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EXHIBIT 10.36
EXECUTION COPY
FIFTH AMENDMENT, WAIVER AND CONSENT dated as of April 21, 1997
(the "Agreement") among SMITH TECHNOLOGY CORPORATION (formerly known as Smith
Environmental Technologies Corporation), BCM ENGINEERS INC., a Pennsylvania
corporation, BCM ENGINEERS INC., an Alabama corporation, RIEDEL ENVIRONMENTAL
SERVICES INC., each of the Lenders which are parties to the Loan Agreement, as
hereinafter defined, and THE CHASE MANHATTAN BANK (formerly known as Chemical
Bank), as Agent for the Lenders. This Agreement is entered into in connection
with a certain Loan and Security Agreement dated as of October 18, 1995 (as
amended through the date hereof, the "Loan Agreement") among the parties to this
Agreement. Terms which are capitalized herein and not otherwise defined shall
have the meanings ascribed to them in the Loan Agreement.
WHEREAS, the Lenders, the Agent and the Borrowers entered into
the Fourth Amendment, Waiver and Consent to the Loan Agreement, dated as of
January 14, 1997 (the "Fourth Amendment"), the effectiveness of which was
subject to the fulfillment of various conditions precedent, the failure of which
to occur as of the date of execution of the Fourth Amendment, and which failure
continues as of the date hereof, has rendered the Fourth Amendment ineffective;
and
WHEREAS, because the various waivers granted by the Lenders
pursuant to Sections 1, 2 and 3 of the Fourth Amendment are not effective, the
payment default and financial covenant violations described in Section 3 of the
Fourth Amendment, the other defaults described in the Fourth Amendment, as well
as certain Specified Defaults (as hereinafter defined) continue to be Events of
Default as of the date hereof; and
WHEREAS, the Borrower has requested the Agent and the Lenders
to consider granting a waiver of the Specified Defaults and (ii) amending the
Loan Agreement in various respects, and the Agent and the Lenders have so
agreed, upon the terms and subject to the conditions contained in this
Agreement;
NOW, THEREFORE, in consideration of the foregoing, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1. AFFIRMATION OF INDEBTEDNESS AND OTHER LIABILITIES.
(a) Each of the Borrowers acknowledges, agrees and certifies
to the Agent and the Lenders that as of the close of business on April 21, 1997,
the aggregate outstanding and unpaid principal amount of (i) the Revolving Loans
equals $25,288,033.23, of which $6,706,700.00 equals the Overadvance, which
shall mean the amount by which the Consolidated Borrowing Base is exceeded by
the aggregate outstanding principal balance of the Revolving
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Loans, as of any date of determination and (ii) the Term Loans equals
$3,588,471.06. Each of the Borrowers (i) represents and warrants to the Lenders
that with respect to the Liabilities there is no offset, defense, claim or
counterclaim of any nature whatsoever (whether known or unknown) as of the date
hereof, including without limitation any offset, defense, claim or counterclaim
arising under the U.S. Bankruptcy Code (the "Code") and (ii) waives any such
offset, defense, claim or counterclaim to the extent the same may exist as of
the date hereof, whether known or unknown;
(b) Each of the Borrowers acknowledges and agrees that the
prompt payment and performance when due of all Liabilities is guaranteed by each
Borrower pursuant to an instrument of Continuing Unconditional Guaranty dated as
of October 18, 1995 (each such instrument a "Guaranty") executed in favor of the
Agent and the Lenders by such Borrower (in such capacity, a "Guarantor") and
each Borrower acknowledges and agrees that the Guaranty executed by it continues
to be valid, binding and enforceable against it; and
(c) Each of the Borrowers acknowledges and agrees that the
lien and security interest held by the Agent for the ratable benefit of the
Lenders in and to the Collateral continues to be a perfected lien against the
Collateral, subject to no other liens or encumbrances thereon except for
Permitted Liens.
SECTION 2. WAIVER AND MODIFICATION OF PRIOR CONSENTS. Subject to the terms and
conditions hereof, the Lenders hereby waive the Specified Defaults, as
hereinafter defined, as Events of Default; provided, however, that the Lenders'
waiver of the Specified Defaults, as Events of Default, shall not constitute,
and shall not be deemed to constitute, a waiver of any other existing Event of
Default, whether or not known to the Lenders, or any future Event of Default
whatsoever. As used herein, the term "Specified Defaults" shall mean (i) the
previous collateral reporting irregularities relating to certain Accounts (the
"Referenced Accounts"), (ii) the failure of the Borrowers to repay the
Overadvance in full; (iii) the violation of certain representations and
warranties relating to Referenced Accounts; (iv) the failure to comply with
financial covenants in prior reporting periods, through the reporting period
ending February 28, 1997, (v) the entry of a judgment in the District Court of
Dallas County, Texas, 101st Judicial District in the amount of $465,842.06 in
favor of Winstead, Sechrest & Minick, P.C., against Smith Technology (the
"Winstead Judgment"), provided that (A) the disposition, payment or satisfaction
of the Winstead Judgment occurs on or before September 30, 1997 in a manner
satisfactory to the Agent, (B) the entry of the Winstead Judgment does not
create a lien on any property of any Borrower or Account Owner and (C) the
holder of the Winstead Judgment does not take any action or commence any
proceeding, the effect of which is to create or impose such lien, or take any
action or commence any proceeding, to enforce or execute on the Winstead
Judgment or levy or foreclose upon any such lien, (vi) the entry of a judgment
in the Montgomery County (Pennsylvania) Court of Common Pleas - Civil Division
in the amount of $1,094,038.72 in favor of Gravers Company, against BCM (the
"Gravers Judgment"), provided that (A) the disposition, payment or satisfaction
of the Gravers Judgment occurs on or before September 30, 1997 in a manner
satisfactory to the Agent, (B) the entry of the Gravers Judgment does not create
a lien on any property of any Borrower or Account Owner and (C) the holder of
the Gravers Judgment does not take any action or commence any proceeding, the
effect of which is to create or impose such lien, or take any action or commence
any proceeding, to enforce or execute on the Gravers Judgment or levy or
foreclose upon any such lien, and (vii)
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any other Default specified in Sections 1, 2 and 3 of the Fourth Amendment,
provided, however, that the conditions to the effectiveness of the waiver of
such other Defaults set forth in the following subparagraphs of Section 3 of the
Fourth Amendment shall be fully incorporated herein by reference thereto as if
fully repeated and restated herein: Section 3(f), (g), (h), (i) and (j). In
addition, the Lenders hereby revoke the consent given by them pursuant to
Section 1 and Section 2 of the Fourth Amendment to the payment in cash, at any
time after the date of this Agreement, of any ESOP Dividends, or to the
redemption for cash, at any time after the date of this Agreement, of any shares
of ESOP Stock, unless any such payment or redemption is made strictly in
accordance with the terms of Paragraph 14(l)(I) of the Loan Agreement.
SECTION 3. RESTRUCTURING OF REVOLVING LINE OF CREDIT. The Lenders and the
Borrowers hereby agree to restructure the Revolving Line of Credit, effective as
of April 21, 1997, by (a) eliminating the Unbilled Account Subline and
eliminating from the Consolidated Borrowing Base all Eligible Unbilled Accounts,
(b) adding a new dollar component to the Consolidated Borrowing Base in an
aggregate amount equal to the sum of (i) $8,000,000, at all times prior to
August 1, 1997, (ii) $6,000,000 (or $5,500,000, in the event a prepayment of the
Term Loans made in accordance with the terms of Paragraph 3(d) of the Loan
Agreement shall not have occurred by August 1, 1997) at all times on and after
August 1, 1997 and prior to October 2, 1997 and (iii) $-0-, at all times on and
after October 2, 1997, (c) converting into a separate term loan that portion of
the outstanding Revolving Loans which, as of April 21, 1997, represents advances
made by the Lenders against Eligible Unbilled Accounts (as so converted, the
"Unbilled Term Loan") and (d) permanently reducing the Revolving Line of Credit
from $27,000,000 to $24,500,000 until October 2, 1997, at which time the
Revolving Line of Credit shall automatically and permanently reduce to
$23,500,000.
SECTION 4. UNBILLED TERM LOAN. The aggregate amount of the original principal
indebtedness outstanding under the Unbilled Term Loan shall be evidenced by the
Borrowers' joint and several promissory notes payable to each Lender, each in
the form of Exhibit F to this Agreement (each an "Unbilled Term Note"). The
Borrowers jointly and severally warrant and represent to the Agent and the
Lenders that as of April 21, 1997, the outstanding and unpaid principal balance
of the Unbilled Term Loan equals $4,435,863.00, and the Borrowers hereby
acknowledge that they are, and hereby confirm their agreement to be, jointly and
severally liable for the payment and satisfaction in full in cash of the
principal amount of the Unbilled Term Loan, and all accrued and unpaid interest
thereon and further confirm that all Liabilities arising from or relating to the
Unbilled Term Loan, and the payment and performance of each of the Unbilled Term
Notes, are secured by the Collateral. The unpaid principal balance of the
Unbilled Term Loan shall be paid in successive weekly installments of $25,000
per week, the first of which installments shall be due and payable on April 25,
1997, and the remaining installments of which shall be due and payable on the
last Business Day of each week thereafter, until paid and satisfied in full,
provided, however, that the unpaid principal balance of the Unbilled Term Loan,
and all accrued and unpaid interest thereon, shall be due and payable in full on
the applicable Maturity Date. If, as of any date of determination on or after
April 21, 1997, the then outstanding principal balance of the Unbilled Term Loan
exceeds an amount equal to fifty per cent (50%) of the Eligible Unbilled
Accounts of the Borrowers as of such date, then the Borrowers shall immediately
make a mandatory prepayment of the unpaid principal balance of the Unbilled Term
Loan, in an amount equal to the amount of such excess, to be applied in the
inverse order of payment of the scheduled installments of principal thereof.
Interest accrued
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on the Unbilled Term Loan shall be payable monthly in arrears, on the first day
of each month, and shall accrue on the unpaid principal balance thereof at the
per annum rate of the ABR plus the Applicable Margin. The Agent is hereby
authorized to debit any Borrower's loan account with the amount of each
installment of interest on and principal of the Unbilled Term Loan, as and when
such installments become due and payable.
