-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K+QNPso17aCIl+X4jfs1Awl0LbGNSatlRe9pfDHy9DYV4RfV9u8lv6/wryRiC69F ACeUKnLkPb8dBcsLmCmUEg== /in/edgar/work/20000622/0000950169-00-000627/0000950169-00-000627.txt : 20000920 0000950169-00-000627.hdr.sgml : 20000920 ACCESSION NUMBER: 0000950169-00-000627 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20000608 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000622 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GTS DURATEK INC CENTRAL INDEX KEY: 0000785186 STANDARD INDUSTRIAL CLASSIFICATION: [7363 ] IRS NUMBER: 222476180 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-14292 FILM NUMBER: 659072 BUSINESS ADDRESS: STREET 1: 10100 OLD COLUMBIA ROAD CITY: COLUMBIA STATE: MD ZIP: 21046 BUSINESS PHONE: 4103125100 MAIL ADDRESS: STREET 1: 10100 OLD COLUMBIA ROAD CITY: COLUMBIA STATE: MD ZIP: 21046 FORMER COMPANY: FORMER CONFORMED NAME: DURATEK CORP DATE OF NAME CHANGE: 19920703 8-K 1 0001.txt GTS DURATEK ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): June 8, 2000 GTS Duratek, Inc. ----------------- (Exact name of registrant as specified in its charter) Delaware 0-14292 22-2476780 - -------------------------------------------------------------------------------- (State or other jurisdiction of (Commission File (I.R.S. Employer incorporation or organization) Number) Identification Number) 10100 Old Columbia Road, Columbia, Maryland 21046 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (410) 312-5100 - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) GTS DURATEK, INC. Item 2. Acquisition or Disposition of Assets. On June 8, 2000, GTS Duratek, Inc. ("GTS Duratek") acquired the nuclear services business of Waste Management, Inc. ("WMI"). The acquisition was effected as the purchase of all of the outstanding capital stock of Waste Management Federal Services, Inc. ("WMFS") from Rust International, Inc. ("Rust") and all of the outstanding membership interests of Chem-Nuclear Systems, LLC ("Chem-Nuclear") from Chemical Waste Management Inc. ("CWM") and CNS Holdings, Inc. ("CNS"). Each of Rust, CWM and CNS are indirect subsidiaries of WMI. The purchase price was $65 million in cash, consisting of $55 million in cash at closing and $10 million additional cash consideration upon the satisfaction of certain post closing conditions. The purchase price is also subject to certain post closing adjustments. The acquired business, known as Waste Management Nuclear Services ("WMNS"), provides low-level radioactive waste management services for the commercial industry and the federal government. WMNS consists primarily of three operating segments: (i) the Federal Services Division which provides radioactive waste handling, transportation, treatment, packaging, storage, disposal, site cleanup and project management services primarily for the U.S. Department of Energy ("DOE") and other federal agencies; (ii) the Commercial Services Division which provides radioactive waste handling, transportation, licensing, packing, disposal and decontamination and decommissioning services primarily to nuclear utilities; and (iii) the Commercial Disposal Division which operates a commercial low-level radioactive waste disposal facility at Barnwell, South Carolina. GTS Duratek generally intends to continue the business of WMNS and to use the assets and facilities of WMNS for essentially the same purposes as they were used prior to the acquisition. GTS Duratek financed the purchase price principally from borrowings under its credit facility, which it amended and restated in connection with the acquisition of WMNS. The amended and restated credit facility is a $135 million facility and includes a $45 million revolving line of credit, based on the amount of eligible accounts receivable, to refinance existing indebtedness and to fund working capital requirements, and two term loans totaling $90 million to refinance existing indebtedness and to finance the acquisition of WMNS. Borrowings under the credit facility bear interest at a floating rate based on either LIBOR or a "base rate," plus margins which are subject to adjustment after six months based upon GTS Duratek's leverage ratio at the time. Substantially all of GTS Duratek's assets, excluding real property and inventory, are pledged as collateral under the credit facility. The credit facility has a five year term, except that one of the term loans matures in six and a half years. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (a) and (b) Financial Statements and Pro Forma Financial Information. - 2 - It is impracticable to provide the required financial statements of WMFS and Chem-Nuclear and the pro forma financial information required by this Item 7 of Form 8-K at this time. The required financial statements and the pro forma financial information will be filed within 60 days of the due date for the filing of this report, in accordance with Item 7(a)(4) of Form 8-K, and in no event later than August 22, 2000. (c) Exhibits 99.1 GTS Duratek, Inc. Press Release dated June 9, 2000. 99.2 Purchase Agreement by and among Chemical Waste Management Inc., Rust International, Inc., CNS Holdings, Inc. and GTS Duratek, Inc. dated March 29, 2000. 99.3 Amendment No. 1 to Purchase Agreement and Disclosure Letter by and among Chemical Waste Management Inc., Rust International, Inc., CNS Holdings, Inc. and GTS Duratek, Inc. dated June 8, 2000. 99.4 Second Amended and Restated Credit Agreement dated as of June 8, 2000 by and among GTS Duratek, Inc., GTS Duratek Bear Creek, Inc., GTS Duratek Colorado, Inc., Hittman Transport Services, Inc., GTS Instrument Services, Incorporated, General Technical Services, Inc., GTSD Sub III, Inc., GTSD Sub IV, Inc., Frank W. Hake Associates LLC, Chem-Nuclear Systems L.L.C., Waste Management Federal Services, Inc., Waste Management Federal Services of Idaho, Inc., Waste Management Federal Services of Hanford, Inc., Waste Management Technical Services, Inc., Waste Management Geotech, Inc., the Lenders party thereto, First Union National Bank, as Administrative Agent, Credit Lyonnais New York Branch, as Documentation Agent, Fleet National Bank, as Syndication Agent, and First Union Securities, Inc., as Lead Arranger and Book Manager. 99.5 Second Amended and Restated Security Agreement dated as of June 8, 2000 made by GTS Duratek, Inc., GTS Duratek Bear Creek, Inc., GTS Duratek Colorado, Inc., Hittman Transport Services, Inc., GTS Instrument Services, Incorporated, General Technical Services, Inc., GTSD Sub III, Inc., GTSD Sub IV, Inc., Frank W. Hake Associates, L.L.C., Chem-Nuclear Systems, L.L.C., Waste Management Federal Services, Inc., Waste Management Federal Services of Idaho, Inc., Waste Management Federal Services of Hanford, Inc., Waste Management Technical Services, Inc., Waste Management Geotech, Inc., and First Union National Bank, as Collateral Agent. - 3 - 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 hereunto duly authorized. GTS DURATEK, INC. Date: June 21, 2000 By: /s/ Craig T. Bartlett ------------------------ Craig T. Bartlett Treasurer - 4 - INDEX TO EXHIBITS Exhibit Number Exhibit Description Page - ------- ------------------- ---- 99.1 GTS Duratek, Inc. Press Release dated June 9, 2000. 99.2 Purchase Agreement by and among Chemical Waste Management Inc., Rust International, Inc., CNS Holdings, Inc. and GTS Duratek, Inc. dated March 29, 2000. 99.3 Amendment No. 1 to Purchase Agreement and Disclosure Letter by and among Chemical Waste Management Inc., Rust International, Inc., CNS Holdings, Inc. and GTS Duratek, Inc. dated June 8, 2000. 99.4 Second Amended and Restated Credit Agreement dated as of June 8, 2000 by and among GTS Duratek, Inc., GTS Duratek Bear Creek, Inc., GTS Duratek Colorado, Inc., Hittman Transport Services, Inc., GTS Instrument Services, Incorporated, General Technical Services, Inc., GTSD Sub III, Inc., GTSD Sub IV, Inc., Frank W. Hake Associates LLC, Chem-Nuclear Systems L.L.C., Waste Management Federal Services, Inc., Waste Management Federal Services of Idaho, Inc., Waste Management Federal Services of Hanford, Inc., Waste Management Technical Services, Inc., Waste Management Geotech, Inc., the Lenders party thereto, First Union National Bank, as Administrative Agent, Credit Lyonnais New York Branch, as Documentation Agent, Fleet National Bank, as Syndication Agent, and First Union Securities, Inc., as Lead Arranger and Book Manager. 99.5 Second Amended and Restated Security Agreement dated as of June 8, 2000 made by GTS Duratek, Inc., GTS Duratek Bear Creek, Inc., GTS Duratek Colorado, Inc., Hittman Transport Services, Inc., GTS Instrument Services, Incorporated, General Technical Services, Inc., GTSD Sub III, Inc., GTSD Sub IV, Inc., Frank W. Hake Associates, L.L.C., Chem-Nuclear Systems, L.L.C., Waste Management Federal Services, Inc., Waste Management Federal Services of Idaho, Inc., Waste Management Federal Services of Hanford, Inc., Waste Management Technical Services, Inc., Waste Management Geotech, Inc., and First Union National Bank, as Collateral Agent. - 5 - EX-99.1 2 0002.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 [GTS LOGO] DURATEK ------------------------ 10100 Old Columbia Road Columbia, Maryland 21046 PRESS RELEASE - -------------------------------------------------------------------------------- For Release: June 9, 2000 Contact: Diane R. Brown, Investor Relations Robert F. Shawver, Exec. V.P. (410) 312-5100 - www.gtsduratek.com - -------------------------------------------------------------------------------- GTS DURATEK COMPLETES ACQUISITION OF WASTE MANAGEMENT NUCLEAR SERVICE Columbia, MD - GTS Duratek, Inc. (NASDAQ: DRTK) today announced that it has completed the acquisition of the nuclear services business of Waste Management, Inc. (NYSE: WMI) for $65 million in cash, consisting of $55 million in cash at closing and $10 million additional cash consideration upon the satisfaction of certain post closing conditions. The purchase price is also subject to certain post-closing adjustments. The acquired business, known as Waste Management Nuclear Services (WMNS), is a leader in providing low-level radioactive waste management services for the commercial industry and the federal government. WMNS is expected to add $100 million in revenues, thereby increasing GTS Duratek's revenue run rate by approximately 55%. WMNS consists primarily of three operating segments: (i) the Federal Services Division which provides radioactive waste handling, transportation, treatment, packaging, storage, disposal, site cleanup and project management services primarily for the U.S. Department of Energy (DOE) and other federal agencies; (ii) the Commercial Services Division which provides radioactive waste handling, transportation, licensing, packing, disposal, and decontamination and decommissioning services primarily to nuclear utilities; and (iii) the Commercial Disposal Division which operates a commercial low-level radioactive waste disposal facility at Barnwell, South Carolina. GTS Duratek financed the purchase price principally from borrowings under its credit facility, which it amended and restated in connection with the WMNS transaction. The amended and restated credit facility is a $135 million facility and includes a $45 million revolving line of credit, to refinance existing indebtedness and to fund working capital requirements, and $90 million of term loans to refinance existing indebtedness and to finance the acquisition of WMNS. Robert E. Prince, GTS Duratek's President and CEO, said, "Completing this transaction is an important step in achieving the Company's five year vision to become a USA leader in providing the best and most comprehensive services and technologies to protect people and the environment from radiation and radioactive waste." GTS Duratek is an USA leader in solving customers' radioactive issues. GTS Duratek has included in its periodic filings under the Securities Exchange Act of 1934, including its Form 10-Q for the quarter ended March 31, 2000, pursuant to the "safe harbor" provisions contained in the Private Securities Litigation Reform Act of 1995, certain cautionary statements which are intended to identify certain important factors that could cause GTS Duratek's actual results to differ materially from those contained in forward-looking statements of GTS Duratek made by or on behalf of GTS Duratek. Reference is made to such statements for a complete discussion of those factors. EX-99.2 3 0003.txt EXHIBIT 99.2 PUR AGMT Exhibit 99.2 Execution Copy -------------- PURCHASE AGREEMENT by and among CHEMICAL WASTE MANAGEMENT INC., as a Seller, RUST INTERNATIONAL, INC., as a Seller CNS HOLDINGS, INC., as a Seller and GTS Duratek, Inc., as Purchaser Dated as of March 29, 2000 TABLE OF CONTENTS Page ---- 1. SALE AND PURCHASE........................................ 1 1.1 Sale and Purchase of the Nuclear Services Shares.... 1 1.2 Closing............................................. 2 1.3 Purchase Price Adjustments.......................... 3 2. REPRESENTATIONS AND WARRANTIES OF THE SELLERS............ 5 2.1 Corporate Status and Authority...................... 6 2.2 No Conflicts; Consents and Approvals, etc........... 6 2.3 Corporate Status of the Companies................... 7 2.4 Capitalization...................................... 7 2.5 Subsidiaries........................................ 8 2.6 Financial Statements................................ 9 2.7 Absence of Undisclosed Liabilities.................. 9 2.8 Real Property; Assets............................... 9 2.9 Contracts........................................... 11 2.10 Employment Agreements and Benefits, etc............. 12 2.10.1 Employment Agreements and Plans............. 12 2.10.2 ERISA and Other Compliance.................. 13 2.10.3 Tax Qualification........................... 14 2.10.4 Post Retirement Medical Plans............... 14 2.10.5 Golden Parachutes........................... 14 2.10.6 Multi-Employer Plans........................ 15 2.11 Intellectual Property............................... 15 2.12 Governmental Authorizations; Compliance with Law.... 16 2.13 Litigation.......................................... 17 2.14 Taxes............................................... 17 2.15 Absence of Changes.................................. 19 2.16 Environmental and Nuclear Matters................... 21 2.17 Banking and Agency Arrangements..................... 24 2.18 Affiliate Transactions.............................. 24 2.19 Brokers............................................. 25 2.20 Insurance........................................... 25 2.21 Names, Business and Location of Assets.............. 26 2.22 No Other Pending Transactions....................... 26 2.23 Prohibited Payments................................. 26 2.24 Officers and Directors; Employee Compensation....... 26 2.25 Accounts Receivable................................. 26 2.26 Year 2000 Compliance................................ 27 3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.......... 27 3.1 Corporate Status and Authority...................... 27 3.2 No Conflicts; Consents and Approvals, etc........... 27 3.3 Financial Ability to Perform........................ 28 3.4 Litigation.......................................... 28 3.5 Purchase for Investment.................................. 28 3.6 Brokers.................................................. 28 4. COVENANTS..................................................... 28 4.1 Satisfaction of Closing Conditions....................... 28 4.2 Conduct of Business, etc................................. 29 4.3 Access and Information................................... 29 4.4 Taxes.................................................... 30 4.5 Supplements to Disclosures............................... 35 4.6 Contact with Customers and Suppliers..................... 36 4.7 Publicity................................................ 36 4.8 Release of Guarantees, Bonds, etc........................ 36 4.9 Transition Services...................................... 38 4.10 Intercompany Accounts.................................... 39 4.11 Indemnification of Directors and Officers................ 39 4.12 Right to Use Certain Marks............................... 39 4.13 Furnish Information for Purchaser's SEC Filings.......... 40 4.14 Termination of Obligations of the Companies and.......... 40 their Subsidiaries 4.15 HSR ACT.................................................. 40 4.16 Further Assurances....................................... 40 4.17 Confidentiality.......................................... 41 4.18 Non-Solicitation......................................... 42 4.19 Non-Interference......................................... 42 4.20 Non-Competition.......................................... 42 4.21 Specific Performance..................................... 43 4.22 Project Financing and Equipment Purchasing for........... 43 Oak Ridge Project 4.23 Maintenance of Closure Surety Bond....................... 44 4.24 Computer Software........................................ 44 4.25 Waste Management Obligation.............................. 44 4.26 Purchase of Land......................................... 44 5. EMPLOYEES AND EMPLOYEE BENEFIT PLANS.......................... 44 6. CONDITIONS PRECEDENT.......................................... 47 6.1 General.................................................. 47 6.2 Conditions to Obligations of Both Parties................ 47 6.2.1 HSR Act........................................... 47 6.2.2 Consents.......................................... 47 6.2.3 No Injunction..................................... 48 6.2.4 Simultaneous Sale and Purchase.................... 48 6.3 Conditions to Obligations of the Sellers................. 48 6.3.1 Representations and Warranties of the Purchaser... 48 6.3.2 Officer's Certificate............................. 48 6.3.3 Opinion of Counsel................................ 48 6.3.4 Ancillary Agreements.............................. 48 6.4 Conditions to Obligations of Purchaser................... 48 6.4.1 Representations and Warranties of the Sellers..... 48 ii 6.4.2 Officer's Certificate............................. 49 6.4.3 Opinion of Counsel................................ 49 6.4.4 Resignations...................................... 49 6.4.5 Tax Certificate................................... 49 6.4.6 Material Adverse Change........................... 49 6.4.7 Deliveries........................................ 49 6.4.8 Ancillary Agreements.............................. 50 7. INDEMNIFICATION............................................... 50 7.1 Survival of Representations and Warranties............... 50 7.2 Indemnification.......................................... 50 7.2.1 By the Sellers.................................... 50 7.2.2 By the Purchaser.................................. 53 7.2.3 Indemnification Procedures........................ 54 7.2.4 Tax Treatment of Indemnity Payment................ 56 7.2.5 Exclusivity of Indemnification Provision.......... 56 7.2.6 Waiver of Contribution............................ 57 7.2.7 Guaranty of Parent Corporation; Successor......... 57 Indemnification Obligations 8. GENERAL PROVISIONS............................................ 57 8.1 Modification; Waiver.................................... 57 8.2 Entire Agreement........................................ 57 8.3 Certain Limitations..................................... 58 8.4 Termination............................................. 58 8.5 Expenses................................................ 59 8.6 Further Actions......................................... 59 8.7 Post-Closing Access..................................... 59 8.8 Notices................................................. 60 8.9 Assignment.............................................. 61 8.10 No Third Party Beneficiaries............................ 61 8.11 Counterparts............................................ 61 8.12 Interpretation.......................................... 61 8.13 Governing Law........................................... 62 8.14 Consent to Jurisdiction, etc............................ 62 8.15 Waiver of Jury Trial.................................... 62 8.16 Certain Definitions..................................... 63 8.17 Severability............................................ 63 8.18 Specific Performance.................................... 64 iii PURCHASE AGREEMENT, dated as of March 29, 2000, between Chemical Waste Management Inc., a Delaware corporation ("CWM"), Rust International, Inc., a --- Delaware corporation ("Rust"), CNS Holdings, Inc., a Delaware corporation ---- ("CNS"), and GTS Duratek, Inc., a Delaware corporation (the "Purchaser"), --- --------- relating to the purchase and sale of all of the outstanding membership interests in Chem-Nuclear Systems L.L.C., a Delaware limited liability company ("Chem- ---- Nuclear"), and all of the shares of outstanding capital stock of Waste - ------- Management Federal Services, Inc., a Delaware corporation ("Federal Services"). ---------------- Each of CWM, Rust and CNS may also be referred to herein individually as a "Seller," and CWM, Rust and CNS may be referred to herein together as the - ------- "Sellers." Each of Chem-Nuclear and Federal Services may also be referred to - -------- herein individually as a "Company," and Chem-Nuclear and Federal Services may be ------- referred to herein together as the "Companies." --------- WHEREAS, CWM owns 99% of the outstanding membership interests (the "Chem-Nuclear Interests") of Chem-Nuclear, and CNS owns 1% of the Chem-Nuclear - ----------------------- Interests; WHEREAS, Rust owns all of the outstanding capital stock (the "Federal ------- Services Shares") of Federal Services (the Federal Services Shares and the Chem- - --------------- Nuclear Interests being referred to herein collectively as the "Nuclear Services ---------------- Shares"); and - ------ WHEREAS, each of CWM and CNS wishes to sell the Chem-Nuclear_Interests owned by it, Rust wishes to sell the Federal Services Shares, and the Purchaser wishes to purchase the Chem-Nuclear Interests and the Federal Services Shares. NOW, THEREFORE, the parties hereto agree as follows: 1. Sale and Purchase. ----------------- 1.1 Sale and Purchase of the Nuclear Services Shares. Subject to the ------------------------------------------------ terms and conditions of this Agreement, at the Closing (as defined in Section 1.2), (i) CWM and CNS shall sell, and the Purchaser shall purchase, the Chem- Nuclear Interests, and (ii) Rust shall sell, and the Purchaser shall purchase, the Federal Services Shares, for an aggregate purchase price of $65.0 million (the "Initial Purchase Price"), payable as set forth below in Section 1.2 and ---------------------- subject to adjustment as provided in Section 1.2(c) and Section 1.3, and to be apportioned between the Chem-Nuclear Interests (such portion, the "Initial Chem- ------------ Nuclear Purchase Price"), and the Federal Services Shares (such portion, the - ---------------------- "Initial Federal Services Purchase Price") and payable to CWM, CNS and Rust as - ---------------------------------------- set forth in Schedule 1.1 hereto. Notwithstanding the foregoing, $10.0 million of the Initial Chem-Nuclear Purchase Price will be deposited into an escrow account with Wilmington Trust of Pennsylvania (the "Escrow Agent") as ------------ escrow agent pursuant to the terms of the Escrow Agreement substantially in the form of Exhibit A hereto (the "Escrow Agreement"). --------- ---------------- 1.2 Closing. The closing of the sale and purchase of the Nuclear ------- Services Shares (the "Closing") will take place at the offices of Debevoise & ------- Plimpton, 875 Third Avenue, New York, New York 10022 at 10:00 A.M., New York time, on the date that is two business days after the satisfaction of the conditions set forth in Sections 6.2.1 and 6.2.2 or at such other date and time as the parties shall have agreed to in writing. Notwithstanding the foregoing, in no event shall the Closing occur prior to thirty (30) days after the date of this Agreement. The date on which the Closing shall occur is hereinafter referred to as the "Closing Date." At the Closing: ------------ (a) CWM, CNS and Rust shall deliver to the Purchaser certificates representing the Nuclear Services Shares that are certificated, accompanied by such stock powers and other documents and instruments as shall be necessary to vest full legal, record and beneficial title in the Nuclear Services Shares in the Purchaser, free and clear of any Liens (as hereinafter defined), other than Liens created by the Purchaser; (b) the Sellers shall also deliver to the Purchaser the following: (i) certificates representing the capital stock or other equity interests owned by the Companies in their subsidiaries; and (ii) a receipt for the payment of the Purchase Price made as contemplated by Section 1.2(c); (c) the Purchaser shall deliver, by wire transfers of immediately available funds: (i) to CWM and CNS, the Initial Chem-Nuclear Purchase Price, except for the funds to be deposited into escrow pursuant to Section 1.1, plus (x) an amount equal to the excess of the sum of the estimated adjusted consolidated stockholders' equity of Chem-Nuclear and its subsidiaries, as determined in accordance with Section 1.3(e), as of the close of business on the Closing Date (the "Chem-Nuclear Estimated Adjusted Closing Stockholders ---------------------------------------------------- Equity"), which estimate shall be prepared by CWM and CNS and delivered to the - ------- Purchaser at least three business days prior to the Closing, over $55,822,711, or minus (y) an amount equal to the excess of $55,822,711 over the Chem-Nuclear Estimated Adjusted Closing Stockholders Equity to the respective accounts previously designated by CWM and CNS to the Purchaser; (ii) to Rust, the Initial Federal Services Purchase Price, plus (x) an amount equal to the excess of the estimated adjusted consolidated stockholders' equity of Federal Services and its subsidiaries, as determined in 2 accordance with Section 1.3(e), as of the close of business on the Closing Date (the "Federal Services Estimated Adjusted Closing Stockholders Equity"), which ---------------------------------------------------------------- estimate shall be prepared by Rust and delivered to the Purchaser at least three business days prior to the Closing, over $21,645,876, or minus (y) an amount equal to the excess of $21,645,876 over the Federal Services Estimated Adjusted Closing Stockholders Equity, to the account previously designated by Rust to the Purchaser; and (iii) $10.0 million to the Escrow Agent pursuant to the Escrow Agreement. 1.3 Purchase Price Adjustments. -------------------------- (a) Within 90 days after the Closing Date, the Sellers will prepare and deliver to the Purchaser unaudited consolidated balance sheets of each of Chem-Nuclear and its subsidiaries and Federal Services and its subsidiaries, in each case as of the close of business on the Closing Date (the "Closing Balance --------------- Sheets"), which shall be prepared on the basis of United States generally - ------ accepted accounting principles ("GAAP"), except to the extent that the unaudited ---- consolidated balance sheets as of September 30, 1999 of each of Chem-Nuclear and its subsidiaries and Federal Services and its subsidiaries (the "Offer Balance ------------- Sheets") were not prepared in accordance with GAAP (which exceptions to GAAP are - ------ disclosed in Section 2.6 of the Disclosure Letter), applied on a basis consistent with the application of GAAP, subject to such exceptions, in the preparation of the Offer Balance Sheets, and except as otherwise provided in Section 1.3(a) of the Disclosure Letter. The Purchaser shall cause each of the Companies and its subsidiaries and their respective employees (i) to assist the Sellers in the preparation of the Closing Balance Sheets and (ii) to provide the Sellers on-site access at all reasonable times to the personnel, properties, books and records of each of the Companies and its subsidiaries necessary for the preparation of the Closing Balance Sheets until final resolution of all matters in dispute under this Section 1.3. (b) During the 60-day period following the date of Purchaser's receipt of the Closing Balance Sheets, the Purchaser and its accountants will be permitted to review the working papers of the Sellers relating to the Closing Balance Sheets, provided that the Purchaser and its accountants execute and deliver a confidentiality agreement, reasonably satisfactory to the Sellers, and adhere to whatever procedures the Sellers reasonably request to safeguard confidential, non-public or privileged information relating to the Sellers or any of their respective subsidiaries. The Closing Balance Sheets will become final and binding upon the parties on the sixtieth day following the date of delivery thereof, unless the Purchaser delivers a written notice (the "Purchaser's Notice") to the Sellers prior to such sixtieth day which specifies - ------------------- in reasonable detail the amount by which and the reasons why it believes particular line items in either or both of the Closing Balance Sheets either (i) contain mathematical errors, (ii) contain 3 errors or misstatements, or (iii) were not prepared in accordance with the methodology specified in the first sentence of Section 1.3(a) and Section 1.3(e). The Purchaser's Notice shall not specify any basis for disagreement with the Closing Balance Sheets other than as set forth in the preceding sentence. (c) If the Purchaser delivers a Purchaser's Notice in accordance with Section 1.3(b), then the parties shall, during the 30-day period beginning on the date of the Sellers' receipt of the Purchaser's Notice, seek in good faith to resolve in writing any differences which they may have with respect to the matters specified in the Purchaser's Notice. If the Purchaser and the Sellers are unable to resolve all of the Purchaser's objections within such 30-day period, then such unresolved objections shall be submitted to the New York office of Deloitte & Touche LLP (the "Third Party Accountant") for review and ---------------------- final and binding resolution of any and all matters which remain in dispute and which were properly included in the Purchaser's Notice. The Sellers and the Purchaser shall use reasonable efforts to cause the Third Party Accountant to render a decision resolving the matters in dispute within 30 days following the submission of such matter to the Third Party Accountant for decision following such briefing and other procedures as the Third Party Accountant shall establish. The Sellers and the Purchaser agree that judgment may be entered upon the determination of the Third Party Accountant in any court having jurisdiction over the party against which such determination is to be enforced. The fees and expenses of the Third Party Accountant shall be borne 50% by the Sellers and 50% by the Purchaser. (d) Within 10 days after (x) the Closing Balance Sheets become final pursuant to Section 1.3(b) or (y) the parties reach agreement pursuant to Section 1.3(c) or (z) the Third Party Accountant renders its decision pursuant to Section 1.3(c), whichever occurs first, a final adjustment to the Initial Purchase Price will be made as follows: (i) if the sum of the amount of adjusted consolidated stockholders' equity of Chem-Nuclear and its subsidiaries, plus the amount of adjusted consolidated stockholders' equity of Federal Services and its subsidiaries, in each case as shown on the Closing Balance Sheets as finally determined pursuant to Section 1.3(b) or (c) ("Aggregate Final Adjusted Stockholders Equity") -------------------------------------------- exceeds the sum of the Chem-Nuclear Estimated Adjusted Closing Stockholders Equity and the Federal Services Estimated Adjusted Closing Stockholders Equity ("Aggregate Estimated Adjusted Stockholders Equity"), by $50,000 or more, then ------------------------------------------------ the Purchaser shall pay to the Sellers the amount of such excess, by wire transfer of immediately available funds to the account or accounts designated by the Sellers, and (ii) if the Aggregate Final Adjusted Stockholders Equity is less than the Aggregate Estimated Adjusted Closing Stockholders Equity by $50,000 or more, then the Sellers shall pay to the Purchaser the amount of such 4 deficit, by wire transfer of immediately available funds to the account or accounts designated by the Purchaser. The parties agree that any difference between Aggregate Final Adjusted Stockholders Equity and Aggregate Estimated Adjusted Stockholders Equity that is less than $50,000 shall not give rise to any obligation to make a payment pursuant to this Section 1.3. (e) For purposes of Sections 1.2(c) and 1.3, "adjusted consolidated stockholders' equity" shall be determined in accordance with GAAP (except to the extent that the Offer Balance Sheets were not prepared in accordance with GAAP, as reflected in Section 2.6 of the Disclosure Letter), applied on a basis consistent with the application of GAAP in the preparation of the Offer Balance Sheets, and except as otherwise specified in Section 1.3(a) of the Disclosure Letter. The parties agree that, except as otherwise specified in Section 1.3(a) of the Disclosure Letter, the adjustment contemplated by Sections 1.2(b) and 1.3 is intended to show the change, if any, of the sum of the consolidated stockholders' equity of Chem-Nuclear and its subsidiaries, plus the consolidated stockholders' equity of Federal Services and its subsidiaries, from the date of the Offer Balance Sheets to the close of business on the Closing Date, and that, except as otherwise specified in Section 1.3(a) of the Disclosure Letter, such change is to be determined by calculating the consolidated stockholders' equity in the same way, using the same methodologies and accounting practices (including with respect to determining estimates and allowances) at both dates. The scope of the disputes to be resolved by the Third Party Accountant is limited to whether such calculations comply with the preceding sentence, and whether there were mathematical errors or other errors or misstatements in the Closing Balance Sheets, and the Third Party Accountant is not to make any other determination. (f) Notwithstanding anything in this Agreement to the contrary, any matter which is the subject of an adjustment, or claimed adjustment, to the Initial Purchase Price pursuant to this Section 1.3, or which would have been the subject of such an adjustment but for the $50,000 thresholds set in Section 1.3(d), may not be asserted by the Purchaser as an alleged misrepresentation or breach of any warranty or covenant in this Agreement. 2. Representations and Warranties of the Sellers. The Sellers, --------------------------------------------- jointly and severally, represent and warrant to the Purchaser that, except as set forth in the Disclosure Letter, dated the date of this Agreement (the "Disclosure Letter"), from the Sellers to the Purchaser: - ------------------ 2.1 Corporate Status and Authority. Each Seller is a corporation ------------------------------ duly incorporated, validly existing and in good standing under the laws of the State of Delaware, the jurisdiction of incorporation for each, and has the corporate power and authority to execute and deliver this Agreement, the Escrow Agreement and the Loan Agreement (as hereinafter defined) (the Escrow 5 Agreement and the Loan Agreement shall be referred to herein as the "Ancillary --------- Agreements") and perform its obligations hereunder and thereunder. The execution and delivery of this Agreement and the Ancillary Agreements by each Seller and the performance of such Seller's obligations hereunder and thereunder have been duly authorized by such Seller's board of directors, and by the board of directors or executive committee of Waste Management, Inc., which constitutes all necessary corporate action on the part of such Seller or any affiliate of such Seller for such authorization. This Agreement and, as of the Closing, the Ancillary Agreements have been duly executed and delivered by each Seller and constitute the valid and binding obligations of such Seller, enforceable against such Seller in accordance with their terms, except as limited by laws affecting the enforcement of creditor's rights generally or by general equitable principles. 2.2 No Conflicts; Consents and Approvals, etc. ----------------------------------------- (a) The execution and delivery of this Agreement and the Ancillary Agreements by each Seller and the performance of its obligations hereunder and thereunder will not result in (i) any conflict with or violation of such - Seller's certificate of incorporation or by-laws, as amended or restated to date, (ii) subject to obtaining the consents referred to in Section 2.2(b), any breach or violation of or default (or give rise to any right of termination, cancellation or acceleration) under any law, statute, rule, regulation, judgment, order, writ, injunction, decree, license, permit or other governmental authorization or any mortgage, lease, agreement, deed of trust, note, bond, indenture, lien or any other instrument to which such Seller or Chem-Nuclear or Federal Services or any of their respective subsidiaries is a party or by which any of them or their respective properties or assets are bound, or (iii) the creation or imposition of any liens, security interests, adverse claims, pledges, charges or encumbrances ("Liens") other than Liens created by or ----- resulting from the actions of the Purchaser or any of its affiliates, except in the case of (ii) and (iii) above for such breaches, violations or defaults and such Liens which would not, individually or in the aggregate, have a material adverse effect on the business, assets, liabilities, operations, financial condition or results of operations of Chem-Nuclear and Federal Services and their subsidiaries taken as a whole (a "Material Adverse Effect"). ----------------------- (b) No consent, approval or authorization of or filing with any third party or any governmental authority is required on the part of either Seller or Chem-Nuclear or Federal Services or any of their respective subsidiaries in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby, except (i) filings required with - respect to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR --- Act") and (ii) filings, consents or approvals which, if not made or obtained, - --- would not have a Material Adverse Effect. 2.3 Corporate Status of the Companies. Chem-Nuclear is a limited --------------------------------- liability company duly formed, validly existing and in good standing under the 6 laws of the State of Delaware. Federal Services is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. Each of the Companies has all requisite limited liability company or corporate power and authority to conduct its business and to own or lease its properties and assets, as now conducted, owned or leased. Each of the Companies is duly qualified to do business in each jurisdiction set forth in Section 2.3 of the Disclosure Letter, which jurisdictions represent all of the jurisdictions where each of the Companies is required to be qualified as the result of the location of its assets or the conduct of its business, except where the failure to be so qualified would not have a Material Adverse Effect. True and correct copies of the organizational documents of the Companies, as amended to the date hereof, including without limitation the charter, by-laws or operating agreement, as applicable, have been made available to the Purchaser and such documents are in full force and effect. None of the Companies is in violation, breach or default of any of the provisions of its organizational documents. Except for the services provided by any Seller or any Non-Company Affiliate to any Company or its subsidiaries which are listed in Section 2.18 of the Disclosure Letter, all of the business of Waste Management Nuclear Services, which includes the Federal Services Division, the Commercial Services Division and the Commercial Disposal Division (as described in the Waste Management Nuclear Services Confidential Information Memorandum dated October 1999) is conducted through the Companies and their subsidiaries. 2.4 Capitalization. The authorized capital stock of Federal -------------- Services consists of 1,000 shares of common stock, par value $1 per share, one hundred (100) of which are issued and outstanding and owned by Rust, free and clear of all Liens, other than created by this Agreement. Of the outstanding limited liability company interests in Chem-Nuclear, 99 percent are owned by CWM and one percent are owned by CNS, in each case free and clear of all Liens, other than created by this Agreement. The Nuclear Services Shares have been duly authorized and validly issued and are fully paid, non-assessable and free of preemptive rights. The Nuclear Services Shares comprise all of the issued and outstanding equity interests of the Companies. There are no outstanding options, warrants, conversion or other rights or agreements of any kind (other than this Agreement) for the purchase or acquisition from, or the sale or issuance by, either Seller or any of the Companies of any membership interests or shares of capital stock of any of the Companies, and no authorization therefor has been given. There are no voting agreements, voting trusts, proxies or other agreements or understandings that are currently in effect or that are currently contemplated with respect to the voting of any membership interests or capital stock of the Companies. There are no agreements, instruments, understandings, orders or decrees that would restrict the transfer by the Sellers of the Nuclear Services Shares pursuant to this Agreement. 7 2.5 Subsidiaries. ------------ (a) Each of the subsidiaries of Chem-Nuclear and each of the subsidiaries of Federal Services is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation, has all requisite corporate power and authority to conduct its business and to own or lease its properties and assets, as now conducted, owned or leased, and is duly qualified to do business in each jurisdiction set forth in Section 2.5 of the Disclosure Letter, which jurisdictions represent all of the jurisdictions where each of the subsidiaries is required to be qualified as the result of the location of its assets or the conduct of its business, except where the failure to be so qualified would not have a material adverse effect on such subsidiary. Section 2.5 of the Disclosure Letter identifies each subsidiary of the Companies and, with respect thereto, sets forth (i) the authorized capital stock, (ii) the number of issued and outstanding shares of capital stock and (iii) the record ownership as of the date of this Agreement of the capital stock or other equity interests. True and correct copies of the organizational documents of the subsidiaries of the Companies, as amended to the date hereof, including without limitation the charter and by-laws, have been made available to the Purchaser and such documents are in full force and effect. None of the subsidiaries of the Companies is in violation, breach or default of any of the provisions of its organizational documents. (b) The authorized capital stock, the issued and outstanding shares and the record ownership of the capital stock of each of the subsidiaries of Chem-Nuclear and each of the subsidiaries of Federal Services is as set forth in Section 2.5 of the Disclosure Letter. All such issued and outstanding shares are owned directly or indirectly by Chem-Nuclear or Federal Services, free and clear of all Liens, and have been duly authorized and validly issued and are fully paid, non-assessable and free of preemptive rights. There are no outstanding options, warrants, conversion or other rights or agreements of any kind for the purchase or acquisition from, or the sale or issuance by, either of Chem-Nuclear or Federal Services, or any of such subsidiaries of any shares of capital stock of any of such subsidiaries, and no authorization therefor has been given. There are no voting agreements, voting trusts, proxies or other agreements or understandings that are currently in effect or that are currently contemplated with respect to the voting of any capital stock of the Companies' subsidiaries. (c) Neither Chem-Nuclear nor Federal Services nor any of their respective subsidiaries has any equity interest or investment in any person. 2.6 Financial Statements. The Sellers have made available to the -------------------- Purchaser complete and correct copies of the unaudited consolidated balance sheets and related consolidated statements of income and cash flows of Chem- Nuclear and its subsidiaries and of Federal Services and its subsidiaries as of, and for the years ending, December 31, 1997 and 1998 and as of, and for the nine months ending September 30, 1999 (collectively, the "Financial Statements"). -------------------- The balance sheets of Chem-Nuclear and its subsidiaries and Federal Services and its subsidiaries at September 30, 1999 are included in 8 Section 2.6 of the Disclosure Letter. The Financial Statements present fairly in all material respects the financial condition and results of operations of each of the Companies and its subsidiaries on a consolidated basis as of the dates and for the periods indicated, and have been prepared in accordance with GAAP (except that the Financial Statements have been presented without any notes thereto, and the interim financial statements included in the Financial Statements do not include period-end adjustments) and on a basis consistent with that of preceding accounting periods. The income statements included in the Financial Statements reflect all material costs and expenses incurred, during the periods covered by such income statements, in connection with the operation of the respective businesses to which such income statements relate, except for the costs of the services rendered by the Sellers and other Non-Company Affiliates described in Section 2.18 of the Disclosure Letter. 2.7 Absence of Undisclosed Liabilities. Except for liabilities ---------------------------------- reflected or reserved against in the Financial Statements, none of the Companies and their subsidiaries has any liabilities, whether known or unknown, absolute, accrued, contingent or otherwise, other than (i) liabilities that will be reflected on the Closing Balance Sheets, (ii) liabilities incurred in the ordinary course of business consistent with past practice since September 30, 1999 and which would not reasonably be expected to have a Material Adverse Effect, and (iii) other liabilities or obligations which, individually or in the aggregate, would not have a Material Adverse Effect. 2.8 Real Property; Assets. --------------------- (a) Section 2.8 of the Disclosure Letter lists all material items of real property either owned by the Companies or any of their respective subsidiaries (the "Owned Real Property") or leased by the Companies or any of ------------------- their respective subsidiaries (the "Leased Real Property"). The Companies or -------------------- their respective subsidiaries have good and marketable title to the Owned Real Property listed on Section 2.8 of the Disclosure Letter and valid leasehold interests in the Leased Real Property listed on Section 2.8 of the Disclosure Letter, in each case, free and clear of all Liens, except for (i) Liens for taxes and other governmental charges and assessments which are not yet due and payable or which are being contested in good faith by appropriate proceedings, (ii) Liens of carriers, warehousemen, mechanics and materialmen and other like Liens arising in the ordinary course of business and as to which adequate reserves have been established in the Financial Statements to the extent required by GAAP, (iii) easements, rights of way, title imperfections and restrictions, zoning ordinances and other similar encumbrances affecting the real property that do not, individually or in the aggregate, materially adversely impair the continued use as currently conducted of the real property as to which they relate, (iv) statutory Liens in favor of lessors arising in connection with any property leased to the Companies or their subsidiaries and that do not, individually or in the aggregate, materially adversely impair the continued use as currently 9 conducted of the real property as to which they relate, (v) Liens reflected in the Financial Statements or arising under the Contracts disclosed pursuant to Section 2.9 and that do not, individually or in the aggregate, materially adversely impair the continued use as currently conducted of the real property to which they relate, and (vi) any other Liens which do not materially interfere with the current use of properties affected thereby ("Permitted Liens"). --------------- Existing public utility services (including, without limitation, all applicable electric lines, sewer and water lines, gas and telephone lines) necessary to the continued use as currently conducted of any Owned Real Property or Leased Real Property are available to service each such property. (b) Each lease (including any option to purchase contained therein) pursuant to which the Companies or any of their respective subsidiaries leases any Leased Real Property listed on Section 2.8 of the Disclosure Letter (the "Leases") is in full force and effect and, to the knowledge of the Sellers, is - ------- enforceable against the landlord which is party thereto in accordance with its terms. There exists no material default or event of default (or any event that with notice or lapse of time or both would become a material default) on the part of the Companies or any of their respective subsidiaries under any Leases, or to the knowledge of the Sellers, any other party thereto. The Sellers have made available to the Purchaser complete and correct copies of all Leases including all amendments thereto. None of the Companies or any of their respective subsidiaries has received any notice of any default under any lease by which it leases any Leased Real Property nor any other termination notice with respect thereto. (c) Each Company or its subsidiaries have legal and beneficial ownership of all of their respective tangible personal property and assets included in the Offer Balance Sheet relating to such Company and all personal property acquired by each Company or its subsidiaries since the date thereof except for properties and assets disposed of in the ordinary course of business since the date of such Offer Balance Sheet, in each case, free and clear of all Liens other than Permitted Liens. The Companies and their subsidiaries own or have the right to use all of the properties and assets necessary for the conduct of their business as currently conducted (the "Business"). Each tangible asset -------- owned by the Companies or their subsidiaries is in such condition and repair (subject to normal wear and tear) as is suitable for its current use, except for such exceptions as would not, individually or in the aggregate, have a Material Adverse Effect. 2.9 Contracts. Section 2.9 of the Disclosure Letter lists all --------- agreements, contracts and commitments of the following types to which any Company or its subsidiaries is a party or by which any Company or its subsidiaries or any of their respective properties is bound as of the date hereof and will be bound following the Closing (other than real property leases and labor or employment-related agreements, which are provided for in Sections 2.8 and 10 2.10, respectively): (a) joint venture, partnership, management and development agreements, (b) mortgages, indentures, loan or credit agreements, pledge agreements, security agreements and other agreements and instruments relating to the borrowing of money or extension of credit in any case in excess of $100,000, (c) facilities or operating agreements relating to facilities owned by third parties and operated by any Company or any subsidiary thereof, (d) waste disposal or waste services contracts which are not cancelable by any Company or any of its subsidiaries on notice of 60 days or less without premium or penalty and which require the payment by or to any Company or any of its subsidiaries after the date hereof of more than $100,000; (e) other agreements, contracts and commitments which are not cancelable by any Company or any of its subsidiaries on notice of 60 days or less without premium or penalty and which require payment by or to such Company or any of its subsidiaries after the date hereof of more than $100,000; (f) each contract, commitment or arrangement restricting any of the Companies or their subsidiaries or employees from engaging in business or from competing in any line of business with any other parties; (g) each contract, agreement or arrangement to which the Companies or their subsidiaries is a party for a line of credit or guarantee, pledge or undertaking of the indebtedness of any other person or entity; (h) each outstanding performance bond which have been delivered to any person or entity in connection with the business and operations of the Companies and their subsidiaries; (i) each existing agreement, option, commitment or right with, to or in any third party to acquire any assets or properties, real or personal, or any interest therein, of the Companies or their subsidiaries having a value in excess of $100,000; (j) each contract creating a Lien other than a Permitted Lien; (k) each contract relating to capital expenditures in excess of $100,000; (l) each executory contract for the purchase or sale of real property or any business or line of business or for any merger or consolidation; (m) each contract with any governmental authority which is not cancelable by any Company or any of its subsidiaries on notice of 60 days or less without premium or penalty and which requires payment by or to such Company or any of its subsidiaries after the date hereof of more than $100,000; (n) each contract, subcontract or other agreement between the Companies or their subsidiaries and a prime contractor under a government contract which is not cancelable by any Company or any of its subsidiaries on notice of 60 days or less without premium or penalty and which requires payment by or to such Company or any of its subsidiaries after the date hereof of more than $100,000; (o) each contract involving the settlement of any litigation or litigation threatened involving in excess of $100,000; and (p) each contract that would prohibit or restrict the Companies' or their subsidiaries' ability to declare or pay dividends or to repurchase or redeem the Companies' or their subsidiaries equity interests. Section 2.9 of the Disclosure Letter lists all outstanding written proposals made by any Company or any of its subsidiaries on or prior to the date hereof that on their face reflect services to be performed (if awarded) by any Company or any of its subsidiaries after the date hereof with a value in excess of $100,000. The Sellers have made available to the Purchaser full and complete copies of all of the contracts and proposals listed in Section 2.9 of the Disclosure 11 Letter. Each such contract is a valid and binding agreement of a Company or one of its subsidiaries and, to Sellers' knowledge, the other party or parties thereto and is in full force and effect. No Company nor any of its subsidiaries nor, to the knowledge of the Sellers, any other person is in default or has failed to comply with or perform its obligations under any of the contracts listed in Section 2.9 of the Disclosure Letter, except for such defaults or failures to comply or perform which would not, individually or in the aggregate, have a Material Adverse Effect. During the past three years, no Company nor any subsidiary has received written notice of any stop work order, suspension of work order, show cause order, proposed termination for default or convenience with respect to any contract, or written notice of proposed debarment or suspension from contracting with any governmental authority. During the past three years, no principal (as defined in 48 C.F.R. 52.209-5(a)(2)) of any Company or its subsidiaries has received written notice of proposed debarment or suspension from contracting with any governmental authority. During the past five years, no Company nor any of their respective subsidiaries has received any still outstanding written claim, credit, proposed disallowance of costs, request for equitable adjustment or request for contract funding, price or schedule adjustment or change order between any of the Companies or their subsidiaries and any of their customers or suppliers, nor to the Sellers' knowledge is any threatened, except for such outstanding or threatened claims, credits, proposed disallowances, requests or change orders that, individually or in the aggregate, would not have a Material Adverse Effect. 