000 8.18% Senior
Secured Notes due May 31, 2004 dated May 29, 1997 (*)
99(e) Credit Agreement dated as of May 29, 1997 among ATC Group
Services Inc., Borrower, the Lenders Party Hereto and The Chase
Manhattan Bank (*) ---------------------------
* Filed herewith.
** Included with the Company's initial Form 10-K report filed with the
Commission on May 29, 1997.
<PAGE>
EXHIBIT INDEX (continued)
- -------------------------------------------------------------------------------
Exhibits incorporated by reference from previously filed documents are as
follows:
(1) Reference is made to the Registrant's Registration Statement File No.
33-19889 on Form S-1, which is incorporated by reference and contains
exhibits 2, 3(a), 3(b) and 3(c).
(2) Reference is made to the Registrant's Form 10-K for the fiscal year
ended February 28, 1990 which is incorporated by reference and
contains Exhibit 10.
(3) Reference is made to the Registrant's Form 10-K for the fiscal year
ended February 29, 1992 which is incorporated by reference and
contains exhibit 10(a).
(4) Reference is made to the Registrant's Form 8-K dated November 10,
1995, as amended, which is incorporated by reference and contains
Exhibits 10(c), 10(d), 10(e), 10(f), 10(g) and 10(h).
(5) Reference is made to the Registrant's Form S-4 Registration
Statement, file No. 33-88380 which is incorporated by reference and
contains Exhibit 2(a).
(6) Reference is made to the Registrant's Form S-8 Registration
Statement, file No. 33-55592 which is incorporated by reference and
contains Exhibit 99.
(7) Reference is made to the Registrant's Form S-8 Registration
Statement, File No. 33-77578 which is incorporated by reference and
contains Exhibit 99.1.
(8) Reference is made to the Registrant's Form 10-Q for the quarter ended
May 31, 1995, which is incorporated by reference and contains Exhibit
3(d).
(9) Reference is made to the Registrant's Form 10-K for its fiscal year
ended February 28, 1995, which is incorporated by reference and
contains Exhibit 10(b).
(10) Reference is made to the Registrant's Form 8-K dated May 24, 1996 as
amended, which is incorporated by reference and contains Exhibits
10(i), 10(j), 10(k), 10(l), 10(m), 10(n), 10(o), 10(p), 10(q), 10(r),
10(s), 10(t), 10(u) and 10(v).
<PAGE>
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.
ATC GROUP SERVICES INC.
(Registrant)
/s/ RICHARD L. PRUITT June 26, 1997
- ---------------------------------------------------------- -------------
(Dated)
Richard L. Pruitt,
Vice President and Principal Accounting Officer; Director
<PAGE>
1995 NON-QUALIFIED STOCK OPTION PLAN
OF
ATC ENVIRONMENTAL INC.
In Replacement of the
1987 Non-Qualified Stock Option Plan
of Aurora Environmental Inc.
Pursuant to Merger Agreement
1. Purpose
The purpose of this Non-Qualified Stock Option Plan (the "Plan") is to
provide an incentive for officers, directors, and employees to render services
and make contributions to ATC Environmental Inc. and each of its subsidiaries
(the "Company"), and to give them an increased interest in the Company's welfare
and progress by affording them an opportunity to acquire ownership of its stock.
2. Stock Subject to the Plan
The stock to be issued upon exercise of options granted under the Plan
shall consist of authorized but unissued shares (or of reacquired shares) of the
Common Stock, par value $.01 per share, of the Company, as determined by the
Board of Directors. The aggregate number of shares which may be issued under
options is 81,750 subject to adjustment as provided in Section 8.
If any options granted under the Plan expire or terminate for any
reason without having been exercised in full, the unpurchased shares shall
become available for further options pursuant to the Plan.
3. Eligibility of Optionees
Options may be granted at the discretion of the Board of Directors only
to officers, directors, and employees of the Company and any of its
subsidiaries. More than one option may be granted to any optionee. Subject to
the foregoing, no further restrictions are placed on the Board of Directors in
determining eligibility or participation for granting Options.
4. Administration
<PAGE>
4
The Plan shall be administered by the Board of Directors or, in the
discretion of the Board, by a Committee (the "Committee"); hereinafter, which if
appointed by the Board of Directors, shall consist of not less than three
directors. The Board of Directors shall fill all vacancies in the Committee and
may remove any member of the Committee at any time, with or without cause. The
Committee shall select its own Chairman and shall hold its meetings at such
times and places as it may determine. The acts of a majority of the Committee at
any meeting, or acts approved in writing by all members of the Committee, shall
be the acts of the Committee.
Subject to the express provisions of the Plan, the Board of Directors
or the Committee shall have full authority (a) to determine, in its discretion,
the individuals (including members of the Board of Directors or the Committee)
to whom, and the times at which, options shall be granted, the number of shares
subject to each option, and the provisions of the respective option agreements
(which need not be identical), including but not limited to provisions
concerning the time or times when, and the extent to which, the options may be
exercised, the transferability of each option, the conditions of exercise
(including non-competition with the Company after termination of service) and
the effect of approved leaves of absence on continuity of service; and the terms
and conditions of payment for shares in full or in installments, the issue of
certificates for shares to be paid for in installments, any limitations upon
transferability of such shares and the voting and dividend rights to which the
holders of such shares may be entitled, though the full amount of the
consideration therefor has not been paid; (b) to prescribe, amend and rescind
rules and regulations relating to the Plan; (c) to interpret the Plan and
determinations necessary or advisable for administering the Plan. All
determinations and interpretations by the Board of Directors or the Committee
shall be binding and conclusive upon all parties.
Notwithstanding the powers vested in the Committee, if such Committee
be appointed, the Board of Directors may also grant options hereunder by the
vote of a majority of the directors.
5. Option Price
The purchase price per share under each option shall be determined by
the Board of Directors or the Committee.
6. Exercise of Options
(a) Each option granted under the Plan shall become exercisable at such
time, or in installments at such times, as may be provided therein. To the
extent that any installment of an option has become exercisable, it may be
exercised thereafter, until termination, in whole at any time or from time to
time in part.
(b) Each option granted under the Plan shall terminate no later than
ten years after the date on which it was granted, but the Board of Directors or
the Committee in its discretion may prescribe a shorter period for any
individual option or options.
(c) An option shall be exercised by written notice of such exercise, in
the form prescribed by the Board of Directors or the Committee, to the Secretary
or Treasurer of the Company, at its principal office. The notice shall specify
the address to which the certificates are to be mailed, the optionees' social
security number and the number of shares for which the option is being exercised
(which number, if less than all of the shares then subject to exercise, shall be
50 or a multiple thereof) and shall be accompanied by payment in full of the
purchase price of such shares. Any required Federal income tax or other
withholding amount shall also be paid (in full) by the optionee at the time of
such exercise. No shares shall be delivered upon exercise of any option until
all laws, rules and regulations which the Board of Directors or the Committee
may deem applicable have been complied with. If a registration statement under
the Securities Act of 1933 is not then in effect with respect to the shares
issuable upon such exercise, it shall be a condition precedent that the person
exercising the option give to the Company a written representation and
undertaking, satisfactory in form and substance to the Board of Directors of the
Committee, that he is acquiring the shares for his own account for investment
and not with a view to the distribution thereof.
(d) The person exercising an option shall not be considered a record
holder of the stock so purchased for any purpose until the date on which he is
actually recorded as the holder of such stock upon the stock records of the
Company.
(e) The Company shall pay all original issue and transfer taxes (other
than required withholding taxes) with respect to the issuance and transfer of
shares of Common Stock of the Company pursuant hereto and all other fees and
expenses necessarily incurred by the Company in connection therewith.
7. Other Option Conditions
(a) Nothing in the Plan or in any option granted pursuant thereto shall
confer on any individual any right to continue in the employ of the Company or
interfere in any way with the right of the Company to terminate his employment
at any time.
(b) Each option granted pursuant to the Plan shall be evidenced by a
written option agreement duly executed by the Company and the optionee.
(c) No holder of any option under the Plan shall, by virtue of hold
such option, be entitled to any rights of a stockholder in the Company.
8. Adjustments Upon Changes in Capitalization
The option agreements shall contain such provisions as the Board of
Directors or the Committee shall determine to be appropriate for the adjustment
of the kind and number of shares subject to each outstanding option, or the
option prices, or both, in the event of any changes in the outstanding Common
Stock, recapitalizations, reorganizations, mergers, consolidations, sales or
exchanges of assets, combinations or exchange of shares, offering of
subscription rights or any other type of change. In the event of any such change
in the outstanding Common Stock, the kind and aggregate number of shares
available under the Plan shall be appropriately adjusted by the Board of
Directors or the Committee, whose determination shall be conclusive.
<PAGE>
9. Term of Plan
The Board of Directors may terminate this Plan at any time. Termination
of the Plan will not affect rights and obligations theretofore granted and then
in effect. No options may be granted later than November 10, 1997.
10. Transferability
No options granted under this Plan shall be transferable by the
optionee except as permitted by the Board of Directors.
11. Amendment and Revocation
The Board of Directors alone shall have the right to alter, amend,
extend or revoke the Plan or any part thereof at any time and from time to time,
provided, however, that without the consent of the optionees, no change may be
made in any option theretofore granted which will impair the rights of existing
optionees.
<PAGE>
CONFORMED COPY
ATC GROUP SERVICES INC.
$32,500,000 8.18% Senior Secured Notes due May 31, 2004
--------------
NOTE AGREEMENT
--------------
May 29, 1997
<PAGE>
(ii)
TABLE OF CONTENTS
Page
1. Authorization of Notes; Security......................................1
2. Sale and Purchase of Notes............................................2
3. Closing...............................................................3
4. Conditions to Closing.................................................3
4.1. Representations and Warranties Correct.......................3
4.2. Performance; No Default; No Material Adverse Change..........3
4.3. Contemporaneous Transactions.................................4
4.4. Compliance Certificate.......................................4
4.5. Security Documents; Collateral...............................4
4.6. Opinion of Counsel for the Company...........................5
4.7. Opinion of Your Special Counsel..............................5
4.8. Certain Additional Documents to be Delivered at or Prior to
the Closing..................................................5
4.9. Sale of Notes to Other Purchasers............................6
4.10. Legal Investment; Certificate................................6
4.11. Sale and Purchase Not Forbidden by Law.......................6
4.12. Payment of Transaction Costs.................................6
4.13. Proceedings and Documents....................................6
5. Representations and Warranties........................................6
5.1. Organization, Standing, etc. of the Company..................6
5.2. Subsidiaries.................................................7
5.3. Qualification................................................7
5.4. Business, etc................................................7
5.5. Capital Stock................................................7
5.6. Financial Statements.........................................8
5.7. Changes; Solvency, etc.......................................9
5.8. Tax Returns and Payments.....................................9
5.9. Funded Debt, Current Debt, Liens, Investments, Transactions
with Affiliates and Leases...................................9
5.10. Title to Properties; Liens; Leases..........................10
5.11. Litigation, etc.............................................10
5.12. Valid and Binding Obligations; Compliance with Other
Instruments, Borrowing Restrictions, etc....................11
5.13. ERISA.......................................................12
5.14. Consents, etc...............................................13
5.15. Proprietary Rights; Licenses................................14
5.16. Offer of Notes..............................................14
5.17. Government Regulation.......................................14
5.18. Regulation G, etc...........................................14
5.19. Investment Bankers, etc.....................................15
5.20. Disclosure..................................................15
5.21. Labor Relations; Suppliers and Customers and Clients........15
6. Use of Proceeds......................................................16
7. Financial Statements and Information.................................16
8. Inspection; Confidentiality..........................................20
9. Prepayment of Notes..................................................21
9.1. Required Annual Prepayment Without Premium of Notes.........21
9.2. Optional Prepayment With Premium of Notes...................21
9.3. Prepayment of Senior Debt at the Option of each Holder with
Available Net Proceeds and Available Unused Proceeds........22
9.4. Prepayment Without Premium of the Notes at the Option of
Holders of the Notes upon a Change of Control...............24
9.5 Notice of Optional Repayments of Notes......................25
9.6. Maturity; Accrued Interest..................................26
9.7. Purchase of Notes...........................................26
9.8. Payment on Non-Business Days................................26
10. Purchase for Investment..............................................26
11. Certain Regulatory Matters...........................................28
12. Method of Payment of Notes...........................................28
13. Liabilities to Other Holders.........................................28
14. Covenants of the Company.............................................28
14.1. Books of Record and Account; Reserves.......................28
14.2. Payment of Taxes; Existence; Maintenance of Properties;
Compliance with Laws; Lines of Business; Proprietary
Right and Licenses..........................................29
14.3. Insurance...................................................30
14.4. Discount or Sale of Receivables.............................30
14.5. Funded Debt, Current Debt and Preferred Shares..............30
14.6. Limitation on Restricted Investments and Restricted
Payments....................................................32
14.7. Certain Financial Covenants.................................34
14.8. Liens.......................................................34
14.9. Transactions with Affiliates................................36
14.10. Limitation on Issuance of Shares of Subsidiaries and
Disposition of Shares.......................................36
14.11. Limitation on Consolidation or Merger, etc..................37
14.12 Limitations on Leasebacks...................................38
14.13. Limitation on Dispositions of Property .....................38
14.14. Modification of Certain Documents, Agreements and
Instruments; Renewal of Bank Credit Documents; Replacement
Collateral Agency and Intercreditor Agreement...............39
14.15. Limitation on Tax Consolidation.............................40
14.16. Revolving Credit Facility...................................40
14.17 Accounts....................................................40
14.18 Further Assurances..........................................40
15. Definitions..........................................................40
15.1. Definitions of Capitalized Terms............................40
15.2. Other Definitions...........................................55
15.3. Accounting Terms and Principles; Laws.......................55
16. Remedies.............................................................55
16.1. Events of Default Defined; Acceleration of Maturity.........55
16.2. Suits for Enforcement, etc..................................60
16.3. Remedies Cumulative.........................................60
16.4. Remedies Not Waived.........................................60
16.5. Application of Payments.....................................61
17. Registration, Transfer and Exchange of Notes.........................61
18. Replacement of Notes.................................................62
19. Amendment and Waiver.................................................62
20. Expenses; Indemnity..................................................63
21. Communications.......................................................63
22. Survival of Agreements, Representations and Warranties, etc..........64
23. Successors and Assigns; Rights of Other Holders......................65
24. Governing Law; Jurisdiction; Waiver of Jury Trial....................65
25. Miscellaneous........................................................65
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Schedule I Schedule of Information for Payment and Notices
Exhibit 1(a) Form of Note
Exhibit 1(b) Form of Note Guarantee
Exhibit 1(c)(i) Form of Security Agreement
Exhibit 1(c)(ii) Form of Collateral Agency and Intercreditor Agreement
Exhibit 3 Wire Instructions
Exhibit 4.3(d) ATEC Subordination Agreement
Exhibit 4.6 Opinion of Kaufmann, Feiner, Yamin, Gildin & Robbins, LLP
Exhibit 4.7 Opinion of Choate, Hall & Stewart
Exhibit 4.8 Additional Documents to be Delivered at or Prior to the Closing
Exhibit 5.2 Subsidiaries
Exhibit 5.5(a) Shares; Stockholders
Exhibit 5.5(b) Other Securities; Commitments; Preemptive and Registration Rights
Exhibit 5.6(a) Financial Statements
Exhibit 5.6(b) Projections
Exhibit 5.6(c) Pro Forma Unaudited Balance Sheet
Exhibit 5.7 Restricted Payments and Restricted Investments
Exhibit 5.8 Taxes
Exhibit 5.9 Funded Debt, Current Debt, Liens, Investments, Affiliates,
Transactions with Affiliates and Leases
Exhibit 5.12(a) Filings and Recordings
Exhibit 5.14 Consents
Exhibit 5.21 Labor Relations
Exhibit 6 Use of Proceeds
Exhibit 7(c)(iv) Information as to New Subsidiaries
</TABLE>
<PAGE>
ATC GROUP SERVICES INC.
104 East 25th Street
New York, NY 10010
May 29, 1997
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
John Hancock Place
200 Clarendon Street
Boston, MA 02117
Ladies and Gentlemen:
ATC GROUP SERVICES INC., a Delaware corporation (the "Company"), agrees
with you as follows:
Authorization of Notes; Security.Security
(a) The Company has authorized the issue and sale of its 8.18%
Senior Secured Notes due May 31, 2004 (herein, together with any notes
issued in exchange therefor or replacement thereof, called the "Notes")
in the aggregate principal amount of $32,500,000. The Notes are to be
substantially in the form of Exhibit 1(a) attached hereto. Payments of
interest on the Notes shall be due and payable semi-annually on the
last day of each May and November, commencing November 30, 1997, and at
maturity, all as further provided herein and in the Notes. In no event
shall the amount paid or agreed to be paid by the Company as interest
and premium on any Note exceed the highest lawful rate permissible
under any law applicable thereto.
(b) The Notes are to be guaranteed by each of ATC New England
Corp., a Delaware corporation, ATC Blattert Inc., a South Dakota
corporation, Hygeia Laboratories, Inc., a Delaware corporation, ATC
Management, Inc., a South Dakota corporation, ATC Insys Technology
Inc., a Delaware corporation, and ATC Environmental Inc., a Delaware
corporation, each a Wholly-Owned Subsidiary of the Company, and by each
Person which hereafter becomes a Subsidiary of the Company, pursuant to
separate guarantees, each substantially in the form of Exhibit 1(b)
attached hereto (as amended, modified and supplemented from time to
time, each, a "Note Guarantee"; collectively, the "Note Guarantees").
<PAGE>
ATC GROUP SERVICES INC.
104 East 25th Street
New York, NY 10010
May 29, 1997
JOHN HANCOCK VARIABLE LIFE
INSURANCE COMPANY
John Hancock Place
200 Clarendon Street
Boston, MA 02117
Ladies and Gentlemen:
ATC GROUP SERVICES INC., a Delaware corporation (the "Company"), agrees
with you as follows:
Authorization of Notes; Security.Security
(a) The Company has authorized the issue and sale of its 8.18%
Senior Secured Notes due May 31, 2004 (herein, together with any notes
issued in exchange therefor or replacement thereof, called the "Notes")
in the aggregate principal amount of $32,500,000. The Notes are to be
substantially in the form of Exhibit 1(a) attached hereto. Payments of
interest on the Notes shall be due and payable semi-annually on the
last day of each May and November, commencing November 30, 1997, and at
maturity, all as further provided herein and in the Notes. In no event
shall the amount paid or agreed to be paid by the Company as interest
and premium on any Note exceed the highest lawful rate permissible
under any law applicable thereto.
(b) The Notes are to be guaranteed by each of ATC New England
Corp., a Delaware corporation, ATC Blattert Inc., a South Dakota
corporation, Hygeia Laboratories, Inc., a Delaware corporation, ATC
Management, Inc., a South Dakota corporation, ATC Insys Technology
Inc., a Delaware corporation, and ATC Environmental Inc., a Delaware
corporation, each a Wholly-Owned Subsidiary of the Company, and by each
Person which hereafter becomes a Subsidiary of the Company, pursuant to
separate guarantees, each substantially in the form of Exhibit 1(b)
attached hereto (as amended, modified and supplemented from time to
time, each, a "Note Guarantee"; collectively, the "Note Guarantees").
<PAGE>
ATC GROUP SERVICES INC.
104 East 25th Street
New York, NY 10010
May 29, 1997
JOHN HANCOCK LIFE INSURANCE
COMPANY OF AMERICA
John Hancock Place
200 Clarendon Street
Boston, MA 02117
Ladies and Gentlemen:
ATC GROUP SERVICES INC., a Delaware corporation (the "Company"), agrees
with you as follows:
Authorization of Notes; Security.Security
(a) The Company has authorized the issue and sale of its 8.18%
Senior Secured Notes due May 31, 2004 (herein, together with any notes
issued in exchange therefor or replacement thereof, called the "Notes")
in the aggregate principal amount of $32,500,000. The Notes are to be
substantially in the form of Exhibit 1(a) attached hereto. Payments of
interest on the Notes shall be due and payable semi-annually on the
last day of each May and November, commencing November 30, 1997, and at
maturity, all as further provided herein and in the Notes. In no event
shall the amount paid or agreed to be paid by the Company as interest
and premium on any Note exceed the highest lawful rate permissible
under any law applicable thereto.
(b) The Notes are to be guaranteed by each of ATC New England
Corp., a Delaware corporation, ATC Blattert Inc., a South Dakota
corporation, Hygeia Laboratories, Inc., a Delaware corporation, ATC
Management, Inc., a South Dakota corporation, ATC Insys Technology
Inc., a Delaware corporation, and ATC Environmental Inc., a Delaware
corporation, each a Wholly-Owned Subsidiary of the Company, and by each
Person which hereafter becomes a Subsidiary of the Company, pursuant to
separate guarantees, each substantially in the form of Exhibit 1(b)
attached hereto (as amended, modified and supplemented from time to
time, each, a "Note Guarantee"; collectively, the "Note Guarantees").
<PAGE>
ATC GROUP SERVICES INC.
104 East 25th Street
New York, NY 10010
May 29, 1997
SIGNATURE 1A (CAYMAN), LTD.
c/o John Hancock Mutual Life
Insurance Company, Portfolio Advisor
John Hancock Place
200 Clarendon Street
Boston, MA 02117
Ladies and Gentlemen:
ATC GROUP SERVICES INC., a Delaware corporation (the "Company"), agrees
with you as follows:
Authorization of Notes; Security.Security
(a) The Company has authorized the issue and sale of its 8.18%
Senior Secured Notes due May 31, 2004 (herein, together with any notes
issued in exchange therefor or replacement thereof, called the "Notes")
in the aggregate principal amount of $32,500,000. The Notes are to be
substantially in the form of Exhibit 1(a) attached hereto. Payments of
interest on the Notes shall be due and payable semi-annually on the
last day of each May and November, commencing November 30, 1997, and at
maturity, all as further provided herein and in the Notes. In no event
shall the amount paid or agreed to be paid by the Company as interest
and premium on any Note exceed the highest lawful rate permissible
under any law applicable thereto.
(b) The Notes are to be guaranteed by each of ATC New England
Corp., a Delaware corporation, ATC Blattert Inc., a South Dakota
corporation, Hygeia Laboratories, Inc., a Delaware corporation, ATC
Management, Inc., a South Dakota corporation, ATC Insys Technology
Inc., a Delaware corporation, and ATC Environmental Inc., a Delaware
corporation, each a Wholly-Owned Subsidiary of the Company, and by each
Person which hereafter becomes a Subsidiary of the Company, pursuant to
separate guarantees, each substantially in the form of Exhibit 1(b)
attached hereto (as amended, modified and supplemented from time to
time, each, a "Note Guarantee"; collectively, the "Note Guarantees").
<PAGE>
ATC GROUP SERVICES INC.
104 East 25th Street
New York, NY 10010
May 29, 1997
ORIX USA CORPORATION
780 Third Avenue, 48th Floor
New York, NY 10017
Ladies and Gentlemen:
ATC GROUP SERVICES INC., a Delaware corporation (the "Company"), agrees
with you as follows:
Authorization of Notes; Security.Security
(a) The Company has authorized the issue and sale of its 8.18%
Senior Secured Notes due May 31, 2004 (herein, together with any notes
issued in exchange therefor or replacement thereof, called the "Notes")
in the aggregate principal amount of $32,500,000. The Notes are to be
substantially in the form of Exhibit 1(a) attached hereto. Payments of
interest on the Notes shall be due and payable semi-annually on the
last day of each May and November, commencing November 30, 1997, and at
maturity, all as further provided herein and in the Notes. In no event
shall the amount paid or agreed to be paid by the Company as interest
and premium on any Note exceed the highest lawful rate permissible
under any law applicable thereto.
(b) The Notes are to be guaranteed by each of ATC New England
Corp., a Delaware corporation, ATC Blattert Inc., a South Dakota
corporation, Hygeia Laboratories, Inc., a Delaware corporation, ATC
Management, Inc., a South Dakota corporation, ATC Insys Technology
Inc., a Delaware corporation, and ATC Environmental Inc., a Delaware
corporation, each a Wholly-Owned Subsidiary of the Company, and by each
Person which hereafter becomes a Subsidiary of the Company, pursuant to
separate guarantees, each substantially in the form of Exhibit 1(b)
attached hereto (as amended, modified and supplemented from time to
time, each, a "Note Guarantee"; collectively, the "Note Guarantees").
<PAGE>
ATC GROUP SERVICES INC.
104 East 25th Street
New York, NY 10010
May 29, 1997
THE CANADA LIFE ASSURANCE COMPANY 330 University Avenue Toronto, Ontario, Canada
M5G 1R8
Ladies and Gentlemen:
ATC GROUP SERVICES INC., a Delaware corporation (the "Company"), agrees
with you as follows:
Authorization of Notes; Security.Security
(a) The Company has authorized the issue and sale of its 8.18%
Senior Secured Notes due May 31, 2004 (herein, together with any notes
issued in exchange therefor or replacement thereof, called the "Notes")
in the aggregate principal amount of $32,500,000. The Notes are to be
substantially in the form of Exhibit 1(a) attached hereto. Payments of
interest on the Notes shall be due and payable semi-annually on the
last day of each May and November, commencing November 30, 1997, and at
maturity, all as further provided herein and in the Notes. In no event
shall the amount paid or agreed to be paid by the Company as interest
and premium on any Note exceed the highest lawful rate permissible
under any law applicable thereto.
(b) The Notes are to be guaranteed by each of ATC New England
Corp., a Delaware corporation, ATC Blattert Inc., a South Dakota
corporation, Hygeia Laboratories, Inc., a Delaware corporation, ATC
Management, Inc., a South Dakota corporation, ATC Insys Technology
Inc., a Delaware corporation, and ATC Environmental Inc., a Delaware
corporation, each a Wholly-Owned Subsidiary of the Company, and by each
Person which hereafter becomes a Subsidiary of the Company, pursuant to
separate guarantees, each substantially in the form of Exhibit 1(b)
attached hereto (as amended, modified and supplemented from time to
time, each, a "Note Guarantee"; collectively, the "Note Guarantees").
<PAGE>
ATC GROUP SERVICES INC.
104 East 25th Street
New York, NY 10010
May 29, 1997
CANADA LIFE INSURANCE COMPANY
OF AMERICA
330 University Avenue
Toronto, Ontario, Canada M5G 1R8
Ladies and Gentlemen:
ATC GROUP SERVICES INC., a Delaware corporation (the "Company"), agrees
with you as follows:
Authorization of Notes; Security.Security
(a) The Company has authorized the issue and sale of its 8.18%
Senior Secured Notes due May 31, 2004 (herein, together with any notes
issued in exchange therefor or replacement thereof, called the "Notes")
in the aggregate principal amount of $32,500,000. The Notes are to be
substantially in the form of Exhibit 1(a) attached hereto. Payments of
interest on the Notes shall be due and payable semi-annually on the
last day of each May and November, commencing November 30, 1997, and at
maturity, all as further provided herein and in the Notes. In no event
shall the amount paid or agreed to be paid by the Company as interest
and premium on any Note exceed the highest lawful rate permissible
under any law applicable thereto.
(b) The Notes are to be guaranteed by each of ATC New England
Corp., a Delaware corporation, ATC Blattert Inc., a South Dakota
corporation, Hygeia Laboratories, Inc., a Delaware corporation, ATC
Management, Inc., a South Dakota corporation, ATC Insys Technology
Inc., a Delaware corporation, and ATC Environmental Inc., a Delaware
corporation, each a Wholly-Owned Subsidiary of the Company, and by each
Person which hereafter becomes a Subsidiary of the Company, pursuant to
separate guarantees, each substantially in the form of Exhibit 1(b)
attached hereto (as amended, modified and supplemented from time to
time, each, a "Note Guarantee"; collectively, the "Note Guarantees").
<PAGE>
ATC GROUP SERVICES INC.
104 East 25th Street
New York, NY 10010
29, 1997
CANADA LIFE INSURANCE COMPANY
OF NEW YORK
330 University Avenue
Toronto, Ontario, Canada M5G 1R8
Ladies and Gentlemen:
ATC GROUP SERVICES INC., a Delaware corporation (the "Company"), agrees
with you as follows:
Authorization of Notes; Security.Security
(a) The Company has authorized the issue and sale of its 8.18%
Senior Secured Notes due May 31, 2004 (herein, together with any notes
issued in exchange therefor or replacement thereof, called the "Notes")
in the aggregate principal amount of $32,500,000. The Notes are to be
substantially in the form of Exhibit 1(a) attached hereto. Payments of
interest on the Notes shall be due and payable semi-annually on the
last day of each May and November, commencing November 30, 1997, and at
maturity, all as further provided herein and in the Notes. In no event
shall the amount paid or agreed to be paid by the Company as interest
and premium on any Note exceed the highest lawful rate permissible
under any law applicable thereto.
(b) The Notes are to be guaranteed by each of ATC New England
Corp., a Delaware corporation, ATC Blattert Inc., a South Dakota
corporation, Hygeia Laboratories, Inc., a Delaware corporation, ATC
Management, Inc., a South Dakota corporation, ATC Insys Technology
Inc., a Delaware corporation, and ATC Environmental Inc., a Delaware
corporation, each a Wholly-Owned Subsidiary of the Company, and by each
Person which hereafter becomes a Subsidiary of the Company, pursuant to
separate guarantees, each substantially in the form of Exhibit 1(b)
attached hereto (as amended, modified and supplemented from time to
time, each, a "Note Guarantee"; collectively, the "Note Guarantees").
<PAGE>
-69-
(c) The Notes are to be secured by and entitled to the
benefits of first priority security interests in all accounts, accounts
receivable, work in process, general intangibles, customer lists and
cash on deposit with The Chase Manhattan Bank, including all proceeds
and products thereof, of the Company and each of its Subsidiaries,
pursuant to separate security agreements between the Collateral Agent
and the Company and each of its Subsidiaries, respectively, each
substantially in the form of Exhibit 1(c)(i) attached hereto (as
amended, modified and supplemented from time to time, each a "Security
Agreement"; collectively, the "Security Agreements"). The Collateral
Agent shall be appointed to act as collateral agent for the holders of
the Notes and the Banks, and shall have agreed to act as such pursuant
to a collateral agency and intercreditor agreement substantially in the
form of Exhibit 1(c)(ii) attached hereto (as amended, modified and
supplemented from time to time, the "Collateral Agency and
Intercreditor Agreement").
The Note Guarantees, the Security Agreements, and the
Collateral Agency and Intercreditor Agreement, together with any and
all other agreements, documents and instruments heretofore or hereafter
securing the Notes and/or other obligations of the Company and/or any
Subsidiaries of the Company under the Operative Documents, as amended,
modified and supplemented from time to time, are sometimes hereinafter
referred to collectively as the "Security Documents" and each,
individually, as a "Security Document". All accounts, accounts
receivable, work in process, general intangibles, customer lists and
cash described in this section 1(c), together with any additions
thereto and replacements and proceeds and products thereof, all as
further described in any of the Security Documents, are sometimes
hereinafter referred to collectively as the "Collateral".
(d) The Notes are to be issued under this Agreement and
separate Note Agreements (the "Other Note Agreements") identical
herewith (except as to the name and address of each of the other
purchasers) being entered into concurrently by the Company with each of
the other purchasers (the "Other Purchasers") named in Schedule I
attached hereto. The issue of Notes to you and the issues of Notes to
each of the Other Purchasers are separate transactions, and you shall
not be liable or responsible for the acts or defaults of the Other
Purchasers.
Sale and Purchase of Notes. The Company will issue and sell to you and, subject
to the terms and conditions hereof and in reliance upon the representations and
warranties of the Company contained herein and in the other Operative Documents,
you will purchase from the Company, at the Closing specified in section 3, the
Notes as specified on that portion of Schedule I attached hereto as is
applicable to you, at a purchase price of 100% of the principal amount thereof.
Closing. The closing of the sale and purchase of the Notes hereunder (the
"Closing") shall take place at the office of Messrs. Choate, Hall & Stewart,
Exchange Place, 53 State Street, Boston, Massachusetts 02109, on May 29, 1997
(the "Closing Date") not later than 11:00 A.M. Boston time (your reinvestment
deadline). At the Closing, the Company will deliver to you the Notes to be
purchased by you against payment of the purchase price thereof to (or for the
benefit of) the Company in immediately available funds in accordance with the
wire instructions set forth on Exhibit 3 attached hereto. Delivery of the Notes
to be purchased by you at Closing shall be made in the form of one or more Notes
(as specified on Schedule I), in each case, dated and bearing interest from, the
Closing Date and registered in such name or names as are specified on Schedule
I. If at the Closing the Company shall fail to tender the Notes to be delivered
to you thereat as provided herein, or if at the Closing any of the conditions
specified in section 4 shall not have been fulfilled to your satisfaction, you
shall, at your election, be relieved of all further obligations under this
Agreement, without thereby waiving any other rights you may have by reason of
such failure or such non-fulfillment.
Conditions to Closing. Your obligation to purchase and pay for the Notes to be
purchased by you hereunder at the Closing is subject to the fulfillment to your
satisfaction, prior to or at the Closing, of the following conditions:
Representations and Warranties Correct. The representations and
warranties made by the Company herein and in the other Operative Documents and
otherwise made in writing by or on behalf of the Company in connection with the
transactions contemplated by the Operative Documents shall have been correct in
all material respects when made and shall be correct in all material respects at
and as of the time of the Closing (both before and immediately after giving
effect to the consummation of the transactions contemplated by the Operative
Documents).
Performance; No Default; No Material Adverse Change. The Company shall
have performed in all material respects all agreements and complied with all
conditions contained herein and in the other Operative Documents required to be
performed or complied with by it prior to or at the Closing, including, without
limitation, those referred to in section 4.3, and at the time of the Closing no
Default or Event of Default shall exist and no condition shall exist which has
resulted in, or could reasonably be expected to result in, a Material Adverse
Change.
<PAGE>
Contemporaneous Transactions. ctions
(a) The Company shall have repaid all Indebtedness outstanding
under the Credit Agreement dated as of May 24, 1996 among the Company,
its Subsidiaries and The Chase Manhattan Bank (as successor to Chemical
Bank), individually and as agent, and the other banks parties thereto
(as amended, the "Old Bank Agreement"), the Old Bank Agreement and all
related agreements, documents and instruments executed in connection
therewith shall have been terminated, all Liens securing any
obligations thereunder shall have been terminated and discharged, and
all financing statements or other instruments filed or recorded to
perfect such Liens shall have been terminated or discharged.
(b) The Company shall have entered into that certain Credit
Agreement dated May 29, 1997 (as amended, modified or supplemented from
time to time in compliance with section 14.14, together with any
renewals thereof, the "Bank Credit Agreement" and, together with all
agreements, documents and instruments executed in connection therewith,
in each case as amended, modified or supplemented from time to time in
compliance with section 14.14, together with any renewals thereof, the
"Bank Credit Documents") with The Chase Manhattan Bank, individually
and as administrative agent (the "Bank Agent"), for itself and the
other lenders parties thereto from time to time (collectively, together
with successor lenders under the Bank Credit Documents, the "Banks"),
the terms and conditions of all of which shall be satisfactory to you,
and no default or event of default shall exist thereunder.
(c) The Company, each of the Banks, the Bank Agent, the
Collateral Agent, you and each of the Other Purchasers shall have
entered into the Collateral Agency and Intercreditor Agreement.
(d) American Testing and Engineering Corporation, an Indiana
corporation ("ATEC"), and Gerald D. Mann shall have executed and
delivered to you and the Banks a Subordination Agreement in the form of
Exhibit 4.3(d) attached hereto, and related UCC-3's subordinating the
Liens in favor of ATEC to the Liens in the Collateral securing the
Notes and the Indebtedness under the Bank Credit Documents.
4.4. Compliance Certificate. You shall have received an Officers'
Certificate, dated the Closing Date, certifying that the conditions
specified in sections 4.1 and 4.2 have been fulfilled.
4.5. Security Documents; Collateral.
(a) The Security Documents shall have been duly authorized,
executed and delivered by each of the parties thereto and shall be in
full force and effect and all agreements, documents and instruments
required to be executed, delivered, filed and/or recorded in connection
therewith shall have been so executed, delivered, filed and/or recorded
so as to perfect the first priority Liens created by the Security
Documents, and such Liens shall be subject to no prior or pari passu
Lien except such other Liens as may be permitted under section 14.8.
(b) You and your special counsel shall be satisfied in all
respects as to: (i) the title to the Collateral (and the absence of any
Liens, other than those permitted under section 14.8, or any
outstanding claims with respect to the Collateral); (ii) the condition
and value of the Collateral; (iii) the recording, filing, validity,
perfection and priority of all Liens created by the Security Documents
(and the payment of all related fees and taxes) and (iv) the receipt by
the Company of all consents of parties to any agreement whose consent
is or may be necessary in connection with the execution, delivery and
performance of any of the Operative Documents.
(c) In connection with the foregoing, at or prior to the
Closing, you shall have received the following items, each of which
shall be in form and substance satisfactory to you:
(i) UCC financing statements (naming the Company and
each of its Subsidiaries, respectively, as debtor and the
Collateral Agent as secured party) in proper form for filing
in the offices specified on Exhibit 5.12(a); and
(ii) lien searches on the Company and each of its
Subsidiaries, respectively, from the applicable offices in
each jurisdiction in which any of the Collateral shall be
located at or after the Closing, which searches shall not
reveal any prior financing statement covering any portion or
all of the Collateral (other than financing statements to be
terminated at or prior to the Closing and other financing
statements permitted under section 14.8).
Opinion of Counsel for the Company. You shall have received from
Messrs. Kaufmann, Feiner, Yamin, Gildin & Robbins, LLP, counsel for the Company,
an opinion, dated the Closing Date, substantially in the form of Exhibit 4.6
attached hereto.
Opinion of Your Special Counsel. You shall have received from Messrs.
Choate, Hall & Stewart, your special counsel, an opinion, dated the Closing
Date, substantially in the form of Exhibit 4.7 attached hereto.