SECTION 5. APPLICATION OF PROCEEDS OF COLLATERAL. The Borrowers jointly and
severally agree that, notwithstanding any understanding or provision in the Loan
Agreement or any Other Agreement to the contrary, unless otherwise directed by
the Agent in writing, as the Agent and the Lenders may direct in their sole and
absolute discretion, all cash Proceeds arising from the sale, transfer or other
disposition of each of the kinds or types of property which constitutes
Collateral shall be immediately delivered to, and applied by, the Agent, as a
mandatory prepayment of the Liabilities, in such order as the Agent and the
Lenders may determine, in their sole and absolute discretion.
SECTION 6. AMENDMENTS TO LOAN AGREEMENT. Upon the fulfillment of the conditions
set forth in Section 7 hereof, the Loan Agreement is hereby amended as follows:
(a) Paragraph 1. Definitions. The definitions of the terms (i)
BCM Borrowing Base, BCM Subline, Borrowing Base, Riedel Borrowing Base, Riedel
Subline, Smith Environmental Borrowing Base, Smith Environmental Subline,
Subline, Term Loan Maturity Date and Unbilled Account Subline are deleted in
their entireties and (ii) Excess Availability, Net Income, Note, Revolving Line
of Credit, Term Loan Commitment and Total Credit Facility are deleted in their
entirety and the following definitions are substituted in lieu thereof. In
addition, the terms "Administrative Borrower", "ESOP Dividend", "ESOP Stock",
"Fifth Amendment", "Gould Arbitration Award", "Gould Settlement Agreement",
"Gravers Settlement Agreement", "Intangible Assets, "Joint Venture Arrangement",
"Maturity Date", "Mutual Pharmaceutical Settlement Agreement", "Net Worth",
"Note", "PRP Group", "Repayment Conditions", "Stock Repurchase Agreement",
"U-Max Litigation", and "Winstead Settlement Agreement", and the definitions
thereof, are added to Paragraph 1 in the appropriate alphabetical order:
"Administrative Borrower" shall mean Smith Technology, or such
other Borrower as the Board of Directors of Smith Technology
may designate in advance, in writing, to the Agent, to perform
the functions of the Administrative Borrower to be performed
by it pursuant to Paragraphs 4 and 6 hereof.
"ESOP Dividend" means dividends payable in cash to the ESOP,
as holder of the ESOP Stock, or to any other holders of the
ESOP Stock.
"ESOP Stock" means the outstanding shares of non-voting
preferred stock of Smith Technology.
"Excess Availability" means as of any date of determination by
the Agent, the excess, if any, of (i) an amount equal to the
excess, if any, of the Consolidated Borrowing Base over the
then applicable sum set forth in
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clause (y) of Paragraph 2 (b)(1), over (ii) the outstanding
Revolving Loans and Letter of Credit Obligations. For purposes
of calculating Excess Availability, the Agent may, in the
exercise of its commercially reasonable credit judgment,
establish a reserve in an aggregate amount based on the
Borrowers' outstanding trade payables which are not current or
which are past due in any material respect, as of such date of
determination, to the extent thereof.
"Fifth Amendment" shall mean the Fifth Amendment, Waiver and
Consent, dated as of April 21, 1997, among the Lenders, the
Agent and the Borrowers.
"Gould Arbitration Award" shall mean the arbitration award in
the amount of $4,500,000 made on or about June 27, 1996
against Smith Technology in favor of the PRP Group.
"Gould Settlement Agreement" shall mean the Settlement
Agreement dated as of January 4, 1997 between Smith Technology
and the PRP Group.
"Gravers Settlement Agreement" shall mean the settlement
agreement which may be entered after the date of the Fifth
Amendment between BCM and Gravers Company.
"Intangible Assets" shall mean, with respect to any Person as
of any date of determination, the book value of all assets of
such Person classified as intangible under GAAP, including
without limitation, good will, deferred taxes, trademarks,
trade names, patents, copyrights, and licenses.
"Joint Venture Arrangement" shall mean any joint venture
agreement or arrangement, whether or not in writing, between
or among Smith Technology and/or any other Borrower, on the
one hand, and one or more unrelated Persons, on the other
hand, the primary purpose of which relates to the provision of
environmental remediation or consultation, or other
technological services.
"Maturity Date" shall mean (i) October 2, 1997, in the event
that the Repayment Conditions shall not have occurred on or
before such date or (ii) October 18, 1998, in the event that
the Repayment Conditions shall have occurred on or before
October 2, 1997.
"Mutual Pharmaceutical Settlement Agreement" shall mean the
settlement agreement dated September 12, 1996, as amended,
among Mutual Pharmaceutical Company, Inc., Smith Technology
and BCM.
"Net Income" (or Net Loss) shall mean, with respect to any
Person and its subsidiaries, on a consolidated basis, for any
period, the aggregate income (or loss) of such Person for such
period which shall be an amount
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equal to revenues and other proper items of income for such
Person, less the aggregate for such Person of any and all
items that are treated as expenses under GAAP, less Federal,
state and local income taxes, but excluding any extraordinary
gains or losses or any gains or losses from the sale or
disposition of assets other than in the ordinary course of
business, and less dividends charged to income during such
period, all computed and calculated in accordance with GAAP
applied on a consistent basis.
"Net Worth" shall mean, with respect to any Person as of any
date of determination, an amount equal to the sum of (i) the
amount appearing on the balance sheet, as of the most recently
ended financial period, of such Person, under the caption
"common stockholders' equity" or under a similarly worded
caption plus (ii) the outstanding principal balance as of such
date of all debt securities which are Junior Securities and
the value as of such date of all equity securities which are
Junior Securities, such value to be based on the amount
carried on the books of the issuer of such equity securities
and reflected on its balance sheet as of the most recently
ended financial period.
"Note" shall mean a Revolving Note, a Term Note or an Unbilled
Term Note.
"PRP Group" shall mean each of the parties to the Gould
Settlement Agreement other than Smith Technology or any other
Borrower.
"Repayment Conditions" shall mean the permanent repayment (i)
in full of all Revolving Loans made against the component of
the Consolidated Borrowing Base described in Paragraph
2(b)(1)(y) and (ii) of all Revolving Loans to an aggregate
outstanding principal amount not to exceed $23,500,000.
"Revolving Line of Credit" shall mean the sum of (i)
$24,500,000, during the period from the date of the Fifth
Amendment through and including October 1, 1997 and (ii)
$23,500,000 at all times on and after October 2, 1997.
"Stock Repurchase Agreement" means the agreement dated
September 28, 1994, between Canonie Environmental Services
Corp. and the trustees of the ESOP, relating to the repurchase
of certain of the shares of ESOP Stock.
"Term Loan Commitment" of a Lender shall mean its commitment
to fund its proportionate share of the Term Loans and its
Proportionate Share of the Unbilled Term Loan (as defined in
the Fifth Amendment), up to the amount set forth opposite its
name on Annex I.
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"Total Credit Facility" shall mean the sum of $32,524,334.06,
as such amount may be decreased in accordance with the terms
of this Agreement.
"U-Max Litigation" shall mean Civil Action No. 3:93-CV-14
brought in the U.S. District Court for the Middle District of
Pennsylvania, captioned U-Max Engineering and Construction
Corp. v. Stroud Township Board of Supervisors v. BCM
Engineers, Inc. and Woodward -- Clyde Consulting.
"Winstead Settlement Agreement" shall mean the settlement
agreement which may be entered after the date of the Fifth
Amendment, between Smith Technology and Winstead, Sechrest &
Minick, P.C.
(b) Paragraph 2. Revolving Loans. Paragraphs 2(a), (b) and (d)
are deleted in their entirety and the following is substituted in lieu thereof:
"2. REVOLVING LOANS.
(a) Subject to the terms and conditions of
this Agreement and the Other Agreements, during the Revolving
Credit Term, absent the existence of an Event of Default, the
Lenders shall make such revolving loans and advances (the
"Revolving Loans") to each Borrower as the Administrative
Borrower shall from time to time request, in accordance with
the terms of paragraph 2(b) hereof, within the Revolving Line
of Credit. The aggregate unpaid principal amount of all
Revolving Loans outstanding as of any date of determination
shall not exceed the lesser of (A) the Consolidated Borrowing
Base and (B) the Revolving Line of Credit minus the
outstanding Letter of Credit Obligations, in each case as of
such date of determination. All Revolving Loans shall be
repaid in full upon the earliest to occur of (i) the
applicable Maturity Date; (ii) the date upon which the
Borrowers shall elect to terminate this Agreement pursuant to
paragraph 12 hereof; and (iii) the date upon which the
Liabilities shall have been accelerated pursuant to paragraph
17 hereof. If as of any date of determination the outstanding
principal balance of the Revolving Loans exceeds (A) the
Revolving Line of Credit then in effect less the outstanding
Letter of Credit Obligations, or (B) the Consolidated
Borrowing Base as of such date of determination, then the
Borrowers shall immediately, and without the necessity of a
demand by the Agent or the Lenders, pay to the Agent such
amounts as may be necessary to eliminate such excess and the
Agent shall apply such payment against the outstanding
principal balance of the Revolving Loans. Each Borrower hereby
authorizes the Agent, in its reasonable credit judgment, to
charge any of such Borrower's accounts to make any payments of
principal or interest required by this Agreement. All
Revolving Loans shall, in the Agent's sole discretion, be
evidenced by one or more promissory notes in form and
substance satisfactory to the Agent. However, if such
Revolving Loans are not so evidenced, such Revolving Loans may
be evidenced solely by entries upon the books and records
maintained by the Agent.
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The Borrowers shall be jointly and severally liable for the
payment of interest on and principal of all Revolving Loans.