2.10 Employment Agreements and Benefits, etc. --------------------------------------- 2.10.1 Employment Agreements and Plans. Section 2.10 of the ------------------------------- Disclosure Letter lists all written agreements, contracts and commitments of the following types to which any Company or any of its subsidiaries is a party: (a) material employment and consulting agreements (including severance and retention agreements), (b) labor and collective bargaining agreements and (c) profit sharing, pension, retirement, bonus, incentive compensation, stock option, stock purchase, deferred compensation, retirement, severance, welfare or other written material employee benefit plans, agreements, contracts or commitments for the benefit of the employees of such Company or its subsidiaries, including such plans of either Seller or any affiliate of such Seller covering employees of such Company or any of its subsidiaries or plans in which employees of such Company or any of its subsidiaries participate (hereinafter referred to as "Plans"). The Companies and their subsidiaries are not in default with regard - ------ to any of such plans, agreements, contracts or commitments, except for such defaults as would not, individually or in the aggregate, result in a Material Adverse Effect. The Companies and their subsidiaries are in compliance in all material respects with applicable laws relating to the employment of labor including, without limitation, the provisions thereof relating to wages, hours, collective bargaining and the payment of social security and taxes and is not liable for any arrears of wages or any material tax or penalty for failure to comply with any of the foregoing. There are no claims, cases, charges of discrimination 12 or controversies pending or, to the best knowledge of Sellers, threatened between the Companies and their subsidiaries and any of their employees or labor unions or other collective bargaining units representing any of their employees. No unfair labor practice complaints have been filed against the Companies or their subsidiaries with the National Labor Relations Board nor has the Companies or their subsidiaries received any notice or communication reflecting an intention or threat to file any such complaint. As of the date hereof, (a) no material strikes, slowdowns, lockouts or work stoppages or material labor arbitrations, grievances or disputes involving any of the employees of the Companies or their subsidiaries or against the Companies or their subsidiaries are pending or, to Sellers' knowledge, are threatened and (b) to Sellers' knowledge, (i) there is no organizational activity underway at the Companies or their subsidiaries and (ii) no labor representative holds bargaining rights. 2.10.2 ERISA and Other Compliance. Plans in which any employee or -------------------------- former employee (or any beneficiary of any of them) of the Companies or any of their subsidiaries is entitled to participate and in which any employee or former employee of only entities that would be treated as a single employer with the Companies and their subsidiaries under section 414(b) or (c) of the Internal Revenue Code of 1986, as amended (the "Code"), participate shall herein be ---- referred to as "WMI Plans". Plans in which any employee or former employee (or --------- any beneficiary of any of them) of the Companies or any of their subsidiaries is entitled to participate and in which any employee or former employee of any entity that would not be treated as a single employer with the Companies and their subsidiaries under section 414(b) or (c) of the Code participates shall herein be referred to as "Non-WMI Plans". All WMI Plans and, to the knowledge ------------- of the Sellers, all Non-WMI Plans comply in all material respects with the requirements of applicable law. There are no pending or threatened investigations, proceedings or other matters concerning the WMI Plans before the Internal Revenue Service ("IRS"), the Department of Labor, the Pension Benefit --- Guaranty Corporation ("PBGC") or any other forum, other than determination ---- letter applications filed with the IRS in the normal course of operating the Plans. No Plan (other than a Non-WMI Plan) to which either Seller or any member of the same controlled group of corporations as such Seller within the meaning of section 4001(a)(3) of ERISA contributes and which is subject to Part 3 of Subtitle B of Title I of ERISA has incurred any "accumulated funding deficiency" within the meaning of section 302 of ERISA or section 412 of the Code and no material liability (other than for annual premiums) to the Pension Benefit Guaranty Corporation has been incurred by any Company or any of its subsidiaries with respect to any such plan. No Seller and no Company nor any of its subsidiaries, nor any director, officer, employee, agent or representative of Sellers or of the Companies or any of their subsidiaries, nor any fiduciary of any Plan has engaged in a transaction in connection with any of the Plans which would subject the Companies or any of their subsidiaries to a material civil penalty assessed pursuant to Section 502(i) of ERISA, or a material tax imposed by Section 4975 of the Code, with respect to any WMI Plan. No Company nor any of its subsidiaries has withdrawn at any 13 time within the preceding six years from any multiemployer plan, as defined in section 3(37) of ERISA, which would subject the Companies or any of their subsidiaries to liability. There are no material pending or, to the knowledge of the Sellers, threatened claims by or on behalf of any WMI Plans or, to the knowledge of the Sellers, any Non-WMI Plan or by any participants or beneficiaries involving any WMI Plan or, to the knowledge of the Sellers, any Non-WMI Plan (other than in each case routine claims for benefits). All contributions required to have been made by any Company or any of its subsidiaries to any Plan under the terms of such Plan or pursuant to any applicable collective bargaining agreement or applicable law (including, without limitation, ERISA and the Code) have been made within the time prescribed by any such Plan, agreement or law. Neither Sellers, the Companies or their subsidiaries nor any fiduciary of any Plan has given notice to any fiduciary liability insurer of any claims or potential claims in connection with any of the WMI Plans which would subject the Companies or their subsidiaries to material liability. 2.10.3 Tax Qualification. Each WMI Plan and, to the knowledge of ----------------- Sellers, each Non-WMI Plan intended to be qualified under section 401(a) of the Code, and the trust (if any) forming a part thereof, has received a favorable determination letter from the IRS (or, through at least December 31, 2000, the "remedial amendment period" for the plan's effective date has not ended) as to its qualification under the Code and to the effect that each such trust is exempt from taxation under section 501(a) of the Code, and, to either Seller's knowledge, nothing has occurred since the date of such determination letter that will adversely affect such qualification or tax-exempt status. 2.10.4 Post-Retirement Medical Plans. Neither the Companies nor any ----------------------------- of their subsidiaries have any liability for any retiree medical benefits for any employee, former employee, or their beneficiaries, under any WMI Plans, and to the knowledge of Sellers, under any Non-WMI Plans, other than as required by Section 601 of ERISA or Section 4980B of the Code. 2.10.5 Golden Parachutes. No amount that could be received by ----------------- (whether in cash or property or the vesting of property), or benefit provided to, any officer, director or employee of the Companies or any of their subsidiaries who is a "disqualified individual" (as such term is defined in proposed Treasury Regulation Section 1.280G-1) under any employment, severance or termination agreement, other compensation arrangement or WMI Plan currently in effect would be an "excess parachute payment" (as such term is defined in Section 280G(b)(1) of the Code). No such person is entitled to receive any additional payment from the Companies, their subsidiaries, the Purchaser, or any other person (a "Parachute Gross Up Payment") in the event that the excise tax -------------------------- of Section 4999(a) of the Code is imposed on such person. The Board of Directors of the Companies has not granted to any officer, director or employee of the Companies or any of their subsidiaries any right to receive any Parachute Gross Up Payment. 14 2.10.6 Multi-Employer Plans. -------------------- (a) Neither the Companies nor any of their subsidiaries is a contributor or party to any pension plan or welfare benefit plan that is a Multiemployer Plan within the meaning of section 4001(a)(3) of ERISA. Neither the Companies nor any of their subsidiaries currently has an obligation or liability to make withdrawal liability (as defined in section 4201(a) of ERISA), shortfall liability, or any other post-withdrawal contributions or payments to any Multiemployer Plan. Neither the Companies nor any of their subsidiaries is delinquent in making any contributions required to be paid to any Multiemployer Plan. There is no pending or, to the knowledge of the Sellers, threatened dispute between the Companies, or any of their subsidiaries, and any Multiemployer Plan concerning payment of contributions or payment of withdrawal liability payments. (b) Neither the Companies nor any of their subsidiaries has received any notice of any failure by a Multiemployer Plan to satisfy the minimum funding requirements of Section 412 of the Code, or of any application for or receipt of a waiver of such minimum funding requirements with respect to any Multiemployer Plan. (c) Purchaser shall not acquire, assume, or become responsible for any withdrawal liability imposed by any Multiemployer Plan (or, with respect to each multiemployer welfare benefit plan, any post-withdrawal liability or contribution obligation imposed by such Plan) upon the Companies or any member of the controlled group of which either of the Companies is a member, (i) arising from the transactions contemplated by this Agreement, or (ii) arising or resulting from a complete or partial withdrawal incurred or experienced by the Companies or any member of the controlled group of which either of the Companies is a member prior to Closing. Purchaser shall have no obligation to indemnify or hold harmless the Sellers, the Companies or any member of the controlled group of which either of the Sellers or the Companies is a member for any such withdrawal liability imposed by any Multiemployer Plan. 2.11 Intellectual Property. Section 2.11 of the Disclosure Letter --------------------- lists all trademarks, copyrights, trade names, service marks, patents, applications in respect thereof and similar intangible rights used by any Company or any of its subsidiaries. For purposes hereof "Intellectual Property" --------------------- means all (i) items identified in Section 2.11 of the Disclosure Letter, (ii) patentable inventions, discoveries, improvements, ideas, know-how, formula, methodology, processes and technology, (iii) computer software, (iv) trade secrets, including confidential and other non-public information and the right to limit the use or disclosure thereof and (v) claims or causes of action arising out of or relating to infringement or misappropriation of any of the foregoing owned or used by the Companies or 15 their subsidiaries. The Companies or their subsidiaries own, free and clear of all Liens other than Permitted Liens, or have the right to use, the Intellectual Property that is necessary to the business of the Companies or their subsidiaries as currently conducted, or as proposed to be conducted pursuant to pending written customer proposals or pending contract bids. The Intellectual Property of the Companies and their subsidiaries constitutes sufficient intellectual property rights for the Companies and their subsidiaries to conduct their business as currently conducted. To the knowledge of either Seller, no Company nor any of its subsidiaries has infringed the intellectual property rights of any other person or entity and no Company nor any of its subsidiaries has received any notice or claim that it is infringing on the intellectual property rights of any person and no Seller has knowledge of any infringement by any person of the Intellectual Property. To the Sellers' knowledge, the trademarks, service marks and patents listed on Section 2.11 of the Disclosure Letter are valid, subsisting and enforceable and there is no pending or threatened action, suit or proceeding that in any way calls into question the ownership, validity, enforceability or use of any of such Intellectual Property. Section 2.11 of the Disclosure Letter sets forth a complete and correct list, as of the date hereof, of all material written licenses to which any Company or any of its subsidiaries is a party, pursuant to which (x) such Company or such subsidiary permits any person or entity to use any of the Intellectual Property, or (y) any person or entity permits such Company or such subsidiary to use any trademarks, service marks, trade names, copyrights or patents not owned by such Company or any of its subsidiaries except for off-the-shelf software licenses (collectively, "Licenses"). The Sellers have made available to the Purchaser --------- complete and correct copies of the Licenses listed in Section 2.11 of the Disclosure Letter. No Company nor any of its subsidiaries, nor, to either Seller's knowledge, any other party thereto, is in default under any License, and each License is in full force and effect as to each Company or any of its subsidiaries party thereto, and to either Seller's knowledge, as to each other party thereto, except for such defaults and failures to be so in full force and effect as, individually and in the aggregate, would not have a Material Adverse Effect. 2.12 Governmental Authorizations; Compliance with Law. The Companies ------------------------------------------------ or their respective subsidiaries, as required, hold all licenses, permits and other governmental authorizations necessary to conduct their businesses as now conducted or as proposed to be conducted, except where the failure to own or possess and hold such licenses, permits and other authorizations would not have a Material Adverse Effect (the "Material Licenses"), and set forth in Section ----------------- 2.12 of the Disclosure Letter is a list of all such Material Licenses. The Sellers have made available for the Purchaser true, correct and complete copies of all Material Licenses. Each of the Companies and each of their subsidiaries has complied with each, and is not in violation of any, law, statute, rule, regulation, judgment, order, decree, license, permit, concession, franchise or other governmental authorization or approval to which it or its business is subject, except where the failure to be in compliance would not have a Material Adverse Effect. No Company nor any of its subsidiaries has received any notice of any 16 violation of any law, statute, rule, regulation, judgment, order, decree, license, permit, concession, franchise or other governmental authorization or approval applicable to it or to any of its properties, except for violations which would not have a Material Adverse Effect. No proceedings are pending or, to the knowledge of the Sellers, threatened to revoke or limit the scope of any licenses, permits or other governmental authorizations. This Section 2.12 does not relate to employee benefits matters, which are the subject of Section 2.10, tax matters, which are the subject of Section 2.14, or environmental matters, which are the subject of Section 2.16. 2.13 Litigation. There are no judicial or administrative actions, ---------- suits, proceedings, arbitrations or investigations pending or, to the knowledge of either Seller, threatened against the Sellers or against the Companies or any of their subsidiaries which (i) would have a Material Adverse Effect, or (ii) question the validity of this Agreement or any action taken or to be taken by the Sellers or by the Company or any of their subsidiaries in connection herewith or which seeks to prohibit, restrict or delay consummation of the transactions contemplated under this Agreement. Neither the Companies or their subsidiaries, nor their assets, properties or business, is subject to any judgment, order, writ, injunction or decree of any court, governmental agency or arbitration tribunal. Neither the Sellers, the Companies nor their subsidiaries is subject to any judgment, decree, injunction, ruling or order of any court, applicable governmental authority or arbitrator which could prohibit, restrict or delay consummation of the transactions contemplated by this Agreement. To the knowledge of the Sellers, no audit, investigation or enforcement proceeding of a criminal, civil or administrative nature by any audit, investigative or enforcement agency of any government (including any written notice of qui tam action brought under the Civil False Claims Act) is pending against any of the Companies or their subsidiaries. 2.14 Taxes. ----- (a) Each Company, each of its subsidiaries and, with respect to the conduct of the business and the ownership of the assets of each Company and its subsidiaries, each affiliated, consolidated combined or unitary tax group of which any Company or any of its subsidiaries has been a member (an "Affiliated ---------- Group"), have timely and accurately filed (or will timely and accurately file) - ----- all material federal, state, local and foreign Tax returns, reports and declarations required to be filed by such entity on or prior to the Closing Date, (b) all Taxes shown as due thereon or claimed to be due by any taxing authority with respect to such Tax returns, reports and declarations, whether or not shown as due thereon, have been paid or are being contested in good faith by appropriate proceedings, (c) each of the Companies and their subsidiaries has withheld and paid all material Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder or other third party, and (d) no claim for assessment and 17 collection of Taxes in respect of the business or assets of any Company or any of its subsidiaries is being asserted or threatened in writing against any Seller, any Company or any of its subsidiaries, or any Affiliated Group other than assessments for Taxes neither due nor in default or are being contested in good faith by appropriate proceedings. Chem Nuclear is, and since December 31, 1996 has been, treated as a "partnership," within the meaning of Section 761(a) of the Internal Revenue Code of 1986, as amended (the "Code") and all relevant ---- provisions of state and local Tax law. There are no tax allocation, tax indemnity or tax sharing agreements between either Company and its subsidiaries, on the one hand, and any Seller or any affiliate of any Seller (other than the Companies and their subsidiaries), on the other hand. "Taxes" means all ----- federal, state, local or foreign taxes, however denominated, including, without limitation, income taxes, franchise taxes, withholding taxes, unemployment insurance taxes, social security taxes, sales and use taxes, excise taxes, real and personal property taxes, stamp taxes, transfer taxes, workers' compensation taxes, gross receipts taxes, value added taxes, ad valorem taxes, intangibles taxes, payroll taxes, excise taxes, customs and other duties and other similar taxes or governmental charges and assessments, together with all interest and penalties payable with respect thereto. (b) Except as set forth in Section 2.14 of the Disclosure Letter, there is no action, suit, proceeding, audit or investigation pending or, to the knowledge of the Sellers, threatened in writing regarding any Taxes in respect of the business or assets of the Companies or their subsidiaries. There is no agreement, waiver or consent providing for an extension of time with respect to the assessment or collection of any Taxes against the Companies or their subsidiaries and no power of attorney granted by the Companies or their subsidiaries with respect to any Tax matters is currently in force. (c) Section 2.14 of the Disclosure Letter sets forth (i) all federal tax elections made in the form of separate documents since July 1, 1998 that are currently in effect with respect to the Companies and their subsidiaries and (ii) all elections made in the form of separate documents since July 1, 1998 for purposes of foreign, state or local Taxes and all consents or agreements made in the form of separate documents since July 1, 1998 for purposes of federal, foreign, state or local Taxes in each case that reasonably could be expected to affect or be binding on the Companies or their subsidiaries or their assets or operations after the Closing Date. Section 2.14 of the Disclosure Letter sets forth all material changes in accounting methods for Tax purposes made or agreed to since July 1, 1998 with respect to the Companies or their subsidiaries. (d) Except as set forth in Section 2.14 of the Disclosure Letter, neither the Companies nor their subsidiaries have (i) executed or filed with the Internal Revenue Service any consent to have the provisions of Section 341(f) of the Internal Revenue Code apply to it, (ii) been subject to Section 999 of the Code, or (iii) been a passive foreign investment company as defined in Section 1296(a) of 18 the Code, or (iv) since January 1, 1995, been a partner in a partnership or an owner of an interest in an entity treated as a partnership for federal income tax purposes. (e) Each of the Sellers is a United States person within the meaning of Section 7701(a)(30) of the Code. (f) None of the Companies or their subsidiaries have any net operating losses subject to limitation under Section 382 of the Code. (g) Except as set forth in Section 2.14 of the Disclosure Letter, there is no net operating loss, net capital loss, unused investment or other credit, unused foreign tax, or excess charitable contribution allocable to the Companies or their subsidiaries. 2.15 Absence of Changes. Since September 30, 1999, no event has ------------------ occurred or condition changed that has had, either individually or in the aggregate, a Material Adverse Effect. Since September 30, 1999, other than in connection with the transactions contemplated by this Agreement, the Companies and their subsidiaries have conducted their business in the ordinary course, in substantially the same manner in which it has been previously conducted and no Company nor any of its subsidiaries has, without the written consent of the Purchaser: (a) purchased or redeemed any shares of its membership interests or capital stock; (b) mortgaged, pledged or subjected to any Lien any of its properties or assets, except for Liens incurred in the ordinary course of business and Permitted Liens; (c) except as required by GAAP, made any material change in its accounting principles or the methods by which such principles are applied for financial reporting purposes; (d) increased the compensation of any officer or employee, other than (i) in the ordinary course of business and consistent with past practice or (ii) to comply with applicable law; (e) disposed or agreed to dispose of any material properties or assets necessary for the conduct of their business, other than in the ordinary course of business; (f) canceled or forgiven any material debts or claims except in the ordinary course of business; 19 (g) incurred any loss materially and adversely affecting any of its assets or properties as the result of any fire, explosion, flood, windstorm, earthquake, labor trouble, riot, accident, act of God, or public enemy or armed forces or other casualty; (h) incurred any indebtedness other than in the ordinary course of business or assumed, guaranteed or otherwise became responsible for the indebtedness of any other party other than in the ordinary course of business; (i) declared or made payment of, or set aside for payment, any dividends or distributions of any assets; (j) written down the value of any material assets or written-off as uncollectible any material notes or accounts receivable, except write-downs and write-offs in the ordinary course of business, none of which individually or in the aggregate, are material; (k) entered into any transaction other than in the ordinary course of business; (l) entered into any government contract or any customer contract involving in excess of $1,000,000; (m) submitted a proposal involving in excess of $1,000,000; (n) entered into any teaming agreement or joint venture agreement; (o) entered into any employment, severance or change-of-control agreement; (p) directly or indirectly paid any severance or termination pay to any officer or employee in excess of three months' salary; (q) made capital expenditures or entered into commitments therefor, aggregating more than $1,000,000; (r) amended or otherwise changed any of the organizational documents of the Companies or their subsidiaries; (s) issued or sold, authorized for issuance or sale, granted any options or made any other agreements with third parties with respect to any equity interest in the Companies or their subsidiaries; (t) established or adopted any Plan; modified, amended, or restated in any material respect, or terminated any Plan; 20 (u) compromised or settled any material claim; (v) acquired the capital stock or equity interests of another entity or acquired all or substantially all of the assets of another entity; or (w) made an agreement to do any of the foregoing. provided, however, that no provision of this Agreement shall restrict the - -------- ------- ability of any Company or any of its subsidiaries to distribute all of its cash, cash equivalents and intercompany accounts receivable or use all of its cash and cash equivalents on or prior to the close of the business day immediately preceding the Closing Date, through legal dividends to its stockholders, repayment of outstanding liabilities or otherwise. 2.16 Environmental and Nuclear Matters. --------------------------------- (a) Each Company and its subsidiaries have been duly issued, will maintain through the Closing and have timely filed applications for, all permits, licenses, authorizations, registrations and other governmental consents necessary to operate their business ("Environmental Permits") under federal, --------------------- state, local, and other governmental laws, regulations, statutes, rules, judgments, orders, common law rulings, and ordinances governing any matters arising out of, resulting from or relating to the pollution, contamination or protection of the environment, including those relating to the manufacture, processing, distribution, use, treatment, generation, storage, disposal, transport, handling or Releases (as defined below) of Hazardous Substances (as defined below) ("Environmental Laws") and all Environmental Permits are in full ------------------ force and effect, except where the failure to hold, obtain, or comply with such permits would not have a Material Adverse Effect. All Environmental Permits are listed on Section 2.16 of the Disclosure Letter. There has been no Release of Hazardous Substances at, on, under or from (i) the Owned Real Property, (ii) the Leased Real Property or (iii) any real property currently operated or formerly owned, operated or leased by the Companies or their subsidiaries (for purposes of this Section 2.16, (i), (ii) and (iii) shall be referred to as the "Real ---- Property"), during the period of such ownership, operation or tenancy, except - -------- (x) in accordance with Environmental Permits, (y) for Releases at, on, under or from sites operated by the Companies or the subsidiaries for which neither the Companies or their subsidiaries have or could have actual or potential liability; or (z) as would not have a Material Adverse Effect. None of the Environmental Permits listed on Section 2.16 of the Disclosure Letter require consent, notification or other action to remain in full force and effect following consummation of the transactions contemplated hereby. (b) Each Company and its subsidiaries have complied and are in compliance with all applicable Environmental Laws or any written notice or 21 demand letter issued thereunder, except where the failure to so comply would not have a Material Adverse Effect. (c) Neither the Companies nor any of their subsidiaries have any liability, known or unknown, under any Environmental Law, except for liabilities (w) that are reflected or reserved against in the Financial Statements, (x) that will be reflected on the Closing Balance Sheets, (y) incurred in the ordinary course of business in accordance with commercially reasonable business practices and in accordance with Environmental Law, or (z) would not have a Material Adverse Effect. There are no pending or, to the knowledge of the Sellers, threatened actions, fines, penalties, sanctions, suits, orders, claims, legal proceedings or other proceedings under Environmental Laws ("Environmental ------------- Proceedings") with respect to the business of the Companies or their - ----------- subsidiaries, the Owned Real Property, the Leased Real Property, any real property currently operated by the Companies or any of their Subsidiaries, nor to Seller's Knowledge, any real property formerly owned, operated, or leased by the Companies or any of their Subsidiaries. No Environmental Proceedings are pending against the Sellers or the Companies or the Companies' subsidiaries with respect to any real property formerly owned, operated, or leased by the Companies or their subsidiaries. Neither the Sellers, the Companies, nor any subsidiary of the Companies, has received any written notice of any information request pursuant to a governmental authority's information-gathering powers under Environmental Laws such as an information request pursuant to section 104(e) of the Comprehensive Environmental Response, Compensation and Liability Act or any complaint, order, directive, citation, notice of responsibility, or notice of potential responsibility, from any governmental authority or any other person or entity or is aware of any fact(s) which might reasonably form the basis for any such actions or notices arising out of or attributable to: (i) the current or past presence, Release, or threatened Release of Hazardous Substances at, on, under or from any part of the Real Property; (ii) the off-site disposal or treatment of Hazardous Substances originating at, on, under or from the Real Property, or the businesses or assets of the Companies or any of their subsidiaries (or any predecessors-in-interest of any of them); or (iii) any violation of Environmental Laws at any part of the Real Property or arising from the activities of the Companies, any of their subsidiaries or any of their predecessors involving Hazardous Substances. (d) Neither the Companies or any of their Subsidiaries owns or operates or has owned or operated, and none of the real property currently owned and, to Seller's knowledge, none of the real property currently leased by the Companies or any of their subsidiaries contains septic systems, drywells, or underground containers, including but not limited to treatment or storage tanks, or underground piping associated with such containers, used currently or in the past for the management of Hazardous Substances. No portion of such properties is or has been used as a dump or landfill, except Chem- 22 Nuclear's permitted disposal facility in Barnwell, South Carolina, or consists of or contains filled in land such that the Companies or their Subsidiaries could incur losses or liabilities, nor to Seller's knowledge, do such properties contain federally-protected wetlands. With respect to any real property formerly owned or leased by the Companies or their subsidiaries (or their respective predecessors-in-interest), during the period of such ownership or tenancy, no portion of such property was used as a dump or landfill. Neither any of the Companies, their subsidiaries, nor to the knowledge of the Sellers, any other person, have disposed of any Hazardous Substances on any real property operated by the Companies or any of their Subsidiaries in violation of any Environmental Law or, except as would not have a Material Adverse Effect, in a manner that could result in liability to the Companies or their Subsidiaries under Environmental Law. To Seller's knowledge, neither PCBs nor asbestos-containing materials are present on or in the Owned Real Property or Leased Real Property or the improvements thereon such that the Company or any of their Subsidiaries is or could be liable for the remediation or abatement of such materials. (e) Sellers have made available to Purchaser copies of all written reports, audits (including, but not limited to, internal compliance audits) and other assessments or allegations concerning actual or potential liabilities under Environmental Laws or environmental conditions in its possession or under its control that relate to (i) the Real Property, (ii) compliance with Environmental Laws, or (iii) any other real property that the Companies or their subsidiaries (or their respective predecessors-in-interest) formerly owned, operated, or leased. (f) Neither the Companies, nor any of their Subsidiaries, nor any other person for whom the Companies or their Subsidiaries are or could be liable, has arranged, by contract, agreement, or otherwise, for the transportation, disposal or treatment of Hazardous Substances at any location that is not currently owned or operated by the Companies or their Subsidiaries, except for facilities of customers of the Companies or their subsidiaries or as set forth in Schedule 2.16. Neither the Owned Real Property, the Leased Real Property, other property operated by the Companies or its Subsidiaries nor, to the Knowledge of Sellers, any location listed on Schedule 2.16 or any real property previously owned or leased by the Companies or their Subsidiaries is listed or proposed to be listed on the National Priorities List or CERCLIS or on any other governmental database or list of properties that may or do require investigation or cleanup under Environmental Laws. (g) No Lien in favor of any person relating to or in connection with any claim under any Environmental Law has been filed or has attached to the currently owned, operated or leased Real Property, or to Seller's knowledge, to any formerly owned, operated, or leased Real Property. 23 (h) For purposes of this Agreement, "Hazardous Substances" means any -------------------- wastes, substances, radiation, or materials (whether solids, liquids or gases) (i) which are hazardous, toxic, infectious, explosive, radioactive, carcinogenic, or mutagenic; (ii) which are or become defined as a "pollutants", "contaminants", "hazardous materials", "hazardous wastes", "hazardous substances", "toxic substances", "radioactive materials", "source material", "byproduct materials", "special nuclear materials", "licensed materials", "solid wastes", or other similar designations in, or otherwise subject to regulation under, any Environmental Laws; (iii) without limitation, which contain polychlorinated biphenyls (PCBs), asbestos and asbestos-containing materials, lead-based paints, urea-formaldehyde foam insulation, or petroleum or petroleum products (including, without limitation, crude oil or any fraction thereof) or (iv) which pose a hazard to human health, natural resources, or the environment. (i) For purposes of this Agreement, "Release" means any emission, ------- spill, seepage, leak, escape, leaching, discharge, injection, pumping, pouring, emptying, dumping, disposal, or release or threatened release of Hazardous Substances into or upon the environment, including the air, soil, improvements, surface water, groundwater, the sewer, septic system, storm drain, publicly owned treatment works, or waste treatment, storage, or disposal systems. 2.17 Banking and Agency Arrangements. Section 2.17 of the Disclosure ------------------------------- Letter sets forth a list of: (a) each bank or similar financial institution in which any Company or any of its subsidiaries has an account or safe deposit box or other custodial arrangement and the numbers of such accounts or safe deposit boxes maintained by the Companies and their subsidiaries; and (b) the names of all persons authorized to draw on each such account or to have access to any such safe deposit box facility. 2.18 Affiliate Transactions. No Company nor any of its subsidiaries ---------------------- is a party to any agreement with (a) any of their respective directors or officers or (b) any Seller or any affiliate of any Seller other than any of the Companies and their subsidiaries (such affiliates, "Non-Company Affiliates"). ---------------------- Section 2.18 of the Disclosure Letter sets forth a list of all material services provided by any Seller or any Non-Company Affiliate to any Company or its subsidiaries. 2.19 Brokers. All negotiations relating to this Agreement and the ------- transactions contemplated hereby have been carried out without the intervention of any person acting on behalf of either Seller or any Company in such manner as to give rise to any valid claim against the Purchaser or any Company for any brokerage or finder's commission, fee or similar compensation, except for 24 Donaldson, Lufkin & Jenrette Securities Corp., whose fees and expenses in respect hereof will be the responsibility of the Sellers or one or more Non- Company Affiliates. 2.20 Insurance. The Companies and their subsidiaries, or one or more --------- Non-Company Affiliates, maintain and have maintained all such insurance policies for the structures, facilities, fixtures, machinery, equipment, motor vehicles, inventory and other properties and assets of the Companies and their subsidiaries and with respect to their employees and operations as are set forth on Section 2.20 of the Disclosure Letter. All such insurance policies are in full force and effect, and the Companies and their subsidiaries are in compliance with all requirements and provisions thereof. Said insurance policies' applicable limits of insurance have not been materially impaired or substantially compromised, and on the date hereof adequate limits of insurance remain in force for all such policies to fully respond to pending and future litigation, claims or losses covered by such policies. Neither the Companies nor their subsidiaries have received any notice of cancellation or nonrenewal with respect to, or disallowance of any claim under, any such insurance policies and no policies maintained by the Companies or their subsidiaries are subject to any retroactive rate or audit adjustments or coinsurance arrangements. Sellers have no knowledge of the occurrence of any event giving rise to a material loss, or which would, if a claim were asserted, give rise to a material loss, involving the Companies' or their subsidiaries' business or operations or any of their assets or properties which is covered by any such insurance. The Sellers have received no notices that any of the Companies' or their subsidiaries' insurance policies will not be renewed upon expiration thereof at premiums substantially equivalent to those currently being paid. The Sellers have made available to the Purchaser a list of all property damage, personal injury claims and workers' compensation claims asserted against the Companies or their subsidiaries during the past five years involving any claim in excess of $50,000. Neither the Companies nor their subsidiaries have received any written notice from any insurance company or insurance board of underwriters of the existence of any default or unsafe condition with respect to the Companies' or their subsidiaries' properties or business that remains unsatisfied or uncured or that will remain unsatisfied or uncured as of the Closing Date. With respect to the Companies' and their subsidiaries' insurance policies identified on Section 2.20 of the Disclosure Letter, (i) all premiums required to be paid with respect thereto have been paid and (ii) there has been no lapse in coverage under such policies during the last five years. Following the Closing, the Companies and their subsidiaries shall have the right to timely tender claims under all of its applicable insurance policies resulting from events or occurrences arising prior to the Closing and the Sellers warrant that they will utilize reasonable commercial efforts to pursue such claims. None of the insurance policies applicable to the Companies or their subsidiaries contain change-of-control provisions that would impact the insurance policies or the coverage following the transactions contemplated hereby. 25 2.21 Names, Business and Location of Assets. Section 2.21 of the -------------------------------------- Disclosure Letter sets forth the list of all names of entities under which the Companies and their subsidiaries have conducted business. Set forth on Section 2.21 of the Disclosure Letter is a complete and accurate listing of all locations at which, to the knowledge of the Sellers, the Companies and their subsidiaries have conducted business as owner or lessor over the last ten years. 2.22 No Other Pending Transactions. Except for the transactions ----------------------------- contemplated by this Agreement: (i) none of the Sellers is a party to or bound by or the subject of any agreement, commitment or undertaking with respect to the sale of the Nuclear Services Shares and (ii) neither the Companies nor their subsidiaries is a party to or bound by or the subject of any agreement, undertaking or commitment to merge or consolidate with, or acquire all or substantially all of the property and assets of, any other person or entity, or to sell all or substantially all of their properties and assets to any other person or entity. 2.23 Prohibited Payments. To Sellers' knowledge, neither the ------------------- Companies nor their subsidiaries, nor any of their directors, officers, owners or affiliates, nor anyone acting on their behalf has (i) used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to foreign or domestic political parties or campaigns from corporate funds, (iii) established or maintained any unlawful fund of corporate monies or other assets, or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment. 2.24 Officers and Directors; Employee Compensation. Section 2.24 of ----------------------- --------------------- the Disclosure Letter sets forth a list, as of the date hereof, of all corporate officers and directors of the Companies and their Subsidiaries. 2.25 Accounts Receivable. The accounts and other receivables set ------------------- forth in the Offer Balance Sheets, or arising after the date thereof, have or shall have arisen in the ordinary course of business of the Companies or their subsidiaries for goods sold and invoiced or services performed. To the best of Sellers' knowledge, except as otherwise reflected in the Offer Balance Sheets, all said receivables are collectible in amounts aggregating not less than the full recorded amounts thereof (less allowance for doubtful accounts set forth in the Offer Balance Sheets or accrued after the date thereof in the ordinary course of business consistent with past practice) and are subject to no offsets, except for normal trade discounts. 2.26 Year 2000 Compliance. Each system owned or used by the -------------------- Companies and their subsidiaries comprised of software, hardware or databases, the operational failure of which would be reasonably likely to result in a Material Adverse Effect (collectively, a "System") is able to accurately ------ process date data 26 including, but not limited to, calculating, comparing and sequencing from, into and between the twentieth century (through year 1999), the year 2000 and the twenty-first century, including leap year calculations (having such ability being referred to herein as "Year 2000 Compliant"). Neither the Companies nor ------------------- any of their subsidiaries will incur material expenses arising from or relating to the failure of any of their Systems to be Year 2000 Compliant. 3. Representations and Warranties of the Purchaser. The Purchaser ----------------------------------------------- represents and warrants to the Sellers as follows: 3.1 Corporate Status and Authority. The Purchaser is a corporation ------------------------------ duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has the corporate power and authority to execute and deliver this Agreement and the Ancillary Agreements and perform its obligations hereunder and thereunder. The execution, delivery and performance of this Agreement and the Ancillary Agreements have been duly authorized by the board of directors of Purchaser, which constitutes all necessary corporate action on the part of Purchaser for such authorization. This Agreement and, as of the Closing, the Ancillary Agreements have been duly executed and delivered by the Purchaser and constitute the valid and binding obligations of the Purchaser, enforceable against it in accordance with their terms, except as limited by laws affecting the enforcement of creditors' rights generally or by general equitable principles. 3.2 No Conflicts; Consents and Approvals, etc. ----------------------------------------- (a) The execution, delivery and performance of this Agreement and the Ancillary Agreements by the Purchaser will not result in (i) any conflict with or violation of the certificate of incorporation or by-laws of the Purchaser, (ii) subject to obtaining the consents referred to in Section 3.2(b), any breach or violation of or default (or give rise to any right of termination, cancellation or acceleration) under any law, statute, rule, regulation, judgment, order, writ, injunction, decree, license, permit or other governmental authorization or any mortgage, lease, agreement, deed of trust, note, bond, indenture, lien or any other instrument to which the Purchaser is a party or by which it or its properties or assets are bound, (iii) the creation or imposition of any Lien, except for such breaches, violations or defaults and such Liens which would not, individually or in the aggregate, impair the ability of the Purchaser to fulfill its obligations hereunder. (b) No consent, approval or authorization of or filing with any third party or governmental authority is required on the part of the Purchaser in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby, except (i) filings required with respect to the HSR Act and (ii) filings, consents or approvals which, if not 27 made or obtained, would not impair the ability of the Purchaser to fulfill its obligations hereunder. 3.3 Financial Ability to Perform. The Purchaser has available or ---------------------------- access to cash funds sufficient to consummate the transactions contemplated by this Agreement. 3.4 Litigation. There are no judicial or administrative actions, ---------- suits, proceedings, arbitrations or investigations involving the Purchaser that are pending or, to the knowledge of the Purchaser, threatened, which question the validity of this Agreement or any action taken or to be taken by it in connection herewith or which seek to prohibit, restrict or delay consummation of the transactions contemplated under this Agreement. The Purchaser is not subject to any judgment, decree, injunction, ruling or order of any court, applicable governmental authority or arbitrator which could prohibit, restrict or delay consummation of the transactions contemplated by this Agreement. 3.5 Purchase for Investment. The Purchaser is acquiring the Nuclear ----------------------- Services Shares for investment and not with a view toward any resale or distribution thereof except in compliance with the Securities Act of 1933, as amended. 3.6 Brokers. All negotiations relating to this Agreement and the ------- transactions contemplated hereby have been carried out without the intervention of any person acting on behalf of the Purchaser in such manner as to give rise to any valid claim against either of the Sellers or any of their affiliates for any brokerage or finder's commission, fee or similar compensation. 4. Covenants. --------- 4.1 Satisfaction of Closing Conditions. The parties shall use their ---------------------------------- commercially reasonable best efforts to bring about the satisfaction as soon as possible of all the conditions contained in Section 6. Without limiting the generality of the foregoing, the parties shall apply for and diligently prosecute all applications for, and shall use their commercially reasonable best efforts promptly to obtain, such consents, authorizations and approvals from such third parties and governmental authorities as shall be necessary to permit the consummation of the transactions contemplated by this Agreement including, without limitation, making the requisite filings with the Federal Trade Commission and the Antitrust Division of the Department of Justice pursuant to the HSR Act, provided that, except for customary filing fees and routine -------- expenditures, in no event shall any party be required to expend material funds or incur material obligations to obtain a third party or governmental consent, authorization or approval. In the event that all such consents, authorizations and approvals are not obtained by the Closing and the Purchaser waives the condition set forth in Section 6.2.2, then the Purchaser will, and will cause the Companies 28 to, indemnify, on a joint and several basis, each Seller and its affiliates from and against any loss, obligation, cost or expense (including reasonable attorneys' fees) that any of them may suffer as a result of such consents, authorizations and approvals having not been obtained. 4.2 Conduct of Business, etc. From the date hereof until the ------------------------ Closing, except (i) for entering into and performing under this Agreement, (ii) as set forth in the Disclosure Letter, (iii) for the effect of the consummation of the transactions contemplated hereby, and (iv) as otherwise consented to by the Purchaser in writing, such consent not to be unreasonably withheld, the Sellers shall cause the Companies and their respective subsidiaries to conduct the Business in the ordinary course in substantially the same manner in which it previously has been conducted and not take any action that would cause a breach of Section 2.15. From the date hereof until the Closing, Sellers shall use commercially reasonable efforts to cause each Company and each of its subsidiaries to (i) maintain its existence in good standing; (ii) maintain its properties in good repair and condition, subject to ordinary wear and tear and in accordance with past practice, and maintain all insurance in effect on the date of this Agreement, except for changes to such insurance in the ordinary course of business that do not materially adversely affect the extent or the subject matter of the coverage provided thereby, and (iii) use commercially reasonable efforts to preserve its business intact and to preserve for the Companies and their subsidiaries the good will of its customers and others having business relationships with the Companies and their subsidiaries. 4.3 Access and Information. The Sellers shall cause the Companies ---------------------- and their subsidiaries to give to the Purchaser and its representatives reasonable access at all reasonable times to the properties, books and records of the Companies and their subsidiaries and to furnish such information and documents in their possession and/or control relating to the Companies and their subsidiaries as the Purchaser may reasonably request, including, without limitation, monthly consolidated balance sheets and income statements of each Company and its subsidiaries, provided that the Purchaser shall not be entitled to conduct tests of the soil, surface or subsurface waters, and air quality at, in, on, beneath or about the Owned Real Property, the Leased Real Property or any other real property operated by the Companies or their subsidiaries without the prior written consent of the Sellers. Purchaser shall have the right but not the obligation: (i) to inspect all records, reports, permits, applications, monitoring results, studies, correspondence, data and any other information or documents related to Hazardous Substances, compliance with Environmental Laws or other environmental conditions; and (ii) to conduct visual, non-invasive inspections of all buildings and equipment at the Owned Real Property and the Leased Real Property for asbestos-containing materials or other Hazardous Substances. Purchaser agrees to conduct such investigations in a manner that minimizes the disruption to the business activities of the Companies and their subsidiaries, and Sellers agree to permit Purchaser reasonable access to all portions of the Owned 29 Real Property and Leased Real Property, both during business hours and after business hours, upon reasonable notice to Sellers. All such information and documents obtained by the Purchaser shall be subject to the terms of the Confidentiality Agreement, dated October 13, 1999 (the "Confidentiality --------------- Agreement"), between the Purchaser and the Sellers. The Purchaser hereby agrees - --------- that the provisions of the Confidentiality Agreement will apply to any properties, books, records, data, documents and other information relating to any Seller or any Non-Company Affiliate provided to the Purchaser or its affiliates or any of their respective advisers or employees pursuant to this Agreement whether before or after the Closing. 