4.8. Certain Additional Documents to be Delivered at or Prior to the
Closing. You shall have received the items specified on Exhibit 4.8 attached
hereto, each of which shall be satisfactory to you in all material respects.
4.9. Sale of Notes to Other Purchasers. At the Closing, the Company
shall issue and sell to the Other Purchasers the Notes to be purchased at the
Closing by the Other Purchasers pursuant to the Other Note Agreements and shall
receive payment in full of the purchase price thereof.
4.10. Legal Investment; Certificate. Your purchase of the Notes to be
issued to you pursuant hereto shall be permitted under the laws and regulations
of any jurisdiction to which you are subject (without resort to any provision of
any such law permitting limited investments by you without restriction as to the
character of the particular investment), and you shall, if requested by you,
have received an Officers' Certificate, dated the Closing Date, certifying as to
such factual matters as to the Company as you may request to enable you to
determine whether your purchase is so permitted.
Sale and Purchase Not Forbidden by Law. The offer, issue, sale and
delivery by the Company of the Notes to be issued pursuant hereto and your
purchase of such Notes at the Closing shall not be prohibited by, and shall not
subject you to any tax, penalty, liability or other onerous condition under or
pursuant to, any law, statute, rule or regulation.
Payment of Transaction Costs. The Company shall have paid in
immediately available funds all fees, expenses and disbursements incurred by you
at or prior to the time of the Closing in connection with the transactions
contemplated by the Operative Documents, including, without limitation, the
reasonable fees, expenses and disbursements of your special counsel, Choate,
Hall & Stewart.
Proceedings and Documents. All proceedings in connection with the
transactions contemplated by the Operative Documents and all agreements,
documents and instruments incident to such transactions shall be satisfactory in
substance and form to you and your special counsel, and you and your special
counsel shall have received all such counterpart originals or certified or other
copies of such agreements, documents and instruments as you or they may
reasonably request.
Representations and Warranties. The Company represents and warrants that (both
before and immediately after giving effect to the transactions consummated at
the Closing):
5.1. Organization, Standing, etc. of the Company. The Company is
a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware, and has all requisite corporate power and
authority to own, lease and operate its properties, to carry on its business as
now conducted and now proposed to be conducted as described in the Disclosure
Document referred to in section 5.4, to execute, deliver and perform each of the
Operative Documents to which it is (or is to be) a party and to consummate the
transactions contemplated by the Operative Documents, and no approval of the
stockholders of the Company or any class thereof is required in connection
therewith.
Subsidiaries. Exhibit 5.2 attached hereto is a complete and correct
list of the Company's Subsidiaries (corporate or other) which correctly
specifies as to each such Subsidiary (a) its legal name, (b) the jurisdiction of
its organization, (c) each other jurisdiction in which it is qualified to do
business, (d) the authorized Shares of such Subsidiary (specifying the class or
classes thereof) and the number of such Shares outstanding, (e) the number (and
percentage) of such outstanding Shares owned by the Company and its other
Subsidiaries and (f) the name of each other holder, if any, of such Shares,
together with the number (and percentage) held by such other holder. Each
Subsidiary of the Company is a corporation or other entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization and has all requisite power and authority to own, lease and operate
its properties, to carry on its business as now conducted, and now proposed to
be conducted, as described in the Disclosure Document, and to execute, deliver
and perform each of the Operative Documents to which it is (or is to be) a party
and to consummate the transactions contemplated thereby. All of the outstanding
Shares of each Subsidiary of the Company are validly issued, fully paid and
nonassessable and not subject to preemptive rights on the part of any other
Person, and all of such Shares have been offered, issued and sold by the issuer
thereof in compliance with all applicable laws. All of the Shares of the
Company's Subsidiaries owned by the Company and its Subsidiaries as shown on
Exhibit 5.2 attached hereto are so owned of record and beneficially and free of
any Lien, proxy, voting agreement, voting trust or similar agreement or
restriction.
Qualification. Each of the Company and its Subsidiaries is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the character of the properties owned or leased or the
nature of the activities conducted makes such qualification or licensing
necessary, except for those jurisdictions in which the failure to be so
qualified or licensed or to be in good standing has not resulted in, and could
not reasonably be expected to result in, a Material Adverse Change.
5.4. Business, etc. The Company and its Subsidiaries are engaged in the
business of engineering, environmental, geotechnical and construction materials
testing and consulting, construction and environmental project management,
information technology consulting and related services (collectively, the
"Business"), as further described in the Company's Confidential Private
Placement Offering Memorandum dated December 1996, including all exhibits and
appendices thereto, prepared by the Company with the assistance of Chase
Securities Inc., a true, correct and complete copy of which has been furnished
to you (the "Disclosure Document").
Capital Stock.al Stock
(a) The authorized, issued and outstanding capital stock of
the Company are fully and accurately described on Exhibit 5.5(a)
attached hereto. All of the outstanding Shares of the Company have been
validly issued and are fully paid and non-assessable and have been
offered, issued and sold by the Company in compliance with all
applicable laws. The number of shares of Common Stock of the Company
beneficially owned by each director and executive officer of the
Company and its Subsidiaries and each other Person that, individually
or together with its Affiliates, beneficially owns 5% or more of such
shares of Common Stock (on a fully diluted basis), along with the
percentage of total outstanding shares of Common Stock of the Company
that such number represents of Common Stock of the Company (on a fully
diluted basis), are set forth on Exhibit 5.5(a) attached hereto. There
are no outstanding Preferred Shares of the Company.
(b) Except as set forth on Exhibit 5.5(b) attached hereto: (i)
there are no outstanding rights, options, warrants or agreements for
the purchase from, or sale or issuance by, the Company or any of its
Subsidiaries of any capital stock or securities convertible into or
exercisable or exchangeable for such stock; (ii) there are no
agreements on the part of the Company or any of its Subsidiaries to
issue, sell or distribute any securities or any assets of the Company
or any of its Subsidiaries; and (iii) neither the Company nor any of
its Subsidiaries has any obligation (contingent or otherwise) to
purchase, redeem or otherwise acquire any of its securities or any
interest therein or to pay any dividend or make any distribution in
respect thereof.
Financial Statements.atements
(a) You have been furnished with the financial statements
referred to on Exhibit 5.6(a) attached hereto, which financial
statements are complete and correct in all material respects (subject,
in the case of any unaudited financial statements, to normal year-end
and audit adjustments), have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby
and present fairly in all material respects the financial position and
the results of operations and cash flows of the Person(s) purported to
be covered thereby as at the respective dates and for the respective
periods indicated, in conformity with GAAP (subject, in the case of any
unaudited financial statements, to normal year-end and audit
adjustments).
(b) The Company has furnished to you the projected financial
information referred to on Exhibit 5.6(b) attached hereto, which
projections were prepared in good faith, are based upon assumptions
that the Company believed were reasonable at the time such projections
were made and took into account all material information regarding the
matters set forth therein. Such projections, when provided, represented
the Company's best estimate of the future financial performance of the
Company and its Subsidiaries, assuming no new acquisitions. Such
projections continue to represent the Company's present best estimate
of the future financial performance of the Company and its
Subsidiaries, subject to the activities inherent in the Company's
business, including, without limitation, acquisitions and project
timing. There is no guarantee that any of such projections will be
attained and actual results may vary from such projections and such
variations may be material.
(c) The pro forma unaudited consolidated balance sheet of the
Company included as Exhibit 5.6(c) attached hereto, fairly presents the
financial position of the Company and its Subsidiaries as at November
30, 1996, adjusted on a pro forma basis to give effect to the
consummation of the transactions contemplated by the Operative
Documents, and reflects all known liabilities of the Company and its
Subsidiaries, contingent or other, as at November 30, 1996, required by
GAAP to be reflected therein.
Changes; Solvency, etc. Since February 29, 1996, (a) there has been no
change in the assets, liabilities or financial condition of the Company and its
Subsidiaries from that set forth on the balance sheet as of such date referred
to on Exhibit 5.6(a), other than changes in the ordinary course of business,
which have not been, either in any case or in the aggregate, materially adverse;
(b) no condition or event has occurred which has resulted in, or could
reasonably be expected to result in, a Material Adverse Change; and (c) except
as set forth on Exhibit 5.7 attached hereto, neither the Company nor any of its
Subsidiaries has, directly or indirectly, declared, ordered, paid or made any
Restricted Payment or Restricted Investment. Each of the Company and each of its
Subsidiaries is and, after giving effect to the transactions contemplated by the
Operative Documents, will be Solvent.
Tax Returns and Payments. The Company and its Subsidiaries have filed
all tax returns required by law to be filed and, except as set forth on Exhibit
5.8 attached hereto, have paid all taxes, assessments and other governmental
charges levied upon any of their respective properties, assets, income,
franchises or sales other than those not yet delinquent and those, not
substantial in aggregate amount, being or about to be contested as provided in
section 14.2(a). The income tax liability of the Company and each of its
Subsidiaries has been finally determined by all applicable governmental
authorities, including without limitation, the Internal Revenue Service, and
satisfied, or the time for audit has expired, for the fiscal years listed on
Exhibit 5.8 attached hereto. Neither the Company nor any of its Subsidiaries has
executed any waiver or waivers that would have the effect of extending the
applicable statute of limitations in respect of income tax liabilities. The
charges, accruals and reserves in the financial statements of the Company and
its Subsidiaries in respect of taxes for all fiscal periods are adequate in the
opinion of the Company, and, except as set forth on Exhibit 5.8 attached hereto,
the Company knows of no unpaid assessments for additional taxes for any fiscal
period or of any basis therefor.
Funded Debt, Current Debt, Liens, Investments, Transactions with
Affiliates and Leases. Exhibit 5.9 attached hereto correctly describes:
(a) all Funded Debt and/or Current Debt of the Company and/or
any of its Subsidiaries to be outstanding immediately following the
Closing and/or all agreements pursuant to which the Company and/or any
of its Subsidiaries has (or have) the right to incur the same, and
identifies any collateral which secures (or will secure) the same;
(b) all Liens to which any of the properties and assets of the
Company and/or any of its Subsidiaries will be subject immediately
following the Closing (other than those of the character described in
section 14.8(b)) which individually or in the aggregate secure
Indebtedness of $50,000 or more;
(c) all Investments (and all agreements and commitments to
make Investments) of the Company and/or any of its Subsidiaries to be
owned or held (or in effect) immediately following the Closing (except
for Investments described in clauses (b) through (i) of the definition
of Permitted Investments);
(d) each of the Affiliates of the Company (other than its
Subsidiaries) and of each of its Subsidiaries, and all material
transactions with such Affiliates which were consummated during the
12-month period ended on the Closing Date or which the Company or any
Subsidiary is now obligated or now intends to consummate at any time in
the future, other than any such transaction consummated or to be
consummated in the ordinary course of business and on arm's-length
terms; and
(e) each material lease, other than Capital Leases, under
which the Company or any of its Subsidiaries is lessee or sublessee
and, with respect to each such lease, the name of the lessor, the
lessee or sublessee, a general description of the property leased, the
annual Rental Obligations payable thereunder and the term thereof.
Title to Properties; Liens; Leases. The Company and its Subsidiaries
have good and marketable title to all of their respective material properties
and assets, including, without limitation, the Collateral and the properties and
assets reflected on the most recent balance sheet referred to on Exhibit 5.6(a)
attached hereto, except properties and assets disposed of since such date in the
ordinary course of business. None of such properties or assets is subject to any
Lien or leases or occupancy agreements (whether oral or written), or any
options, except those described on Exhibit 5.9 attached hereto or those of a
character described in section 14.8(b). Each of the Company and its Subsidiaries
enjoys peaceful and undisturbed possession under all material leases under which
it operates, and all of such leases are valid, subsisting and in full force and
effect. None of such leases contains any unusual or burdensome provision, which,
in either case, has resulted in, or could reasonably be expected to result in, a
Material Adverse Change.
5.11. Litigation, etc. There is no action, proceeding or investigation
pending or threatened (or any basis therefor known to the Company) which
questions the validity of any of the Operative Documents or any action taken or
to be taken pursuant to any of the Operative Documents or which has resulted in,
or could reasonably be expected to result in, a Material Adverse Change. There
is no outstanding judgment, decree or order which has resulted in, or could
reasonably be expected to result in, a Material Adverse Change.
5.12. Valid and Binding Obligations; Compliance with Other
Instruments, Borrowing Restrictions, etc. Valid and Binding Obligations;
Compliance with Other Instruments, Borrowing Restrictions, etc.
(a) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the valid and legally binding
obligation of the Company enforceable against the Company in accordance
with its terms. Each of the other Operative Documents to which the
Company or any of its Subsidiaries is (or is to be) a party has been
duly authorized by such Person and, when executed and delivered, will
constitute the valid and legally binding obligation of such Person,
enforceable against it in accordance with its terms, subject to the
effect of applicable bankruptcy or similar laws of general application
now or hereafter in effect affecting the rights and remedies of
creditors and general equity principles. The provisions of the Security
Documents are effective to create in favor of the Collateral Agent
legal, valid and enforceable security interests in all of the right,
title and interest of the Company and its Subsidiaries in the
Collateral. At the Closing, by virtue of the recording and filing of
the financing statements and other instruments specified on Exhibit
5.12(a) attached hereto in the applicable offices listed on such
exhibit, all of which recordings and filings will have been made and
will be in full force and effect at or prior to the Closing, there
shall have been created in favor of the Collateral Agent fully
perfected first security interests in all right, title and interest of
the Company and its Subsidiaries in the Collateral, subject to no other
Liens or claims of any other Person other than the Liens in favor of
the Bank Agent permitted under section 14.8(c). No other filing or
action is presently required in order to perfect such security
interests, except that perfection of such security interests in
Collateral consisting of cash must be perfected by possession.
(b) Neither the Company nor any of its Subsidiaries is in
violation of or in default under any term of its charter, by-laws or
other organizational document, or of any agreement, document,
instrument, judgment, decree, order, law, statute, rule or regulation
applicable to the Company or any of its Subsidiaries or any of their
respective properties and assets, in any way which has resulted in, or
could reasonably be expected to result in, a Material Adverse Change.
Without limiting the generality of the foregoing, the Company and its
Subsidiaries are in compliance with (and have not, and none of their
predecessors in interest have, received any notice to the contrary) and
there is no reasonable possibility of any liability of or any judgment,
decree or order binding upon or applicable to the Company or any of its
Subsidiaries or any of their respective properties or assets under or
on account of any Environmental Laws, except where the same has not
resulted in, and could not reasonably be expected to result in, a
Material Adverse Change.
(c) The execution, delivery and performance of and the
consummation of the transactions contemplated by the Operative
Documents will not violate or constitute a default under, or permit any
Person to accelerate or to require the prepayment of any Indebtedness
or the repurchase of any securities of the Company or any of its
Subsidiaries or to terminate any material lease or agreement of the
Company or any of its Subsidiaries pursuant to, or result in the
creation of any Lien (other than the Liens created by the Security
Documents and the Bank Credit Documents) upon any of the properties or
assets of the Company or any of its Subsidiaries pursuant to any term
of the charter, by-laws or other organizational document of the Company
or any of its Subsidiaries or of any agreement, document, instrument,
judgment, decree, order, law, statute, rule or regulation applicable to
the Company or any of its Subsidiaries or any of their respective
properties and assets, including, without limitation, the Collateral.
(d) Neither the Company nor any of its Subsidiaries is a party
to or bound by or subject to any charter, by-law or other
organizational document, or any agreement, document, instrument,
judgment, decree, order, law, statute, rule or regulation (other than
the Bank Credit Agreement and laws, statutes, rules and regulations
applicable to corporations generally) (i) which restricts its right or
ability to incur and repay Funded Debt or Current Debt; (ii) under the
terms of or pursuant to which its obligation to pay all amounts due
from it and/or to perform all obligations imposed on it and/or to
comply with the terms applicable to it under any of the Operative
Documents is in any way restricted; (iii) which restricts its right or
ability to pay dividends and/or to make any other distributions in
respect of its Shares, to mortgage or dispose of its properties, to
make Investments or capital expenditures, to enter into and perform
leases and/or to pay executive compensation; or (iv) which has resulted
in, or could reasonably be expected to result in, a Material Adverse
Change.
ERISA. ERISA
(a) The Company and each ERISA Affiliate have operated and
administered each Plan in compliance with all applicable laws except
for such instances of noncompliance which have not resulted in, and
could not reasonably be expected to result in, a Material Adverse
Change. Neither the Company nor any ERISA Affiliate has incurred any
liability pursuant to Title I or IV of ERISA or the penalty or excise
tax provisions of the Code relating to employee benefit plans (as
defined in section 3 of ERISA), and no event, transaction or condition
has occurred or exists that could reasonably be expected to result in
the incurrence of any such liability by the Company or any ERISA
Affiliate, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate, in either
case pursuant to Title I or IV of ERISA or to such penalty or excise
tax provisions or to section 401(a)(29) or 412 of the Code, other than
such liabilities or Liens as would not individually or in the aggregate
result in a Material Adverse Change.
(b) The present value of the aggregate benefit liabilities
under each of the Plans (other than Multiemployer Plans), determined as
of the end of such Plan's most recently ended plan year on the basis of
the actuarial assumptions specified for funding purposes in such Plan's
most recent actuarial valuation report, did not exceed the aggregate
current value of the assets of such Plan allocable to such benefit
liabilities. The term "benefit liabilities" has the meaning specified
in section 4001 of ERISA and the terms "current value" and "present
value" have the meaning specified in section 3 of ERISA.
(c) The Company and the ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of
Multiemployer Plans that individually or in the aggregate could result
in a Material Adverse Change. The Company and the ERISA Affiliates have
made all required contributions to Multiemployer Plans. Neither the
Company nor any ERISA Affiliate has incurred, nor would reasonably
expect to incur, any Withdrawal Liability upon a complete or partial
withdrawal from any Multiemployer Plan that individually or in the
aggregate could result in a Material Adverse Change. To the best of the
Company's knowledge, no Multiemployer Plan is, or is reasonably
expected to be, insolvent, in reorganization or terminated within the
meaning of Title IV of ERISA.
(d) The expected post retirement benefit obligation
(determined as of the last day of the most recently ended fiscal year
of the Company in accordance with Financial Accounting Standards Board
Statement No. 106, without regard to liabilities attributable to
continuation coverage mandated by section 4980B of the Code) of the
Company is $0.
(e) The consummation of the transactions contemplated by the
Operative Documents will not involve any transaction that is subject to
the prohibitions of section 406(a) of ERISA or in connection with which
a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the
Code. The representation in the first sentence of this section 5.13(e)
is made by the Company in reliance upon and subject to the accuracy of
your representation in section 10(b) as to the sources of the funds
used to pay the purchase price of the Notes to be purchased by you.
Consents, etc. No consent or filing with, or other action by, any
Person (including, without limitation, any creditor of or lender to the Company
or any of its Subsidiaries or any governmental authority) is required as a
condition precedent to the valid execution, delivery and performance of and the
consummation of the transactions contemplated by the Operative Documents and/or
the exercise by the Collateral Agent or any holder of any Notes of any of its
rights under the Operative Documents or otherwise in respect of the Notes, other
than (a) those specified on Exhibit 5.14 attached hereto, all of which have been
obtained (or will have been obtained on or prior to the Closing), are (or will
be at the time of the Closing) unconditional and are (or will be at the time of
the Closing) in full force and effect and not subject to appeal or review and
(b) the filing and recording of the Security Documents and/or related financing
statements and instruments specified on Exhibit 5.12(a) attached hereto, all of
which filings and recordings have been made (or will have been made on or before
the Closing).
Proprietary Rights; Licenses. The Company and its Subsidiaries have all
Proprietary Rights and Licenses as are adequate for the conduct of their
respective businesses as now conducted and now proposed to be conducted, without
any known conflict with the rights of others. Each such Proprietary Right and
License is in full force and effect, all material obligations with respect
thereto have been fulfilled and performed, and there is no infringement thereof
by any other Person. No default in the performance or observance by the Company
and/or any of its Subsidiaries (or any of their respective predecessors in
interest) of its obligations thereunder has occurred which permits, or after
notice or lapse of time or both would permit, the revocation or termination of
any Proprietary Right or License or which has resulted in, or could reasonably
be expected to result in, a Material Adverse Change.
Offer of Notes. Neither the Company, any of its Subsidiaries or any
Person acting on their behalf (a) has directly or indirectly offered the Notes
or any part thereof or any similar securities for issue or sale to, or solicited
any offer to buy any of the same from, anyone other than you, the Other
Purchasers and not more than 75 other institutional investors or (b) has taken
or will take any action which would bring the issuance and sale of the Notes
within the provisions of Section 5 of the Securities Act or the registration or
qualification provisions of any applicable blue sky or other securities laws.
Government Regulation. Neither the Company nor any of its Subsidiaries
is subject to regulation under the Public Utility Holding Company Act of 1935,
the Federal Power Act, the Investment Company Act of 1940 or the Interstate
Commerce Act.
Regulation G, etc. Neither the Company nor any of its Subsidiaries
owns, will use all or any part of the proceeds of the sale of the Notes to
acquire, or has any intention of acquiring, any "margin stock" within the
meaning of Regulation G (12 CFR Part 207) of the Board of Governors of the
Federal Reserve System (herein called a "margin security"). None of the proceeds
of the Notes will be used directly or indirectly, for the purpose of purchasing
or carrying any margin security or for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry any margin
security or for any other purpose which might constitute the transactions
contemplated by the Operative Documents a "purpose credit" within the meaning of
said Regulation G or cause this Agreement or any of the other Operative
Documents to violate Regulation G or any other regulation of the Board of
Governors of the Federal Reserve System, or the Exchange Act.
Investment Bankers, etc. Neither the Company, any of its Subsidiaries
or any Person acting on their behalf (a) has dealt with any broker, finder,
commission agent or other similar Person in connection with the sale of the
Notes and the other transactions contemplated by the Operative Documents other
than Chase Securities Inc. or (b) is under any obligation to pay any broker's
fee, finder's fee or commission in connection with such transactions, other than
a fee to Chase Securities Inc., which fee is the obligation solely of the
Company.
Disclosure. Neither this Agreement nor any of the other Operative
Documents nor any other document, certificate or written statement furnished to
you by or on behalf of the Company or any of its Subsidiaries in connection with
the transactions contemplated by the Operative Documents, contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein and therein not misleading in the
light of the circumstances under which such statements were made, it being
understood that, except as set forth in section 5.6, no representation or
warranty is made with respect to any projections or other prospective financial
information. There is no fact known to the Company (other than information
concerning general economic conditions known to the public generally) which has
resulted in, or could reasonably be expected to result in, a Material Adverse
Change that has not been set forth in this Agreement, the other Operative
Documents and the other documents, certificates and written statements referred
to above in this section 5.20.
Labor Relations; Suppliers, Customers and Clients. lients
(a) Except as disclosed on Exhibit 5.21 attached hereto, no
dispute or controversy involving employees of the Company or any of its
Subsidiaries has resulted in, or could reasonably be expected to result
in, a Material Adverse Change. Neither the Company nor any of its
Subsidiaries anticipates that its relationships with its unions, if
any, or its employees will result in, or are reasonably likely to
result in, any Material Adverse Change.
(b) The relationships with the suppliers to and customers and
clients of the Company and/or its Subsidiaries are satisfactory
commercial working relationships and, during the 12-month period ended
on the Closing Date, no such supplier, customer or client has canceled
or otherwise terminated its relationship with or decreased its
services, supplies or materials to or its usage or purchase of the
services or products of the Company or any of its Subsidiaries, as the
case may be, in a manner which has resulted in, or could reasonably be
expected to result in, a Material Adverse Change. The Company is not
aware of, nor has it received any notice concerning, any plan or
intention of any such supplier, customer or client to take any such
action.
Use of Proceeds.Proceeds
(a) The proceeds of the sale of the Notes will be used on the
Closing Date to make the payments to the Persons and for the purposes
specified on Exhibit 6 attached hereto and any remaining balance of
such proceeds will be used for general corporate purposes and
acquisitions effected in compliance with this Agreement.
(b) The Company will not, and will not permit any Subsidiary
to, directly or indirectly, use any part of such proceeds for any
purpose which would violate any provision of any applicable law,
statute, regulation, rule, order or restriction, including, without
limitation, Regulation G or any other regulation of the Board of
Governors of the Federal Reserve System (herein called a "margin
security") or for the purpose of reducing or retiring any Indebtedness
that was originally incurred to purchase or carry any margin security
or for any other purpose that might constitute the transactions
contemplated by the Operative Documents a "purpose credit" within the
meaning of said Regulation G or cause this Agreement or any of the
other Operative Documents to violate Regulation G or any other
regulation of the Board of Governors of the Federal Reserve System, or
the Exchange Act or any other applicable law, statute, regulation,
rule, order or restriction.
Financial Statements and Information. The Company will furnish to you in
duplicate, so long as you shall hold any of the Notes, and to each other
institutional holder from time to time of any Notes:
(a) as soon as available and in any event within 50 days after
the end of each quarterly accounting period in each fiscal year of the
Company, the consolidated and, if otherwise prepared, consolidating
balance sheets of the Company and its Subsidiaries at the end of such
period and the related consolidated and, if otherwise prepared,
consolidating statements of operations, stockholders' equity and cash
flows for such period and for the portion of such fiscal year ended on
the last day of such period, in each case setting forth in comparative
form the corresponding figures for the same period and portion of the
next preceding fiscal year, all in reasonable detail and certified by
the chief financial officer or controller of the Company to be true and
correct in all material respects and to have been prepared in
accordance with GAAP, subject to normal year-end and audit adjustments;
(b) as soon as available and in any event within 105 days
after the end of each fiscal year of the Company, the consolidated and,
if otherwise prepared, consolidating balance sheets of the Company and
its Subsidiaries at the end of such year and the related consolidated
and, if otherwise prepared, consolidating statements of operations,
stockholders' equity and cash flows for such year, in each case setting
forth in comparative form the corresponding figures for the next
preceding fiscal year, all in reasonable detail and accompanied by the
standard unqualified report on such consolidated financial statements
of the Company and its Subsidiaries of Deloitte & Touche LLP or other
accountants of recognized national standing selected by the Company and
consented to by the Required Holders of the Notes (which consent shall
not be unreasonably withheld or delayed), which report shall (i) state
that the audit of such accountants in connection with such consolidated
financial statements has been conducted in accordance with generally
accepted auditing standards and that such accountants believe that such
audit provides a reasonable basis for their opinion, (ii) contain the
other statements required from time to time by the American Institute
of Certified Public Accountants for an auditor's standard unqualified
opinion (and shall not contain any additional explanatory paragraph
concerning uncertainties or other matters), (iii) include the opinion
of such accountants that such consolidated financial statements present
fairly in all material respects the consolidated financial position of
the Company and its Subsidiaries as at the end of such fiscal year and
the consolidated results of operations and cash flows for such fiscal
year, in conformity with GAAP, and (iv) be accompanied by (A) a
separate report or certificate from such accountants or a footnote in
the audited financial statements, in either case which report,
certificate or footnote shall state (x) that such accountants are
familiar with the terms of the Operative Documents and provide negative
assurance relative to compliance with the applicable covenants of the
Operative Documents as they relate to accounting matters and (y)
whether or not their examination has disclosed the existence, during or
at the end of the fiscal year covered by such financial statements
and/or the date of such certificate, of (I) any Change of Control or
(II) any Default or Event of Default and, if their examination has
disclosed such a condition or event, specifying in reasonable detail
the nature and period of existence thereof, provided that in issuing
such certificate or approving such footnote such accountants shall not
be required to go beyond normal accounting procedures conducted in
connection with issuing their report referred to above, and (B) a
letter from such accountants with respect to the internal control
structure of the Company and its Subsidiaries with respect to such
fiscal year most recently ended, issued in accordance with Statement on
Auditing Standards No. 60 issued by the Auditing Standards Board of the
American Institute of Certified Public Accountants.
(c) together with each delivery of financial statements
pursuant to sections 7(a) and 7(b), an Officers' Certificate which
shall:
(i) state that, after due inquiry, the signers do not
have knowledge of the existence during the fiscal period
covered by such financial statements or as at the date of such
Officers' Certificate, of (A) any "reportable condition" (as
defined in Statement on Auditing Standards No. 60 issued by
the Auditing Standards Board of the American Institute of
Certified Public Accountants) in the internal control
structure of the Company or any of its Subsidiaries, (B) any
Change of Control or (C) any Default or Event of Default, or,
if such is not the case, specifying in reasonable detail the
nature and period of existence thereof and what action the
Company or the applicable Subsidiary has taken, is taking and
proposes to take with respect thereto and the date, if any, on
which it is estimated the same will be remedied;
(ii) show in reasonable detail all computations
required to demonstrate compliance, during and at the end of
the fiscal period covered by such financial statements, with
the provisions of sections 14.5, 14.6, 14.7, 14.8 and 14.13;
(iii) include in reasonable detail management's
discussion and analysis of the results of operations and the
financial condition of the Company and its Subsidiaries as at
the end of and for the fiscal period covered by such financial
statements, including a supplemental discussion of any
significant variations from the budgets for such period
delivered pursuant to section 7(h); and
(iv) if there shall exist any Subsidiary of the
Company as of the date of such Officers' Certificate which did
not exist as of the date of the last Officers' Certificate
delivered pursuant to this section 7(c), specify with respect
to each such Subsidiary the information called for by Exhibit
7(c)(iv), contain a brief description of the nature of each
such Subsidiary's business and certify that such new
Subsidiary is a party to a Note Guarantee and a Security
Agreement.
(d) as promptly as practicable (but in any event not later
than five Business Days) after receipt thereof, copies of all reports
or written comments (including, without limitation, audit reports,
so-called management letters and any other reports or communications
with respect to the internal control structure of the Company or any of
its Subsidiaries) submitted to the Company or any of its Subsidiaries
by independent accountants or others;
(e) as promptly as practicable (but in any event not later
than five Business Days) after the same are available, copies of (i)
all press releases, notices, proxy statements, financial statements,
reports and documents as the Company or any of its Subsidiaries shall
release or make available generally to their stockholders and (ii) all
periodic and special reports, documents and registration statements
(other than on Form S-8) which are furnished or filed, or any officer
or director or stockholder of the Company or any of its Subsidiaries
furnished or filed with respect to the Company or any of its
Subsidiaries with the Commission (or any analogous foreign governmental
authority) or any securities exchange;
(f) as promptly as practicable (but in any event not later
than five Business Days) after the occurrence of any of the following
conditions or events, an Officers' Certificate specifying in reasonable
detail the nature and period of existence thereof, and what action has
been taken, is being taken and is proposed to be taken with respect
thereto: (i) with respect to any Plan, any reportable event, as defined
in section 4043(b) of ERISA and the regulations thereunder, for which
notice thereof has not been waived pursuant to such regulations as in
effect on the date hereof; (ii) the taking by the PBGC of steps to
institute, or the threatening by the PBGC of the institution of,
proceedings under section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or the receipt by the
Company or any ERISA Affiliate of a notice from a Multiemployer Plan
that such action has been taken by the PBGC with respect to such
Multiemployer Plan; or (iii) any event, transaction or condition that
could result in the incurrence of any liability by the Company or any
ERISA Affiliate pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit plans,
or in the imposition of any Lien on any of the rights, properties or
assets of the Company or any ERISA Affiliate pursuant to Title I or IV
of ERISA or such penalty or excise tax provisions, if such liability or
Lien, taken together with any other such liabilities or Liens then
existing, has resulted in, or could reasonably be expected to result
in, a Material Adverse Change;
(g) as promptly as practicable (but in any event not later
than five Business Days) after the occurrence of (i) any Default or
Event of Default or (ii) any condition or event which has resulted in,
or could reasonably be expected to result in, a Material Adverse
Change, an Officers' Certificate specifying in reasonable detail the
nature and period of existence thereof, what action the Company or any
of its Subsidiaries has taken, is taking and proposes to take with
respect thereto and the date, if any, on which it is estimated the same
will be remedied;
(h) as promptly as practicable (but in any event not later
than 30 days) prior to the end of each fiscal year of the Company, an
annual budget prepared on a quarterly basis for the Company and its
Subsidiaries for the succeeding fiscal year (displaying anticipated
consolidated and, if otherwise prepared, consolidating balance sheets
and statements of operations, stockholders' equity and cash flows) and,
promptly upon preparation thereof, any other significant budgets which
the Company or any of its Subsidiaries prepares and any revisions of
such annual or other budgets;
(i) such other material information relating to the Company
and/or any of its Subsidiaries as shall be furnished to any bank,
financial institution or other Person to which the Company or any of
its Subsidiaries is indebted for borrowed money (other than information
relating solely to collateral for such Indebtedness), including,
without limitation, any notice of default or event of default under the
Bank Credit Agreement, such information and notices to be furnished to
the holders of the Notes at the same time as they are furnished to, or
immediately after they are received from, any such bank, financial
institution or other Person; and
(j) such other information as from time to time may
reasonably be requested.
Inspection; Confidentiality. iality
(a) The Company will permit any Person designated by any institutional
holder of any of the Notes (provided that any such Person other than an
employee, attorney or accountant for any such institutional holder shall be
subject to the reasonable approval of the Company prior to making any such
visit, inspection, examination or discussion) on reasonable notice and at such
holder's expense (unless a Default or Event of Default shall have occurred and
be continuing, in which case, at the Company's expense), to visit and inspect
any of the properties of the Company and its Subsidiaries, to examine its and
their books and records (and to make copies thereof and take extracts therefrom)
and to discuss its and their affairs, finances and accounts with and to be
advised as to the same by, its and their officers, consultants, counsel and
accountants (each of whom the Company hereby directs and authorizes to engage in
such discussions), all at such reasonable times and intervals as such holder may
desire.
(b) For the purposes of this section 8(b), "Confidential Information"
means information delivered to any holder of the Notes by or on behalf of the
Company or any Subsidiary in connection with the transactions contemplated by or
otherwise pursuant to this Agreement that is proprietary in nature and that was
clearly marked or labeled or otherwise adequately identified when received by
such holder as being confidential information of the Company or such Subsidiary,
provided that such term does not include information that (a) was publicly known
or otherwise known to such holder prior to the time of such disclosure, (b)
subsequently becomes publicly known through no act or omission by such holder or
any Person acting on behalf of such holder, (c) otherwise becomes known to such
holder other than through disclosure by the Company or any Subsidiary or (d)
constitutes financial statements delivered to such holder under section 7.1 that
are otherwise publicly available. Each holder of the Notes will maintain the
confidentiality of such Confidential Information in accordance with procedures
adopted by such holder in good faith to protect confidential information of
third parties delivered to such holder provided that each holder may deliver or
disclose Confidential Information to (i) its directors, officers, employees,
partners, members, agents, attorneys and Affiliates (to the extent such
disclosure reasonably relates to the administration of the investment
represented by such holder's Notes), (ii) such holder's financial advisors and
other professional advisors who agree to hold confidential the Confidential
Information substantially in accordance with the terms of this section 8(b),
(iii) any other holder of any Note, provided that such other holder shall have
agreed to hold confidential such Confidential Information substantially in
accordance with the terms of this section 8(b), (iv) any institutional investor
to which such holder sells or offers to sell its Note or any part thereof or any
participation therein (if such Person has agreed in writing prior to its receipt
of such Confidential Information to be bound by the provisions of this section
8(b)), (v) any Person from which such holder offers to purchase any security of
the Company (if such Person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this section 8(b)),
(vi) any federal or state regulatory authority having jurisdiction over such
holder, (vii) the National Association of Insurance Commissioners or any similar
organization, or any nationally recognized rating agency that requires access to
information about such holder's investment portfolio or (viii) any other Person
to which such delivery or disclosure may be necessary or appropriate (w) to
effect compliance with any law, rule, regulation or order applicable to such
holder, (x) in response to any subpoena or other legal process, (y) in
connection with any litigation to which such holder is a party or (z) if an
Event of Default has occurred and is continuing, to the extent such holder may
reasonably determine such delivery and disclosure to be necessary or appropriate
in the enforcement or for the protection of the rights and remedies under its
Notes and the other operative Documents. Each holder of a Note, by its
acceptance of a Note, will be deemed to have agreed to be bound by and to be
entitled to the benefits of this section 8(b) as though it were a party to this
Agreement.
Prepayment of Notes.of Notes
Required Annual Prepayment Without Premium of Notes. On each May 31,
commencing May 31, 2000, until the Notes have been paid in full, the Company
will prepay without premium $6,500,000 aggregate principal amount of the Notes
(or such lesser principal amount thereof as shall then be outstanding), subject
to decrease as described in the next succeeding sentence. In the case of each
partial prepayment of the Notes under this section 9.1, the principal amount of
the Notes to be prepaid shall be allocated among all of the Notes in proportion,
as nearly as practicable, to the respective unpaid principal amounts thereof
(but assuming, solely for purposes of making any such allocation, that there
have been no prepayments made of any of the Notes under either section 9.3 or
9.4), with adjustments, to the extent practicable, to compensate for any prior
prepayments under this section 9.1 not made exactly in such proportion, provided
that, in the event the foregoing allocation would result in the allocation to
any Note of a prepayment amount in excess of the outstanding principal amount of
such Note, the prepayment amount so allocated to such Note shall be reduced by
the amount of such excess and, in addition, the aggregate amount of the
principal prepayment required to be made in respect of all Notes on such date
shall be reduced by the same amount. No partial prepayment of the Notes pursuant
to section 9.2, 9.3. or 9.4 shall alter the obligation of the Company to make
the required prepayments provided for in this section 9.1.
9.2. Optional Prepayment With Premium of Notes. At any time or from
time to time, the Company may, at its option, upon notice as set forth in
section 9.5, prepay all or any part (in an integral multiple of $100,000 and a
minimum of $1,000,000 or such lesser principal amount as shall then be
outstanding) of the Notes, upon the concurrent payment of a premium equal to the
Make Whole Amount. Any partial prepayment of the Notes pursuant to this section
9.2 shall be applied to the payment of installments of principal of the Notes in
inverse order of maturity. In the case of each partial prepayment of the Notes
under this section 9.2, the principal amount of the Notes to be prepaid shall be
allocated among all of the Notes at the time outstanding (excluding any Notes at
the time owned by the Company of any Affiliate of the Company) in proportion, as
nearly as practicable, to the respective unpaid principal amounts thereof, with
adjustments, to the extent practicable, to compensate for any prior prepayments
under this section not made exactly in such proportion.