(b) The Lenders shall make Revolving Loans
to the Borrowers up to the lesser of the amounts calculated
pursuant to clauses (1) and (2) below, the amount calculated
pursuant to clause (1) below being the "Consolidated Borrowing
Base":
(1) an amount equal to the sum of
(x) up to eighty percent (80%) of the face amount (less
maximum discounts, credits and allowances which may be taken
by or granted to Account Debtors in connection therewith) of
the Eligible Accounts of each of the Account Owners, less such
reserves as the Agent elects to establish from time to time in
the exercise of its commercially reasonable credit judgment
plus (y) (i) at all times on and after the date of the Fifth
Amendment and prior to August 1, 1997, the sum of $8,000,000,
(ii) at all times on and after August 1, 1997 and prior to
October 2, 1997, the sum of $6,000,000, unless at least
$500,000 in principal amount of the Term Loans shall not have
been prepaid, in accordance with Paragraph 3(d) hereof, in
which case the amount in effect under this clause (ii) shall
equal $5,500,000 and (iii) at all times on and after October
2, 1997, the sum of $-0-, minus (z) the outstanding amount of
all Letter of Credit Obligations and
(2) the Revolving Line of Credit,
minus the outstanding amount of all Letter of Credit
Obligations.
(d) Borrowing of Revolving Loans;
Disbursement of Proceeds. The Lenders and the Borrower
anticipate that the Administrative Borrower may request the
Lenders to make Revolving Loans on a daily or similarly
periodic basis, and in such event, as a matter of
administrative convenience, the Lenders have established
certain borrowing mechanics and procedures for the making of
such Revolving Loans, as set forth in paragraphs (2)(d)(i) and
2(e) hereof. Should the Administrative Borrower request the
Lenders to make Revolving Loans on a less frequent basis, the
Lenders have established other borrowing mechanics and
procedures for the making of such Revolving Loans, as set
forth in paragraphs 2(d)(ii) and 2(f) hereof.
(i) Agent Advances. The Agent is
authorized by the Lenders, but is not obligated, to make
Revolving Loans on any Business Day on their behalf ("Agent
Advances"), up to the amount available for borrowing under
paragraph 2(b) hereof, based upon the Administrative
Borrower's representations that the conditions for borrowing
are satisfied, as set forth in paragraph 15(b) hereof.
(ii) Lender Advances. Subject to the
limitations of paragraph 2(b) hereof and the determination by
the Agent and the
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Lenders that the conditions for borrowing contained in
paragraph 15(b) hereof are satisfied, Revolving Loans shall be
made directly by each Lender, to the extent of its
Proportionate Share thereof, upon notice from the
Administrative Borrower to the Agent pursuant to paragraph
6(a) hereof ("Lender Advances")."
(c) Paragraph 3. Term Loans. The second sentence of Paragraph
3(a) is deleted in its entirety and the following is substituted in lieu
thereof, and a new Paragraph 3(d) is added as follows:
"Principal payable on account of each Term Loan shall be
payable in successive monthly installments in the amount of
$37,500 each, in the case of the Term Loan made to Smith
Technology, $37,500 each, in the case of the Term Loan made to
BCM and $60,416.67 each in the case of the Term Loan made to
Riedel. Each such installment shall be due and payable on the
last day of each month, the first of which installments shall
be due and payable on the last day of the month immediately
following the 30th day after the Closing Date. Each such
installment shall be based on an amortization schedule
consisting of forty-eight (48) equal and level payments, the
last installment of which shall be in an amount equal to the
then unpaid principal balance thereof, provided, however, that
the entire unpaid principal balance of each Term Loan shall be
due and payable in full upon the earliest to occur of (A) the
applicable Maturity Date, (B) the date upon which the
Borrowers shall have elected to terminate this Agreement,
pursuant to paragraph 12 hereof and (C) the date upon which
the Liabilities shall have been accelerated pursuant to
paragraph 17 hereof."
"(d) In addition to the mandatory prepayments of the
unpaid principal balance of the Term Loans to be made by the
Borrowers pursuant to subparagraphs 3(b) and (c) hereof, on or
before August 1, 1997, the Borrowers shall make a mandatory
prepayment of the Term Loans in an amount equal to not less
than $500,000 in the aggregate, to be applied pro rata against
the scheduled installments of principal of the Term Loans, in
the inverse order thereof. Such prepayment may be funded in
such manner as the Borrowers may elect, whether from
internally generated cash flow, proceeds of asset sales, or
otherwise."
(d) Paragraph 4. Letters of Credit. Paragraph 4(a) is deleted
in its entirety and the following is substituted in lieu thereof:
"4. LETTERS OF CREDIT.
(a) Subject to the terms and conditions of
this Agreement and the Other Agreements, during the Revolving
Credit Term, absent the existence of an Event of Default, from
time to time upon the Administrative Borrower's request, the
Issuing Bank may issue Letters of
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Credit in its sole and absolute discretion, provided that no
Letter of Credit shall have an expiry date (i) more than 365
days from the date of issuance or (ii) not later than the
thirtieth day prior to the expiration of the Revolving Credit
Term. The Borrowers' reimbursement obligations in respect of
each Letter of Credit issued for any Borrower's account shall
be joint and several obligations. Any payment made by the
Issuing Bank, the Agent or any Lender to any Person on account
of any Letter of Credit shall constitute a Revolving Loan
hereunder. At no time shall the aggregate sum of direct
Revolving Loans made by the Lenders to Borrowers plus the
contingent liability of the Lenders under the outstanding
Letters of Credit be in excess of the Revolving Line of Credit
or an amount equal to the sum of the amounts calculated
pursuant to clauses (x) and (y) of Paragraph 2(b)(1) hereof."
(e) Paragraph 5. Interest, Fees and Charges. Paragraph 5(b) is
deleted in its entirety and the following is substituted in lieu thereof:
"(b) Determination of Applicable Margin. The Applicable Margin
shall mean, in the case of all Loans, four and one-half per
cent (4 1/2%), it being understood that on and after the
effective date of the Fifth Amendment, the Lenders shall make
only ABR Revolving Loans, ABR Term Loans and ABR Unbilled Term
Loans (as defined in the Fifth Amendment), and the Lenders
shall not make, nor shall the Borrowers be entitled to borrow,
any Loans bearing interest based on the Eurodollar Rate."
(f) Paragraph 11. Schedules and Reports. Paragraph 11(a) is
deleted in its entirety and the following is substituted in lieu thereof, and
paragraph 11(b) is amended by (i) deleting the word "and" at the end of clause
(viii) thereof and substituting a semi-colon in lieu thereof and (ii) deleting
the period at the end of clause (ix) thereof and substituting the following in
lieu thereof:
"(a) Each Account Owner shall, on a daily basis,
deliver by facsimile transmission to the Agent, on each
Business Day for the previous Business Day, a borrowing base
certificate of such Account Owner for such previous Business
Day, in form and substance satisfactory to the Agent, together
with a report of such Account Owner's sales, collections,
debit and credit adjustments for such previous Business Day.
Each Account Owner shall, on a monthly basis, deliver by
facsimile transmission to the Agent, on the first Business Day
each month for the previous month, a report of such Account
Owner's Eligible Unbilled Accounts and Unbilled Accounts for
such previous month. In addition, each Account Owner shall
deliver to the Agent on the last Business Day of each month a
projection, prepared by an authorized representative of such
Account Owner, of the checks, cash, instruments and other
collections such Account Owner expects to receive during the
following month in payment of Accounts owing to such Account
Owner which are not Eligible Accounts."
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"(x) a progress report in reasonable detail of work
performed and to be performed under outstanding contracts and
other agreements to which any Borrower or Account Owner is a
party, individually representing gross revenues of at least
$10,000 for such month or $50,000 in the aggregate (based on
the amounts reflected on the Borrowers' invoices for such
month), in respect of environmental remediation or
consultation, or other technological services, provided in the
usual course of its business by such Borrower or Account
Owner, together with a schedule setting forth in reasonable
detail such Borrower's or Account Owner's related accruals and
related cash expenditures and receipts; (xi) a status report,
together with all pertinent documentation, in respect of (A)
the Gould Arbitration Award, including without limitation the
docketing of or levy of execution upon any judgment in
connection therewith, and, if applicable, the Gould Settlement
Agreement, (B) the judgment entered on October 18, 1995, as
amended, in favor of the plaintiffs in the U-Max Litigation,
the appeal by BCM of such judgment and any levy of execution
upon such judgment and (C) the Mutual Pharmaceutical
Settlement Agreement; (xii) a status report regarding any
proposed amendment, modification or waiver of any material
term or provision of any of the Junior Securities; and (xiii)
all documentation relating to any proposed or existing Joint
Venture Arrangement, together with a description, in
reasonable detail, of all projects in respect of which any
such Joint Venture Arrangement is or will be engaged."
(g) Paragraph 12. Termination. Paragraph 12(a) is amended by
deleting the first sentence thereof in its entirety and by substituting the
following in lieu thereof:
"(b) The Revolving Loan Commitments shall be in
effect during the period commencing on the Closing Date and
ending on the applicable Maturity Date (such period, the
"Revolving Credit Term"), at which time all Revolving Loans
and Letter of Credit Obligations, all accrued but unpaid
interest thereon, and all fees, costs, charges and other
expenses payable in connection therewith shall be due and
payable unless (i) the due date of the Liabilities is
accelerated pursuant to paragraph 17 hereof or (ii) the
Borrowers elect to terminate this Agreement prior to the end
of the Revolving Credit Term, in which case each Borrower
shall pay all of the Liabilities of such Borrower in full on
the effective date of such termination, provided, however,
that the security interests and liens created under this
Agreement and the Other Agreements shall survive such
termination until the date upon which payment and satisfaction
in full of the Liabilities shall have occurred."
(h) Paragraph 14. Covenants. Paragraph 14(a) is amended by
deleting the date "September 30, 1996" and by substituting therefor the date
"December 31, 1997".