4.4 Taxes. ----- (a) The Sellers shall pay (without duplication of amounts otherwise payable), and shall indemnify and hold harmless the Purchaser Indemnitees (as hereinafter defined) from and against, all Taxes of or payable by the Affiliated Group or any member thereof, which includes the Sellers, the Companies and their respective subsidiaries for all taxable periods or portions thereof ending on or before the Closing Date (including, without limitation, reasonable out-of-pocket attorneys' fees and other costs attributable to the assessment and collection thereof), other than (x) any such Taxes and any interest and penalties arising from any act or omission by the Purchaser or, after the Closing, any Company or any of its subsidiaries or (y) any Barnwell-Related Taxes (as defined in Section 4.4(i)) accruing after December 31, 1999. The Purchaser shall be responsible for all Taxes of or payable by any Company or its subsidiaries following the Closing which are not described as being the responsibility of the Sellers in the first sentence of this Section 4.4(a). In the case of Taxes, other than Barnwell- Related Taxes accruing after December 31, 1999, that are payable with respect to a taxable period that begins before the Closing Date and ends after the Closing Date, the portion of any such Tax that is allocable to the portion of the period ending on the Closing Date shall be: (i) in the case of Taxes that are either (x) based upon or related to income or receipts, or (y) imposed in connection with any sale or other transfer or assignment of property (real or personal, tangible or intangible), deemed equal to the amount which would be payable if the taxable year ended at the time of the Closing and Purchaser shall prepare books and working papers (including a closing of the books) which will clearly demonstrate the income and activities of the Companies and their subsidiaries for the period ending at the time of the Closing and such post-closing partial period; and (ii) in the case of Taxes, other than income taxes, imposed on a periodic basis with respect to the assets of the Companies and their subsidiaries or otherwise measured by the level of capital, revenue, sales, equity or other comparable item, deemed to be the amount of such Taxes for the entire period (or, in the case of such Taxes determined on an arrears basis, the amount 30 of such Taxes for the immediately preceding period), multiplied by a fraction the numerator of which is the number of calendar days in the period ending on the Closing Date and the denominator of which is the number of calendar days in the entire period. (b) Returns. The Sellers shall cause Federal Services and each of its ------- subsidiaries to join, for all taxable periods ending on or prior to the Closing Date, (i) in the consolidated federal income tax returns which include the Sellers and (ii) in the consolidated, combined or unitary state, local or foreign income tax returns of or including the Sellers or any Non-Company Affiliate with respect to which any Company or any of its subsidiaries (A) has joined in the most recent taxable year or (B) is required by law to join in filing, and shall prepare and file all such tax returns. CWM and CNS shall, to the extent required by law, cause all Tax items attributable to Chem-Nuclear to be reported on the federal income tax return of the Affiliated Group of which they are members and on all state, local and foreign income and franchise tax returns that either of them is required to file, in either case for all taxable periods ending on or before the Closing Date, provided that if the Sellers determine that they are unable to file any such return under applicable law, the Purchaser shall, upon a Seller's request, cause such return (as prepared by Sellers) to be duly and timely filed by Chem-Nuclear. The Sellers shall prepare or cause to be prepared and file or cause to be filed on a timely basis all other Tax returns in respect of each Company or its subsidiaries that are required to be filed on or prior to the Closing Date or that relate to any taxable period ending on or before the Closing Date and such returns will be in proper form and filed with the appropriate governmental authority. The Sellers shall also prepare, or cause to be prepared, and file, or cause to be filed, all information returns required to be filed by or with respect to Chem-Nuclear pursuant to Section 6031 of the Code, or any comparable provision of state, local or foreign law, for all Tax periods ending on or before the Closing Date. The Purchaser shall prepare or cause to be prepared and file or cause to be filed Tax returns for any taxable period ending after the Closing Date required of each Company and its subsidiaries and shall report on such returns (including any consolidated federal income tax return filed by the Purchaser) any transactions by or relating to such Company or any of its subsidiaries occurring after the Closing. Any such tax returns which the Purchaser is responsible for preparing and filing pursuant to the immediately preceding sentence that include the taxable periods prior to the Closing Date shall, insofar as they relate to any Company or any of its subsidiaries, be prepared on a basis consistent with the last previous such returns filed in respect of such Company and its subsidiaries (except to the extent counsel for the Purchaser renders a legal opinion that there is no reasonable basis in law therefor or determines that a return cannot be so prepared and filed without being subject to penalties). Each party shall timely file any return for which it is responsible. The Sellers shall not, or cause any Non-Company Affiliate to, amend any Tax returns relating to periods or portions thereof ending on or prior to the Closing Date that would result in any Tax 31 liability or obligation for the Purchaser or the Companies or their subsidiaries for any period after the Closing Date. (c) Election. On or before the due date for filing the federal income -------- tax information return required to be filed by Chem-Nuclear (pursuant to Section 6031 of the Code) for the tax period ending on the Closing Date, at the option of the Purchaser, an election pursuant to Section 754 of the Code shall have been filed with respect to Chem-Nuclear. (d) Refunds. The Sellers shall be entitled to retain, or receive ------- immediate payment from any Company, its subsidiaries or the Purchaser of, any tax refund (including, without limitation, refunds arising by reason of amended returns filed after the Closing Date) or credit of federal, state, local or foreign taxes (plus any interest thereon received with respect thereto from the applicable taxing authority) relating to any Company or any of its subsidiaries, that were paid with respect to a period ending on or prior to the Closing Date and if Sellers were liable under this Agreement for the payment of such Taxes, provided that there is no corresponding increase in a Tax attributable to the Purchaser, the Companies or their subsidiaries after the Closing Date. In addition, any reduction of Taxes ("Reduced Taxes") due with respect to the ------------- assets or business of the Companies or their subsidiaries for any period or partial period ending after the Closing Date that is attributable to an adjustment on audit by a taxing authority requiring the Companies or their subsidiaries to capitalize expenses or otherwise defer deductions that were currently deducted on a Tax return as originally filed for periods ending on or prior to the Closing Date shall be credited to the Sellers, and Purchaser shall pay over such Reduced Taxes to the Sellers promptly after the receipt of any refund of Taxes attributable thereto or the payment of any Reduced Tax or the reporting of any Tax liability in an amount reflecting such Reduced Taxes, less the reasonable expenses incurred by the Purchaser, if any, to amend any Tax returns in order to pursue such refund. Any dispute with respect to Reduced Taxes shall be resolved by the Third Party Accountant, and any such determination by the Third Party Accountant shall be final. The Purchaser shall be entitled to the benefit of any refund or credit of federal, state, local or foreign taxes (plus any interest thereon received with respect thereto from the applicable taxing authority) relating to any Company or any of its subsidiaries, that were paid with respect to a period after the Closing Date. In addition, any tax refund for a period before the Closing Date arising out of the carryback of a loss or credit incurred by the Companies or their subsidiaries in a taxable period ending after the Closing Date shall be the property of Purchaser and, if received by the Sellers, shall be paid over promptly to the Purchaser. The Purchaser and the Sellers agree to cooperate, and the Purchaser agrees to cause each Company, its subsidiaries and its other affiliates to cooperate with the Sellers, with respect to claiming any refund referred to in this Section 4.4(d), provided that the Sellers shall not be obligated by the terms of this Section 4.4(d) to amend any Tax return previously filed in order to claim a 32 refund attributable to the carryback of a loss or credit incurred by the Companies or their subsidiaries in a taxable period after the Closing Date. (e) Cooperation. The Sellers and the Purchaser will provide each ----------- other with such cooperation and information in their possession or to which they have reasonable access as either of them reasonably may request of the other in filing any return, amended return or claim for refund, determining a liability for Taxes or a right to a refund of Taxes, or participating in or conducting an audit or other proceeding in respect of Taxes. Each of the Purchaser and the Sellers shall retain all returns, schedules and work papers, records and other documents in its possession relating to Tax matters of the Companies and their subsidiaries for each taxable period first ending after the Closing Date and for all prior taxable periods until the later of (i) the expiration of the statute of limitations of the taxable periods to which such returns and other documents relate, without regard to extensions except to the extent notified by the other party in writing of such extensions for the respective Tax periods or (ii) six years following the due date (without extension) for such returns. After the Closing Date each tax return and report prepared or caused to be prepared by the Purchaser, any Company or any of its subsidiaries with respect to such Company or any of its subsidiaries which relates to any period that includes days on or before the Closing Date shall be subject to pre-filing review by the Sellers. In the event of any disagreement between the Purchaser, any Company or any of its subsidiaries, on the one hand, and the Sellers, on the other hand, such disagreement shall be resolved by the Third Party Accountant, and any such determination by the Third Party Accountant shall be final. The fees and expenses of the Third Party Accountant shall be borne 50% by the Purchaser and 50% by the Sellers. Unless otherwise agreed to by the parties, tax returns and reports subject to such pre-filing review shall be submitted by the party preparing such return to the other at least 30 days prior to the due date (including extensions) of such return or report and the recipient shall either complete its review or provide written comments on such return or report within 15 days of receipt of such return or report. After the Closing Date, each tax return and report prepared or caused to be prepared by the Sellers or Non- Company Affiliate with respect to the Companies or any of their subsidiaries shall be prepared on a basis consistent with the last previous such returns filed with respect to the Companies or such subsidiaries (except to the extent counsel for the Sellers renders a legal opinion that there is no reasonable basis in law therefor or determines that a return cannot be so prepared and filed without being subject to penalties). The Sellers agree to provide Purchaser with copies of all separate company state and federal income tax returns, or information returns for partnerships, for the Companies and their subsidiaries for the stub period ending in 2000 and the prior three tax periods (1997 through 1999) within 30 days after they have been filed. (f) Audits. Each of the Purchaser and the Sellers shall promptly ------ notify the other in writing within ten days from its receipt of notice of (i) any pending or threatened federal, state, local or foreign tax audits or assessments of 33 any Company or any of its subsidiaries, so long as any taxable periods of such Company or subsidiary ending on or prior to the Closing Date remain open, and (ii) any pending or threatened federal, state, local or foreign tax audits or assessments of the Purchaser or any Seller which may affect the tax liabilities of any Company or any of its subsidiaries, in each case for taxable periods ending on or prior to the Closing Date. The Sellers shall have the right to control the conduct and disposition of any tax audit or administrative or court proceeding relating to any Company, its subsidiaries and any Affiliated Group for taxable periods ending on or prior to the Closing Date and to employ counsel of their choice at their expense and the Purchaser shall have the right to consult with the Sellers during such proceedings at its own expense. The Purchaser agrees that it shall, at its own expense, cooperate fully, and cause each Company and its subsidiaries to cooperate fully, with the Sellers and its counsel in the defense against or compromise of any claim in said proceeding. If the Sellers do not assume the defense of any such audit or proceeding within a reasonable period of time, the Purchaser may control the conduct and disposition of the same in such manner as it may deem appropriate, and in such event the Sellers shall indemnify the Purchaser for all its liabilities, obligations, and out-of-pocket costs and expenses in connection therewith. In the event that issues relating to a potential adjustment for which the Sellers would be liable pursuant to this Section 4.4 are required to be dealt with in the same proceeding as separate issues relating to a potential adjustment for which the Purchaser would be liable, the Purchaser shall have the right, at its expense, to control the audit or proceeding with respect to the latter issues. With respect to issues relating to potential adjustment for which both the Sellers and the Purchaser, the Companies or their subsidiaries could be liable, (i) each party may participate in the audit or proceeding, and (ii) the audit or proceeding shall be controlled by that party which would bear the burden of the greater portion of the sum of the adjustment and any corresponding adjustments that may reasonably be anticipated for future Tax periods. The principle set forth in the immediately preceding sentence shall govern also for purposes of deciding any issue that must be decided jointly (including, without limitation, choice of judicial forum) in situations in which separate issues are otherwise controlled under this Section 4.4 by the Purchaser and the Sellers. Neither the Purchaser nor any Seller shall enter into any compromise or agree to settle any claim pursuant to any Tax audit or proceeding which would adversely affect the other party for such year or subsequent year, or would give rise to a claim for indemnification under this Section 4.4, without the written consent of the other party, which consent may not be unreasonably withheld. (g) Conduct of Business. On the Closing Date, as to matters which ------------------- could affect the tax returns of any Company or any of its subsidiaries with respect to periods ending on or prior to the Closing Date, the Purchaser shall cause such Company and each of its subsidiaries to carry on its business only in the ordinary course in substantially the same manner as heretofore conducted. 34 (h) Payment of Transaction-Related Taxes. All transfer, sales, use ------------------------------------ and similar taxes, duties and transfer fees, including fees to record assignments, arising out of the sale of the Nuclear Services Shares pursuant to this Agreement shall be paid (or caused to be paid) one-half by the Purchaser and one-half by the Sellers. (i) Barnwell-Related Taxes. In addition to the foregoing, the Sellers ---------------------- shall pay all Taxes related to the operation of the Barnwell Facility ("Barnwell-Related Taxes") that are due to the State of South Carolina after the ---------------------- Closing Date to the extent that funds therefor have been collected by the Companies or their subsidiaries from their customers prior to the Closing Date and distributed by the Companies or their subsidiaries to the Sellers or a Non- Company Affiliate. (j) Tax Sharing Agreements. The Sellers shall hold harmless and ---------------------- indemnify the Purchaser against any Tax liabilities of the Companies or their subsidiaries resulting from the existence of any tax sharing agreement between the Sellers or a Non-Company Affiliate, on the one hand, and the Companies or their subsidiaries on the other hand. (k) Liability for Taxes of Other Persons. Each of the Sellers agrees ------------------------------------ to indemnify the Purchaser from and against any adverse consequences the Purchaser may suffer resulting from, arising out of, relating to, in the nature of, or caused by any liability of the Companies or their subsidiaries for Taxes of the Sellers or any Non-Company Affiliate under Regulation Section 1.1502-6 of the Code (or any similar provision of state, local or foreign law). (l) Retention of Carryovers. Sellers will not elect to retain any net ----------------------- operating loss carryovers or capital loss carryovers of the Companies or their subsidiaries under Regulation Section 1.1502-20(g) of the Code. 4.5 Supplements to Disclosures. From time to time prior to the -------------------------- Closing Date, the Sellers may amend or supplement the Disclosure Letter with respect to any matter that, if existing or occurring at or prior to the Closing Date, would have been required to be set forth or described therein or that is necessary to complete or correct any information in any representation or warranty contained in Section 2 and Sellers shall notify Purchaser in writing of such amendment or supplement. For purposes of determining the fulfillment of the condition precedent set forth in Section 6.4.1, no such amendment or supplement shall be given effect; for all other purposes, including, without limitation, Section 7.2.1, each such amendment and supplement shall be given effect. At all times prior to the Closing, the Sellers shall as promptly as possible notify the Purchaser in writing of the occurrence of any event as to which any of them obtains knowledge that would make any of the representations, warranties and disclosures made herein with respect to the Sellers, the Companies or their subsidiaries untrue or misleading or which is reasonably likely to result in the failure of a condition specified in Section 6 hereof. 35 4.6 Contact with Customers and Suppliers. Neither the Purchaser nor ------------------------------------ any of its agents, affiliates, employees, directors or officers shall contact and communicate with any employees, customers, suppliers or licensors of any Company and its subsidiaries in connection with the transactions contemplated hereby except with the prior written consent of the Sellers, which consent will not be unreasonably withheld, but may be conditioned upon an officer of either of the Sellers being present at any such meeting or conference, among other conditions as may be required by the Sellers. 4.7 Publicity. No press release or public announcement related to --------- this Agreement, or the transactions contemplated hereby, shall be issued or made without the joint approval of the Sellers and the Purchaser, unless required by law (in the reasonable opinion of counsel) in which case the Sellers and the Purchaser shall have the right to review such press release or announcement prior to publication. 4.8 Release of Guarantees, Bonds, etc. --------------------------------- (a) The Sellers, the Companies and their subsidiaries and certain Non- Company Affiliates have, with respect to the business of the Companies and their subsidiaries, (i) issued certain guaranties, and (ii) obtained certain surety or performance bonds with respect to which a Seller or one or more Non-Company Affiliates has reimbursement or indemnification obligations and, after the date hereof and prior to the Closing, the Sellers, the Companies and their subsidiaries and certain Non-Company Affiliates may, in its sole discretion but after consulting with Purchaser, in the ordinary course of conduct of their business, modify such guaranties or issue additional guaranties, or obtain additional bonds. The Purchaser also acknowledges the Sellers, the Companies and their subsidiaries and certain Non-Company Affiliates have been, or may be, required to furnish security for the benefit of the issuer or issuers of such bonds or in connection with such guaranties, including in the form of an irrevocable stand-by letter or letters of credit. Such guaranties and such additional guaranties, if any, and any security furnished in connection therewith, are referred to herein as the "Guaranties", and such bonds and such ---------- additional bonds, if any, and any security furnished in connection therewith, are referred to herein as the "Bonds". The Sellers have used reasonable efforts ----- to list all Guaranties and Bonds outstanding as of the date hereof in Section 4.8 of the Disclosure Letter. (b) The Purchaser shall use its commercially reasonable best efforts (i) to obtain complete and unconditional release of the Sellers and any relevant Non-Company Affiliates at the Closing with respect to all of the Guaranties and Bonds identified in Section 4.8 of the Disclosure Letter or otherwise identified by the Sellers to the Purchaser in writing at any time, including after the Closing, and (ii) to cause the issuer or issuers thereof to terminate and redeliver to the Sellers and such Non-Company Affiliates any 36 stand-by letters of credit or other security provided by the Sellers or such Non-Company Affiliates in connection with any such identified Guaranties or Bonds. The releases and the terminations referred to above in this Section 4.8(b) are collectively referred to as the "Guarantee Release". ----------------- (c) If the Guarantee Release shall not have occurred in full on or prior to Closing, then Purchaser shall (i) at the Closing, deliver to the Sellers or to one or more Non-Company Affiliates designated by the Sellers an irrevocable, standby letter of credit (the "Standby LoC") from a bank or other ----------- financial institution reasonably satisfactory to the Sellers (the "Issuer"), in ------ an amount equal to the aggregate face amount of the Bonds and Guaranties identified in Section 4.8 of the Disclosure Letter with respect to which any Seller or any Non-Company Affiliate shall not have been completely and unconditionally released (any such Bonds or other Guarantees being referred to as "Outstanding") and (ii) indemnify and hold harmless each Seller and each Non- ----------- Company Affiliate that is party to, or has furnished security in connection with, any Outstanding Bond or Guaranty from any and all losses, claims, liability or damage (including reasonable attorneys' fees and other costs and expenses) in respect of any such Outstanding Bonds or Guaranties, including, without limitation, interest on any unreimbursed payment made by such Seller or Non-Company Affiliate at the prime rate posted from time to time by the Chase, N.A. plus two percent (2%) per annum from the date of payment until the date reimbursed, except that the Purchaser shall not be required to indemnify or hold harmless any Seller or Non-Company Affiliate to the extent that the losses, claims, liability or damage arise from events or conditions that entitle any Purchaser Indemnitee to indemnification pursuant to Section 7.2 hereof, taking into consideration the deductible and the maximum limitation, as applicable, in Section 7.2.1(c). The Standby LoC shall have the following terms and conditions: (i) The Standby LoC shall be for an initial term of one year following the Closing Date and shall provide that it shall be automatically renewed from time to time at each renewal date thereafter for an additional one- year term unless and until all Outstanding Guaranties and Bonds identified in Section 4.8 of the Disclosure Letter shall have been terminated. The Standby LoC shall further provide that the issuer shall give the Sellers notice not more than 60 nor less than 30 days prior to each renewal date whether the Standby LoC has been renewed for an additional year and, if it has been renewed, the amount for which it has been renewed; (ii) The Sellers shall be entitled to draw upon the Standby LoC upon presentation of a sight draft of either Seller accompanied by a certificate of such Seller stating that (x) a claim in respect of any of the Guaranties or the Bonds identified in Section 4.8 of the Disclosure Letter has been asserted against such Seller or any Non-Company Affiliate, or (y) the Purchaser shall not have notified the Sellers at least 30 days prior to any scheduled renewal date and within 15 days of the written request therefor by the 37 Sellers that either (A) the Standby LoC has been renewed, or (B) all Outstanding Guaranties and Bonds identified in Section 4.8 of the Disclosure Letter have been terminated (and all security furnished in connection therewith shall have been released and redelivered to the Sellers or such Non-Company Affiliate) and delivered to the Sellers reasonably satisfactory evidence of such termination; (iii) The right of any Seller to draw upon the Standby LoC and to receive any notices relating thereto shall be assignable by such Seller in whole or part (from time to time and at any time), without the consent of the Purchaser to any affiliate of such Seller or any trustee or agent for lenders to such Seller or any of its affiliates, provided that the Seller has provided written notice thereof to the Purchaser. (d) Following the Closing, if there shall exist any Outstanding Guaranties or Bonds: (i) The Purchaser will use its commercially reasonable best efforts to obtain the complete and unconditional release of the Sellers and any Non- Company Affiliate with respect to such Outstanding Guaranties and Bonds (whether by replacement of such Guaranties and Bonds or otherwise) and the Sellers shall, and shall cause the Non-Company Affiliates to cooperate with Purchaser to secure such releases. The commercially reasonable best efforts obligation in the immediately preceding sentence shall include, without limitation, the obligation to pay commercially reasonable consideration. (ii) The Purchaser shall promptly pay to the Sellers, after receipt by Purchaser of any invoice therefor, all reasonable out-of-pocket costs and expenses of the Sellers and any Non-Company Affiliate (to the extent relating to any period of time after the Closing) relating to Outstanding Guaranties and Bonds which shall be deemed to include, without limitation, all fees, expenses and other amounts payable under credit and bonding arrangements in respect thereof, in each case until the complete and unconditional release of the Sellers' and such Non-Company Affiliates' obligations with respect thereto. (iii) Following the initial annual term of the Standby LoC, the Purchaser shall cause the Standby LoC to be renewed each year, for an amount equal to not less than the aggregate face amount of the Outstanding Guaranties and Bonds identified in Section 4.8 of the Disclosure Letter at the time of renewal plus the amount of any unreimbursed drawings or payments thereunder as of the date of such renewal, and the Purchaser shall pay all fees, costs and expenses relating to each such renewal. 4.9 Transition Services. The Sellers or their affiliates shall ------------------- continue to provide to the Companies and their subsidiaries the services listed in Section 4.9 of the Disclosure Letter on a cost basis (including agreed upon 38 allocated overhead expense) and otherwise on the terms and conditions set forth in Section 4.9 of the Disclosure Letter. 4.10 Intercompany Accounts. All intercompany accounts between any --------------------- Company or any of its subsidiaries, on the one hand, and any Seller or any Non- Company Affiliate, on the other hand, shall be canceled as of the close of business on the business day immediately preceding the Closing Date, except for trade payables arising in the ordinary course of business. The accounts shall be settled as follows: (a) to the extent that any Company and its subsidiaries are indebted to any Seller or any Non-Company Affiliate, such debt shall be canceled and the amount of the debt so canceled shall be deemed a capital contribution by such Seller to such Company, and (b) to the extent that any Seller or any Non-Company Affiliate is indebted to any Company and its subsidiaries such debt shall be canceled and the amount of the debt so canceled shall be deemed a dividend from such Company to such Seller. 4.11 Indemnification of Directors and Officers. The Purchaser shall ----------------------------------------- cause each Company and its subsidiaries to honor their obligations to indemnify and advance defense costs to each present and former officer or director of such Company and its subsidiaries pursuant to its By-Laws and shall not permit the Certificate of Incorporation or By-Laws of any Company or any of its subsidiaries to be amended for a period of seven years in a manner which adversely affects the indemnification rights of present and former directors and officers of such Company or any of its subsidiaries, except as required by applicable law. 4.12 Right to Use Certain Marks. -------------------------- (a) To the extent that any trademarks, service marks, brand names or trade, corporate or business names of either Seller or of any Non-Company Affiliate ("Seller Marks") are used by any Company or any of its subsidiaries on ------------ stationery, signage, equipment, invoices, receipts, forms, packaging, advertising and promotional materials, product, training and service literature and materials, software or like materials ("Marked Materials") or appear on any ---------------- Company's or any of its subsidiaries' inventory at the Closing, such Company and its subsidiaries may use such Marked Materials or sell such inventory for a period of one year after the Closing, but the Purchaser shall not without prior written consent of the Sellers, which consent shall not be unreasonably withheld, use such Seller Marks in any other manner during such time. The Seller Marks are listed in Section 4.12 of the Disclosure Letter. (b) After the Closing, the Purchaser shall use reasonable commercial efforts to cause each Company and its subsidiaries not to use any Marked Materials (other than training materials or software for internal use only) without first crossing out or marking over such Seller Marks or otherwise clearly indicating on such Marked Materials that such Company and its subsidiaries are no longer affiliates with either Seller or any Non-Company Affiliate. After the 39 Closing the Purchaser shall procure that the Companies and their respective subsidiaries do not reorder any Marked Materials. Within one year following the Closing, the Purchaser shall cause each Company and its subsidiaries to replace or alter any signage to remove any reference to Seller Marks and shall remove any Seller Marks from any equipment, training materials or software. 4.13 Furnish Information for Purchaser's SEC Filings. The Sellers ----------------------------------------------- will, and will cause the Companies to, as promptly as possible furnish all data and information in their possession, or in the possession of any Non-Company Affiliate, relating to the Companies and their subsidiaries as the Purchaser may reasonably request in connection with its preparation of disclosures relating to the transactions contemplated hereby for filing with the Securities and Exchange Commission ("SEC") on a Current Report on Form 8-K or any other filing required --- by the Securities Exchange Act of 1934, as amended. 4.14 Termination of Obligations of the Companies and their ----------------------------------------------------- Subsidiaries. Sellers shall cause the Companies and their subsidiaries to be - ------------ terminated or released as guarantors or parties to loan and financing agreements between the Sellers or Non-Company Affiliates and their lenders as of the Closing Date. 4.15 HSR Act. Sellers and the Purchaser shall, promptly after the ------- execution and delivery of this Agreement, file with the Federal Trade Commission and the Antitrust Division of the Department of Justice the notification required to be filed with respect to the transactions contemplated by this Agreement under the HSR Act and the rules and regulations thereunder (the "Notification"). The parties hereto shall use their best efforts to (i) respond - ------------- promptly to any requests for additional information made by such agencies and (ii) resist vigorously at their respective cost and expense any assertion that the transactions contemplated hereby constitute a violation of the antitrust laws, all to the end of expediting the Closing. Purchaser shall not be required to dispose of or make any change in any portion of its business to obtain consent, authorization or approval under the HSR Act. All fees required to file the Notification and any related filings shall be paid by the Purchaser. 4.16 Further Assurances. From and after the Closing, each of the ------------------ Sellers and Purchaser agree to execute and deliver such further documents and instruments and to do such other acts and things as the other party may reasonably request (at the expense of the requesting party to the extent it involves a material out-of-pocket expense) in order to effectuate the transactions contemplated hereby. In the event any party shall be involved in litigation, threatened litigation or government inquiries with respect to a matter involving the Companies or their subsidiaries, the other parties shall also make available to such first party, at reasonable times and subject to reasonable requirements of its own business, such of its personnel as may have information relevant to the matters provided such first party shall reimburse the providing party for its 40 reasonable costs for employee time incurred in connection therewith if more than one business day is required. Each party shall provide to the other and its employees, agents and representatives access at reasonable times and upon reasonable notice to information and documentation relating to pre-Closing matters concerning the Companies and their subsidiaries including, without limitation, insurance information. 4.17 Confidentiality. Each of the Sellers acknowledges and agrees --------------- that it may possess certain data and knowledge of the Companies and their subsidiaries, their business and their operations which are proprietary in nature and confidential. Each of the Sellers agrees that it will not, and will use reasonable efforts to cause its subsidiaries not to, at any time following the Closing Date, use for its own benefit any confidential information or trade secrets of the Companies or their subsidiaries that relate specifically to Competition (as defined in Section 4.20 hereof), or reveal, divulge or make known to any other person, firm, corporation or entity, any confidential information or trade secrets regarding the Companies and their subsidiaries, their business and their operations. At the Closing, Sellers shall deliver to the Companies all lists of customers, books, records and all other property constituting confidential information belonging to the Companies or their subsidiaries. If at any time a Seller is requested or required (by oral questions, interrogatories, requests for information or documents, subpoenas or similar legal process) to disclose any such information, the Seller shall notify Purchaser immediately and shall cooperate with Purchaser so that Purchaser may, at its own expense, seek an appropriate protective order and/or waive compliance with the provisions hereof. If, in the absence of a protective order or the receipt of a waiver hereunder, in the reasonable opinion of the relevant Seller's counsel, Seller is compelled to disclose such information to any tribunal or any governmental agency to avoid being liable for contempt or suffering any other loss or penalty, such Seller may disclose such information to such tribunal or agency without liability hereunder; provided, however, that such Seller shall give Purchaser prompt notice of such decision. Sellers shall use commercially reasonable efforts to prevent their respective directors, officers, employees, agents and representatives from violating the provisions of this Section 4.17. For purposes hereof, the term "confidential information" shall include, but not be limited to, information related to the production, product specifications, intellectual property, pricing policies, bid strategies, cost structure, personnel policies, customer and marketing relationships, method or practice of soliciting business, and business and financial information of the Companies and their subsidiaries. The restrictions contained in this Section 4.17 shall not extend to any information which can be demonstrated to have been (i) in the public domain prior to the Closing, or (ii) entered the public domain after the Closing other than through disclosure by any of the Sellers or their respective subsidiaries, directors, officers, employees, agents or representatives. 41 4.18 Non-Solicitation. Each of the Sellers agrees that it will not, ---------------- and will use reasonable efforts to cause its subsidiaries not to, at any time during the period of three years following the Closing Date, directly or indirectly, solicit for employment or retention of, in any capacity, any employee, or any consultant listed on Schedule 4.18 of the Disclosure Letter, currently employed, retained or paid by the Companies or their subsidiaries, provided that this covenant shall not apply to the general advertisement of employment opportunities. 4.19 Non-Interference. Each of the Sellers agrees that it will not, ---------------- during the period of three years following the Closing Date, directly or indirectly, for whatever reason, whether for its own account or for the account of any other person, firm, corporation or entity solicit any of the customers with whom the Companies or their subsidiaries provided services for the two year period prior to the Closing Date for the purpose of causing such customers not to engage, or continue to engage, the Companies or their subsidiaries to perform --------- the services described in Section 4.20(i). Sellers shall use their best efforts ------- to prevent their respective subsidiaries from violating the provisions of this Section 4.19. 4.20 Non-Competition. --------------- (a) The following terms, when used in this Section 4.20, shall have the following meanings: (i) "Competition" means (A) the provision of services with respect to the management, packaging, consolidation, processing, treatment, transportation and disposal of radioactive wastes, and (B) the operation of radioactive waste treatment facilities, storage facilities and disposal sites. For purposes of this Section 4.20, "radioactive waste" means "low-level radioactive waste" and "high-level radioactive waste" or "spent nuclear fuel" each as defined in the Nuclear Waste Policy Act of 1982, 42 U.S.C. (S) 10101 or waste containing "source material" or "special nuclear material" as defined in the Atomic Energy Act of 1954, 42 U.S.C. (S) 2014, provided, however, ----------------- "radioactive waste" shall not include any type or quantity of "high-level radioactive waste", "low-level radioactive waste", "spent nuclear fuel", "source material" or "special nuclear material" that is not regulated as such by any state or federal agency, commission or similar entity having jurisdiction over possession, transportation, use, or disposal of such material. (ii) "Directly or Indirectly" means either for one's own account or as a partner, stockholder, owner, consultant or agent of another Person. (iii) "Person" means an individual, corporation, partnership, limited liability company, joint venture, trust or other entity. 42 (iv) "Restricted Territory" means the United States, Canada and all other jurisdictions worldwide in which the Companies or their subsidiaries is conducting or has conducted business at or prior to the Closing Date. (b) The Sellers shall not, for a period of three years after the date hereof, Directly or Indirectly, engage in Competition in the Restricted Territory; provided that the Sellers may, without violating this covenant, own as a passive investment not in excess of 5% of the outstanding equity interests in a Person which engages in Competition. (c) Sellers shall use their best efforts to prevent their respective subsidiaries from violating the provisions of this Section 4.20. (d) Each of the Sellers acknowledges and agrees that in view of the nature of the business of the Companies and their subsidiaries and the business objectives of the Purchaser in acquiring them, the foregoing territorial and time limitations are reasonable and properly required for the adequate protection of Purchaser and that in the event that any such territorial or time limitation is deemed to be unreasonable, then such limitations shall be automatically reduced to the maximum extent permitted by a court of competent jurisdiction and, as reduced, the territorial and/or time limitation shall be enforced. 4.21 Specific Performance. Sellers acknowledge that a violation of -------------------- the foregoing covenants contained in Sections 4.17 through 4.20 may cause irreparable injury to the Purchaser, the Companies or their subsidiaries and that the Purchaser shall be entitled, in addition to any other rights and remedies it may have, to injunctive relief without being required to prove actual damages or post bond. 4.22 Project Financing and Equipment Purchasing for Oak Ridge -------------------------------------------------------- Project. The Sellers or a Non-Company Affiliate shall provide to Purchaser, the - ------- Companies or their subsidiaries financing with respect to certain capital expenditures to be incurred by the Companies or their subsidiaries on the Oak Ridge Environmental Disposal Facility Contract (the "Oak Ridge Contract"), that ------------------ involves constructing and operating a landfill on the U.S. Department of Energy's property in Oak Ridge, Tennessee pursuant to a loan agreement, security agreement and related agreements agreed by the Sellers and the Purchaser and having the terms and conditions set forth in Exhibit B (collectively, the "Loan --------- ---- Agreement"). Notwithstanding the provisions of Section 4.8 hereof, the Sellers - --------- or a Non-Company Affiliate will also maintain and the Purchaser will pay or reimburse for, as applicable, any premiums or other costs or expenses of any letters of credit or bonds that are required under the terms of the Oak Ridge Contract for as long as such letters of credit or bonds are required under the terms of the Oak Ridge Contract. Purchaser will indemnify and promptly reimburse the Sellers or a Non-Company Affiliate if and to the extent that such 43 letters of credit or bonds are drawn upon, for such amount drawn, in each case, together with interest thereon at the prime rate announced from time to time by Chase, N.A. plus two percent (2%) per annum from the date that the letters of credit or bonds were drawn upon to the date of payment by the Purchaser. 4.23 Maintenance of Closure Surety Bond. Notwithstanding the ---------------------------------- provisions of Section 4.8 hereof, the Sellers or a Non-Company Affiliate shall maintain and pay any premiums or other costs or expenses for the $3 million closure surety bond on Chem-Nuclear's waste disposal facility in Barnwell, South Carolina (the "Barnwell Facility") for as long as such closure surety bond is ----------------- required by the applicable regulatory authorities of the State of South Carolina, but in no event more than three years from the Closing Date. Purchaser will indemnify and promptly reimburse the Sellers or a Non-Company Affiliate if and to the extent that the closure surety bond is drawn upon, for such amount drawn, together with interest thereon at the prime rate announced from time to time by Chase, N.A. plus two percent (2%) per annum from the date that the closure surety bond was drawn upon to the date of payment by the Purchaser. 4.24 Computer Software. The Sellers will, or will cause their ----------------- subsidiaries or affiliates to, transfer or assign to Purchaser, for no additional consideration, all licenses and rights to use the Microsoft computer software that is used in the business of the Companies or their subsidiaries, so that the Purchaser may use such software after the Closing Date without cost or expense. To the extent that the Companies or their subsidiaries do not have sufficient licenses to use the Microsoft computer software, then the Sellers will obtain such licenses at their cost and expense. 4.25 Waste Management Obligation. Waste Management, Inc. ("Waste --------------------------- ----- Management") hereby agrees to become a party to this Agreement with respect to - ---------- the covenants contained in Sections 4.17 through 4.24 and the term "Sellers" as used therein shall also refer to Waste Management. 4.26 Purchase of Land. The Purchaser or one of its affiliates shall ---------------- use commercially reasonable efforts to purchase or acquire, within five (5) years following the Closing, the parcels of property described in Section 4.26 of the Disclosure Letter. 5. Employees and Employee Benefit Plans. ------------------------------------ (a) Each employee of any Company or any of its subsidiaries and each former employee of any Company or any of its subsidiaries entitled to any compensation, benefits or other payments arising in connection with such former employee's employment with any Company or any of its subsidiaries shall be referred to as the "Company Employees." Nothing herein expressed or implied by ----------------- this Agreement shall confer upon any Company Employee, or legal representative thereof, any rights or remedies, including, without limitation, any 44 right to employment for any specified period, of any nature or kind whatsoever, under or by reason of this Agreement. Except as otherwise provided by any applicable collective bargaining agreement or other agreement pursuant to which Company Employees participate in a Non-WMI Plan, the Purchaser will, or will cause any Company or one of its subsidiaries or the Purchaser's subsidiaries, as applicable, to provide each Company Employee who is employed by the Purchaser, the Companies or their subsidiaries after the Closing Date with a salary or wage level and bonus opportunity, to the extent applicable, and with employee benefits and other terms and conditions of employment that are the same as the benefits and terms and conditions provided to the Purchaser's employees of like position with length of service with the Companies and their subsidiaries, up to the Closing Date, to be recognized by the Purchaser for all purposes, including, without limitation, for the purposes of the Purchaser's benefit plans (other than accrual of benefits). From and after the Closing, the Purchaser shall, or shall cause any Company or one of its subsidiaries or one of the Purchaser's subsidiaries, as applicable, to honor, pay, perform, and satisfy any and all liabilities, obligations and responsibilities to or in respect of each Company Employee arising under the terms of or in connection with any of Purchaser's benefit plans (which may include any WMI Plans in which, pursuant to the mutual consent of the Sellers and Purchaser, Company Employees participate during a transition period after the Closing Date) or any Non-WMI Plans and the Waste Management Federal Services, Inc. M&I 401(k) Plan and the Waste Management Federal Services, Inc. 125 Plan in which Company Employees continue to participate after the Closing Date (except for any liabilities, obligations or responsibilities for which the Purchaser Indemnitees are entitled to indemnification under Section 7.2.1, taking into consideration the deductible and the maximum limitation, as applicable, in Section 7.2.1(c)). (b) Effective from and after the Closing, except as otherwise provided by any applicable collective bargaining agreement or other agreement pursuant to which Company Employees participate in a Non-WMI Plan and the Waste Management Federal Services, Inc. M&I 401(k) Plan and the Waste Management Federal Services, Inc. 125 Plan, the Purchaser shall cause each Company Employee and his or her eligible dependents to be eligible to participate immediately in each employee benefit plan maintained by the Purchaser and each other benefit arrangement maintained by the Purchaser for the benefit of similarly situated employees of the Purchaser (which may include any WMI Plans in which, pursuant to the mutual consent of Sellers and Purchaser, Company Employees participate during a transition period after the Closing Date) ("Purchaser's Plans"). In ----------------- connection therewith, the Purchaser shall cause each of Purchaser's Plans that are health benefit plans to give credit under Purchaser's Plans for the co- payments and deductible expenses of the Company Employees and their eligible dependents incurred prior to the Closing for the plan year in which the Closing occurs under the Purchaser's Plans for similarly situated employees of Purchaser. From and after the Closing, except to the extent accrued on the Closing Balance Sheets, the Sellers shall remain solely responsible for 45 liabilities for contributions payable with respect to periods prior to the Closing Date and claims of the Company Employees and their eligible dependents incurred prior to the Closing Date under all of the WMI Plans which are employee welfare benefit plans (as such term is defined in Section 3(l) of ERISA), including, but not limited to, those Plans that are severance, health, short- term disability, accident or life insurance plans (but not including the Waste Management Federal Services, Inc. 125 Plan and the Waste Management Inc. Flex Spending Account) and the Purchaser shall be solely responsible for all such liabilities for contributions payable with respect to periods commencing on or after the Closing Date and claims incurred by any Company Employee and his or her eligible dependents on or after the Closing Date under any of the Purchaser's Plans (which may include any WMI Plans in which, pursuant to the mutual consent of Sellers and Purchaser, Company Employees participate during a transition period after the Closing Date) or any Non-WMI Plans and the Waste Management Federal Services, Inc. M&I 401(k) Plan and the Waste Management Federal Services, Inc. 125 Plan in which Company Employees continue to participate after the Closing Date. The Purchaser and the Sellers shall cooperate in ensuring that welfare benefit coverage for Company Employees and their eligible dependents prior to the Closing is coordinated with such coverage provided after the Closing. Purchaser agrees to indemnify and hold harmless the Seller Indemnitees from and against any Damages (other than negative claims experience in excess of $100,000 per Transitional Employee, Qualified Beneficiary and each dependent, if any, of such Transitional Employee or Qualified Beneficiary) incurred or sustained by Seller Indemnitees as a result of the continuing of such Company Employees in the WMI Plans pursuant to Section 4.9 including without limitation any liability under Section 4980B of the Code or Section 601 through 607 of ERISA (COBRA). (c) As soon as practicable after the Closing Date, employees of each Company and its subsidiaries who were participants in the Waste Management Retirement Savings Plan (the "Waste Management 401(k) Plan") and who are ---------------------------- actively employed by the Purchaser, the Companies or their subsidiaries after the Closing Date shall commence participation in a tax-deferred savings plan maintained by the Purchaser (the "Purchaser 401(k) Plan"). Prior to the Closing --------------------- Date, each of the Purchaser and the Sellers shall deliver to the other party a favorable determination letter from the IRS regarding the qualified status of the Purchaser 401(k) Plan or the Waste Management 401(k) Plan, as the case may be. Within two weeks after the signing of this Agreement, the Seller and the Purchaser shall agree in writing to either (i) transfer assets from the Waste Management 401(k) Plan in a trust to trust transfer to the Purchaser 401(k) Plan (Alternative One) or (ii) permit Plan Participants to receive a distribution under Section 401(k)(10) of the Code (Alternative Two), (in either case as described below). Under Alternative One, as soon as practicable following the later of (i) the expiration of a 30-day period following the date of filing of any required notices with the IRS by the plan sponsor and the Purchaser, and (ii) the Purchaser's reasonable determination that the transfer of assets will not 46 jeopardize the qualified status of the Purchaser's 401(k) Plan, the Sellers shall cause the transfer from the Waste Management 401(k) Plan to the Purchaser 401(k) Plan of the value of the full account balances of such employees in cash and employee loans on the date of transfer (which account balances will have been credited with appropriate earnings attributable to the period from the Closing Date to the date of transfer described herein). Under Alternative Two, the Sellers will permit each employee who is a participant in the Waste Management 401(k) Plan to elect (i) to receive a distribution of the value in his account less the amount of any outstanding loan to such participant under such Plan (such participant's "Account Balance"), (ii) to roll over such --------------- participant's Account Balance to an individual retirement account of such participant or (iii) to roll over such participant's Account Balance (but for purposes of this clause (iii) including the amount of any outstanding loan) in cash and, if applicable, employee loan to the Purchaser 401(k) Plan as soon as practicable after the Closing Date, and the Purchaser shall cause Purchaser 401(k) Plan to accept such transfers. WMI or the Sellers shall make all matching and other contributions with respect to such employees that are payable with respect to periods before the Closing Date. (d) With respect to the Waste Management Inc. Spending Account ("WMI --- Flex Plan"), WMI or Sellers shall take the reasonable and necessary action to - --------- transfer the account balances as of the date of transfer of the participants in such plan who are employees of each Company and its subsidiaries ("Flex Plan --------- Participants") to a plan established by the Purchaser with the current third - ------------ party administrator of the WMI Flex Plan. Purchaser will reimburse the Sellers or WMI for the aggregate amount, if any, advanced by Sellers or WMI under the WMI Flex Plan for such Flex Plan Participants to the extent the account balance transferred is not reduced by such amount. 6. Conditions Precedent. -------------------- 6.1 General. The respective obligations set forth herein of the ------- Sellers and the Purchaser to consummate the sale and purchase of the Nuclear Services Shares at the Closing shall be subject to the fulfillment, on or before the Closing Date, in the case of the Sellers, of the conditions set forth in Sections 6.2 and 6.3, and, in the case of the Purchaser, of the conditions set forth in Sections 6.2 and 6.4. 