9.3. Prepayment of Senior Debt at the Option of each Holder with
Available Net Proceeds and Available Unused Proceeds.
(a) The Company shall during the thirty day period after the
consummation of a Sale of Assets made in compliance with section 14.13(d) give
written notice to each holder of Senior Debt of the occurrence of such Sale of
Assets, which notice shall (i) specify (x) the aggregate Net Asset Sale Proceeds
thereof which are not expected to be applied within 360 days of the consummation
of such sale to the purchase by the Company or its Subsidiaries of property and
assets (other than cash or cash equivalents) used and useful in the ordinary
course of business of the Company and its Subsidiaries (the "Available Net
Proceeds"), and (y) the portion of the Available Net Proceeds equal to the
percentage thereof which the then outstanding principal balance of the Senior
Debt of such holder represents of the then outstanding principal balance of all
Senior Debt (such "Holder's Net Proceeds Prepayment Amount"), and (ii) offer to
prepay a principal amount of the Senior Debt of such holder in an amount equal
to the sum of (x) such Holder's Net Proceeds Prepayment Amount plus (y) any
additional Available Net Proceeds not required by the other holders of Senior
Debt to prepay such other holders' Senior Debt ("Excess Available Net
Proceeds"). Each holder of Notes shall have the right, by written notice to the
Company delivered within 30 days after receipt by such holder of a prepayment
offer from the Company delivered pursuant to this section 9.3(a), to require the
Company to prepay such holder's Notes, without premium or penalty, in the
principal amount specified in such notice from such holder, which amount shall
not exceed such Holder's Net Proceeds Prepayment Amount, provided that such
holder may also elect to require that such prepayment amount be increased by the
amount specified in such notice not to exceed the amount of Excess Available Net
Proceeds (it being agreed that Available Net Proceeds originally offered to a
holder of the Notes and not required by such holder to prepay such holder's
Notes shall be used first to prepay the Notes of other holders electing to have
prepayments made with such Available Net Proceeds pursuant to this section 9.3
(a), before such Available Net Proceeds may be used to prepay other Senior Debt,
and that Available Net Proceeds originally offered to holders of Senior Debt
other than the Notes and not required by such holders to prepay such other
Senior Debt shall then be available to all other holders of Senior Debt,
including the Notes, for prepayment of such Senior Debt on a pro rata basis in
proportion to the amounts requested by such other holders to be prepaid). Upon
receipt from a holder of the Notes of written notice pursuant to this section
9.3(a) requiring a prepayment of such holder's Notes, the Company shall, on the
forty-fifth day following delivery by the Company of the original prepayment
offer, prepay the Notes of such holder in the amount specified in such written
request (including any increase specified in such written request, but only to
the extent Excess Available Net Proceeds are available to cover such increase).
(b) At any time that the aggregate amount of Available Unused Proceeds
equals or exceeds $5,000,000, the Company shall give written notice to each
holder of Senior Debt which notice shall (i) specify (x) the aggregate amount of
Available Unused Proceeds, and (y) the portion of the Available Unused Proceeds
equal to the percentage thereof which the then outstanding principal balance of
the Senior Debt of such holder represents of the then outstanding principal
balance of all Senior Debt (such "Holder's Unused Proceeds Prepayment Amount"),
and (ii) offer to prepay a principal amount of the Senior Debt of such holder in
an amount equal to the sum of (x) such Holder's Unused Proceeds Prepayment
Amount plus (y) any additional Available Unused Proceeds not required by the
other holders of Senior Debt to prepay such other holders' Senior Debt ("Excess
Available Unused Proceeds"). Each holder of Notes shall have the right, by
written notice to the Company delivered within 30 days after receipt by such
holder of a prepayment offer from the Company delivered pursuant to this section
9.3 (b), to require the Company to prepay such holder's Notes, without premium
or penalty, in the principal amount specified in such notice from such holder,
which amount shall not exceed such Holder's Unused Proceeds Prepayment Amount,
provided that such holder may also elect to require that such prepayment amount
be increased by the amount specified in such notice not to exceed the amount of
Excess Available Unused Proceeds (it being agreed that Available Unused Proceeds
originally offered to a holder of the Notes and not required by such holder to
prepay such holder's Notes shall be used first to prepay the Notes of other
holders electing to have prepayments made with such Available Unused Proceeds
pursuant to this section 9.3(b), before such Available Unused Proceeds may be
used to prepay other Senior Debt, and that Available Unused Proceeds originally
offered to holders of Senior Debt other than the Notes and not required by such
holders to prepay such other Senior Debt shall then be available to all other
holders of Senior Debt, including the Notes, for prepayment of such Senior Debt
on a pro rata basis in proportion to the amounts requested by such other holders
to be prepaid). Upon receipt from a holder of the Notes of written notice
pursuant to this section 9.3(b) requiring a prepayment of such holder's Notes,
the Company shall, on the forty-fifth day following delivery by the Company of
the original prepayment offer, prepay the Notes of such holder in the amount
specified in such written request (including any increase specified in such
written request, but only to the extent Excess Available Unused Proceeds are
available to cover such increase).
(c) Any partial prepayment of a Note pursuant to this section 9.3 shall
be applied to the payment of installments of principal of such Note in inverse
order of maturity.
9.4 Prepayment Without Premium of the Notes at the Option of Holders
of the Notes upon a Change of Control.
(a) If any Change of Control is to occur, then not less than
60 days nor more than 90 days prior to the occurrence of such Change of
Control (or in the event of a hostile tender offer for the Company, not
less than 15 Business Days nor more than 90 days prior to the
occurrence of such Change of Control), the Company will notify each
holder of the Notes of such pending Change of Control and the date upon
which it is scheduled or estimated to occur. If any holder of a Note
then outstanding furnishes a written request for prepayment to the
Company (in accordance with section 21) not more than 60 days (15
Business Days in the event of a hostile tender offer for the Company)
after receipt by such holder of such notice of such Change of Control
from the Company, the Company will prepay, without premium or penalty,
the principal amount of the Notes of such holder specified in such
written request. Each such prepayment shall occur on the date upon
which the Change of Control occurs, unless the Company and such holder
agree to a different date, and no prepayment requested pursuant to this
section 9.4 shall be due unless the Change of Control shall occur.
(b) In the event the Company fails to deliver to each holder
of the Notes the notice of a pending Change of Control as required by
section 9.4(a), any holder of a Note may, upon obtaining knowledge of a
pending or completed Change of Control, notify the Company of such
Change of Control, whereupon the Company shall, and any holder of a
Note may, promptly notify each other holder of the Notes of such
pending or completed Change of Control, the nature thereof, and the
date upon which such Change of Control is scheduled to occur or did
occur. If any holder of a Note furnishes a written request for
prepayment to the Company (in accordance with section 21) not more than
60 days after receipt by such holder of such notice of such Change of
Control, the Company shall prepay the principal amount of the Notes of
such holder specified in such request, without premium or penalty. Each
such prepayment shall occur (x) in the case of a pending Change of
Control, on the date on which such Change of Control occurs and (y) in
the case of a completed Change of Control, on the 15th day after such
written request is so given by any such holder, unless the Company and
such holders agree to a different date.
(c) For purposes of this section 9.4, the term "Change of
Control" shall mean any event or transaction or series of events or
transactions (occurring for whatever reason) pursuant to which any
Person (other than George Rubin or Morry F. Rubin, who are presently
the Chairman and President of the Company, respectively), together with
"affiliates" and "associates" of such Person, within the meaning of
Rule 12b-2 of the Commission under the Exchange Act, shall acquire
control or beneficial ownership (including beneficial ownership
resulting from the formation of a "group" within the meaning of Rule
13d-5 of the Commission under the Exchange Act) of more than 50% of the
outstanding Shares of any class of Voting Stock of the Company.
(d) Each notice from the Company pursuant to this section 9.4
shall make explicit reference to this section 9.4 and shall state that
the right of the holders of the Notes then outstanding to require
prepayment thereof must be exercised within 60 days of the receipt of
such notice. Not less than 10 days prior to any prepayment of any Notes
of any holder pursuant to this section 9.4, the Company shall deliver
to such holder an Officers' Certificate which shall set forth (i) the
date fixed for prepayment; (ii) the aggregate principal amount of the
Notes to be prepaid on such date; and (iii) the aggregate principal
amount of the Notes held by such holder to be prepaid on such date and
the amount of accrued interest to be paid to such holder on such date.
(e) For purposes of this section 9.4, beneficial ownership
shall be determined in the manner set forth in Rule 13d-3 of the
Commission under the Exchange Act.
(f) The provisions of this section 9.4 are applicable to
successive Changes of Control and no failure on the part of any holder
to exercise any right under this section 9.4 arising on account of such
Change of Control shall affect or impair any other right of such holder
under this Agreement or any of the other Operative Documents upon the
occurrence of any other or any subsequent Change of Control.
(g) Any partial prepayment of a Note pursuant to this section
9.4 shall be applied to the payment of installments of principal of
such Note in inverse order of maturity.
Notice of Optional Prepayments of Notes. In the case of each prepayment
under section 9.2, the Company shall give written notice thereof to each holder
of any Notes not less than 30 nor more than 60 days prior to the date fixed for
such prepayment. Each such notice shall set forth:
(a) the date fixed for prepayment;
(b) the aggregate principal amount of the Notes to be
prepaid on such date; and
(c) the aggregate principal amount of the Notes held by such
holder to be prepaid on such date and the amount of accrued interest
and an estimate of the Make Whole Amount, if any, to be paid to such
holder on such date (together with the calculation of such estimated
premium, which calculation shall be satisfactory to each holder of the
Notes to be prepaid).
Maturity; Accrued Interest. In the case of each prepayment of all or
any part of any Note, the principal amount to be prepaid shall mature and become
due and payable on the date fixed for such prepayment, together with interest on
such principal amount accrued to such date and the premium, if any, due thereon.
Purchase of Notes. The Company will not, and will not permit any
Affiliate of the Company to, directly or indirectly, purchase or otherwise
acquire, or offer to purchase or otherwise acquire, any of the outstanding Notes
except by way of payment or prepayment in accordance with the provisions of the
Notes and this Agreement.
Payment on Non-Business Days. If any amount hereunder or under the
Notes shall become due on a day which is not a Business Day, such payment shall
be due on the next succeeding Business Day.
Purchase for Investment.vestment
(a) You represent and warrant (i) that you have been furnished
with all information that you have requested for the purpose of
evaluating your proposed acquisition of the Notes to be issued to you
pursuant hereto and (ii) that you will acquire such Notes for your own
account for investment and not for distribution in any manner that
would violate applicable securities laws, but without prejudice to your
rights to dispose of such Notes or a portion thereof to a transferee or
transferees, in accordance with such laws if at some future time you
deem it advisable to do so. The acquisition of such Notes by you at the
Closing shall constitute your confirmation of the foregoing
representations and warranties. You understand that such Notes are
being sold to you in a transaction which is exempt from the
registration requirements of the Securities Act, and that, in making
the representations and warranties contained in section 5.16, the
Company is relying, to the extent applicable, upon your representations
and warranties contained herein.
(b) You represent that at least one of the following
statements is an accurate representation as to each source of funds (a
"Source") to be used by you to pay the purchase price of the Notes to
be purchased by you hereunder:
(i) the Source is an "insurance company general
account" as defined in Section V(e) of Prohibited Transaction
Exemption ("PTE") 95-60 (issued July 12, 1995) and, except as
you have disclosed to the Company in writing pursuant to this
section (i), the amount of reserves and liabilities for the
general account contract(s) held by or on behalf of any
employee benefit plan or group of plans maintained by the same
employer or employee organization do not exceed 10% of the
total reserves and liabilities of the general account
(exclusive of separate account liabilities) plus surplus as
set forth in the NAIC Annual Statement filed with the state of
domicile of the insurer; or
(ii) the Source is a separate account of an insurance
company maintained by you in which an employee benefit plan
(or its related trust) has an interest, which separate account
is maintained solely in connection with your fixed contractual
obligations under which the amounts payable, or credited, to
such plan and to any participant or beneficiary of such plan
(including any annuitant) are not affected in any manner by
the investment performance of the separate account; or
(iii) the Source is either (A) an insurance company
pooled separate account, within the meaning of PTE 90-1
(issued January 29, 1990), or (B) a bank collective investment
fund, within the meaning of the PTE 91-38 (issued July 12,
1991) and, except as you have disclosed to the Company in
writing pursuant to this section (iii), no employee benefit
plan or group of plans maintained by the same employer or
employee organization beneficially owns more than 10% of all
assets allocated to such pooled separate account or collective
investment fund; or
(iv) the Source constitutes assets of an "investment
fund" (within the meaning of Part V of the QPAM Exemption)
managed by a "qualified professional asset manager" or "QPAM"
(within the meaning of Part V of the QPAM Exemption), no
employee benefit plan's assets that are included in such
investment fund, when combined with the assets of all other
employee benefit plans established or maintained by the same
employer or by an affiliate (within the meaning of Section
V(c)(1) of the QPAM Exemption) of such employer or by the same
employee organization and managed by such QPAM, exceed 20% of
the total client assets managed by such QPAM, the conditions
of Part I(c) and (g) of the QPAM Exemption are satisfied,
neither the QPAM nor a person controlling or controlled by the
QPAM (applying the definition of "control" in Section V(e) of
the QPAM Exemption) owns a 5% or more interest in the Company
and (A) the identity of such QPAM and (B) the names of all
employee benefit plans whose assets are included in such
investment fund have been disclosed to the Company in writing
pursuant to this section (iv); or
(v) the Source is a governmental plan; or
(vi) the Source is one or more employee benefit
plans, or a separate account or trust fund comprised of one or
more employee benefit plans, each of which has been identified
to the Company in writing pursuant to this section (vi); or
(vii) the Source does not include assets of any
employee benefit plan, other than a plan exempt from the
coverage of ERISA.
As used in this section 10(b), the terms "employee benefit plan",
"governmental plan", "party in interest" and "separate account" shall
have the respective meanings assigned to such terms in Section 3 of
ERISA, and the term "QPAM Exemption" means PTE 84-14 (issued March 13,
1984).
Certain Regulatory Matters. The Company will take, or will cause to be taken,
such action as any holder of Notes may reasonably request from time to time to
facilitate any sale or disposition by any such holder of any Notes without
registration under the Securities Act and/or any applicable securities laws
within the limitation of the exemptions provided by any rule or regulation
thereunder, including, without limitation, Rule 144A under the Securities Act,
provided that the Company shall not be obligated to incur any expense in order
to facilitate a sale or disposition by a holder of the Notes under Regulation S
under the Securities Act.
12. Method of Payment of Notes. Irrespective of any provision hereof or of the
other Operative Documents to the contrary, so long as you (or your nominee) or
any other institutional holder (or the nominee for such other institutional
holder) shall hold any Note, the Company will make all payments on such Note to
you or such other institutional holder by the method and at the address for such
purpose specified in Schedule I attached hereto or by such other method or at
such other address as you or such institutional holder may designate in writing,
without requiring any presentation or surrender of such Note, except that if any
Note shall be paid, prepaid and/or repurchased in full, such Note shall be
surrendered to the Company promptly following such payment, prepayment or
repurchase and canceled.
Liabilities to Other Holders. Neither this Agreement nor any of the other
Operative Documents nor any disposition of any of the Notes shall be deemed to
create any liability or obligation on your part to enforce any provision hereof
or of any of the other Operative Documents for the benefit or on behalf of any
other Person who may be the holder of any Notes.
Covenants of the Company. From and after the date of this Agreement, and
thereafter so long as any of the Notes shall remain outstanding, the Company
will duly perform and observe, for the benefit of the holders of the Notes, each
and all of the covenants hereinafter set forth:
Books of Record and Account; Reserves. The Company will, and will cause
each of its Subsidiaries to (a) at all times keep proper books of record and
account in which full, true and correct entries shall be made of its
transactions in accordance with GAAP; and (b) set aside on its books from its
earnings for each fiscal year all such proper reserves as shall be required in
accordance with GAAP in connection with its business.
14.2. Payment of Taxes; Existence; Maintenance of Properties;
Compliance with Laws; Lines of Business;Payment of Taxes; Existence; Maintenance
of Properties; Compliance with Laws; Lines of Business; Proprietary Right and
Licenses. The Company will, and will cause each of its Subsidiaries to:
(a) pay and discharge promptly as they become due and payable
all taxes, assessments and other governmental charges or levies imposed
upon it or its income or upon any of its property, as well as all
material claims of any kind (including material claims for labor,
materials and supplies) which, if unpaid, might by law become a Lien
upon its property; provided that neither the Company nor any of its
Subsidiaries shall be required to pay any such tax, assessment, charge,
levy or claim if the amount, applicability or validity thereof shall
currently be contested in good faith by appropriate proceedings
promptly initiated and diligently conducted and if it shall have set
aside on its books such reserves, if any, with respect thereto as are
required by GAAP and deemed adequate by the Company and its independent
accountants; provided, further, that the Company will, and will cause
each of its Subsidiaries to, pay any such tax, assessment, charge, levy
or claim prior to the commencement of any proceeding to foreclose any
Lien securing the same;
(b) do or cause to be done all things necessary to preserve
and keep in full force and effect its existence;
(c) maintain and keep its properties in good repair, working
order and condition, and from time to time make all needful and proper
repairs, renewals and replacements, so that the business carried on in
connection therewith may be properly and advantageously conducted at
all times;
(d) comply in all material respects with all applicable laws,
statutes, rules, regulations and orders of, and all applicable
restrictions imposed by, all governmental authorities in respect of the
conduct of its business and the ownership of its property (including,
without limitation, Environmental Laws) and all other obligations which
it incurs pursuant to any contract or agreement, whether oral or
written, express or implied, as such obligations become due;
(e) engage only in the Business (and in other lines of
business related to the Business) and engage principally in the
environmental consulting and engineering component of the Business,
substantially in the manner described in the Disclosure Document; and
(f) own or have a valid license for all material Proprietary
Rights and Licenses used by it in the conduct of its business.
Insurance. The Company will, and will cause each of its Subsidiaries
to, maintain with financially sound and reputable insurers, insurance with
respect to its properties and business against casualties or contingencies of
the kinds customarily insured against by Persons of established reputation
engaged in the same or a similar business and similarly situated, in such
amounts and by such methods as shall be customary for such Persons and
reasonably deemed adequate by the Company; provided that such insurance shall be
in amounts not less than those maintained by the Company and its Subsidiaries,
as the case may be, on the date hereof.
Discount or Sale of Receivables. The Company will not, and will not
permit any Subsidiary of the Company, directly or indirectly, to discount or
sell any of its accounts receivable, except that the Company or any Subsidiary
of the Company may settle doubtful accounts in the ordinary course of business
or grant discounts in the ordinary course of business for early or timely
payment of accounts receivable, and the Company and its Subsidiaries may
collaterally assign their accounts receivable as security for the Notes and the
Company's obligations under the Bank Credit Documents to the extent permitted
under section 14.8.
Funded Debt, Current Debt and Preferred Shares. The Company will not,
and will not permit any Subsidiary of the Company to, create, assume, incur,
guarantee, or in any manner become or be liable in respect of any Funded Debt or
Current Debt (it being agreed that for purposes of this section 14.5 contingent
Indebtedness shall be deemed to be incurred at the time, if any, that such
contingent Indebtedness first becomes Funded Debt or Current Debt,
notwithstanding that such contingent Indebtedness was originally incurred at an
earlier time) or issue, sell or have outstanding any Preferred Shares other
than:
(a) in the case of the Company and its Subsidiaries:
(i) Funded Debt evidenced by the Notes and the Note
Guarantees;
(ii) Funded Debt, Current Debt and, solely in the
case of Subsidiaries of the Company (but not the Company
itself), Preferred Shares, in each case outstanding on the
date hereof and as described on Exhibit 5.9 or Exhibit 5.2
attached hereto (but excluding any Funded Debt or Current Debt
outstanding under the Bank Credit Documents);
(iii) Funded Debt or Current Debt under the Bank
Credit Documents, provided that the aggregate principal amount
(and face amount of any letters of credit) of such Funded Debt
and Current Debt permitted by this clause (iii) shall at no
time exceed $15,000,000;
(iv) additional Funded Debt, Current Debt and, solely
in the case of Subsidiaries of the Company (but not the
Company itself), Preferred Shares not otherwise permitted
under this section 14.5 (including Funded Debt and/or Current
Debt incurred pursuant to the Bank Credit Documents in excess
of the amount permitted by clause (iii) above and also
including Funded Debt and/or Current Debt incurred to extend,
refinance, refund or renew any outstanding Funded Debt and/or
Current Debt otherwise permitted under this section 14.5(a) or
Preferred Shares issued in exchange for Preferred Shares
otherwise permitted under this section 14.5(a)), provided
that, both at the time of and immediately after giving effect
to the incurrence or issuance thereof and the retirement of
any Indebtedness or Preferred Shares which are concurrently
being retired:
(A) no Default or Event of Default shall
have occurred and be continuing; and
(B) Consolidated Total Debt shall not exceed
55% of Consolidated Capitalization; and
(C) in the case of additional Funded Debt or
Current Debt being incurred by a Subsidiary of the
Company or Preferred Shares being issued by a
Subsidiary of the Company, the sum (x) of the
aggregate Total Debt of the Company's Subsidiaries
and (y) the aggregate liquidation value of all
outstanding Preferred Shares of the Company's
Subsidiaries shall not exceed 10% of Consolidated Net
Worth at the end of the immediately preceding fiscal
quarter of the Company; and
(b) in the case of any Subsidiary of the Company, Current Debt
or Funded Debt owed to the Company or to a Wholly-Owned Subsidiary Guarantor or
Preferred Shares owned by the Company or a Wholly-Owned Subsidiary Guarantor.
For the purposes of this section 14.5, if at any time any Person shall
become a Subsidiary of the Company, such Subsidiary shall be deemed to have
issued at such time all Preferred Shares and to have become liable at such time
in respect of all Current Debt and Funded Debt which such Subsidiary shall have
outstanding at such time. The renewal, extension, refinancing or refunding of
any Current Debt or Funded Debt or the issuance of Preferred Shares in exchange
for Preferred Shares permitted by this section 14.5 shall constitute the
issuance of additional Current Debt, Funded Debt or Preferred Shares, as the
case may be, which is, in turn, subject to the limitation of the applicable
provisions of this section 14.5.
The Company will not, and will not permit any Subsidiary of the Company
to, become obligated under any Guarantee unless as of the date such Guarantee is
entered into or otherwise created, assumed or incurred, (x) the maximum amount
which the Company or such Subsidiary may become obligated to pay thereunder is
then known and determined and (y) to the extent such Guarantee constitutes
Funded Debt or Current Debt, such Guarantee may then be entered into or
otherwise created, assumed or incurred in compliance with this section 14.5.
14.6. Limitation on Restricted Investments and Restricted Payments.
(a) The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, at any time, authorize,
declare or make, or incur any liability to make, any Restricted
Investment or any Restricted Payment, unless in each case both at the
time of and after giving effect to such action:
(i) the sum of (x) the aggregate value of all
Restricted Investments of the Company and its Subsidiaries
(valued, in the manner provided in section 14.6(d),
immediately after such action) plus (y) the aggregate amount
of all Restricted Payments of the Company and its
Subsidiaries, declared or made during the period commencing on
the Closing Date and ending on the date such action is taken,
would not exceed the sum of:
(A) the sum of (i) $2,000,000, and (ii) 50%
of aggregate Consolidated Net Income for the period
commencing on March 1, 1997 and ending on the last
day of the most recently completed fiscal quarter of
the Company immediately prior to the date such action
is taken (the "Test Period"), plus
(B) the aggregate amount of Net Proceed
of Capital Stock for the Test Period; and
(ii) the Company would be permitted to become liable
in respect of at least $1.00 of additional Funded Debt or
Current Debt under section 14.5(a)(iv); and
(iii) no Default or Event of Default would exist.
(b) The Company will not, and will not permit any of its
Subsidiaries to, enter into or be or become bound by any agreement
(other than this Agreement, the Other Note Agreements, and the Bank
Credit Agreement) which encumbers or restricts, or create or otherwise
cause or suffer to exist or become effective any encumbrance or
restriction upon, the right or ability of any Subsidiary of the Company
to:
(i) pay dividends or make any other distribution
on its Shares (or any participation in its profits) owned by
the Company or any Subsidiary of the Company;
(ii) pay any Indebtedness owed to the Company or
any Subsidiary of the Company;
(iii) make loans or advances to or Investments in
the Company or any Subsidiary of the Company; or
(iv) transfer any of its properties or assets to
the Company or any Subsidiary of the Company.
(c) Each Person which becomes a Subsidiary of the Company
after the Closing Date will be deemed to have made, on the date such
Person becomes a Subsidiary of the Company, all Restricted Investments
of such Person in existence on such date. Investments in any Person
that ceases to be a Subsidiary of the Company after the Closing Date
(but in which the Company or another Subsidiary continues to maintain
an Investment) will be deemed to have been made on the date on which
such Person ceases to be a Subsidiary of the Company.
(d) For purposes of this section 14.6 and for purposes of
clauses (i) and (j) of the definition of Permitted Investment, as of
any date of determination, each Investment shall be valued at the
greater of:
(i) the amount at which such Investment is initially
shown on the books of the Company or any of its Subsidiaries
(or zero if such Investment is not shown on any such books);
and
(ii) either
(A) in the case of any Guarantee of the
obligation of any Person, the amount which the
Company or any of its Subsidiaries has paid (or is
obligated to pay) on account of such obligation less
any recoupment by the Company or such Subsidiary of
any such payments, or
(B) in the case of any other Investment, the
excess of (x) the greater of (1) the amount
originally entered on the books of the Company or any
of its Subsidiaries with respect thereto and (2) the
cost thereof to the Company or its Subsidiary over
(y) any return of capital (after income taxes
applicable thereto) upon such Investment through the
sale or other liquidation thereof or part thereof or
otherwise.
Certain Financial Covenants. The Company will, and will cause its
Subsidiaries to:
(a) Interest Expense Coverage Ratio. Maintain at the end of
each fiscal quarter of the Company a ratio of (i) Consolidated EBITDA
for the four consecutive fiscal quarters then ended to (ii)
Consolidated Interest Expense during such period of not less than 3.00
to 1.00.
(b) Fixed Charge Coverage Ratio. Maintain at the end of
each fiscal quarter of the Company a Consolidated Fixed Charge Coverage
Ratio of not less than 2.50 to 1.00.
(c) Consolidated Net Income. Maintain Consolidated Net Income
in excess of $1.00 for each period of four consecutive fiscal quarters
of the Company.
(d) Minimum Consolidated Net Worth. Maintain at the end of
each fiscal quarter of the Company Consolidated Net Worth of not less
than the sum of (i) $36,351,442, plus (ii) an amount equal to 50% of
aggregate Consolidated Net Income (but only if a positive number) for
the period commencing on March 1, 1997 and ending on the last day of
such fiscal quarter.
(e) Minimum Working Capital. Maintain at the end of each
fiscal year of the Company Consolidated Working Capital of not less
than $24,000,000 as of the fiscal year ending February 28, 1998, which
minimum required amount shall increase by $2,000,000 per year as of the
end of each fiscal year thereafter. This section 14.7(e) shall
automatically terminate and be of no further force and effect from and
after the date on which the Bank Credit Agreement ceases to contain the
covenant set forth in section 5.10(e) of the Bank Credit Agreement.
Liens The Company will not, and will not permit any Subsidiary of the
Company to, create, assume, incur or suffer to exist any Lien in respect of any
property of any character (whether owned on the date hereof or hereafter
acquired) other than:
(a) Liens on the Collateral securing the Notes;
(b) Liens (other than any Lien created by any Environmental
Law or by Section 4068 of ERISA), charges and encumbrances which (i)
are incurred in the ordinary course of business and which are
incidental to the conduct of the business of the Company and its
Subsidiaries and the ownership of its and their property, (ii) are not
incurred in connection with the borrowing of money or the obtaining of
advances or credit, (iii) do not in the aggregate materially detract
from the value of the property of the Company or its Subsidiaries or
materially impair the use thereof in the operation of its or their
business and (iv) do not (and could not reasonably be expected to)
materially adversely affect the rights of the holders of the Notes;
(c) Liens on the Collateral securing Funded Debt and/or
Current Debt or other obligations of the Company and its Subsidiaries
under the Bank Credit Agreement, in each case to the extent that such
Funded Debt or Current Debt is permitted under section 14.5(a) (iii) or
(iv);
(d) any Lien existing on the date hereof and referred to on
Exhibit 5.9 attached hereto (excluding any Lien securing obligations
under the Bank Credit Documents) and the replacement, extension or
renewal of any such Lien upon or in the same property theretofore
subject thereto, in each case as security for the Funded Debt or
Current Debt originally secured by such existing Lien (without increase
in the amount or change in any direct or contingent obligor) of such
Funded Debt or Current Debt;
(e) any Lien constituting a purchase money security interest
(including Capital Leases and any other title retention or deferred
purchase device) incurred in the ordinary course of business to finance
the acquisition and/or improvement (or incurred within six months of
the acquisition or improvement, as the case may be) of any real
property or equipment (including any Lien on real property or equipment
if such Lien is incurred to finance the acquisition by the Company and
its Subsidiaries of the operating assets (including such real property
and equipment) of a third party), including, in the case of any Person
which is to be acquired by the Company and thereafter becomes a
Subsidiary, any such Lien existing upon or in such Person's real
property or equipment at the time such Person becomes a Subsidiary,
provided that (i) such Lien does not extend to or cover any property of
the Company or any of its Subsidiaries other than the property being
leased or acquired, (ii) the aggregate principal amount of Indebtedness
secured thereby shall not exceed the cost of such property and (iii) if
the Indebtedness secured thereby constitutes Funded Debt or Current
Debt, such Funded Debt or Current Debt is permitted under section
14.5(a)(iv); and
(f) additional Liens upon any of the assets of the Company or
any of its Subsidiaries (other than the Collateral) not otherwise
permitted under this section 14.8 (other than additional Liens securing
obligations under the Bank Credit Documents), provided that the
aggregate value of such assets so subject to such Liens at no time
shall exceed an amount equal to 10% of Consolidated Net Worth as of the
end of the most recently completed fiscal quarter of the Company.
Notwithstanding anything to the contrary contained herein, in no event shall the
Company create, assume, incur or suffer to exist any Lien, or permit any
Subsidiary of the Company to create, assume, incur or suffer to exist any Lien,
on any of the Collateral except Liens permitted under clauses (a) and (c) of
this section 14.8 and existing Liens described on Exhibit 5.9 attached hereto
(which Exhibit shall specifically describe the Collateral encumbered by such
existing Liens).
Transactions with Affiliates. The Company will not, and will not permit
any Subsidiary of the Company to, engage in any transaction (including, without
limitation, the purchase, sale or exchange of any properties and assets or the
rendering of any services) with an Affiliate of the Company or of such
Subsidiary on terms less favorable to the Company or such Subsidiary in any
material respect than would be obtainable at the time in comparable transactions
of the Company or such Subsidiary with a Person not such an Affiliate.
14.10. Limitation on Issuance of Shares of Subsidiaries and Disposition
of Shares.
(a) The Company will not permit any Subsidiary of the Company
to issue, sell or otherwise dispose of any Shares (or any securities
convertible into or exercisable or exchangeable for Shares) of such
Subsidiary, except to the Company or to a Wholly-Owned Subsidiary
Guarantor or, in the case of Preferred Shares, as permitted by section
14.5(a).
(b) The Company will not sell, transfer or otherwise dispose
of any Shares (or any securities convertible into or exercisable or
exchangeable for Shares) of any Subsidiary of the Company or any
Indebtedness of any Subsidiary of the Company, or permit any Subsidiary
of the Company to sell, transfer or otherwise dispose of (except to the
Company or to a Wholly-Owned Subsidiary Guarantor) any Shares,
securities or any Indebtedness of any other Subsidiary of the Company
unless (i) both at the time of and immediately after giving effect to
such disposition, no Default or Event of Default shall have occurred
and be continuing, (ii) such disposition shall be made in compliance
with section 14.12, if applicable, and (iii) each of the following
conditions shall be complied with:
(A) simultaneously with such disposition,
all such Shares, securities and Indebtedness of such
Subsidiary at the time owned by the Company and by
every other Subsidiary of the Company shall be
disposed of as an entirety;
(B) the Board of Directors of the Company
shall have reasonably determined in good faith, as
evidenced by a written resolution thereof promptly
delivered to the holders of the Notes, that (1) the
disposition of such Shares, securities and
Indebtedness is in the best interests of the Company
and is not disadvantageous in any material respect to
the holders of the Notes and (2) such Shares,
securities and Indebtedness are being disposed of for
fair and adequate cash consideration and on fair and
adequate terms; and
(C) following such disposition, the
Subsidiary being disposed of shall not have any
continuing investment in the Company or any other of
its Subsidiaries not being simultaneously disposed
of.
14.11. Limitation on Consolidation or Merger, etc. The Company will
not, and will not permit any of its Subsidiaries to, consolidate with or merge
into any other Person or sell, lease or otherwise dispose of all or
substantially all of its property in a single transaction or series of
transactions to any Person or Persons (except that any Subsidiary of the Company
may (x) merge into, or sell, lease or otherwise dispose of all or substantially
all of its property in a single transaction or series of transactions to the
Company (if the Company is the surviving entity of such transaction) or a
Wholly-Owned Subsidiary Guarantor of the Company (if the surviving entity to
such transaction is a Wholly-Owned Subsidiary Guarantor of the Company) or (y)
sell, lease or otherwise dispose of its property in compliance with section
14.13 (other than 14.13(d)), provided that the Company may consolidate with or
merge into, or sell, lease or otherwise dispose of all or substantially all of
its property to, any other Person so long as:
(a) the successor formed by such consolidation or the survivor
of such merger or the Person that acquires all or substantially all of
the property of the Company, as the case may be (the "Successor
Corporation"), shall be a Solvent corporation organized and existing
under the laws of the United States of America, any state thereof or
the District of Columbia and having all or substantially all its
property in the United States of America;
(b) if the Company is not the Successor Corporation, the
Successor Corporation shall have executed and delivered to each holder
of Notes its assumption of the due and punctual performance and
observance of each covenant and condition of this Agreement and each of
the other Operative Documents (pursuant to such agreements and
instruments as shall be reasonably satisfactory to the Required Holders
of Notes), and the Company shall have caused to be delivered to each
holder of Notes an opinion of independent counsel reasonably
satisfactory to the Required Holders of the Notes, to the effect that
all agreements or instruments effecting such assumption are legal,
valid and binding obligations of such Successor Corporation enforceable
against it in accordance with their respective terms (except as such
enforcement may be limited by insolvency, bankruptcy, reorganization or
other laws of general application relating to the enforcement of
creditors' rights or by general equity principles), that the Notes
remain secured by the Note Guarantees and the other Security Documents
pursuant to perfected, first priority security interests in the
Collateral, and covering such other matters as the Required Holders of
the Notes may reasonably request.
(c) both before and immediately after giving effect to such
transaction, no Default or Event of Default would exist; and
(d) after giving effect to such transaction, (i) the Successor
Corporation shall have a Consolidated Net Worth equal to or greater
than the Consolidated Net Worth of the Company immediately prior to
such transaction and (ii) the Successor Corporation shall be permitted
to incur at least $1.00 of additional Funded Debt or Current Debt under
section 14.5(a)(iv).
No sale, lease or other disposition by the Company shall have the effect of
releasing the Company (or any successor corporation that shall theretofore have
become such in the manner prescribed in this section 14.11) or any of its
Subsidiaries from its liability under this Agreement or any of the other
Operative Documents.
14.12 Limitations on Leasebacks. The Company will not, and will not
permit any of its Subsidiaries, directly or indirectly, to sell or otherwise
dispose of any of its property if, as part of the same transaction or series of
related transactions, any such Person shall then or thereafter rent or lease as
lessee, or similarly acquire the right to possession or use of, such property
(or a major portion thereof), or other property which it intends to use for
substantially the same purpose or purposes, under any lease, agreement or other
arrangement which obligates any such person to pay rent as lessee or make any
other payments for such possession or use.
14.13. Limitation on Dispositions of Property. The Company will not,
and will not permit any of its Subsidiaries to, directly or indirectly, sell,
lease or otherwise dispose of any of their respective properties and assets
(including any right, title or interest in any property or asset), whether owned
on the date hereof or hereafter acquired and whether real, personal or mixed,
tangible or intangible, including, without limitation, Shares, securities or
Indebtedness of any Subsidiary of the Company, except:
(a) any sale of inventory or work in process in the ordinary
course of business;
(b) any transaction permitted under section 14.11;
(c) any sale, lease or disposition of assets by a Subsidiary
to the Company or to a Wholly-Owned Subsidiary Guarantor; and
(d) any sale by the Company or any of its Subsidiaries of any
of their respective properties and assets (other than any such
properties or assets which constitute part of the Collateral) (each a
"Sale of Assets") unless (i) both before and immediately after giving
effect to such transaction, (x) no Default or Event of Default shall
exist, and (y) the Company shall be permitted to incur at least $1.00
of additional Funded Debt or Current Debt under section 14.5(a)(iv),
(ii) such properties and assets are sold for cash consideration equal
to the fair market value of such properties and assets, and (iii) the
Net Asset Sale Proceeds of such sale are (x) within 30 days after the
consummation of such sale, offered to the holders of Senior Debt
pursuant to section 9.3(a) as prepayment of the Senior Debt, and
applied to such prepayment to the extent required by such holders,
and/or (y) applied within 360 days after the consummation of such sale
to the purchase by the Company or any of its Subsidiaries of property
and assets (other than cash or cash equivalents) used and useful in the
ordinary course of business of the Company or such Subsidiary. The Net
Asset Sale Proceeds of any Sale of Assets pursuant to this clause (d)
shall be deposited directly and held in a segregated account at the
Collateral Agent until applied in accordance with the preceding
sentence, and any such Net Asset Sale Proceeds not so applied within
360 days after consummation of such Sale of Assets shall constitute
"Available Unused Proceeds". When the aggregate amount of Available
Unused Proceeds exceeds $5,000,000, the Company shall offer all of such
Available Unused Proceeds to the holders of the Senior Debt pursuant to
section 9.3(b) as prepayment of the Senior Debt. Any such Available
Unused Proceeds which are not so required by such holders to be applied
in prepayment of the Senior Debt shall be released from the segregated
account at the Collateral Agent, shall cease to constitute Available
Unused Proceeds and thereafter may be used for general corporate
purposes of the Company and its Subsidiaries.