(i) Paragraph 14. Covenants. Paragraph 14(b)(i) is deleted in
its entirety and the following is substituted in lieu thereof:
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"(i) no later than thirty (30) days after each
calendar month (except with respect to any such calendar month
which coincides with the last month of any fiscal quarter, as
to which such financial statements shall be delivered no later
than forty-five (45) days after such calendar month) copies of
internally prepared financial statements of Smith Technology
and its Subsidiaries on a consolidated and consolidating,
monthly and year-to-date, basis, including, without
limitation, (x) balance sheets and statements of income of
Smith Technology and its Subsidiaries (which shall disclose in
reasonable detail the effect on the income statement and on
the balance sheet of (A) the sale, transfer or other
disposition, if any, of any plant, property or equipment, and
(B) any checks, cash, instruments and other collections, if
any, received in payment of Accounts which are not Eligible
Accounts) and (y) statements of retained earnings of Smith
Technology and its Subsidiaries, certified by the chief
financial officer of Smith Technology and accompanied by a No
Default Certificate and a Leverage Ratio Certificate, each
signed by the Borrowers' Chief Financial Officer (which
Certificates, for purposes hereof, may be consolidated into
one certificate);"
(j) Paragraph 14. Covenants. The parenthetical proviso
contained in Paragraph 14(k) is deleted in its entirety and the following is
substituted in lieu thereof:
"(provided, however, that on and after the date of
the Fifth Amendment, Borrower shall not create any new
Subsidiary or Affiliate, and provided further that Borrower
shall (1) deliver to the Agent for the ratable benefit of the
Lenders, pursuant to an executed stock pledge and security
agreement, the form and substance of which shall be
satisfactory to the Agent, the stock certificates evidencing
all of the issued and outstanding shares of the capital stock
of such newly created Subsidiary or Affiliate, together with
stock transfer powers relating thereto, executed in blank and
(2) cause each such newly created Subsidiary or Affiliate,
upon the organization thereof, to execute and deliver to the
Agent, for the ratable benefit of the Lenders (a) financing
statements on form UCC-1, suitable for recordation in all
requisite jurisdictions and (b) a secured guaranty of the
Liabilities of each Borrower pursuant to an instrument of
secured guaranty in form and substance satisfactory to the
Agent)"
(k) Paragraph 14. Covenants. Paragraph 14(l) through the end
of clause (I) thereof is deleted in its entirety and the following is
substituted in lieu thereof:
"(l) Borrower shall not (i) declare or pay any
dividend or other distribution (whether in cash or in kind) on
any class of its capital stock, or purchase, redeem or retire
any shares of any class of its stock, or make any payment on
account of, or set apart assets for the repurchase,
redemption, defeasance or retirement of, any class of its
stock, or (ii) make any optional payment on, or any prepayment
on or redemption of (including without limitation by making
payments to a sinking fund or
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analogous fund) or repurchase of any indebtedness for borrowed
money other than indebtedness pursuant to this Agreement,
provided, however, that
(I) Borrower may pay ESOP Dividends and
redeem shares of ESOP Stock, so long as any such payment or
redemption is made strictly in accordance with the terms of
the dividend and redemption schedule annexed to the Fifth
Amendment, and Borrower may make additional dividend payments
on any Junior Securities which are equity securities,
additional redemptions of ESOP Stock and scheduled payments of
principal of and interest on Junior Securities which are debt
securities, so long as (A) the amount and timing of any such
payment is made strictly in accordance with the terms of the
Junior Security relating thereto (or the agreement or
instrument pursuant to which such Junior Security shall have
been issued), (B) no Default or Event of Default shall have
occurred and be continuing at the time of such payment or
would occur as a result thereof and (C) the Excess
Availability of the Borrowers, after giving effect to any such
payment, when averaged with the Excess Availability of the
Borrowers for the preceding period of ninety (90) consecutive
days, shall be not less than (i) the sum of $8,000,000, at all
times on and after the date of the Fifth Amendment and prior
to October 2, 1997 or (ii) the sum of $6,000,000, at all times
on and after October 2, 1997, unless at least $500,000 in
principal amount of the Term Loans shall not have been
prepaid, in accordance with Paragraph 3(d) hereof, in which
case the amount in effect under this clause (ii) shall equal
$5,500,000; and"
(l) Paragraph 14. Covenants. Paragraph 14(n) is deleted in its
entirety and the following is substituted in lieu thereof:
"(n) Borrower shall not change its fiscal year from a
fiscal year ending on September 30, nor amend its
organizational documents, or without the Lenders' prior
written consent, materially amend or modify any material term
or condition of the CVC Notes, the CVC Bridge Notes, the CVC
Note Purchase Agreement, the Gould Settlement Agreement, the
Mutual Pharmaceutical Settlement Agreement or the Consent
Judgment."
(m) Paragraph 14. Covenants. Clauses (i) through (vii) of
paragraph 14(o) are deleted in their entireties, the following are substituted
in lieu thereof, and clause (viii) thereof is renumbered as clause (v) thereof:
"(o) Borrowers shall maintain and keep in full force
and effect each of the financial covenants set forth below.
The calculation and determination of each such financial
covenant, and all accounting terms contained therein, shall be
so calculated and construed in accordance with GAAP, applied
on a basis consistent with the financial statements of the
Borrowers delivered on or before the Closing Date:
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(i) Consolidated Net Income or Loss. Smith
Technology and its Subsidiaries, on a consolidated basis,
shall not have, as of the end of (A)(1) the fiscal quarter
ending in December 1996, a Net Loss of greater than $355,000,
(2) the fiscal quarter ending in March, 1997, a Net Loss of
greater than $4,000,000, (3) the fiscal quarter ending in
June, 1997, a Net Loss of greater than $1,000,000 and (4) the
fiscal quarter ending in September, 1997, a Net Loss of
greater than $500,000 and (B) the fiscal month of October,
1997 and each fiscal month thereafter, a Net Loss of greater
than $100,000, provided, however, that solely for purposes of
determining compliance with this covenant only, the
calculation of the Net Loss of Smith Technology and its
Subsidiaries, on a consolidated basis, as of the end of any
period of determination, shall exclude the aggregate amount of
ESOP Dividends paid in accordance with Section 14(1) during
such period;
(ii) Consolidated Net Worth. Smith
Technology and its Subsidiaries, on a consolidated basis,
shall maintain at all times during (A) the fiscal quarter
ending in March, 1997, a Net Worth of not less than
$17,000,000, (B) the fiscal quarter ending in June, 1997, a
Net Worth of not less than $16,500,000 and (C) the fiscal
quarter ending in September, 1997, a Net Worth of not less
than $16,000,000, provided, however, that solely for purposes
of determining compliance with this covenant only, the
calculation of such Net Worth shall exclude any restructuring
charges taken or incurred by Smith Technology and its
Subsidiaries, on a consolidated basis, not to exceed
$3,500,000, in the aggregate;
(iii) Minimum FFO. Smith Technology and its
Subsidiaries, on a consolidated basis, shall maintain a
minimum FFO of not less than (A) $150,000 for the fiscal
quarter ending in June, 1997 and (B) $650,000 for the fiscal
quarter ending in September, 1997;
(iv) Consolidated Capital Expenditures.
Smith Technology and its Subsidiaries, on a consolidated
basis, shall not make Capital Expenditures of an aggregate
amount during (A) the fiscal quarter ending in March, 1997 in
excess of $525,000, (B) each fiscal quarter thereafter in
excess of $450,000 and (C) any fiscal year in excess of
$1,700,000;
(n) Paragraph 15(b). Conditions Precedent. Paragraph 15(b) is
amended by (i) deleting the word "and" at the end of clause (ii) thereof, (ii)
deleting the period at the end of clause (iii) thereof and substituting a
semi-colon in lieu thereof and (iii) adding the following new clauses (iv) and
(v) as follows:
"(iv) The Agent shall be satisfied with the
information delivered to it from time to time by the Borrowers
with respect to the Collateral; and
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(v) no lien in the nature of a materialman's,
supplier's, mechanic's or laborer's lien, or other similar
lien or security interest (any such lien, a "Mechanic's
Lien"), encumbering any property of any of the Borrowers, to
secure the payment of any amounts due to a subcontractor of
any of the Borrowers, shall have been created (other than by
operation of law) or shall have attached or become perfected."
(o) Paragraph 16. Default. Paragraph 16 is amended by (i)
deleting clause (a) thereof and substituting the following in lieu thereof, (ii)
deleting the word "or" at the end of clause (j) thereof, (iii) deleting the
period at the end of clause (k) thereof and substituting a semi-colon in lieu
thereof, and (iv) adding the following new clauses (1), (m), (n) and (o) as
follows:
"(a) the failure of any Obligor to pay when due, declared due,
or demanded by the Lenders, the principal amount of the Loans,
or any of the other Liabilities, provided, however, that the
failure of the Borrowers to make a mandatory prepayment of the
Term Loans in accordance with the terms of Paragraph 3(d)
shall not constitute an Event of Default hereunder;
(l) Smith Technology, any other Borrower or Account Owner, to
the extent it is a party to the Gould Settlement Agreement,
the Winstead Settlement Agreement, the Mutual Pharmaceutical
Settlement Agreement, or the Gravers Settlement Agreement,
shall be in default thereunder or the holder of the judgment
in favor of the Stroud Township Board of Directors against BCM
in connection with the U-Max Litigation, the holder of the
judgment in favor of Winstead, Sechrest & Minick, P.C. against
Smith Technology in the amount of $465,842.06 or the holder of
the judgment in favor of Gravers Company against BCM in the
amount of $1,094,038.72 shall take any action or commence any
proceeding, the effect of which is to (i) create or impose a
lien on any property of any Borrower or Account Owner or (ii)
enforce or execute on such judgment or levy or foreclose upon
such lien.
(m) the engagement of the consulting firm of Walker Truesdell
& Associates (the "Consultants") by Smith Technology shall be
terminated by Smith Technology, or notice of the termination
of such engagement shall have been given by Smith Technology,
or the scope of such engagement shall be limited by Smith
Technology in any material manner;
(n) any Borrower shall cause Thomas F. Herlihy to cease to
perform the functions of President or Chief Executive Officer
of Smith Technology, or
(o) the creation (other than by operation of law), attachment
or perfection of a Mechanic's Lien on any property of the
Borrower shall have occurred and such Mechanic's Lien shall
secure the repayment of
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indebtedness, together with the outstanding principal amount
of indebtedness secured by all other then existing Mechanic's
Liens, in an aggregate amount greater than $50,000."