6.2 Conditions to Obligations of Both Parties. ----------------------------------------- 6.2.1 HSR Act. The waiting period under the HSR Act shall have ------- been terminated or expired. 6.2.2 Consents. All (i) governmental consents necessary to effect -------- the transactions contemplated by this Agreement and to enable the Purchaser to continue the business and operations of the Companies and their subsidiaries after consummation of such transactions, and (ii) third party consents listed in 47 Section 6.2.2 of the Disclosure Letter, shall have been obtained. Such consents shall be unqualified and unconditional or shall be subject only to such qualifications or conditions as are consented to by the Purchaser and the Sellers, such consent not to be unreasonably withheld. 6.2.3 No Injunction. There shall not be in effect any injunction or ------------- other order issued by a court of competent jurisdiction restraining, prohibiting or delaying the consummation of the transactions contemplated by this Agreement. 6.2.4 Simultaneous Sale and Purchase. The sale and purchase of all ------------------------------ of the Nuclear Services Shares shall be consummated simultaneously. 6.3 Conditions to Obligations of the Sellers. ---------------------------------------- 6.3.1 Representations and Warranties of the Purchaser. The ----------------------------------------------- representations and warranties in Section 3 shall be true and correct when made and at and as of the Closing with the same effect as though made at and as of such time, with such exceptions as are not, individually or in the aggregate, material. The Purchaser shall have duly performed and complied in all material respects with all agreements and covenants contained herein required to be performed or complied with by it at or before the Closing. 6.3.2 Officer's Certificate. The Purchaser shall have delivered to --------------------- the Sellers a certificate, dated the Closing Date and signed by an authorized senior officer of it, as to the fulfillment of the conditions set forth in Section 6.3.1. 6.3.3 Opinion of Counsel. The Sellers shall have received from Hogan ------------------ & Hartson L.L.P., counsel for the Purchaser, an opinion in substantially the form of Exhibit C hereto. --------- 6.3.4 Ancillary Agreements. The Ancillary Agreements shall have been -------------------- duly executed and delivered by Purchaser and shall be in full force and effect with respect to the Purchaser. 6.4 Conditions to Obligations of Purchaser. -------------------------------------- 6.4.1 Representations and Warranties of the Sellers. The --------------------------------------------- representations and warranties in Section 2 shall be true and correct when made and at and as of the Closing with the same effect as though made at and as of such time, with such exceptions as are not, individually or in the aggregate, material. The Sellers shall have duly performed and complied in all material respects with all agreements and covenants contained herein required to be performed or complied with by either of them at or before the Closing. 6.4.2 Officer's Certificate. The Sellers shall have delivered to --------------------- the Purchaser a certificate, dated the Closing Date and signed by an authorized 48 senior officer of each Seller, as to the fulfillment of the conditions set forth in Section 6.4.1. 6.4.3 Opinion of Counsel. The Purchaser shall have received from ------------------ Debevoise & Plimpton, counsel for the Sellers, an opinion in substantially the form of Exhibit D hereto. --------- 6.4.4 Resignations. The directors and officers of the Companies and ------------ their subsidiaries who are listed on Section 6.4.4 of the Disclosure Letter shall have submitted their written resignations from the Boards of Directors and other positions with the Companies and their subsidiaries, effective as of the Closing Date. 6.4.5 Tax Certificate. Each Seller shall have delivered to the --------------- Purchaser the certificate described in Treasury Regulation Section 1.1445- 2(b)(2)(i) to the effect that such Seller is not a foreign person within the meaning of Section 1445 of the Code. 6.4.6 Material Adverse Change. After the date hereof, there shall ----------------------- have been no event occur or condition change that has either individually, or in the aggregate, a Material Adverse Effect. 6.4.7 Deliveries. Sellers shall have delivered to Purchaser the ---------- following: (i) the recorded certificate of incorporation or other organizational documents, as amended or supplemented to date, of the Sellers, the Companies and their subsidiaries, recently certified by the Secretary of State of the jurisdiction in which each such entity is domiciled; (ii) a certificate of the Secretary of each of the Sellers concerning (A) its certificate of incorporation and bylaws, (B) the adoption of resolutions by its board of directors and, if applicable, stockholders authorizing the transactions contemplated by this Agreement and (C) the incumbency of its officers, all in form and substance reasonably satisfactory to Purchaser; (iii) recent long form (if available) good standing certificates for the Sellers and the Companies and their subsidiaries issued by the Secretaries of State of the jurisdictions in which the Sellers and the Companies and their subsidiaries are domiciled and for the Companies and their subsidiaries certificates of qualification to do business as a foreign corporation in each of the jurisdictions in which such Company or subsidiary is qualified; and (iv) an owner's affidavit dated the Closing Date in a form reasonably satisfactory to the applicable title company. 49 6.4.8 Ancillary Agreements. The Ancillary Agreements shall have been -------------------- duly executed and delivered by each of the Sellers and shall be in full force and effect with respect to each of the Sellers. 7. Indemnification. --------------- 7.1 Survival of Representations and Warranties; Time for Claims. ----------------------------------------------------------- (a) The representations and warranties made by the Sellers and the Purchaser made pursuant to this Agreement or any certificate to be delivered in connection with the Closing hereunder shall survive the Closing and expire upon the second anniversary of the Closing Date, except that the representations and warranties made in or pursuant to (i) Sections 2.1, 2.3, 2.4, 2.5 and 3.1 shall survive the Closing without limitation, and (ii) Section 2.10 (only to the extent such representations relate to Tax liabilities) and Section 2.14 shall survive until 60 days after the expiration (including extensions) of the applicable statute of limitations. (b) Any claim for indemnification may be brought without limit as to time, except as expressly provided in this paragraph. Any claim for indemnification under clause (ii) of Section 7.2.1 or clause (ii) of Section 7.2.2 must be brought in accordance with Section 7.2.3 prior to the expiration of the applicable representation and warranty pursuant to Section 7.1(a). Any claim for indemnification under clause (vii) of Section 7.2.1 must be brought in accordance with Section 7.2.3 prior to the fifth anniversary of the Closing Date. Any claim for indemnification under clause (iv) of Section 7.2.1 must be brought in accordance with Section 7.2.3 prior to the second anniversary of the Closing Date. However, the obligation to indemnify for a claim for which timely notice in accordance with the terms and provisions of this Agreement was provided by the party seeking indemnification hereunder shall extend until such time as the remedy, including, without limitation, the payment of monetary damages, is completed. 7.2 Indemnification. --------------- 7.2.1 By the Sellers. From and after the Closing, subject to Section -------------- 7.1, the Sellers agree to indemnify and hold harmless the Purchaser and its officers, directors, employees, agents, representatives, affiliates, successors and assigns (collectively, "Purchaser Indemnitees"), on a joint and several --------------------- basis, from and against any loss, liability, damage, claim, deficiency, cost, expense, interest, award, judgment or penalty, including, without limitation, reasonable attorneys' fees and other costs and expenses (collectively, "Damages"), incurred or sustained by the Purchaser Indemnitees as a result of ------- (i) the breach or non-fulfillment by any Seller of any agreement or covenant set forth in this Agreement or the Ancillary Agreements, (ii) the breach of any representation or warranty set forth in this Agreement or made in any certificate delivered pursuant hereto in connection with the Closing, (iii) any liabilities of the Companies or their 50 subsidiaries existing as of the Closing Date (A) that consistent with past practice, would be reflected on a balance sheet of a Seller or Non-Company Affiliate and would not be reflected on a balance sheet of any of the Companies, (B) of which, as of the Closing Date, the Sellers had knowledge, and (C) that are not reflected on the Closing Balance Sheets, (iv) any liabilities of the Companies or their subsidiaries which relate to or arise out (A) plans maintained and sponsored by Waste Management ("Parent Plans"), including retiree medical liability and pension underfunding under the Parent Plans or (B) a complete or partial withdrawal under Title IV of ERISA incurred by either of the Companies or any of their subsidiaries prior to the Closing Date under a Multiemployer Plan or (C) failure to make contributions to the benefit plans listed on Section 2.10 of the Disclosure Letter with respect to periods ending prior to the Closing Date except in the case of each of the preceding clauses (A), (B) and (C), to the extent that any such liabilities are (x) reflected on the Closing Balance Sheets, (y) attributable to participation on and after the Closing Date by a Company Employee who is employed by the Purchaser, the Companies or their subsidiaries after the Closing Date, in any Parent Plan in which pursuant to the mutual consent of the Sellers and the Purchaser, such Company Employee participates during a transition period after the Closing Date or (z) liabilities for severance of employees of either of the Companies or any of their subsidiaries arising on or after the Closing, (v) the matters identified in Section 7.2.1(A) of the Disclosure Letter, (vi) the matters identified in Section 7.2.1(B) of the Disclosure Letter, (vii) any other environmental liabilities (including, without limitation, environmental regulatory liabilities) that are the result of acts or conditions that occurred or existed prior to the Closing Date relating to the construction, operation, maintenance and partial closure of the Barnwell Facility that are not otherwise covered by the closure or long-term care trust funds or applicable insurance, and (viii) in the event that the Purchaser or one of its affiliates notifies the applicable regulatory authorities of the State of South Carolina in writing that it intends to commence shutdown of the Barnwell Facility and the closure activities and ceases permanently to accept waste for disposal at the Barnwell Facility by a date (such applicable date being referred to herein as the "Shutdown Deadline") no later than the later of (a) June 30, 2000 and (b) - ------------------ twenty-eight (28) days after the earlier of (x) the date on which the spring 2000 session or any subsequent special session (called prior to June 30, 2000 in which matters relating to the Barnwell Facility are on the agenda (a "Barnwell -------- Special Session")) of the South Carolina state legislature adjourns and (y) - --------------- the date on which the legislation relating to South Carolina joining the Atlantic Low-Level Radioactive Waste Compact and the repeal of the contingent annual license tax imposed on the Barnwell Facility shall either (A) have become effective or (B) have been rejected and no longer be on the agenda for the spring 2000 session or a Barnwell Special Session, provided that in no event shall the Shutdown Deadline be later than December 31, 2000, any liability for the contingent annual license tax imposed on the Barnwell Facility, or the operator thereof, by the State of South Carolina with respect to periods or portions thereof beginning after June 30, 2000, provided that if the Purchaser or any of its affiliates, successors or assigns accepts any waste at the Barnwell 51 Facility after the Shutdown Deadline, the obligations of the Sellers under this clause (viii) shall immediately terminate and the Purchaser shall repay to the Sellers any payments made by the Sellers pursuant to this clause (viii) together with interest on the amount of such payment at a rate equal to the prime rate announced from time to time by Chase, N.A. plus two percent (2%) per annum from the date of payment by the Sellers until the date of repayment by the Purchaser. There shall not be any duplicative payments or indemnities by any Seller under this Section 7.2.1. The rights of the Purchaser Indemnitees to indemnification under this Section 7 shall be limited as follows: (a) The amount of any Damages incurred by the Purchaser Indemnitees shall be reduced by the net amount of the Tax benefits actually realized by the Purchaser Indemnitees or any of their affiliates by reason of such Damage. (b) The amount of any Damages incurred by the Purchaser Indemnitees shall be reduced by the net amount the Purchaser Indemnitees recovers (after deducting all attorneys' fees, expenses and other costs of recovery) from any insurer or other party liable for such Damages, and the Purchaser, on behalf of the Purchaser Indemnitees, shall use reasonable efforts to effect any such recovery. (c) The Purchaser Indemnitees shall be entitled to indemnification under Section 7.2.1(ii), (iv) and (vii) only to the extent that the aggregate amount of such Damages (reduced as provided in paragraphs (a) and (b) above) exceeds $750,000 and then only for the amount of such excess. In no event will the Purchaser Indemnitees be entitled to indemnification exceeding the aggregate purchase price received by the Sellers under this Agreement and the Escrow Agreement other than Section 5(i) thereof (the "Purchase Price"), except as -------------- expressly provided in this Section 7.2.1(c). The Sellers will indemnify the Purchaser Indemnitees for the amount of the Purchaser Indemnitees' Damages pursuant to Sections 7.2.1(i), (iii) and (viii) without limitation or deduction, and any such Damages shall not count toward the aggregate limitation on indemnifiable Damages referred to in the second sentence of this Section 7.2.1(c). For the purposes of applying the maximum limitation set forth in this Section 7.2.1(c), the amount of Damages paid by the Sellers and Non-Company Affiliates shall be deemed to include the amount of all losses, claims, liabilities and damages (including reasonable attorneys' fees and other costs and expenses) incurred by the Sellers and Non-Company Affiliates for which the Purchaser would have been responsible under Sections 4.8 or 5 but for its rights to indemnification under this Section 7.2.1. (d) If the Purchaser gives the notice referred to in Section 7.2.1(viii), the Purchaser agrees that it will contribute up to an aggregate of $1.0 52 million, on a dollar-for-dollar basis with Sellers and the Non-Company Affiliates, solely for out-of-pocket legal expenses paid to unaffiliated third parties associated with contesting liability for the tax referred to in Section 7.2.1(viii). (e) If a Purchaser Indemnitee is or becomes entitled to recover by contribution from a third party or otherwise any amount of Damages incurred by a Purchaser Indemnitee as a result of a matter for which the Purchaser Indemnitees have received indemnification payments from the Sellers pursuant to this Section 7, the Purchaser Indemnitees hereby assign to the Sellers all right to claim and receive any such amount, and the Purchaser Indemnitees shall promptly pay over any such amount received by them to the Sellers, to the extent of the indemnification payments received from the Sellers. 7.2.2 By the Purchaser. From and after the Closing, subject to ---------------- Section 7.1, the Purchaser agrees to indemnify and hold harmless each Seller, each Non-Company Affiliate and each director, officer employee, agent, representative, successor or assign of any of the foregoing (collectively, "Seller Indemnitees") from and against any Damages incurred or sustained by - ------------------- Seller Indemnitees as a result of (i) the breach or non-fulfillment by the Purchaser of any agreement or covenant set forth in this Agreement or the Ancillary Agreements, and (ii) the breach of any representation or warranty set forth in this Agreement, and provided, that there shall not be any duplicative -------- payments or indemnities by the Purchaser. The rights of the Seller Indemnitees to indemnification under this Section 7 shall be limited as follows: (a) The amount of any Damages incurred by the Seller Indemnitees shall be reduced by the net amount of the Tax benefits actually realized by any Seller Indemnitees or any of their affiliates by reason of such Damages. (b) The amount of any Damages incurred by Seller Indemnitees shall be reduced by the net amount the Seller Indemnitees recover (after deducting all attorneys' fees, expenses and other costs of recovery) from any insurer or other party liable for such Damages, and the Sellers, on behalf of the Seller Indemnitees, shall use reasonable efforts to effect any such recovery. (c) In no event will the Seller Indemnitees be entitled to indemnification exceeding 50% of the aggregate purchase price paid by the Purchaser to the Sellers, provided that this limitation shall only apply to indemnification under Section 7.2.2(ii). (d) If a Seller Indemnitee is or becomes entitled to recover by contribution from a third party or otherwise any amount of Damages incurred by a Seller Indemnitee as a result of a matter for which the Seller Indemnitees have 53 received indemnification payments from the Purchaser pursuant to this Section 7, the Seller Indemnitees hereby assign to the Purchaser all right to claim and receive any such amount, and the Seller Indemnitees shall promptly pay over any such amount received by them to the Purchaser, to the extent of the indemnification payments received from the Purchaser. 7.2.3 Indemnification Procedures. A party entitled to -------------------------- indemnification hereunder shall herein be referred to as an "Indemnitee." A ---------- party obligated to indemnify an Indemnitee hereunder shall herein be referred to as an "Indemnitor." ---------- (a) Third Party Claims. Within 10 business days after an Indemnitee ------------------ receives notice of any third party claim or the commencement of any action by any third party which such Indemnitee reasonably believes may give rise to a claim for indemnification from an Indemnitor hereunder, such Indemnitee shall, if a claim in respect thereof is to be made against an Indemnitor under Section 7, notify such Indemnitor in writing in reasonable detail of such claim or action and include with such notice copies of all notices and documents (including court papers) served on or received by the Indemnitee from such third party. Failure to give such written notice within the time period described above, shall not release the Indemnitor except to the extent such party is prejudiced by such failure. Upon receipt of such notice, the Indemnitor shall be entitled to participate in such claim or action, to assume the defense thereof with counsel reasonably satisfactory to the Indemnitee, and to settle or compromise such claim or action, provided that if such settlement or compromise -------- shall provide for any relief other than a monetary payment by the Indemnitor, such settlement or compromise shall be effected only with the consent of the Indemnitee, which consent shall not be unreasonably withheld or delayed. After notice to the Indemnitee of the Indemnitor's election to assume the defense of such claim or action, the Indemnitor shall not be liable to the Indemnitee under Section 7 for any legal or other expenses subsequently incurred by the Indemnitee in connection with the defense thereof other than reasonable costs of investigation, provided that the Indemnitee shall have the right to employ -------- counsel to represent it if (x) the employment of such counsel has been - specifically authorized in writing by the Indemnitor, (y) such claim or action involves remedies other than monetary damages and such remedies, in the Indemnitee's reasonable judgment, could have a material adverse effect on such Indemnitee or (z) the named parties to any such third party claim (including impleaded parties) include both the Indemnitee and the Indemnitor and such Indemnitee shall have been advised in writing by its counsel that there may be conflicting interests between the Indemnitor and the Indemnitee in the legal defense of such third party claim, and in any such event the fees and expenses of such separate counsel shall be paid by the Indemnitor, provided that the -------- Indemnitor shall not be obligated to pay the fees or expenses of more than one separate counsel for all Indemnitees arising out the same claim or action. If the Indemnitor does not elect to assume the defense of such claim or action within 30 days of the Indemnitee's delivery of 54 notice of such a claim or action, the Indemnitor shall be deemed to have waived its right to assume the defense of such third party claim and the Indemnitee shall be entitled to assume the defense thereof. If the Indemnitor fails to acknowledge in writing its indemnification obligation to the Indemnitee for such claim or action within a reasonable period following the request therefor by the Indemnitee, the Indemnitee shall be entitled to assume the defense of such claim or action in any manner it deems appropriate including, without limitation, settling any such third party claim or consenting to the entry of any judgment with respect thereto, provided that it acts reasonably and in good faith. Unless it has been conclusively determined through a final judicial determination (or settlement tantamount thereto) that the Indemnitor is not liable to the Indemnitee under this Section 7.2.3., the Indemnitee shall act reasonably and in accordance with its good faith business judgment with respect to such defense, and shall not settle or compromise any such claim or action without the consent of the Indemnitor, which consent shall not be unreasonably withheld or delayed. The parties hereto agree to render to each other such assistance as may reasonably be requested in order to insure the proper and adequate defense of any such claim or action, including making employees available on a mutually convenient basis to provide additional information and explanation of any relevant materials or to testify at any proceedings relating to such claim or action. (b) Other Claims. Within 10 business days after an Indemnitee ------------ sustains any Damages not involving a third party claim or action which such Indemnitee reasonably believes may give rise to a claim for indemnification from an Indemnitor hereunder, such Indemnitee shall deliver notice of such claim to the Indemnitor, specifying with reasonable detail the basis on which indemnification is being asserted and the amount of such Damages. If the Indemnitor does not notify the Indemnitee within 30 calendar days following its receipt of such notice that the Indemnitor disputes its liability to the Indemnitee under this Section 7, such claim specified by the Indemnitee in such notice shall be conclusively deemed a liability of the Indemnitor under this Section 7 and the Indemnitor shall pay the amount of such claim to the Indemnitee on demand or, in the case of any notice in which the amount of the claim (or any portion thereof) is estimated, on such later date when the amount of such claim (or such portion thereof) becomes finally determined. If the Indemnitor has timely disputed its liability with respect to such claim, as provided above, the Indemnitor and the Indemnitee shall proceed in good faith to negotiate a resolution of such dispute and, if not resolved through negotiations, such dispute shall be resolved by litigation in an appropriate court of competent jurisdiction. (c) Prompt Payment. The Indemnitor shall promptly pay or reimburse, -------------- as appropriate, the Indemnitee for any Damages to which it is entitled to be indemnified hereunder. Neither party shall permit any exercise of any right of set-off against the other party. 55 (d) Mitigation of Damages. In addition to any obligation of the --------------------- Purchaser Indemnitees to mitigate Damages under applicable law, for any matter as to which the Sellers are, or are reasonably likely to be liable to the Purchaser Indemnitees for Damages covered by (A) clause (ii) of Section 7.2.1 (only to the extent such Damages arise out of a breach of Section 2.16), (B) clause (vi) of Section 7.2.1 (provided that clauses (ii) and (v) below of this Section 7.2.3(d) shall not apply to items (3) or (4) of Section 7.2.1(B) of the Disclosure Letter, or (C) clause (vii) of Section 7.2.1, the Purchaser shall, and shall cause its affiliates to (i) at all times act reasonably so as to minimize Damages, (ii) not take any action the expense of which would constitute Damages, unless and only to the extent that (A) such action is required by any applicable law, regulation or governmental authority, (B) such action is reasonably likely to minimize the amount of Damages for which the Purchaser Indemnitees would be entitled to indemnification for under Section 7.2.1, or (C) Waste Management or one of the Sellers requests in writing that the Purchaser or one of its affiliates take such action, (iii) give the Sellers, Waste Management and their respective representatives reasonable access at all reasonable times to such information and documents in their possession and/or control relating to the calculation of Damages, (iv) consult with the Sellers, Waste Management and their respective representatives with respect to, and allow the Sellers and Waste Management and their respective representatives to monitor, any remedial, monitoring or similar activities the expense of which may constitute Damages and (v) offer to Waste Management or the Sellers the opportunity on commercially reasonable terms and at Waste Management's or the Seller's expense to control and engage, directly or indirectly, in any required remedial activities, provided that Waste Management or the Sellers, as applicable, agrees to indemnify the Purchaser Indemnitees to the extent that such remedial activities performed directly or indirectly by Waste Management or the Sellers results in additional Damages to the Purchaser Indemnitees. (e) Barnwell Legislation. Until the Shutdown Deadline, the -------------------- Companies' participation in the consideration of the Barnwell Legislation by the legislature of the State of South Carolina will be handled by Regan E. Voit, with the advice of the McNair Law Firm, P.A. and Allan E. Stalvey. The Purchaser, through Mr. Voit, shall keep WMI apprised of the status of the Barnwell Legislation and advise WMI of any proposed changes in the Barnwell Legislation as promptly as reasonably practicable. 7.2.4 Tax Treatment of Indemnity Payment. The Sellers and the ---------------------------------- Purchaser agree to treat any indemnity payment made pursuant to Section 7.2 as an adjustment to the purchase price for all Tax purposes unless otherwise required by law. 7.2.5 Exclusivity of Indemnification Provision. In the absence of ---------------------------------------- fraud and except as set forth in Section 4.21, the indemnity provided for in this Section 7 shall be the sole and exclusive remedy for Damages owing from the 56 Sellers to the Purchaser Indemnitees and from the Purchaser to the Seller Indemnitees that arise from the matters described in Sections 7.2.1 and 7.2.2. In furtherance of the foregoing, each of the parties hereby waives, from and after the Closing, to the fullest extent permitted under applicable law, any and all rights, claims and causes of action it or any of its affiliates may have against the other party or its affiliates relating to the subject matter of this Agreement arising under or based upon any federal, state or local law, ordinance, rule or regulation or otherwise, other than a claim on the basis of fraud. 7.2.6 Waiver of Contribution. Sellers shall not have any right to ---------------------- seek contribution from any of the Companies or their subsidiaries in the event that the Sellers are required to indemnify Purchaser Indemnitees under this Agreement. 7.2.7 Guaranty of Parent Corporation; Successor Indemnification --------------------------------------------------------- Obligations. - ----------- (a) Waste Management hereby unconditionally guarantees the payment obligations of the Sellers under this Agreement which shall include, without limitation, the payment obligations under Sections 1.3, 4.4, 4.22, 4.23, and the indemnification obligations of the Sellers in this Section 7 and hereby joins in and becomes a party to this Agreement for the purpose of signifying its agreement with respect to such guaranty obligation. (b) The indemnification obligations of Purchaser and WMI pursuant to this Section 7 shall be binding upon any successor to Purchaser or WMI. Without limiting the generality of the foregoing, the indemnification obligations of Purchaser and WMI shall be binding upon any successor to a significant portion of Purchaser's or WMI's business, by way of merger, consolidation, statutory share exchange, sale of all, substantially all or any significant part of a party's assets, or the distribution of any significant amount of a party's business or assets by way of spin-off, split-off or similar transaction. 8. General Provisions. ------------------ 8.1 Modification; Waiver. This Agreement may be modified only by a -------------------- written instrument executed by the parties hereto. Any of the terms and conditions of this Agreement may be waived in writing at any time on or prior to the Closing Date by the party entitled to the benefits thereof. 8.2 Entire Agreement. This Agreement, including the Disclosure ---------------- Letter, is the entire agreement of the parties with respect to the subject matter hereof and supersedes all other prior agreements, understandings, documents, projections, financial data, statements, representations and warranties, oral or written, express or implied, between the parties hereto and their respective affiliates, representatives and agents in respect of the subject matter hereof, 57 except that this Agreement does not supersede the Confidentiality Agreement, the terms and conditions of which the parties hereto expressly reaffirm. 8.3 Certain Limitations. It is the explicit intent and understanding ------------------- of each of the parties hereto that neither party nor any of its affiliates, representatives or agents is making any representation or warranty whatsoever, oral or written, express or implied, other than those set forth in Sections 2 and 3 and neither party is relying on any statement, representation or warranty, oral or written, express or implied, made by the other party or such other party's affiliates, representatives or agents, including, without limitation, any such statement, representation or warranty contained in any offering memorandum or any information, document or material made available to the Purchaser in certain "data rooms", management presentations or any other form in expectation of the transactions contemplated hereby, except for the representations and warranties set forth in such Sections 2 and 3. EXCEPT AS OTHERWISE SPECIFICALLY SET FORTH IN THIS AGREEMENT, THE PARTIES EXPRESSLY DISCLAIM ANY IMPLIED WARRANTY OR REPRESENTATION AS TO CONDITION, MERCHANTABILITY OR SUITABILITY AS TO ANY OF THE ASSETS OF THE BUSINESS AND, EXCEPT AS OTHERWISE SPECIFICALLY SET FORTH IN THIS AGREEMENT, IT IS UNDERSTOOD THAT THE PURCHASER TAKES THE ASSETS OF THE BUSINESS "AS IS" AND "WHERE IS". The parties agree that this is an arm's length transaction in which the parties' undertakings and obligations are limited to the performance of their obligations under this Agreement. The Purchaser acknowledges that it is a sophisticated investor, that it has undertaken a full investigation of the Business, and that it has only a contractual relationship with the Sellers, based solely on the terms of this Agreement, and that there is no special relationship of trust or reliance between it and either Seller. 8.4 Termination. ----------- (a) This Agreement may be terminated: (i) at any time prior to the Closing Date by mutual consent of the Purchaser and the Sellers, (ii) by the Purchaser or the Sellers, if the Closing shall not have taken place on or before May 25, 2000 or such later date as the parties may have agreed to in writing, or (iii) by either the Purchaser or the Sellers by written notice to the other party if any event, fact or condition shall occur or exist that shall have made it impossible to satisfy a condition precedent to the terminating party's obligations to consummate the transactions contemplated by this Agreement, and such event, fact or condition shall not have been cured within 30 days after the non-terminating party is made aware of such event, fact or condition, unless the occurrence or existence of such event, fact or condition shall be due to the failure of the terminating party to perform or comply with any of the agreements or covenants hereof to be performed or complied with by such party prior to the Closing, provided that with respect to any termination pursuant to the foregoing -------- clauses (ii) and (iii), the non-occurrence of the Closing is not attributable to a 58 breach of the terms hereof by the party seeking termination or a breach of the terminating party's representations and warranties made herein. (b) In the event of termination by the Sellers or the Purchaser pursuant to this Section 8.4, written notice thereof shall forthwith be given to the other party and the transactions contemplated by this Agreement shall be terminated without further action by either party. If the transactions contemplated by this Agreement are terminated as provided herein: (i) The Purchaser shall return to the Sellers all documents and other materials received from the Sellers, and their respective affiliates and agents (including all copies of or materials developed from any such documents or other materials) relating to the transactions contemplated hereby, whether obtained before or after the execution hereof; and (ii) All confidential information received by the Purchaser with respect to the Sellers and their respective affiliates shall be treated in accordance with the Confidentiality Agreement which shall remain in full force and effect notwithstanding the termination of this Agreement. (c) If this Agreement is terminated as provided in this Section 8.4, this Agreement shall become null and void and of no further force or effect, except for the Confidentiality Agreement as amended by the last sentence of Section 4.3, Section 4.7 relating to publicity, and Section 8.5 relating to certain expenses. Nothing in this Section 8.4 shall be deemed to release any party from any liability for any breach by such party of the terms and provisions of this Agreement or to impair the right of any party to compel specific performance by any other party of its obligations under this Agreement. 8.5 Expenses. Except as expressly provided herein, whether or not -------- the transactions contemplated herein shall be consummated, each party shall pay its own expenses incident to the preparation and performance of this Agreement. 8.6 Further Actions. Each party shall execute and deliver such --------------- certificates and other documents and take such other actions as may reasonably be requested by the other party in order to consummate or implement the transactions contemplated hereby. 8.7 Post-Closing Access. In connection with any matter relating to ------------------- any period prior to, or any period ending on, the Closing, each party shall, upon the request and at the expense of the other party, permit the requesting party and its representatives full access at all reasonable times to the non- privileged books, records and personnel of the Companies and their subsidiaries, and each party shall execute (and the Purchaser shall cause the Companies and their respective subsidiaries to execute) such documents as the other party may 59 reasonably request to enable the first party to file any required reports or tax returns relating to the Companies or any of their subsidiaries, to defend any litigation involving any party or its affiliates or otherwise for a valid business purpose. Each party shall not dispose of such books and records during the seven-year period beginning with the Closing Date without the other party's consent, which shall not be unreasonably withheld. Following the expiration of such seven-year period, the first party may dispose of such books and records at any time upon giving 60 days' prior written notice to the other party, unless the second party agrees to take possession of such books and records within 60 days at no expense to the first party. 8.8 Notices. All notices, requests, demands and other communications ------- hereunder shall be in writing and shall be deemed to have been duly given or made as follows: (a) if sent by registered or certified mail in the United States return receipt requested, upon receipt; (b) if sent by reputable overnight air courier (such as DHL or Federal Express), two business days after mailing; (c) if sent by facsimile transmission, with a copy mailed on the same day in the manner provided in (a) or (b) above, when transmitted and receipt is confirmed by telephone; or (d) if otherwise actually personally delivered, when delivered and shall be delivered as follows: if to the Sellers: c/o Waste Management Inc. 1001 Fannin, Suite 4000 Houston, Texas 77002 Fax Number: (713) 209-0704 Attention: General Counsel with copies to: Debevoise & Plimpton 875 Third Avenue New York, New York 10022 Fax Number: (212) 909-6836 Attention: Robert F. Quaintance, Jr. 60 if to the Purchaser: GTS Duratek, Inc. 10100 Old Columbia Road Columbia, Maryland 21046 Fax Number: (410) 290-9112 Attention: Robert F. Shawver, Executive Vice President and Chief Financial Officer with a copy to: Hogan & Hartson L.L.P. 111 South Calvert Street Baltimore, Maryland 21202 Fax Number: (410) 539-6981 Attention: Lawrence R. Seidman or to such other address or to such other person as any party hereto shall have last designated by notice to the other parties. 8.9 Assignment. This Agreement shall be binding upon and inure to ---------- the benefit of the parties hereto and their respective successors and assigns, provided that any assignment, by operation of law or otherwise, by any party hereto shall require the prior written consent of the other parties and any purported assignment or other transfer without such consent shall be void and unenforceable. Notwithstanding the foregoing, (a) the Purchaser may assign this Agreement to any of its subsidiaries or affiliates without the Sellers' consent, provided that the Purchaser shall remain jointly and severally liable for its obligations hereunder and (b) the Purchaser and any of its subsidiaries or affiliates may grant a security interest in their respective rights herein to the lenders of the Purchaser and its subsidiaries providing financing for the transactions contemplated by this Agreement (and any refinancings thereof). 8.10 No Third Party Beneficiaries. Except as provided in Sections ---------------------------- 4.4, 4.8, 4.9, 4.11 and 7, nothing in this Agreement shall confer any rights upon any person or entity which is not a party or a successor or permitted assignee of a party to this Agreement. 8.11 Counterparts. This Agreement may be executed in counterparts, ------------ both of which shall constitute one and the same instrument. 8.12 Interpretation. The section headings in this Agreement are for -------------- convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provision hereof. Any references to the Sellers' knowledge or the knowledge of either Seller shall mean the actual knowledge of 61 the persons listed in Section 8.12 of the Disclosure Letter. Any reference to a Schedule to this Agreement shall mean a Section of the Disclosure Letter. 8.13 Governing Law. This Agreement shall be construed, performed and ------------- enforced in accordance with the laws of the State of Delaware, without regard to the conflicts of law principles of such state. 8.14 Consent to Jurisdiction, etc. ---------------------------- (a) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdictions of any Federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby or for recognition or enforcement of any judgment relating thereto, 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 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. (b) Each of the parties hereto 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 or the transactions contemplated hereby in any New York Federal court. 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. (c) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 8.8. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law. 8.15 Waiver of Jury Trial. -------------------- (a) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 62 (b) EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) 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, (ii) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (iii) IT MAKES SUCH WAIVER VOLUNTARILY, AND (iv) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATION IN THIS SECTION 8.15. 8.16 Certain Definitions . The following terms used herein shall ------------------- have the following meanings: (a) "affiliate" means, with respect to any specified person, a person --------- that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified; (b) "control" (including the correlative terms "controlling," ------- "controlled by" and "under common control with") means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting equity interest, by contract or otherwise; (c) "person" means an individual, corporation, partnership, limited ------ liability company, association, joint-stock company, trust, unincorporated organization or government or political subdivision thereof; and (d) "subsidiary" means, with respect to any person, an affiliate that ---------- is controlled by such person directly, or indirectly through one or more intermediaries. 8.17 Severability. If any provision of this Agreement shall be held ------------ to be illegal, invalid or unenforceable under any applicable law, then such contravention or invalidity shall not invalidate the entire Agreement. Such provision shall be deemed modified to the extent necessary to render it legal, valid and enforceable, and if no such modification shall render it legal, valid and enforceable, then this Agreement shall be construed as if not containing the provision held to be invalid, and the rights and obligations of the parties shall be construed and enforced accordingly. 63 8.18 Specific Performance. In addition to any other remedies which -------------------- Purchaser may have at law or in equity, each Seller hereby acknowledges that the Nuclear Services Shares and the Companies and their subsidiaries are unique, and that the harm to the Purchaser resulting from breaches by any Seller of its obligations under Sections 1.1 and 1.2 cannot be adequately compensated by damages. Accordingly, each Seller agrees that Purchaser shall have the right to have such obligations specifically performed by the Sellers and that Purchaser shall have the right to obtain an order or decree of such specific performance in the courts referred to in Section 8.14 hereof. [SIGNATURES APPEAR ON THE FOLLOWING PAGE] 64 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written. CHEMICAL WASTE MANAGEMENT INC. By: /s/ Brian J. Blankfield ----------------------- Name: Brian J. Blankfield Title: Vice President & Secretary CNS HOLDINGS, INC. By: /s/ Brian J. Blankfield ----------------------- Name: Brian J. Blankfield Title: Vice President & Secretary RUST INTERNATIONAL, INC. By: /s/ Brian J. Blankfield ----------------------- Name: Brian J. Blankfield Title: Vice President & Secretary GTS DURATEK, INC. By: /s/ Robert F. Shawver --------------------- Name: Robert F. Shawver Title: Executive Vice President and Chief Financial Officer 65 The undersigned hereby joins in this Agreement for the purpose of acknowledging its agreement to guaranty the payment obligations of the Sellers pursuant to this Agreement which include, without limitation, Sections 1.3, 4.4, 4.22, 4.23 and Section 7 hereof. The undersigned also hereby joins in this Agreement for the purpose of acknowledging its agreement to be bound by the covenants set forth in Sections 4.17 through 4.24 and Section 5 hereof as if it were a Seller for purposes thereof. The undersigned in not bound by any other provision of this Agreement. WASTE MANAGEMENT, INC. By: /s/ Ronald H. Jones ------------------- Name: Ronald H. Jones Title: Vice President & Treasurer By: /s/ Brian J. Blankfield ----------------------- Name: Brian J. Blankfield Title: Vice President & Assistant Secretary 66 EX-99.3 4 0004.txt EXHIBIT 99.3 AMEND NO 1 Exhibit 99.3 AMENDMENT NO. 1 TO PURCHASE AGREEMENT AND DISCLOSURE LETTER AMENDMENT NO. 1, dated June 8, 2000, to the Purchase Agreement dated March 29, 2000, (the "Agreement") and the Disclosure Letter dated March 29, 2000 (the "Disclosure Letter"), each among Chemical Waste Management Inc., Rust International, Inc., CNS Holdings, Inc. (together, the "Sellers") and GTS Duratek, Inc. (the "Purchaser"). Capitalized terms used herein without definition shall have the respective meanings assigned to them in the Agreement. WHEREAS, the Sellers and the Purchaser desire to amend the Agreement and the Disclosure Letter as set forth below; NOW, THEREFORE, in consideration of the mutual covenants and obligations set forth in this Amendment No. 1, the parties hereto agree as follows: 1. Section 4.8(b) of the Agreement is amended to add the following at the end thereof: The Purchaser shall post replacement bonds for each of the Bonds set forth in Section 4.8 of the Disclosure Letter (other than the three that are designated "BID" and the one that is designated "AWARD" in the column headed "Bond Number" on Annex 4.8 to the Disclosure Letter) on or prior to the Closing Date (each, a "Replacement Bond"). At the Closing, the Purchaser shall deliver (i) a fully executed copy of each Replacement Bond (which Replacement Bond shall state prominently on its face the Bond which it is replacing) and (ii) a copy of the transmittal letter for each Replacement Bond addressed to the entity for which the Replacement Bond is being posted requesting that such entity release and return the Bond which is being replaced. 2. The first sentence of Section 4.8(c) of the Agreement is amended to read in its entirety as follows: (c) If any Seller or any Non-Company Affiliate shall not have been completely and unconditionally released with respect to any Bond or Guaranty (any such Bonds or Guarantees being referred to as "Outstanding") on or prior to Closing, then, so long as Purchaser has complied with its obligations under Section 4.8(b), the Closing shall nevertheless occur and Purchaser shall (i) (A) with respect to the Outstanding Bonds identified in - Section 4.8 of the Disclosure Letter for which Replacement Bonds have not been delivered in accordance with Section 4.8(b), deliver to the Sellers or to one or more Non-Company Affiliates designated by the Sellers, at the Closing, an irrevocable, standby letter of credit (the "Standby LoC") from a bank or other financial institution reasonably satisfactory to the Sellers (the "Issuer"), in an amount equal to the aggregate face amount of such Outstanding Bonds, and (B) with respect to the Outstanding Guarantees identified in Section 4.8 of - the Disclosure Letter, take the actions specified in Section 4.8(d), (e), (f) and (g), and (ii) indemnify and hold harmless each Seller and each Non- Company Affiliate that is party to, or has furnished security in connection with, any Outstanding Bond or Guaranty from any and all losses, claims, liability or damage (including reasonable attorneys' fees and other costs and expenses) in respect of any such Outstanding Bonds or Guaranties, including, without limitation, interest on any un-reimbursed payment made by such Seller or Non-Company Affiliate at the prime rate posted from time to time by the Chase, N.A. plus two percent (2%) per annum from the date of payment until the date reimbursed, except that the Purchaser shall not be required to indemnify or hold harmless any Seller or Non-Company Affiliate to the extent that the losses, claims, liability or damage arise from events or conditions that entitle any Purchaser Indemnitee to indemnification pursuant to Section 7.2 hereof, taking into consideration the deductible and the maximum limitation, as applicable, in Section 7.2.1(c). 3. Section 4.8(d) of the Agreement is amended to add the following at the end of clause (i) thereof: Without limiting the foregoing, the Purchaser will, at such time as the Purchaser and Waste Management Inc. ("WMI") shall mutually agree, but in any event no later than twelve months after the Closing Date, deliver to the State of South of Carolina Budget and Control Board and the Department of Health and Environmental Control of the State of South Carolina (collectively, the "South Carolina Agencies") a written guaranty by the Purchaser containing the same terms as the Corporate Guarantee of Responsibility for Chem-Nuclear at Barnwell delivered by Waste Management Inc. in 1982 and referred to in Section 4.8 of the Disclosure Letter (the "Barnwell Guaranty"). 