14.14. Modification of Certain Documents, Agreements and Instruments;
Renewal of Bank Credit DocumentsModification of Certain Documents, Agreements
and Instruments; Renewal of Bank Credit Documents; Replacement Collateral Agency
and Intercreditor Agreement. The Company will not and will not permit any
Subsidiary to (a) amend, modify or waive, or permit the amendment, modification
or waiver of, any term, condition or provision of its charter or by-laws or
other organizational document in any respect which could reasonably be expected
to result in a Material Adverse Change, (b) file any resolution of the Board of
Directors with the Secretary of State of the jurisdiction of its incorporation;
(c) change its fiscal year, or (d) amend or modify, or permit the amendment or
modification of, any term, condition or provision of any of the Bank Credit
Documents (other than any renewals thereof) except as permitted by the
Collateral Agency and Intercreditor Agreement. For the avoidance of doubt,
nothing contained herein or in the Collateral Agency and Intercreditor Agreement
shall be deemed to limit the ability of the Company to enter into renewals of
the Bank Credit Documents on such terms and conditions as may be agreed upon
between the Company and the Banks, without the consent of the holders of the
Notes, provided that the Funded Debt and Current Debt incurred under such
renewal agreements must otherwise be permitted under this Agreement and the
execution, delivery and performance of such renewal agreements must otherwise
not violate any provision of this Agreement or the other Operative Documents.
The holders of the Notes agree to enter into a replacement collateral agency and
intercreditor agreement with the Banks and the Collateral Agent with respect to
any such renewal agreements of the Bank Credit Documents on the same terms and
conditions as the Collateral Agency and Intercreditor Agreement, except for
section 7.4 of the Collateral Agency and Intercreditor Agreement, which section
shall be omitted from the replacement collateral agency and intercreditor
agreement.
Limitation on Tax Consolidation. The Company will not and will not
permit any Subsidiary to become a party to a consolidated federal income tax
return with any Person other than the Company and its Subsidiaries.
14.16 Revolving Credit Facility. The Company will maintain at all times
an aggregate of used and unused borrowing capacity of not less than $15,000,000
under a committed revolving credit facility.
14.17 Accounts. The Company and its Subsidiaries shall maintain at all
times their primary depositary and operating accounts (which shall not be deemed
to include the investment accounts of the Company and its Subsidiaries) with the
Collateral Agent, provided that each active office of the Company and its
Subsidiaries may maintain with a depositary institution other than the
Collateral Agent a separate operating account for each such active office,
provided that the amount on deposit in any such operating account shall at no
time exceed $10,000.
Further Assurances. urances
(a) From time to time hereafter, the Company will execute and
deliver, or will cause to be executed and delivered, promptly but in
any event within 5 days, such additional agreements, documents and
instruments and will take all such other actions as the Required
Holders of the Notes may reasonably request for the purpose of
implementing or effectuating the provisions of this Agreement, the
Security Documents and the other Operative Documents or for more fully
perfecting or renewing the rights of the Collateral Agent or the
holders of the Notes thereunder.
(b) Without limiting the generality of the foregoing, in the
event that the Company at any time or from time to time shall elect to
organize or acquire any Subsidiary, then and in each such case the
Company shall (but in any event not later than 20 days prior to
consummating any such transaction) notify each holder of Notes and, not
later than the date upon which such transaction is consummated, will
cause to be executed and delivered to the holder or holders of Notes, a
Note Guarantee and Security Agreement executed by such Subsidiary.
Definitions. Note: Bracketed items are cross-references to the section or
sections of the Agreement in which the specified definitions are used; they
appear for purpose of convenience only and do not affect the meaning of such
definitions.
Definitions of Capitalized Terms. The terms defined in this section
15.1, whenever used in this Agreement, shall, unless the context otherwise
requires, have the following respective meanings:
"Affiliate" of any Person shall mean any other Person which, directly
or indirectly, controls or is controlled by or is under common control with such
first-mentioned Person, or any individual, in the case of a Person who is an
individual, who has a relationship by blood, marriage or adoption to such
first-mentioned Person not more remote than first cousin, and, without limiting
the generality of the foregoing, shall include (a) any Person beneficially
owning, holding or controlling, directly or indirectly, 10% or more of any class
of Voting Stock of such first-mentioned Person, (b) any Person of which such
first-mentioned Person owns, holds or controls, directly or indirectly, 10% or
more of any class of Voting Stock or (c) any director, officer or executive
employee of such first-mentioned Person; provided that, in the absence of actual
control, the term Affiliate shall in no event include any financial institution
which would otherwise be an Affiliate solely by virtue of owning, holding or
controlling, directly or indirectly, Voting Stock of the Company or by virtue of
having board visitation rights or a designee on the Board of Directors of the
Company; provided, further, that in no event shall you or any other
institutional holder of Notes be deemed to be an Affiliate of the Company. For
the purposes of this definition, "control" (including, with correlative
meanings, the terms "controlled by" and "under common control with"), as used
with respect to any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of Voting Stock or by contract or
otherwise; provided that in no event shall the fact that a Person is a holder of
Indebtedness of such Person be considered sufficient by itself to enable such
Person to direct or cause the direction of the management and policies of such
Person.
"ATEC" shall have the meaning specified in section 4.3.
"Available Net Proceeds" shall have the meaning specified in section
9.3.
"Available Unused Proceeds" shall have the meaning specified in section
14.13.
"Bank Agent" shall have the meaning specified in section 4.3.
"Bank Credit Agreement" shall have the meaning specified in section 4.3
"Bank Credit Documents" shall have the meaning specified in section 4.3
"Banks" shall have the meaning specified in section 4.3.
"Business" shall have the meaning specified in section 5.4.
"Business Day" shall mean any day other than a Saturday, Sunday or
other day which shall be in Boston, Massachusetts, or New York, New York, a
legal holiday or a day on which banking institutions therein are authorized by
law to close.
"Capitalization" of any Person shall mean, at any date, the sum of (a)
Total Debt of such Person at such date, and (b) Net Worth of such Person as of
the end of the most recently completed fiscal quarter of such Person.
"Capital Lease" shall mean any lease or similar arrangement which is of
such a nature that payment obligations of the lessee or obligor thereunder are
required to be capitalized and shown as liabilities upon a balance sheet of such
lessee or obligor prepared in accordance with GAAP.
"Change of Control" shall have the meaning specified in section 9.4.
"Closing" and "Closing Date" shall have the respective meanings
specified in section 3.
"Code" shall mean the Internal Revenue Code of 1986, or any successor
federal statute, and the rules and regulations promulgated thereunder, all as
amended, modified or supplemented from time to time.
"Collateral" shall have the meaning specified in section 1.
"Collateral Agency and Intercreditor Agreement" shall have the meaning
specified in section 1.
"Collateral Agent" shall mean The Chase Manhattan Bank, acting pursuant
to the Collateral Agency and Intercreditor Agreement as collateral agent for the
holders of the Notes and the Banks, and any replacement or successor collateral
agent thereunder.
"Commission" shall mean the Securities and Exchange Commission and
shall also mean any successor thereto.
"Common Stock" shall mean the Common Stock of the Company as
constituted on the Closing Date and any stock into which such Common Stock shall
have been changed or any stock resulting from any reclassification of such
Common Stock.
"Company" shall mean ATC Group Services Inc., a Delaware corporation,
and any successor corporation.
"Confidential Information" shall have the meaning specified in section
8(b).
"Consolidated Capitalization" [14.5], "Consolidated Current Assets"
[14.7], "Consolidated Current Liabilities" [14.7], "Consolidated EBITDA" [14.7],
"Consolidated Fixed Charges" [14.7], "Consolidated Interest Expense" [14.7],
"Consolidated Net Income" [14.6, 14.7], "Consolidated Net Worth" [14.5, 14.7 and
14.8], "Consolidated Rental Obligations" [14.7], and "Consolidated Total Debt"
[14.5], shall mean the Capitalization, Current Assets, Current Liabilities,
EBITDA, Fixed Charges, Interest Expense, Net Income, Net Worth, Rental
Obligations, and Total Debt, as the case may be, of the Company and its
Subsidiaries (whether or not ordinarily consolidated in consolidated financial
statements of the Company and its Subsidiaries), all consolidated in accordance
with GAAP, and after giving appropriate effect to outside minority interests, if
any, in Subsidiaries in accordance with GAAP, provided that (a) in determining
Consolidated Net Income and Consolidated EBITDA there shall be excluded (i) the
Net Income of any Person (other than a Subsidiary of the Company) in which the
Company or any Subsidiary of the Company has an ownership interest, except to
the extent that any such Net Income has been actually received by the Company or
such Subsidiary in the form of dividends or similar distributions, (ii) any
undistributed Net Income of a Subsidiary of the Company which for any reason is
unavailable for distribution to the Company or any other Subsidiary of the
Company, (iii) the Net Income of any Person accrued prior to the date it becomes
a Subsidiary of the Company or is merged into or consolidated with the Company
or a Subsidiary of the Company, (iv) in the case of a successor to the Company
by consolidation, merger or transfer of assets, the Net Income of such successor
accrued prior to such consolidation, merger or transfer, (v) any deferred or
other credit representing the excess of the equity in any Subsidiary of the
Company at the date of acquisition thereof over the cost of the investment in
such Subsidiary, and (vi) any restoration to income of any contingency reserve,
except to the extent that provision for such reserve was made out of income
accrued during the same period, and (b) in determining Consolidated Net Worth no
amount shall be included therein on account of (i) any excess cost of
acquisition of shares of any Subsidiary of the Company over the book value of
the assets of such Subsidiary attributable to such shares on the books of such
Subsidiary at the date of acquisition of such shares or (ii) any excess of the
book value of the assets of such Subsidiary attributable to such assets at the
date of such acquisition over the cost of acquisition of such assets.
"Consolidated Fixed Charges Coverage Ratio" [14.7] shall mean, on any
date, the ratio of (a) the sum of (i) Consolidated EBITDA for the period of four
consecutive fiscal quarters of the Company ending on such date, plus (ii)
one-third of Consolidated Rental Obligations in respect of leases other than
Capital Leases for such period to (b) Consolidated Fixed Charges for such
period.
"Consolidated Working Capital" shall mean, at any date, the amount by
which Consolidated Current Assets at such date exceeds Consolidated Current
Liabilities at such date.
"Current Assets" [14.7] of any Person shall mean, at any date, amounts
classified as such according to GAAP.
"Current Liabilities" [14.7] of any Person shall mean, at any date,
amounts classified as such according to GAAP, but including, in the case of the
Company, all sums outstanding under the Bank Credit Agreement.
"Current Debt" [14.5, 14.7] of any Person shall mean, at any date, (a)
all Indebtedness for borrowed money or in respect of Capital Leases or the
deferred purchase price of property, whether or not interest bearing, and
whether secured or unsecured, of such Person at such date which would, in
accordance with GAAP, be classified as short-term Indebtedness at such date, but
specifically including the current maturities of such Person's Funded Debt, (b)
all Guarantees by such Person at such date of Current Debt of others and (c) the
aggregate amount which is due on or before the expiration of twelve months from
such date in respect of any Redeemable Shares of such Person.
"Default" shall mean any condition or event which constitutes or, after
notice or lapse of time or both, would constitute an Event of Default.
"Disclosure Document" shall have the meaning specified in section 5.4.
"EBITDA" of any Person shall mean, for any period, the Net Income of
such Person for such period (a) after restoring thereto (without duplication)
amounts deducted for (i) Interest Expense, (ii) taxes in respect of income and
profits, (iii) amortization expense, including amortization of intangible
assets, including good will and covenants not to compete, and depreciation
expense, and (iv) the write-off of or the establishment of an allowance against
intangible assets, including good will and covenants not to compete, and (b)
excluding (without duplication) any gains or losses on the sale of assets other
than in the ordinary course of business, in each case determined in accordance
with GAAP.
"Environmental Laws" shall mean any law, statute, rule, regulation or
other governmental standard or requirement relating or pertaining to (a) the
generation, manufacture, management, handling, use, sale, transportation,
treatment, storage, disposal, delivery, discharge, release or emission of any
waste, pollutant or toxic, hazardous or other substance, or (b) any other act,
omission or condition affecting or involving the environment or air or water
pollution or soil or groundwater contamination.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
or any successor federal statute, and the rules and regulations promulgated
thereunder, all as amended, modified or supplemented from time to time.
"ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) that, together with the Company, would be treated as a single
employer under section 4001(b) of ERISA, or that is a member of a group of which
the Company is a member and that is a controlled group within the meaning of
section 4971(e)(2)(B) of the Code.
"Event of Default" shall have the meaning specified in section 16.1.
"Excess Available Net Proceeds" shall have the meaning specified in
section 9.3.
"Excess Available Unused Proceeds" shall have the meaning specified in
section 9.3.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations
promulgated thereunder, all as amended, modified or supplemented from time to
time.
"Fixed Charges" for any Person shall mean, for any period, the sum
(without duplication of amounts) of (a) all Interest Expense of such Person for
such period and (b) one-third of all Rental Obligations of such Person for such
period in respect of leases other than Capital Leases and other than equipment
leases with a term of six months or less entered into for the performance of a
specific client project, in each case determined in accordance with GAAP.
"Funded Debt" of any Person shall mean, at any date, (a) all
Indebtedness for borrowed money or in respect of Capital Leases or the deferred
purchase price of property, whether or not interest-bearing, of such Person
which would, in accordance with GAAP, be classified as long-term Indebtedness at
such date, but in any event (i) including all such Indebtedness, whether secured
or unsecured, of such Person which matures (or which, pursuant to the terms of a
revolving credit agreement or otherwise, is directly or indirectly renewable or
extendible at the option of such Person for a period ending) more than twelve
months after the date of the creation thereof, notwithstanding the fact that
payments in respect thereof (whether installment, serial maturity or sinking
fund payments or otherwise) are required to be made by such Person not more than
twelve months after the date as of which the amount of Funded Debt is being
determined, other than any amount which is at the time included in Current Debt
of such Person, and (ii) including non-contingent obligations to ATEC pursuant
to a Master Sublease and Master Equipment Lease Agreement, each dated May 24,
1996, but excluding any such obligations which constitute Rental Obligations of
the Company, (b) all Guarantees by such Person at such date of Funded Debt of
others, and (c) the aggregate amount which is due more than twelve months from
such date in respect of any Redeemable Shares of such Person.
"GAAP" shall mean generally accepted accounting principles as in effect
in the United States from time to time, consistently applied.
"Guarantee" of any Person shall mean, at any date, any obligation of
such Person at such date guaranteeing, directly or indirectly, any Indebtedness
or other obligation of any other Person in any manner, but in any event
including all endorsements (other than for collection or deposit in the ordinary
course of business), all discounts with recourse and all obligations incurred
through an agreement, contingent or otherwise, (a) to purchase the obligations
of any other Person or any security therefor or to advance or supply funds for
the payment or purchase of such obligations, or (b) to purchase, sell or lease
(as lessee or lessor) property, products, materials or supplies or to purchase
or sell transportation or services, primarily for the purpose of enabling the
obligor to make payment of such obligations or to assure the owner of such
obligations against loss, regardless of the delivery or non-delivery of the
property, products, materials or supplies or the furnishing or nonfurnishing of
the transportation or services, or (c) to provide funds for the payment of, or
obligating such Person to make, any loan, advance, capital contribution or other
investment in the obligor for the purpose of assuring a minimum equity, asset
base, working capital or other balance sheet condition for any date or to
provide funds for the payment of any obligation, dividend or stock liquidation
payment, or otherwise to supply funds to or in any manner invest in the obligor.
The amount of any Guarantee shall be equal to the amount of all Indebtedness and
other obligations directly or indirectly guaranteed thereby.
"Holder's Net Proceeds Prepayment Amount" shall have the meaning
specified in section 9.3.
"Holder's Unused Proceeds Prepayment Amount" shall have the meaning
specified in section 9.3.
"Indebtedness" of any Person shall mean, at any date, all indebtedness,
liabilities and other obligations of such Person at such date (other than items
of shareholders' equity) which would, in accordance with GAAP, be classified as
liabilities of such Person, but in any event including (without duplication):
(a) all Guarantees of such Person;
(b) all indebtedness, liabilities and other obligations
secured by any Lien in respect of property owned by such Person,
whether or not such Person has assumed or become liable for the payment
of such obligations;
(c) all indebtedness, liabilities and other obligations of
such Person arising under any conditional sale or other title retention
agreement, whether or not the rights and remedies of the seller or
lender under such agreement in the event of default are limited to
repossession or sale of such property;
(d) the amount of the obligation required to be recorded
by the lessee in respect of any Capital Lease under which such Person
is lessee; and
(e) all indebtedness, liabilities and other obligations
arising in connection with letters of credit, bankers acceptances or
other credit enhancement facilities and in connection with interest
rate swaps, currency swaps and similar obligations which require such
Person to make payments, whether periodically or upon the happening of
a contingency.
"Indemnified Costs" shall have the meaning specified in section 20.
"Indemnitee" shall have the meaning specified in section 20.
"Interest Expense" [14.7] of any Person shall mean, for any period, the
aggregate amount of (a) all interest paid, payable or guaranteed during such
period by such Person in respect of Funded Debt and Current Debt (including,
without limitation, Capital Leases), determined in accordance with GAAP, and (b)
all interest capitalized or deferred during such period, determined in
accordance with GAAP. Interest which is payable at a floating or variable rate
shall be determined on the basis of the rate in effect on the date as of which
Interest Expense is to be determined.
"Investment" shall mean any investment made by stock purchase, capital
contribution, loan, advance, acquisition of Indebtedness, Guarantee or
otherwise, provided that in no event shall the term Investment include the
direct acquisition of the operating assets of another Person.
"Licenses" shall mean certificates of public convenience and necessity,
franchises, licenses and other permits and authorizations from governmental
authorities.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, lien (statutory or otherwise), preference, priority,
security interest, chattel mortgage or other charge or encumbrance of any kind,
or any other type of preferential arrangement, including, without limitation,
the lien or retained security title of a conditional vendor and any easement,
right of way or other encumbrance on title to real property and any lease having
substantially the same effect as any of the foregoing.
"Make Whole Amount" shall mean, at any date, with respect to any
prepayment or payment (whether on account of acceleration or otherwise) of any
Notes, if the Treasury Rate plus 50 basis points at such date is lower than
8.18% per annum, the excess of (a) the present value of the principal and
interest payments on and in respect of the Notes being prepaid or paid, as the
case may be, that would otherwise become due and payable (without giving effect
to such prepayment or payment) (including the final payment on the maturity date
of the Notes), discounted at a rate which is equal to the Treasury Rate plus 50
basis points over (b) the principal amount of the Notes being prepaid or paid,
as the case may be, at par. If the Treasury Rate plus 50 basis points at the
date of such prepayment or payment is equal to or higher than 8.18% per annum,
the Make Whole Amount is zero.
"Material Adverse Change" shall mean a material adverse change in or
effect upon any of (a) the condition (financial or otherwise), business,
performance, operations, properties, profits or prospects of the Company or the
Company and its Subsidiaries taken as one enterprise, (b) the legality, validity
or enforceability of this Agreement, the Notes or any of the other Operative
Documents, including, without limitation, the Liens created or intended to be
created by the Security Documents; (c) the rights and remedies of any holder of
Notes or (d) the ability of the Company or any of its Subsidiaries to perform
its obligations under any of the Operative Documents and/or to comply with any
of the terms thereof applicable to it.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
section 4001(a)(3) of ERISA to which the Company or any ERISA Affiliate is
making or accruing an obligation to make contributions.
"Net Asset Sale Proceeds" shall mean, in the case of any Sale of
Assets, the gross cash proceeds of such sale whenever received by the Company
and its Subsidiaries after deducting: (a) the aggregate amount of Indebtedness
secured by a Lien on the assets so sold or incurred in connection with the
original acquisition of the assets so sold, but in each case only to the extent
such Indebtedness is required to be repaid and is so repaid as a condition to or
upon consummation of such sale, (b) the reasonable out-of-pocket expenses
incurred by the Company and its Subsidiaries in connection with such sale, and
(c) all taxes payable by the Company and its Subsidiaries as a result of such
sale, including taxes in respect of income and profits.
"Net Income" [14.7] of any Person shall mean, for any period, the net
income (or net loss), excluding all extraordinary, unusual, nonrecurring and/or
nonoperating gains or losses of such Person for such period, determined in
accordance with GAAP.
"Net Proceeds of Capital Stock" shall mean, for any period, all cash
proceeds (net of all costs and out-of-pocket expenses in connection therewith,
including, without limitation, placement, underwriting and brokerage fees and
expenses) received by the Company during such period, from the sale of Shares
(but not the sale of Redeemable Shares) of the Company.
"Net Worth" [14.7] of any Person shall mean, at any date, the sum of
(a) the capital stock (excluding treasury stock and capital stock subscribed and
unissued) and (b) surplus (including retained earnings, additional paid-in
capital and the balance of the current profit and loss account not transferred
to surplus) of such Person at such date, determined in accordance with GAAP.
"Note Guarantee" and "Note Guarantees" shall have the respective
meanings specified in section 1.
"Notes" shall have the meaning specified in section 1.
"Officers' Certificate" shall mean a certificate signed on behalf of
the Company by its President or one of its Vice Presidents and by its Treasurer
or one of its Assistant Treasurers.
"Old Bank Agreement" shall have the meaning specified in section 4.3.
"Operative Documents" shall mean this Agreement, the Other Note
Agreements, the Notes, the Security Documents, the Collateral Agency and
Intercreditor Agreement and each of the other agreements, documents and
instruments executed in connection herewith and therewith, each as it may from
time to time be amended, modified or supplemented.
"Other Note Agreements" and "Other Purchasers" shall have the
respective meanings specified in section 1.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, and shall
also mean any successor thereto.
"Permitted Investment" shall mean any of the following Investments:
(a) Investments existing on the date hereof and referred to in
Exhibit 5.9 attached hereto;
(b) Investments by the Company or by any Subsidiary of the
Company in any Wholly-Owned Subsidiary Guarantor (or in any Person
which simultaneously therewith becomes a Wholly-Owned Subsidiary
Guarantor) made by stock purchase, capital contribution, loan or
advance, provided that (i) both at the time of and immediately after
giving effect to any such Investment, no Default or Event of Default
shall have occurred and be continuing and (ii) all such Investments are
made only in Solvent entities (A) which are organized under the laws of
and conduct substantially all of their respective businesses in the
United States of America or a state thereof or the District of Columbia
and having all or substantially all of its property in the United
States of America; and (B) whose lines of business are not materially
different from those in which the Company and its Subsidiaries are now
engaged;
(c) Investments by any Subsidiary of the Company in the
Company;
(d) readily marketable obligations (having a maturity not in
excess of 12 months from the date of acquisition thereof) of, or fully
and unconditionally guaranteed (as to both principal and interest) by,
the United States of America or an agency thereof, or a foreign
government, the treasury obligations of which are rated AAA by Standard
& Poor's Corporation and Aaa by Moody's Investors Service, Inc.;
(e) negotiable certificates of deposit (having a maturity not
in excess of 12 months from the date of acquisition thereof) evidencing
direct obligations of any federally insured commercial bank or trust
company organized and operating in the United States of America having
either (i) capital and surplus and undistributed profits of at least
$100,000,000 or (ii) assets of at least $1,000,000,000 and in each case
having the highest rating available from Moody's Investors Service,
Inc. and Standard & Poor's Corporation;
(f) repurchase agreements (having a term not in excess of 90
days) with any commercial bank or trust company described in clause (e)
above, provided that (i) title to and custody of the collateral for
each such repurchase agreement is held by the Company or an agent of
the Company other than the issuer of such repurchase agreement and
affiliates thereof, (ii) the fair market value (for purposes hereof,
the fair market value of the collateral shall mean the bid prices
thereof as published in a standard publication) of the collateral for
each such repurchase agreement shall at all times be at least 102% of
the amount of such repurchase obligation and (iii) the collateral for
each such repurchase agreement shall be in negotiable form, shall be
free of all liens and shall consist solely of securities of the sort
described in clause (d) above;
(g) accounts receivable arising from transactions in the
ordinary course of business; contingent liabilities represented by
endorsements of negotiable instruments for collection or deposit in the
ordinary course of business; advances, deposits, down payments and
prepayments on account of firm purchase orders made in the ordinary
course of business;
(h) commercial paper and loan participations (having a
maturity not in excess of 270 days from the date of issue ) evidencing
the direct obligation of any corporation organized and operating in the
United States of America and having a rating which is A-1 or P-1 or
better at the time of acquisition thereof;
(i) commercial paper and loan participations (having a
maturity not in excess of 270 days from the date of issue) evidencing
the direct obligation of any corporation organized and operating in the
United States of America and having a rating A-3 or P-3 or better at
the time of acquisition thereof, provided that the aggregate value
(determined as provided in section 14.6) of all Investments made
pursuant to this clause (i) shall not exceed $5,000,000; and
(j) other Investments made after the Closing Date not
otherwise permitted by the preceding clauses of this definition,
provided that (i) all such Investments are made only in Solvent
entities and (ii) both at the time of and immediately after giving
effect to any such Investment, (A) no Default or Event of Default shall
have occurred and be continuing and (B) the aggregate value (determined
as provided in section 14.6) of all Investments made pursuant to this
clause (j) does not exceed 15% of Consolidated Net Worth.
"Person" shall mean an individual, a corporation, an association, a
joint-stock company, a business trust or other similar organization, a
partnership, a limited liability company, a joint venture, a trust, an
unincorporated organization or a government or any agency, instrumentality or
political subdivision thereof.
"Plan" shall mean an "employee benefit plan" (as defined in section
3(3) of ERISA) that is or, within the preceding five years, has been established
or maintained, or to which contributions are or, within the preceding five
years, have been made or required to be made, by the Company or any ERISA
Affiliate or with respect to which the Company or any ERISA Affiliate may have
any liability.
"Preferred Shares", as applied to shares of any Person, shall mean
Shares of such Person which shall be entitled to preference or priority over any
other Shares of such Person in respect of either the payment of dividends or the
distribution of assets upon liquidation.
"Proprietary Rights" shall mean any patents, registered and common law
trademarks, service marks, trade names, copyrights, licenses and other similar
rights (including, without limitation, know-how, trade secrets and other
confidential information) and applications for each of the foregoing, if any.
"Redeemable" shall mean, with respect to any Shares of any Person, each
Share of such Person that is (a) redeemable, payable or required to be purchased
or otherwise retired or extinguished, or convertible into Funded Debt or Current
Debt of such Person, (i) at a fixed or determinable date, whether by operation
of any sinking fund or otherwise, (ii) at the option of any Person other than
such Person or (iii) upon the occurrence of a condition not solely within the
control of such Person or (b) convertible into other Redeemable Shares.
"Rental Obligations" of any Person shall mean, for any period, all
rents and other amounts determined in accordance with GAAP paid, payable or
guaranteed during such period by such Person, as lessee or sublessee under any
lease, including, without limitation, any amount required to be paid by such
Person as rents or additional rents on account of maintenance, repairs,
insurance, taxes, utilities and similar charges determined in accordance with
GAAP. Whenever it is necessary to determine the amount of Rental Obligations for
any period, to the extent that such Rental Obligations are not definitely
determinable by the terms of the lease, the Rental Obligations not so definitely
determinable shall be estimated in good faith and in such reasonable manner as
the Board of Directors of the Company may select (as evidenced by certified
resolutions thereof promptly delivered to the holder or holders of the Notes).
Notwithstanding the foregoing, Rental Obligations of the Company and its
Subsidiaries shall include only that portion of the amounts payable by the
Company under the ATEC Master Sublease and Master Equipment Lease Agreement,
each dated May 24, 1996, which is being expensed by the Company and its
Subsidiaries, which was based on the fair market value of the property subject
to such agreements.
"Required Holders" as applied to describe the required holder or
holders of the Notes, shall mean, at any date, the holder or holders of 51% or
more in aggregate principal amount of the Notes at the time outstanding
(excluding all Notes at the time owned by the Company or any Affiliate of the
Company).
"Restricted Investment" shall mean any investment other than a
Permitted Investment.
"Restricted Payment" as applied to any Person shall mean:
(a) any dividend or other distribution or payment (including
any distribution of properties, assets, cash, rights, obligations or
securities), direct or indirect, on account of any Shares of such
Person now or hereafter outstanding (including, without limitation,
Preferred Shares) or any securities convertible into or exercisable or
exchangeable for such Shares or any rights, options or warrants to
acquire any such Shares, except for (i) any such dividend or
distribution or payment to the Company and/or any Wholly-Owned
Subsidiary Guarantor and (ii) a dividend payable to all of the holders
of the Common Stock solely in shares of Common Stock; and
(b) any redemption, retirement, purchase or other acquisition,
direct or indirect, of any Shares of such Person now or hereafter
outstanding (including, without limitation, Preferred Shares) or any
securities convertible into or exercisable or exchangeable for such
Shares or any rights, options or warrants to acquire any such Shares.
For purposes of this Agreement, the amount of any Restricted Payment
made in property other than cash shall be the greater of (x) the fair
market value of such property (as reasonably determined in good faith
by the board of directors (or equivalent governing body) of the Person
making such Restricted Payment) and (y) the net book value thereof on
the books of such Person, in each case determined as of the date on
which such Restricted Payment is made.
"Sale of Assets" shall have the meaning specified in section 14.13.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor federal statute, and the rules and regulations promulgated
thereunder, all as amended, modified or supplemented from time to time.
"Security Agreement" and "Security Agreements" shall have the
respective meanings specified in section 1.
"Security Document" and "Security Documents" shall have the respective
meanings specified in section 1.
"Senior Debt" shall mean all Funded Debt and/or Current Debt of the
Company, including, without limitation, the Notes and the Current Debt and
Funded Debt outstanding under the Bank Credit Agreement, other than any such
Funded Debt or Current Debt which is subordinate in right of payment to the
Notes and/or the Current Debt and Funded Debt outstanding under the Bank Credit
Agreement.
"Shares" of any Person shall include any and all shares of capital
stock, partnership interests, membership interests, or other shares, interests,
participations or other equivalents (however designated of any class) in the
capital of, or other ownership interests in, such Person.
"Solvent" as applied to any Person at any date shall mean that on and
as of such date (a) the fair value of the properties and assets of such Person
is greater than the total amount of liabilities, including, without limitation,
contingent liabilities, of such Person, (b) the present fair salable value of
the properties and assets of such Person is not less than the amount that will
be required to pay the probable liability of such Person on its debts as they
become absolute and matured, (c) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person's ability to
pay as such debts and liabilities mature and (d) such Person is not engaged in
business or a transaction, and is not about to engage in business or a
transaction, for which such Person's properties and assets would constitute an
unreasonably small capital. The amount of contingent liabilities on and as of
any date shall be computed as the amount that, in the light of all the facts and
circumstances existing on and as of such date, represents the amount that can
reasonably be expected to become an actual or matured liability. For purposes of
this definition, "Person" shall mean, where so required by the context in which
the term "Solvent" appears, such Person and its Subsidiaries taken as a whole.
"Source" shall have the meaning specified in section 10(b).
"Subsidiary" of any Person at any date shall mean (a) any other Person
a majority (by number of votes) of the Voting Stock of which is owned by such
first-mentioned Person and/or by one or more other Subsidiaries of such
first-mentioned Person; (b) any other Person of which such first-mentioned
Person or any of its other Subsidiaries is a general partner; and (c) any other
Person with respect to which such first-mentioned Person and/or any one or more
other Subsidiaries of such first-mentioned Person (i) is entitled to 50% or more
of such Person's profits or losses or 50% or more of such Person's assets on
liquidation or (ii) holds an equity interest in such Person of 50% or more or
(iii) is entitled to elect or direct the election of the majority of the
directors or other governing body of such Person. As used herein, unless the
context clearly requires otherwise, the term "Subsidiary" refers to a Subsidiary
of the Company.
"Successor Corporation" shall have the meaning specified in section
14.11.
"Test Period" shall have the meaning specified in section 14.6.
"Total Debt" [14.5] of any Person shall mean, at any date, the sum of
Funded Debt and Current Debt of such Person outstanding on such date (which
shall not be deemed to include undrawn commitments under the Bank Credit
Documents).
"Treasury Rate" at any time with respect to any Notes being prepaid or
paid (whether on account of acceleration or otherwise), as the case may be,
shall mean and shall be determined by reference to the applicable display on the
Bloomberg Financial Markets Service as of 10:00 A.M., Boston time, on the second
Business Day prior to the date fixed for such prepayment or payment (or, if such
display is no longer available, any publicly available source of similar market
data as selected by the Required Holders of the Notes), and shall be the yield
on actively traded United States Treasury securities adjusted to a maturity
equal to the then remaining Weighted Average Life to Maturity of the Notes then
being prepaid or paid (whether on account of acceleration or otherwise) (the
"Remaining Life"). If the Remaining Life is not equal to the maturity of a
United States Treasury security for which a yield is given, the Treasury Rate
shall be obtained by linear interpolation (calculated to the nearest one-twelfth
of a year) from the weekly average yields of the two closest United States
Treasury securities for which such yields are given, except that if the
Remaining Life is less than one year, the average yield on actively traded
United States Treasury securities adjusted to a constant maturity of one year
shall be used. The Treasury Rate shall be computed to the fifth decimal place
(one-thousandth of a percentage point) and then rounded to the fourth decimal
place (one-hundredth of a percentage point).
"Voting Stock", when used with reference to any Person, shall mean
Shares (however designated) of such Person having ordinary voting power for the
election of a majority of the members of the board of directors (or other
governing body) of such Person, other than Shares having such power only by
reason of the happening of a contingency.
"Weighted Average Life to Maturity" of any Indebtedness or obligation
shall mean, at any date, the number of years obtained by dividing the then
Remaining Dollar-years of such Indebtedness or obligation by the then
outstanding principal amount of such Indebtedness or obligation. For purposes of
this definition, the "Remaining Dollar-years" of any Indebtedness or obligation
shall mean, at any date, the total of the products obtained by multiplying (a)
the amount of each then remaining installment, sinking fund, serial maturity or
other required payment, including payment at final maturity, in respect thereof,
by (b) the number of years (calculated to the nearest one-twelfth) which will
elapse between such date and the making of such payment.
"Wholly-Owned Subsidiary" shall mean any Subsidiary all of the
outstanding shares of which, other than directors' qualifying shares, shall at
the time be owned by the Company and/or by one or more other Wholly-Owned
Subsidiaries and the accounts of which are consolidated with those of the
Company in accordance with GAAP.
"Wholly-Owned Subsidiary Guarantor" shall mean any Wholly-Owned
Subsidiary that has delivered to each holder of any Notes a valid, binding and
enforceable Note Guarantee and Security Agreement, and all of whose properties
and assets which constitute Collateral are subject to valid and enforceable
first priority perfected Liens in favor of the Collateral Agent.
"Withdrawal Liability" shall have the meaning given such term under
Part 1 of Subtitle E of Title IV of ERISA.
Other Definitions. The terms defined in this section 15.2, whenever
used in this Agreement, shall, unless the context otherwise requires, have the
respective meanings hereinafter specified.
"this Agreement" (and similar references to any of the other Operative
Documents) shall mean, and the words "herein" (and "therein"), "hereof" (and
"thereof"), "hereunder" (and "thereunder") and words of similar import shall
refer to, such instruments as they may from time to time be amended, modified or
supplemented.
"corporation" shall include an association, joint stock company,
business trust or other similar organization.
"premium" when used in conjunction with references to principal of and
interest on the Notes, shall mean any amount due upon any payment or prepayment
of any of the Notes, other than principal and interest, and shall include the
Make Whole Amount.
Accounting Terms and Principles; Laws.es; Laws
(a) All accounting terms used herein which are not expressly
defined in this Agreement shall have the respective meanings given to
them, all computations made pursuant to this Agreement shall be made
and all financial statements shall be prepared in accordance with GAAP
as in effect in the United States from time to time.
(b) All references herein to laws, statutes, rules,
regulations and/or to other governmental restrictions, standards and/or
requirements shall, unless the context clearly requires otherwise, be
deemed to refer to those promulgated, issued and/or enforced by any
domestic or foreign federal, state or local government, governmental
agency, authority, court, instrumentality or regulatory body,
including, without limitation, those of the United States of America or
any state thereof or the District of Columbia.