(p) Paragraph 26. The Administrative Borrower. A new Paragraph
26, captioned "The Administrative Borrower", is added to the Loan Agreement as
follows:
"26. The Administrative Borrower. Each Borrower
hereby irrevocably appoints Smith Technology as the
Administrative Borrower, agent and attorney-in-fact for the
Borrowers, which appointment shall remain in full force and
effect unless and until the Agent shall have received prior
written notice signed by the Borrowers that such appointment
has been revoked and that another Borrower has been appointed
Administrative Borrower. Each Borrower hereby irrevocably
appoints and authorizes the Administrative Borrower (i) to
provide the Agent with all notices with respect to all Loans
obtained for the benefit of any Borrower and all other notices
and instructions under this Agreement and (ii) to take such
action as the Administrative Borrower deems appropriate on its
behalf to obtain all Loans and to exercise such other powers
as are reasonably incidental thereto to carry out the purposes
of this Agreement. Each Borrower hereby irrevocably appoints
and authorizes the Administrative Borrower to provide the
Agent with all notices and to take all action as the
Administrative Borrower deems appropriate with respect to all
Letters of Credit under this Agreement. It is understood that
the handling of the Loans and the Collateral of the Borrowers
in a combined fashion, as more fully set forth herein, is done
solely as an accommodation to the Borrowers in order to
utilize the collective borrowing powers of the Borrowers in
the most efficient and economical manner and at their request,
and that none of the Agent, the Lenders or the Letter of
Credit Issuer shall incur liability to the Borrowers as a
result hereof. Each of the Borrowers expects to derive
benefit, directly or indirectly, from the handling of the
Loans and the Collateral in a combined fashion since the
successful operation of each Borrower is dependent on the
continued successful performance of the integrated group. To
induce the Agent, the Lenders and the Letter of Credit Issuer
to do so, and in consideration thereof, each of the Borrowers
hereby jointly and severally agrees to indemnify the
Indemnified Parties and hold the Indemnified Parties harmless
against any and all liability, expense, loss or claim of
damage or injury, made against the Indemnified Parties by the
Borrowers or by any third party whosoever, arising from or
incurred by reason of (a) the handling of the Loans and
Collateral of the Borrowers as herein provided or (b) the
Agent, any Lender and the Letter of Credit Issuer relying on
any instructions of the Administrative Borrower but excluding
such liabilities, expenses, losses or claims to the extent
finally judicially determined to have resulted from the gross
negligence or willful misconduct of the Indemnified Party.
(q) Annex I to the Loan Agreement is deleted in its entirety
and Annex I hereto is substituted in lieu thereof.
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(r) Schedules 1(a), 13(q), 13(s) and 13(t) to the Loan
Agreement are deleted in their entireties and the Schedules annexed to the
Fourth Amendment, captioned Schedules 1(a), 13(q), 13(s) and 13(t), are
respectively substituted in lieu thereof, and Schedules 13(e), 13(f) and 13(g)
to the Loan Agreement are added thereto in the forms of the Schedules annexed to
the Fourth Amendment, captioned Schedules 13(e), 13(f) and 13(g), respectively.
(s) New Exhibit F to the Loan Agreement is hereby added in the
form of Exhibit F to this Agreement.
(t) The first sentence of each of (i) the Revolving Note, (ii)
the Term Note executed by Smith Technology, (iii) the Term Note executed by BCM
and (iv) the Term Note executed by Reidel, in each case in favor of The Chase
Manhattan Bank, is deleted and the following are substituted in lieu thereof,
respectively:
(i) "FOR VALUE RECEIVED, SMITH TECHNOLOGY
CORPORATION, a Delaware corporation, BCM ENGINEERS, INC., a
Pennsylvania corporation, and RIEDEL ENVIRONMENTAL SERVICES,
INC., an Oregon corporation (each a "Borrower" and
collectively the "Borrowers"), jointly and severally promise
to pay to the order of THE CHASE MANHATTAN BANK ("Payee"), at
the office of the Agent located at 633 Third Avenue, 7th
Floor, New York, New York 10017, Attention: Credit Deputy, the
principal sum of FOURTEEN MILLION TWO HUNDRED FIFTY THOUSAND
DOLLARS ($14,250,000) on the applicable Maturity Date, or so
much of such principal sum as shall be outstanding and unpaid
on the applicable Maturity Date, all as more fully set forth
in the Loan and Security Agreement dated as of October 18,
1995 (the "Loan Agreement") among the Borrowers, BCM
Engineers, Inc., an Alabama corporation, the various lenders
which are or which may become parties to the Loan Agreement
(the "Lenders") and The Chase Manhattan Bank (formerly known
as Chemical Bank), as agent for the Lenders (in such capacity,
the "Agent")."
(ii) "FOR VALUE RECEIVED, SMITH TECHNOLOGY
CORPORATION, a Delaware corporation (the "Borrower"), promises
to pay to the order of THE CHASE MANHATTAN BANK ("Payee"), at
the office of the Agent located at 633 Third Avenue, 7th
Floor, New York, New York 10017, Attention: Credit Deputy, the
principal sum of NINE HUNDRED THOUSAND DOLLARS ($900,000) on
the last day of the applicable Maturity Date, or so much of
such principal sum as shall be outstanding and unpaid on the
applicable Maturity Date, all as more fully set forth in the
Loan and Security Agreement dated as of October 18, 1995 (the
"Loan Agreement") among the Borrower, BCM Engineers, Inc., a
Pennsylvania corporation, Riedel Environmental Services Inc.,
an Oregon corporation, BCM Engineers, Inc., an Alabama
corporation, the various lenders which are or which may become
parties to the Loan Agreement (the "Lenders") and The Chase
Manhattan Bank (formerly
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known as Chemical Bank), as agent for the Lenders (in such
capacity, the "Agent")."
(iii) "FOR VALUE RECEIVED, BCM ENGINEERS INC., a
Pennsylvania corporation (the "Borrower"), promises to pay to
the order of THE CHASE MANHATTAN BANK ("Payee"), at the office
of the Agent located at 633 Third Avenue, 7th Floor, New York,
New York 10017, Attention: Credit Deputy, the principal sum of
NINE HUNDRED THOUSAND DOLLARS ($900,000) on the last day of
the applicable Maturity Date, or so much of such principal sum
as shall be outstanding and unpaid on the applicable Maturity
Date, all as more fully set forth in the Loan and Security
Agreement dated as of October 18, 1995 (the "Loan Agreement")
among the Borrower, Smith Technology Corporation (formerly
known as Smith Environmental Technologies Corporation), a
Delaware corporation, Riedel Environmental Services, Inc., an
Oregon corporation, BCM Engineers, Inc., an Alabama
corporation, the various lenders which are or which may become
parties to the Loan Agreement (the "Lenders") and The Chase
Manhattan Bank (formerly known as Chemical Bank), as agent for
the Lenders (in such capacity, the "Agent")."
(iv) "FOR VALUE RECEIVED, RIEDEL ENVIRONMENTAL
SERVICES, INC., an Oregon corporation (the "Borrower"),
promises to pay to the order of THE CHASE MANHATTAN BANK
("Payee"), at the office of the Agent located at 633 Third
Avenue, 7th Floor, New York, New York 10017, Attention: Credit
Deputy, the principal sum of ONE MILLION FOUR HUNDRED FIFTY
THOUSAND DOLLARS ($1,450,000) on the last day of the
applicable Maturity Date, or so much of such principal sum as
shall be outstanding and unpaid on the applicable Maturity
Date, all as more fully set forth in the Loan and Security
Agreement dated as of October 18, 1995 (the "Loan Agreement")
among the Borrower, BCM Engineers, Inc., a Pennsylvania
corporation, Smith Technology Corporation (formerly known as
Smith Environmental Technologies Corporation), a Delaware
corporation, BCM Engineers, Inc., an Alabama corporation, the
various lenders which are or which may become parties to the
Loan Agreement (the "Lenders") and The Chase Manhattan Bank
(formerly known as Chemical Bank), as agent for the Lenders
(in such capacity, the "Agent")."
(u) The first sentence of each of (i) the Revolving Note, (ii)
the Term Note executed by Smith Technology, (iii) the Term Note executed by BCM
and (iv) the Term Note executed by Reidel, in each case in favor of BTM Capital
Corporation, is deleted and the following are substituted in lieu thereof,
respectively:
(i) "FOR VALUE RECEIVED, SMITH TECHNOLOGY
CORPORATION, a Delaware corporation, BCM ENGINEERS, INC.,
a Pennsylvania corporation, and RIEDEL ENVIRONMENTAL
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SERVICES, INC., an Oregon corporation (each a "Borrower" and
collectively the "Borrowers"), jointly and severally promise
to pay to the order of BTM CAPITAL CORPORATION (formerly known
as BOT Financial Corporation) ("Payee"), at the office of the
Agent located at 633 Third Avenue, 7th Floor, New York, New
York 10017, Attention: Credit Deputy, the principal sum of
FOURTEEN MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS
($14,250,000) on the applicable Maturity Date, or so much of
such principal sum as shall be outstanding and unpaid on the
applicable Maturity Date, all as more fully set forth in the
Loan and Security Agreement dated as of October 18, 1995 (the
"Loan Agreement") among the Borrowers, BCM Engineers, Inc., an
Alabama corporation, the various lenders which are or which
may become parties to the Loan Agreement (the "Lenders") and
The Chase Manhattan Bank (formerly known as Chemical Bank), as
agent for the Lenders (in such capacity, the "Agent")."
(ii) "FOR VALUE RECEIVED, SMITH TECHNOLOGY
CORPORATION, a Delaware corporation (the "Borrower"), promises
to pay to the order of BTM CAPITAL CORPORATION (formerly known
as BOT Financial Corporation) ("Payee"), at the office of the
Agent located at 633 Third Avenue, 7th Floor, New York, New
York 10017, Attention: Credit Deputy, the principal sum of
NINE HUNDRED THOUSAND DOLLARS ($900,000) on the last day of
the applicable Maturity Date, or so much of such principal sum
as shall be outstanding and unpaid on the applicable Maturity
Date, all as more fully set forth in the Loan and Security
Agreement dated as of October 18, 1995 (the "Loan Agreement")
among the Borrower, BCM Engineers, Inc., a Pennsylvania
corporation, Riedel Environmental Services Inc., an Oregon
corporation, BCM Engineers, Inc., an Alabama corporation, the
various lenders which are or which may become parties to the
Loan Agreement (the "Lenders") and The Chase Manhattan Bank
(formerly known as Chemical Bank), as agent for the Lenders
(in such capacity, the "Agent")."