4. The following clauses (e) and (f) are added to Section 4.8 of the Agreement: (e) Until the Guarantee Release is obtained for the Barnwell Guaranty, the Purchaser will (i) continue in effect the American Nuclear Insurance $100 million facility liability coverage with respect to the Barnwell Facility with substantially the same deductible, coverage and exclusions as are in effect immediately prior to the Closing, with WMI and its affiliates as additional insureds; 2 (ii) maintain in effect with AIG additional property insurance with respect to the Barnwell Facility covering claims for on-site and off-site clean-up of pre-existing and new conditions, claims of third parties for on-site and off-site bodily injury and property damage and legal defense of any such claims with coverage limits of $120 million per incident and $120 million aggregate and containing the terms and conditions set forth in Annex 4.8(e) to the Disclosure Letter, provided that the Purchaser will pay $1,136,628 of the total policy premium/placement fee/tax associated with such policy and WMI will pay $866,272 of the total policy premium/placement fee/tax associated with such policy; (iii) twelve months after the Closing Date furnish to WMI and thereafter maintain in effect an irrevocable standby letter of credit or an irrevocable surety bond from a bank or other financial institution reasonably acceptable to WMI in the amount of $5 million, which letter of credit or surety bond may be drawn by WMI or any of its affiliates by delivering a certificate to the effect that (X) a claim has been asserted - under the Barnwell Guaranty or (Y) the Purchaser has not notified WMI at - least 30 days prior to any scheduled renewal date that such letter of credit or surety bond has been renewed; and (iv) eighteen months after the Closing Date, furnish to WMI and maintain in effect an additional letter of credit or surety bond in the amount of $5 million and otherwise meeting the requirements of clause (iii); provided that in lieu of the requirements of the preceding clauses (iii) -------- and (iv), the Purchaser may at its election furnish to WMI and maintain in effect an insurance policy issued by an insurance company reasonably acceptable to WMI insuring WMI and its affiliates against all claims under the Barnwell Guaranty, with coverage limits of $25 million per occurrence and $25 million aggregate, with a deductible of no more than $1 million and no exclusions other than those to which WMI shall have reasonably consented in writing. Any insurance policy maintained pursuant to the preceding clauses (i) or (ii) or proviso shall provide that WMI shall receive 30 days' advance notice of any material change, cancellation, expiration or non-renewal of coverage and that, except as provided in clause (ii), WMI and its affiliates shall not have any obligation to pay any premiums or assessments thereunder but shall be entitled to pay premiums or assessments not timely paid by the Purchaser in which event the Purchaser shall promptly reimburse WMI or such affiliate the amount of such payment together with interest thereon at the prime rate announced from time to time by Chase, N.A. plus two percent (2%) per annum from the date such payment is made to the date of reimbursement by the Purchaser. Any such insurance shall provide primary coverage to WMI and its affiliates. None of the State of South Carolina or the Budget and Control Board or Department of Health and Environmental 3 Control of the State of South Carolina will be a named insured or additional insured under any insurance policy maintained pursuant to the preceding clauses (i) or (ii) or proviso. The Purchaser shall make available to WMI within 90 days after the Closing Date and at least annually thereafter with copies of the policies of insurance referred to above. (f) Until the Guarantee Release is obtained for the Barnwell Guaranty, (i) the Purchaser shall and shall cause Chem-Nuclear to (A) maintain all of the property and equipment used at the Barnwell Facility in good repair and working order, ordinary wear and tear excepted, and make all necessary repairs and replacements or improvements necessary to conform to good industry practice; (B) obtain and maintain in full force and effect all material licenses, permits and other governmental authorizations required for the operation of the Barnwell Facility; (C) comply in all material respects with all applicable laws (including without limitation all Environmental Laws), statutes, rules, regulations, judgments, orders, decrees, licenses, permits (including without limitation all Environmental Permits), concessions, franchises, leases or other agreements, authorizations or approvals to which the Barnwell Facility or the operation of the Barnwell Facility is subject, maintain procedures (including without limitation procedures regarding inspection and approval of waste accepted for disposal at the Barnwell Facility, recordkeeping, inspection of trenches and caps and monitoring of Releases) to ensure such compliance that are consistent with good industry practice and promptly cure any instance of material non-compliance; and (D) if Chem-Nuclear shall propose to enter into or amend, modify, supplement or seek a waiver under any permit, license or other governmental authorization relating to the Barnwell Facility or the operation of the Barnwell Facility or any agreement with the State of South Carolina or the South Carolina Agencies (collectively, the "State"), in a manner that changes the types of waste that are permitted to be disposed of at the Barnwell Facility or that could reasonably be expected to either increase the likelihood that a claim would be made against WMI or its affiliates under the Barnwell Guaranty or to increase the potential liability of WMI or its affiliates in the event of such a claim under the Barnwell Guaranty, notify the Monitor (as defined below) of such proposed permit, license, governmental authorization, agreement, amendment, modification, supplement or waiver and provide the Monitor with reasonable access to all communications, reports, and other information related to such proposed permit, license, governmental authorization, agreement, amendment, modification, supplement or waiver consistent with the access provided to the Monitor pursuant to Section 4(f)(ii) below. (ii) WMI shall be entitled to designate an environmental consulting firm or person (the "Monitor"), to monitor and audit, at WMI's expense, the 4 operations at the Barnwell Facility and the Purchaser's compliance with the requirements of this Agreement and with good industry practice. WMI shall promptly forward to the Purchaser copies of any written report by the Monitor. The Purchaser shall ensure that the Monitor is provided reasonable access to Barnwell and to Purchaser and Chem-Nuclear personnel, agents, advisors, customers and relevant books and records at such times as the Monitor may reasonably require. The Purchaser shall ensure that the Monitor is provided reasonable access to (A) copies of each audit of the operations at the Barnwell Facility by any regulator, insurer, customer or customer organization or other person and (B) copies of any notice, order, request for information, communication or report received by the Purchaser or any of its affiliates in connection with any alleged Release or any alleged violation of applicable law (including without limitation Environmental Law), statute, rule, regulation, judgment, order, decree, license, permit (including without limitation any Environmental Permit), concession, franchise, lease or other agreement, authorization or approval to which the Barnwell Facility or the operations at the Barnwell are subject. The Monitor shall not be entitled to conduct tests of the soil, surface or subsurface waters, and air quality at, in on, beneath or about the Barnwell Facility or the related real property, or any other real property operated by the Purchaser or its affiliates without the prior written consent of the Purchaser. WMI shall, and shall cause the Monitor to, cooperate with Purchaser to preserve the confidentiality of the information made available to the Monitor pursuant hereto and to avoid the waiver of any applicable privileges against disclosure with respect thereto, provided that the foregoing will not prohibit either WMI or the Purchaser from disclosing such information to the State. (iii) The Purchaser shall implement at its expense any and all investigation, remediation, removal and response actions which are necessary to maintain in effect the insurance called for by Section 4.8(e). (iv) In the event that (a) the State asserts or threatens to assert a claim under the Barnwell Guaranty and there is no Alternative Source (as defined below) to address the matter that is the subject of such claim or (b) any insurer providing insurance called for by Section 4.8(e) has given notice of termination of such insurance due to the failure of the Purchaser or its affiliates to appropriately respond to any finding or recommendation made by such insurer with respect to the Barnwell Facility, then Purchaser and its affiliates shall, if the State approves, permit WMI or its designees to have access to the Barnwell Facility and to undertake, under the control of WMI or such designee and at Purchaser's expense, such investigation, testing, clean-up, remediation or response as WMI or such designee, with the consent of the State, deems reasonably necessary or appropriate. The Purchaser shall not be required to pay the expense of WMI or its designee pursuant to the previous sentence to the extent that the expense arises 5 from events or conditions that entitle any Purchaser Indemnitee to indemnification pursuant to Section 7.2 hereof, taking into consideration the deductible and the maximum limitation, as applicable, in Section 7.2.1(c). "Alternative Source" means, with respect to any matter that is the subject of a claim or threatened claim under the Barnwell Guaranty, any of the following: (v) the letters of credit or bonds referred to in Section 4.8(e) (iii) and (iv) above are in amounts sufficient to pay the costs of addressing such matter and Purchaser is diligently addressing such matter to the satisfaction of the State; (w) Purchaser has sufficient financial and other resources to address such matter and does diligently address such matter to the satisfaction of the State; (x) any insurer which has issued an insurance policy with sufficient coverage available to pay the costs of addressing such matter has confirmed that such matter is covered by such insurance and Purchaser (or such insurer) is diligently addressing such matter to the satisfaction of the State; (y) the State has confirmed that the costs of addressing such matter will be paid out of the closure or long-term care funds maintained for the Barnwell Facility and not pursuant to the Barnwell Guaranty; or (z) the State has confirmed that it will not seek to recover such costs under the Barnwell Guaranty. (g) All surety bonds and letters of credit identified in Section 4.8 of the Disclosure Letter must be replaced at Closing in accordance with Section 4.8(b), provided that any such other bonds or letters of credit not so released in accordance with 4.8(b) may be satisfied in accordance with Section 4.8(c). Notwithstanding the foregoing, (i) no additional action need be taken at Closing if the Guaranty Release for the Guarantee of Lease (Lakewood Office) or the Guarantee to the Illinois Department of Safety have not been obtained, provided that until the Guarantee Release for the Guarantee to the Illinois Department of Safety is obtained, the Purchaser and its affiliates will not perform any significant increase in the work under the related contract, (ii) no additional action need be taken at or after the Closing with respect to the Guaranty Release for the North Carolina Project Guarantee and (iii) no action need be taken at or after the closing with respect to the three bonds that are designated "BID" and the one that is designated "AWARD" in the column headed "Bond Number" on Annex 4.8 to the Disclosure Letter. 5. Section 8.4(a) of the Agreement is amended by changing the date in clause (ii) thereof to noon, Eastern time, on June 9, 2000. 6. Section 8.18 of the Agreement is amended to add the following at the end thereof: In addition to any other remedies which the Sellers or Waste Management Inc. may have at law or in equity, the Purchaser hereby acknowledges that the harm to the Sellers and WMI resulting from breaches by the Purchaser of its 6 obligations under the last sentence of Section 4.8(d)(i) and under Section 4.8(e) cannot be adequately compensated by damages. Accordingly, the Purchaser agrees that the Sellers and WMI shall have the right to have such obligations specifically performed by the Purchaser and the Sellers and WMI shall have the right to obtain an order or decree of such specific performance in the courts referred to in Section 8.14 hereof. 7. Section 1.3(a) of the Disclosure Letter is amended to add the following paragraph (f): (f) Deferred income taxes. 8. The following is added to Section 4.8 of the Disclosure Letter under Chem-Nuclear Guaranties: North Carolina Project/CWM/LSR # 08142. Annex 4.8(e) to this Amendment No. 1 is added as Annex 4.8(e) to the Disclosure Letter. 9. To the extent permissible under WMI's master services agreements for geosynthetic liners, WMI will provide the Purchaser their most advantageous prices available under such agreements for such product for use in performing the Oak Ridge Contract. Nothing herein shall obligate WMI to provide such pricing if not allowable under such master services agreements. 10. The Purchaser and the Sellers agree that the adjustments to the Initial Chem-Nuclear Purchase Price and the Initial Federal Services Purchase Price based on the Chem-Nuclear Estimated Adjusted Closing Stockholders Equity and the Federal Services Estimated Adjusted Closing Stockholders Equity, as contemplated by Sections 1.2(c)(i) and 1.2(c)(ii), respectively, shall each be $0, and that the Initial Purchase Price to be delivered at Closing shall be $65.0 million, of which $10.0 million shall be deposited into an escrow account with the Escrow Agent. 7 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written. CHEMICAL WASTE MANAGEMENT INC. By: /S/ Brian J. Blankfield -------------------------------- Name: Brian J. Blankfield Title: Vice President & Secretary CNS HOLDINGS, INC. By: /S/ Brian J. Blankfield -------------------------------- Name: Brian J. Blankfield Title: Vice President & Secretary RUST INTERNATIONAL, INC. By: /S/ Brian J. Blankfield -------------------------------- Name: Brian J. Blankfield Title: Vice President & Secretary GTS DURATEK, INC. By: /S/ Robert F. Shawver -------------------------------- Name: Robert F. Shawver Title: Executive Vice President and Chief Financial Officer 8 EX-99.4 5 0005.txt EXHIBIT 99.4 2ND AMEND CREDIT AGMT Exhibit 99.4 ================================================================================ SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of June 8, 2000 by and among GTS DURATEK, INC., and the Subsidiary Borrowers referred to herein as Borrowers, the Lenders referred to herein, FIRST UNION NATIONAL BANK, as Administrative Agent, CREDIT LYONNAIS NEW YORK BRANCH, as Documentation Agent, FLEET NATIONAL BANK, as Syndication Agent, and FIRST UNION SECURITIES, INC., as Lead Arranger and Book Manager ================================================================================ TABLE OF CONTENTS ARTICLE I DEFINITIONS........................................................................................... 1 SECTION 1.1 Definitions...................................................................................... 1 SECTION 1.2 General.......................................................................................... 24 SECTION 1.3 Other Definitions and Provisions................................................................. 24 ARTICLE II REVOLVING CREDIT FACILITY............................................................................. 24 SECTION 2.1 Revolving Credit Loans........................................................................... 24 SECTION 2.2 Swingline Loans.................................................................................. 25 SECTION 2.3 Procedure for Advances of Revolving Credit and Swingline Loans................................... 26 SECTION 2.4 Repayment of Revolving Credit and Swingline Loans................................................ 27 SECTION 2.5 Notes............................................................................................ 28 SECTION 2.6 Permanent Reduction of the Revolving Credit Commitment and/or Swingline Commitment............... 28 SECTION 2.7 Termination of Revolving Credit Facility......................................................... 29 ARTICLE III LETTER OF CREDIT FACILITY............................................................................. 29 SECTION 3.1 L/C Commitment................................................................................... 29 SECTION 3.2 Procedure for Issuance of Letters of Credit...................................................... 30 SECTION 3.3 Commissions and Other Charges.................................................................... 30 SECTION 3.4 L/C Participations............................................................................... 31 SECTION 3.5 Reimbursement Obligation of the Borrowers........................................................ 32 SECTION 3.6 Obligations Absolute............................................................................. 32 SECTION 3.7 Effect of Application............................................................................ 33 ARTICLE IV TERM LOAN FACILITIES.................................................................................. 33 SECTION 4.1 Term Loans....................................................................................... 33 SECTION 4.2 Procedure for Advance of Term Loans.............................................................. 33 SECTION 4.3 Repayment of Term Loans.......................................................................... 34 SECTION 4.4 Prepayments of Term Loans........................................................................ 35 SECTION 4.5 Term Notes....................................................................................... 37 ARTICLE V GENERAL LOAN PROVISIONS............................................................................... 37 SECTION 5.1 Interest......................................................................................... 37 SECTION 5.2 Notice and Manner of Conversion or Continuation of Loans......................................... 40 SECTION 5.3 Fees............................................................................................. 41 SECTION 5.4 Manner of Payment................................................................................ 41 SECTION 5.5 Crediting of Payments and Proceeds............................................................... 42 SECTION 5.6 Adjustments...................................................................................... 43 SECTION 5.7 Nature of Obligations of Lenders Regarding Extensions of Credit; Assumption by the Administrative Agent............................................................................. 43 SECTION 5.8 Changed Circumstances............................................................................ 44
i SECTION 5.9 Indemnity........................................................................................ 46 SECTION 5.10 Capital Requirements............................................................................. 46 SECTION 5.11 Taxes............................................................................................ 46 SECTION 5.12 Security......................................................................................... 48 ARTICLE VI CLOSING; CONDITIONS OF CLOSING AND BORROWING.......................................................... 48 SECTION 6.1 Closing.......................................................................................... 48 SECTION 6.2 Conditions to Closing and Initial Extensions of Credit........................................... 48 SECTION 6.3 Conditions to All Extensions of Credit........................................................... 53 ARTICLE VII REPRESENTATIONS AND WARRANTIES OF THE BORROWERS....................................................... 54 SECTION 7.1 Representations and Warranties................................................................... 54 SECTION 7.2 Survival of Representations and Warranties, Etc. ................................................ 60 ARTICLE VIII FINANCIAL INFORMATION AND NOTICES..................................................................... 60 SECTION 8.1 Financial Statements and Projections............................................................. 60 SECTION 8.2 Officer's Compliance Certificate................................................................. 61 SECTION 8.3 Accountants' Certificate......................................................................... 61 SECTION 8.4 Other Reports.................................................................................... 62 SECTION 8.5 Notice of Litigation and Other Matters........................................................... 63 SECTION 8.6 Accuracy of Information.......................................................................... 64 ARTICLE IX AFFIRMATIVE COVENANTS................................................................................. 65 SECTION 9.1 Preservation of Corporate Existence and Related Matters.......................................... 65 SECTION 9.2 Maintenance of Property.......................................................................... 65 SECTION 9.3 Insurance........................................................................................ 65 SECTION 9.4 Accounting Methods and Financial Records......................................................... 65 SECTION 9.5 Payment and Performance of Obligations........................................................... 65 SECTION 9.6 Compliance With Laws and Approvals............................................................... 66 SECTION 9.7 Environmental Laws............................................................................... 66 SECTION 9.8 Compliance with ERISA............................................................................ 66 SECTION 9.9 Compliance With Agreements....................................................................... 67 SECTION 9.10 Conduct of Business.............................................................................. 67 SECTION 9.11 Visits and Inspections........................................................................... 67 SECTION 9.12 Additional Subsidiaries.......................................................................... 67 SECTION 9.13 Use of Proceeds.................................................................................. 67 SECTION 9.14 Collection of Accounts; Notification to Account Debtors.......................................... 68 SECTION 9.15 Existing Letters of Credit....................................................................... 68 SECTION 9.16 Further Assurances............................................................................... 68 ARTICLE X FINANCIAL COVENANTS................................................................................... 69 SECTION 10.1 Leverage Ratio................................................................................... 69 SECTION 10.2 Fixed Charge Coverage Ratio...................................................................... 69
ii SECTION 10.3 Interest Coverage Ratio.......................................................................... 69 SECTION 10.4 Limitation on Capital Expenditures............................................................... 69 SECTION 10.5 Minimum Stockholders' Equity..................................................................... 70 SECTION 10.6 Pro Forma Calculations........................................................................... 70 ARTICLE XI NEGATIVE COVENANTS.................................................................................... 70 SECTION 11.1 Limitations on Debt.............................................................................. 70 SECTION 11.2 Limitations on Guaranty Obligations.............................................................. 71 SECTION 11.3 Limitations on Liens............................................................................. 72 SECTION 11.4 Limitations on Loans, Advances, Investments and Acquisitions..................................... 73 SECTION 11.5 Limitations on Mergers and Liquidation........................................................... 75 SECTION 11.6 Limitations on Sale of Assets.................................................................... 75 SECTION 11.7 Limitations on Dividends and Distributions....................................................... 76 SECTION 11.8 Aging and Secondary Waste........................................................................ 76 SECTION 11.9 Limitations on Exchange and Issuance of Capital Stock............................................ 76 SECTION 11.10 Transactions with Affiliates..................................................................... 77 SECTION 11.11 Certain Accounting Changes....................................................................... 77 SECTION 11.12 Amendments; Payments and Prepayments of Subordinated Debt or Preferred Stock..................... 77 SECTION 11.13 Restrictive Agreements........................................................................... 77 ARTICLE XII DEFAULT AND REMEDIES.................................................................................. 78 SECTION 12.1 Events of Default................................................................................ 78 SECTION 12.2 Remedies......................................................................................... 81 SECTION 12.3 Rights and Remedies Cumulative; Non-Waiver; etc.................................................. 81 ARTICLE XIII THE ADMINISTRATIVE AGENT AND COLLATERAL AGENT......................................................... 82 SECTION 13.1 Appointment...................................................................................... 82 SECTION 13.2 Delegation of Duties............................................................................. 82 SECTION 13.3 Exculpatory Provisions........................................................................... 82 SECTION 13.4 Reliance by the Agents........................................................................... 83 SECTION 13.5 Notice of Default................................................................................ 83 SECTION 13.6 Non-Reliance on the Agents and Other Lenders..................................................... 83 SECTION 13.7 Indemnification.................................................................................. 84 SECTION 13.8 The Agents in Their Individual Capacity.......................................................... 84 SECTION 13.9 Resignation of the Agents; Successor Agents...................................................... 85 SECTION 13.10 Documentation Agent and Syndication Agent........................................................ 85 ARTICLE XIV MISCELLANEOUS......................................................................................... 85 SECTION 14.1 Notices.......................................................................................... 85 SECTION 14.2 Expenses; Indemnity.............................................................................. 86 SECTION 14.3 Set-off.......................................................................................... 87 SECTION 14.4 Governing Law.................................................................................... 87
iii SECTION 14.5 Consent to Jurisdiction.......................................................................... 87 SECTION 14.6 Waiver of Jury Trial............................................................................. 88 SECTION 14.7 Reversal of Payments............................................................................. 88 SECTION 14.8 Injunctive Relief; Punitive Damages.............................................................. 89 SECTION 14.9 Accounting Matters............................................................................... 89 SECTION 14.10 Successors and Assigns; Participations........................................................... 89 SECTION 14.11 Amendments, Waivers and Consents................................................................. 93 SECTION 14.12 Performance of Duties............................................................................ 94 SECTION 14.13 All Powers Coupled with Interest................................................................. 94 SECTION 14.14 Survival of Indemnities.......................................................................... 94 SECTION 14.15 Titles and Captions.............................................................................. 94 SECTION 14.16 Severability of Provisions....................................................................... 94 SECTION 14.17 Counterparts..................................................................................... 95 SECTION 14.18 Term of Agreement................................................................................ 95 SECTION 14.19 GTS as Agent for Borrowers; Obligations Joint and Several Contributions and Indemnity............ 95 SECTION 14.20 Inconsistencies with Other Documents; Independent Effect of Covenants............................ 96
iv EXHIBITS Exhibit A - Form of Borrowing Base Certificate Exhibit B-1 - Form of Revolving Credit Note Exhibit B-2 - Form of Swingline Note Exhibit B-3 - Form of Term A Note Exhibit B-4 - Form of Term B Note Exhibit C-1 - Form of Notice of Revolving Credit/Swingline Borrowing Exhibit C-2 - Form of Term Loan Borrowing Exhibit D - Form of Notice of Account Designation Exhibit E - Form of Notice of Prepayment Exhibit F - Form of Notice of Conversion/Continuation Exhibit G - Form of Officer's Compliance Certificate Exhibit H - Form of Assignment and Acceptance Exhibit I - Form of Joinder Agreement Exhibit J - Form of Pledge Agreement Exhibit K - Form of Security Agreement Exhibit L - Form of Notice of Assignment Exhibit M - Form of Bear Creek Operations Report SCHEDULES Schedule 1.1(a) - Lenders and Commitments Schedule 1.1(b) - Existing Letters of Credit Schedule 7.1(a) - Jurisdictions of Organization and Qualification Schedule 7.1(b) - Subsidiaries and Capitalization Schedule 7.1(f) - Taxes Schedule 7.1(i) - ERISA Plans Schedule 7.1(l) - Material Contracts Schedule 7.1(m) - Labor and Collective Bargaining Agreements Schedule 7.1(s) - Debt, Guaranty Obligations and Bonding Obligations as of the Closing Date Schedule 7.1(t) - Litigation Schedule 11.3 - Existing Liens Schedule 11.4 - Existing Loans, Advances and Investments v SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of the 8th day of June, 2000, by and among GTS DURATEK, INC., a Delaware corporation ("GTS") and each of the Subsidiaries of GTS listed on the signature pages hereto and each additional Subsidiary of GTS which hereafter becomes a Borrower pursuant to Section 9.12 (collectively, the "Subsidiary Borrowers" and, together with GTS, the "Borrowers"), the Lenders who are or may become a party to this Agreement, FIRST UNION NATIONAL BANK, as Administrative Agent for the Lenders, CREDIT LYONNAIS NEW YORK BRANCH, as Documentation Agent and FLEET NATIONAL BANK, as Syndication Agent. STATEMENT OF PURPOSE -------------------- The Borrowers have requested, and the Lenders have agreed, to amend and restate the Existing Facility (as defined below) pursuant to which the Lenders have agreed to extend certain credit facilities to the Borrowers on the terms and conditions of this Agreement. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, such parties hereby agree as follows: ARTICLE I DEFINITIONS ----------- SECTION 1.1 Definitions. The following terms when used in this Agreement ----------- shall have the meanings assigned to them below: "Accounts" means all "accounts" (as defined in the UCC) now owned or -------- hereafter acquired by any Borrower, and shall also mean and include all accounts receivable, contract rights, book debts, notes, drafts and other obligations or indebtedness owing to such Borrower arising from the sale, lease or exchange of goods or other property by it and/or the performance of services by it (including, without limitation, any such obligation which might be characterized as an account, contract right or general intangible under the UCC as in effect in any jurisdiction) and all of such Borrower's rights in, to and under all purchase orders for goods, services or other property, and all of such Borrower's rights to any goods, services or other property represented by any of the foregoing (including returned or repossessed goods and unpaid seller's rights of rescission, replevin, reclamation and rights to stoppage in transit) and all monies due to or to become due to such Borrower under all contracts for the sale, lease or exchange of goods or other property and/or the performance of services by it (whether or not yet earned by performance on the part of such Borrower), in each case whether now in existence or hereafter arising or acquired including, without limitation, the right to receive the proceeds of said purchase orders and contracts and all collateral security and guarantees of any kind given by any Person with respect to any of the foregoing. "Account Debtor" means, with respect to any Account, any Person obligated -------------- to make payment thereunder, including, without limitation, any account debtor thereon. "Acquisition Documents" means the WNMS Purchase Agreement and all documents --------------------- and agreements delivered in connection therewith. "Adjusted Maturity Date" means November 3, 2003. ---------------------- "Administrative Agent" means First Union in its capacity as administrative -------------------- agent hereunder, and any successor thereto appointed pursuant to Section 13.9. "Administrative Agent's Office" means the office of the Administrative ----------------------------- Agent specified in or determined in accordance with the provisions of Section 14.1(c). "Administration Agreement" shall mean the Administration Agreement, dated ------------------------ May 23, 2000, between GTS and the Oak Ridge SPE, concerning the supply by GTS of staffing, equipment, office space and other support necessary for the Oak Ridge SPE to perform its obligations under the Project Documents. "Affiliate" means, with respect to any Person, any other Person (other than --------- a Borrower or a Subsidiary) which directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such first Person or any of its Subsidiaries. The term "control" means (a) the power to vote five percent (5%) or more of the securities or other equity interests of a Person having ordinary voting power, or (b) the possession, directly or indirectly, of any other power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise. "Aged Waste" means all Waste, including customer and Secondary Waste, that ---------- remains in the possession of any Borrower or Subsidiaries thereof for a period greater than three hundred sixty-five (365) days from receipt and acceptance. "Aging Waste" means all Waste, including customer and Secondary Waste, that ----------- remains in the possession of any Borrower or Subsidiaries thereof for a period greater than one hundred eighty (180) days and less than three hundred sixty-six (366) days from receipt and acceptance. "Agents" means the collective reference to the Administrative Agent and ------ Collateral Agent. "Aggregate Commitment" means the aggregate amount of the Lenders' -------------------- Commitments hereunder, as such amount may be reduced or modified at any time or from time to time pursuant to the terms hereof. On the Closing Date, the Aggregate Commitment shall be One Hundred Thirty-Five Million Dollars ($135,000,000). "Agreement" means this Second Amended and Restated Credit Agreement, as --------- amended, restated or otherwise modified. 2 "Applicable Law" means all applicable provisions of constitutions, laws, -------------- statutes, ordinances, rules, treaties, regulations, permits, licenses, approvals, interpretations and orders of courts or Governmental Authorities and all orders and decrees of all courts and arbitrators. "Applicable Margin" shall have the meaning assigned thereto in Section ----------------- 5.1(c). "Application" means an application, in the form specified by the Issuing ----------- Lender from time to time, requesting the Issuing Lender to issue a Letter of Credit. "Assignment and Acceptance" shall have the meaning assigned thereto in ------------------------- Section 14.10. "Assignment of Claims Act" means Assignment of Claims Act of 1940 (41 ------------------------ U.S.C. Section 15, 31 U.S.C. Section 3737, and 31 U.S.C. Section 3727), including all amendments thereto and regulations promulgated thereunder. "Assignment of Security Interest in United States Patents and Trademarks" ----------------------------------------------------------------------- means the Second Amended and Restated Assignments of Security Interest in United States Patent and Trademarks, dated as of even date executed by a Borrower in favor of the Collateral Agent, for the ratable benefit of the Agents and the Lenders, and any additional assignments executed by any Borrower in favor of the Collateral Agent for the ratable benefit of the Agents and the Lenders substantially in the form of such existing assignments executed by any Borrower, as amended, restated or otherwise modified. "Base Rate" means, at any time, the higher of (a) the Prime Rate and (b) --------- the sum of (i) the Federal Funds Rate plus (ii) 1/2 of 1%; each change in the ---- Base Rate shall take effect simultaneously with the corresponding change or changes in the Prime Rate or the Federal Funds Rate. "Base Rate Loan" means any Loan (other than a Swingline Loan) bearing -------------- interest at a rate based upon the Base Rate as provided in Section 5.1(a). "Bear Creek" means GTS Duratek Bear Creek, Inc., a Tennessee Corporation. ---------- "Bear Creek Operations Report" means the report, substantially in the form ---------------------------- of Exhibit M, setting forth the financial results, key performance indicators, --------- product line information, volume and cost per unit data and Secondary Waste and Aging Waste Data. "Benefited Lender" shall have the meaning assigned thereto in Section 5.6. ---------------- "Bonding Obligations" means, with respect to any Borrower or any Subsidiary ------------------- thereof, without duplication, the face amount (including, without limitation, any contingent obligations arising in connection therewith), of any surety, performance or other bond issued at the request of or delivered by such Borrower or Subsidiary thereof to any other Person owed any contractual or other obligation by such Borrower or Subsidiary thereof to secure the performance of such 3 contractual or other obligations or otherwise benefit such Person to whom such contractual or other obligations are owed. All outstanding Bonding Obligations as of the Closing Date are set forth on Schedule 7.1(s). --------------- "Borrowers" shall have the meaning assigned thereto in the preamble hereof. --------- "Borrowing Base" means at any date of determination thereof, the sum of (a) -------------- ninety percent (90%) of Eligible Government Receivables, plus (b) eighty-five ---- percent (85%) of Eligible Commercial Receivables plus (c) the lesser of (i) ---- fifty percent (50%) of Eligible Unbilled Receivables and (ii) Two Million Dollars ($2,000,000). "Borrowing Base Certificate" means each certificate delivered by the -------------------------- Borrowers substantially in the form of Exhibit A. --------- "Borrowing Limit" means, at any date of determination thereof, an amount --------------- equal to the lesser of (a) the Borrowing Base and (b) the Revolving Credit Commitment of all Lenders. "Business Day" means (a) for all purposes other than as set forth in clause ------------ (b) below, any day other than a Saturday, Sunday or legal holiday on which banks in Charlotte, North Carolina, Baltimore, Maryland and New York, New York, are open for the conduct of their commercial banking business, and (b) with respect to all notices and determinations in connection with, and payments of principal and interest on, any LIBOR Rate Loan, any day that is a Business Day described in clause (a) and that is also a day for trading by and between banks in Dollar deposits in the London interbank market. "Calculation Date" shall have the meaning assigned thereto in Section ---------------- 5.1(c)(ii). "Capital Asset" means, with respect to the Borrowers and their ------------- Subsidiaries, any asset that should, in accordance with GAAP, be classified and accounted for as a capital asset on a Consolidated balance sheet of the Borrower and their Subsidiaries. "Capital Expenditure Adjustment" means an amount equal to the one-time ------------------------------ Capital Expenditures made by the Borrowers or any Subsidiary thereof in connection with the Best Way Metals project; provided that the aggregate amount -------- of such Capital Expenditure Adjustment shall not exceed $3,000,000. "Capital Expenditures" means, with respect to the Borrowers and their -------------------- Subsidiaries for any period, the aggregate cost of all Capital Assets acquired by the Borrowers and their Subsidiaries during such period determined on a Consolidated basis in accordance with GAAP; provided, that Capital Expenditures -------- shall not include the purchase price paid in connection with a Permitted Acquisition, or expenditures for the repair, restoration or replacement of any asset that was damaged or destroyed, in an amount equal to any insurance proceeds received in connection with such damage or destruction. 4 "Capital Lease" means, with respect to the Borrowers and their ------------- Subsidiaries, any lease of any property that should, in accordance with GAAP, be classified and accounted for as a capital lease on a Consolidated balance sheet of the Borrowers and their Subsidiaries. "Cash Equivalents" means (a) direct obligations of the United States or any ---------------- agency thereof, or obligations guaranteed by the United States of any agency thereof, (b) commercial paper rated in the highest grade by a nationally recognized credit rating agency or (c) time deposits with, including certificates of deposit issued by, any office located in the United States of any bank or trust company which is organized under the laws of the United States or any state thereof and has capital, surplus and undivided profits aggregating at least $250,000,000; provided, in each case that such investment matures -------- within one year from the date of acquisition thereby by any Borrower. "Change in Control" shall have the meaning assigned thereto in Section ----------------- 12.1(i). "Chem-Nuclear Canada" means Chem-Nuclear Canada, Inc. ------------------- "Closing Date" means the date of this Agreement or such later Business Day ------------ upon which each condition described in Section 6.1 and Section 6.2 shall be satisfied or waived in all respects in a manner acceptable to the Administrative Agent, in its sole discretion. "Closing EBITDA" means Pro Forma adjusted EBITDA (excluding the historical -------------- EBITDA of the commercial disposal operations (Barnwell)), for the four (4) consecutive fiscal quarter period ending March 31, 2000. "Code" means the Internal Revenue Code of 1986, and the rules and ---- regulations thereunder, each as amended, supplemented or otherwise modified. "Collateral" shall have the meaning assigned thereto in the Pledge ---------- Agreement and the Security Agreement, as applicable. "Collateral Agent" means First Union, in its capacity as collateral agent ---------------- hereunder, and any successor thereto appointed pursuant to Section 13.9. "Commitment" means, as to any Lender, the sum of such Lender's (a) ---------- Revolving Credit Commitment, (b) Term A Loan Commitment and (c) Term B Loan Commitment. "Commitment Fee Rate" shall have the meaning assigned thereto in Section ------------------- 5.3(a). "Commitment Percentage" means, as to any Lender at any time, the ratio of --------------------- (a) the amount of the Commitment of such Lender to (b) the Aggregate Commitment of all the Lenders. "Consolidated" means, when used with reference to financial statements or ------------ financial statement items of the Borrowers and their Subsidiaries, such statements or items on a consolidated basis in accordance with applicable principles of consolidation under GAAP. 5 "Credit Facilities" means the collective reference to the Revolving Credit ----------------- Facility, the Swingline Facility, the L/C Facility, the Term A Loan Facility and the Term B Loan Facility. "Debt" means, with respect to the Borrowers and their Subsidiaries at any ---- date and without duplication, the sum of the following calculated on a Consolidated basis in accordance with GAAP: (a) all liabilities, obligations and indebtedness for borrowed money including but not limited to obligations evidenced by bonds, debentures, notes or other similar instruments of any such Person, (b) all obligations to pay the deferred purchase price of property or services of any such Person, except trade payables and other similar charges and expenses arising in the ordinary course of business, (c) all obligations of any such Person as lessee under Capital Leases, (d) all Debt of any other Person secured by a Lien on any asset of any such Person, (e) all Guaranty Obligations of any such Person, (f) all obligations, contingent or otherwise, of any such Person relative to the face amount of letters of credit, whether or not drawn, including without limitation any Reimbursement Obligation, and banker's acceptances issued for the account of any such Person, (g) all obligations of any such Person to redeem, repurchase, exchange, defease, in each case in cash, or otherwise make cash payments in respect of capital stock or other securities of such Person excluding any such obligations which are not, by their terms entitled to any cash payment, cash redemption, cash repurchase, cash exchange or cash defeasance at any time prior to the later to occur of the Revolving Credit Maturity Date, the Term A Loan Maturity Date or the Term B Loan Maturity Date (excluding the obligations of GTS under the Preferred Stock) and (h) all net obligations incurred by any such Person pursuant to Hedging Agreements; provided -------- that, Bonding Obligations shall not be considered Debt. "Default" means any of the events specified in Section 12.1 which with the ------- passage of time, the giving of notice or any other condition, would constitute an Event of Default. "Dollars" or "$" means, unless otherwise qualified, dollars in lawful -------------- currency of the United States. "EBITDA" means, for any period, the sum of the following determined on a ------ Consolidated basis, without duplication, for the Borrowers and their Subsidiaries in accordance with GAAP: (a) Net Income for such period plus (b) ---- the sum of the following to the extent deducted in determining Net Income: (i) income, franchise and other taxes, (ii) Interest Expense, (iii) amortization, depreciation and other non-cash charges, (iv) extraordinary losses less (c) ---- interest income and any extraordinary gains which were included in determining Net Income. "Eligible Assignee" means, with respect to any assignment of the rights, ----------------- interest and obligations of a Lender hereunder, a Person that is at the time of such assignment (a) a commercial bank organized under the laws of the United States or any state thereof, or any entity affiliated with or controlled by a Lender, in each case having combined capital and surplus in excess of $500,000,000, (b) a commercial bank organized under the laws of any other country that is a member of the Organization of Economic Cooperation and Development, or a political subdivision of any such country, having combined capital and surplus in excess of $500,000,000, (c) a finance 6 company, fund, insurance company or other financial institution which in the ordinary course of business extends credit of the type extended hereunder and that has total assets in excess of $1,000,000,000, (d) already a Lender hereunder (whether as an original party to this Agreement or as the assignee of another Lender), (e) the successor (whether by transfer of assets, merger or otherwise) to all or substantially all of the commercial lending business of the assigning Lender, (f) any special purpose investment funds which are organized by any Person that would qualify as an "Eligible Assignee" under clauses (a) through (e) of this definition for the specific purpose of making or acquiring participation in or investing in Loans of the type made pursuant to this Agreement or (g) any other Person that has been approved in writing as an Eligible Assignee by the Borrowers and the Administrative Agent. "Eligible Commercial Receivables" means, at any date of determination ------------------------------- thereof, any bona fide Account (other than any Account that arises out of a Government Contract) created or acquired by any Borrower or any Subsidiary thereof in the ordinary course of their business as presently conducted for which the Account Debtor has been billed and which Account satisfies and continues to satisfy the following requirements: (i) The Account is a bona fide existing obligation of the named Account Debtor arising from the rendering of services or the sale and delivery of merchandise to such Account Debtor in the ordinary course of business on terms that are normal and customary in the business of the Borrowers or their Subsidiaries and is actually and absolutely owing to a Borrower or a Subsidiary of any Borrower and is not contingent for any reason and such Borrower or such Subsidiary has lawful and absolute title to such Account; (ii) The Account does not arise out of transactions with an employee, officer, agent, director, stockholder or other Affiliate of any Borrower or any Subsidiary thereof unless arising in the ordinary course of business conducted on an arm's-length basis; (iii) The Account is evidenced by an invoice and has not remained unpaid for a period exceeding ninety (90) days or more beyond the invoice date of the invoice; (iv) The Account is not due from an Account Debtor whose debt on Accounts that are unpaid ninety (90) days or more after the invoice date of the respective invoices exceeds fifty percent (50%) of such Account Debtor's total debt to the Borrowers and their Subsidiaries; (v) The Account is a valid, legally enforceable obligation of the Account Debtor and no offset (including without limitation discounts, advertising allowances, counterclaims or contra accounts) or other defense on the part of such Account Debtor or any claim on the part of such Account Debtor denying liability thereunder has been asserted; provided, however, -------- ------- that if the Account is subject to any such offset, defense or claim, or any inventory related thereto has been returned, such account shall not be an 7 Eligible Commercial Receivable only to the extent of the maximum amount of such offset, defense, claim or return and the balance of such Account, if it otherwise represents a valid, uncontested and legally enforceable obligation of the Account Debtor and meets all of the other criteria for eligibility set forth herein, shall be considered an Eligible Commercial Receivable; (vi) The Account Debtor is not the subject of any bankruptcy or insolvency proceeding of any kind; (vii) If the Account Debtor is located outside of the United States (excluding its territories and possessions other than Puerto Rico), the Account (x) is payable in the full amount of the face value of the Account in Dollars and is supported by an irrevocable letter of credit issued by a United States financial institution, satisfactory to the Administrative Agent in its reasonable discretion, or (y) is credit guaranteed in full by a Foreign Credit Insurance Association ("FCIA") insurance policy or such similar policy reasonably acceptable to the Administrative Agent; (viii) The services have been performed (unless billing prior to such services having been performed is permitted under the agreement with the Account Debtor) or the subject merchandise has been shipped or delivered on open Account to the named Account Debtor on an absolute sale basis and not on a bill-and-hold, consignment, on approval or subject to any other repurchase or return agreement and no material part of the subject goods has been returned; (ix) Other than pursuant to the Security Documents, the Account is not subject to any Lien or security interest whatsoever, including any Account owed pursuant to any contractual or other obligation of any Borrower or any Subsidiary thereof subject to any Bonding Obligation; (x) The Account is not evidenced by chattel paper or an instrument of any kind; (xi) The Account is not due from an Account Debtor whose total debt to the Borrowers and their Subsidiaries, on a Consolidated basis, on Accounts exceeds fifteen percent (15%) of the aggregate amount of the Eligible Commercial Receivables; provided, however, that the Account shall -------- ------- not be an Eligible Commercial Receivable only to the extent of such excess, if it otherwise represents a valid, uncontested and legally enforceable obligation of the Account Debtor and meets all of the other criteria for eligibility set forth herein; (xii) The Account has not been turned over to any Person that is not a Subsidiary or Affiliate of the Borrower for collection; and 8 (xiii) The Administrative Agent has not determined, in good faith in its reasonable discretion in accordance with its internal credit policies that (A) collection of the Account is insecure or (B) the Account may not be paid by reason of the Account Debtor's financial inability to pay; provided, however, that any Account referred to in this clause (xiii) -------- shall not become ineligible for the reason stated in this subsection (xiii), until the Administrative Agent shall have given the Borrowers three (3) Business Days' advance notice of such determination. "Eligible Government Receivables" means, at any date of determination ------------------------------- thereof, any bona fide Account arising out of a Government Contract created or acquired by any Borrower or any Subsidiary thereof in the ordinary course of their business as presently conducted for which the Account Debtor has been billed and that (a) the applicable Borrower shall have satisfied the requirements of the Assignment of Claims Act, as amended, and any similar state legislation in respect thereof; (b) the Administrative Agent is satisfied as to the absence of set-offs, counterclaims and other defenses to payment on the part of the United States or such state governmental authority; and that (c) the Account satisfies and continues to satisfy requirements contained in clauses (i) through (xii) of the definition of Eligible Commercial Receivables; provided, -------- that with regard to clauses (iii) and (iv) of such definition, Accounts arising under Government Contracts which do not remain unpaid for a period of more of more than one-hundred twenty (120) days beyond the applicable invoice date shall qualify as "Eligible Government Receivables". "Eligible Unbilled Receivables" means, at any date of determination ----------------------------- thereof, any Account which is an Eligible Commercial Receivable or Eligible Government Receivable, but for the fact such Account has not been invoiced as a result of normal frequency of billing under the particular contract, or as a result of government delays in the preparation of contract documents and which will be invoiced within thirty (30) days of the "as of" date of the particular Borrowing Base Certificate. "Employee Benefit Plan" means any employee benefit plan within the meaning --------------------- of Section 3(3) of ERISA which (a) is maintained by any Borrower or by any ERISA Affiliate for employees of any Borrower or any ERISA Affiliate or (b) has at any time within the preceding six years been maintained by any Borrower or by any ERISA Affiliate for the employees of any Borrower or any current or former ERISA Affiliate. "Environmental Laws" means any and all federal, state and local laws, ------------------ statutes, ordinances, rules, regulations, permits, licenses, approvals, interpretations and orders of courts or Governmental Authorities, relating to the protection of human health or the environment, including, but not limited to, requirements pertaining to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation, handling, reporting, licensing, permitting, investigation or remediation of Hazardous Materials. "ERISA" means the Employee Retirement Income Security Act of 1974, and the ----- rules and regulations thereunder, each as amended, supplemented or otherwise modified. 