Remedies.Remedies
Events of Default Defined; Acceleration of Maturity. If any one or more
of the following events ("Events of Default") shall occur (for whatever reason),
that is to say:
(a) if default shall be made in the due and punctual payment
of all or any part of the principal of, or premium (if any) on, any
Note, when and as the same shall become due and payable, whether at the
stated maturity thereof, by notice of or demand for prepayment, or
otherwise;
(b) if default shall be made in the due and punctual payment
of any interest on any Note when and as such interest shall become due
and payable and such default shall have continued for a period of five
Business Days;
(c) if default shall be made in the performance or observance
of any term of sections 7(g), 8, 9.7, 14.2(b), or 14.5 to 14.18,
inclusive of this Agreement or of any term of sections 1.04 or 1.05 of
any of the Security Agreements;
(d) if default shall be made in the performance or observance
of any other term in this Agreement or any of the other Operative
Documents and such default shall have continued for a period of 30 days
after the earlier to occur of (i) the Company's obtaining actual
knowledge of such default or (ii) the Company's receipt of written
notice of such default;
(e) if the Company or any Subsidiary of the Company shall make
a general assignment for the benefit of creditors, or shall not pay its
debts as they become due, or shall admit in writing its inability to
pay its debts as they become due, or shall file a voluntary petition in
bankruptcy, or shall be adjudicated bankrupt or insolvent, or shall
file any petition or answer seeking for itself any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
similar relief under any present or future statute, law or regulation,
or shall file any answer admitting or not contesting the material
allegations of a petition filed against it in any such proceeding, or
shall seek or consent to or acquiesce in the appointment of any
trustee, custodian, receiver, liquidator or fiscal agent for it or for
all or any substantial part of its properties, or the Company or any
Subsidiary of the Company or its board of directors or controlling
equityholders shall take any corporate or similar action looking to its
dissolution or liquidation;
(f) if, within 60 days after the commencement of an action
against the Company or any Subsidiary of the Company seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law
or regulation, such action shall not have been dismissed or all orders
or proceedings affecting the operations or business of the Company or
such Subsidiary stayed, or if the stay of any such order or proceeding
shall thereafter be set aside, or if, within 60 days after the
appointment without the consent or acquiescence of the Company or such
Subsidiary of any trustee, custodian, receiver, liquidator or fiscal
agent for the Company or any Subsidiary of the Company or for all or
any substantial part of their respective properties, such appointment
shall not have been vacated;
(g) if, under the provisions of any law for the relief or aid
of debtors, any court or governmental agency of competent jurisdiction
shall assume custody or control of the Company or of any Subsidiary of
the Company or of all or any substantial part of their respective
properties;
(h) if (i) the Company or any Subsidiary of the Company shall
fail to make any payment due on any Indebtedness (other than the Notes
and Indebtedness under the Bank Credit Documents) or other obligation
or to perform, observe or discharge any covenant, condition or
obligation in any agreement, document or instrument evidencing,
securing or relating to such Indebtedness or other obligation, and such
failure shall continue beyond any applicable grace period, if the
aggregate outstanding amount thereof exceeds $2,000,000 or if the
aggregate outstanding amount thereof together with any other
Indebtedness or other obligation as to which the Company is in default
exceeds $3,000,000, (ii) any such Indebtedness or other obligation
shall become due and payable by its terms and shall not be paid or
extended or (iii) as a consequence of the occurrence or continuation of
any event or condition, the Company or any Subsidiary of the Company
shall become obligated to purchase or repay any such Indebtedness or
obligation before its regular maturity or before its regularly
scheduled date of payment (or one or more Persons shall have the right
to require the Company or any Subsidiary of the Company so to purchase
or repay such Indebtedness or other obligation); provided that any
payment made into an escrow account or to a court appointed trustee,
pending the settlement of a bona fide dispute with respect to any such
Indebtedness or other obligation, shall not be deemed a failure to make
such payment for purposes of this clause (h) so long as such payment
cures or suspends the existence of the default under the underlying
obligation;
(i) if (i) the Company or any Subsidiary of the Company shall
fail to make any payment due on any Indebtedness under the Bank Credit
Documents or to perform, observe or discharge any covenant, condition
or obligation in any agreement, document or instrument evidencing,
securing or relating to such Indebtedness, and such failure shall
continue beyond any applicable grace period, (ii) any such Indebtedness
shall become due and payable by its terms and shall not be paid or
extended or (iii) as a consequence of the occurrence or continuation of
any event or condition, the Company or any Subsidiary of the Company
shall become obligated to purchase or repay any such Indebtedness
before its regular maturity or before its regularly scheduled date of
payment (or one or more Persons shall have the right to require the
Company or any Subsidiary of the Company so to purchase or repay such
Indebtedness);
(j) if a final judgment for the payment of money which,
together with all other outstanding final judgments for the payment of
money against the Company and/or any of its Subsidiaries, exceeds an
aggregate of $2,500,000 shall be rendered by a court of record against
the Company or any Subsidiary, and the Company or such Subsidiary shall
not discharge the same or provide for its discharge in accordance with
its terms, or procure a stay of execution thereof within 45 days from
the date of entry thereof and within such period of 45 days, or such
longer period during which execution of such judgment shall have been
stayed, move to vacate such judgment or appeal therefrom and cause the
execution thereof to be stayed pending determination of such motion or
during such appeal;
(k) if any representation or warranty made by or on behalf of
the Company or any Subsidiary of the Company in this Agreement or in
any of the other Operative Documents or in any agreement, document or
instrument delivered under or pursuant to any provision hereof or
thereof shall prove to have been false or incorrect in any material
respect on the date as of which made;
(l) if, at any time, this Agreement or any of the other
Operative Documents shall for any reason (other than the scheduled
termination thereof in accordance with its terms) expire, fail to be in
full force and effect or be disaffirmed, repudiated, canceled,
terminated or declared to be unenforceable, null and void (other than
by a holder of the Notes (excluding the Company or any Affiliate of the
Company));
(m) if any foreclosure proceeding to exercise a power of sale
or other similar proceeding is instituted or any attempted sale,
seizure or other similar enforcement action is instituted by the holder
of any Lien upon all or any part of the assets of the Company or any of
its Subsidiaries whether or not the Lien is prior to or subordinate to
any of the Security Documents; or
(n) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is
sought or granted under section 412 of the Code, (ii) a notice of
intent to terminate any Plan shall have been or is reasonably expected
to be filed with the PBGC or the PBGC shall have instituted proceedings
under section 4042 of ERISA to terminate or appoint a trustee to
administer any Plan or the PBGC shall have notified the Company or any
ERISA Affiliate that a Plan may become a subject of any such
proceedings, (iii) the aggregate "amount of unfunded benefit
liabilities" (within the meaning of section 4001(a)(18) of ERISA) under
all Plans, determined in accordance with Title IV of ERISA, shall
exceed $250,000, (iv) the Company or any ERISA Affiliate shall have
incurred or is reasonably expected to incur any liability pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of the
Code relating to employee benefit plans, (v) the Company or any ERISA
Affiliate withdraws from any Multiemployer Plan, or (vi) the Company or
any Subsidiary of the Company establishes or amends any employee
welfare benefit plan that provides post-employment welfare benefits in
a manner that would increase the liability of the Company and/or its
Subsidiaries thereunder; and any such event or events described in
clauses (i) through (vi) above, either individually or together with
any other such event or events, has resulted in, or could reasonably be
expected to result in, a Material Adverse Change;
then, in the case of any Event of Default (other than one of the character
described in subdivisions (e), (f) or (g) of this section 16.1) and at the
option of the Required Holders of the Notes at the time outstanding (excluding
any Notes at the time owned by the Company or any Affiliate of the Company),
exercised by written notice to the Company, the principal of all Notes shall
forthwith become due and payable, together with interest accrued thereon,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived, and the Company shall forthwith upon any such
acceleration pay to the holder or holders of all the Notes then outstanding (i)
the entire principal of and interest accrued on the Notes, and (ii) in addition,
to the extent permitted by applicable law, an amount equal to the Make Whole
Amount, as liquidated damages and not as a penalty; provided that, in the case
of an Event of Default of the character described in section 16.1(a) or 16.1(b)
and irrespective of whether all of the Notes have been declared due and payable
by the Required Holders of the Notes at the time outstanding (except any Notes
at the time owned by the Company or any Affiliate of the Company), any holder of
Notes who or which has not consented to any waiver with respect to such Event of
Default may, at the option of such holder, by written notice to the Company,
declare all Notes then held by such holder to be, and such Notes shall thereupon
become, forthwith due and payable, together with interest accrued thereon,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived, and the Company shall forthwith upon any such
acceleration pay to such holder (i) the entire principal of and interest accrued
on such Notes, and (ii) in addition, to the extent permitted by applicable law,
an amount equal to the Make Whole Amount, as liquidated damages and not as a
penalty; provided, further, that, in the case of an Event of Default of the
character described in section 16.1(e), (f) and (g), the principal of all Notes
shall forthwith become due and payable, together with interest accrued thereon
(including any interest accruing after the commencement of any action or
proceeding under any bankruptcy, insolvency or other similar law, and any other
interest that would have accrued but for the commencement of such proceeding,
whether or not any such interest is allowed as an enforceable claim in such
proceeding), without presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived, and the Company shall forthwith upon
any such acceleration pay to the holder or holders of all the Notes then
outstanding (i) the entire principal of and interest accrued on the Notes, and
(ii) in addition, to the extent permitted by applicable law, an amount equal to
the Make Whole Amount, as liquidated damages and not as a penalty.
Notwithstanding the foregoing provisions, at any time after the
occurrence of any Event of Default and of notice thereof, if any, by any holder
or holders of Notes and before any judgment, decree or order for payment of the
money due has been obtained by or on behalf of any holder or holders of the
Notes, the Required Holders of the Notes by written notice to the Company, may
rescind and annul such Event of Default and/or notice of such Event of Default
and the consequences thereof with respect to all of the Notes (including any
Notes which were accelerated pursuant to the first proviso in the preceding
paragraph by any holder or holders on account of an Event of Default of the
character described in section 16.1(a) or (b)) if (1) the Company has paid a sum
sufficient to pay (A) all overdue installments of interest on all Notes at the
rate specified in the Notes, (B) the principal of (and premium, if any, on) any
Notes which have become due otherwise than by such Event of Default or notice
thereof and interest thereon at the rate for overdue amounts specified in the
Notes and (C) to the extent that payment of such interest is lawful, interest
upon overdue interest at the rate for overdue amounts specified in the Notes and
(2) all Defaults and Events of Default, other than the non-payment of the
principal of Notes which have become due solely by such acceleration, have been
cured or waived as provided in section 19. No such rescission shall affect any
subsequent default or impair any right consequent thereon.
16.2. Suits for Enforcement, etc. In case any one or more of the Events
of Default specified in section 16.1 shall have occurred, and irrespective of
whether any Notes have become or have been declared immediately due and payable
under section 16.1, the holder of any Note may proceed to protect and enforce
its rights either by suit in equity or by action at law, or both, whether for
the specific performance of any covenant or agreement applicable to such Note in
this Agreement or any of the other Operative Documents or in aid of the exercise
of any power granted herein or therein, or such holder may proceed to enforce
any other legal or equitable right of the holder of such Note, including the
payment of such Note. The Company stipulates that the remedies at law of the
holder or holders of the Notes in the event of any default or threatened default
by the Company in the performance of or compliance with any covenant or
agreement in this Agreement or any of the other Operative Documents are not and
will not be adequate and that, to the fullest extent permitted by law, such
terms may be specifically enforced by a decree for the specific performance
thereof, whether by an injunction against a violation thereof or otherwise.
Without limiting the generality of the foregoing (and without derogating from
any provision contained in this Agreement or any of the other Operative
Documents), upon the occurrence and during the continuance of an Event of
Default, the Required Holders of the Notes shall have the right to apply for and
have a receiver appointed for the Company and its Subsidiaries, or any one or
more of them, by a court of competent jurisdiction in any action taken by any
such holders to enforce their respective rights and remedies hereunder and under
the other Operative Documents in order to manage, protect and preserve the
assets of the Company and its Subsidiaries and continue the operation of the
business of the Company and its Subsidiaries, or to sell or dispose of the
assets of the Company and its Subsidiaries, and to collect all revenues and
profits thereof and apply the same to the payment of all expenses and other
charges of such receivership, including the compensation of the receiver, and
the Company hereby consents to such appointment without regard to the existence
of any misfeasance or malfeasance or the presence of any defenses that would
otherwise be available to such application.
Remedies Cumulative. No remedy conferred in this Agreement or in any of
the other Operative Documents upon the holder of any Note is intended to be
exclusive of any other remedy, and each and every such remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or
thereunder or now or hereafter existing at law or in equity or by statute or
otherwise.
Remedies Not Waived. No course of dealing between the Company and any
of its Subsidiaries, on the one hand, and any holder of any Note, on the other
hand, and no delay by any such holder in exercising any rights hereunder or
under any of the other Operative Documents shall operate as a waiver of any
rights of any such holder.
Application of Payments. In case any one or more of the Events of
Default specified in section 16.1 shall have occurred, all amounts to be applied
to the prepayment or payment of any Notes, shall be applied, after the payment
of all related costs and expenses incurred by the holders of the Notes
(including, without limitation, compensation to any and all trustees,
liquidators, receivers or similar officials and reasonable fees, expenses and
disbursements of counsel) in such order of priority as is determined by the
Required Holders of the Notes.
Registration, Transfer and Exchange of Notes. Notes
(a) Notes issued hereunder shall be issued in registered form.
The Company shall keep at its principal executive office (which is now
located at the address set forth at the beginning of this Agreement), a
register in which it shall provide for the registration and transfer of
the Notes. The name and address of each holder of the Notes shall be
registered in such register and at the time of any transfer of any
Notes, the Company may require the transferee to specify its address
for payments, notices and other purposes. The Company shall furnish to
any institutional holder of any Notes, promptly following request
therefor, a complete and correct copy of the names and addresses of all
registered holders of the Notes.
(b) Whenever any Note or Notes shall be surrendered for
transfer or exchange (it being agreed that Notes surrendered for
transfer may be submitted to the Company by either the transferor or
the transferee), the Company at its expense will execute and deliver in
exchange therefor a new Note or Notes as may be requested by such
holder, in the same aggregate unpaid principal amount as that of the
Note or Notes so surrendered. Each such new Note shall be in registered
form, shall be dated so as not to result in any loss of interest and
shall be in such principal amount or amounts and registered in such
name or names as such holder may designate in writing.
(c) The Company may treat the Person in whose name any Note is
registered as the owner of such Note for the purpose of receiving any
payment due on such Note, whether or not such Note be overdue, and for
all other purposes, and the Company shall not be affected by any notice
to the contrary.
(d) The Company shall not be obligated to issue to any Person
any Note in a denomination of less than $500,000 unless the aggregate
principal amount of all Notes held or to be held by such Person and its
Affiliates is $500,000 or more, in which case the Company shall issue
such number of Notes and in such denominations as such Person shall
request, or such Person is acquiring all of the Notes held by any other
Person and the Affiliates of such other Person. The figure "$500,000"
in each instance it appears in the immediately preceding sentence shall
be reduced from time to time in the same proportion as the aggregate
unpaid principal amount of all of the Notes is reduced as a result of
any prepayment thereof.
Replacement of Notes. Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of any Note and
(in case of loss, theft or destruction) of indemnity reasonably satisfactory to
it, and (in the case of mutilation) upon surrender and cancellation of such
Note, the Company at its expense will execute and deliver in lieu of such Note a
new Note of like tenor and dated so as not to result in any loss of interest.
Your unsecured agreement to indemnify and/or affidavit and that of any other
institutional holder shall constitute indemnity and/or evidence of loss, theft,
destruction or mutilation satisfactory to the Company for the purpose of this
section 18.
Amendment and Waiver. Waiver
(a) Any term of this Agreement and, unless explicitly provided
otherwise therein, of any of the other Operative Documents may, with
the consent of the Company, be amended, or compliance therewith may be
waived, by one or more substantially concurrent written instruments
signed by the Required Holders of the Notes, provided that (i) without
the consent of the holders of all of the Notes at the time outstanding,
no such amendment or waiver shall (A) change the amount of the
principal of or the rate of interest on or amounts of any premium
payable with respect to any of the Notes, or change the payment terms
of any of the Notes, or subordinate the obligation of the Company to
pay any amount due on the Notes to any other obligation, or (B) change
the percentage of holders of Notes required to approve any such
amendment, effectuate any such waiver or accelerate payment of the
Notes; and (ii) no such amendment or waiver shall extend to or affect
any obligation not expressly amended or waived or impair any right
consequent thereon.
(b) The Company will not, directly or indirectly, solicit,
request or negotiate for or with respect to any term of the Operative
Documents unless each holder of the Notes shall be afforded the
opportunity of considering the same and shall be supplied by the
Company with sufficient information to enable it to make an informed
decision with respect thereto. Executed or true and correct copies of
any amendment or waiver effected pursuant to this section 19 shall be
delivered by the Company to each holder of Notes forthwith (but in any
event not later than five days) following the effective date thereof.
The Company will not, directly or indirectly, pay or cause to be paid
any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, to any holder of the Notes as consideration
for or as an inducement to the entering into by any holder thereof of
any amendment or waiver of any term of the Operative Documents unless
such remuneration is concurrently offered, on the same terms, ratably
to all of the holders of the Notes.
Expenses; Indemnity. Whether or not the transactions contemplated by any of the
Operative Documents shall be consummated, the Company will pay or cause to be
paid (or reimbursed, as the case may be) and will defend, indemnify and hold you
(and each other holder of any of the Notes) and each of your (and such other
holder's) directors, officers, employees, agents, advisors and Affiliates (each,
an "Indemnitee") harmless (on an after tax basis) in respect of all costs,
losses, expenses (including, without limitation, the reasonable fees, costs,
expenses and disbursements of counsel) and damages (collectively, "Indemnified
Costs") incurred by or asserted against any Indemnitee in connection with the
negotiation, execution, delivery, performance and/or enforcement of this
Agreement or any of the other Operative Documents (including, without
limitation, so-called work-outs and/or restructurings and all amendments,
waivers and consents hereunder and thereunder, whether or not effected) and/or
the consummation of the transactions contemplated hereby and thereby or which
may otherwise be related in any way to this Agreement or any other Operative
Documents or such transactions or such Indemnitee's relationship to the Company
or any of its Affiliates or any of their respective properties and assets,
including, without limitation, (a) any and all Indemnified Costs related in any
way to the requirements of any Environmental Laws (as the same may be amended,
modified or supplemented from time to time) or to any environmental
investigation, assessment, site monitoring, containment, clean up, remediation,
removal, restoration, reporting and sampling, whether or not consented to, or
requested or approved by, any Indemnitee, and whether or not such Indemnified
Cost is attributable to an event or condition originating from any properties or
assets of the Company or any of its Subsidiaries or any other properties
previously or hereafter owned, leased, occupied or operated by the Company or
any of its Subsidiaries, and (b) any taxes and fees (including interest and
penalties), including, without limitation, all recording and filing fees,
issuance, revenue and documentary stamp and similar taxes, which may be payable
by the Collateral Agent or any Indemnitee in respect of the execution and
delivery of this Agreement, the Security Documents and each of the other
Operative Documents, including the execution and delivery (but not the transfer)
of any Note or in respect of any amendment of or waiver under or with respect to
this Agreement or any of the other Operative Documents. Notwithstanding the
foregoing, the Company shall not have any obligation to an Indemnitee under this
section 20 with respect to any Indemnified Cost which is finally determined by a
court of competent jurisdiction to have arisen solely and directly as a result
of the willful misconduct or bad faith of such Indemnitee.
21. Communications. All communications provided for herein and, unless
explicitly provided otherwise therein, in any of the other Operative Documents
shall be in writing and sent (a) by telecopy if the sender on the same day sends
a confirming copy of such communication by a recognized overnight delivery
service (charges prepaid), (b) by a recognized overnight delivery service
(charges prepaid), or (c) by messenger. Any such communication must be sent, (i)
if to the Company (or any Subsidiary of the Company), to the Company (or such
Subsidiary) at:
ATC Group Services Inc.
104 East 25th Street, 10th Fl.
New York, NY 10010
Attention:
Telecopy No.: (212) 353-8280
with a copy (which shall not constitute notice) to:
Kaufmann, Feiner, Yamin, Gildin & Robbins, LLP
777 Third Avenue, 24th Floor
New York, New York 10017
Attention: Richard H. Rosenblum, Esq.
Telecopy No.: (212) 755-3174
or at such other address (or telecopy number) as may be furnished in writing by
the Company to each holder of any Note, and (ii) if to you, at your address for
such purpose set forth in Schedule I attached hereto with a copy (which shall
not constitute notice) to:
Choate, Hall & Stewart
Exchange Place
53 State Street
Boston, MA 02109
Attention: Frank B. Porter, Jr., Esq.
Telecopy No.: (617) 248-4000
and if to any other holder of any Note, at the address of such holder as it
appears on the applicable register maintained pursuant to section 17 or at such
other address and/or telecopy number as may be furnished in writing by you or by
any other holder to the Company. Communications under this section 21 shall be
deemed given only when actually received.
22. Survival of Agreements, Representations and Warranties, etc. All agreements,
representations and warranties contained herein and in the other Operative
Documents or made in writing by or on behalf of the Company or its Subsidiaries
in connection with the transactions contemplated by the Operative Documents
shall be deemed to have been relied upon by you and shall survive the execution
and delivery of this Agreement and each of the other Operative Documents, the
issue, sale and delivery of the Notes and payment therefor and any disposition
of the Notes by you, whether or not any investigation at any time is made by you
or on your behalf. All statements contained in any certificate delivered to you
by or on behalf of the Company or its Subsidiaries in connection with the
transactions contemplated by the Operative Documents shall constitute
representations and warranties by the Company under this Agreement and shall be
subject to the terms of this section 22. The covenants contained in section 20
shall survive the date upon which none of the Notes shall be outstanding and the
termination of this Agreement and each of the other Operative Documents.
Successors and Assigns; Rights of Other Holders. This Agreement and, unless
explicitly provided otherwise therein, each of the other Operative Documents
shall bind and inure to the benefit of and be enforceable by the Company and
you, successors to the Company and your successors and assigns, and, in
addition, shall inure to the benefit of and be enforceable by each holder from
time to time of any Notes who, upon acceptance thereof, shall, without further
action, be entitled to enforce the applicable provisions and enjoy the
applicable benefits hereof and thereof. The Company may not assign any of its
rights or obligations hereunder or under any of the other Operative Documents
without the written consent of the Required Holders.
Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement and, unless
explicitly provided otherwise therein, each of the other Operative Documents,
including the validity hereof and thereof and the rights and obligations of the
parties hereunder and thereunder, and all amendments and supplements hereof and
thereof and all waivers and consents hereunder and thereunder, shall be
construed in accordance with and governed by the domestic substantive laws of
the State of New York without giving effect to any choice of law or conflicts of
law provision or rule that would cause the application of the domestic
substantive laws of any other jurisdiction. The Company, to the extent that it
may lawfully do so, hereby consents to service of process, and to be sued, in
The Commonwealth of Massachusetts and consents to the jurisdiction of the courts
of The Commonwealth of Massachusetts and the United States District Court for
the District of Massachusetts, as well as to the jurisdiction of all courts to
which an appeal may be taken from such courts, for the purpose of any suit,
action or other proceeding arising out of any of its obligations hereunder or
thereunder or with respect to the transactions contemplated hereby or thereby,
and expressly waives any and all objections it may have as to venue in any such
courts. The Company further agrees that a summons and complaint commencing an
action or proceeding in any of such courts shall be properly served and shall
confer personal jurisdiction if served personally or by certified mail to it at
its address set forth in section 21 or as otherwise provided under the laws of
the State of New York or The Commonwealth of Massachusetts, as the case may be.
Notwithstanding the foregoing, the Company agrees that nothing contained in this
section 24 shall preclude the institution of any such suit, action or other
proceeding in any jurisdiction other than the State of New York or The
Commonwealth of Massachusetts. THE COMPANY IRREVOCABLY WAIVES ALL RIGHT TO A
TRIAL BY JURY IN ANY SUIT, ACTION OR OTHER PROCEEDING INSTITUTED BY OR AGAINST
THE COMPANY IN RESPECT OF ITS OBLIGATIONS HEREUNDER OR THEREUNDER OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
Miscellaneous. The headings in this Agreement and in each of the other Operative
Documents are for purposes of reference only and shall not limit or otherwise
affect the meaning hereof or thereof. This Agreement (together with the other
Operative Documents) embodies the entire agreement and understanding between you
and the Company and supersedes all prior agreements and understandings relating
to the subject matter hereof. Each covenant contained herein and in each of the
other Operative Documents shall be construed (absent an express provision to the
contrary) as being independent of each other covenant contained herein and
therein, so that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant. If any provision in this Agreement or in any of the other Operative
Documents refers to any action taken or to be taken by any Person, or which such
Person is prohibited from taking, such provision shall be applicable, whether
such action is taken directly or indirectly by such Person, whether or not
expressly specified in such provision. In case any provision in this Agreement
or any of the other Operative Documents shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby. This Agreement
and, unless explicitly provided otherwise therein, each of the other Operative
Documents, may be executed in any number of counterparts and by the parties
hereto or thereto, as the case may be, on separate counterparts but all such
counterparts shall together constitute but one and the same instrument.
[The remainder of this page is left blank intentionally.]
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement under seal between you and the Company. Please
then return one of such counterparts to the Company.
Very truly yours,
ATC GROUP SERVICES INC.
By: /s/ MORRY F. RUBIN
-----------------------------
Morry F. Rubin, President
The foregoing Agreement is hereby agreed to as of the date thereof.
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By: /s/ STEPHEN J. BLEWITT
Stephen J. Blewitt,
Senior Investment Officer
DS1:330049
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement under seal between you and the Company. Please
then return one of such counterparts to the Company.
Very truly yours,
ATC GROUP SERVICES INC.
By: /s/ MORRY F. RUBIN
-----------------------------
Morry F. Rubin, President
The foregoing Agreement is hereby agreed to as of the date thereof.
JOHN HANCOCK VARIABLE LIFE
INSURANCE COMPANY
By: /s/ STEPHEN J. BLEWITT
Stephen J. Blewitt,
Authorized Signatory
DS1:330049
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement under seal between you and the Company. Please
then return one of such counterparts to the Company.
Very truly yours,
ATC GROUP SERVICES INC.
By: /s/ MORRY F. RUBIN
-----------------------------
Morry F. Rubin, President
The foregoing Agreement is hereby agreed to as of the date thereof.
JOHN HANCOCK LIFE INSURANCE
COMPANY OF AMERICA
By: /s/ STEPHEN J. BLEWITT
Stephen J. Blewitt,
Authorized Signatory
DS1:330049
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement under seal between you and the Company. Please
then return one of such counterparts to the Company.
Very truly yours,
ATC GROUP SERVICES INC.
By: /s/ MORRY F. RUBIN
-----------------------------
Morry F. Rubin, President
The foregoing Agreement is hereby agreed to as of the date thereof.
SIGNATURE 1A (CAYMAN), LTD.
By: John Hancock Mutual Life Insurance
Company, Portfolio Advisor
By: /s/ STEPHEN J. BLEWITT
Stephen J. Blewitt,
Senior Investment Officer
DS1:330049
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement under seal between you and the Company. Please
then return one of such counterparts to the Company.
Very truly yours,
ATC GROUP SERVICES INC.
By: /s/ MORRY F. RUBIN
-----------------------------
Morry F. Rubin, President
The foregoing Agreement is hereby agreed to as of the date thereof.
ORIX USA CORPORATION
By: /s/ CHARLES D. HOOKER
Charles D. Hooker, Man. Dir.
DS1:330049
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement under seal between you and the Company. Please
then return one of such counterparts to the Company.
Very truly yours,
ATC GROUP SERVICES INC.
By: /s/ MORRY F. RUBIN
-----------------------------
Morry F. Rubin, President
The foregoing Agreement is hereby agreed to as of the date thereof.
THE CANADA LIFE ASSURANCE COMPANY
By: /s/ KEVIN PHELAN
Kevin Phelan, Asst. Treas.
DS1:330049
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement under seal between you and the Company. Please
then return one of such counterparts to the Company.
Very truly yours,
ATC GROUP SERVICES INC.
By: /s/ MORRY F. RUBIN
-----------------------------
Morry F. Rubin, President
The foregoing Agreement is hereby agreed to as of the date thereof.
CANADA LIFE INSURANCE COMPANY
OF AMERICA
By: /s/ KEVIN PHELAN
Kevin Phelan, Asst. Treas.
DS1:330049
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement under seal between you and the Company. Please
then return one of such counterparts to the Company.
Very truly yours,
ATC GROUP SERVICES INC.
By: /s/ MORRY F. RUBIN
-----------------------------
Morry F. Rubin, President
The foregoing Agreement is hereby agreed to as of the date thereof.
CANADA LIFE INSURANCE COMPANY
OF NEW YORK
By: /s/ KEVIN PHELAN
Kevin Phelan, Asst. Treas.
DS1:330049
<PAGE>
H:\RE\JH\ATCGROUP\CREDITAG.2\8105-10\5/23/97
CREDIT AGREEMENT
dated as of
May 29, 1997
among
ATC GROUP SERVICES INC., Borrower,
The Lenders Party Hereto
and
THE CHASE MANHATTAN BANK,
as Administrative Agent
----------------------------------
<PAGE>
1
H:\RE\JH\ATCGROUP\CREDITAG.2\8105-10\5/23/97
CREDIT AGREEMENT dated as of May 29, 1997, among ATC GROUP SERVICES
INC., a corporation organized and existing under the laws of the State of
Delaware, having its principal office and place of business located at 104 East
25th Street, New York, N.Y. 10010 (the "Borrower"); the LENDERS party hereto
(each a "Lender" and, collectively, the "Lenders") and THE CHASE MANHATTAN BANK,
as Administrative Agent.
PREAMBLE
WHEREAS, the Borrower is about to issue and sell senior secured notes
(each a "Note" and collectively, the "Notes") in the aggregate principal amount
of $32,500,000 pursuant to certain note agreements as amended, modified, and
supplemented, from time to time, in accordance therewith (each a "Note
Agreement" and collectively, the "Note Agreements") between the Borrower and the
purchasers of such notes together with their successors and assigns, (each a
"Note Holder" and collectively, the "Note Holders"), and;
WHEREAS, the Note Agreements require that the Borrower shall have
executed a revolving credit agreement pursuant to which the Lenders shall have
agreed to make revolving credit loans to the Borrower from time to time up to
the maximum principal amount at any one time outstanding of $15,000,000, and;
WHEREAS, the Notes and the revolving credit loans are to be guaranteed
by the Guarantors (such term, and the other capitalized terms used in this
Agreement, having the meanings hereinafter defined) and secured by and entitled
to the benefits of first priority security interests in the Collateral of the
Borrower and each of its Subsidiaries, pursuant to separate security agreements
between the Collateral Agent and the Borrower and each of its Subsidiaries,
respectively, (as amended, modified and supplemented from time to time, each a
"Security Agreement" and collectively the "Security Agreements"), and;
WHEREAS, the Collateral Agent has been appointed to act as collateral
agent for the Note Holders and the Lenders and has agreed to act as such
pursuant to a collateral agency and intercreditor agreement (as amended,
modified and supplemented from time to time, the "Collateral Agency and
Intercreditor Agreement") and;
WHEREAS, the Lenders have agreed to make the revolving credit loans,
subject to the terms of this Agreement, and the Administrative Agent has agreed
to perform certain services in connection therewith, as herein provided.
NOW THEREFORE, the parties hereto agree as follows:
<PAGE>
ARTICLE I
Definitions
SECTION 1.01. Defined TermsSECTION 1.01. Defined Terms. As used in this
Agreement, the following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"Accounts Receivable" shall mean any and all rights of the Borrower and
its Subsidiaries to payment for goods sold or leased or for services rendered,
including accounts, contract rights, general intangibles, purchase orders,
instruments or documents, whether due or to become due and whether or not it has
been earned by performance, and whether now or hereafter acquired or arising in
the future and any proceeds arising therefrom or relating thereto.
"Acquisition Financing" shall refer to Loans made pursuant to this
Agreement to fund the acquisition by the Borrower of the stock or the assets of
a Person (x) at the closing of such acquisition or (y) at a later date as
deferred compensation for the acquisition of such stock or assets.
"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate.
"Adjusted Alternate Base Rate" means with respect to any ABR Borrowing,
an interest rate per annum equal to 90% of the Alternate Base Rate, except that,
whenever the Prime Rate shall be equal to or greater than 11%, the Adjusted
Alternate Base Rate shall be an interest rate per annum equal to 95% of the
Alternate Base Rate.
"Administrative Agent" means The Chase Manhattan Bank, in its capacity
as administrative agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative Questionnaire in a
form supplied by the Administrative Agent.
"Affiliate"of any Person shall mean any other Person which, directly or
indirectly, controls or is controlled by or is under common control with such
first-mentioned Person, or any individual, in the case of a Person who is an
individual, who has a relationship by blood, marriage or adoption to such
first-mentioned Person not more remote than first cousin, and, without limiting
the generality of the foregoing, shall include (a) any Person beneficially
owning, holding or controlling, directly or indirectly, 10% or more of any class
of Voting Stock of such first-mentioned Person, (b) any Person of which such
first-mentioned Person owns, holds or controls, directly or indirectly, 10% or
more of any class of Voting Stock or (c) any director, officer or executive
employee of such first-mentioned Person; provided that, in the absence of actual
control, the term Affiliate shall in no event include any financial institution
which would otherwise be an Affiliate solely by virtue of owning, holding or
controlling, directly or indirectly, Voting Stock of the Borrower or by virtue
of having board visitation rights or a designee on the Board of Directors of the
Borrower; provided, further, that in no event shall you or any other
institutional holder of Notes be deemed to be an Affiliate of the Borrower. For
the purposes of this definition, "control" (including, with correlative
meanings, the terms "controlled by" and "under common control with"), as used
with respect to any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of Voting Stock or by contract or
otherwise; provided that in no event shall the fact that a Person is a holder of
Indebtedness of such Person be considered sufficient by itself to enable such
Person to direct or cause the direction of the management and policies of such
Person.
"Alternate Base Rate" means, for any day, a rate per annum equal to the
greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in
effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change
in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate shall be
effective from and including the effective date of such change in the Prime
Rate, the Base CD Rate or the Federal Funds Effective Rate, respectively.
"Applicable Percentage" means, with respect to any Lender, the
percentage of the total Commitments represented by such Lender's Commitment. If
the Commitments have terminated or expired, the Applicable Percentages shall be
determined based upon the Commitments most recently in effect, giving effect to
any assignments.
"Assessment Rate" means, for any day, the annual assessment rate in
effect on such day that is payable by a member of the Bank Insurance Fund
classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in dollars at the
offices of such member in the United States; provided that if, as a result of
any change in any law, rule or regulation, it is no longer possible to determine
the Assessment Rate as aforesaid, then the Assessment Rate shall be such annual
rate as shall be determined by the Administrative Agent to be representative of
the cost of such insurance to the Lenders.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.04), and accepted by the Administrative Agent, in the form
of Exhibit A or any other form approved by the Administrative Agent.
"ATEC" shall have the meaning specified on Schedule 4.01(l).
"Available Net Proceeds" shall have the meaning specified in section 2.08.
"Available Unused Proceeds" shall have the meaning specified in section
6.09.
"Availability Period" means the period from and including the Effective
Date to but excluding the earlier of the Maturity Date and the date of
termination of the Commitments.
"Bank Credit Agreement" shall mean this Agreement.
"Bank Credit Documents" shall mean the Loan Documents.
"Base CD Rate" means the sum of (a) the Three-Month Secondary CD Rate
multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.
"Board" means the Board of Governors of the Federal Reserve System of
the United States of America.
"Borrower" means ATC Group Services Inc., a Delaware corporation.
"Borrowing" means a Revolving Borrowing.
"Borrowing Certificate" means a Borrowing Certificate in the form
annexed hereto as Exhibit D, signed by the Financial Officer of the Borrower.
"Borrowing Request" means a request by the Borrower for a Revolving
Borrowing in accordance with Section 2.03.
"Business" shall have the meaning specified in Section 3.13.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by law
to remain closed; provided that, when used in connection with a Eurodollar Loan,
the term "Business Day" shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.
"Capitalization" of any Person shall mean, at any date, the sum of (a)
Total Debt of such Person at such date, and (b) Net Worth of such Person as of
the end of the most recently completed fiscal quarter of such Person.
"Capital Lease" shall mean any lease or similar arrangement which is of
such a nature that payment obligations of the lessee or obligor thereunder are
required to be capitalized and shown as liabilities upon a balance sheet of such
lessee or obligor prepared in accordance with GAAP.
"Capitalized Lease Obligations" of any Person means the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Change in Control" shall mean any event or transaction or series of
events or transactions (occurring for whatever reason) pursuant to which any
Person (other than George Rubin or Morry F. Rubin, who are presently the
Chairman and President of the Borrower, respectively), together with
"affiliates" and "associates" of such Person, within the meaning of Rule 12b-2
of the Commission under the Exchange Act, shall acquire control or beneficial
ownership (including beneficial ownership resulting from the formation of a
"group" within the meaning of Rule 13d-5 of the Commission under the Exchange
Act) of more than 50% of the outstanding Shares of any class of Voting Stock of
the Borrower.
"Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender (or, for
purposes of Section 2.12(b), by any lending office of such Lender or by such
Lender's holding company, if any) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the date of this Agreement.
"Class", when used in reference to any Loan or Borrowing, refers to the
Revolving Loans.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral" means with respect to the Borrower and each of its
Subsidiaries all of their Accounts, Accounts Receivable, work in process,
General Intangibles, customer lists and all Proceeds of the foregoing, plus cash
on deposit at The Chase Manhattan Bank. All capitalized terms used in this
definition shall have the meaning given them under the Uniform Commercial Code
of the jurisdiction where such Collateral is located.
"Collateral Agency and Intercreditor Agreement" shall have the meaning
specified in the Preamble.
"Collateral Agent" shall mean The Chase Manhattan Bank, acting pursuant
to the Collateral Agency and Intercreditor Agreement as collateral agent for the
Note Holders and the Lenders, and any replacement or successor collateral agent
thereunder.
"Commitment" means, with respect to each Lender, the commitment of such
Lender to make Revolving Loans expressed as an amount representing the maximum
aggregate amount of such Lender's Revolving Credit Exposure hereunder, as such
commitment may be (a) reduced from time to time pursuant to Section 2.09 and (b)
reduced or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section 9.04. The initial amount of each Lender's Commitment
is set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to
which such Lender shall have assumed its Commitment, as applicable. The initial
aggregate amount of the Lenders' Commitments is $15,000,000.