(iii) "FOR VALUE RECEIVED, BCM ENGINEERS INC., a
Pennsylvania corporation (the "Borrower"), promises to pay to
the order of BTM CAPITAL CORPORATION (formerly known as BOT
Financial Corporation) ("Payee"), at the office of the Agent
located at 633 Third Avenue, 7th Floor, New York, New York
10017, Attention: Credit Deputy, the principal sum of NINE
HUNDRED THOUSAND DOLLARS ($900,000) on the last day of the
applicable Maturity Date, or so much of such principal sum as
shall be outstanding and unpaid on the applicable Maturity
Date, all as more fully set forth in the Loan and Security
Agreement dated as of October 18, 1995 (the "Loan Agreement")
among the Borrower, Smith Technology Corporation (formerly
known as Smith Environmental Technologies Corporation), a
Delaware corporation, Riedel Environmental Services, Inc., an
Oregon corporation, BCM Engineers, Inc., an Alabama
corporation, the various lenders which are
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or which may become parties to the Loan Agreement (the
"Lenders") and The Chase Manhattan Bank (formerly known as
Chemical Bank), as agent for the Lenders (in such capacity,
the "Agent")."
(iv) "FOR VALUE RECEIVED, RIEDEL ENVIRONMENTAL
SERVICES, INC., an Oregon corporation (the "Borrower"),
promises to pay to the order of BTM CAPITAL CORPORATION
(formerly known as BOT Financial Corporation) ("Payee"), at
the office of the Agent located at 633 Third Avenue, 7th
Floor, New York, New York 10017, Attention: Credit Deputy, the
principal sum of ONE MILLION FOUR HUNDRED FIFTY THOUSAND
DOLLARS ($1,450,000) on the last day of the applicable
Maturity Date, or so much of such principal sum as shall be
outstanding and unpaid on the applicable Maturity Date, all as
more fully set forth in the Loan and Security Agreement dated
as of October 18, 1995 (the "Loan Agreement") among the
Borrower, BCM Engineers, Inc., a Pennsylvania corporation,
Smith Technology Corporation (formerly known as Smith
Environmental Technologies Corporation), a Delaware
corporation, BCM Engineers, Inc., an Alabama corporation, the
various lenders which are or which may become parties to the
Loan Agreement (the "Lenders") and The Chase Manhattan Bank
(formerly known as Chemical Bank), as agent for the Lenders
(in such capacity, the "Agent")."
SECTION 7. CONDITIONS PRECEDENT TO EFFECTIVENESS OF AGREEMENT. This Agreement
shall not be effective unless and until each of the following conditions shall
have been satisfied in the sole discretion of the Lenders or waived by the
Lenders, for whose sole benefit such conditions exist:
(a) The Agent and each of the Lenders shall have received a
fully executed counterpart or original of this Agreement and each Lender shall
have received an executed Unbilled Term Note, each payable to its order in an
amount equal to its Proportionate Share of the Unbilled Term Loan, in the form
of Exhibit F to this Agreement.
(b) The Agent and the Lenders shall have received and reviewed
to their satisfaction a true and correct copy, duly executed, of the corporate
resolutions of the Board of Directors of Smith Technology adopted pursuant to
the meeting held by them on April 14, 1997, as described in the letter dated
April 16, 1997 from W. D. Nelson, Vice President and General Counsel of Smith
Technology to James Laughlin, Esq., The Chase Manhattan Bank.
(c) The Agent and the Lenders shall have received and reviewed
to their satisfaction a schedule, in reasonable detail, captioned "Schedule of
ESOP Dividend Payments and ESOP Stock Redemptions", of the amounts, dates,
payment terms and other pertinent details in respect of all payments which the
Borrowers propose to make after the date of this Agreement of ESOP Dividends and
all redemptions or repurchases which the Borrowers propose to make after the
date of this Agreement of shares of ESOP Stock.
(d) Upon the effectiveness of this Agreement, all
representations and warranties set forth in the Loan Agreement (except for such
inducing representations and
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warranties that were only required to be true and correct as of a prior date and
except for such representations and warranties as relate to the defaults
described in clause (ii) hereof) shall be true and correct in all material
respects on and as of the effective date hereof, and no Default or Event of
Default shall have occurred and be continuing, other than (i) the Specified
Defaults and (ii) the failure of Borrowers to pay their trade accounts payable
and subcontractors when due.
(e) Except for the incurrence of the Overadvance, no event or
development shall have occurred since the date of delivery to the Lenders of the
Borrowers' most recent financial statements which event or development has had
or is reasonably likely to have a Material Adverse Effect.
(f) The Agent shall have received a certificate from Smith
Technology, executed by its Chief Executive Officer or other authorized officer,
as to the accuracy and, completeness of the representations and warranties
contained in Section 12 hereof.
(g) All corporate and legal proceedings and all documents and
instruments executed or delivered in connection with this Agreement shall be
satisfactory in form and substance satisfactory to the Lenders and their
counsel, and the Lenders and their counsel shall have received all information
and copies of all documents which the Lenders and their counsel may have
requested in connection herewith and the matters contemplated hereunder, such
documents, when requested by them, to be certified by appropriate corporate
authorities.
(h) The Agent shall have received an opinion of the Borrowers'
counsel as to the authority of various officers of the Borrowers.
(i) The Lenders shall have received such further agreements,
consents, instruments and documents specifically as may be necessary or proper
in the reasonable opinion of the Lenders, the Agent and their counsel to carry
out the provisions and purposes of this Agreement.
SECTION 8. EVENTS OF DEFAULT; REMEDIES.
(a) The occurrence of any one or more of the following events
or conditions shall constitute a default (an "Event of Default") under this
Agreement and an Event of Default under the Loan Agreement and the Other
Agreements:
(i) any of the Borrowers shall fail to pay any amount
when due under this Agreement or shall fail to discharge when
due any other Liability to the Lenders or shall fail to pay
any other indebtedness when due to the Lenders;
(ii) any of the Borrowers shall fail to perform any
obligation or covenant required to be performed by it under
the terms of this Agreement;
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(iii) any of the Borrowers shall make or furnish any
warranty, representation or statement to the Agent or any of
the Lenders in connection with this Agreement, or any other
agreement to which such Borrower, the Agent, or such lender
are parties, which is or was knowingly false or misleading in
any material respect when made or furnished;
(iv) The Lenders shall have failed to receive on or
before May 15, 1997 the financial statements of Smith
Technology and its Subsidiaries, on a consolidated basis, for
the fiscal year ending September 30, 1996, certified without
qualification;
(v) The Lenders shall have failed to receive on or
before May 15, 1997 detachable warrants, in form and
substance, and containing such terms and conditions,
satisfactory to them, to acquire on a pro rata basis, at a
nominal exercise price, that number of shares of the common
voting stock of Smith Technology equal to 7.5%, on a fully
diluted basis, of such stock; or
(vi) The Lenders shall have failed to receive on or
before June 1, 1997 (A) a copy of an executed settlement
agreement between BCM and Gravers Company pertaining to the
judgment in the amount of $1,094,038.72 in their favor against
BCM, and (B) a subordination agreement executed by the Gravers
Company in favor of the Agent and the Lenders, such settlement
agreement and subordination agreement to be in form and
substance and to contain such terms and conditions, as are
satisfactory to the Agent and the Lenders.
(b) Upon the occurrence and during the continuance of an
"Event of Default", as defined in this Section 8, or any other Event of Default,
the Lenders, at their sole option and in their sole discretion, may exercise any
and all of their rights and remedies under this Agreement or any Other
Agreements, and all other rights and remedies available to the Lenders at law or
in equity.
SECTION 9. RELEASE. For and in consideration of the mutual covenants and
obligations set forth herein, each of the Borrowers (collectively the
"Releasors") hereby releases and discharges each of the Lenders and the Agent,
and each of their respective officers, directors, partners, agents, employees,
attorneys and other professionals, affiliates, successors and assigns
(collectively the "Releasee") from all actions, causes of action, claims for
contribution or indemnification that may be brought by the Releasors or any
third party, suits, debts, dues, sums of money, accounts, reckonings, bonds,
bills, specialties, covenants, contracts, controversies, agreements, premises,
variances, trespasses, damages, judgments, extents, executions, claims, and
demands whatsoever, in law, admiralty or equity (including, without limitation,
any action under 11 U.S.C. Sections 542-553) (all of the foregoing being
collectively, "Claims"), which against the Releasee, the Releasors or the
Releasors' partners, agents, employees, attorneys, affiliates, heirs, executors,
administrators, successors or assigns ever had, now have or hereafter can, shall
or may, have for, upon, or by reason of any matter, cause or thing whatsoever
from the
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beginning of the world to the date of the delivery of this Agreement by reason
or on account of or in any way related to any acts, omissions or circumstances
(whether known or unknown) occurring prior to or as of the date hereof in
connection with or arising out of or referring or relating in any way to (a) any
and all Claims based upon, relating to or arising from any and all transactions,
relationships or dealings relating to loans or other financial accommodations
made by the Releasee to or for the account of Releasors; and (b) all
documentation underlying the indebtedness of the Releasors to the Releasee,
provided, however, that the Releasee shall not be released from any Claim
arising from the Releasee's gross negligence or willful misconduct.
SECTION 10. CONSENT TO RELIEF FROM AUTOMATIC STAY. Each of the Borrowers hereby
agrees that if any of them shall (i) file with any bankruptcy court of competent
jurisdiction or be the subject of any petition under the Code, (ii) be the
subject of any order for relief under the Code, (iii) file or be the subject of
any petition seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under any present or future federal
or state act or law relating to bankruptcy, insolvency, or other relief for
debtors, (iv) seek, consent to or acquiesce in the appointment of any trustee,
receiver, conservator or liquidator, (v) be the subject of any order judgment or
decree entered by any court of competent jurisdiction approving a petition filed
against any of them for any reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any present or
future federal or state act or law relating to bankruptcy, insolvency, or relief
for debtors, the Agent and the Lenders shall thereupon be entitled to relief
from any automatic stay imposed by Section 362 of the Code or from any other
stay or suspension of remedies imposed in any other manner with respect to the
exercise of the rights and remedies otherwise available to the Agent and the
Lenders under the Loan Agreement, any of the Other Agreements, hereunder or
under any documents delivered in connection therewith.