9 "ERISA Affiliate" means any Person who together with any Borrower is --------------- treated as a single employer within the meaning of Section 414(b), (c), (m) or (o) of the Code or Section 4001(b) of ERISA. "Eurodollar Reserve Percentage" means, for any day, the percentage ----------------------------- (expressed as a decimal and rounded upwards, if necessary, to the next higher 1/100th of 1%) which is in effect for such day as prescribed by the Federal Reserve Board (or any successor) for determining the maximum reserve requirement (including without limitation any basic, supplemental or emergency reserves) in respect of eurocurrency liabilities or any similar category of liabilities for a member bank of the Federal Reserve System in New York City. "Event of Default" means any of the events specified in Section 12.1, ---------------- provided that any requirement for passage of time, giving of notice, or any other condition, has been satisfied. "Excess Cash Flow" means, with respect to the Borrowers and their ---------------- Subsidiaries for any period an amount equal to the greater of (a) zero and (b) the sum of the following, in each case, for such period without duplication (i) EBITDA minus (ii) Capital Expenditures (including for purposes of this ----- definition the amount of deferred project costs financed under the Waste Management Loan Agreement) minus (iii) Interest Expense paid in cash minus (iv) ----- ----- federal, state and other income and franchise and other taxes to the extent included in the determination of EBITDA minus (v) Rental Expense minus (vi) any ----- ----- dividends paid or distributions made by GTS or other payments made to shareholders of GTS (as permitted hereunder) minus (vii) an amount equal to any ----- increase in Consolidated Working Capital during such period (and plus an amount ---- equal to any decrease in Consolidated Working Capital during such period) minus ----- (viii) an amount equal to any decrease in Debt (excluding Debt consisting of the items described in clauses (e) and (f) of the definition of Debt) during such period (and plus an amount equal to any increase in Debt (excluding Debt ---- consisting of the items described in clauses (e) and (f) of the definition of Debt) during such period) minus (ix) any cash paid for Permitted Acquisitions ----- (excluding the WMNS Acquisition). As used in this definition, the term "Consolidated Working Capital" at any date means Consolidated Current Assets (exclusive of cash and Cash Equivalents) of GTS and its Subsidiaries at such date minus Consolidated Current Liabilities (excluding short term debt and the ----- current portion of any long term debt) of such Person at such date. The term "Consolidated Current Assets" at any date means all assets which would, in accordance with GAAP, be classified on a consolidated balance sheet of GTS and its Subsidiaries as current assets at such date. The term "Consolidated Current Liabilities" at any date, means all liabilities which would, in accordance with GAAP, be classified on a consolidated balance sheet of GTS and its Subsidiaries as current liabilities at such date. "Excess Proceeds" shall have the meaning assigned thereto in Section --------------- 2.6(b). "Existing Facility" means the Amended and Restated Credit Agreement dated ----------------- as of February 1, 1999 among GTS, GTS Duratek Bear Creek, Inc., GTS Duratek Colorado, Inc., Hittman Transport Services, Inc., GTS Instrument Services, Incorporated, General Technical Services, Inc., Analytical Resources, Inc. and GTSD SUB III, Inc., as borrowers thereunder, the lenders party thereto, First Union National Bank, as administrative agent, collateral agent and 10 issuing lender and First Union Commercial Corporation as swingline lender and lender. "Existing Letters of Credit" means those letters of credit issued by any -------------------------- Issuing Lender and existing on the Closing Date and identified on Schedule -------- 1.1(b). - ------ "Existing Loans" shall have the meaning assigned thereto in Section 6.2 -------------- (i). "Extensions of Credit" means (a) with respect to all Lenders, the aggregate -------------------- principal amount of all outstanding Loans and L/C Obligations, (b) with respect to each Lender, the sum of (i) such Lender's Revolving Credit Commitment Percentage of the outstanding Revolving Credit Loans, Swingline Loans and L/C Obligations, (ii) such Lender's Term A Loan Percentage of the outstanding Term A Loans and (iii) such Lender's Term B Loan Percentage of the outstanding Term B Loans or (c) the making of any Loan or the issuance of any Letter of Credit by a Lender, as the context requires. "FDIC" means the Federal Deposit Insurance Corporation, or any successor ---- thereto. "Federal Funds Rate" means, the rate per annum (rounded upwards, if ------------------ necessary, to the next higher 1/100th of 1%) representing the daily effective federal funds rate as quoted by the Administrative Agent and confirmed in Federal Reserve Board Statistical Release H.15 (519) or any successor or substitute publication selected by the Administrative Agent. If, for any reason, such rate is not available, then "Federal Funds Rate" shall mean a daily rate which is determined, in the opinion of the Administrative Agent, to be the rate at which federal funds are being offered for sale in the national federal funds market at 9:00 a.m. (Charlotte time). Rates for weekends or holidays shall be the same as the rate for the most immediate preceding Business Day. "First Union" means First Union National Bank, a national banking ----------- association, and its successors. "Fiscal Year" means the fiscal year of the Borrowers and their Subsidiaries ----------- ending on December 31. "Fixed Charges" means, with respect to the Borrowers and their ------------- Subsidiaries, for any period, the sum of the following each calculated on a Consolidated basis without duplication for such period in accordance with GAAP: (a) Interest Expense (but not including non-cash interest) plus (b) Rental ---- Expense plus (c) scheduled principal payments with respect to Debt plus (d) any ---- ---- dividends paid on Preferred Stock plus (e) any payments in connection with ---- Permitted Stock Repurchases. "GAAP" means generally accepted accounting principles, as recognized by the ---- American Institute of Certified Public Accountants and the Financial Accounting Standards Board, as in effect from time to time, applied on a basis consistent with the 1999 annual audited Consolidated financial statements of the Borrowers and their Consolidated Subsidiaries (except for changes concurred in by the Borrowers' independent public accountants). 11 "Governmental Approvals" means all authorizations, consents, approvals, ---------------------- licenses and exemptions of, registrations and filings with, and reports to, all Governmental Authorities. "Governmental Authority" means any nation, province, state or political ---------------------- subdivision thereof, any central bank and any government or any Person exercising executive, legislative, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing. "Governmental Contract" means a contract between any Borrower and an --------------------- agency, department or instrumentality of the United States or any state Governmental Authority in the United States where such Borrower is the prime contractor. "Guaranty Obligation" means, with respect to the Borrowers and their ------------------- Subsidiaries, without duplication, any obligation, contingent or otherwise, of any such Person pursuant to which such Person has directly or indirectly guaranteed any Debt or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of any such Person (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation (whether arising by virtue of partnership arrangements, by agreement to keep well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement condition or otherwise) or (b) entered into for the purpose of assuring in any other manner the obligee of such Debt or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided, that the term Guaranty -------- Obligation shall not include endorsements for collection or deposit in the ordinary course of business. "Hazardous Materials" means any substances or materials which are or become ------------------- defined as hazardous wastes, hazardous substances or toxic substances or require investigation or remediation under any Applicable Law or are or become regulated by any Governmental Authority. "Hedging Agreement" means any agreement with respect to an interest rate ----------------- swap, collar, cap, floor or a forward rate agreement or other agreement regarding the hedging of interest rate risk exposure executed in connection with hedging the interest rate exposure of any Borrower, and any confirming letter executed pursuant to such hedging agreement, all as amended, restated or otherwise modified. "Inactive Subsidiary" means any Subsidiary identified as "inactive" on ------------------- Schedule 7.1(a) as of the Closing Date. - --------------- "Initial Adjustment Date" shall have the meaning assigned thereto in ----------------------- Section 5.1(c)(i). "Interest Expense" means, for any period, total interest expense ---------------- (including, without limitation, interest expense attributable to Capital Leases) determined on a Consolidated basis, 12 without duplication, for the Borrowers and their Subsidiaries in accordance with GAAP. "Interest Period" shall have the meaning assigned thereto in Section --------------- 5.1(b). "ISPA 98" means the International Standby Practices (1998 Revision, ------- effective January 1, 1999), International Chamber of Commerce Publication No. 590. "Issuing Lender" means (a) with respect to Letters of Credit issued -------------- hereunder, First Union, in its capacity as issuer thereof, or any successor thereto and (b) with respect to the Existing Letters of Credit, the Lender issuing such Existing Letter of Credit. "Joinder Agreement" means a Joinder Agreement substantially in the form of ----------------- Exhibit I executed by each future Subsidiary in accordance with Section 9.12, as - --------- amended, restated or otherwise modified. "L/C Commitment" means the lesser of (a) Fifteen Million Dollars -------------- ($15,000,000) and (b) the Revolving Credit Commitment. "L/C Facility" means the letter of credit facility established pursuant to ------------ Article III hereof. "L/C Obligations" means at any time, an amount equal to the sum of (a) the --------------- aggregate undrawn and unexpired amount of the then outstanding Letters of Credit and (b) the aggregate amount of drawings under Letters of Credit which have not then been reimbursed pursuant to Section 3.5. "L/C Participants" means, with respect to any given Letter of Credit, the ---------------- collective reference to all the Lenders other than the Issuing Lender of such Letter of Credit. "Lender" means each Person executing this Agreement as a Lender (including, ------ without limitation, the Issuing Lender and the Swingline Lender unless the context otherwise requires) set forth on the signature pages hereto and each Person that hereafter becomes a party to this Agreement as a Lender pursuant to Section 14.10. "Lending Office" means, with respect to any Lender, the office of such -------------- Lender maintaining such Lender's Extensions of Credit. "Letters of Credit" means the collective reference to the letters of credit ----------------- issued pursuant to Section 3.1 and the Existing Letters of Credit. "Leverage Ratio" shall have the meaning assigned thereto in Section 10.1. -------------- "LIBOR" means the rate of interest per annum determined on the basis of the ----- rate for deposits in Dollars in minimum amounts of at least $5,000,000 for a period equal to the applicable Interest Period which appears on the Dow Jones Market Screen 3750 at approximately 11:00 a.m. 13 (London time) two (2) Business Days prior to the first day of the applicable Interest Period (rounded upward, if necessary, to the nearest 1/100th of 1%). If, for any reason, such rate does not appear on Dow Jones Market Screen 3750, then "LIBOR" shall be determined by the Administrative Agent to be the arithmetic average (rounded upward, if necessary, to the nearest 1/100th of 1%) of the rate per annum at which deposits in Dollars would be offered by first class banks in the London interbank market to the Administrative Agent approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of the applicable Interest Period for a period equal to such Interest Period and in an amount substantially equal to the amount of the applicable Loan. Each calculation by the Administrative Agent of LIBOR shall be conclusive and binding for all purposes, absent manifest error. "LIBOR Rate" means a rate per annum (rounded upwards, if necessary, to the ---------- next higher 1/100th of 1%) determined by the Administrative Agent pursuant to the following formula: LIBOR Rate = LIBOR ---------------------------------- 1.00-Eurodollar Reserve Percentage "LIBOR Rate Loan" means any Loan bearing interest at a rate based upon the --------------- LIBOR Rate as provided in Section 5.1(a). "Lien" means, with respect to any asset, any mortgage, lien, pledge, ---- charge, security interest or encumbrance of any kind in respect of such asset. For the purposes of this Agreement, a Person shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, Capital Lease or other title retention agreement relating to such asset. "Loan Documents" means, collectively, this Agreement, the Notes, the -------------- Applications, any Hedging Agreement with any Lender (which such Hedging Agreement is permitted or required hereunder), the Security Documents and each other document, instrument, certificate and agreement executed and delivered by any Borrower or its Subsidiaries in connection with this Agreement or otherwise referred to herein or contemplated hereby, all as may be amended, restated or otherwise modified. "Loans" means the collective reference to the Revolving Credit Loans, the ----- Term Loans and the Swingline Loans and "Loan" means any of such Loans. "Material Adverse Effect" means, with respect to the Borrowers and their ----------------------- Subsidiaries taken as a whole, a material adverse effect on the properties, business, operations or condition (financial or otherwise) of such Persons or the ability of such Persons to perform their obligations under the Loan Documents or Material Contracts, in each case to which any such Person is a party. "Material Contract" means (a) any contract or other agreement, written or ----------------- oral, of any Borrower or any of its Subsidiaries involving monetary liability of or to any Person in an amount in excess of $15,000,000 per annum, or (b) any other contract or agreement, written or oral, of any 14 Borrower or any of its Subsidiaries the failure to comply with which could reasonably be expected to have a Material Adverse Effect. "Maturity Adjustment Date" means June 30, 2003. ------------------------ "Multiemployer Plan" means a "multiemployer plan" as defined in Section ------------------ 4001(a)(3) of ERISA to which any Borrower or any ERISA Affiliate is making, or is accruing an obligation to make, contributions within the preceding six years. "Net Cash Proceeds" means, as applicable, (a) with respect to any sale or ----------------- other disposition of assets, the gross cash proceeds received by any Borrower or any of its Subsidiaries from such sale less the sum of (i) all income taxes and ---- other taxes assessed by a Governmental Authority as a result of such sale and any other fees and expenses incurred in connection therewith, (ii) the principal amount of, premium, if any, and interest on any Debt secured by a Lien on the asset (or a portion thereof) sold, which Debt is required to be repaid in connection with such sale, (iii) reserves in accordance with GAAP for liabilities relating to such sale and (iv) payments on account of minority ownership interests required in connection with such sale, (b) with respect to any offering of capital stock or issuance of Debt, the gross cash proceeds received by any Borrower or any of its Subsidiaries therefrom less all legal, ---- underwriting and other fees and expenses incurred in connection therewith and (c) with respect to any payment under an insurance policy or in connection with a condemnation proceeding, the amount of cash proceeds received by any Borrower or any of its Subsidiaries from an insurance company or Governmental Authority, as applicable, net of all expenses of collection. "Net Income" means, with respect to the Borrowers and their Subsidiaries ---------- for any period, the Consolidated Net Income (or loss) thereof for such period determined without duplication in accordance with GAAP; provided, that there -------- shall be excluded from net income (or loss) the income (or loss) of any other Person (other than any Wholly-Owned Subsidiary) in which any Borrower has an ownership interest unless received by such Borrower or Wholly-Owned Subsidiary in a cash distribution. "Non-Disturbance Agreement" means the non-disturbance agreement dated as of ------------------------- February 1, 1999 executed by the Borrowers, the Agents, the Lenders and BNFL, Inc. "Non-Material Subsidiary" means, at any date of determination, any ----------------------- Subsidiary which has stockholders' equity or assets with a value of less than $50,000 at such date. "Notes" means the collective reference to the Revolving Credit Notes, the ----- Swingline Note, the Term A Notes, the Term B Notes and "Note" means any of such Notes. "Notice of Assignment" means each Notice of Assignment executed by a -------------------- Borrower with respect to a Government Contract to which such Borrower is a party substantially in the form of Exhibit L. --------- 15 "Notice of Account Designation" shall have the meaning assigned thereto in ----------------------------- Section 2.3(b). "Notice of Conversion/Continuation" shall have the meaning assigned thereto --------------------------------- in Section 5.2. "Notice of Prepayment" shall have the meaning assigned thereto in Section -------------------- 2.4(c). "Notice of Revolving Credit/Swingline Borrowing" shall have the meaning ---------------------------------------------- assigned thereto in Section 2.3(a). "Notice of Term Loan Borrowing" shall have the meaning assigned thereto in ----------------------------- Section 4.2(a). "Oak Ridge Contract" shall mean the agreement, dated November 29, 1999 ------------------ between Waste Management Federal Services, Inc. and Bechtel Jacobs Co. LLC, identified as Customer Contract No.: 23900-SC-BC008U. "Oak Ridge SPE" means GTSD Sub V, Inc., a Delaware corporation and, a ------------- single purpose entity and Wholly-Owned Subsidiary of Waste Management Federal Services, Inc. "Oak Ridge SPE Guaranty and Security Agreement" means the guaranty and --------------------------------------------- security agreement executed by the Oak Ridge SPE in favor of the Collateral Agent for the ratable benefit of the Agents and Lenders, in form and substance satisfactory to the Administrative Agent, as amended, restated or otherwise modified. "Obligations" means, in each case, whether now in existence or hereafter ----------- arising: (a) the principal of and interest on (including interest accruing after the filing of any bankruptcy or similar petition) the Loans, (b) the L/C Obligations, (c) all payment and other obligations owing by any Borrower to any Lender or the Administrative Agent under any Hedging Agreement with any Lender (which such Hedging Agreement is permitted or required hereunder), and (d) all other fees and commissions (including attorney's fees), charges, indebtedness, loans, liabilities, financial accommodations, obligations, covenants and duties owing by any Borrower to the Lenders or the Administrative Agent, of every kind, nature and description, direct or indirect, absolute or contingent, due or to become due, contractual or tortious, liquidated or unliquidated, and whether or not evidenced by any note, in each case under or in respect of this Agreement, any Note, any Letter of Credit or any of the other Loan Documents. "Officer's Compliance Certificate" shall have the meaning assigned thereto -------------------------------- in Section 8.2. "Operating Lease" shall mean, as to any Person, as determined in accordance --------------- with GAAP, any lease of property by such Person as lessee which is not a Capital Lease. "Other Taxes" shall have the meaning assigned thereto in Section 5.11(b). ----------- 16 "PBGC" means the Pension Benefit Guaranty Corporation or any successor ---- agency. "Pension Plan" means any Employee Benefit Plan, other than a Multiemployer ------------ Plan, which is subject to the provisions of Title IV of ERISA or Section 412 of the Code and which (a) is maintained by any Borrower or by any ERISA Affiliate for employees of any Borrower or any ERISA Affiliates or (b) has at any time within the preceding six years been maintained by any Borrower or by any ERISA Affiliate for the employees of any Borrower or any of their current or former ERISA Affiliates. "Permitted Acquisitions" means those acquisitions permitted pursuant to ---------------------- Section 11.4(c) or otherwise consented to by the Super Majority Lenders. "Permitted Investments" means the stock, interests, Debt or other --------------------- obligation or security, business, assets, other investments or interests, loans, advances and extensions of credit permitted by Section 11.4 or otherwise consented to by the Required Lenders. "Permitted Liens" means Liens permitted pursuant to Section 11.3 or --------------- otherwise consented to by the Required Lenders. "Permitted Stock Repurchases" means those stock repurchases permitted --------------------------- pursuant to Section 11.7(d). "Person" means an individual, corporation, limited liability company, ------ partnership, association, trust, business trust, joint venture, joint stock company, pool, syndicate, sole proprietorship, unincorporated organization, Governmental Authority or any other form of entity or group thereof. "Pledge Agreement" means the collective reference to the pledge agreements ---------------- of even date executed by GTS, GTS Duratek Bear Creek, Inc., General Technical Services, Inc., Waste Management Federal Services, Inc. and GTSD Sub IV, Inc. in favor of the Collateral Agent for the ratable benefit of the Agents and the Lenders, substantially in the form of Exhibit J, as amended, restated or --------- otherwise modified. "Preferred Stock" means the 8% Cumulative Convertible Redeemable Preferred --------------- Stock of GTS. "Preferred Stock Redemption Amendment" means an amendment, in form and ------------------------------------ substance reasonably satisfactory to the Administrative Agent, to the terms of the Preferred Stock, which such amendment has the effect of extending the mandatory redemption date of such Preferred Stock to a date which is at least ninety-one (91) days after the later to occur of the Revolving Credit Maturity Date, the Term A Loan Maturity Date or the Term B Loan Maturity Date, in each case as in effect on the Closing Date. 17 "Prime Rate" means, at any time, the rate of interest per annum publicly ---------- announced from time to time by First Union as its prime rate. Each change in the Prime Rate shall be effective as of the opening of business on the day such change in the Prime Rate occurs. The parties hereto acknowledge that the rate announced publicly by First Union as its Prime Rate is an index or base rate and shall not necessarily be its lowest or best rate charged to its customers or other banks. "Prior Lender" shall have the meaning assigned thereto in Section 6.2(i). ------------ "Pro Forma" shall have the meaning assigned thereto in Section 10.6. --------- "Project Documents" shall mean the Oak Ridge Contract, the Administration ----------------- Agreement and each of the Subcontracts. "Register" shall have the meaning assigned thereto in Section 14.10(d). -------- "Reimbursement Obligation" means the obligation of the Borrowers to ------------------------ reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn under Letters of Credit. "Rental Expense" means all obligations of the Borrowers and their -------------- Subsidiaries under Operating Leases. "Required Lenders" means any combination of Lenders whose Revolving Credit ---------------- Commitment Percentages, Term A Loan Percentages and Term B Loan Percentages are greater than fifty percent (50%) of the Aggregate Commitment and, if the Commitments or this Agreement have been terminated pursuant to Section 12.2, any combination of Lenders holding greater than fifty percent (50%) of the Extensions of Credit. "Responsible Officer" means any of the following: the chief executive ------------------- officer, treasurer, or chief financial officer of any Borrower or any other officer of any Borrower reasonably acceptable to the Administrative Agent. "Revolving Credit Commitment" means (a) as to any Lender, the obligation of --------------------------- such Lender to make Revolving Credit Loans to and issue or participate in Letters of Credit issued for the account of the Borrowers hereunder in an aggregate principal amount or face amount at any time outstanding not to exceed the amount set forth opposite such Lender's name on Schedule 1.1(a) hereto as --------------- such amount may be reduced or modified at any time or from time to time pursuant to the terms hereof and (b) as to all Lenders, the aggregate commitment of all Lenders to make Revolving Credit Loans and issue or participate in Letters of Credit, as such amount or face amount may be reduced or modified at any time or from time to time pursuant to the terms hereof. The Revolving Credit Commitment of all Lenders on the Closing Date shall be Forty-Five Million Dollars ($45,000,000). "Revolving Credit Commitment Percentage" means, as to the respective -------------------------------------- Revolving Credit Commitment of any Lender at any time, the ratio of (a) the amount of the Revolving Credit Commitment of such Lender to (b) the Revolving Credit Commitments of all Lenders. 18 "Revolving Credit Facility" means the revolving credit facility established ------------------------- pursuant to Article II hereof. "Revolving Credit Loans" means any revolving loan made to the Borrowers ---------------------- pursuant to Section 2.1, and all such revolving loans collectively as the context requires. "Revolving Credit Maturity Date" means the earliest of the dates referred ------------------------------ to in Section 2.7. "Revolving Credit Notes" means the collective reference to the Revolving ---------------------- Credit Notes made by the Borrowers payable to the order of each Lender, substantially in the form of Exhibit B-1 hereto, evidencing the Revolving Credit ----------- Facility, and any amendments and modifications thereto, any substitutes therefor, and any replacements, restatements, renewals or extension thereof, in whole or in part; "Revolving Credit Note" means any of such Revolving Credit Notes. "Secondary Waste" means Waste generated directly or indirectly by --------------- processing customer Waste. "Security Agreement" means the amended and restated security agreement of ------------------ even date herewith executed by the Borrowers in favor of the Collateral Agent for the ratable benefit of the Agents and the Lenders, substantially in the form of Exhibit K, as amended, restated or otherwise modified. --------- "Security Documents" means the collective reference to the Pledge ------------------ Agreement, the Security Agreement, the Oak Ridge SPE Guaranty and Security Agreement, the Notices of Assignment, the Assignment of Security Interest in United States Patents and Trademarks, and each other agreement or writing pursuant to which any Borrower or any Subsidiary thereof purports to pledge or grant a security interest in any property or assets securing the Obligations or any such Person purports to guaranty the payment and/or performance of the Obligations. "Solvent" means, as to the Borrowers and their Subsidiaries on a particular ------- date, that any such Person (a) has capital sufficient to carry on its business and transactions and all business and transactions in which it is about to engage and is able to pay its Debts as they mature, (b) owns property having a value, both at fair valuation and at present fair saleable value, greater than the amount required to pay its probable liabilities (including contingencies), and (c) does not believe that it will incur Debts or liabilities beyond its ability to pay such Debts or liabilities as they mature. "Subcontracts" shall mean the agreements between the Oak Ridge SPE and each ------------ of its subcontractors from time to time. "Subordinated Debt" means the collective reference to Debt on Schedule ----------------- -------- 7.1(s) hereof designated as Subordinated Debt and any other Debt of any Borrower - ------ or any Subsidiary thereof subordinated in right and time of payment to the Obligations on terms and conditions reasonably satisfactory to the Administrative Agent and Required Lenders. 19 "Subordination Agreement" means the subordination agreement dated as of ----------------------- February 1, 1999 executed by the Collateral Agent, BNFL, Inc. ("BNFL"), GTS, GTS Instrument Services, Incorporated and General Technical Services, Inc. (collectively, the "Obligors") subordinating to the Obligations amounts owed by the Obligors to BNFL (a) under the convertible debenture dated November 7, 1995 executed by the Obligors in favor of BNFL in the amount of Ten Million Dollars ($10,000,000) and (b) under the Non-Disturbance Agreement and certain agreements related thereto. "Subsidiary" means as to any Person, any corporation, partnership, limited ---------- liability company or other entity of which more than fifty percent (50%) of the outstanding capital stock or other ownership interests having ordinary voting power to elect a majority of the board of directors or other managers of such corporation, partnership, limited liability company or other entity is at the time, directly or indirectly, owned by or the management is otherwise controlled by such Person (irrespective of whether, at the time, capital stock or other ownership interests of any other class or classes of such corporation, partnership, limited liability company or other entity shall have or might have voting power by reason of the happening of any contingency). Unless otherwise qualified references to "Subsidiary" or "Subsidiaries" herein shall refer to those of the Borrowers. "Subsidiary Borrowers" shall have the meaning assigned thereto in the -------------------- preamble hereof. "Substantially Similar Line of Business" means any business which is -------------------------------------- involved in the treatment, remediation, transportation, processing, disposal or burial of radioactive, hazardous, mixed and other wastes, or which provides technical support services that include, but are not limited to, site decontamination and decommissioning, radiological engineering services, staff augmentation and outage support, instrumentation services, environmental and computer consulting and environmental health and safety training. "Super Majority Lenders" means any combination of Lenders whose Revolving ---------------------- Credit Commitment Percentages, Term A Loan Percentages and Term B Loan Percentages are greater than sixty-six and two-thirds percent (66 %) of the Aggregate Commitment and, if the Commitments or this Agreement have been terminated pursuant to Section 12.2, any combination of Lenders holding greater than sixty-six and two-thirds percent (66 %) of the Extensions of Credit. "Swingline Commitment" means the lesser of (a) Five Million Dollars -------------------- ($5,000,000) and (b) the Revolving Credit Commitment. "Swingline Facility" means the Swingline Facility established pursuant to ------------------ Article II hereof. "Swingline Lender" means First Union in its capacity as swingline lender ---------------- hereunder. "Swingline Loan" means any swingline loan made by the Swingline Lender to -------------- the Borrowers pursuant to Section 2.2, and all such swingline loans collectively as the context requires. 20 "Swingline Note" means the Swingline Note made by the Borrowers payable to -------------- the order of the Swingline Lender, substantially in the form of Exhibit B-2 ----------- hereto, evidencing the Swingline Facility, and any amendments, modifications and supplements thereto, any substitutes therefor, and any replacements, restatements, renewals or extensions thereof, in whole or in part. "Swingline Termination Date" means the earliest to occur of (a) the -------------------------- resignation of First Union as Administrative Agent in accordance with Section 13.9 and (b) the Revolving Credit Maturity Date. "Taxes" shall have the meaning assigned thereto in Section 5.11(a). ----- "Term A Loan Commitment" means (a) as to any Lender, the obligation of such ---------------------- Lender to make a Term A Loan for the account of the Borrowers hereunder in an aggregate principal amount not to exceed the amount set forth opposite such Lender's name on Schedule 1.1(a) and (b) as to all Lenders, the aggregate --------------- commitment of all Lenders to make Term A Loans. The Term A Loan Commitment of all Lenders as of the Closing Date shall be Fifty Million Dollars ($50,000,000). "Term A Loan Facility" means the term loan facility established pursuant to -------------------- Article IV hereof under which the Lenders make Term A Loans to the Borrowers. "Term A Loan Maturity Date" means June 8, 2005; provided that, if the ------------------------- -------- Preferred Stock Redemption Amendment shall not have become effective on or prior to the Maturity Adjustment Date, the Term A Loan Maturity Date shall mean the Adjusted Maturity Date. "Term A Loan Percentage" means, as to any Lender, (a) prior to making the ---------------------- Term A Loans, the ratio of (i) the Term A Loan Commitment of such Lender to (ii) the Term A Loan Commitments of all Lenders and (b) after the Term A Loans are made, the ratio of (i) the outstanding principal balance of the Term A Loan of such Lender to (ii) the aggregate outstanding principal balance of the Term A Loans of all Lenders. "Term A Loans" means the term loans made to the Borrowers by the Lenders ------------ pursuant to Section 4.1(a). "Term A Notes" means the Term A Notes made by the Borrowers payable to the ------------ order of each of the Lenders, substantially in the form of Exhibit B-3 hereto, ----------- evidencing the Term A Loan Facility, and any amendments, modifications and supplements thereto, any substitutes therefor, and any replacements, restatements, renewals or extensions thereof, in whole or in part. "Term B Loan Commitment" means (a) as to any Lender, the obligation of such ---------------------- Lender to make a Term B Loan for the account of the Borrowers hereunder in an aggregate principal amount not to exceed the amount set forth opposite such Lender's name on Schedule 1.1(a) and (b) as to all Lenders, the aggregate --------------- commitment of all Lenders to make Term B Loans. The Term B Loan Commitment of all Lenders as of the Closing Date shall be Forty Million Dollars ($40,000,000). 21 "Term B Loan Facility" means the term loan facility established pursuant to -------------------- Article IV hereof under which the Lenders make Term B Loans to the Borrowers. "Term B Loan Maturity Date" means December 8, 2006; provided that, if the ------------------------- -------- Preferred Stock Redemption Amendment shall not have become effective on or prior to the Maturity Adjustment Date, the Term B Loan Maturity Date shall mean the Adjusted Maturity Date. "Term B Loan Percentage" means, as to any Lender, (a) prior to making the ---------------------- Term B Loans, the ratio of (i) the Term B Loan Commitment of such Lender to (ii) the Term B Loan Commitments of all Lenders and (b) after the Term B Loans are made, the ratio of (i) the outstanding principal balance of the Term B Loan of such Lender to (ii) the aggregate outstanding principal balance of the Term B Loans of all Lenders. "Term B Loans" means the term loans made to the Borrowers by the Lenders ------------ pursuant to Section 4.1(a). "Term Loans" means the Term A Loans or the Term B Loans made to the ---------- Borrowers pursuant to Section 4.1, or all such Term Loans, as the context requires. "Term Notes" means the Term A Notes or the Term B Notes, or any combination ---------- thereof. "Termination Event" means: (a) a "Reportable Event" described in Section ----------------- 4043 of ERISA, or (b) the withdrawal of any Borrower or any ERISA Affiliate from a Pension Plan during a plan year in which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA, or (c) the termination of a Pension Plan, the filing of a notice of intent to terminate a Pension Plan or the treatment of a Pension Plan amendment as a termination under Section 4041 of ERISA, or (d) the institution of proceedings to terminate, or the appointment of a trustee with respect to, any Pension Plan by the PBGC, or (e) any other event or condition which would constitute grounds under Section 4042(a) of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan, or (f) the partial or complete withdrawal of any Borrower or any ERISA Affiliate from a Multiemployer Plan, or (g) the imposition of a Lien pursuant to Section 412 of the Code or Section 302 of ERISA, or (h) any event or condition which results in the reorganization or insolvency of a Multiemployer Plan under Sections 4241 or 4245 of ERISA, or (i) any event or condition which results in the termination of a Multiemployer Plan under Section 4041A of ERISA or the institution by PBGC of proceedings to terminate a Multiemployer Plan under Section 4042 of ERISA. "Total Debt" means, as of any date of determination with respect to the ---------- Borrowers and their Subsidiaries on a Consolidated basis without duplication, the sum of all Debt of the Borrowers and their Subsidiaries. "Transactions" means the collective reference to the WMNS Acquisition and ------------ the initial Extensions of Credit. 22 "Uniform Customs" means the Uniform Customs and Practice for Documentary --------------- Credits (1993 Revision), effective January 1994, International Chamber of Commerce Publication No. 500. "UCC" means the Uniform Commercial Code as in effect in the State of New --- York; provided, however, in the event that, by mandatory provisions of law, any -------- ------- or all of the attachment, perfection or priority of the Collateral Agent's or any Lender's security interest in any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of New York, the term "UCC" shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for the purpose of the provisions hereof relating to such attachment, perfection or priority and for purposes of definitions related to such provisions. "United States" means the United States of America. ------------- "Waste" means any product or other materials received and accepted by any ----- Borrower or Subsidiary thereof for processing, treatment, disposal, burial or remediation of radioactive, hazardous, mixed and other wastes. "Waste Management Loan" means the loan, in the amount not to exceed --------------------- $11,900,000, evidenced by the Waste Management Loan Agreement. "Waste Management Loan Agreement" means the subordinated loan agreement ------------------------------- (including all other documents executed and/or delivered in connection therewith) between GTS or a Subsidiary thereof, as borrower, and Waste Management, Inc., as lender, substantially on the terms and conditions therefor, as set forth in the term sheet attached as Exhibit B to the WMNS Purchase --------- Agreement, as such subordinated loan agreement and/or related documents are amended, restated or otherwise modified. "Wholly-Owned" means, with respect to a Subsidiary, that all of the shares ------------ of capital stock or other ownership interests of such Subsidiary are, directly or indirectly, owned or controlled by any Borrower and/or one or more of its Wholly-Owned Subsidiaries. "WMNS Acquisition" means the acquisition by GTS of (a) all of the ---------------- outstanding membership interests of Chem-Nuclear Systems L.L.C., a Delaware limited liability company and all Subsidiaries thereof and (b) all of the outstanding shares of capital stock of Waste Management Federal Services, Inc., a Delaware corporation and all Subsidiaries thereof, in each case, pursuant to the terms of the WMNS Purchase Agreement. "WMNS Companies" means Chem-Nuclear Systems L.L.C., a Delaware limited -------------- liability company and all Subsidiaries thereof and Waste Management Federal Services, Inc., a Delaware corporation and all Subsidiaries thereof. 23 "WMNS Purchase Agreement" means that certain Purchase Agreement dated as of ----------------------- March 29, 2000 between Chemical Waste Management Inc., Rust International, Inc. and CNS Holdings, Inc., as Sellers, Waste Management, Inc. and GTS, as Purchaser, as amended by Amendment No. 1, dated June 8, 2000, and as further amended, restated or otherwise modified with the consent of the Required Lenders and all exhibits and schedules thereto. SECTION 1.2 General. Unless otherwise specified, a reference in this ------- Agreement to a particular section, subsection, Schedule or Exhibit is a reference to that section, subsection, Schedule or Exhibit of this Agreement. Wherever from the context it appears appropriate, each term stated in either the singular or plural shall include the singular and plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine, the feminine and the neuter. Any reference herein to "Charlotte time" shall refer to the applicable time of day in Charlotte, North Carolina. SECTION 1.3 Other Definitions and Provisions. -------------------------------- (a) Use of Capitalized Terms. Unless otherwise defined therein, all ------------------------ capitalized terms defined in this Agreement shall have the defined meanings when used in this Agreement, the Notes and the other Loan Documents or any certificate, report or other document made or delivered pursuant to this Agreement. (b) Miscellaneous. The words "hereof", "herein" and "hereunder" and words ------------- of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. ARTICLE II REVOLVING CREDIT FACILITY ------------------------- SECTION 2.1 Revolving Credit Loans. Subject to the terms and conditions ---------------------- of this Agreement, each Lender severally agrees to make Revolving Credit Loans to the Borrowers on a joint and several basis from time to time from the Closing Date through the Revolving Credit Maturity Date as requested by GTS on behalf of the Borrowers in accordance with the terms of Section 2.3; provided, that (a) -------- each Lender's Revolving Credit Commitment Percentage of the sum of the aggregate amount of all outstanding Revolving Credit Loans, Swingline Loans and L/C Obligations shall at no time exceed such Lender's Revolving Credit Commitment and (b) no borrowing of Revolving Credit Loans shall be made if, immediately after giving effect thereto, the aggregate principal amount of Revolving Credit Loans then outstanding plus (i) all outstanding Swingline Loans plus (ii) the ---- ---- aggregate principal amount of all outstanding L/C Obligations would exceed the then applicable Borrowing Limit. Each Revolving Credit Loan by a Lender shall be in a principal amount equal to such Lender's Revolving Credit Commitment Percentage of the aggregate principal amount of Revolving Credit Loans requested on such occasion. Subject to the terms and conditions hereof, the Borrowers may borrow, repay and reborrow Revolving Credit Loans hereunder until the Revolving Credit Maturity Date. 24 SECTION 2.2 Swingline Loans. --------------- (a) Availability. Subject to the terms and conditions of this Agreement, ------------ the Swingline Lender agrees to make Swingline Loans to the Borrowers from time to time from the Closing Date through, but not including, the Swingline Termination Date; provided, that the Swingline Lender shall have no obligation -------- to make any Swingline Loan, if, after giving effect to any amount requested, (a) the aggregate principal amount of all Swingline Loans then outstanding would exceed the Swingline Commitment or (b) the aggregate principal amount of all Revolving Credit Loans then outstanding plus the aggregate principal amount of all Swingline Loans then outstanding plus the L/C Obligations then outstanding ---- would exceed the then applicable Borrowing Limit. (b) Refunding. --------- (i) If not earlier repaid by the Borrowers, Swingline Loans shall be refunded by the Lenders on demand by the Swingline Lender. Such refundings shall be made by the Lenders in accordance with their respective Revolving Credit Commitment Percentages and shall thereafter be reflected as Revolving Credit Loans of the Lenders on the books and records of the Administrative Agent. Each Lender shall fund its respective Revolving Credit Commitment Percentage of Revolving Credit Loans as required to repay Swingline Loans outstanding to the Swingline Lender upon demand by the Swingline Lender but in no event later than 2:00 p.m. (Charlotte time) on the next succeeding Business Day after such demand is made. No Lender's obligation to fund its respective Revolving Credit Commitment Percentage of a Swingline Loan shall be affected by any other Lender's failure to fund its Revolving Credit Commitment Percentage of a Swingline Loan, nor shall any Lender's Revolving Credit Commitment Percentage be increased as a result of any such failure of any other Lender to fund its Revolving Credit Commitment Percentage of a Swingline Loan. (ii) The Borrowers shall pay to the Swingline Lender on demand the amount of such Swingline Loans to the extent amounts received from the Lenders pursuant to Section 2.2(b)(i) are not sufficient to repay in full the outstanding Swingline Loans requested or required to be refunded. In addition, each Borrower hereby authorizes the Administrative Agent to charge any account maintained with the Swingline Lender (up to the amount available therein) in order to immediately pay the Swingline Lender the amount of such Swingline Loans to the extent amounts received from the Lenders are not sufficient to repay in full the outstanding Swingline Loans requested or required to be refunded. If any portion of any such amount paid to the Swingline Lender shall be recovered by or on behalf of the Borrowers from the Swingline Lender in bankruptcy or otherwise, the loss of the amount so recovered shall be ratably shared among all the Lenders in accordance with their respective Revolving Credit Commitment Percentages (unless the amounts so recovered by or on behalf of the Borrowers pertain to a Swingline Loan extended after the occurrence and during the continuance of an Event of Default of which the Administrative Agent has received actual notice and which such Event of Default has not been waived by the Required Lenders or the Lenders, as applicable). 25 (iii) Each Lender acknowledges and agrees that its obligation to refund Swingline Loans in accordance with the terms of this Section 2.2 is absolute and unconditional and shall not be affected by any circumstance whatsoever, including, without limitation, non-satisfaction of the conditions set forth in Article VI. Further, each Lender agrees and acknowledges that if prior to the refunding of any outstanding Swingline Loans pursuant to this Section 2.2, one of the events described in Section 12.1(j) or (k) shall have occurred, each Lender will, on the date the applicable Revolving Credit Loan would have been made, purchase an undivided participating interest in the Swingline Loan to be refunded in an amount equal to its Revolving Credit Commitment Percentage of the aggregate amount of such Swingline Loan. Each Lender will immediately transfer to the Swingline Lender, in immediately available funds, the amount of its participation and upon receipt thereof the Swingline Lender will deliver to such Lender a certificate evidencing such participation dated the date of receipt of such funds and for such amount. Whenever, at any time after the Swingline Lender has received from any Lender such Lender's participating interest in a Swingline Loan, the Swingline Lender receives any payment on account thereof, the Swingline Lender will distribute to such Lender its participating interest in such amount (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender's participating interest was outstanding and funded). SECTION 2.3 Procedure for Advances of Revolving Credit and Swingline -------------------------------------------------------- Loans. - ----- (a) Requests for Borrowing. GTS, on behalf of the Borrowers, shall give the ---------------------- Administrative Agent irrevocable prior written notice in the form attached hereto as Exhibit C-1 (a "Notice of Revolving Credit/Swingline Borrowing") not ----------- later than 11:00 a.m. (Charlotte time) (i) on the same Business Day as each Swingline Loan or Base Rate Loan and (ii) at least three (3) Business Days before each LIBOR Rate Loan, of its intention to borrow, specifying (A) the date of such borrowing, which shall be a Business Day, (B) the amount of such borrowing, which shall be in an amount equal to the amount of the Aggregate Commitment then available to the Borrowers, or if less, (x) with respect to Base Rate Loans in an aggregate principal amount of $1,000,000 or a whole multiple of $500,000 in excess thereof, (y) with respect to LIBOR Rate Loans in an aggregate principal amount of $3,000,000 or a whole multiple of $1,000,000 in excess thereof and (z) with respect to Swingline Loans in an aggregate principal amount of $50,000 or a whole multiple thereof in excess thereof, (C) whether such Loan is to be a Revolving Credit Loan or Swingline Loan, (D) in the case of a Revolving Credit Loan whether the Loans are to be LIBOR Rate Loans or Base Rate Loans, and (E) in the case of a LIBOR Rate Loan, the duration of the Interest Period applicable thereto. Notices received after 11:00 a.m. (Charlotte time) shall be deemed received on the next Business Day. The Administrative Agent shall promptly notify the Lenders of each Notice of Borrowing. (b) Disbursement of Revolving Credit and Swingline Loans. Not later than ---------------------------------------------------- 3:00 p.m. (Charlotte time) on the proposed borrowing date, (i) each Lender will make available to the Administrative Agent, for the account of the Borrowers, at the office of the Administrative Agent in funds immediately available to the Administrative Agent, such Lender's Revolving Credit Commitment Percentage of the Revolving Credit Loans to be made on such borrowing date and (ii) the Swingline Lender will make available to the Administrative Agent, for the account of the 26 Borrowers, at the office of the Administrative Agent in funds immediately available to the Administrative Agent, the Swingline Loans to be made on such borrowing date. The Borrowers hereby irrevocably authorize the Administrative Agent to disburse the proceeds of each borrowing requested pursuant to this Section 2.3 in immediately available funds by crediting or wiring such proceeds to the deposit account of the Borrowers identified in the most recent notice substantially in the form of Exhibit D hereto (a "Notice of --------- Account Designation") delivered by the Borrowers to the Administrative Agent or as may be otherwise agreed upon by the Borrowers and the Administrative Agent from time to time. Subject to Section 5.7 hereof, the Administrative Agent shall not be obligated to disburse the portion of the proceeds of any Revolving Credit Loan requested pursuant to this Section 2.3 to the extent that any Lender has not made available to the Administrative Agent its Revolving Credit Commitment Percentage of such Loan. Revolving Credit Loans to be made for the purpose of refunding Swingline Loans shall be made by the Lenders as provided in Section 2.2(b). SECTION 2.4 Repayment of Revolving Credit and Swingline Loans. ------------------------------------------------- (a) Repayment on Revolving Credit Maturity Date. The Borrower shall repay ------------------------------------------- the outstanding principal amount of (i) all Revolving Credit Loans in full on the Revolving Credit Maturity Date, and (ii) all Swingline Loans in accordance with Section 2.2(b) and, in any event, on the Swingline Termination Date, together, in each case, with all accrued but unpaid interest thereon and all other amounts arising in connection therewith. (b) Mandatory Repayment of Revolving Credit Loans. If at any time the sum --------------------------------------------- of (A) the aggregate principal amount of all Revolving Credit Loans outstanding at such time plus (B) the aggregate principal amount of all Swingline Loans ---- outstanding at such time plus (C) the aggregate L/C Obligations outstanding at ---- such time shall exceed the Borrowing Limit at such time, the Borrowers shall repay immediately upon notice from the Administrative Agent, by payment to the Administrative Agent for the account of the Swingline Lender or Lenders, as applicable, Revolving Credit Loans, Swingline Loans and/or furnishing cash collateral reasonably satisfactory to the Administrative Agent or repay the L/C Obligations in an amount equal to such excess with each such repayment applied first to the principal amount of the outstanding Swingline Loans and second to - ----- ------ the principal amount of the L/C Obligations and third to the principal amount of ----- outstanding Revolving Credit Loans. Such cash collateral shall be applied in accordance with Section 12.2(b). Each such repayment shall be accompanied by any amount required to be paid pursuant to Section 5.9 hereof. (c) Optional Repayments. The Borrowers may at any time and from time to ------------------- time repay the Revolving Credit Loans, in whole or in part, upon at least three (3) Business Days' irrevocable notice to the Administrative Agent with respect to LIBOR Rate Loans and one (1) Business Day irrevocable notice with respect to Base Rate Loans and Swingline Loans, in the form attached hereto as Exhibit E (a --------- "Notice of Prepayment") specifying the date and amount of repayment and whether the repayment is of LIBOR Rate Loans, Base Rate Loans, Swingline Loans or a combination thereof, and, if of a combination thereof, the amount allocable to each. Upon receipt of such notice, the Administrative Agent shall promptly notify each Lender. If any such notice is 27 given, the amount specified in such notice shall be due and payable on the date set forth in such notice. Partial repayments shall be in an aggregate amount of $1,000,000 or a whole multiple of $500,000 in excess thereof with respect to Base Rate Loans, $3,000,000 or a whole multiple of $1,000,000 in excess thereof with respect to LIBOR Rate Loans and $50,000 or a whole multiple thereof with respect to Swingline Loans. Each such repayment shall be accompanied by any amount required to be paid pursuant to Section 5.9 hereof. (d) Limitation on Repayment of LIBOR Rate Loans. The Borrowers may not ------------------------------------------- repay any LIBOR Rate Loan on any day other than on the last day of the Interest Period applicable thereto unless such repayment is accompanied by any amount required to be paid pursuant to Section 5.9 hereof. SECTION 2.5 Notes. ----- (a) Revolving Credit Notes. Each Lender's Revolving Credit Loans and the ---------------------- obligation of the Borrowers to repay such Revolving Credit Loans shall be evidenced by a separate Revolving Credit Note executed by the Borrowers payable to the order of such Lender representing the obligation of the Borrowers to pay such Lender's Revolving Credit Commitment or, if less, the aggregate unpaid principal amount of all Revolving Credit Loans made and to be made by such Lender to the Borrowers hereunder, plus interest and all other fees, charges and ---- other amounts due thereon. Each Revolving Credit Note shall bear interest on the unpaid principal amount thereof at the applicable interest rate per annum specified in Section 5.1. (b) Swingline Note. The Swingline Loans and the obligation of the -------------- Borrowers to repay such Swingline Loans shall be evidenced by a Swingline Note executed by the Borrowers payable to the order of the Swingline Lender representing the obligation of the Borrowers to pay the Swingline Lender's Swingline Commitment or, if less, the aggregate unpaid principal amount of all Swingline Loans made by the Swingline Lender to the Borrowers hereunder, plus ---- interest on such principal amounts and all other fees, charges and other amounts due thereon. The Swingline Note shall bear interest on the unpaid principal amount thereof at the applicable interest rate per annum specified in Section 5.1. SECTION 2.6 Permanent Reduction of the Revolving Credit Commitment ------------------------------------------------------ and/or Swingline Commitment. - --------------------------- (a) Voluntary Reduction. The Borrowers shall have the right at any time ------------------- and from time to time, upon at least five (5) Business Days prior written notice to the Administrative Agent, to permanently reduce, without premium or penalty, (i) the entire Revolving Credit Commitment and/or Swingline Commitment at any time or (ii) portions of the Revolving Credit Commitment and/or Swingline Commitment, from time to time, in an aggregate principal amount not less than $3,000,000 or any whole multiple of $1,000,000 in excess thereof. (b) If at any time proceeds remain after the prepayment of Term A Loans and Term B Loans pursuant to Section 4.4(b)(vi) ("Excess Proceeds"), the Revolving Credit Commitment shall be permanently reduced by an amount equal to the amount of such Excess Proceeds. 