"Common Stock" shall mean the Common Stock of the Borrower as
constituted on the Closing Date and any stock into which such Common Stock shall
have been changed or any stock resulting from any reclassification of such
Common Stock.
"Consolidated Capitalization" " Consolidated Current Assets",
"Consolidated Current Liabilities", "Consolidated EBITDA", "Consolidated Fixed
Charges", "Consolidated Interest Expense", "Consolidated Net Income",
"Consolidated Net Worth", "Consolidated Rental Obligations" and "Consolidated
Total Debt", shall mean the Capitalization, Current Assets, Current Liabilities,
EBITDA, Fixed Charges, Interest Expense, Net Income, Net Worth, Rental
Obligations and Total Debt, as the case may be, of the Borrower and its
Subsidiaries (whether or not ordinarily consolidated in consolidated financial
statements of the Borrower and its Subsidiaries), all consolidated in accordance
with GAAP, and after giving appropriate effect to outside minority interests, if
any, in Subsidiaries, provided that (a) in determining Consolidated Net Income
and Consolidated EBITDA there shall be excluded (i) the Net Income of any Person
(other than a Subsidiary of the Borrower) in which the Borrower or any
Subsidiary of the Borrower has an ownership interest, except to the extent that
any such Net Income has been actually received by the Borrower or such
Subsidiary in the form of dividends or similar distributions, (ii) any
undistributed Net Income of a Subsidiary of the Borrower which for any reason is
unavailable for distribution to the Borrower or any other Subsidiary of the
Borrower, (iii) the Net Income of any Person accrued prior to the date it
becomes a Subsidiary of the Borrower or is merged into or consolidated with the
Borrower or a Subsidiary of the Borrower, (iv) in the case of a successor to the
Borrower by consolidation, merger or transfer of assets, the Net Income of such
successor accrued prior to such consolidation, merger or transfer, (v) any
deferred or other credit representing the excess of the equity in any Subsidiary
of the Borrower at the date of acquisition thereof over the cost of the
investment in such Subsidiary, and (vi) any restoration to income of any
contingency reserve, except to the extent that provision for such reserve was
made out of income accrued during the same period, and (b) in determining
Consolidated Net Worth no amount shall be included therein on account of (i) any
excess cost of acquisition of shares of any Subsidiary of the Borrower over the
book value of the assets of such Subsidiary attributable to such shares on the
books of such Subsidiary at the date of acquisition of such shares or (ii) any
excess of the book value of the assets of such Subsidiary attributable to such
assets at the date of such acquisition over the cost of acquisition of such
assets.
"Consolidated Fixed Charges Coverage Ratio" shall mean, on any date,
the ratio of (a) the sum of (i) Consolidated EBITDA for the period of four
consecutive fiscal quarters of the Borrower ending on such date, plus (ii)
one-third of Consolidated Rental Obligations in respect of leases other than
Capital Leases for such period to (b) Consolidated Fixed Charges for such
period.
"Consolidated Total Unsubordinated Liabilities" shall mean all items
which, in accordance with generally accepted accounting principles applied on a
consistent basis, would properly be included on the liability side of the
balance sheet (other than Subordinated Debt, capital stock, capital surplus and
retained earning), as of the date on which the amount of Consolidated Total
Unsubordinated Liabilities is to be determined, of the Borrower and its
Subsidiaries computed and consolidated in accordance with generally accepted
accounting principles applied on a consistent basis.
"Consolidated Working Capital" shall mean for the Borrower and its
Subsidiaries, the amount by which Consolidated Current Assets exceed
Consolidated Current Liabilities.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
"Current Assets" of any Person shall mean, at any date, amounts
classified as such according to GAAP.
"Current Debt" of any Person shall mean, at any date, (a) all
Indebtedness for borrowed money or in respect of Capital Leases or the deferred
purchase price of property, whether or not interest bearing, and whether secured
or unsecured, of such Person at such date which would, in accordance with GAAP,
be classified as short-term Indebtedness at such date, but specifically
including the current maturities of such Person's Funded Debt, (b) all
Guarantees by such Person at such date of Current Debt of others and (c) the
aggregate amount which is due on or before the expiration of twelve months from
such date in respect of any Redeemable Shares of such Person.
"Current Liabilities" of any Person shall mean, at any date, amounts
classified as such according to GAAP, but including, in the case of the
Borrower, all sums outstanding under this Agreement.
"Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Disclosed Matters" means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 3.06.
"Dollars" or "$" refers to lawful money of the United States of America
"EBITDA" of any Person shall mean, for any period, the Net Income of
such Person for such period (a) after restoring thereto (without duplication)
amounts deducted for (i) Interest Expense, (ii) taxes in respect of income and
profits, (iii) amortization expense, including amortization of intangible
assets, including goodwill and covenants not to compete, and depreciation
expense, and (iv) the write-off of or the establishment of an allowance against
intangible assets, including goodwill and covenants not to compete, and (b)
excluding (without duplication) any gains or losses on the sale of assets other
than in the ordinary course of business, in each case determined in accordance
with GAAP.
"Effective Date" means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 9.02).
"Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such term in Article VII
"Excess Available Net Proceeds" shall have the meaning specified in
section 2.08.
"Excess Available Unused Proceeds" shall have the meaning specified in
section 2.08.
"Excluded Taxes" means, with respect to the Administrative Agent, any
Lender or any other recipient of any payment to be made by or on account of any
obligation of the Borrower hereunder, (a) income or franchise taxes imposed on
(or measured by) its net income by the United States of America, or by the
jurisdiction under the laws of which such recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its
applicable lending office is located, (b) any branch profits taxes imposed by
the United States of America or any similar tax imposed by any other
jurisdiction in which the Borrower is located and (c) in the case of a Foreign
Lender (other than an assignee pursuant to a request by the Borrower under
Section 2.16(b)), any withholding tax that is imposed on amounts payable to such
Foreign Lender at the time such Foreign Lender becomes a party to this Agreement
(or designates a new lending office) or is attributable to such Foreign Lender's
failure to comply with Section 2.14(e), except to the extent that such Foreign
Lender (or its assignor, if any) was entitled, at the time of designation of a
new lending office (or assignment), to receive additional amounts from the
Borrower with respect to such withholding tax pursuant to Section 2.14(a).
"Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or controller of the Borrower.
"Financing Statements" means the UCC-1 Financing Statements signed by
the Borrower and each Subsidiary and to be filed in the offices listed on
Schedule 4.01(h) to perfect the security interests in the Collateral granted
under each Security Agreement.
"Fixed Charges" for any Person shall mean, for any period, the sum
(without duplication of amounts) of (a) all Interest Expense of such Person for
such period and (b) one-third of all Rental Obligations of such Person for such
period in respect of leases other than Capital Leases and equipment leases with
a term of six months or less, entered into for the performance of a specific
client project, in each case determined in accordance with GAAP.
"Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"Funded Debt" of any Person shall mean, at any date, (a) all
Indebtedness for borrowed money or in respect of Capital Leases or the deferred
purchase price of property, whether or not interest-bearing, of such Person
which would, in accordance with GAAP, be classified as long-term Indebtedness at
such date, but in any event (i) including all such Indebtedness, whether secured
or unsecured, of such Person which matures (or which, pursuant to the terms of a
revolving credit agreement or otherwise, is directly or indirectly renewable or
extendible at the option of such Person for a period ending) more than twelve
months after the date of the creation thereof, notwithstanding the fact that
payments in respect thereof (whether installment, serial maturity or sinking
fund payments or otherwise) are required to be made by such Person not more than
twelve months after the date as of which the amount of Funded Debt is being
determined, other than any amount which is at the time included in Current Debt
of such Person and (ii) including non-contingent obligations to ATEC pursuant to
a Master Sublease and Master Equipment Lease Agreement, each dated May 24, 1996,
but excluding any such obligations which constitute Rental Obligations of the
Borrower, (b) all Guarantees by such Person at such date of Funded Debt of
others, and (c) the aggregate amount which is due more than twelve months from
such date in respect of any Redeemable Shares of such Person.
"GAAP" means generally accepted accounting principles in the United States
of America.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guarantors" means ATC New England Corp., a Delaware corporation; ATC
Blattert Inc., a South Dakota corporation; Hygeia Laboratories Inc., a Delaware
corporation; ATC Management Inc., a South Dakota corporation; ATC Insys
Technology Inc., a Delaware corporation; ATC Environmental Inc., a Delaware
corporation and future Subsidiaries.
"Guarantee" of or by any Person (the "guarantor") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "primary obligor") in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.
"Guaranty" means the joint and several guaranty of payment by the
Guarantors of all principal, interest, fees and other sums due to the Lenders
under this Agreement or the other Loan Documents.
"Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Hedging Agreement" means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement.
"Holder's Net Proceeds Prepayment Amount" shall have the meaning
specified in section 2.08.
"Holder's Unused Proceeds Prepayment Amount" shall have the meaning
specified in section 2.08.
"Indebtedness" of any Person shall mean, at any date, all indebtedness,
liabilities and other obligations of such Person at such date (other than items
of shareholders' equity) which would, in accordance with GAAP, be classified as
liabilities of such Person, but in any event including (without duplication):
(a) all Guarantees of such Person;
(b) all indebtedness, liabilities and other obligations
secured by any Lien in respect of property owned by such Person,
whether or not such Person has assumed or become liable for the payment
of such obligations;
(c) all indebtedness, liabilities and other obligations of
such Person arising under any conditional sale or other title retention
agreement, whether or not the rights and remedies of the seller or
lender under such agreement in the event of default are limited to
repossession or sale of such property;
(d) the amount of the obligation required to be recorded by
the lessee in respect of any Capital Lease under which such Person is
lessee; and
(e) all indebtedness, liabilities and other obligations
arising in connection with letters of credit, bankers acceptances or
other credit enhancement facilities and in connection with interest
rate swaps, currency swaps and similar obligations which require such
Person to make payments, whether periodically or upon the happening of
a contingency.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Interest Election Request" means a request by the Borrower to convert
or continue a Revolving Borrowing in accordance with Section 2.08.
"Interest Expense" of any Person shall mean, for any period, the
aggregate amount of (a) all interest paid, payable or guaranteed during such
period by such Person in respect of Funded Debt and Current Debt (including,
without limitation, Capital Leases), determined in accordance with GAAP, and (b)
all interest capitalized or deferred during such period, determined in
accordance with GAAP. Interest which is payable at a floating or variable rate
shall be determined on the basis of the rate in effect on the date as of which
Interest Expense is to be determined.
"Interest Payment Date" means (a) with respect to any ABR Loan or Prime
Based Loan, the last day of each March, June, September and December, (b) with
respect to any Eurodollar Loan, the last day of the Interest Period applicable
to the Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an Interest Period of more than three months' duration, each day
prior to the last day of such Interest Period that occurs at intervals of three
months' duration after the first day of such Interest Period.
"Interest Period" means with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrower may elect; provided, that (i) if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (ii) any Interest Period
pertaining to a Eurodollar Borrowing that commences on the last Business Day of
a calendar month (or on a day for which there is no numerically corresponding
day in the last calendar month of such Interest Period) shall end on the last
Business Day of the last calendar month of such Interest Period. For purposes
hereof, the date of a Borrowing initially shall be the date on which such
Borrowing is made and, in the case of a Revolving Borrowing, thereafter shall be
the effective date of the most recent conversion or continuation of such
Borrowing.
"Investment" shall mean any investment made by stock purchase, capital
contribution, loan, advance, acquisition of Indebtedness, Guarantee or
otherwise, provided that in no event shall the term Investment include the
direct acquisition of the operating assets of another Person.
"Lenders" means the Persons listed on Schedule 2.01 and any other
Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Acceptance.
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate rounded upwards,
if necessary, to the next 1/16 of 1% at which dollar deposits of $5,000,000 and
for a maturity comparable to such Interest Period are offered by the principal
London office of the Administrative Agent in immediately available funds in the
London interbank market at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Loan Documents" means this Agreement, the Guaranties, the Promissory
Notes, the Security Agreements and the Financing Statements.
"Loans" means the loans made by the Lenders to the Borrower pursuant to
this Agreement.
"Margin" means, with respect to any Loan bearing interest at a rate
based on the LIBO Rate, 1.75%.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
the Borrower and the Subsidiaries taken as a whole, (b) the ability of the
Borrower to perform any of its obligations under this Agreement or any of the
Loan Documents and (c) the rights of or remedies available to the Lenders under
this Agreement or any Loan Documents.
"Material Adverse Change" shall mean a material adverse change in or
effect upon any of (a) the condition (financial or otherwise), business,
performance, operations, properties, profits or prospects of the Borrower or the
Borrower and its Subsidiaries taken as one enterprise, (b) the legality,
validity or enforceability of this Agreement, the Promissory Notes or any of the
other Loan Documents, including, without limitation, the Liens created or
intended to be created by the Security Documents; (c) the rights and remedies of
any holder of the Promissory Notes or (d) the ability of the Borrower or any of
its Subsidiaries to perform its obligations under any of the Loan Documents
and/or to comply with any of the terms thereof applicable to it.
"Maturity Date" means November 30, 1999.
"Multiemployer Plan" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Net Asset Sale Proceeds" shall mean, in the case of any Sale of
Assets, the gross cash proceeds of such sale whenever received by the Borrower
and its Subsidiaries after deducting: (a) the aggregate amount of Indebtedness
secured by a Lien on the assets so sold or incurred in connection with the
original acquisition of the assets so sold, but in each case only to the extent
such Indebtedness is required to be repaid and is so repaid as a condition to or
upon consummation of such sale, (b) the reasonable out-of-pocket expenses
incurred by the Borrower and its Subsidiaries in connection with such sale, and
(c) all taxes payable by the Borrower and its Subsidiaries as a result of such
sale, including taxes in respect of income and profits.
"Net Income" of any Person shall mean, for any period, the net income
(or net loss), excluding all extraordinary, unusual, nonrecurring and/or
nonoperating gains or losses of such Person for such period, determined in
accordance with GAAP.
"Net Proceeds of Capital Stock" shall mean, for any period, all cash
proceeds (net of all costs and out-of-pocket expenses in connection therewith,
including, without limitation, placement, underwriting and brokerage fees and
expenses) received by the Borrower during such period, from the sale of Shares
(but not the sale of Redeemable Shares) of the Borrower.
"Net Worth" of any Person shall mean, at any date, the sum of (a) the
capital stock (excluding treasury stock and capital stock subscribed and
unissued) and (b) surplus (including retained earnings, additional paid-in
capital and the balance of the current profit and loss account not transferred
to surplus) of such Person at such date, determined in accordance with GAAP.
"Note Agreement" and "Note Agreements" shall have the respective
meanings specified in the Preamble.
"Note" and "Notes" shall have the respective meanings specified in the
Preamble.
"Note Holder" and "Note Holders" shall have the respective meanings
specified in the Preamble.
"Old Bank Debt" means all outstanding indebtedness of the Borrower and
its Subsidiaries to The Chase Manhattan Bank and Atlantic Bank of New York
incurred pursuant to a certain Credit Agreement dated as of May 24, 1996, as
amended by a certain First Amendment to Credit Agreement dated as of August 12,
1996, by a certain Second Amendment to Credit Agreement dated as of September
23, 1996 and a certain Third Amendment to Credit Agreement dated as of January
13, 1997.
"Other Taxes" means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"Permitted Investment" shall mean any of the following Investments:
(a) Investments existing on the date hereof and referred
to in Schedule 3.12 attached hereto;
(b) Investments by the Borrower or by any Subsidiary of the
Borrower in any Wholly-Owned Subsidiary Guarantor (or in any Person
which simultaneously therewith becomes a Wholly-Owned Subsidiary
Guarantor) made by stock purchase, capital contribution, loan or
advance, provided that (i) both at the time of and immediately after
giving effect to any such Investment, no Default or Event of Default
shall have occurred and be continuing and (ii) all such Investments are
made only in Solvent entities (A) which are organized under the laws of
and conduct substantially all of their respective businesses in the
United States of America or a state thereof or the District of Columbia
and having all or substantially all of its property in the United
States of America; and (B) whose lines of business are not materially
different from those in which the Borrower and its Subsidiaries are now
engaged;
(c) Investments by any Subsidiary of the Borrower in the
Borrower;
(d) readily marketable obligations (having a maturity not in
excess of 12 months from the date of acquisition thereof) of, or fully
and unconditionally guaranteed (as to both principal and interest) by,
the United States of America or an agency thereof, or a foreign
government, the treasury obligations of which are rated AAA by Standard
& Poor's Corporation and Aaa by Moody's Investors Service, Inc.;
(e) negotiable certificates of deposit (having a maturity not
in excess of 12 months from the date of acquisition thereof) evidencing
direct obligations of any federally insured commercial bank or trust
company organized and operating in the United States of America having
either (i) capital and surplus and undistributed profits of at least
$100,000,000 or (ii) assets of at least $1,000,000,000 and in each case
having the highest rating available from Moody's Investors Service,
Inc. and Standard & Poor's Corporation;
(f) repurchase agreements (having a term not in excess of 90
days) with any commercial bank or trust company described in clause (e)
above, provided that (i) title to and custody of the collateral for
each such repurchase agreement is held by the Borrower or an agent of
the Borrower other than the issuer of such repurchase agreement and
affiliates thereof, (ii) the fair market value (for purposes hereof,
the fair market value of the collateral shall mean the bid prices
thereof as published in a standard publication) of the collateral for
each such repurchase agreement shall at all times be at least 102% of
the amount of such repurchase obligation and (iii) the collateral for
each such repurchase agreement shall be in negotiable form, shall be
free of all liens and shall consist solely of securities of the sort
described in clause (d) above;
(g) accounts receivable arising from transactions in the
ordinary course of business; contingent liabilities represented by
endorsements of negotiable instruments for collection or deposit in the
ordinary course of business; advances, deposits, down payments and
prepayments on account of firm purchase orders made in the ordinary
course of business;
(h) commercial paper and loan participations (having a
maturity not in excess of 270 days from the date of issue ) evidencing
the direct obligation of any corporation organized and operating in the
United States of America and having a rating which is A-1 or P-1 or
better at the time of acquisition thereof;
(i) commercial paper and loan participations (having a
maturity not in excess of 270 days from the date of issue) evidencing
the direct obligation of any corporation organized and operating in the
United States of America and having a rating A-3 or P-3 or better at
the time of acquisition thereof, provided that the aggregate value
(determined as provided in section 6.03) of all Investments made
pursuant to this clause (i) shall not exceed $5,000,000; and
(j) other Investments made after the Closing Date not
otherwise permitted by the preceding clauses of this definition,
provided that (i) all such Investments are made only in Solvent
entities and (ii) both at the time of and immediately after giving
effect to any such Investment, (A) no Default or Event of Default shall
have occurred and be continuing and (B) the aggregate value (determined
as provided in section 6.03) of all Investments made pursuant to this
clause (j) does not exceed 15% of Consolidated Net Worth.
"Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Preferred Shares", as applied to shares of any Person, shall mean
Shares of such Person which shall be entitled to preference or priority over any
other Shares of such Person in respect of either the payment of dividends or the
distribution of assets upon liquidation.
"Prime Rate" means the rate of interest per annum publicly announced
from time to time by The Chase Manhattan Bank as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.
"Private Placement Documents" shall mean the Notes, the Note
Agreements, the Guarantees of the Notes, the Security Agreements and the
Collateral Agency and Intercreditor Agreement.
"Promissory Note" means a note of the Borrower executed and delivered
to each Lender, in the form of Exhibit C.
"Redeemable" shall mean, with respect to any Shares of any Person, each
Share of such Person that is (a) redeemable payable or required to be purchased
or otherwise retired or extinguished, or convertible into Funded Debt or Current
Debt of such Person, (i) at a fixed or determinable date, whether by operation
of any sinking fund or otherwise, (ii) at the option of any Person other than
such Person or (iii) upon the occurrence of a condition not solely within the
control of such Person or (b) convertible into other Redeemable Shares.
"Register" has the meaning set forth in Section 9.04.
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Rental Obligations" of any Person shall mean, for any period, all
rents and other amounts determined in accordance with GAAP paid, payable or
guaranteed during such period by such Person, as lessee or sublessee under any
lease, including, without limitation, any amount required to be paid by such
Person as rents or additional rents on account of maintenance, repairs,
insurance, taxes, utilities and similar charges determined in accordance with
GAAP. Whenever it is necessary to determine the amount of Rental Obligations for
any period, to the extent that such Rental Obligations are not definitely
determinable by the terms of the lease, the Rental Obligations not so definitely
determinable shall be estimated in good faith and in such reasonable manner as
the Board of Directors of the Borrower may select (as evidenced by certified
resolutions thereof promptly delivered to the holder or holders of the Notes).
Notwithstanding the foregoing, Rental Obligations of the Borrower and its
Subsidiaries shall include only that portion of the amounts payable by the
Borrower under the ATEC Master Sublease and Master Equipment Lease Agreement,
each dated May 24, 1996, which is being expensed by the Borrower and its
Subsidiaries, which was based on the fair market value of the property subject
to such agreements.
"Required Lenders" means, at any time, Lenders having Revolving Credit
Exposures and unused Commitments representing 100% of the sum of the total
Revolving Credit Exposures and unused Commitments at such time.
"Restricted Investments" means any investment other than a Permitted
Investment.
"Restricted Payment" as applied to any Person shall mean:
(a) any dividend or other distribution or payment (including
any distribution of properties, assets, cash, rights, obligations or
securities), direct or indirect, on account of any Shares of such
Person now or hereafter outstanding (including, without limitation,
Preferred Shares) or any securities convertible into or exercisable or
exchangeable for such Shares or any rights, options or warrants to
acquire any such Shares, except for (i) any such dividend or
distribution or payment to the Borrower and/or any Wholly-Owned
Subsidiary Guarantor and (ii) a dividend payable to all of the holders
of the Common Stock solely in shares of Common Stock; and
(b) any redemption, retirement, purchase or other acquisition,
direct or indirect, of any Shares of such Person now or hereafter
outstanding (including, without limitation, Preferred Shares) or any
securities convertible into or exercisable or exchangeable for such
Shares or any rights, options or warrants to acquire any such Shares.
For purposes of this Agreement, the amount of any Restricted Payment
made in property other than cash shall be the greater of (x) the fair
market value of such property (as reasonably determined in good faith
by the board of directors (or equivalent governing body) of the Person
making such Restricted Payment) and (y) the net book value thereof on
the books of such Person, in each case determined as of the date on
which such Restricted Payment is made.
"Revolving Credit Exposure" means, with respect to any Lender at any
time, the sum of the outstanding principal amount of such Lender's Revolving
Loans.
"Revolving Loan" means a Loan made pursuant to Section 2.03.
"Sale of Assets" shall have the meaning specified in section 6.09.
"Security Documents" shall mean each Guaranty, Security Agreement and
UCC-1 Financing Statement executed and delivered hereunder.
"Senior Debt" shall mean all Funded Debt and/or Current Debt of the
Borrower, including, without limitation, the Notes and the Current Debt and
Funded Debt outstanding under this Agreement, other than any such Funded Debt or
Current Debt which is subordinate in right of payment to the Notes and/or the
Current Debt and Funded Debt outstanding under this Agreement.
"Security Agreement" means an agreement executed and delivered by the
Borrower and each Subsidiary to the Administrative Agent granting a first lien
security interest.
"Shares" of any Person shall include any and all shares of capital
stock, partnership interests, membership interests, or other shares, interests,
participations or other equivalents (however designated of any class) in the
capital of, or other ownership interests in, such Person.
"Solvent" as applied to any Person at any date shall mean that on and
as of such date (a) the fair value of the properties and assets of such Person
is greater than the total amount of liabilities, including, without limitation,
contingent liabilities, of such Person, (b) the present fair salable value of
the properties and assets of such Person is not less than the amount that will
be required to pay the probable liability of such Person on its debts as they
become absolute and matured, (c) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person's ability to
pay as such debts and liabilities mature and (d) such Person is not engaged in
business or a transaction, and is not about to engage in business or a
transaction, for which such Person's properties and assets would constitute an
unreasonably small capital. The amount of contingent liabilities on and as of
any date shall be computed as the amount that, in the light of all the facts and
circumstances existing on and as of such date, represents the amount that can
reasonably be expected to become an actual or matured liability. For purposes of
this definition, "Person" shall mean, where so required by the context in which
the term "Solvent" appears, such Person and its Subsidiaries taken as a whole.
"Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as "Eurocurrency Liabilities" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.
"subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests are,
as of such date, owned, controlled or held, or (b) that is, as of such date,
otherwise Controlled, by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.
"Subsidiary" means any subsidiary of the Borrower.
"Subordinated Debt" or "Indebtedness" means all Indebtedness which is
subordinated in right of payment, form and substance satisfactory to the
Administrative Agent and each Lender to all Indebtedness of the Borrower to each
Lender.
"Successor Corporation" shall have the meaning specified in Section
6.07.
"Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Test Period" shall have the meaning specified in Section 6.03.
"Three-Month Secondary CD Rate" means, for any day, the secondary
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day is not a Business Day, the next preceding Business
Day) by the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release H.15(519) during the
week following such day) or, if such rate is not so reported on such day or such
next preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York City
received at approximately 10:00 a.m., New York City time, on such day (or, if
such day is not a Business Day, on the next preceding Business Day) by the
Administrative Agent from three negotiable certificate of deposit dealers of
recognized standing selected by it.
"Total Debt" of any Person shall mean, at any date, the sum of Funded
Debt and Current Debt of such Person outstanding on such date (which shall not
be deemed to include the undrawn Commitment of any Lender hereunder).
"Transactions" means the execution, delivery and performance by (i) the
Borrower of this Agreement, its Security Agreement, the Promissory Notes, the
UCC-1 Financing Statements, the borrowing of Loans and the use of the proceeds
thereof, and (ii) by each Guarantor of its Guaranty, Security Agreement and
UCC-1 Financing Statements.
"Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate
Base Rate.
"Voting Stock" when used with reference to any Person, shall mean
Shares (however designated) of such Person having ordinary voting power for the
election of a majority of the members of the board of directors (or other
governing body) of such Person, other than Shares having such power only by
reason of the happening of a contingency.
"Wholly-Owned Subsidiary" shall mean any Subsidiary all of the
outstanding shares of which, other than directors' qualifying shares, shall at
the time be owned by the Borrower and/or by one or more other Wholly-Owned
Subsidiaries and the accounts of which are consolidated with those of the
Borrower in accordance with GAAP.
"Wholly-Owned Subsidiary Guarantor" shall mean any Wholly-Owned
Subsidiary that has delivered to each Lender a valid, binding and enforceable
Promissory Note, Guaranty and Security Agreement, and all of whose properties
and assets which constitute Collateral are subject to valid and enforceable
first priority perfected Liens in favor of the Collateral Agent.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
"Working Capital" shall mean the excess of Current Assets over Current
Liabilities.
SECTION 1.02. Classification of Loans and Borrowings. For purposes of
this Agreement, Loans may be classified and referred to by Class (e.g., a
"Revolving Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type
(e.g., a "Eurodollar Revolving Loan"). Borrowings also may be classified and
referred to by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a
"Eurodollar Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving
Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and conditions set
forth herein, each Lender agrees to make Revolving Loans to the Borrower from
time to time during the Availability Period in an aggregate principal amount
that will not result in (a) such Lender's Revolving Credit Exposure exceeding
such Lender's Commitment or (b) the sum of the total Revolving Credit Exposures
exceeding the total Commitments. Within the foregoing limits and subject to the
terms and conditions set forth herein, the Borrower may borrow, prepay and
reborrow Revolving Loans.
SECTION 2.02. Loans and Borrowings. (a) Each Revolving Loan shall be
made as part of a Borrowing consisting of Revolving Loans made by the Lenders
ratably in accordance with their respective Commitments. The failure of any
Lender to make any Loan required to be made by it shall not relieve any other
Lender of its obligations hereunder; provided that the Commitments of the
Lenders are several and no Lender shall be responsible for any other Lender's
failure to make Loans as required.
(b) Subject to Section 2.14, (i) each Revolving Borrowing
shall be comprised entirely of Eurodollar Loans or ABR Loans as the Borrower may
request in accordance herewith. Each Lender at its option may make any
Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan; provided that any exercise of such option shall not
affect the obligation of the Borrower to repay such Loan in accordance with the
terms of this Agreement.
(c) At the commencement of each Interest Period for any
Eurodollar Revolving Borrowing, such Borrowing shall be in an aggregate amount
that is an integral multiple of $100,000 and not less than $500,000. At the time
that each ABR Revolving Borrowing is made, such Borrowing shall be in an
aggregate amount that is an integral multiple of $100,000. Borrowings of more
than one Type may be outstanding at the same time; provided that there shall not
at any time be more than a total of 5 Eurodollar Revolving Borrowings
outstanding.
(d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request, or to elect to convert or continue,
any Borrowing if the Interest Period requested with respect thereto would end
after the Maturity Date.
SECTION 2.03. Requests for Revolving Borrowings. To request a Revolving
Borrowing, the Borrower shall notify the Administrative Agent of such request by
telephone (a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m.,
New York City time, three Business Days before the date of the proposed
Borrowing or (b) in the case of an ABR Borrowing, not later than 11:00 a.m., New
York City time, on the date of the proposed Borrowing. Each such telephonic
Borrowing Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Borrowing Request
in a form approved by the Administrative Agent and signed by the Borrower. Each
such telephonic and written Borrowing Request shall specify the following
information in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business
Day;
(iii) whether such Borrowing is to be a Eurodollar Borrowing
or an ABR Borrowing;
(iv) in the case of a Eurodollar Borrowing, the initial
Interest Period to be applicable thereto, which shall be a
period contemplated by the definition of the term "Interest
Period"; and
(v) the location and number of the Borrower's account to which
funds are to be disbursed, which shall comply with the
requirements of Section 2.07.
If no election as to the Type of Revolving Borrowing is specified, then the
requested Revolving Borrowing shall be an ABR Borrowing. If no Interest Period
is specified with respect to any requested Eurodollar Revolving Borrowing, then
the Borrower shall be deemed to have selected an Interest Period of one month's
duration. Promptly following receipt of a Borrowing Request in accordance with
this Section, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender's Loan to be made as part of the
requested Borrowing.
SECTION 2.04. Funding of Borrowings. (a) Each Lender shall make each
Loan to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 12:00 noon, New York City time, to the account of
the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders. The Administrative Agent will make such Loans available
to the Borrower by promptly crediting the amounts so received, in like funds, to
an account of the Borrower maintained with the Administrative Agent in New York
City and designated by the Borrower in the applicable Borrowing Request.
(b) Unless the Administrative Agent shall have received notice
from a Lender prior to the proposed date of any Borrowing that such Lender will
not make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable Lender and the Borrower severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount with interest thereon, for
each day from and including the date such amount is made available to the
Borrower to but excluding the date of payment to the Administrative Agent, at
(i) in the case of such Lender, the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation or (ii) in the case of the Borrower,
the interest rate applicable to ABR Loans. If such Lender pays such amount to
the Administrative Agent, then such amount shall constitute such Lender's Loan
included in such Borrowing, but in no event shall the amount thereof so included
in such Borrowing exceed the aggregate of (x) such corresponding amount and (y)
interest computed at the interest rate applicable to ABR Loans.
SECTION 2.05. Interest Elections. (a) Each Revolving Borrowing
initially shall be of the Type specified in the applicable Borrowing Request
and, in the case of a Eurodollar Revolving Borrowing, shall have an initial
Interest Period as specified in such Borrowing Request. Thereafter, the Borrower
may elect to convert such Borrowing to a different Type or to continue such
Borrowing and, in the case of a Eurodollar Revolving Borrowing, may elect
Interest Periods therefor, all as provided in this Section. The Borrower may
elect different options with respect to different portions of the affected
Borrowing, in which case each such portion shall be allocated ratably among the
Lenders holding the Loans comprising such Borrowing, and the Loans comprising
each such portion shall be considered a separate Borrowing.
(b) To make an election pursuant to this Section, the Borrower
shall notify the Administrative Agent of such election by telephone by the time
that a Borrowing Request would be required under Section 2.03 if the Borrower
were requesting a Revolving Borrowing of the Type resulting from such election
to be made on the effective date of such election. Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Interest Election
Request in a form approved by the Administrative Agent and signed by the
Borrower.
(c) Each telephonic and written Interest Election Request
shall specify the following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request
applies and, if different options are being elected with respect to
different portions thereof, the portions thereof to be allocated to
each resulting Borrowing (in which case the information to be specified
pursuant to clauses (iii) and (iv) below shall be specified for each
resulting Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resultin Borrowing is to be an ABR
Borrowing or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of the
term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election
Request, the Administrative Agent shall advise each Lender of the details
thereof and of such Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest
Election Request with respect to a Eurodollar Revolving Borrowing prior to the
end of the Interest Period applicable thereto, then, unless such Borrowing is
repaid as provided herein, at the end of such Interest Period such Borrowing
shall be converted to an ABR Borrowing. Notwithstanding any contrary provision
hereof, if an Event of Default has occurred and is continuing and the
Administrative Agent, at the request of the Required Lenders, so notifies the
Borrower, then, so long as an Event of Default is continuing (i) no outstanding
Revolving Borrowing may be converted to or continued as a Eurodollar Borrowing
and (ii) unless repaid, each Eurodollar Revolving Borrowing shall be converted
to an ABR Borrowing at the end of the Interest Period applicable thereto.
SECTION 2.06. Termination and Reduction of Commitments.
(a) Unless previously terminated, the Commitments shall
terminate on the Maturity Date.
(b) The Borrower may at any time terminate, or from time to
time reduce, the Commitments; provided that (i) each reduction of the
Commitments shall be in an amount that is an integral multiple of $100,000 and
not less than $100,000 and (ii) the Borrower shall not terminate or reduce the
Commitments if, after giving effect to any concurrent prepayment of the Loans in
accordance with Section 2.08, the sum of the Revolving Credit Exposures would
exceed the total Commitments.
(c) The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Commitments under paragraph (b) of this
Section at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Borrower pursuant to this Section shall be irrevocable; provided that a notice
of termination of the Commitments delivered by the Borrower may state that such
notice is conditioned upon the effectiveness of other credit facilities, in
which case such notice may be revoked by the Borrower (by notice to the
Administrative Agent on or prior to the specified effective date) if such
condition is not satisfied. Any termination or reduction of the Commitments
shall be permanent. Each reduction of the Commitments shall be made ratably
among the Lenders in accordance with their respective Commitments.
SECTION 2.07. Repayment of Loans; Evidence of Debt. (a) The Borrower
hereby unconditionally promises to pay to the Administrative Agent for the
account of each Lender the then unpaid principal amount of each Revolving Loan
on the Maturity Date.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of the Borrower to
such Lender resulting from each Loan made by such Lender, including the amounts
of principal and interest payable and paid to such Lender from time to time
hereunder.
(c) The Administrative Agent shall maintain accounts in which
it shall record (i) the amount of each Loan made hereunder, the Class and Type
thereof and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder for the account of the Lenders and each
Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraph (b) or (c) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement.
(e) Loans made by each Lender to the Borrower shall be
evidenced by a Promissory Note payable to the order of such Lender (or, if
requested by such Lender, to such Lender and its registered assigns).
Thereafter, the Loans evidenced by such Promissory Note and interest thereon
shall at all times (including after assignment pursuant to Section 9.04) be
represented by one or more Promissory Notes in such form payable to the order of
the payee named therein (or, if such promissory note is a registered note, to
such payee and its registered assigns).
SECTION 2.08. Prepayment of Loans. (a) The Borrower shall have the
right at any time and from time to time to prepay any Borrowing in whole or in
part, subject to prior notice in accordance with paragraph (b) of this Section.
(b) The Borrower shall notify the Administrative Agent by
telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Revolving Borrowing, not later than 11:00 a.m., New
York City time, three Business Days before the date of prepayment and (ii) in
the case of prepayment of an ABR Revolving Borrowing, not later than 11:00 a.m.,
New York City time, one Business Day before the date of prepayment. Each such
notice shall be irrevocable and shall specify the prepayment date and the
principal amount of each Borrowing or portion thereof to be prepaid; provided
that, if a notice of prepayment is given in connection with a conditional notice
of termination of the Commitments as contemplated by Section 2.06, then such
notice of prepayment may be revoked if such notice of termination is revoked in
accordance with Section 2.06. Promptly following receipt of any such notice
relating to a Revolving Borrowing, the Administrative Agent shall advise the
Lenders of the contents thereof. Each partial prepayment of any Revolving
Borrowing shall be in an amount that would be permitted in the case of an
advance of a Revolving Borrowing of the same Type as provided in Section 2.02.
Each prepayment of a Revolving Borrowing shall be applied ratably to the Loans
included in the prepaid Borrowing. Prepayments shall be accompanied by accrued
interest to the extent required by Section 2.10.