SECTION 11. INDEMNITY. Each of the Borrowers jointly and severally agrees to
defend and hold the Agent and each of the Lenders harmless from and against any
and all claims, charges, actions, suits, proceedings, lawsuits, obligations,
liabilities, fines, penalties, costs and expenses, including, but not limited
to, reasonable attorneys' fees, in connection with the breach of any
representation or warranty of such Borrower, the breach or default by such
Borrowers of any term, covenant or condition hereunder, the collection or
recovery of any portion of the Liabilities or the Agent's or any of the Lenders'
enforcement of its rights under this Agreement, the Loan Agreement or any of the
Other Agreements. The obligations and provisions contained in this Section shall
continue and remain in full force and effect after the Liabilities have been
paid and discharged in full.
SECTION 12. REPRESENTATIONS AND WARRANTIES. In order to induce the Lenders and
the Agent to enter into this Agreement, Smith Technology and each other Borrower
makes the following representations and warranties in favor of each of the
Lenders and the Agent (which representations and warranties shall survive the
execution and delivery of this Agreement) as of the date hereof.
(a) Smith Technology and each other Borrower has the corporate
power, authority and legal right to execute, deliver and perform this Agreement,
and the instruments, agreements, documents and transactions contemplated hereby,
and has taken all actions necessary
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to authorize the execution, delivery and performance of this Agreement, and the
instruments, agreements, documents and transactions contemplated hereby.
(b) No consent of any Person (including, without limitation,
shareholders or creditors of Smith Technology, as the case may be) other than
the Lenders, and no consent, permit, approval or authorization of, exemption by,
notice or report to, or registration, filing or declaration with, any
governmental authority, is required in connection with the execution, delivery,
performance, validity or enforceability of this Agreement, and the instruments,
agreements, documents and transactions contemplated hereby.
(c) This Agreement has been duly executed and delivered on
behalf of Smith Technology and each other Borrower by its duly authorized
officer, and constitutes the legal, valid and binding obligation of Smith
Technology and each such Borrower, enforceable in accordance with its terms.
(d) Except for the Specified Defaults and except for the
failure of the Borrowers to (i) pay their trade accounts payable and
subcontractors when due, (ii) make timely payment of their rental obligations
under lease agreements and (iii) make timely payment of their obligations under
the Gould Settlement Agreement, the Winstead Settlement Agreement and the Mutual
Pharmaceutical Settlement Agreement, neither Smith Technology nor any other
Borrower is in default under any indenture, mortgage, deed of trust, agreement
or other instrument to which it is a party or by which it may be bound. Neither
the execution and delivery of this Agreement, nor the consummation of the
transactions herein contemplated, nor compliance with the provisions hereof or
thereof will (i) violate any law or regulation, (ii) result in or cause a
violation by Smith Technology or by any other Borrower of any order or decree of
any court or government instrumentality, (iii) conflict with, or result in the
breach of, or constitute a default under, any indenture, mortgage, deed of
trust, agreement or other instrument to which Smith Technology or any other
Borrower is a party or by which it may be bound, (iv) result in the creation or
imposition of any lien, charge, or encumbrance upon any of the property of Smith
Technology or of any other Borrower, except in favor of the Agent for the
benefit of the Lenders, to secure the Liabilities, or (v) violate any provision
of the Articles or Certificate of Incorporation, By-Laws or any capital stock
provisions of Smith Technology or of any other Borrower.
(e) No Default or Event of Default has occurred and is
continuing, except for the Specified Defaults and except for the default
described in Section 7(d)(ii) of this Agreement.
(f) Since the date of the Agent's receipt of Smith
Technology's consolidated financial statements for the period ended February 28,
1997, no change or event has occurred which has had or is reasonably likely to
have a Material Adverse Effect, except for the Specified Defaults and matters
related thereto.
(g) On September 23, 1996 Smith Technology filed with the
Secretary of State of Delaware a Certificate of Ownership and Merger, pursuant
to which Smith Technology changed its corporate name from "Smith Technology
Technologies Corporation" to "Smith Technology Corporation". Such change of name
became effective on September 23, 1996.
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Such change of name is only a change in the corporate name of Smith Technology,
and not a change in Smith Technology's corporate structure or business.
(h) Neither the entry of the Stroud Township Judgment, the
Gravers Judgment nor the Winstead Judgment creates a lien on any property of any
Borrower or Account Owner, and no holder of any such judgment is as of the date
of this Agreement a "lien creditor" of any Borrower, or Account Owner, as such
term is defined under Section 9-301 of the Uniform Commercial Code as in effect
under applicable law.
(i) the Agent has a perfected lien on and security interest in
all of the Collateral, wherever located, subject to no other liens except for
Permitted Liens.
(j) The recitals contained in this Agreement are due and
correct in all respects.
(k) The Borrowers have consulted with counsel and with such
other experts and advisors as they have deemed necessary in connection with the
negotiation, execution and delivery of this Agreement.
SECTION 13. NO PARTNERSHIP. Nothing contained in this Agreement shall be deemed
to create any rights or obligations of partnership, joint venture or similar
association between any of the Lenders and the Agent, on the one hand, and any
of the Borrowers, on the other hand, nor cause the Agent or any Lender to be
responsible in any way for the debts or obligations of the Borrowers or any
Person.
SECTION 14. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective heirs,
executors, administrators, successors and assigns.
SECTION 15. NO OTHER AGREEMENTS. All prior understandings and agreements among
the parties are merged in this Agreement, which alone fully and completely
expresses the understandings and agreements among them and which is entered into
after full investigation. None of the parties hereto is relying upon any
statement or representation made by any other party not embodied in this
Agreement.
SECTION 16. NO WAIVER. No failure or delay of any party hereto in the exercise
of any right given to such party hereunder shall be deemed to be a waiver
thereof. No waiver by any party hereto of any condition hereunder for its
benefit (unless the time specified herein for exercise of such right, or
satisfaction of such condition, has expired), shall constitute a waiver of any
other or further right nor shall any single or partial exercise of any right
preclude other or further exercise thereof or of any other rights. The waiver of
any breach hereunder shall not be deemed to be a waiver of any other or
subsequent breach hereof. No extensions of time for the performance of any
obligation shall be deemed or construed as an extension of time for the
performance of any other obligation.
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SECTION 17. FURTHER ASSURANCES. Each party shall, from time to time, execute,
acknowledge and deliver such further instruments, and perform such additional
acts, as any other party may reasonably request in order to consummate the
transactions contemplated by this Agreement.
SECTION 18. SEVERABILITY. If any term or provisions of this Agreement or the
application thereof to any person or entity or circumstance shall to any extent
be invalid or unenforceable, the remainder of this Agreement, or the application
of such term or provision to such person or entity or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby, and each term and provision of this Agreement shall be valid and be
enforced to the fullest extent permitted by law.
SECTION 19. SUBMISSION TO JURISDICTION.
(a) Any legal action or proceeding with respect to this Agreement may
be brought in the courts of the State of New York or, if requisites of
jurisdiction obtain, of the United States of America for the Southern District
of New York, and, by execution and delivery hereof, each Borrower hereby accepts
for itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. Nothing contained herein, however, shall
affect the right of the Agent or the Lenders to commence legal proceedings or
otherwise proceed against any of the Borrowers in any other jurisdiction. Each
of the Borrowers waives (i) the right to trial by jury in the event of any
litigation to which any of the Agent, the Lenders and such Borrower are parties
in respect of any matter arising under or in connection with this Agreement,
whether or not such litigation has been commenced in respect of the Loan
Agreement or this Agreement and whether or not other persons are also parties
thereto, (ii) any claim that New York County, New York, is an inconvenient forum
and (iii) any claim against any of the Lenders for consequential or special
damages respecting any loan documents or the transactions contemplated
thereunder or hereunder. Execution of this Agreement by the Lenders shall be
deemed to constitute a waiver by the Lenders of the right to trial by jury in
the event of any litigation in respect of which a Borrower has waived its right
to trial by jury hereunder; and
(b) No delay on the part of the Agent or any of the Lenders in
exercising any of its options, powers or rights, or partial or single exercise
thereof, whether arising hereunder and the Loan Agreement, under any of the
Other Agreements or otherwise, shall constitute a waiver thereof or affect any
right hereunder or thereunder. No waiver of any of such rights under this
Agreement shall be deemed to be made unless the same shall be in writing, duly
signed by the Agent, the Lenders and the Borrowers. Each such waiver (if any)
shall apply only with respect to the specific instance involved and shall in no
way impair the rights of the Agent, the Lenders or the obligations of the
Borrowers hereunder in any other respect at any other time.
SECTION 20. GENERAL PROVISIONS.
(a) Each Guarantor (i) has signed below to indicate its
consent to the terms and provisions of this Agreement and all documents and
agreements to be executed or delivered in connection herewith and (ii)
reaffirms, ratifies and confirms the continuing validity and enforceability of
the Guaranty executed by it in accordance with its terms and acknowledges that
its liability, and the rights of the Agent and the Lenders under such Guaranty,
shall be
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unaffected by the terms of this Agreement and shall remain in full force and
effect through the final and indefeasible payment of all sums owed to the
Lenders under this Agreement and the Loan Agreement.
(b) The Borrowers and Lenders agree that on or before August
15, 1997, they shall meet and confer for the purpose of negotiating in good
faith the financial covenants to be observed by the Borrowers during the period
from September 30, 1997 through the applicable Maturity Date (such financial
covenants, the "Referenced Covenants"), such Referenced Covenants to be based on
the financial projections, prepared by the Borrowers, of their operations and
financial performance for the fiscal year ending September 30, 1998. The
Borrowers further agree that, notwithstanding anything to the contrary contained
in Paragraph 15(b) of the Loan Agreement, in the event that the Borrowers and
the Lenders fail for any reason to reach agreement by September 30, 1997 as to
the Referenced Covenants to be observed by the Borrowers, then, in such event,
on and after October 2, 1997, any Revolving Loans or other extensions of credit
which the Lenders may make to or for the Borrowers' benefit shall be made solely
at the Lenders' discretion, exercised in a commercially reasonable manner.