28 (c) Application. Each permanent reduction permitted or required pursuant ----------- to this Section 2.6 shall be accompanied by a payment of principal sufficient to reduce the aggregate outstanding (i) Revolving Credit Loans and L/C Obligations, as applicable, after such reduction to the Revolving Credit Commitment as so reduced and if the Revolving Credit Commitment as so reduced is less than the aggregate amount of all outstanding Letters of Credit, the Borrowers shall be required to deposit in a cash collateral account opened by the Administrative Agent, in its name and on its books and over which it shall have sole dominion and control, an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit and (ii) Swingline Loans after such reduction to the Swingline Commitment as so reduced. Any reduction of (i) the Revolving Credit Commitment to zero shall be accompanied by payment of all outstanding Revolving Credit Loans and Swingline Loans (and furnishing of cash collateral satisfactory to the Administrative Agent for all L/C Obligations) and shall result in the termination of the Revolving Credit Commitment and the Swingline Commitment and the Revolving Credit Facility and Swingline Facility and (ii) the Swingline Commitment to zero shall be accompanied by payment of all outstanding Swingline Loans and shall result in the termination of the Swingline Commitment and Swingline Facility. Such cash collateral shall be applied in accordance with Section 12.2(b). If the reduction of the Revolving Credit Commitment requires the repayment of any LIBOR Rate Loan, such repayment shall be accompanied by any amount required to be paid pursuant to Section 5.9 hereof. SECTION 2.7 Termination of Revolving Credit Facility. The Revolving ---------------------------------------- Credit Facility shall terminate on the earliest of (a) June 8, 2005, (b) the date of termination by the Borrowers pursuant to Section 2.6(a) and (c) the date of termination by the Administrative Agent on behalf of the Lenders pursuant to Section 12.2(a); provided that, if the Preferred Stock Redemption Amendment -------- shall not have become effective on or prior to the Maturity Adjustment Date, the date set forth in clause (a) of this Section 2.7 shall be deemed to be replaced with the Adjusted Maturity Date. ARTICLE III LETTER OF CREDIT FACILITY ------------------------- SECTION 3.1 L/C Commitment. -------------- (a) Subject to the terms and conditions hereof, First Union, as the Issuing Lender, in reliance on the agreements of the other Lenders set forth in Section 3.4(a), agrees to issue standby letters of credit ("Letters of Credit") for the account of the Borrowers on a joint and several basis on any Business Day from the Closing Date through but not including the date which is five (5) Business Days prior to the Revolving Credit Maturity Date in such form as may be approved from time to time by the Issuing Lender; provided, that the Issuing Lender shall -------- have no obligation to issue any Letter of Credit if, after giving effect to such issuance, (i) the L/C Obligations would exceed the L/C Commitment or (ii) the sum of (A) the L/C Obligations at such time plus (B) the ---- 29 aggregate principal amount of all outstanding Revolving Credit Loans and Swingline Loans would exceed the then applicable Borrowing Limit. If at any time the L/C Obligations exceed such permitted amount, the Borrowers shall furnish to the Administrative Agent cash collateral satisfactory to the Administrative Agent in an amount equal to such excess to be applied in accordance with Section 12.2(b). (b) Each Letter of Credit shall (i) be denominated in Dollars in a minimum amount of $100,000, (ii) be a standby letter of credit issued to support obligations of the Borrowers or any of their Subsidiaries, contingent or otherwise, incurred in the ordinary course of business, (iii) expire on a date no later than one (1) year from the date of issuance thereof; provided, that in -------- no case shall such expiration date be later than five (5) Business Days prior to the Revolving Credit Maturity Date and (iv) be subject to the Uniform Customs and/or ISPA 98, as set forth in the Application or as determined by the Issuing Lender and to the extent not inconsistent therewith, the laws of the State of New York. The Issuing Lender shall not at any time be obligated to issue any Letter of Credit hereunder if such issuance would conflict with, or cause the Issuing Lender or any L/C Participant to exceed any limits imposed by, any Applicable Law. References herein to "issue" and derivations thereof with respect to Letters of Credit shall also include extensions or modifications of any Existing Letters of Credit, unless the context otherwise requires. SECTION 3.2 Procedure for Issuance of Letters of Credit. The ------------------------------------------- Borrowers may from time to time request that the Issuing Lender issue a Letter of Credit by delivering to the Issuing Lender at the Administrative Agent's Office an Application therefor, completed to the satisfaction of the Issuing Lender, and such other certificates, documents and other papers and information as the Issuing Lender may request. Upon receipt of any Application, the Issuing Lender shall process such Application and the certificates, documents and other papers and information delivered to it in connection therewith in accordance with its customary procedures and shall, subject to Section 3.1 and Article VI hereof, promptly issue the Letter of Credit requested thereby (but in no event shall the Issuing Lender be required to issue any Letter of Credit earlier than three (3) Business Days after its receipt of the Application therefor and all such other certificates, documents and other papers and information relating thereto) by issuing the original of such Letter of Credit to the beneficiary thereof or as otherwise may be agreed by the Issuing Lender and the Borrowers. The Issuing Lender shall promptly furnish to the Borrowers a copy of such Letter of Credit and promptly notify each Lender of the issuance and upon request by any Lender, furnish to such Lender a copy of such Letter of Credit and the amount of such Lender's L/C Participation therein. SECTION 3.3 Commissions and Other Charges. ----------------------------- (a) The Borrowers shall pay to the Administrative Agent, for the account of the Issuing Lender and the L/C Participants, a letter of credit commission with respect to each Letter of Credit in an amount equal to the product of (i) the face amount of such Letter of Credit times (ii) an annual percentage equal to ----- the Applicable Margin with respect to LIBOR Rate Loans in effect on the date of issuance of such Letter of Credit. Such commission shall be payable quarterly in arrears on the last Business Day of each calendar quarter and on the Revolving Credit Maturity Date. 30 (b) In addition to the foregoing commission, the Borrowers shall pay the Issuing Lender an issuance fee of 0.125% per annum on the face amount of each Letter of Credit, payable quarterly in arrears on the last Business Day of each calendar quarter and on the Revolving Credit Maturity Date; provided, that such -------- issuance fee shall not be payable with respect to the Existing Letters of Credit. (c) The Borrowers shall also pay all normal costs and expenses of the Issuing Lender in connection with the issuance, transfer or other administration of the Letters of Credit. (d) The Administrative Agent shall, promptly following its receipt thereof, distribute to the Issuing Lender and the L/C Participants all commissions received by the Administrative Agent in accordance with their respective Revolving Credit Commitment Percentages. SECTION 3.4 L/C Participations. ------------------ (a) The Issuing Lender irrevocably agrees to grant and hereby grants to each L/C Participant, and, to induce the Issuing Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase and hereby accepts and purchases from the Issuing Lender, on the terms and conditions hereinafter stated, for such L/C Participant's own account and risk an undivided interest equal to such L/C Participant's Revolving Credit Commitment Percentage in the Issuing Lender's obligations and rights under each Letter of Credit and the amount of each draft paid by the Issuing Lender thereunder. Each L/C Participant unconditionally and irrevocably agrees with the Issuing Lender that, if a draft is paid under any Letter of Credit for which the Issuing Lender is not reimbursed in full by the Borrowers in accordance with the terms of this Agreement, such L/C Participant shall pay to the Issuing Lender upon demand at the Issuing Lender's address for notices specified herein an amount equal to such L/C Participant's Revolving Credit Commitment Percentage of the amount of such draft, or any part thereof, which is not so reimbursed. (b) Upon becoming aware of any amount required to be paid by any L/C Participant to the Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion of any payment made by the Issuing Lender under any Letter of Credit, the Issuing Lender shall notify each L/C Participant of the amount and due date of such required payment and such L/C Participant shall pay to the Issuing Lender the amount specified on the applicable due date. If any such amount is paid to the Issuing Lender after the date such payment is due, such L/C Participant shall pay to the Issuing Lender on demand, in addition to such amount, the product of (i) such amount, times (ii) the daily average Federal ----- Funds Rate as determined by the Administrative Agent during the period from and including the date such payment is due to the date on which such payment is immediately available to the Issuing Lender, times (iii) a fraction the ----- numerator of which is the number of days that elapse during such period and the denominator of which is 360. A certificate of the Issuing Lender with respect to any amounts owing under this Section 3.4(b) shall be conclusive in the absence of manifest error. With respect to payment to the Issuing Lender of the unreimbursed amounts described in this Section 3.4(b), if the L/C Participants receive notice that 31 any such payment is due (A) prior to 1:00 p.m. (Charlotte time) on any Business Day, such payment shall be due that Business Day, and (B) after 1:00 p.m. (Charlotte time) on any Business Day, such payment shall be due on the following Business Day. (c) Whenever, at any time after the Issuing Lender has made payment under any Letter of Credit and has received from any L/C Participant its Revolving Credit Commitment Percentage of such payment in accordance with this Section 3.4, the Issuing Lender receives any payment related to such Letter of Credit (whether directly from any Borrower or otherwise), or any payment of interest on account thereof, the Issuing Lender will distribute to such L/C Participant its pro rata share thereof; provided, that in the event that any such payment - --- ---- -------- received by the Issuing Lender shall be required to be returned by the Issuing Lender, such L/C Participant shall return to the Issuing Lender the portion thereof previously distributed by the Issuing Lender to it. SECTION 3.5 Reimbursement Obligation of the Borrowers. In the event of ----------------------------------------- any drawing under any Letter of Credit, the Borrowers jointly and severally agree to reimburse (either with the proceeds of a Revolving Credit Loan as provided for in this Section 3.5 or with funds from other sources), in same day funds, the Issuing Lender on each date on which the Issuing Lender notifies the Borrowers of the date and amount of a draft paid under any Letter of Credit for the amount of (a) such draft so paid and (b) any amounts referred to in Section 3.3(c) incurred by the Issuing Lender in connection with such payment. Unless the Borrowers shall immediately notify the Issuing Lender that the Borrowers intend to reimburse the Issuing Lender for such drawing from other sources or funds, the Borrowers shall be deemed to have timely given a Notice of Revolving Credit/Swingline Borrowing to the Administrative Agent requesting that the Lenders make a Revolving Credit Loan bearing interest at the Base Rate on such date in the amount of (a) such draft so paid and (b) any amounts referred to in Section 3.3(c) incurred by the Issuing Lender in connection with such payment, and the Lenders shall make a Revolving Credit Loan bearing interest at the Base Rate in such amount, the proceeds of which shall be applied to reimburse the Issuing Lender for the amount of the related drawing and costs and expenses. Each Lender acknowledges and agrees that its obligation to fund a Revolving Credit Loan in accordance with this Section 3.5 to reimburse the Issuing Lender for any draft paid under a Letter of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including, without limitation, non-satisfaction of the conditions set forth in Section 2.3(a) or Article VI. If the Borrowers have elected to pay the amount of such drawing with funds from other sources and shall fail to reimburse the Issuing Lender as provided above, the unreimbursed amount of such drawing shall bear interest at the rate which would be payable on any outstanding Base Rate Loans which were then overdue from the date such amounts become payable (whether at stated maturity, by acceleration or otherwise) until payment in full. SECTION 3.6 Obligations Absolute. The obligations of the Borrowers -------------------- under this Article III (including without limitation the Reimbursement Obligation) shall be irrevocable, absolute and unconditional under any and all circumstances and irrespective of any set-off, counterclaim or defense to payment which the Borrowers may have or have had against the Issuing Lender or any beneficiary of a Letter of Credit. The Borrowers also agree with the Issuing Lender that the Issuing Lender and the L/C Participants shall not be responsible for, and the 32 Reimbursement Obligation of the Borrowers under Section 3.5 shall not be affected by, among other things, the validity or genuineness of this Agreement, any documents or of any endorsements thereon, even though such documents shall in fact prove to be invalid, fraudulent or forged, or any dispute between or among the Borrowers and any beneficiary of any Letter of Credit or any other party to which such Letter of Credit may be transferred or any claims whatsoever of a Borrower against any beneficiary of such Letter of Credit or any such transferee or the application or misapplication of the proceeds or any Letter of Credit by any beneficiary thereunder. The Issuing Lender shall not be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit, except for errors or omissions caused by the Issuing Lender's gross negligence or willful misconduct. The Borrowers agree that any action taken or omitted by the Issuing Lender under or in connection with any Letter of Credit or the related drafts or documents, if done in the absence of gross negligence or willful misconduct and in accordance with the standards of care specified in the Uniform Customs and, to the extent not inconsistent therewith, the UCC as in effect in the State of New York from time to time shall be binding on the Borrowers and shall not result in any liability of the Issuing Lender or any L/C Participant to the Borrowers. The responsibility of the Issuing Lender to the Borrowers in connection with any draft presented for payment under any Letter of Credit shall, in addition to any payment obligation expressly provided for in such Letter of Credit, be limited to determining that the documents (including each draft) delivered under such Letter of Credit in connection with such presentment are in conformity with such Letter of Credit. SECTION 3.7 Effect of Application. To the extent that any provision of --------------------- any Application related to any Letter of Credit is inconsistent with the provisions of this Article III, the provisions of this Article III shall apply. ARTICLE IV TERM LOAN FACILITIES -------------------- SECTION 4.1 Term Loans. Subject to the terms and conditions of this ---------- Agreement, each Lender severally agrees to make the following Term Loans: (a) A Term A Loan to the Borrowers on a joint and several basis on the Closing Date in a principal amount equal to such Lender's Term A Loan Commitment; and (b) A Term B Loan to the Borrowers on a joint and several basis on the Closing Date in a principal amount equal to such Lender's Term B Loan Commitment. If not made by the Closing Date, the Term A Loan Commitment and Term B Loan Commitment will expire and be of no further force or effect. SECTION 4.2 Procedure for Advance of Term Loans. GTS, on behalf of ----------------------------------- the Borrowers, shall give the Administrative Agent irrevocable prior written notice in the form attached hereto as Exhibit C-2 (a "Notice of Term Loan ----------- Borrowing") not later than 11:00 a.m. 33 (Charlotte time) on the Closing Date requesting that the Lenders make the Term A Loans and the Term B Loans each as a Base Rate Loan on such date in an amount equal to the aggregate Term A Loan Commitment and Term B Loan Commitment, respectively. Upon receipt of such Notice of Term Loan Borrowing from GTS on behalf of the Borrowers, the Administrative Agent shall promptly notify each Lender thereof. Not later than 2:00 p.m. (Charlotte time) on the Closing Date, each Lender will make available to the Administrative Agent, for the account of the Borrowers, at the office of the Administrative Agent in funds immediately available to the Administrative Agent, such Lender's (i) Term A Loan Percentage of the Term A Loans and (ii) Term B Loan Percentage of the Term B Loans to be made on the Closing Date. The Borrowers hereby irrevocably authorize the Administrative Agent to disburse the proceeds of each borrowing requested pursuant to this Section 4.2 in immediately available funds by crediting or wiring such proceeds to the deposit account of the Borrowers identified in the Notice of Account Designation. Subject to Section 5.7 hereof, the Administrative Agent shall not be obligated to disburse the portion of the proceeds of any Term Loan requested pursuant to this Section 4.2 to the extent that any Lender has not made available to the Administrative Agent its Term A Loan Percentage of such Term A Loan or Term B Loan Percentage of such Term B Loan, as applicable. SECTION 4.3 Repayment of Term Loans. ----------------------- (a) Term A Loans. Commencing June 30, 2000, the Borrowers shall repay the ------------ outstanding principal amount of the Term A Loans in equal quarterly installments in amounts equal to the following percentage of the Term A Loans outstanding on the Closing Date on the last day of each calendar quarter, in accordance with the following amortization schedule: ------------------------------------------------------------------------- Period Aggregate Percentage Reduction of Term A Loans for Period ------------------------------------------------------------------------- 6/30/00 through 3/31/01 20% ------------------------------------------------------------------------- Next four calendar quarters 20% ------------------------------------------------------------------------- Next four calendar quarters 20% ------------------------------------------------------------------------- Next four calendar quarters 20% ------------------------------------------------------------------------- Next four calendar quarters 20% ------------------------------------------------------------------------- If not sooner paid, the Term A Loans shall be paid in full, together with accrued interest thereon, on the Term A Loan Maturity Date. (b) Term B Loans. Commencing June 30, 2000, the Borrowers shall repay the ------------ outstanding principal amount of the Term B Loans in equal quarterly installments in amounts equal to the following percentage of the Term B Loans outstanding on the Closing Date on the last day of each calendar quarter, in accordance with the following amortization schedule: 34 ------------------------------------------------------------------------- Period Aggregate Percentage Reduction of Term B Loans for Period ------------------------------------------------------------------------- 6/30/00 through 9/30/00 0.50% ------------------------------------------------------------------------- Next four calendar quarters 1.00% ------------------------------------------------------------------------- Next four calendar quarters 1.00% ------------------------------------------------------------------------- Next four calendar quarters 1.00% ------------------------------------------------------------------------- Next four calendar quarters 1.00% ------------------------------------------------------------------------- Next four calendar quarters 47.75% ------------------------------------------------------------------------- Next four calendar quarters 47.75% ------------------------------------------------------------------------- If not sooner paid, the Term B Loans shall be paid in full, together with accrued interest thereon, on the Term B Loan Maturity Date. SECTION 4.4 Prepayments of Term Loans. ------------------------- (a) Optional Prepayment of Term Loans. The Borrowers shall have the right --------------------------------- at any time and from time to time, upon delivery to the Administrative Agent of a Notice of Prepayment (i) at least two (2) Business Days prior to any repayment of a Base Rate Loan and (ii) at least three (3) Business Days prior to the repayment of a LIBOR Rate Loan to prepay the Term Loans in whole or in part without premium or penalty except as provided below and as required pursuant to Section 5.9. Upon receipt of any such notice, the Administrative Agent promptly shall forward a copy thereof to the Lenders. Each optional prepayment of the Term Loans hereunder shall be in an aggregate principal amount of at least $1,000,000 or any whole multiple of $250,000 in excess thereof with respect to Base Rate Loans and $2,000,000 or any whole multiple of $500,000 in excess thereof with respect to LIBOR Rate Loans, shall be applied to reduce the outstanding principal balance of the Term Loans on a pro rata basis between the --- ---- Term A Loans and the Term B Loans and to reduce on a pro rata basis the --- ---- remaining scheduled principal installments of the Term Loans under Section 4.3 in inverse order of maturity. (b) Mandatory Prepayment of Term Loans. ---------------------------------- (i) Debt Proceeds. The Borrowers shall make mandatory principal ------------- prepayments (in the manner set forth in Section 4.4(b)(vi) below) of the Term Loans in amounts equal to one hundred percent (100%) of the Net Cash Proceeds from any incurrence of Debt by any Borrower or any of its Subsidiaries (except Debt permitted pursuant to Sections 11.1(a) through 11.1(i)). Such prepayment shall be made within three (3) Business Days after the date of consummation of any such transaction. 35 (ii) Equity Proceeds. The Borrowers shall make mandatory principal --------------- prepayments (in the manner set forth in Section 4.4(b)(vi) below) of the Term Loans in amounts equal to fifty percent (50%) of the aggregate Net Cash Proceeds from any offering of equity securities by any Borrower or any of its Subsidiaries (excluding Net Cash Proceeds from the issuance of any common or preferred stock of GTS permitted under this Agreement and (A) issued to finance any Permitted Acquisition or (B) issued to The Carlyle Group or its Affiliates). Such prepayment shall be made within three (3) Business Days after the date of consummation of any such transaction. (iii) Asset Sale Proceeds. The Borrowers shall make mandatory ------------------- principal prepayments (in the manner set forth in Section 4.4(b)(vi) below) of the Term Loans in amounts equal to one hundred percent (100%) of the Net Cash Proceeds from the sale or other disposition of assets by any Borrower or any of its Subsidiaries other than in the ordinary course of business, including without limitation, pursuant to Section 11.6(g). Such prepayment shall be made within three (3) Business Days after the date of consummation of any such transaction. (iv) Insurance and Condemnation Proceeds. No later than one hundred ----------------------------------- eighty (180) days following the date of receipt by any Borrower or any Subsidiary thereof of any Net Cash Proceeds under any of the property or casualty insurance policies thereof or from any condemnation proceeding which have not been reinvested as of such date in similar assets, the Borrowers shall make mandatory principal prepayments (in the manner set forth in Section 4.4(b)(vi) below) of the Term Loans in amounts equal to one hundred percent (100%) of such Net Cash Proceeds. Notwithstanding any of the foregoing to the contrary, upon and during the continuance of an Event of Default and upon notice from the Administrative Agent, all proceeds from such insurance policies or condemnation proceedings, received by any Borrower or any Subsidiary thereof shall be directly paid over to the Administrative Agent and applied to make prepayments of the Term Loans (in the manner set forth in Section 4.4(b)(vi) below), such prepayments to be made within three (3) Business Days after the Borrower's receipt of such proceeds. (v) Excess Cash Flow. Within ninety (90) days after the end of any ---------------- Fiscal Year commencing with the Fiscal Year ending December 31, 2000, the Borrowers shall make a mandatory principal prepayment (in the manner set forth in Section 4.4(b)(vi) below) of the Term Loans in an amount equal to fifty percent (50%) of Excess Cash Flow, if any, for such Fiscal Year. (vi) Notice; Manner of Payment. Upon the occurrence of any event ------------------------- triggering the prepayment requirement under Sections 4.4(b)(i) through and including 4.4(b)(v), GTS on behalf of the Borrowers shall give prompt written notice of such event and the amount of the corresponding prepayment to the Administrative Agent and upon receipt of such notice, the Administrative Agent shall promptly so notify the Lenders. Each mandatory prepayment of the Term Loans under Section 4.4(b) shall be applied as follows: (i) first, to reduce the outstanding principal balance of the Term Loans on a pro rata basis between --- ---- the Term A Loans and the 36 Term B Loans and to reduce the remaining scheduled principal installments of the Term Loans under Section 4.3 in inverse order of maturity and (ii) second, to the extent of any excess, to reduce permanently the Revolving Credit Commitment pursuant to Section 2.6(b). (c) No Reborrowing of Term Loans. Amounts prepaid under the Term Loans ---------------------------- pursuant to Section 4.3 or Section 4.4 may not be reborrowed and will constitute a permanent reduction in the applicable Term Loan Commitment. Each prepayment shall be accompanied by any amount required to be paid pursuant to Section 5.9 hereof. SECTION 4.5 Term Notes ---------- . Each Lender's Term A Loans and the obligation of the Borrowers to repay such Term A Loans shall be evidenced by a Term A Note, payable to the order of such Lender representing the Borrowers' obligation to pay such Lender's Term A Loan Commitment in accordance with the terms hereof. Each Lender's Term B Loans and the obligation of the Borrowers to repay such Term B Loans shall be evidenced by a Term B Note, payable to the order of such Lender representing the Borrowers' obligation to pay such Lender's Term B Loan Commitment in accordance with the terms hereof. Each Term Note shall bear interest on the unpaid principal amount thereof at the applicable interest rate per annum specified in Section 5.1. ARTICLE V GENERAL LOAN PROVISIONS ----------------------- SECTION 5.1 Interest. -------- (a) Interest Rate Options. Subject to the provisions of this Section 5.1, --------------------- at the election of GTS on behalf of the Borrowers, the aggregate principal balance of any Revolving Credit Note and any Term Loan Note shall bear interest at (i) the Base Rate plus the Applicable Margin as set forth in Section 5.1(c) ---- or (ii) the LIBOR Rate plus the Applicable Margin as set forth in Section ---- 5.1(c); provided that the LIBOR Rate shall not be available until three (3) -------- Business Days after the Closing Date. The Swingline Note shall bear interest at the Base Rate plus the Applicable Margin as set forth in Section 5.1(c). The ---- Borrowers shall select the rate of interest and Interest Period, if any, applicable to any Loan at the time a Notice of Revolving Credit/Swingline Borrowing is given pursuant to Section 2.3(a) or a Notice of Term Loan Borrowing is given pursuant to Section 4.2 or at the time a Notice of Conversion/Continuation is given pursuant to Section 5.2. Each Loan or portion thereof bearing interest based on the Base Rate (other than Swingline Loans) shall be a "Base Rate Loan", each Loan or portion thereof bearing interest based on the LIBOR Rate shall be a "LIBOR Rate Loan." Any Loan or any portion thereof as to which the Borrowers have not duly specified an interest rate as provided herein shall be deemed a Base Rate Loan. (b) Interest Periods. In connection with each LIBOR Rate Loan, GTS on ---------------- behalf of the Borrowers, by giving notice at the times described in Section 5.1(a), shall elect an interest period (each, an "Interest Period") to be applicable to such LIBOR Rate Loan, which Interest Period shall be a period of one (1), two (2), three (3), or six (6) months with respect to each LIBOR Rate Loan; provided that: -------- 37 (i) the Interest Period shall commence on the date of advance of or conversion to any LIBOR Rate Loan and, in the case of immediately successive Interest Periods, each successive Interest Period shall commence on the date on which the next preceding Interest Period expires; (ii) if any Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day; provided, that if any Interest Period with respect -------- to a LIBOR Rate Loan would otherwise expire on a day that is not a Business Day but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the next preceding Business Day; (iii) any Interest Period with respect to a LIBOR Rate Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the relevant calendar month at the end of such Interest Period; (iv) no Interest Period shall extend beyond the Revolving Credit Termination Date, the Term A Loan Maturity Date or the Term B Loan Maturity Date, as applicable, and Interest Periods shall be selected by the Borrowers so as to permit the Borrowers to make mandatory reductions of the Revolving Credit Commitment pursuant to Section 2.6(b) and the quarterly principal installment payments pursuant to Section 4.3 without payment of any amounts pursuant to Section 5.9; and (v) there shall be no more than seven (7) Interest Periods in effect at any time. (c) Applicable Margin. The Applicable Margin provided for in Section 5.1(a) ----------------- with respect to the Loans (the "Applicable Margin") shall (i) for the period commencing on the Closing Date and ending on the date that is six (6) months from the Closing Date (the "Initial Adjustment Date"), equal the percentages set forth as follows: Revolving Credit and Term A Loan Facilities Term B Loan Facility Applicable Margin Per Annum Applicable Margin Per Annum Base Rate + LIBOR Rate + Base Rate + LIBOR Rate + --------------------------- --------------------------- 2.25% 3.25% 2.75% 3.75% and (ii) commencing on the Initial Adjustment Date and for each fiscal quarter thereafter, shall be based upon the Leverage Ratio as set forth in the table below and shall be determined and adjusted on the Initial Adjustment Date and thereafter, quarterly on the date (each a "Calculation Date") ten (10) Business Days after the date by which the Borrowers are required to provide an Officer's 38 Compliance Certificate for the most recently ended fiscal quarter of the Borrowers and their Subsidiaries; provided, that with respect to the period -------- commencing on the Initial Adjustment Date and ending on the next Calculation Date to occur after the Initial Adjustment Date, the calculation of the Applicable Margin shall be based on the most recent Officer's Compliance Certificate received by the Administrative Agent and Lenders prior to the Initial Adjustment Date. Notwithstanding the foregoing, if the Borrowers fail to provide the Officer's Compliance Certificate as required by Section 8.2 for the most recently ended fiscal quarter of the Borrowers and their Subsidiaries preceding the applicable Calculation Date, the Applicable Margin from such Calculation Date shall be based on Pricing Level 1 (as shown below) until such time as an appropriate Officer's Compliance Certificate is provided, at which time the Pricing Level shall be determined by reference to the Leverage Ratio as of the last day of the most recently ended fiscal quarter of the Borrowers preceding such Calculation Date. The Applicable Margin shall be effective from one Calculation Date until the next Calculation Date. Any adjustment in the Applicable Margin shall be applicable to all Extensions of Credit then existing or subsequently made or issued.
Revolving Credit and Term A Loan Facilities Term B Loan Facility Applicable Margin Per Annum Applicable Margin Per Annum Level Leverage Ratio Base Rate + LIBOR Rate + Base Rate + LIBOR Rate + - ----- -------------- --------------------------- --------------------------- 1 Greater than or equal to 3.00 to 1.0. 2.50% 3.50% 3.00% 4.00% 2 Less than 3.00 to 1.0 but greater than or equal to 2.50 to 1.0. 2.25% 3.25% 2.75% 3.75% 3 Less than 2.50 to 1.0 but greater than or equal to 2.00 to 1.0. 2.00% 3.00% 2.50% 3.50% 4 Less than 2.00 to 1.0 but greater than or equal to 1.50 to 1.0. 1.75% 2.75% 2.25% 3.25% 5 Less than 1.50 to 1.0. 1.50% 2.50% 2.00% 3.00%
(d) Default Rate. Subject to Section 12.3, at the discretion of the ------------ Administrative Agent and Required Lenders upon the occurrence and during the continuance of an Event of Default, (i) the Borrowers shall no longer have the option to request LIBOR Rate Loans or Swingline Loans, (ii) all outstanding LIBOR Rate Loans shall bear interest at a rate per annum two percent (2%) in excess of the rate then applicable to LIBOR Rate Loans, as applicable, until the end of the applicable Interest Period and thereafter at a rate equal to two percent (2%) in excess of the rate then applicable to Base Rate Loans (calculated at the highest Applicable Margin), and (iii) all outstanding Base Rate Loans and Swingline Loans shall bear interest at a rate per annum equal to two percent (2%) in excess of the rate then applicable to Base Rate Loans. Interest shall continue to accrue on the Notes after the filing by or against any Borrower of any petition seeking any relief in 39 bankruptcy or under any act or law pertaining to insolvency or debtor relief, whether state, federal or foreign. (e) Interest Payment and Computation. Interest on each Base Rate Loan and -------------------------------- Swingline Loans shall be payable in arrears on the last Business Day of each calendar quarter commencing June 30, 2000; and interest on each LIBOR Rate Loan shall be payable on the last day of each Interest Period applicable thereto, and if such Interest Period extends over three (3) months, at the end of each three (3) month interval during such Interest Period. Interest on LIBOR Rate Loans and all fees payable hereunder shall be computed on the basis of a 360-day year and assessed for the actual number of days elapsed and interest on Base Rate Loans shall be computed on the basis of a 365/66-day year and assessed for the actual number of days elapsed. (f) Maximum Rate. In no contingency or event whatsoever shall the ------------ aggregate of all amounts deemed interest hereunder or under any of the Notes charged or collected pursuant to the terms of this Agreement or pursuant to any of the Notes exceed the highest rate permissible under any Applicable Law which a court of competent jurisdiction shall, in a final determination, deem applicable hereto. In the event that such a court determines that the Lenders have charged or received interest hereunder in excess of the highest applicable rate, the rate in effect hereunder shall automatically be reduced to the maximum rate permitted by Applicable Law and the Lenders shall at the Administrative Agent's option (i) promptly refund to the Borrowers any interest received by Lenders in excess of the maximum lawful rate or (ii) shall apply such excess to the principal balance of the Obligations. It is the intent hereof that the Borrowers not pay or contract to pay, and that neither the Administrative Agent nor any Lender receive or contract to receive, directly or indirectly in any manner whatsoever, interest in excess of that which may be paid by the Borrowers under Applicable Law. SECTION 5.2 Notice and Manner of Conversion or Continuation of Loans. -------------------------------------------------------- Provided that no Event of Default has occurred and is then continuing, the Borrowers shall have the option to convert at any time following the third Business Day after the Closing Date all or any portion of its outstanding Base Rate Loans (other than Swingline Loans) in a principal amount equal to $2,000,000 or any whole multiple of $500,000 in excess thereof into one or more LIBOR Rate Loans and (b) upon the expiration of any Interest Period, (i) convert all or any part of its outstanding LIBOR Rate Loans in a principal amount equal to $1,000,000 or a whole multiple of $250,000 in excess thereof into Base Rate Loans or (ii) continue such LIBOR Rate Loans as LIBOR Rate Loans. Whenever the Borrowers desire to convert or continue Loans as provided above, GTS on behalf of the Borrowers shall give the Administrative Agent irrevocable prior written notice in the form attached as Exhibit F (a "Notice of Conversion/Continuation") --------- not later than 11:00 a.m. (Charlotte time) three (3) Business Days before the day on which a proposed conversion or continuation of such Loan is to be effective specifying (A) the Loans to be converted or continued, and, in the case of any LIBOR Rate Loan to be converted or continued, the last day of the Interest Period therefor specifying the Credit Facility to which such Loan relates, (B) the effective date of such conversion or continuation (which shall be a Business Day), (C) the principal amount of such Loans to be converted or continued, and (D) the Interest Period to be applicable to such converted or continued LIBOR Rate Loan. The Administrative Agent shall promptly notify the Lenders of such Notice of Conversion/Continuation. 40 SECTION 5.3 Fees. ---- (a) Commitment Fee. Commencing on the Closing Date and continuing through -------------- but excluding the Revolving Credit Maturity Date, the Borrowers shall pay to the Administrative Agent, for the account of the Lenders, a non-refundable commitment fee at a rate per annum equal to the rate set forth below (the "Commitment Fee Rate") on the average daily unused portion of the Revolving Credit Commitment (the outstanding principal balance of all Revolving Credit Loans, Swingline Loans and L/C Obligations shall be considered usage). The commitment fee shall be payable in arrears on the last Business Day of each calendar quarter commencing June 30, 2000, and on the Revolving Credit Maturity Date. Such commitment fee shall be distributed by the Administrative Agent to the Lenders pro rata in accordance with the Lenders' respective Revolving Credit --- ---- Commitment Percentages. The Commitment Fee Rate provided for above shall equal the percentage set forth below corresponding to the level at which the Applicable Margin is determined in accordance with Section 5.1(c). Any change in the applicable level at which Applicable Margin is determined shall result in a corresponding and simultaneous change in the Commitment Fee Rate. Level Commitment Fee Rate ----- ------------------- 1 0.500% 2 0.500% 3 0.500% 4 0.375% 5 0.375% (b) Administrative Agent's and Other Fees. In order to compensate the ------------------------------------- Administrative Agent for structuring and syndicating the Loans and for its obligations hereunder, the Borrowers agree to pay to the Administrative Agent, for its account, the fees set forth in the separate fee letter agreement executed by the GTS, on behalf of itself and the other Borrowers, and the Administrative Agent dated March 29, 2000. SECTION 5.4 Manner of Payment. (a) Each payment by the Borrowers on ----------------- account of the principal of or interest on the Revolving Credit Loans or of any fee, commission or other amounts (including the Reimbursement Obligation) payable to the Lenders under this Agreement with respect to the Revolving Credit Loans, the Letters of Credit or any Revolving Credit Note shall be made not later than 1:00 p.m. (Charlotte time) on the date specified for payment under this Agreement to the Administrative Agent at the Administrative Agent's Office for the account of the Lenders having a Revolving Credit Commitment (other than as set forth below) pro rata in accordance with their respective Revolving --- ---- Credit Commitment Percentages, (except as specified below) in Dollars, in immediately available funds and shall be made without 41 any set-off, counterclaim or deduction whatsoever, (b) each payment to the Administrative Agent on account of the principal of or interest on the Swingline Loans or of any fee, commission or other amounts shall be made in like manner, except for the account of the Swingline Lender, (c) each payment by the Borrowers on account of the principal of or interest on the Term A Loans or of any fee, commission or other amounts payable to the Lenders under this Agreement with respect to the Term A Loans or any Term A Note shall be made in like manner, for the account of the Lenders having a Term A Loan Commitment pro rata --- ---- in accordance with their respective Term A Loan Percentages and shall be made without any set-off, counterclaim or deduction whatsoever, (d) each payment by the Borrowers on account of the principal of or interest on the Term B Loans or of any fee, commission or other amounts payable to the Lenders under this Agreement with respect to the Term B Loans or any Term B Note shall be made in like manner, for the account of the Lenders having a Term B Loan Commitment pro --- rata in accordance with their respective Term B Loan Percentages and shall be - ---- made without any set-off, counterclaim or deduction whatsoever and (e) any other amounts payable to the Lenders under this Agreement shall be made in like manner pro rata based on its or their respective share in the Obligation with respect - --- ---- to which such payment was received and shall be made without any set-off, counterclaim or deduction whatsoever. Any payment received after such time but before 2:00 p.m. (Charlotte time) on such day shall be deemed a payment on such date for the purposes of Section 12.1, but for all other purposes shall be deemed to have been made on the next succeeding Business Day. Any payment received after 3:00 p.m. (Charlotte time) shall be deemed to have been made on the next succeeding Business Day for all purposes. Upon receipt by the Administrative Agent of each such payment, the Administrative Agent shall distribute to each Lender at its address for notices set forth herein its pro --- rata share of such payment in accordance with such Lender's Revolving Credit - ---- Commitment Percentage, Term A Loan Percentage and/or Term B Loan Percentage, as applicable (except as specified below) and shall wire advice of the amount of such credit to each Lender. Each payment to the Administrative Agent of the Issuing Lender's fees or L/C Participants' commissions shall be made in like manner, but for the account of the Issuing Lender or the L/C Participant, as the case may be. Each payment to the Administrative Agent of the Administrative Agent's or Issuing Lender's fees or expenses shall be made for the account of the Administrative Agent or Issuing Lender, as the case may be, and each amount payable by the Borrowers to the Swingline Lender with respect to the Swingline Note shall be made to the Administrative Agent for the account of the Swingline Lender, and any amount payable to any Lender under Sections 5.8, 5.9, 5.10, 5.11 or 14.2 shall be paid to the Administrative Agent for the account of the applicable Lender. Subject to Section 5.1(b)(ii) if any payment under this Agreement or any Note shall be specified to be made upon a day which is not a Business Day, it shall be made on the next succeeding day which is a Business Day and such extension of time shall in such case be included in computing any interest if payable along with such payment. SECTION 5.5 Crediting of Payments and Proceeds. In the event that the ---------------------------------- Borrowers shall fail to pay any of the Obligations when due and the Obligations have been accelerated pursuant to Section 12.2, all payments received by the Lenders upon the Notes and the other Obligations and all net proceeds from the enforcement of the Obligations shall be applied first to all expenses then due and payable by the Borrowers hereunder, then to all indemnity obligations then due and payable by the Borrowers hereunder, then to all Administrative Agent's and Issuing 42 Lender's fees then due and payable, then to all commitment and other fees and commissions then due and payable, then to accrued and unpaid interest on the Swingline Note to the Swingline Lender, then to the principal amount outstanding under the Swingline Note to the Swingline Lender, then to accrued and unpaid interest on the other Notes and the Reimbursement Obligation (pro rata in --- ---- accordance with all such amounts due), then to the principal amount of the other Notes and Reimbursement Obligation and any termination payments due in respect of a Hedging Agreement with any Lender (which such Hedging Agreement is permitted hereunder and required or requested by the Required Lenders) (pro rata --- ---- in accordance with all such amounts due) and then to the cash collateral account described in Section 12.2(b) hereof to the extent of any L/C Obligations then outstanding, then to any termination payments due in respect of a Hedging Agreement with any Lender (which such Hedging Agreement is permitted, but not required or requested by the Required Lenders), in that order. SECTION 5.6 Adjustments. If any Lender (a "Benefited Lender") shall ----------- at any time receive any payment of all or part of the Obligations owing to it, or interest thereon, or if any Lender shall at any time receive any collateral in respect of the Obligations owing to it (whether voluntarily or involuntarily, by set-off or otherwise) in a greater proportion than any such payment to and collateral received by any other Lender, if any, in respect of the Obligations owing to such other Lender, or interest thereon, such Benefited Lender shall purchase for cash from the other Lenders such portion of each such other Lender's Extensions of Credit, or shall provide such other Lenders with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such Benefited Lender to share the excess payment or benefits of such collateral or proceeds ratably with each of the Lenders; provided, that if all -------- or any portion of such excess payment or benefits is thereafter recovered from such Benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned to the extent of such recovery, but without interest. The Borrowers agree that each Lender so purchasing a portion of another Lender's Extensions of Credit may exercise all rights of payment (including, without limitation, rights of set-off) with respect to such portion as fully as if such Lender were the direct holder of such portion. SECTION 5.7 Nature of Obligations of Lenders Regarding Extensions of -------------------------------------------------------- Credit; Assumption by the Administrative Agent. The obligations of the Lenders - ---------------------------------------------- under this Agreement to make the Loans and issue or participate in Letters of Credit are several and are not joint or joint and several. Unless the Administrative Agent shall have received notice from a Lender prior to a proposed borrowing date that such Lender will not make available to the Administrative Agent such Lender's ratable portion of the amount to be borrowed on such date (which notice shall not release such Lender of its obligations hereunder), the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on the proposed borrowing date in accordance with Sections 2.3(b) and 4.2, and the Administrative Agent may, in reliance upon such assumption, make available to the Borrowers on such date a corresponding amount. If such amount is made available to the Administrative Agent on a date after such borrowing date, such Lender shall pay to the Administrative Agent on demand an amount, until paid, equal to the product of (a) the amount not made available by such Lender in accordance with the terms hereof, times (b) the daily average Federal Funds Rate during such period as ----- determined by the Administrative Agent, times (c) a fraction the numerator of ----- which is the number of days that elapse 43 from and including such borrowing date to the date on which such amount not made available by such Lender in accordance with the terms hereof shall have become immediately available to the Administrative Agent and the denominator of which is 360. A certificate of the Administrative Agent with respect to any amounts owing under this Section 5.7 shall be conclusive, absent manifest error. If such Lender's Revolving Credit Commitment Percentage, Term A Loan Percentage or Term B Loan Percentage, as applicable, of such borrowing is not made available to the Administrative Agent by such Lender within three (3) Business Days after such borrowing date, the Administrative Agent shall be entitled to recover such amount made available by the Administrative Agent with interest thereon at the rate per annum applicable to Base Rate Loans hereunder, on demand, from the Borrowers. The failure of any Lender to make its Revolving Credit Commitment Percentage, Term A Loan Percentage or Term B Loan Percentage, as applicable, of any Loan available shall not relieve it or any other Lender of its obligation, if any, hereunder to make its Revolving Credit Commitment Percentage, Term A Loan Percentage or Term B Loan Percentage, as applicable, of such Loan available on such borrowing date, but no Lender shall be responsible for the failure of any other Lender to make its Revolving Credit Commitment Percentage, Term A Loan Percentage or Term B Loan Percentage, as applicable, of such Loan available on the borrowing date. SECTION 5.8 Changed Circumstances. --------------------- (a) Circumstances Affecting LIBOR Rate Availability. If with respect to ----------------------------------------------- any Interest Period the Administrative Agent or any Lender (after consultation with Administrative Agent) shall determine that, by reason of circumstances affecting the foreign exchange and interbank markets generally, deposits in eurodollars, in the applicable amounts are not being quoted via Dow Jones Market Screen 3750 or offered to the Administrative Agent or such Lender for such Interest Period, then the Administrative Agent shall forthwith give notice thereof to the Borrowers. Thereafter, until the Administrative Agent notifies the Borrowers that such circumstances no longer exist, the obligation of the Lenders to make LIBOR Rate Loans and the right of the Borrowers to convert any Loan to or continue any Loan as a LIBOR Rate Loan shall be suspended, and the Borrowers shall repay in full (or cause to be repaid in full) the then outstanding principal amount of each such LIBOR Rate Loan together with accrued interest thereon, on the last day of the then current Interest Period applicable to such LIBOR Rate Loan or convert the then outstanding principal amount of each such LIBOR Rate Loan to a Base Rate Loan as of the last day of such Interest Period. (b) Laws Affecting LIBOR Rate Availability. If, after the date hereof, the -------------------------------------- introduction of, or any change in, any Applicable Law or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or any of their respective Lending Offices) with any request or directive (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency, shall make it unlawful or impossible for any of the Lenders (or any of their respective Lending Offices) to honor its obligations hereunder to make or maintain any LIBOR Rate Loan, such Lender shall promptly give notice thereof to the Administrative Agent and the Administrative Agent shall promptly give notice to the Borrowers and the other Lenders. Thereafter, until the Administrative Agent notifies the Borrowers 44 that such circumstances no longer exist, (i) the obligations of the Lenders to make LIBOR Rate Loans and the right of the Borrowers to convert any Loan or continue any Loan as a LIBOR Rate Loan shall be suspended and thereafter the Borrowers may select only Base Rate Loans hereunder, and (ii) if any of the Lenders may not lawfully continue to maintain a LIBOR Rate Loan to the end of the then current Interest Period applicable thereto as a LIBOR Rate Loan, the applicable LIBOR Rate Loan shall immediately be converted to a Base Rate Loan for the remainder of such Interest Period. (c) Increased Costs. If, after the date hereof, the introduction of, or --------------- any change in, any Applicable Law, or in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any of the Lenders (or any of their respective Lending Offices) with any request or directive (whether or not having the force of law) of such Governmental Authority, central bank or comparable agency: (i) shall subject any of the Lenders (or any of their respective Lending Offices) to any tax, duty or other charge with respect to any Note, Letter of Credit or Application or shall change the basis of taxation of payments to any of the Lenders (or any of their respective Lending Offices) of the principal of or interest on any Note, Letter of Credit or Application or any other amounts due under this Agreement in respect thereof (except for changes in the rate of tax on the overall net income of any of the Lenders or any of their respective Lending Offices imposed by the jurisdiction in which such Lender is organized or is or should be qualified to do business or such Lending Office is located); or (ii) shall impose, modify or deem applicable any reserve (including, without limitation, any imposed by the Board of Governors of the Federal Reserve System), special deposit, insurance or capital or similar requirement against assets of, deposits with or for the account of, or credit extended by any of the Lenders (or any of their respective Lending Offices) or shall impose on any of the Lenders (or any of their respective Lending Offices) or the foreign exchange and interbank markets any other condition affecting any Note; and the result of any of the foregoing is to increase the costs to any of the Lenders of maintaining any LIBOR Rate Loan or issuing or participating in Letters of Credit or to reduce the yield or amount of any sum received or receivable by any of the Lenders under this Agreement or under the Notes in respect of a LIBOR Rate Loan or Letter of Credit or Application, then such Lender shall promptly notify the Administrative Agent, and the Administrative Agent shall promptly notify the Borrowers of such fact and demand compensation therefor and, within fifteen (15) days after such notice by the Administrative Agent, the Borrowers shall pay to such Lender such additional amount or amounts as will compensate such Lender or Lenders for such increased cost or reduction. The Administrative Agent will promptly notify the Borrowers of any event of which it has knowledge which will entitle such Lender to compensation pursuant to this Section 5.8(c); provided, -------- that the Administrative Agent shall incur no liability whatsoever to the Lenders or the Borrowers in the event it fails to do so. The