(c) The Borrower shall during the thirty day period after the
consummation of a Sale of Assets made in compliance with section 6.09(d) give
written notice to each holder of Senior Debt of the occurrence of such Sale of
Assets, which notice shall (i) specify (x) the aggregate Net Asset Sale Proceeds
thereof which are not expected to be applied within 360 days of the consummation
of such sale to the purchase by the Borrower or its Subsidiaries of property and
assets (other than cash or cash equivalents) used and useful in the ordinary
course of business of the Borrower and its Subsidiaries (the "Available Net
Proceeds"), and (y) the portion of the Available Net Proceeds equal to the
percentage thereof which the then outstanding principal balance of the Senior
Debt of such holder represents of the then outstanding principal balance of all
Senior Debt (such "Holder's Net Proceeds Prepayment Amount"), and (ii) offer to
prepay a principal amount of the Senior Debt of such holder in an amount equal
to the sum of (x) such Holder's Net Proceeds Prepayment Amount plus (y) any
additional Available Net Proceeds not required by the other holders of Senior
Debt to prepay such other holders' Senior Debt ("Excess Available Net
Proceeds"). Each Lender shall have the right, by written notice to the Borrower
delivered within 30 days after receipt by such Lender of a prepayment offer from
the Borrower delivered pursuant to this section 2.08(c), to require the Borrower
to prepay such Lender's Promissory Note, subject to the provisions of section
2.13 hereof, in the principal amount specified in such notice from such Lender,
which amount shall not exceed such Lender's Net Proceeds Prepayment Amount,
provided that such Lender may also elect to require that such prepayment amount
be increased by the amount specified in such notice not to exceed the amount of
Excess Available Net Proceeds (it being agreed that Available Net Proceeds
originally offered to a Note Holder and not required by such holder to prepay
such Note Holder's Notes shall be used first to prepay the Notes of other Note
Holders electing to have prepayments made with such Available Net Proceeds
pursuant to section 9.3 (a) of its Note Agreement, before such Available Net
Proceeds may be used to prepay other Senior Debt, and that Available Net
Proceeds originally offered to holders of Senior Debt other than the Notes and
not required by such holders to prepay such other Senior Debt shall then be
available to all other holders of Senior Debt, including the Notes, for
prepayment of such Senior Debt on a pro rata basis in proportion to the amounts
requested by such other holders to be prepaid). Upon receipt from a Lender of
written notice pursuant to this section 2.08(c) requiring a prepayment of such
Lender's Promissory Note, the Borrower shall, on the forty-fifth day following
delivery by the Borrower of the original prepayment offer, prepay the Promissory
Note of such Lender in the amount specified in such written request (including
any increase specified in such written request, but only to the extent Excess
Available Net Proceeds are available to cover such increase).
(d) At any time that the aggregate amount of Available Unused
Proceeds equals or exceeds $5,000,000, the Borrower shall give written notice to
each holder of Senior Debt which notice shall (i) specify (x) the aggregate
amount of Available Unused Proceeds, and (y) the portion of the Available Unused
Proceeds equal to the percentage thereof which the then outstanding principal
balance of the Senior Debt of such holder represents of the then outstanding
principal balance of all Senior Debt (such "Holder's Unused Proceeds Prepayment
Amount"), and (ii) offer to prepay a principal amount of the Senior Debt of such
holder in an amount equal to the sum of (x) such Holder's Unused Proceeds
Prepayment Amount plus (y) any additional Available Unused Proceeds not required
by the other holders of Senior Debt to prepay such other holders' Senior Debt
("Excess Available Unused Proceeds"). Each Lender shall have the right, by
written notice to the Borrower delivered within 30 days after receipt by such
Lender of a prepayment offer from the Borrower delivered pursuant to this
section 2.08(d), to require the Borrower to prepay such Lender's Promissory
Note, subject to the provisions of section 2.13 hereof, in the principal amount
specified in such notice from such Lender, which amount shall not exceed such
Lender's Unused Proceeds Prepayment Amount, provided that such Lender may also
elect to require that such prepayment amount be increased by the amount
specified in such notice not to exceed the amount of Excess Available Unused
Proceeds (it being agreed that Available Unused Proceeds originally offered to a
Lender and not required by such Lender to prepay such Lender's Promissory Note
shall be used first to prepay the Notes of the Note Holders electing to have
prepayments made with such Available Unused Proceeds pursuant to section 9.3(b)
of its Note Agreement, before such Available Unused Proceeds may be used to
prepay other Senior Debt, and that Available Unused Proceeds originally offered
to holders of Senior Debt other than the Notes and not required by such holders
to prepay such other Senior Debt shall then be available to all other holders of
Senior Debt, including the Notes, for prepayment of such Senior Debt on a pro
rata basis in proportion to the amounts requested by such other holders to be
prepaid). Upon receipt from a Lender of written notice pursuant to this section
2.08(d) requiring a prepayment of such Lender's Promissory Note, the Borrower
shall, on the forty-fifth day following delivery by the Borrower of the original
prepayment offer, and subject to the provisions of Section 2.13 hereof, prepay
the Promissory Note of such Lender in the amount specified in such written
request (including any increase specified in such written request, but only to
the extent Excess Available Unused Proceeds are available to cover such
increase).
SECTION 2.09. Fees. (a) The Borrower agrees to pay to the
Administrative Agent (i) a single facility fee for the Lenders in the amount of
$37,500 on or before the Effective Date and (ii) for the account of each Lender,
a commitment fee, which shall accrue at the per annum rate of L% on the daily
unused portion of the Commitment of such Lender during the period from and
including the Effective Date to but excluding the date on which such Commitment
terminates; provided that, if such Lender continues to have any Revolving Credit
Exposure after its Commitment terminates, then such commitment fee shall
continue to accrue on the daily amount of such Lender's Revolving Credit
Exposure from and including the date on which its Commitment terminates to but
excluding the date on which such Lender ceases to have any Revolving Credit
Exposure. Accrued commitment fees shall be payable in arrears on the last day of
March, June, September and December of each year and on the date on which the
Commitments terminate, commencing on the first such date to occur after the date
hereof; provided that any commitment fees accruing after the date on which the
Commitments terminate shall be payable on demand. All commitment fees shall be
computed on the basis of a year of 360 days and shall be payable for the actual
number of days elapsed (including the first day but excluding the last day).
(b) The Borrower agrees to pay to the Administrative Agent,
for its own account, annually, the sum of $10,000.00, payable in semi-annual
installments of $5,000 each, commencing on the Effective Date.
(c) All fees payable hereunder shall be paid on the dates due,
in immediately available funds, to the Administrative Agent for distribution, in
the case of commitment fees, to the Lenders. Fees paid shall not be refundable
under any circumstances.
SECTION 2.10. Interest.
(a) The Loans comprising each Eurodollar Borrowing shall bear
interest (i) in the case of a Eurodollar Revolving Loan, at the Adjusted LIBO
Rate for the Interest Period in effect for such Borrowing plus the Margin.
(b) The Loans compromising each ABR Borrowing shall bear
interest at the Adjusted Alternate Base Rate.
(c) Notwithstanding the foregoing, if any principal of or
interest on any Loan or any fee or other amount payable by the Borrower
hereunder is not paid when due, whether at stated maturity, upon acceleration or
otherwise, such overdue amount shall bear interest, after as well as before
judgment, at a rate per annum equal to (i) in the case of overdue principal of
any Loan, 3% plus the rate otherwise applicable to such Loan as provided in the
preceding paragraphs of this Section or (ii) in the case of any other amount, 3%
plus the rate applicable to ABR Loans as provided in paragraph (b) of this
Section.
(d) Accrued interest on each Loan shall be payable in arrears
on each Interest Payment Date for such Loan and upon termination of the
Commitments; provided that (i) interest accrued pursuant to paragraph (c) of
this Section shall be payable on demand, (ii) in the event of any repayment or
prepayment of any Loan, accrued interest on the principal amount repaid or
prepaid shall be payable on the date of such repayment or prepayment and (iii)
in the event of any conversion of any Eurodollar Revolving Loan prior to the end
of the current Interest Period therefor, accrued interest on such Loan shall be
payable on the effective date of such conversion.
(f) All interest hereunder shall be computed on the basis of a
year of 360 days, except that interest computed by reference to the Alternate
Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall
be computed on the basis of a year of 365 days (or 366 days in a leap year), and
in each case shall be payable for the actual number of days elapsed (including
the first day but excluding the last day). The applicable Adjusted Alternate
Base Rate, Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be
determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error.
SECTION 2.11. Alternate Rate of Interest. If prior to the commencement
of any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination
shall be conclusive absent manifest error) that adequate and reasonable
means do not exist for ascertaining the Adjusted LIBO Rate or the LIBO
Rate, as applicable, for such Interest Period; or
(b) the Administrative Agent is advised by the Required
Lenders that the Adjusted LIBO Rate or the LIBO Rate, as applicable,
for such Interest Period will not adequately and fairly reflect the
cost to such Lenders (or Lender) of making or maintaining their Loans
(or its Loan) included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Revolving Borrowing to, or
continuation of any Revolving Borrowing as, a Eurodollar Borrowing shall be
ineffective, (ii) if any Borrowing Request requests a Eurodollar Revolving
Borrowing, such Borrowing shall be made as an ABR Borrowing.
SECTION 2.12. Increased Costs. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Lender (except any such
reserve requirement reflected in the Adjusted LIBO Rate); or
(ii) impose on any Lender or the London interbank market any
other condition affecting this Agreement or Eurodollar Loans made by
such Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan), then the Borrower will pay to such Lender or
such additional amount or amounts as will compensate such Lender for such
additional costs incurred or reduction suffered.
(b) If any Lender determines that any Change in Law regarding
capital requirements has or would have the effect of reducing the rate of return
on such Lender's capital or on the capital of such Lender's holding company, if
any, as a consequence of this Agreement or the Loans made by such Lender, to a
level below that which such Lender or such Lender's holding company could have
achieved but for such Change in Law (taking into consideration such Lender's
policies and the policies of such Lender's holding company with respect to
capital adequacy), then from time to time the Borrower will pay to such Lender
such additional amount or amounts as will compensate such Lender or such
Lender's holding company for any such reduction suffered.
(c) A certificate of a Lender setting forth the amount or
amounts necessary to compensate such Lender or its holding company, as the case
may be, as specified in paragraph (a) or (b) of this Section shall be delivered
to the Borrower and shall be conclusive absent manifest error. The Borrower
shall pay such Lender the amount shown as due on any such certificate within 10
days after receipt thereof.
(d) Failure or delay on the part of any Lender to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender's right to demand such compensation; provided that the Borrower shall not
be required to compensate a Lender pursuant to this Section for any increased
costs or reductions incurred more than 270 days prior to the date that such
Lender notifies the Borrower of the Change in Law giving rise to such increased
costs or reductions and of such Lender's intention to claim compensation
therefor; provided further that, if the Change in Law giving rise to such
increased costs or reductions is retroactive, then the 270-day period referred
to above shall be extended to include the period of retroactive effect thereof.
SECTION 2.13. Break Funding Payments. In the event of (a) the payment
of any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of Default
or a Sale of Assets, pursuant to Section 2.08 hereof), (b) the conversion of any
Eurodollar Loan other than on the last day of the Interest Period applicable
thereto, (c) the failure to borrow, convert, continue or prepay any Revolving
Loan on the date specified in any notice delivered pursuant hereto (regardless
of whether such notice may be revoked under Section 2.08(b) and is revoked in
accordance therewith) or (d) the assignment of any Eurodollar Loan other than on
the last day of the Interest Period applicable thereto as a result of a request
by the Borrower pursuant to Section 2.16, then, in any such event, the Borrower
shall compensate each Lender for the loss, cost and expense attributable to such
event. In the case of a Eurodollar Loan, such loss, cost or expense to any
Lender shall be deemed to include an amount determined by such Lender to be the
excess, if any, of (i) the amount of interest which would have accrued on the
principal amount of such Loan had such event not occurred, at the Adjusted LIBO
Rate (in the case of a Eurodollar Loan) that would have been applicable to such
Loan, for the period from the date of such event to the last day of the then
current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period for
such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would
bid were it to bid, at the commencement of such period, for dollar deposits of a
comparable amount and period from other banks in the eurodollar market. A
certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.
SECTION 2.14. Taxes. (a) Any and all payments by or on account of any
obligation of the Borrower hereunder shall be made free and clear of and without
deduction for any Indemnified Taxes or Other Taxes; provided that if the
Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent or Lender
(as the case may be) receives an amount equal to the sum it would have received
had no such deductions been made, (ii) the Borrower shall make such deductions
and (iii) the Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent and
each Lender within 10 days after written demand therefor, for the full amount of
any Indemnified Taxes or Other Taxes paid by the Administrative Agent or such
Lender on or with respect to any payment by or on account of any obligation of
the Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section) and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A
certificate as to the amount of such payment or liability delivered to the
Borrower by a Lender, or by the Administrative Agent on its own behalf or on
behalf of a Lender, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower
shall deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment and a copy
of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from
or reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by applicable
law, such properly completed and executed documentation prescribed by applicable
law or reasonably requested by the Borrower as will permit such payments to be
made without withholding or at a reduced rate.
SECTION 2.15. Payments Generally; Pro Rata Treatment; Sharing of
Set-offs. (a) The Borrower shall make each payment required to be made by it
hereunder (whether of principal, interest, fees, or of amounts payable under
Section 2.12, 2.13 or 2.14, or otherwise) prior to 12:00 noon, New York City
time, on the date when due, in immediately available funds, without set-off or
counterclaim. Any amounts received after such time on any date may, in the
discretion of the Administrative Agent, be deemed to have been received on the
next succeeding Business Day for purposes of calculating interest thereon. All
such payments shall be made to the Administrative Agent at its offices at 270
Park Avenue, New York, New York except that payments pursuant to Sections 2.12,
2.13, 2.14 and 9.03 shall be made directly to the Persons entitled thereto. The
Administrative Agent shall distribute any such payments received by it for the
account of any other Person to the appropriate recipient promptly following
receipt thereof. If any payment hereunder shall be due on a day that is not a
Business Day, the date for payment shall be extended to the next succeeding
Business Day, and, in the case of any payment accruing interest, interest
thereon shall be payable for the period of such extension. All payments
hereunder shall be made in dollars.
(b) If at any time insufficient funds are received by and
available to the Administrative Agent to pay fully all amounts of principal,
interest and fees then due hereunder, such funds shall be applied (i) first,
towards payment of interest and fees then due hereunder, ratably among the
parties entitled thereto in accordance with the amounts of interest and fees
then due to such parties, and (ii) second, towards payment of principal then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of principal then due to such parties.
(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans resulting in such Lender receiving
payment of a greater proportion of the aggregate amount of its Revolving Loans
and accrued interest thereon than the proportion received by any other Lender,
then the Lender receiving such greater proportion shall purchase (for cash at
face value) participations in the Revolving Loans of other Lenders to the extent
necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Revolving Loans and; provided that (i) if
any such participations are purchased and all or any portion of the payment
giving rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to any
payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its Loans to any assignee
or participant, other than to the Borrower or any Subsidiary or Affiliate
thereof (as to which the provisions of this paragraph shall apply). The Borrower
consents to the foregoing and agrees, to the extent it may effectively do so
under applicable law, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against the Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders that the Borrower will not
make such payment, the Administrative Agent may assume that the Borrower has
made such payment on such date in accordance herewith and may, in reliance upon
such assumption, distribute to the Lenders the amount due. In such event, if the
Borrower has not in fact made such payment, then each of the Lenders severally
agrees to repay to the Administrative Agent forthwith on demand the amount so
distributed to such Lender with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to
be made by it pursuant to Section 2.04(b) or 2.15(d), then the Administrative
Agent may, in its discretion (notwithstanding any contrary provision hereof),
apply any amounts thereafter received by the Administrative Agent for the
account of such Lender to satisfy such Lender's obligations under such Sections
until all such unsatisfied obligations are fully paid.
SECTION 2.16. Mitigation Obligations; Replacement of Lenders. (a) If
any Lender requests compensation under Section 2.12, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.14, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment
of such Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 2.12 or 2.14, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 2.12, or
if the Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.14,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.04), all its interests, rights and obligations under this Agreement to
an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i) the Borrower
shall have received the prior written consent of the Administrative Agent, which
consent shall not unreasonably be withheld, (ii) such Lender shall have received
payment of an amount equal to the outstanding principal of its Loans, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder,
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other amounts) and (iii)
in the case of any such assignment resulting from a claim for compensation under
Section 2.12 or payments required to be made pursuant to Section 2.14, such
assignment will result in a reduction in such compensation or payments. A Lender
shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances
entitling the Borrower to require such assignment and delegation cease to apply.
SECTION 2.17. Use of Proceeds. The proceeds of the Loans will be used
only (i) for working capital, (ii) for general corporate purposes, not to exceed
in the aggregate amount at any one time outstanding, the sum of $2,000,000 and
(iii) for Acquisition Financings, subject to the limitation that not more than
$7,500,000 of the total Commitments may be used at any one time for Acquisition
Financings. No part of the proceeds of any Loan will be used, whether directly
or indirectly, for any purpose that entails a violation of any of the
Regulations of the Board, including Regulations G, U and X.
ARTICLE III
Representations and Warranties
The Borrower represents and warrants to the Lenders that:
SECTION 3.01. Organization; Powers. (a) Each of the Borrower and its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.
(b) Schedule 3.01(b) attached hereto is a complete and correct
list of the Borrower's Subsidiaries (corporate or other) which correctly
specifies as to each such Subsidiary (a) its legal name, (b) the jurisdiction of
its organization, (c) each other jurisdiction in which it is qualified to do
business, (d) the authorized Shares of such Subsidiary (specifying the class or
classes thereof) and the number of such Shares outstanding, (e) the number (and
percentage) of such outstanding Shares owned by the Borrower and its other
Subsidiaries and (f) the name of each other holder, if any, of such Shares,
together with the number (and percentage) held by such other holder.
SECTION 3.02. Authorization; Enforceability. The Transactions are
within the Borrower's corporate powers and have been duly authorized by all
necessary corporate and, if required, stockholder action. This Agreement has
been duly executed and delivered by the Borrower and constitutes a legal, valid
and binding obligation of the Borrower, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors' rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.
SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions
(a) do not require any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority, except such as have been
obtained or made and are in full force and effect, (b) will not violate any
applicable law or regulation or the charter, by-laws or other organizational
documents of the Borrower or any of its Subsidiaries or any order of any
Governmental Authority, (c) will not violate or result in a default under any
indenture, agreement or other instrument binding upon the Borrower or any of its
Subsidiaries or its assets, or give rise to a right thereunder to require any
material payment to be made by the Borrower or any of its Subsidiaries, and (d)
will not result in the creation or imposition of any Lien on any asset of the
Borrower or any of its Subsidiaries, other than a lien on the Collateral of the
Borrower and its Subsidiaries pursuant to the Security Agreements.
SECTION 3.04. Financial Condition; No Material Adverse Change. (a) The
Borrower has heretofore furnished to the Lenders its consolidated balance sheet
and statements of income, stockholders equity and cash flows (i) as of and for
the fiscal year ended February 28, 1996, reported on by Deloitte & Touche, LLP,
independent public accountants, and (ii) as of and for the fiscal quarter and
the portion of the fiscal year ended November 30, 1996, certified by its chief
financial officer. Such financial statements present fairly, in all material
respects, the financial position and results of operations and cash flows of the
Borrower and its consolidated Subsidiaries as of such dates and for such periods
in accordance with GAAP, subject to year-end audit adjustments and the absence
of footnotes in the case of the statements referred to in clause (ii) above.
(b) Since November 30, 1996, there has been no material
adverse change in the business, assets, operations, prospects or condition,
financial or otherwise, of the Borrower and its Subsidiaries, taken as a whole.
SECTION 3.05. Properties. (a) Each of the Borrower and its Subsidiaries
has good title to, or valid leasehold interests in, all its real and personal
property material to its business, including the Collateral, except for minor
defects in title that do not interfere with its ability to conduct its business
as currently conducted or to utilize such properties for their intended
purposes.
(b) Each of the Borrower and its Subsidiaries owns, or is
licensed to use, all trademarks, tradenames, copyrights, patents and other
intellectual property material to its business, and the use thereof by the
Borrower and its Subsidiaries does not infringe upon the rights of any other
Person, except for any such infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
SECTION 3.06. Litigation and Environmental Matters. (a) There are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or any of its Subsidiaries (i) as to which
there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters) or (ii) that involve this Agreement or the Transactions.
(b) Except for the Disclosed Matters and except with respect
to any other matters that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, neither the
Borrower nor any of its Subsidiaries (i) has failed to comply with any
Environmental Law or to obtain, maintain or comply with any permit, license or
other approval required under any Environmental Law, (ii) has become subject to
any Environmental Liability, (iii) has received notice of any claim with respect
to any Environmental Liability or (iv) knows of any basis for any Environmental
Liability.
(c) Since the date of this Agreement, there has been no change
in the status of the Disclosed Matters that, individually or in the aggregate,
has resulted in, or materially increased the likelihood of, a Material Adverse
Effect.
SECTION 3.07. Compliance with Laws and Agreements. Each of the Borrower
and its Subsidiaries is in compliance with all laws, regulations and orders of
any Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
No Default has occurred and is continuing.
SECTION 3.08. Investment and Holding Company Status. Neither the
Borrower nor any of its Subsidiaries is (a) an "investment company" as defined
in, or subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION 3.09. Taxes. Each of the Borrower and its Subsidiaries has
timely filed or caused to be filed all Tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which the Borrower or such Subsidiary, as
applicable, has set aside on its books adequate reserves or (b) except as set
forth on Schedule 3.09 and (c) to the extent that the failure to do so could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The expected post retirement benefit
obligation (determined as of the last day of the most recently ended fiscal year
of the Borrower in accordance with Financial Accounting Standards Board
Statement No. 106, without regard to liabilities attributable to continuation
coverage mandated by section 4980B of the Code) of the Borrower is $0.
SECTION 3.11. Disclosure. The Borrower has disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which it or any
of its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. None of the reports, financial statements, certificates
or other information furnished by or on behalf of the Borrower to the
Administrative Agent or any Lender in connection with the negotiation of this
Agreement or delivered hereunder (as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided that,
with respect to projected financial information, the Borrower represents only
that such information was prepared in good faith based upon assumptions believed
to be reasonable at the time. Such projections continue to represent the
Borrower's present best estimate of the future financial performance of the
Borrower and its Subsidiaries, subject to the activities inherent in the
Borrower's business, including, without limitation, acquisitions and project
timing. There is no guarantee that any of such projections will be attained and
actual results may vary from such projections and such variations may be
material.
. Schedule 3.12 attached hereto correctly describes:sactions with
Affiliates and Leases
(a) all Funded Debt and/or Current Debt of the Borrower and/or
any of its Subsidiaries to be outstanding immediately following the
Effective Date and/or all agreements pursuant to which the Borrower
and/or any of its Subsidiaries has (or have) the right to incur the
same, and identifies any collateral which secures (or will secure) the
same;
(b) all Liens to which any of the properties and assets of the
Borrower and/or any of its Subsidiaries will be subject immediately
following the Effective Date (other than those of the character
described in section 6.04(b)) which individually or in the aggregate
secure Indebtedness of $50,000 or more;
(c) all Investments (and all agreements and commitments to
make Investments) of the Borrower and/or any of its Subsidiaries to be
owned or held (or in effect) immediately following the Effective Date
(except for Investments described in clauses (b) through (i) of the
definition of Permitted Investments);
(d) each of the Affiliates of the Borrower (other than its
Subsidiaries) and of each of its Subsidiaries, and all material
transactions with such Affiliates which were consummated during the
12-month period ended on the Effective Date or which the Borrower or
any Subsidiary is now obligated or now intends to consummate at any
time in the future, other than any such transaction consummated or to
be consummated in the ordinary course of business and on arm's-length
terms; and
(e) each material lease, other than Capital Leases, under
which the Borrower or any of its Subsidiaries is lessee or sublessee
and, with respect to each such lease, the name of the lessor, the
lessee or sublessee, a general description of the property leased, the
annual Rental Obligations payable thereunder and the term thereof.
SECTION 3.13. Business, etc. The Borrower and its Subsidiaries are
engaged in the business of engineering, environmental, geotechnical and
construction materials and testing and consulting, construction and
environmental project management, information technology consulting and related
services (collectively, the "Business"), as further described in the Borrower's
Confidential Private Placement Offering Memorandum dated December 1996,
including all exhibits and appendices thereto, prepared by the Borrower with the
assistance of Chase Securities, Inc., a true, correct and complete copy of which
has been furnished to the Administrative Agent.
ARTICLE IV
Conditions
SECTION 4.01. Effective Date. The obligations of the Lenders to make
Loans hereunder shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have
received from each party hereto either (i) a counterpart of this
Agreement signed on behalf of such party or (ii) written evidence
satisfactory to the Administrative Agent (which may include telecopy
transmission of a signed signature page of this Agreement) that such
party has signed a counterpart of this Agreement.
(b) The Administrative Agent shall have received a favorable
written opinion (addressed to the Administrative Agent and the Lenders
and dated the Effective Date) of Messrs. Kaufmann, Feiner, Yamin,
Gildin & Robbins, LLP, counsel for the Borrower and the Guarantors,
substantially in the form of Exhibit B, and covering such other matters
relating to the Borrower, this Agreement, the other Loan Documents or
the Transactions as the Required Lenders shall reasonably request. The
Borrower hereby requests such counsel to deliver such opinion.
(c) The Administrative Agent shall have received such
documents and certificates as the Administrative Agent or its counsel
may reasonably request relating to the organization, existence and good
standing of the Borrower, the authorization of the Transactions and any
other legal matters relating to the Borrower, this Agreement or the
Transactions, all in form and substance satisfactory to the
Administrative Agent and its counsel.
(d) The Administrative Agent shall have received a
certificate, dated the Effective Date and signed by the President, a
Vice President or a Financial Officer of the Borrower, confirming
compliance with the conditions set forth in paragraphs (a) and (b) of
Section 4.02.
(e) The Administrative Agent shall have received all fees and
other amounts due and payable on or prior to the Effective Date,
including, to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses required to be reimbursed or paid by the
Borrower hereunder.
(f) The Administrative Agent shall have received evidence that
the Notes have been purchased pursuant to the Note Agreements and that
the Net Proceeds received therefrom by the Borrower have been applied
to the payment in full of the Old Bank Debt.
(g) The Administrative Agent shall have received a duly
executed and acknowledged Promissory Note in favor of each Lender, the
Guaranties, the Security Agreements and the Collateral Agency and
Intercreditor Agreement.
(h) The Administrative Agent shall have received evidence that
the UCC-1 Financing Statements have been filed and/or recorded so as to
perfect the first priority lien created by the Security Agreements and
that such liens are subject to no prior or pari passu lien except such
other liens as may be permitted under Section 6.02. UCC Financing
Statements (naming the Borrower and each of its Subsidiaries,
respectively, as Debtor and the Collateral Agent as Secured Party)
shall be in proper form for filing in the offices specified on Schedule
4.01(h).
(i) The Administrative Agent shall have received lien searches
on the Borrower and each of its Subsidiaries, respectively, for the
applicable offices in each jurisdiction in which any of the Collateral
shall be located at or after the Effective Date, as specified on
Schedule 4.01(h) which searches shall not reveal any prior financing
statement covering any portion or all of the Collateral (other than
financing statements to be terminated at/or prior to the Effective
Date).
(j) The Administrative Agent shall have received evidence of
compliance by the Borrower and each of its Subsidiaries, respectively,
with the insurance requirements of Section 5.05.
(k) The Administrative Agent shall have received at/or prior
to the Effective Date, the additional documents specified on Schedule
4.01(l) attached hereto.
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding.
SECTION 4.02. Each Credit Event. The obligation of each Lender to make
a Loan on the occasion of any Borrowing is subject to the satisfaction of the
following conditions:
(a) The representations and warranties of the Borrower set
forth in this Agreement shall be true and correct on and as of the date of such
Borrowing.
(b) At the time of and immediately after giving effect to such
Borrowing, no Default shall have occurred and be continuing.
Each Borrowing shall be deemed to constitute a representation and
warranty by the Borrower on the date thereof as to the matters specified in
paragraphs (a) and (b) of this Section and shall be confirmed by delivery to the
Administrative Agent of a certificate signed by the President, a Vice President
or a Financial Officer of the Borrower.
SECTION 4.03. Loans For Acquisition Financing. The obligation of each
Lender to make any Loan, the proceeds of which are to be used directly or
indirectly for an Acquisition Financing which exceeds in the aggregate, with
respect to the stock or assets of a single Person, $500,000, is subject to the
receipt by each Lender of a fully executed copy of the purchase agreement and
all other documents related to such Acquisition Financing.
ARTICLE V
Affirmative Covenants
Until the Commitments have expired or been terminated and the principal
of and interest on each Loan and all fees payable hereunder shall have been paid
in full the Borrower covenants and agrees with the Lenders that:
SECTION 5.01. Financial Statements and Other Information. The Borrowe
will furnish to the Administrative Agent and each Lender:
(a) within 105 days after the end of each fiscal year of the
Borrower, its audited consolidated balance sheet and related statements of
operations, stockholders' equity and cash flows as of the end of and for such
year, setting forth in each case in comparative form the figures for the
previous fiscal year, all reported on by independent public accountants of
recognized national standing (without a "going concern" or like qualification or
exception and without any qualification or exception as to the scope of such
audit) to the effect that such consolidated financial statements present fairly
in all material respects the financial condition and results of operations of
the Borrower and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied and within 130 days after the end of
each fiscal year of the Borrower, internally prepared consolidating statements;
(b) within 50 days after the end of each of the first three
fiscal quarters of each fiscal year of the Borrower, its consolidated balance
sheet and related statements of operations, stockholders' equity and cash flows
as of the end of and for such fiscal quarter and the then elapsed portion of the
fiscal year (including the financial statement of ATC Insys Technology Inc.
individually and as consolidated with the Borrower), setting forth in each case
in comparative form the figures for the corresponding period or periods of (or,
in the case of the balance sheet, as of the end of) the previous fiscal year,
all certified by one of its Financial Officers as presenting fairly in all
material respects the financial condition and results of operations of the
Borrower and its consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied, subject to normal year-end audit adjustments and
the absence of footnotes;
(c) concurrently with any delivery of financial statements
under clause (a) or (b) above, a certificate of a Financial Officer of the
Borrower (i) certifying as to whether a Default has occurred and, if a Default
has occurred, specifying the details thereof and any action taken or proposed to
be taken with respect thereto, (ii) setting forth reasonably detailed
calculations demonstrating compliance with the covenants set forth in Sections
5.09, and (iii) stating whether any change in GAAP or in the application thereof
has occurred since the date of the audited financial statements referred to in
Section 3.04 and, if any such change has occurred, specifying the effect of such
change on the financial statements accompanying such certificate;
(d) concurrently with any delivery of financial statements
under clause (a) above, a certificate of the accounting firm that reported on
such financial statements stating whether they obtained knowledge during the
course of their examination of such financial statements of any Default (which
certificate may be limited to the extent required by accounting rules or
guidelines);
(e) within 30 days after the end of each fiscal quarter of the
Borrower, a quarterly schedule of Accounts Receivable of the Borrower and its
Subsidiaries, in form and substance satisfactory to the Administrative Agent and
each Lender, current as of the close of business on the last business day of
such quarter and certified by the Financial Officer, showing, separately, those
Accounts Receivable which are more than 30, 60 or 90 days old, together with an
Accounts Receivable reconciliation;
(f) within 30 days after the end of each month, a Borrowing
Certificate;
(g) promptly after the same become publicly available, copies
of all periodic and other reports, proxy statements and other materials filed by
the Borrower or any Subsidiary with the Securities and Exchange Commission, or
any Governmental Authority succeeding to any or all of the functions of said
Commission, or with any national securities exchange, or distributed by the
Borrower to its shareholders generally, as the case may be; and
(h) promptly following any request therefor, such other
information regarding the operations, business affairs and financial condition
of the Borrower or any Subsidiary, or compliance with the terms of this
Agreement, as the Administrative Agent or any Lender may reasonably request.
SECTION 5.02. Notices of Material Events. The Borrower will furnish to
the Administrative Agent and each Lender prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or
proceeding by or before any arbitrator or Governmental Authority
against or affecting the Borrower or any Affiliate thereof that, if
adversely determined, could reasonably be expected to result in a
Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together
with any other ERISA Events that have occurred, could reasonably be
expected to result in liability of the Borrower and its Subsidiaries in
an aggregate amount exceeding $250,000; and
(d) any other development that results in, or could reasonably
be expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
SECTION 5.03.(a) Existence; Conduct of Business. The Borrower will, and
will cause each of its Subsidiaries to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of its business; provided that the foregoing shall not prohibit
any merger, consolidation, liquidation or dissolution permitted under Section
6.03.
(b) The Borrower will and will cause each of its Subsidiaries
to engage only in the Business (and in other lines of business related to the
Business) and engage principally in the environmental consulting and engineering
component of the Business.
SECTION 5.04. Payment of Obligations. The Borrower will, and will cause
each of its Subsidiaries to, pay its obligations, including Tax liabilities,
that, if not paid, could result in a Material Adverse Effect before the same
shall become delinquent or in default, except where (a) the validity or amount
thereof is being contested in good faith by appropriate proceedings, (b) the
Borrower or such Subsidiary has set aside on its books adequate reserves with
respect thereto in accordance with GAAP and (c) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect.
SECTION 5.05. Maintenance of Properties; Insurance. The Borrower will,
and will cause each of its Subsidiaries to, (a) keep and maintain all property
material to the conduct of its business in good working order and condition,
ordinary wear and tear excepted, and (b) maintain, with financially sound and
reputable insurance companies, insurance in such amounts and against such risks
as are customarily maintained by companies engaged in the same or similar
businesses operating in the same or similar locations.
SECTION 5.06. Books and Records; Inspection Rights. The Borrower will,
and will cause each of its Subsidiaries to, keep proper books of record and
account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. The Borrower will, and
will cause each of its Subsidiaries to, permit any representatives designated by
the Administrative Agent or any Lender (provided that any such representative
other than an employee, attorney or accountant for the Administrative Agent or
any Lender, shall be subject to the reasonable approval of the Borrower prior to
making any such visit, inspection or examination), upon reasonable prior notice,
and at the expense of the Borrower, to visit and inspect its properties, to
examine and make extracts from its books and records, and to discuss its
affairs, finances and condition with its officers and independent accountants,
all at such reasonable times and as often as reasonably requested, but not less
frequently than annually, and provided that no Event of Default exists, and/or
no circumstances shall have arisen which shall necessitate a greater volume of
work by such representatives than is presently anticipated, the cost of any each
audit shall not exceed $15,000.
SECTION 5.07. Compliance with Laws. The Borrower will, and will cause
each of its Subsidiaries to, comply with all laws, rules, regulations and orders
of any Governmental Authority applicable to it or its property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 5.08 Guaranties by Future Subsidiaries. The Borrower will cause
each future Subsidiary to execute and deliver to the Administrative Agent a
Guaranty, Security Agreement and appropriate Financing Statements.
SECTION 5.09. Certain Financial Covenants. The Borrower will, and will
cause its Subsidiaries to:
(a) Interest Expense Coverage Ratio. Maintain at the end of
each fiscal quarter of the Borrower a ratio of (i) Consolidated EBITDA
for the four consecutive fiscal quarters then ended to (ii)
Consolidated Interest Expense during such period of not less than 3.00
to 1.00.
(b) Fixed Charge Coverage Ratio. Maintain at the end of
each fiscal quarter of the Borrower a Consolidated Fixed Charge Coverage
Ratio of not less than 2.50 to 1.00.
(c) Consolidated Net Income. Maintain Consolidated Net
Income in excess of $1.00 for each period of four consecutive fiscal
quarters of the Borrower.
(d) Minimum Consolidated Net Worth. Maintain at the end of
each fiscal quarter of the Borrower Consolidated Net Worth of not less
than the sum of (i) 80% of the Consolidated Net Worth of the Borrower
at February 28, 1997 plus (ii) an amount equal to 50% of aggregate
Consolidated Net Income (but only if a positive number) for the period
commencing on March 1, 1997 and ending on the last day of such fiscal
quarter.
(e) Minimum Consolidated Working Capital. Maintain at the end
of each fiscal year of the Borrower Consolidated Working Capital of not
less than $24,000,000 through February 28, 1998, which minimum required
amount shall increase by $2,000,000 per year as of the end of each
fiscal year thereafter.
SECTION 5.10. Accounts. The Borrower and its Subsidiaries shall
maintain at all times their primary depositary and operating accounts (which
shall not be deemed to include the investment accounts of the Borrower and its
Subsidiaries) with the Collateral Agent, provided that each active office of the
Borrower and its Subsidiaries may maintain with a depositary institution other
than the Collateral Agent a separate operating account for each such active
office, provided that the amount on deposit in any such operating account shall
at no time exceed $10,000.
ARTICLE VI
Additional Covenants
Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full,
the Borrower covenants and agrees with the Lenders that:
SECTION 6.01. Discount or Sale of Receivables. The Borrower will not,
and will not permit any Subsidiary of the Borrower, directly or indirectly, to
discount or sell any of its accounts receivable, except that the Borrower or any
Subsidiary of the Borrower may settle doubtful accounts in the ordinary course
of business or grant discounts in the ordinary course of business for early or
timely payment of accounts receivable, and the Borrower and its Subsidiaries may
collaterally assign their accounts receivable as security for the Borrower's
obligations under this Agreement and under the Private Placement Documents to
the extent permitted under Section 6.04.
SECTION 6.02. Funded Debt, Current Debt and Preferred Shares. The
Borrower will not, and will not permit any Subsidiary of the Borrower to,
create, assume, incur, guarantee, or in any manner become or be liable in
respect of any Funded Debt or Current Debt (it being agreed that for purposes of
this Section 6.02 contingent Indebtedness shall be deemed to be incurred at the
time, if any, that such contingent Indebtedness first becomes Funded Debt or
Current Debt, notwithstanding that such contingent Indebtedness was originally
incurred at an earlier time) or issue, sell or have outstanding any Preferred
Shares other than:
(a) in the case of the Borrower and its Subsidiaries:
(i) Funded Debt evidenced by the Notes and the
Note Guarantees;
(ii) Funded Debt, Current Debt and, solely in the
case of Subsidiaries of the Borrower (but not the Borrower
itself), Preferred Shares, in each case outstanding on the
date hereof and as described on Schedule 3.12 attached hereto
(but excluding any Funded Debt or Current Debt outstanding
under this Agreement);
(iii) Funded Debt or Current Debt under this
Agreement, provided that the aggregate principal amount (and
face amount of any letters of credit) of such Funded Debt and
Current Debt permitted by this clause (iii) shall at no time
exceed $15,000,000;
(iv) additional Funded Debt, Current Debt and, solely
in the case of Subsidiaries of the Borrower (but not the
Borrower itself), Preferred Shares not otherwise permitted
under this section 6.02 (including Funded Debt and/or Current
Debt incurred pursuant to this Agreement in excess of the
amount permitted by clause (iii) above and also including
Funded Debt or Current Debt incurred to extend, refinance,
refund or renew any outstanding Funded Debt and/or Current
Debt otherwise permitted under this section 6.02(a) or
Preferred Shares issued in exchange for Preferred Shares
otherwise permitted under this section 6.02(a)), provided
that, both at the time of and immediately after giving effect
to the incurrence or issuance thereof and the retirement of
any Indebtedness or Preferred Shares which are concurrently
being retired:
(A) no Default or Event of Default shall
have occurred and be continuing; and
(B) Consolidated Total Debt shall not
exceed 55% of Consolidated Capitalization; and
(C) in the case of additional Funded Debt or
Current Debt being incurred by a Subsidiary of the
Borrower or Preferred Shares being issued by a
Subsidiary of the Borrower, the sum (x) of the
aggregate Total Debt of the Borrower's Subsidiaries
and (y) the aggregate liquidation value of all
outstanding Preferred Shares of the Borrower's
Subsidiaries shall not exceed 10% of Consolidated Net
Worth at the end of the immediately preceding fiscal
quarter of the Borrower; and
(b) in the case of any Subsidiary of the Borrower, Current
Debt or Funded Debt owed to the Borrower or to a Wholly-Owned Subsidiary
Guarantor or Preferred Shares owned by the Borrower or a Wholly-Owned Subsidiary
Guarantor.