(c) The Borrowers jointly and severally agree that, in
consideration of the Lenders' willingness to enter into this Agreement and to
consummate the transactions described herein, the Borrowers shall pay to the
Agent, to be shared by the Lenders on a pro rata basis, a fee of, $250,000,
which shall be due and payable in full on October 2, 1997. The Borrowers'
obligation to pay such fee shall constitute a Liability secured by all of the
Collateral.
(d) Nothing contained in this Agreement shall be deemed to be
a waiver of any Defaults or Events of Default other than the Designated
Defaults, whether or not the Agent or any of the Lenders shall have any
knowledge thereof, nor shall anything contained in this Agreement be deemed to
be a waiver of any future Default or Events of Default whatsoever, it being
understood that the waiver contained herein shall only extend to the specific
Events of Default identified herein.
(e) Except as expressly amended on the terms set forth in this
Agreement, the Loan Agreement and all other agreements, documents, instruments
and certificates executed in connection therewith, are ratified and confirmed in
all respects and shall remain in full force and effect in accordance with their
respective terms.
(f) All references in the Other Agreements to the Loan
Agreement shall mean the Loan Agreement as waived and amended as of the
effective date hereof, and as waived and amended hereby and as hereafter
amended, supplemented or modified from time to time. From and after the date
hereof, all references in the Loan Agreement to "this Agreement," "hereof,"
"herein," or similar terms, shall mean and refer to the Loan Agreement as waived
and amended by this Agreement.
(g) This Agreement may be executed by the parties hereto
individually or in combination, in one or more counterparts, each of which shall
be an original and all of which shall constitute one and the same agreement.
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(h) This Agreement shall be governed and controlled by the
laws of the State of New York without reference to its choice of law principles.
(Signature Page Follows)
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IN WITNESS WHEREOF, each of the Borrowers, BCM-Alabama, the
Lenders and the Agent have caused this Agreement to be duly executed by their
respective officers thereunto duly authorized as of the day and year first above
written.
SMITH TECHNOLOGY CORPORATION, RIEDEL ENVIRONMENTAL SERVICES INC.,
formerly known as
Smith Environmental
Technologies Corporation By:
--------------------------------
(Title)
By:
-----------------------------------
(Title)
BCM ENGINEERS INC., THE CHASE MANHATTAN BANK, as a
a Pennsylvania corporation Lender and as Agent, formerly
known as Chemical Bank
By: By:
----------------------------------- -------------------------------
(Title) (Title)
BCM ENGINEERS INC., BTM CAPITAL CORPORATION,
an Alabama corporation formerly known as
BOT Financial Corporation
By: By:
----------------------------------- -------------------------------
(Title) (Title)
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ANNEX I
TERM LOAN, AND
UNBILLED TERM
REVOLVING LOAN LOAN
NAME AND ADDRESS OF LENDERS COMMITMENT COMMITMENT COMMITMENT
- ----------------------------------------- ------------------------ ------------------------ -------------------------
BTM Capital Corporation, $16,262,167.03 $12,250,000 $4,012,167.03
formerly known as BOT Financial
Corporation
2001 Ross Avenue
Suite 3160
Dallas, Texas 75201
The Chase Manhattan Bank, $16,262,167.03 $12,250,000 $4,012.167.03
formerly known as
Chemical Bank
633 Third Avenue
New York, New York 10017
======================== ======================== =========================
$32,524, 334.06 $24,500,000 $8,024,334.06
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EXHIBIT F
FORM OF UNBILLED TERM NOTE
EXECUTED AS OF THE ____ DAY OF
_______, 1997
$---------------
FOR VALUE RECEIVED, SMITH TECHNOLOGY CORPORATION, BCM
ENGINEERS INC., AN ALABAMA CORPORATION AND RIEDEL ENVIRONMENTAL SERVICES INC.
(each a "Borrower"), jointly and severally promise to pay to the order of [NAME
OF LENDER ("PAYEE")], at the office of the Agent located at 633 Third Avenue,
7th Floor, New York, New York 10017, Attention: Credit Deputy, the principal sum
of __________________ __________ DOLLARS ($________) on the applicable Maturity
Date or so much of such principal sum as shall be outstanding and unpaid on the
applicable Maturity Date. This Unbilled Term Note is executed and delivered in
connection with the Loan and Security Agreement dated as of October 18, 1995 (as
amended through the date hereof, the "Loan Agreement") among the Borrowers, BCM
Engineers, Inc., an Alabama corporation, the various lenders which are or which
may become parties to the Loan Agreement (the "Lenders") and The Chase Manhattan
Bank, as agent for the Lenders (in such capacity, the "Agent"). Terms which are
capitalized in this Unbilled Term Note but are not otherwise defined shall have
the meanings ascribed to them in the Loan Agreement. The Borrowers further
promise to make scheduled payments of principal and mandatory prepayments of
principal of this Unbilled Term Note as set forth in the Fifth Amendment, Waiver
and Consent dated as of April 21, 1997 among the Borrowers, the Lenders and the
Agent (the "Fifth Amendment") and to pay interest on the outstanding principal
amount hereof on the dates and at the rates provided in the Fifth Amendment from
the date hereof until payment in full hereof. This Unbilled Term Note is
referred to in the Fifth Amendment and is subject to and entitled to all
provisions and benefits thereof and of the Loan Agreement.
The Borrowers hereby authorize the Agent to charge
any account of any of the Borrowers for all sums payable hereunder as and when
such sums become due. If payment hereunder becomes due and payable on a day
which is not a Business Day, the due date thereof shall be extended to the next
succeeding Business Day, and interest shall be payable thereon at the rate
specified during such extension. Credit shall be given for payments made in the
manner and at the times provided in the Loan Agreement. It is the intent of the
parties that the rate of interest and other charges to the Borrowers under this
Unbilled Term Note shall be lawful; therefore, if for any reason the interest or
other charges payable hereunder are found by a court of competent jurisdiction,
in a final determination, to exceed the limit which Payee may lawfully charge
the Borrowers, then the obligation to pay interest or other charges shall
automatically be reduced to such limit and, if any amount in excess of such
limit shall have been paid, then such amount shall be refunded to the Borrowers.
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32
The principal and all accrued interest hereunder may
be prepaid by the Borrowers, in part or in full, at any time, without penalty.
The Borrowers waive the benefit of any law that would
otherwise restrict or limit Payee in the exercise of its right, which is hereby
acknowledged, to set-off against the Liabilities, without notice and at any time
hereafter, any liability owing from Payee to the Borrowers. The Borrowers waive
every defense, counterclaim or setoff which the Borrowers may now have or
hereafter may have to any action by the Agent or Payee in enforcing this
Unbilled Term Note and/or any of the other Liabilities, or in enforcing the
Agent's rights in the Collateral and ratify and confirm whatever the Agent may
do pursuant to the terms hereof and of the Loan Agreement and with respect to
the Collateral and agree that the Agent shall not be liable for any error in
judgment or mistakes of fact or law, other than for gross negligence.
The Borrowers, any other party liable with respect to
the Liabilities and any and all endorsers and accommodation parties, and each
one of them, if more than one, waives any and all presentment, demand, notice of
dishonor, protest, and all other notices and demands in connection with the
enforcement of Payee's rights hereunder.
The loan evidenced hereby has been made and this
Unbilled Term Note has been delivered at New York, New York. THIS UNBILLED TERM
NOTE SHALL BE GOVERNED AND CONTROLLED BY THE INTERNAL LAWS OF THE STATE OF NEW
YORK AS TO INTERPRETATION, ENFORCEMENT, VALIDITY, CONSTRUCTION, EFFECT, AND IN
ALL OTHER RESPECTS, INCLUDING WITHOUT LIMITATION, THE LEGALITY OF THE INTEREST
RATE AND OTHER CHARGES, and shall be binding upon the Borrowers and each of
their heirs, legal representatives, successors and assigns. If this Unbilled
Term Note contains any blanks when executed by the Borrowers, Payee is hereby
authorized, without notice to the Borrowers to complete any such blanks
according to the terms upon which the loan or loans were granted. Wherever
possible, each provision of this Unbilled Term Note shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Unbilled Term Note shall be prohibited by or be invalid under such law,
such provision shall be severable, and be ineffective to the extent of such
prohibition or invalidity, without invalidating the remaining provisions of this
Unbilled Term Note.
To induce Payee to make the loan evidenced by this
Unbilled Term Note, the Borrowers (i) irrevocably agree that, subject to Payee's
sole and absolute election, all actions arising directly or indirectly as a
result or in consequence of this Unbilled Term Note or any other agreement with
Payee, or the Collateral, shall be instituted and litigated only in courts
having situs in the City of New York, New York, (ii) hereby consent to the
exclusive jurisdiction and venue of any State or Federal Court located and
having its situs in said city, and (iii) waive any objection based on forum
non-conveniens. IN ADDITION, THE BORROWERS HEREBY WAIVE TRIAL BY JURY IN ANY
ACTION OR PROCEEDING WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THIS UNBILLED TERM
NOTE, THE LIABILITIES, THE COLLATERAL, ANY ALLEGED TORTIOUS CONDUCT BY THE
BORROWERS OR PAYEE OR WHICH IN ANY WAY, DIRECTLY OR INDIRECTLY, ARISES OUT OF OR
RELATES TO THE RELATIONSHIP BETWEEN THE BORROWERS AND PAYEE, waives personal
service of any and all process, and consents that all such service of process
may be made by certified mail, return receipt requested, directed to the
Borrowers
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at the address indicated in the Agent's records; and service so made shall be
complete five (5) days after the same has been deposited in the U.S. mails as
aforesaid.
IN WITNESS WHEREOF, the Borrowers have executed this Unbilled
Term Note on the date above set forth.
SMITH TECHNOLOGY CORPORATION
By:___________________________________
Name:
Title:
BCM ENGINEERS INC.,
a Pennsylvania corporation
By:___________________________________
Name:
Title:
RIEDEL ENVIRONMENTAL SERVICES,
INC.
By:___________________________________
Name:
Title:
F-3