For the purposes of this section 6.02, if at any time any Person shall
become a Subsidiary of the Borrower, such Subsidiary shall be deemed to have
issued at such time all Preferred Shares and to have become liable at such time
in respect of all Current Debt and Funded Debt which such Subsidiary shall have
outstanding at such time. The renewal, extension, refinancing or refunding of
any Current Debt or Funded Debt or the issuance of Preferred Shares in exchange
for Preferred Shares permitted by this section 6.02 shall constitute the
issuance of additional Current Debt, Funded Debt or Preferred Shares, as the
case may be, which is, in turn, subject to the limitation of the applicable
provisions of this section 6.02.
The Borrower will not, and will not permit any Subsidiary of the
Borrower to, become obligated under any Guarantee (other than service related
bonds or indemnity warranties securing the performance by the Borrower or its
Subsidiaries in the ordinary course of the Borrower's or such Subsidiaries'
Business) unless as of the date such Guarantee is entered into or otherwise
created, assumed or incurred, (x) the maximum amount which the Borrower or such
Subsidiary may become obligated to pay thereunder is then known and determined
and (y) to the extent such Guarantee constitutes Funded Debt or Current Debt,
such Guarantee may then be entered into or otherwise created, assumed or
incurred in compliance with this section 6.02.
SECTION 6.03. Limitation on Restricted Investments and Restricted
Payments.
(a) The Borrower will not, and will not permit any of its
Subsidiaries to, directly or indirectly, at any time, authorize, declare or
make, or incur any liability to make, any Restricted Investment or any
Restricted Payment, unless in each case both at the time of and after giving
effect to such action:
(i) the sum of (x) the aggregate value of all
Restricted Investments of the Borrower and its Subsidiaries
(valued, in the manner provided in section 6.03(d),
immediately after such action) plus (y) the aggregate amount
of all Restricted Payments of the Borrower and its
Subsidiaries, declared or made during the period commencing on
the Closing Date and ending on the date such action is taken,
would not exceed the sum of:
(A) the sum of (i) $2,000,000 and (ii) 50%
of aggregate Consolidated Net Income (but only if a
positive number) for the period commencing on March
1, 1997 and ending on the last day of the most
recently completed fiscal quarter of the Borrower
immediately prior to the date such action is taken
(the "Test Period"), plus
(B) the aggregate amount of Net Proceeds
of Capital Stock for the Test Period; and
(ii) the Borrower would be permitted to become liable
in respect of at least $1.00 of additional Funded Debt or
Current Debt under section 6.02(a)(iv); and
(iii) no Default or Event of Default would exist.
(b) The Borrower will not, and will not permit any of its
Subsidiaries to, enter into or be or become bound by any agreement (other than
this Agreement or the Note Agreements) which encumbers or restricts, or create
or otherwise cause or suffer to exist or become effective any encumbrance or
restriction upon, the right or ability of any Subsidiary of the Borrower to:
(i) pay dividends or make any other distribution on its Shares (or any
participation in its profits) owned by the Borrower or any Subsidiary of
the Borrower;
(ii) pay any Indebtedness owed to the Borrower or any Subsidiary of the
Borrower;
(iii) make loans or advances to or Investments in the Borrower or any
Subsidiary of the Borrower; or
(iv) transfer any of its properties or assets to the Borrower or any
Subsidiary of the Borrower.
(c) Each Person which becomes a Subsidiary of the Borrower
after the Effective Date will be deemed to have made, on the date such Person
becomes a Subsidiary of the Borrower, all Restricted Investments of such Person
in existence on such date. Investments in any Person that ceases to be a
Subsidiary of the Borrower after the Closing Date (but in which the Borrower or
another Subsidiary continues to maintain an Investment) will be deemed to have
been made on the date on which such Person ceases to be a Subsidiary of the
Borrower.
(d) For purposes of this section 6.03 and for purposes of
clauses (i) and (j) of the definition of Permitted Investment, as of any date of
determination, each Investment shall be valued at the greater of:
(i) the amount at which such Investment is
initially shown on the books of the Borrower or any
of its Subsidiaries (or zero if such Investment is
not shown on any such books); and
(ii) either
(A) in the case of any Guarantee of the
obligation of any Person, the amount which the
Borrower or any of its Subsidiaries has paid (or is
obligated to pay) on account of such obligation less
any recoupment by the Borrower or such Subsidiary of
any such payments, or
(B) in the case of any other Investment, the
excess of (x) the greater of (1) the amount
originally entered on the books of the Borrower or
any of its Subsidiaries with respect thereto and (2)
the cost thereof to the Borrower or its Subsidiary
over (y) any return of capital (after income taxes
applicable thereto) upon such Investment through the
sale or other liquidation thereof or part thereof or
otherwise.
SECTION 6.04. Liens The Borrower will not, and will not permit any
Subsidiary of the Borrower to, create, assume, incur or suffer to exist any Lien
in respect of any property of any character (whether owned on the date hereof or
hereafter acquired) other than:
(a) Liens on the Collateral securing the Promissory Notes;
(b) Liens (other than any Lien created by any Environmental Law or by Section
4068 of ERISA), charges and encumbrances which (i) are incurred in the
ordinary course of business and which are incidental to the conduct of the
business of the Borrower and its Subsidiaries and the ownership of its and
their property, (ii) are not incurred in connection with the borrowing of
money or the obtaining of advances or credit, (iii) do not in the aggregate
materially detract from the value of the property of the Borrower or its
Subsidiaries or materially impair the use thereof in the operation of its
or their business and (iv) do not (and could not reasonably be expected to)
materially adversely affect the rights of the Lenders;
(c) Liens on the Collateral securing Funded Debt and/or Current Debt or other
obligations of the Borrower and its Subsidiaries under the Private
Placement Documents, in each case to the extent that such Funded Debt or
Current Debt is permitted under section 6.02(a) (i) or (iv);
(d) any Lien existing on the date hereof and referred to on Schedule 3.12
attached hereto (excluding any Lien securing obligations under the Private
Placement Documents) and the replacement, extension or renewal of any such
Lien upon or in the same property theretofore subject thereto, in each case
as security for the Funded Debt or Current Debt originally secured by such
existing Lien (without increase in the amount or change in any direct or
contingent obligor) of such Funded Debt or Current Debt;
(e) any Lien constituting a purchase money security interest (including Capital
Leases and any other title retention or deferred purchase device) incurred
in the ordinary course of business to finance the acquisition and/or
improvement (or incurred within six months of the acquisition or
improvement, as the case may be) of any real property or equipment
(including any Lien on real property or equipment if such Lien is incurred
to finance the acquisition by the Borrower and its Subsidiaries of the
operating assets (including such real property and equipment) of a third
party), including, in the case of any Person which is to be acquired by the
Borrower and thereafter becomes a Subsidiary, any such Lien existing upon
or in such Person's real property or equipment at the time such Person
becomes a Subsidiary, provided that (i) such Lien does not extend to or
cover any property of -------- the Borrower or any of its Subsidiaries
other than the property being leased or acquired, (ii) the aggregate
principal amount of Indebtedness secured thereby shall not exceed the cost
of such property and (iii) if the Indebtedness secured thereby constitutes
Funded Debt or Current Debt, such Funded Debt or Current Debt is permitted
under section 6.02(a)(iv); and
(f) additional Liens upon any of the assets of the Borrower or any of its
Subsidiaries (other than the Collateral) not otherwise permitted under this
section 6.04 (other than additional Liens securing obligations under the
Private Placement Documents), provided that the aggregate value of such
assets so subject to such Liens at no time shall exceed an amount equal to
10% of Consolidated Net Worth as of the end of the most recently completed
fiscal quarter of the Borrower.
Notwithstanding anything to the contrary contained herein, in no event shall the
Borrower create, assume, incur or suffer to exist any Lien, or permit any
Subsidiary of the Borrower to create, assume, incur or suffer to exist any Lien,
on any of the Collateral except Liens permitted under clauses (a) and (c) of
this section 6.04, and existing Liens described on Schedule 3.12 attached hereto
(which Schedule shall specifically describe the Collateral encumbered by such
existing Liens).
SECTION 6.05. Transactions with Affiliates. The Borrower will not, and
will not permit any Subsidiary of the Borrower to, engage in any transaction
(including, without limitation, the purchase, sale or exchange of any properties
and assets or the rendering of any services) with an Affiliate of the Borrower
or of such Subsidiary on terms less favorable to the Borrower or such Subsidiary
in any material respect than would be obtainable at the time in comparable
transactions of the Borrower or such Subsidiary with a Person not such an
Affiliate.
Limitation on Issuance of Shares of Subsidiaries and Disposition of
Shares.osition of Shares
(a) The Borrower will not permit any Subsidiary of the
Borrower to issue, sell or otherwise dispose of any Shares (or any
securities convertible into or exercisable or exchangeable for Shares)
of such Subsidiary, except to the Borrower or to a Wholly-Owned
Subsidiary Guarantor or, in the case of Preferred Shares, as permitted
by section 6.02(a).
(b) The Borrower will not sell, transfer or otherwise dispose
of any Shares (or any securities convertible into or exercisable or
exchangeable for Shares) of any Subsidiary of the Borrower or any
Indebtedness of any Subsidiary of the Borrower, or permit any
Subsidiary of the Borrower to sell, transfer or otherwise dispose of
(except to the Borrower or to a Wholly-Owned Subsidiary Guarantor) any
Shares, securities or any Indebtedness of any other Subsidiary of the
Borrower unless (i) both at the time of and immediately after giving
effect to such disposition, no Default or Event of Default shall have
occurred and be continuing, (ii) such disposition shall be made in
compliance with section 6.08, if applicable, and (iii) each of the
following conditions shall be complied with:
(A) simultaneously with such disposition,
all such Shares, securities and Indebtedness of such
Subsidiary at the time owned by the Borrower and by
every other Subsidiary of the Borrower shall be
disposed of as an entirety;
(B) the Board of Directors of the Borrower
shall have reasonably determined in good faith, as
evidenced by a written resolution thereof promptly
delivered to the Lenders, that (1) the disposition of
such Shares, securities and Indebtedness is in the
best interests of the Borrower and is not
disadvantageous in any material respect to the
Lenders, and (2) such Shares, securities and
Indebtedness are being disposed of for fair and
adequate cash consideration and on fair and adequate
terms; and
(C) following such disposition, the
Subsidiary being disposed of shall not have any
continuing investment in the Borrower or any other of
its Subsidiaries not being simultaneously disposed
of.
SECTION 6.07. Limitation on Consolidation or Merger, etc. The Borrower
will not, and will not permit any of its Subsidiaries to, consolidate with or
merge into any other Person or sell, lease or otherwise dispose of all or
substantially all of its property in a single transaction or series of
transactions to any Person or Persons (except that any Subsidiary of the
Borrower may (x) merge into, or sell, lease or otherwise dispose of all or
substantially all of its property in a single transaction or series of
transactions to the Borrower (if the Borrower is the surviving entity of such
transaction) or a Wholly-Owned Subsidiary Guarantor of the Borrower (if the
surviving entity to such transaction is a Wholly-Owned Subsidiary Guarantor of
the Borrower) or (y) sell, lease or otherwise dispose of its property in
compliance with section 6.09 (other than 6.09(d)), provided that the Borrower
may consolidate with or merge into, or sell, lease or otherwise dispose of all
or substantially all of its property to, any other Person so long as:
(a) the successor formed by such consolidation or the survivor
of such merger or the Person that acquires all or substantially all of
the property of the Borrower, as the case may be (the "Successor
Corporation"), shall be a Solvent corporation organized and existing
under the laws of the United States of America, any state thereof or
the District of Columbia and having all or substantially all its
property in the United States of America;
(b) if the Borrower is not the Successor Corporation, the
Successor Corporation shall have executed and delivered to each Lender
its assumption of the due and punctual performance and observance of
each covenant and condition of this Agreement and each of the other
Loan Documents (pursuant to such agreements and instruments as shall be
reasonably satisfactory to the Required Lenders), and the Borrower
shall have caused to be delivered to each Lender an opinion of
independent counsel reasonably satisfactory to the Required Lenders, to
the effect that all agreements or instruments effecting such assumption
are legal, valid and binding obligations of such Successor Corporation
enforceable against it in accordance with their respective terms
(except as such enforcement may be limited by insolvency, bankruptcy,
reorganization or other laws of general application relating to the
enforcement of creditors' rights or by general equity principles), that
the Promissory Notes remain secured by the Guaranty and the Security
Agreement of the Guarantors pursuant to perfected, first priority
security interests in the Collateral, and covering such other matters
as the Required Lenders of the Notes may reasonably request.
(c) both before and immediately after giving effect to
such transaction, no Default or Event of Default would exist; and
(d) after giving effect to such transaction, (i) the Successor
Corporation shall have a Consolidated Net Worth equal to or greater
than the Consolidated Net Worth of the Borrower immediately prior to
such transaction and (ii) the Successor Corporation shall be permitted
to incur at least $1.00 of additional Funded Debt or Current Debt under
section 6.02(a)(iv).
No sale, lease or other disposition by the Borrower shall have the effect of
releasing the Borrower (or any successor corporation that shall theretofore have
become such in the manner prescribed in this section 6.07) or any of its
Subsidiaries from its liability under this Agreement or any of the other
Operative Documents.
SECTION 6.08. Limitations on Leasebacks. The Borrower will not, and
will not permit any of its Subsidiaries, directly or indirectly, to sell or
otherwise dispose of any of its property if, as part of the same transaction or
series of related transactions, any such Person shall then or thereafter rent or
lease as lessee, or similarly acquire the right to possession or use of, such
property (or a major portion thereof), or other property which it intends to use
for substantially the same purpose or purposes, under any lease, agreement or
other arrangement which obligates any such person to pay rent as lessee or make
any other payments for such possession or use.
SECTION 6.09. Limitation on Dispositions of Property. The Borrower will
not, and will not permit any of its Subsidiaries to, directly or indirectly,
sell, lease or otherwise dispose of any of their respective properties and
assets (including any right, title or interest in any property or asset),
whether owned on the date hereof or hereafter acquired and whether real,
personal or mixed, tangible or intangible, including, without limitation,
Shares, securities or Indebtedness of any Subsidiary of the Borrower, except:
(a) any sale of inventory or work in process in the
ordinary course of business;
(b) any transaction permitted under s ection 6.07;
(c) any sale, lease or disposition of assets by a
Subsidiary to the Borrower or to a Wholly-Owned Subsidiary Guarantor;
and
(d) any sale by the Borrower or any of its Subsidiaries of any
of their respective properties and assets (other than any such
properties or assets which constitute part of the Collateral) (each a
"Sale of Assets") unless (i) both before and immediately after giving
effect to such transaction, (x) no Default or Event of Default shall
exist, and (y) the Borrower shall be permitted to incur at least $1.00
of additional Funded Debt or Current Debt under section 6.02(a)(iv),
(ii) such properties and assets are sold for cash consideration equal
to the fair market value of such properties and assets, and (iii) the
Net Asset Sale Proceeds of such sale are (x) within 30 days after the
consummation of such sale, offered to the holders of Senior Debt
pursuant to section 2.08(a) as prepayment of the Senior Debt, and
applied to such prepayment to the extent required by such holders,
and/or (y) applied within 360 days after the consummation of such sale
to the purchase by the Borrower or any of its Subsidiaries of property
and assets (other than cash or cash equivalents) used and useful in the
ordinary course of business of the Borrower or such Subsidiary. The Net
Asset Sale Proceeds of any Sale of Assets pursuant to this clause (d)
shall be deposited directly and held in a segregated account at the
Collateral Agent until applied in accordance with the preceding
sentence, and any such Net Asset Sale Proceeds not so applied within
360 days after consummation of such Sale of Assets shall constitute
"Available Unused Proceeds". When the aggregate amount of Available
Unused Proceeds exceeds $5,000,000, the Borrower shall offer all of
such Available Unused Proceeds to the holders of the Senior Debt
pursuant to section 2.08(b) as prepayment of the Senior Debt. Any such
Available Unused Proceeds which are not so required by such holders to
be applied in prepayment of the Senior Debt shall be released from the
segregated account at the Collateral Agent, shall cease to constitute
Available Unused Proceeds and thereafter may be used for general
corporate purposes of the Borrower and its Subsidiaries.
SECTION 6.10. Modification of Certain Documents, Agreements and
Instruments. The Borrower will not and will not permit any Subsidiary to (a)
amend, modify or waive, or permit the amendment, modification or waiver of, any
term, condition or provision of its charter or by-laws or other organizational
document in any respect which could reasonably be expected to have a Material
Adverse Effect upon the Borrower or any Subsidiary, (b) file any resolution of
the Board of Directors with the Secretary of State of the jurisdiction of its
incorporation, (c) change its fiscal year, or (d) amend or modify, or permit the
amendment of modification of, any term, condition or provision of any of the
Private Placement Documents, except as permitted by the Collateral Agency and
Intercreditor Agreement and the Note Agreements.
Limitation on Tax Consolidation. The Borrower will not and will not
permit any Subsidiary to become a party to a consolidated federal income tax
return with any Person other than the Borrower and its Subsidiaries.
SECTION 6.12. Materially Alter Nature of Business. The Borrower
will not and will not permit any Subsidiary to materially alter the nature of
its Business without the prior written consent of the Required Lenders.
ARTICLE VII
Events of Default
If any of the following events ("Events of Default") shall occur:
(a) the Borrower shall fail to pay any principal of any Loan
when and as the same shall become due and payable, whether at the due
date thereof or at a date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or
any fee or any other amount (other than an amount referred to in clause
(a) of this Article) payable under this Agreement, when and as the same
shall become due and payable, and such failure shall continue
unremedied for a period of five Business Days;
(c) any representation or warranty made or deemed made by or
on behalf of the Borrower or any Subsidiary in or in connection with
this Agreement or any amendment or modification hereof or waiver
hereunder, or in any report, certificate, financial statement or other
document furnished pursuant to or in connection with this Agreement or
any amendment or modification hereof or waiver hereunder, shall prove
to have been incorrect when made or deemed made;
(d) the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in Section 5.02, 5.03 (with
respect to the Borrower's existence) or 5.08 or in Article VI;
(e) the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in this Agreement (other
than those specified in clause (a), (b) or (d) of this Article), and
such failure shall continue unremedied for a period of 10 Business Days
after notice thereof from the Administrative Agent to the Borrower
(which notice will be given at the request of any Lender);
(f) the Borrower or any Subsidiary shall fail to make any
payment required under or to observe or perform any covenant, condition
or agreement contained in any other Loan Document and such failure
shall continue unremedied beyond the expiration of any applicable
notice and cure period;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation,
reorganization or other relief in respect of the Borrower or any
Subsidiary or its debts, or of a substantial part of its assets, under
any Federal, state or foreign bankruptcy, insolvency, receivership or
similar law now or hereafter in effect or (ii) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar
official for the Borrower or any Subsidiary or for a substantial part
of its assets, and, in any such case, such proceeding or petition shall
continue undismissed for 60 days or an order or decree approving or
ordering any of the foregoing shall be entered;
(h) the Borrower or any Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation,
reorganization or other relief under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in
effect, (ii) consent to the institution of, or fail to contest in a
timely and appropriate manner, any proceeding or petition described in
clause (h) of this Article, (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any Subsidiary or
for a substantial part of its assets, (iv) file an answer admitting the
material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors
or (vi) take any action for the purpose of effecting any of the
foregoing;
(i) the Borrower or any Subsidiary shall become unable, admit
in writing or fail generally to pay its debts as they become due;
(j) one or more final judgments for the payment of money in an
aggregate amount in excess of $2,500,000 shall be rendered against the
Borrower, any Subsidiary or any combination thereof and the same shall
remain undischarged for a period of 60 consecutive days during which
execution shall not be effectively stayed, or any action shall be
legally taken by a judgment creditor to attach or levy upon any assets
of the Borrower or any Subsidiary to enforce any such judgment;
(k) an ERISA Event shall have occurred that, in the opinion of
the Required Lenders, when taken together with all other ERISA Events
that have occurred, could reasonably be expected to result in a
Material Adverse Effect;
(l) a Change in Control shall occur;
(m) if (i) the Borrower or any Subsidiary of the Borrower
shall fail to make any payment due on any Indebtedness (other than the
Notes and the Promissory Notes) or other obligation or to perform,
observe or discharge any covenant, condition or obligation in any
agreement, document or instrument evidencing, securing or relating to
such Indebtedness or other obligation, and such failure shall continue
beyond any applicable grace period, if the aggregate outstanding amount
thereof exceeds $2,000,000 or if the aggregate outstanding amount
thereof together with any other Indebtedness or other obligation as to
which the Borrower is in default exceeds $3,000,000, (ii) any such
Indebtedness or other obligation shall become due and payable by its
terms and shall not be paid or extended or (iii) as a consequence of
the occurrence or continuation of any event or condition, the Borrower
or any Subsidiary of the Borrower shall become obligated to purchase or
repay any such Indebtedness or obligation before its regular maturity
or before its regularly scheduled date of payment (or one or more
Persons shall have the right to require the Borrower or any Subsidiary
of the Borrower so to purchase or repay such Indebtedness or other
obligation); provided that any payment made into an escrow account or
to a court appointed trustee, pending the settlement of a bona fide
dispute with respect to any such Indebtedness or other obligation,
shall not be deemed a failure to make such payment for purposes of this
clause (h) so long as such payment cures or suspends the existence of
the default under the underlying obligation;
(n) if (i) the Borrower or any Subsidiary of the Borrower
shall fail to make any payment due on any Indebtedness under the
Private Placement Documents or to perform, observe or discharge any
covenant, condition or obligation in any agreement, document or
instrument evidencing, securing or relating to such Indebtedness, and
such failure shall continue beyond any applicable grace period, (ii)
any such Indebtedness shall become due and payable by its terms and
shall not be paid or extended or (iii) as a consequence of the
occurrence or continuation of any event or condition, the Borrower or
any Subsidiary of the Borrower shall become obligated to purchase or
repay any such Indebtedness before its regular maturity or before its
regularly scheduled date of payment (or one or more Persons shall have
the right to require the Borrower or any Subsidiary of the Borrower so
to purchase or repay such Indebtedness);
then, and in every such event (other than an event with respect to the Borrower
described in clause (g) or (h) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and (ii)
declare the Loans then outstanding to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations of the Borrower accrued hereunder, shall become due
and payable immediately, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Borrower and (iii) proceed to
exercise any and all remedies permitted under the Loan Documents or by law; and
in case of any event with respect to the Borrower described in clause (g) or (h)
of this Article, the Commitments shall automatically terminate and the principal
of the Loans then outstanding, together with accrued interest thereon and all
fees and other obligations of the Borrower accrued hereunder, shall
automatically become due and payable, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower and the
Administrative Agent may, and at the request of the Required Lenders shall, by
notice to the Borrower proceed to exercise any and all remedies permitted under
the Loan Documents or by law.
ARTICLE VIII
The Administrative Agent
Each of the Lenders hereby irrevocably appoints the Administrative
Agent as its agent and authorizes the Administrative Agent to take such actions
on its behalf and to exercise such powers as are delegated to the Administrative
Agent by the terms hereof, together with such actions and powers as are
reasonably incidental thereto.
The bank serving as the Administrative Agent hereunder shall have the
same rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations
except those expressly set forth herein. Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or
other implied duties, regardless of whether a Default has occurred and is
continuing, (b) the Administrative Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated hereby that the Administrative Agent is
required to exercise in writing by the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 9.02), and (c) except as expressly set forth herein, the
Administrative Agent shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to the Borrower or
any of its Subsidiaries that is communicated to or obtained by the bank serving
as Administrative Agent or any of its Affiliates in any capacity. The
Administrative Agent shall not be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 9.02) or in the absence of its own gross negligence or
wilful misconduct. The Administrative Agent shall be deemed not to have
knowledge of any Default unless and until written notice thereof is given to the
Administrative Agent by the Borrower or a Lender, and the Administrative Agent
shall not be responsible for or have any duty to ascertain or inquire into (i)
any statement, warranty or representation made in or in connection with this
Agreement, (ii) the contents of any certificate, report or other document
delivered hereunder or in connection herewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein, (iv) the validity, enforceability, effectiveness or genuineness of
this Agreement or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article IV or elsewhere herein, other
than to confirm receipt of items expressly required to be delivered to the
Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.
The Administrative Agent may perform any and all its duties and
exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor Administrative
Agent as provided in this paragraph, the Administrative Agent may resign at any
time by notifying the Lenders and the Borrower. Upon any such resignation, the
Required Lenders shall have the right, in consultation with the Borrower, to
appoint a successor. If no successor shall have been so appointed by the
Required Lenders and shall have accepted such appointment within 30 days after
the retiring Administrative Agent gives notice of its resignation, then the
retiring Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent which shall be a bank with an office in New York, New York,
or an Affiliate of any such bank. Upon the acceptance of its appointment as
Administrative Agent hereunder by a successor, such successor shall succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder. The fees payable by the
Borrower to a successor Administrative Agent shall be the same as those payable
to its predecessor unless otherwise agreed between the Borrower and such
successor. After the Administrative Agent's resignation hereunder, the
provisions of this Article and Section 9.03 shall continue in effect for the
benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Administrative Agent.
Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any related agreement or any document furnished hereunder or thereunder.
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Borrower, to it at ATC Group Services Inc., 104 E. 25th Street,
10th Floor, New York, New York 10010, Attention: President, with a copy to
ATC Group Services Inc. 1515 E. 10th Street, Sioux Falls, South Dakota
57103, Attention: Chief Financial Officer;
(b) if to the Administrative Agent, to The Chase Manhattan Bank, Loan and
Agency Services, 1 Chase Manhattan Plaza, 8th Floor, New York, New York
10081, Attention: Leonora Kiernan, Telecopier: (212) 552-5650;
(c) if to the Lenders, to them at the following addresses: The Chase Manhattan
Bank, Middle Market Banking Group, Bay Plaza, 2100 Bartow Avenue, Third
Floor, Bronx, New York 10475, Attention: Richard F. Donatuti, Vice
President, Telecopier: (718)379-8838 and Atlantic Bank of New York, 960
Avenue of the Americas, 6th Floor, New York, New York 10001, Attention:
Joseph Fradelos, Vice President, Telecopier: (212) 695-6907.
(d) if to any other Lender, to it at its address (or telecopy number) set forth
in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the
Administrative Agent or any Lender in exercising any right or power hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and remedies of the
Administrative Agent and the Lenders hereunder are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
Without limiting the generality of the foregoing, the making of a Loan shall not
be construed as a waiver of any Default, regardless of whether the
Administrative Agent or any Lender may have had notice or knowledge of such
Default at the time.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Borrower and the Required Lenders or by the Borrower
and the Administrative Agent with the consent of the Required Lenders; provided
that no such agreement shall (i) increase the Commitment of any Lender without
the written consent of such Lender, (ii) reduce the principal amount of any Loan
or reduce the rate of interest thereon, or reduce any fees payable hereunder,
without the written consent of each Lender affected thereby, (iii) postpone the
scheduled date of payment of the principal amount of any Loan, or any interest
thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse
any such payment, or postpone the scheduled date of expiration of any
Commitment, without the written consent of each Lender affected thereby, (iv)
change Section 2.15(b) or (c) in a manner that would alter the pro rata sharing
of payments required thereby, without the written consent of each Lender, or (v)
change any of the provisions of this Section or the definition of "Required
Lenders" or any other provision hereof specifying the number or percentage of
Lenders required to waive, amend or modify any rights hereunder or make any
determination or grant any consent hereunder, without the written consent of
each Lender; provided further that no such agreement shall amend, modify or
otherwise affect the rights or duties of the Administrative Agent hereunder
without the prior written consent of the Administrative Agent.
SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower
shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates, including the reasonable fees, charges
and disbursements of counsel for the Administrative Agent, in connection with
the syndication of the credit facilities provided for herein, the preparation
and administration of this Agreement and the other Loan Documents, or any
amendments, modifications or waivers of the provisions hereof (whether or not
the transactions contemplated hereby or thereby shall be consummated), (ii) all
out-of-pocket expenses incurred by the Administrative Agent or any Lender,
including the fees, charges and disbursements of any counsel for the
Administrative Agent or any Lender, in connection with the enforcement or
protection of its rights in connection with this Agreement or the other Loan
Documents, including its rights under this Section, or in connection with the
Loans made including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans.
(b) The Borrower shall indemnify the Administrative Agent and
each Lender, and each Related Party of any of the foregoing Persons (each such
Person being called an "Indemnitee") against, and hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related expenses,
including the fees, charges and disbursements of any counsel for any Indemnitee,
incurred by or asserted against any Indemnitee arising out of, in connection
with, or as a result of (i) the execution or delivery of this Agreement or any
agreement or instrument contemplated hereby, the performance by the parties
hereto of their respective obligations hereunder or the consummation of the
Transactions or any other transactions contemplated hereby, (ii) any Loan or the
use of the proceeds therefrom, (iii) any actual or alleged presence or release
of Hazardous Materials on or from any property owned or operated by the Borrower
or any of its Subsidiaries, or any Environmental Liability related in any way to
the Borrower or any of its Subsidiaries, or (iv) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; provided that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses resulted from the gross negligence or wilful
misconduct of such Indemnitee.
(c) To the extent that the Borrower fails to pay any amount
required to be paid by it to the Administrative Agent under paragraph (a) or (b)
of this Section, each Lender severally agrees to pay to the Administrative Agent
such Lender's Applicable Percentage (determined as of the time that the
applicable unreimbursed expense or indemnity payment is sought) of such unpaid
amount; provided that the unreimbursed expense or indemnified loss, claim,
damage, liability or related expense, as the case may be, was incurred by or
asserted against the Administrative Agent in its capacity as such.
(d) To the extent permitted by applicable law, the Borrower
shall not assert, and hereby waives, any claim against any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or
as a result of, this Agreement or any agreement or instrument contemplated
hereby, the Transactions, any Loan or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable not
later than 10 days after written demand therefor.
SECTION 9.04. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby, except that the
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by the Borrower without such consent shall be null and
void). Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby (and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent and
the Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.
(b) Any Lender may assign to one or more assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it); provided that
(i) except in the case of an assignment to a Lender or an Affiliate of a Lender,
each of the Borrower and the Administrative Agent must give their prior written
consent to such assignment (which consent shall not be unreasonably withheld),
(ii) except in the case of an assignment to a Lender or an Affiliate of a Lender
or an assignment of the entire remaining amount of the assigning Lender's
Commitment, the amount of the Commitment of the assigning Lender subject to each
such assignment (determined as of the date the Assignment and Acceptance with
respect to such assignment is delivered to the Administrative Agent) shall not
be less than $5,000,000 unless each of the Borrower and the Administrative Agent
otherwise consent, (iii) each partial assignment shall be made as an assignment
of a proportionate part of all the assigning Lender's rights and obligations
under this Agreement, (iv) the parties to each assignment shall execute and
deliver to the Administrative Agent an Assignment and Acceptance, together with
a processing and recordation fee of $3,500, and (v) the assignee, if it shall
not be a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire; and provided further that any consent of the Borrower otherwise
required under this paragraph shall not be required if an Event of Default under
clause (g) or (h) of Article VII has occurred and is continuing. Subject to
acceptance and recording thereof pursuant to paragraph (d) of this Section, from
and after the effective date specified in each Assignment and Acceptance the
assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Acceptance, have the rights and obligations of a
Lender under this Agreement, and the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Acceptance, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.12, 2.13, 2.14 and 9.03). Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (e) of this Section.
(c) The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at one of its offices in The City of New
York a copy of each Assignment and Acceptance delivered to it and a register for
the recordation of the names and addresses of the Lenders, and the Commitment
of, and principal amount of the Loans owing to, each Lender pursuant to the
terms hereof from time to time (the "Register"). The entries in the Register
shall be conclusive, and the Borrower, the Administrative Agent and the Lenders
may treat each Person whose name is recorded in the Register pursuant to the
terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrower and any Lender, at any reasonable time and from time
to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, the assignee's
completed Administrative Questionnaire (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) of this Section and any written consent to such assignment required by
paragraph (b) of this Section, the Administrative Agent shall accept such
Assignment and Acceptance and record the information contained therein in the
Register. No assignment shall be effective for purposes of this Agreement unless
it has been recorded in the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Borrower or the
Administrative Agent, sell participations to one or more banks or other entities
(a "Participant") in all or a portion of such Lender's rights and obligations
under this Agreement (including all or a portion of its Commitment and the Loans
owing to it); provided that (i) such Lender's obligations under this Agreement
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (iii) the
Borrower, the Administrative Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.02(b) that affects such Participant.
Subject to paragraph (f) of this Section, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.12, 2.13 and 2.14 to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section. To the extent permitted by
law, each Participant also shall be entitled to the benefits of Section 9.08 as
though it were a Lender, provided such Participant agrees to be subject to
Section 2.15(c) as though it were a Lender.
(f) A Participant shall not be entitled to receive any greater
payment under Section 2.12 or 2.14 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrower's prior written consent. A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 2.14 unless
the Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrower, to comply with Section
2.14(e) as though it were a Lender.
(g) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.
SECTION 9.05. Survival. All covenants, agreements, representations and
warranties made by the Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any
Loans, regardless of any investigation made by any such other party or on its
behalf and notwithstanding that the Administrative Agent, or any Lender may have
had notice or knowledge of any Default or incorrect representation or warranty
at the time any credit is extended hereunder, and shall continue in full force
and effect as long as the principal of or any accrued interest on any Loan or
any fee or any other amount payable under this Agreement is outstanding and
unpaid and so long as the Commitments have not expired or terminated. The
provisions of Sections 2.12, 2.13, 2.14 and 9.03 and Article VIII shall survive
and remain in full force and effect regardless of the consummation of the
transactions contemplated hereby, the repayment of the Loans, the expiration or
termination of the Letters of Credit and the Commitments or the termination of
this Agreement or any provision hereof.
SECTION 9.06. Counterparts; Integration; Effectiveness. This Agreement
may be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and any
separate letter agreements with respect to fees payable to the Administrative
Agent constitute the entire contract among the parties relating to the subject
matter hereof and supersede any and all previous agreements and understandings,
oral or written, relating to the subject matter hereof. Except as provided in
Section 4.01, this Agreement shall become effective when it shall have been
executed by the Administrative Agent and when the Administrative Agent shall
have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 9.07. Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 9.08. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations at any time
owing by such Lender or Affiliate to or for the credit or the account of the
Borrower against any of and all the obligations of the Borrower now or hereafter
existing under this Agreement held by such Lender, irrespective of whether or
not such Lender shall have made any demand under this Agreement and although
such obligations may be unmatured. The rights of each Lender under this Section
are in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process.
(a) This Agreement shall be construed in accordance with and
governed by the law of the State of New York.
(b) The Borrower hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
Supreme Court of the State of New York sitting in New York County and of the
United States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Administrative Agent
or any Lender may otherwise have to bring any action or proceeding relating to
this Agreement against the Borrower or its properties in the courts of any
jurisdiction.
(c) The Borrower hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement in any court
referred to in paragraph (b) of this Section. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.
(d) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 9.01. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 9.12. Confidentiality. Each of the Administrative Agent and the
Lenders agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its and its Affiliates'
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority, (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other party
to this Agreement, (e) in connection with the exercise of any remedies hereunder
or any suit, action or proceeding relating to this Agreement or the enforcement
of rights hereunder, (f) subject to an agreement containing provisions
substantially the same as those of this Section, to any assignee of or
Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement, (g) with the consent of the Borrower
or (h) to the extent such Information (i) becomes publicly available other than
as a result of a breach of this Section or (ii) becomes available to the
Administrative Agent or any Lender on a nonconfidential basis from a source
other than the Borrower. For the purposes of this Section, "Information" means
all information received from the Borrower relating to the Borrower or its
business, other than any such information that is available to the
Administrative Agent or any Lender on a nonconfidential basis prior to
disclosure by the Borrower; provided that, in the case of information received
from the Borrower after the date hereof, such information is clearly identified
at the time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.
SECTION 9.13. Interest Rate Limitation. Notwithstanding anything herein
to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively the "Charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
[The remainder of this page is left blank intentionally.]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
ATC GROUP SERVICES INC.
a Delaware corporation
By /s/ Morry F. Rubin
Name: Morry F. Rubin
Title: President
THE CHASE MANHATTAN BANK,
individually and as
Administrative Agent,
By /s/ Richard F. Donatuti
Name: Richard F. Donatuti
Title: Vice President
ATLANTIC BANK OF NEW YORK
By /s/ Joseph Fradelos
Name: Joseph Fradelos
Title: Assistant Vice President
<PAGE>
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