amount of such compensation shall be determined, in the applicable Lender's sole discretion, based upon the assumption that such Lender funded its Revolving Credit Commitment Percentage, Term A Loan Percentage or Term B Loan Percentage, as applicable, of 45 the LIBOR Rate Loans in the London interbank market and using any reasonable attribution or averaging methods which such Lender deems appropriate and practical. A certificate of such Lender setting forth the basis for determining such amount or amounts necessary to compensate such Lender shall be forwarded to the Borrowers through the Administrative Agent and shall be conclusively presumed to be correct save for manifest error. SECTION 5.9 Indemnity. The Borrowers hereby indemnify each of the --------- Lenders against any loss or expense which may arise or be attributable to each Lender's obtaining, liquidating or employing deposits or other funds acquired to effect, fund or maintain any Loan (a) as a consequence of any failure by the Borrowers to make any payment when due of any amount due hereunder in connection with a LIBOR Rate Loan, (b) due to any failure of the Borrowers to borrow on a date specified therefor in a Notice of Borrowing or Notice of Continuation/Conversion or make a prepayment after giving notice thereof to the Administrative Agent or (c) due to any payment, prepayment or conversion of any LIBOR Rate Loan on a date other than the last day of the Interest Period therefor. The amount of such loss or expense shall be determined, in the applicable Lender's sole discretion, based upon the assumption that such Lender funded its Revolving Credit Commitment Percentage, Term A Loan Percentage or Term B Loan Percentage, as applicable, of the LIBOR Rate Loans in the London interbank market and using any reasonable attribution or averaging methods which such Lender deems appropriate and practical. A certificate of such Lender setting forth the basis for determining such amount or amounts necessary to compensate such Lender shall be forwarded to the Borrowers through the Administrative Agent and shall be conclusively presumed to be correct save for manifest error. SECTION 5.10 Capital Requirements. If after the date hereof either -------------------- (a) the introduction of, or any change in, or in the interpretation of, any Applicable Law or (b) compliance with any guideline or request from any central bank or comparable agency or other Governmental Authority (whether or not having the force of law), has or would have the effect of reducing the rate of return on the capital of, or has affected or would affect the amount of capital required to be maintained by, any Lender or any corporation controlling such Lender as a consequence of, or with reference to the Commitments and other commitments of this type, below the rate which the Lender or such other corporation could have achieved but for such introduction, change or compliance, then within five (5) Business Days after written demand by any such Lender, the Borrowers shall pay to such Lender from time to time as specified by such Lender additional amounts sufficient to compensate such Lender or other corporation for such reduction. A certificate as to such amounts submitted to the Borrowers and the Administrative Agent by such Lender, shall, in the absence of manifest error, be presumed to be correct and binding for all purposes. SECTION 5.11 Taxes. ----- (a) Payments Free and Clear. Any and all payments by the Borrowers ----------------------- hereunder or under the Notes or the Letters of Credit shall be made free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholding, and all liabilities with respect thereto excluding, (i) in the case of each Lender and the Administrative Agent, income and franchise taxes imposed by the jurisdiction under the laws of which such Lender 46 or the Administrative Agent (as the case may be) is organized or is or should be qualified to do business or any political subdivision thereof, (ii) in the case of each Lender, income and franchise taxes imposed by the jurisdiction of such Lender's Lending Office or any political subdivision thereof and (iii) any United States federal income tax that is imposed on, or required to be deducted from, a payment hereunder (or under the Notes or Letters of Credit) by reason of a failure to comply with the requirements of Section 5.11(e) (all such non- excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "Taxes"). If the Borrowers shall be required by law to deduct or withhold any Taxes from or in respect of any sum payable hereunder or under any Note or Letter of Credit to any Lender or the Administrative Agent, (A) the sum payable shall be increased as may be necessary so that after making all required deductions or withholdings (including deductions or withholdings applicable to additional sums payable under this Section 5.11) such Lender or the Administrative Agent (as the case may be) receives an amount equal to the amount such party would have received had no such deductions or withholdings been made, (B) the Borrowers shall make such deductions or withholdings, (C) the Borrowers shall pay the full amount deducted to the relevant taxing authority or other authority in accordance with applicable law, and (D) the Borrowers shall deliver to the Administrative Agent evidence of such payment to the relevant taxing authority or other Governmental Authority in the manner provided in Section 5.11(d). (b) Stamp and Other Taxes. In addition, the Borrowers shall pay any --------------------- present or future stamp, registration, recordation or documentary taxes or any other similar fees or charges or excise or property taxes, levies of the United States or any state or political subdivision thereof or any applicable foreign jurisdiction which arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Agreement, the Loans, the Letters of Credit, the other Loan Documents, or the perfection of any rights or security interest in respect thereto (hereinafter referred to as "Other Taxes"). (c) Indemnity. The Borrowers shall indemnify each Lender and the --------- Administrative Agent for the full amount of Taxes and Other Taxes (including, without limitation, any Taxes and Other Taxes imposed by any jurisdiction on amounts payable under this Section 5.11) paid by such Lender or the Administrative Agent (as the case may be) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. Such indemnification shall be made within thirty (30) days from the date such Lender or the Administrative Agent (as the case may be) makes written demand therefor. (d) Evidence of Payment. Within thirty (30) days after the date of any ------------------- payment of Taxes or Other Taxes, the Borrowers shall furnish to the Administrative Agent, at its address referred to in Section 14.1, the original or a certified copy of a receipt evidencing payment thereof or other evidence of payment satisfactory to the Administrative Agent. (e) Delivery of Tax Forms. Each Lender organized under the laws of a --------------------- jurisdiction other than the United States or any state thereof shall deliver to the Borrowers, with a copy to the Administrative Agent, on the Closing Date or concurrently with the delivery of the relevant 47 Assignment and Acceptance, as applicable, (i) two United States Internal Revenue Service Forms W-8ECI or Forms W-8BEN, as applicable (or successor forms) properly completed and certifying in each case that such Lender is entitled to a complete exemption from withholding or deduction for or on account of any United States federal income taxes, and (ii) an Internal Revenue Service Form W-8BEN or W-8ECI or successor applicable form, as the case may be, to establish an exemption from United States backup withholding taxes. Each such Lender further agrees to deliver to the Borrowers, with a copy to the Administrative Agent, a Form W-8BEN or W-8ECI, or successor applicable forms or manner of certification, as the case may be, on or before the date that any such form expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Borrowers, certifying in the case of a Form W-8BEN or W-8ECI that such Lender is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes (unless in any such case an event (including without limitation any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders such forms inapplicable or the exemption to which such forms relate unavailable and such Lender notifies the Borrowers and the Administrative Agent that it is not entitled to receive payments without deduction or withholding of United States federal income taxes) and, in the case of a Form W-8BEN or W-8ECI, establishing an exemption from United States backup withholding tax. (f) Survival. Without prejudice to the survival of any other agreement of -------- the Borrowers hereunder, the agreements and obligations of the Borrowers contained in this Section 5.11 shall survive the payment in full of the Obligations and the termination of the Commitments. SECTION 5.12 Security. The Obligations of the Borrowers shall be -------- secured as provided in the Security Documents. ARTICLE VI CLOSING; CONDITIONS OF CLOSING AND BORROWING -------------------------------------------- SECTION 6.1 Closing. The closing shall take place at the offices of ------- Hogan & Hartson, 111 So. Calvert Street, Baltimore, Maryland 21202 at 10:00 a.m. on June 8, 2000, or on such other date and time as the parties hereto shall mutually agree. SECTION 6.2 Conditions to Closing and Initial Extensions of Credit. ------------------------------------------------------ The obligation of the Lenders to close this Agreement and to make the initial Loan or participate in the initial Letter of Credit, if any, is subject to the satisfaction of each of the following conditions: (a) Executed Loan Documents. This Agreement, the Revolving Credit Notes, ----------------------- the Term A Notes, the Term B Notes, the Swingline Note and the Security Documents shall have been duly authorized, executed and delivered to the Administrative Agent by the parties thereto, shall be in full force and effect and no Default or Event of Default shall exist thereunder, and the Borrowers shall have delivered original counterparts thereof to the Administrative Agent. 48 (b) Closing Certificates; etc. -------------------------- (i) Officer's Certificate of the Borrowers. The Administrative Agent -------------------------------------- shall have received a certificate from a Responsible Officer, in form and substance satisfactory to the Administrative Agent, to the effect that all representations and warranties of the Borrowers contained in this Agreement and the other Loan Documents are true, correct and complete; that the Borrowers are not in violation of any of the covenants contained in this Agreement and the other Loan Documents; that, after giving effect to the transactions contemplated by this Agreement, no Default or Event of Default has occurred and is continuing; and that the Borrowers have satisfied each of the closing conditions. (ii) Certificate of Secretary of each Borrower. The Administrative ----------------------------------------- Agent shall have received a certificate of the secretary or assistant secretary of each Borrower and the Oak Ridge SPE certifying as to the incumbency and genuineness of the signature of each officer of such Borrower and the Oak Ridge SPE executing Loan Documents to which it is a party and certifying that attached thereto is a true, correct and complete copy of (A) the articles of incorporation or certificate of formation, as applicable, of such Borrower and the Oak Ridge SPE and all amendments thereto, certified as of a recent date by the appropriate Governmental Authority in its jurisdiction of incorporation or formation, as applicable, (B) the bylaws or operating agreement, as applicable, of such Borrower and the Oak Ridge SPE as in effect on the date of such certifications, (C) resolutions duly adopted by the Board of Directors or other governing body, as applicable, of such Borrower and the Oak Ridge SPE authorizing the borrowings contemplated hereunder and the execution, delivery and performance of this Agreement and the other Loan Documents to which it is a party, and (D) each certificate required to be delivered pursuant to Section 6.2(b)(iii). (iii) Certificates of Good Standing. The Administrative Agent shall ----------------------------- have received long-form certificates as of a recent date of the good standing of each Borrower and the Oak Ridge SPE under the laws of its jurisdiction of organization or formation, as applicable, and to the extent requested by the Administrative Agent, each other jurisdiction where such Borrower or the Oak Ridge SPE is qualified to do business, including, if applicable, a certification that such Person has filed required tax returns and owes no delinquent taxes. (iv) Opinions of Counsel. The Administrative Agent shall have ------------------- received favorable opinions of counsel to the Borrowers and the Oak Ridge SPE addressed to the Administrative Agent and the Lenders with respect to the Borrowers and the Oak Ridge SPE, the Loan Documents and such other matters as the Lenders shall request. (v) Tax Forms. The Administrative Agent shall have received copies --------- of the United States Internal Revenue Service forms required by Section 5.11(e) hereof. (vi) Borrowing Base Certificate. The Administrative Agent shall have -------------------------- received a Borrowing Base Certificate from the chief executive officer or chief financial officer of the Borrower in the form of Exhibit A attached hereto, --------- which shall be accurate and complete in all material respects. 49 (c) Collateral. ---------- (i) Filings and Recordings. All filings and recordations that are ---------------------- necessary to perfect the security interests of the Lenders in the collateral described in the Security Documents shall have been received by the Collateral Agent and the Collateral Agent shall have received evidence satisfactory to the Collateral Agent that upon such filings and recordations such security interests constitute valid and perfected first priority Liens therein. (ii) Pledged Collateral. The Collateral Agent shall have received ------------------ original stock certificates or other certificates evidencing the capital stock or other ownership interests pledged pursuant to the Pledge Agreement, together with an undated stock power for each such certificate duly executed in blank by the registered owner thereof. (iii) Lien Search. The Collateral Agent shall have received the results ----------- of a Lien search made against the Borrowers under the Uniform Commercial Code (or applicable judicial docket) as in effect in any state in which any material portion of its assets are located, indicating among other things that its assets are free and clear of any Lien except for Liens permitted hereunder. (iv) Hazard and Liability Insurance. The Collateral Agent shall have ------------------------------ received certificates of insurance, evidence of payment of all insurance premiums for the current policy year of each, and if requested by the Collateral Agent, copies (certified by a Responsible Officer) of insurance policies in the form required under the Security Documents and otherwise in form and substance reasonably satisfactory to the Collateral Agent. (v) Assignment of Claims Act Notices. Notices of assignment, in form -------------------------------- and substance satisfactory to the Collateral Agent, with respect to Government Contracts identified in any "Perfection Certificate" under and as defined in the Security Agreement duly executed by the Borrower party to such contract in compliance with the Assignment of Claims Act. (d) Consents; Defaults. ------------------ (i) Governmental and Third Party Approvals. The Borrowers and the -------------------------------------- Oak Ridge SPE shall have obtained (A) all necessary approvals, authorizations and consents of all Governmental Authorities and courts having jurisdiction with respect to the transactions contemplated by this Agreement and the other Loan Documents and (B) all material third party consents necessary in connection with the transactions contemplated by this Agreement and the other Loan Documents. (ii) No Injunction, Etc. No action, proceeding, investigation, ------------------- regulation or legislation shall have been instituted, threatened or proposed before any Governmental Authority to enjoin, restrain, or prohibit, or to obtain substantial damages in respect of, or which is related to 50 or arises out of this Agreement or the other Loan Documents or the consummation of the transactions contemplated hereby or thereby, or which, in the Administrative Agent's sole discretion, would make it inadvisable to consummate the transactions contemplated by this Agreement and such other Loan Documents. (iii) No Event of Default. No Default or Event of Default shall have ------------------- occurred and be continuing. (e) The Transactions. ---------------- (i) WMNS Acquisition. The Administrative Agent shall have received ---------------- evidence that (A) the WMNS Acquisition has been consummated in accordance with the terms of the WMNS Purchase Agreement, (B) the purchase price paid in connection with the WMNS Acquisition Agreement shall not exceed $65,000,000 (plus any purchase price adjustment set forth in Section 1.3 of the WMNS ---- Purchase Agreement) and (C) all material conditions precedent set forth in the WMNS Purchase Agreement have been satisfied including, without limitation, the delivery of all (1) third party consents material to the closing of the WMNS Acquisition, (2) shareholder approvals required by the terms of the WMNS Purchase Agreement and (3) governmental consents necessary to effect the transactions contemplated by the WMNS Purchase Agreement, shall have been obtained. (ii) Transaction Certificate. The Borrowers shall have delivered to ----------------------- the Administrative Agent a certificate, in form and substance reasonably satisfactory to the Administrative Agent, and certified as accurate by a Responsible Officer, that on the Closing Date after consummation of the Transactions, (A) Total Debt of the Borrowers and their Subsidiaries (determined in a manner reasonably satisfactory to the Administrative Agent) does not exceed $110 million, (B) Senior Debt of the Borrowers and their Subsidiaries (determined in a manner reasonably satisfactory to the Administrative Agent) does not exceed $98 million and (C) Closing EBITDA of the Borrowers and their Subsidiaries (determined in a manner reasonably satisfactory to the Administrative Agent) equals or exceeds $39.5 million, (D) attached thereto is a calculation evidencing, to the reasonable satisfaction of the Administrative Agent, Pro Forma compliance by the Borrowers with the financial covenants set forth in Article X as of March 31, 2000, (E) after giving effect to the Transactions, the Borrowers and their Subsidiaries taken as a whole are Solvent, (F) the payables of the Borrowers are current and not past due, except where failure to pay could not reasonably be expected to have a Material Adverse Effect, (G) attached thereto is a Pro Forma balance sheet of the Borrowers and their Subsidiaries setting forth on a Pro Forma basis the financial condition of the Borrowers and their Subsidiaries on a Consolidated basis as of the date of such certificate reflecting on a Pro Forma basis the effect of the Transactions, including all fees and expenses in connection therewith, and evidencing compliance on a Pro Forma basis with the covenants contained in Article XI hereof and (H) attached thereto are the financial projections previously delivered to the Administrative Agent representing the good faith opinions of each Borrower and senior management thereof as to the projected results contained therein. 51 (f) Financial Matters. ----------------- (i) Financial Statements. The Administrative Agent shall (A) -------------------- have received (1) the audited Consolidated financial statements of the Borrowers and their Subsidiaries for Fiscal Years 1998 and 1999 (excluding the WMNS Companies and their Subsidiaries) and the audited Consolidated financial statements of WMNS Companies and their Subsidiaries for fiscal year 1999, in each case accompanied by an unqualified opinion of a nationally recognized accounting firm and prepared in accordance with GAAP and applicable Securities and Exchange Commission guidelines, (2) updated Pro Forma Consolidated statements of income and balance sheets for the Borrowers and their Subsidiaries and the WMNS Companies and their Subsidiaries for fiscal year 1999 in form reasonably satisfactory to the Administrative Agent, (3) unaudited Consolidated financial statements of the Borrowers and their Subsidiaries and the WMNS Companies and their Subsidiaries for the fiscal quarter ending March 31, 2000, and (4) any updates or modifications to the projected financial statements of the Borrowers and their Subsidiaries previously received by the Administrative Agent and (B) be reasonably satisfied that none of the financial information delivered pursuant to clause (A) above (excluding the financial projections) evidences or reveals any material adverse change from the information previously delivered to the Administrative Agent. (ii) Payment at Closing; Fee Letters. The Borrowers shall have ------------------------------- paid the fees set forth or referenced in Section 5.3 and any other accrued and unpaid fees or commissions due hereunder (including, without limitation, legal fees and expenses) to the Administrative Agent and Lenders, and to any other Person such amount as may be due thereto in connection with the transactions contemplated hereby, including all taxes, fees and other charges in connection with the execution, delivery, recording, filing and registration of any of the Loan Documents. The Administrative Agent shall have received duly authorized and executed copies of the fee letter agreement referred to in Section 5.3(b). (g) Non-Disturbance Agreement; Subordination Agreement. The Administrative -------------------------------------------------- Agent shall be satisfied that the Non-Disturbance Agreement and the Subordination Agreement shall remain in full force and effect, notwithstanding the closing of this Agreement. (h) Miscellaneous. ------------- (i) Notice of Borrowing. The Administrative Agent shall have ------------------- received a Notice of Borrowing from GTS on behalf of the Borrowers in accordance with Section 2.3(a) and Section 4.2, and a Notice of Account Designation specifying the account or accounts to which the proceeds of any Loans made after the Closing Date are to be disbursed. (ii) Proceedings and Documents. All opinions, certificates and ------------------------- other instruments and all proceedings in connection with the transactions contemplated by this Agreement shall be satisfactory in form and substance to the Lenders. The Lenders shall have received copies of all other instruments and other evidence as the Lender may reasonably request, in form and substance satisfactory to the Lenders, with respect to the transactions contemplated by 52 this Agreement and the taking of all actions in connection therewith. (iii) Due Diligence and Other Documents. The Borrowers shall --------------------------------- have delivered to the Administrative Agent such other documents, certificates and opinions as the Administrative Agent may reasonably request. (i) Repayment of Existing Debt -------------------------- (i) Refinancing of Existing Facility. On the Closing Date, -------------------------------- (A) all loans under the Existing Facility ("Existing Loans") made by any lender under the Existing Facility (each a "Prior Lender") who is not a Lender hereunder shall be repaid in full and the commitments and other obligations and (except as expressly set forth in the Existing Facility) rights of such Prior Lender shall be terminated, (B) all outstanding Existing Loans shall be deemed Loans hereunder and the Administrative Agent shall make such transfers of funds as are necessary in order that the outstanding balance of such Loans, together with any Loans funded on the Closing Date, reflect the Commitments of the Lenders hereunder, (C) all outstanding letters of credit issued pursuant to the Existing Facility and all other Existing Letters of Credit shall be deemed Letters of Credit hereunder and each Lender agrees to purchase a participation therein pursuant to Section 3.4 in accordance with its Revolving Credit Commitment Percentage, (D) there shall have been paid in cash in full all accrued but unpaid interest due on the Existing Loans to but excluding the Closing Date, (E) there shall have been paid in cash in full all accrued but unpaid fees under the Existing Facility due to but excluding the Closing Date and all other amounts, costs and expenses then owing to any of the Prior Lenders and/or any Agent, as agent under the Existing Facility, in each case to the satisfaction of such Agent or Prior Lender, as the case may be, regardless of whether or not such amounts would otherwise be due and payable at such time pursuant to the terms of the Existing Facility and (F) all outstanding promissory notes issued by the Borrowers to the Prior Lenders under the Existing Facility shall be deemed canceled and the originally executed copies thereof shall be promptly returned to the Administrative Agent who shall forward such notes to the Borrowers. (ii) Repayment of Debt Existing on the Closing Date. On the ----------------------------------------------- Closing Date all outstanding Debt of the Borrowers and their Subsidiaries (other than the Existing Facility which shall be refinanced as set forth above and Debt permitted pursuant to Section 11.1) shall be terminated and repaid in full, and all collateral security therefor shall be released and the Administrative Agent shall have received evidence of such termination, including, without limitation, any Uniform Commercial Code termination statements and a pay-off letter in form and substance satisfactory to it evidencing such repayment, termination, reconveyance and release. SECTION 6.3 Conditions to All Extensions of Credit. The obligations of -------------------------------------- the Lenders to make any Extensions of Credit (including the initial Extension of Credit) are subject to the satisfaction of the following conditions precedent on the date of such Extension of Credit: (a) Continuation of Representations and Warranties. The representations ---------------------------------------------- and warranties contained in Article VII shall be true and correct on and as of such borrowing or 53 issuance date with the same effect as if made on and as of such date; except for any representation and warranty made as of an earlier date, which representation and warranty shall remain true and correct as of such earlier date. (b) No Existing Default. No Default or Event of Default shall have ------------------- occurred and be continuing hereunder (i) on the borrowing date with respect to such Loan or after giving effect to the Loans to be made on such date or (ii) or the issue date with respect to such Letter of Credit or after giving effect to the issuance of such Letter of Credit on such date. (c) Officer's Compliance Certificate; Additional Documents. The ------------------------------------------------------ Administrative Agent shall have received the current Officer's Compliance Certificate (or with respect to the initial borrowing, the Transaction Certificate) and each additional document, instrument, legal opinion or other item of information reasonably requested by it. ARTICLE VII REPRESENTATIONS AND WARRANTIES OF THE BORROWERS ----------------------------------------------- SECTION 7.1 Representations and Warranties. To induce the Administrative ------------------------------ Agent and Lenders to enter into this Agreement and to induce the Lenders to make Extensions of Credit, each Borrower hereby represents and warrants to the Administrative Agent and Lenders both before and after giving effect to the transactions contemplated hereunder that: (a) Organization; Power; Qualification. Each Borrower and each Subsidiary ---------------------------------- thereof is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation, has the power and authority to own its properties and to carry on its business as now being and hereafter proposed to be conducted and is duly qualified and authorized to do business in each jurisdiction in which the character of its properties or the nature of its business requires such qualification and authorization, except where the failure to be duly qualified and authorized will not have a Material Adverse Effect. The jurisdictions in which each Borrower and each Subsidiary thereof are organized and qualified to do business as of the Closing Date are described on Schedule 7.1(a). --------------- (b) Ownership. Each Subsidiary of each Borrower as of the Closing Date is --------- listed on Schedule 7.1(b). As of the Closing Date, the capitalization of each --------------- Borrower and each Subsidiary thereof consists of the number of shares, authorized, issued and outstanding, of such classes and series, with or without par value, described on Schedule 7.1(b). All outstanding shares have been duly --------------- authorized and validly issued and are fully paid and nonassessable. The shareholders of the Subsidiaries of each Borrower and the number of shares owned by each as of the Closing Date are described on Schedule 7.1(b). As of the --------------- Closing Date, there are no outstanding stock purchase warrants, subscriptions, options, securities, instruments or other rights of any type or nature whatsoever, which are convertible into, exchangeable for or otherwise provide for or permit the issuance of capital stock of any Borrower or any Subsidiary thereof, except as described on Schedule 7.1(b). --------------- 54 (c) Authorization of Agreement, Loan Documents and Borrowing. Each Borrower -------------------------------------------------------- and each Subsidiary thereof has the right, power and authority and has taken all necessary corporate and other action to authorize the execution, delivery and performance of this Agreement and each of the other Loan Documents to which it is a party in accordance with their respective terms. This Agreement and each of the other Loan Documents have been duly executed and delivered by the duly authorized officers of each Borrower and each of its Subsidiaries party thereto, and each such document constitutes the legal, valid and binding obligation of each Borrower or its Subsidiary party thereto, enforceable in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar state or federal debtor relief laws from time to time in effect which affect the enforcement of creditors' rights in general and the availability of equitable remedies. (d) Compliance of Agreement, Loan Documents and Borrowing with Laws, Etc. --------------------------------------------------------------------- The execution, delivery and performance by each Borrower and each Subsidiary thereof of the Loan Documents and Acquisition Documents to which each such Person is a party, in accordance with their respective terms, the Extensions of Credit hereunder, the granting of the Liens under the Security Documents and the transactions contemplated hereby do not and will not, by the passage of time, the giving of notice or otherwise, (i) require any Governmental Approval or violate any Applicable Law relating to any Borrower or any Subsidiary thereof, (ii) conflict with, result in a breach of or constitute a default under (A) the articles of incorporation, bylaws or other organizational documents of any Borrower or any Subsidiary thereof or (B) any indenture, agreement or other instrument to which such Person is a party or by which any of its properties may be bound or any Governmental Approval relating to such Person which could reasonably be expected to have a Material Adverse Effect, or (iii) result in or require the creation or imposition of any Lien upon or with respect to any property now owned or hereafter acquired by such Person other than Liens arising under the Loan Documents. (e) Compliance with Law; Governmental Approvals. Each Borrower and each ------------------------------------------- Subsidiary thereof (i) has all Governmental Approvals required by any Applicable Law for it to conduct its business, each of which is in full force and effect, is final and not subject to review on appeal and is not the subject of any pending or, to the best of its knowledge, threatened attack by direct or collateral proceeding, and (ii) is in compliance with each Governmental Approval applicable to it and in compliance with all other Applicable Laws relating to it or any of its respective properties, in each case except to the extent that any such lack of Governmental Approval or failure to comply would not have a Material Adverse Effect. (f) Tax Returns and Payments. Each Borrower and each Subsidiary thereof ------------------------ has duly filed or caused to be filed all federal, state, material local and other tax returns required by Applicable Law to be filed, and has paid, or made adequate provision for the payment of, all federal, state, local and other taxes, assessments and governmental charges or levies upon it and its property, income, profits and assets which are due and payable. Except as set forth on Schedule 7.1(f) and except for claims for taxes which are being contested in - --------------- good faith and as to which adequate reserves are maintained in accordance with GAAP, no Governmental Authority has 55 asserted any Lien or other claim against any Borrower or Subsidiary thereof with respect to unpaid taxes which has not been discharged or resolved. The charges, accruals and reserves on the books of each Borrower and each Subsidiary thereof in respect of federal, state, material local and other taxes for all Fiscal Years and portions thereof since the organization of such Borrower and each Subsidiary thereof are in the judgment of each such Borrower adequate, and each such Borrower does not anticipate any additional taxes or assessments for any of such years. (g) Intellectual Property Matters. Each Borrower and each Subsidiary ----------------------------- thereof owns or possesses rights to use all franchises, licenses, copyrights, copyright applications, patents, patent rights or licenses, patent applications, trademarks, trademark rights, trade names, trade name rights, copyrights and rights with respect to the foregoing which are required to conduct its business. No event has occurred which permits, or after notice or lapse of time or both would permit, the revocation or termination of any such rights, and no Borrower nor any Subsidiary thereof is liable to any Person for infringement under Applicable Law with respect to any such rights as a result of its business operations. (h) Environmental Matters. In the ordinary course of its business, each --------------------- Borrower conducts an ongoing review of the effect of Environmental Laws on the business, operations and properties of such Borrower and its Subsidiaries, in the course of which it identifies and evaluates associated liabilities and costs (including, without limitation, any capital or operating expenditures required for clean-up or closure of properties presently or previously owned, any capital or operating expenditures required to achieve or maintain compliance with environmental protection standards imposed by law or as a condition of any license, permit or contract, any related constraints on operating activities, including any periodic or permanent shutdown of any facility or reduction in the level of or change in the nature of operations conducted at any such facility, any costs or liabilities in connection with off-site disposal of wastes or Hazardous Substances, and any actual or potential liabilities to third parties, including employees, and any related costs and expenses). On the basis of this review, each Borrower has concluded that such associated liabilities and costs, including the costs of compliance with Environmental Laws, could not reasonably be expected to have a Material Adverse Effect. (i) ERISA. ----- (i) As of the Closing Date, no Borrower nor any ERISA Affiliate maintains or contributes to, or has any obligation under, any Employee Benefit Plans other than those identified on Schedule 7.1(i); --------------- (ii) Each Borrower and each ERISA Affiliate is in material compliance with all applicable provisions of ERISA and the regulations and published interpretations thereunder with respect to all Employee Benefit Plans except for any required amendments for which the remedial amendment period as defined in Section 401(b) of the Code has not yet expired. Other than as set forth on Schedule 7.1(i), each Employee Benefit Plan that is intended to be --------------- qualified under Section 401(a) of the Code has been determined by the Internal Revenue Service to be so qualified, and each trust related to such plan has been determined to be exempt under Section 56 501(a) of the Code. No liability has been incurred by any Borrower or any ERISA Affiliate which remains unsatisfied for any taxes or penalties with respect to any Employee Benefit Plan or any Multiemployer Plan; (iii) Other than as set forth on Schedule 7.1(i), no Pension Plan has --------------- been terminated, nor has any accumulated funding deficiency (as defined in Section 412 of the Code) been incurred (without regard to any waiver granted under Section 412 of the Code), nor has any funding waiver from the Internal Revenue Service been received or requested with respect to any Pension Plan, nor has any Borrower or any ERISA Affiliate failed to make any contributions or to pay any amounts due and owing as required by Section 412 of the Code, Section 302 of ERISA or the terms of any Pension Plan prior to the due dates of such contributions under Section 412 of the Code or Section 302 of ERISA, nor has there been any event requiring any disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA with respect to any Pension Plan; (iv) No Borrower nor any ERISA Affiliate has: (A) engaged in a nonexempt prohibited transaction described in Section 406 of the ERISA or Section 4975 of the Code, (B) incurred any liability to the PBGC which remains outstanding other than the payment of premiums and there are no premium payments which are due and unpaid, (C) failed to make a required contribution or payment to a Multiemployer Plan, or (D) failed to make a required installment or other required payment under Section 412 of the Code; (v) Other than as set forth on Schedule 7.1(i), no Termination --------------- Event has occurred or is reasonably expected to occur; and (vi) Other than as set forth on Schedule 7.1(i), no proceeding, claim, --------------- lawsuit and/or investigation is existing or, to the best knowledge of any Borrower after due inquiry, threatened concerning or involving any (A) employee welfare benefit plan (as defined in Section 3(1) of ERISA) currently maintained or contributed to by any Borrower or any ERISA Affiliate, (B) Pension Plan or (C) Multiemployer Plan. (j) Margin Stock. No Borrower nor any Subsidiary thereof is engaged ------------ principally or as one of its activities in the business of extending credit for the purpose of "purchasing" or "carrying" any "margin stock" (as each such term is defined or used in Regulation U of the Board of Governors of the Federal Reserve System). No part of the proceeds of any of the Loans or Letters of Credit will be used for purchasing or carrying margin stock or for any purpose which violates, or which would be inconsistent with, the provisions of Regulation T, U or X of such Board of Governors. (k) Government Regulation. No Borrower nor any Subsidiary thereof is an --------------------- "investment company" or a company "controlled" by an "investment company" (as each such term is defined or used in the Investment Company Act of 1940, as amended) and no Borrower nor any Subsidiary thereof is, or after giving effect to any Extension of Credit will be, subject to regulation under the Public Utility Holding Company Act of 1935 or the Interstate Commerce Act, each as amended, or any other Applicable Law which limits its ability to incur or consummate the transactions contemplated hereby. 57 (l) Material Contracts. Schedule 7.1(l) sets forth a complete and accurate ------------------ --------------- list of all Material Contracts of the Borrowers and their Subsidiaries in effect as of the Closing Date not listed on any other Schedule hereto; other than as set forth in Schedule 7.1(l), each such Material Contract is, and after giving --------------- effect to the consummation of the transactions contemplated by the Loan Documents will be, in full force and effect in accordance with the terms thereof. The Borrowers and their Subsidiaries have delivered or made available to the Administrative Agent a true and complete copy of each Material Contract required to be listed on Schedule 7.1(l) or any other Schedule hereto. --------------- (m) Employee Relations. Each Borrower and each Subsidiary thereof has a ------------------ stable work force in place and is not, as of the Closing Date, party to any collective bargaining agreement nor has any labor union been recognized as the representative of its employees except as set forth on Schedule 7.1(m). No --------------- Borrower knows of any pending, threatened or contemplated strikes, work stoppage or other collective labor disputes involving its employees or those of its Subsidiaries, which would have a Material Adverse Effect. (n) Financial Statements. The financial statements delivered pursuant to -------------------- Section 6.2(f)(i) are complete and correct in all material respects and fairly present the assets, liabilities and financial position of the Borrowers and their Subsidiaries as at such dates, and the results of the operations and changes of financial position for the periods then ended. All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP, except (i) for deviations from GAAP disclosed in the WMNS Purchase Agreement and (ii) in the case of the unaudited financial statements referred to above, for the omission of footnotes and ordinary year end adjustments). The Borrowers and their Subsidiaries have no Debt, obligation or other unusual forward or long-term commitment which is not reflected in accordance with GAAP in the foregoing financial statements or in the notes thereto. (o) No Material Adverse Change. Since December 31, 1999, there has been no -------------------------- material adverse change in the properties, business, operations, or condition (financial or otherwise) of the Borrowers and their Subsidiaries taken as a whole and no event has occurred or condition arisen that could reasonably be expected to have a Material Adverse Effect, except as previously disclosed in materials filed with the Securities and Exchange Commission after December 31, 1999 and prior to the Closing Date. (p) Solvency. As of the Closing Date and after giving effect to the WMNS -------- Acquisition and each Extension of Credit made hereunder, GTS and its Subsidiaries, taken as a whole, will be Solvent. (q) Titles to Properties. Each Borrower and each Subsidiary thereof has -------------------- such title to the real property owned by it as is necessary or desirable to the conduct of its business and valid and legal title to all of its personal property and assets, including, but not limited to, those reflected on the balance sheets of the Borrowers and their Subsidiaries delivered pursuant to Section 7.1(n), 58 except those which have been disposed of by any Borrower or any Subsidiary thereof subsequent to such date which dispositions have been in the ordinary course of business or as otherwise expressly permitted hereunder. (r) Liens. None of the properties and assets of any Borrower or any ----- Subsidiary thereof is subject to any Lien, except Permitted Liens. No financing statement under the Uniform Commercial Code of any state which names any Borrower or any Subsidiary thereof or any of their respective trade names or divisions as debtor and which has not been terminated, has been filed in any state or other jurisdiction and no Borrower nor any Subsidiary thereof has signed any such financing statement or any security agreement authorizing any secured party thereunder to file any such financing statement, except to perfect Permitted Liens. (s) Debt and Guaranty Obligations. Schedule 7.1(s) is a complete and ----------------------------- --------------- correct listing of all Debt and Guaranty Obligations of each Borrower and each Subsidiary thereof as of the Closing Date in excess of $750,000. Each Borrower and each Subsidiary thereof have performed and are in compliance with all of the terms of such Debt and Guaranty Obligations and all instruments and agreements relating thereto, and no default or event of default, or event or condition which with notice or lapse of time or both would constitute such a default or event of default on the part of any Borrower or any Subsidiary thereof exists with respect to any such Debt or Guaranty Obligation. (t) Litigation. Except for matters existing on the Closing Date and set ---------- forth on Schedule 7.1(t), there are no actions, suits or proceedings pending --------------- nor, to the knowledge of any Borrower, threatened against or in any other way relating adversely to or affecting any Borrower or any Subsidiary thereof or any of their respective properties in any court or before any arbitrator of any kind or before or by any Governmental Authority which, if adversely determined could reasonably be expected to have a Material Adverse Effect, and which are reasonably likely to be determined adversely to the Borrower or such Subsidiary. (u) Absence of Defaults. No event has occurred or is continuing which ------------------- constitutes a Default or an Event of Default. (v) Accounts. Each Account shown on the most recent Borrowing Base -------- Certificate is, as of the date of the Borrowing Base Certificate, qualified to be in the Borrowing Base. (w) Year 2000. As of the Closing Date, each Borrower and each Subsidiary --------- thereof has implemented a comprehensive and detailed strategic plan to eliminate any Year 2000 Problem that could reasonably be expected to result in a Material Adverse Effect. "Year 2000 Problem" shall mean, with respect to any Person, the possibility that the computer applications and software programs used by such Person in the operation of its business will be unable to effectively process data including data fields requiring references to dates on and after January 1, 2000, and may experience or produce invalid or incorrect results or abnormal operation related to or as a result of the occurrence of such dates. 59 (x) Accuracy and Completeness of Information. All written information, ---------------------------------------- reports and other papers and data other than financial projections produced by or on behalf of each Borrower and each Subsidiary thereof and furnished to the Lenders were, at the time the same were so furnished, complete and correct in all material respects to the extent necessary to give the recipient a true and accurate knowledge of the subject matter. No document furnished or written statement other than financial projections made to the Administrative Agent or the Lenders by any Borrower or any Subsidiary thereof in connection with the negotiation, preparation or execution of this Agreement or any of the Loan Documents contains or will contain any untrue statement of a fact material to the creditworthiness of any Borrower or any Subsidiary thereof or omits or will omit to state a material fact necessary in order to make the statements contained therein not misleading. No Borrower is aware of any facts which it has not disclosed in writing to the Administrative Agent having a Material Adverse Effect, or insofar as any Borrower can now foresee, could reasonably be expected to have a Material Adverse Effect. SECTION 7.2 Survival of Representations and Warranties, Etc. All ----------------------------------------------- representations and warranties set forth in this Article VII and all representations and warranties contained in any certificate, or any of the Loan Documents (including but not limited to any such representation or warranty made in or in connection with any amendment thereto) shall constitute representations and warranties made under this Agreement. All representations and warranties made under this Agreement shall be made or deemed to be made at and as of the Closing Date, shall survive the Closing Date and shall not be waived by the execution and delivery of this Agreement, any investigation made by or on behalf of the Lenders or any borrowing hereunder. ARTICLE VIII FINANCIAL INFORMATION AND NOTICES --------------------------------- Until all the Obligations have been paid and satisfied in full and the Commitments terminated, unless consent has been obtained in the manner set forth in Section 14.11 hereof, each Borrower will furnish or cause to be furnished to the Administrative Agent and to the Lenders at their respective addresses as set forth on Schedule 1.1(a), or such other office as may be designated by the --------------- Administrative Agent and Lenders from time to time: SECTION 8.1 Financial Statements and Projections. ------------------------------------ (a) Quarterly Financial Statements. As soon as practicable and in any ------------------------------ event within forty-five (45) days after the end of the first three fiscal quarters, an unaudited Consolidated balance sheet of the Borrowers and their Subsidiaries as of the close of such fiscal quarter and unaudited Consolidated statements of income, retained earnings and cash flows for the fiscal quarter then ended and that portion of the Fiscal Year then ended, including the notes thereto, all in reasonable detail setting forth in comparative form the corresponding figures for the preceding Fiscal Year and prepared by the Borrowers in accordance with GAAP and, if applicable, containing disclosure of the effect on the financial position or results of operations of any change in the application of accounting principles and practices during the period, and certified by the chief financial officer of each Borrower to present fairly in all material respects the financial condition of the Borrowers and 60 their Subsidiaries as of their respective dates and the results of operations of the Borrowers and their Subsidiaries for the respective periods then ended, subject to normal year end adjustments. (b) Annual Financial Statements. As soon as practicable and in any event --------------------------- within ninety (90) days after the end of each Fiscal Year, an audited Consolidated and consolidating balance sheet of the Borrowers and their Subsidiaries as of the close of such Fiscal Year and audited Consolidated and consolidating statements of income, retained earnings and cash flows for the Fiscal Year then ended, including the notes thereto, all in reasonable detail setting forth in comparative form the corresponding figures for the preceding Fiscal Year and prepared by an independent certified public accounting firm acceptable to the Administrative Agent in accordance with GAAP and, if applicable, containing disclosure of the effect on the financial position or results of operation of any change in the application of accounting principles and practices during the year, and accompanied by a report thereon by such certified public accountants that is not qualified with respect to scope limitations imposed by any Borrower or any Subsidiary thereof or with respect to accounting principles followed by any Borrower or any Subsidiary thereof not in accordance with GAAP or with respect to whether the Borrowers and their Subsidiaries, taken as a whole, are a going concern. (c) Annual Business Plan and Financial Projections. As soon as practicable ---------------------------------------------- and in any event within forty-five (45) days after the beginning of each Fiscal Year beginning with the 2001 Fiscal Year, a business plan of the Borrowers and their Subsidiaries for the ensuing four (4) fiscal quarters, such plan to be prepared in accordance with GAAP and to include, on a quarterly basis, the following: a quarterly operating and capital budget, a projected income statement, statement of cash flows and balance sheet and a report containing management's discussion and analysis of such projections, accompanied by a certificate from the chief financial officer of each Borrower to the effect that, to the best of such officer's knowledge, such projections are good faith estimates of the financial condition and operations of the Borrowers and their Subsidiaries for such four (4) quarter period. SECTION 8.2 Officer's Compliance Certificate. At each time financial -------------------------------- statements are delivered pursuant to Sections 8.1 (a) or (b) and at such other times as the Administrative Agent shall reasonably request, a certificate of the chief financial officer or the treasurer of each Borrower in the form of Exhibit G attached hereto (an "Officer's Compliance Certificate"). - --------- SECTION 8.3 Accountants' Certificate. If requested by the Administrative ------------------------ Agent, simultaneously with the delivery of each set of financial statements referred to in Section 8.1(b) (or at such other time as the Administrative Agent may specify), a statement of the firm of independent public accountants which reported on such statements (i) whether anything has come to their attention to cause them to believe that any Default existed on the date of such statements and (ii) confirming the calculations set forth in the officer's certificate delivered simultaneously therewith pursuant to Section 8.2. 61 SECTION 8.4 Other Reports. ------------- (a) Auditors' Management Letters. Promptly upon receipt thereof, copies of ---------------------------- each report submitted to any Borrower or its Consolidated Subsidiaries by independent public accountants in connection with any annual, interim or special audit made by them of the books of such Borrower or its Consolidated Subsidiaries including, without limitation, each report submitted to such Borrower or its Consolidated Subsidiaries concerning its accounting practices and systems and any final comment letter submitted by such accountants to management in connection with the annual audit of such Borrower and its Consolidated Subsidiaries. (b) SEC Filings. Within five (5) days after the sending, filing or receipt ----------- thereof, copies of (i) all financial statements, reports, notices and proxy statements that GTS shall send to its shareholders, and (ii) all regular, periodic and special reports, registration statements and prospectuses (other than on Form S-8) that GTS shall render to or file with the Securities and Exchange Commission, the National Association of Securities Dealers, Inc. or any national securities exchange. (c) Borrowing Base Certificate. As soon as available, but in any event -------------------------- within twenty (20) days after the end of each calendar month (or on a more frequent basis if requested by the Administrative Agent), a Borrowing Base Certificate. (d) Accounts Receivable Aging Report. As soon as available, but in any -------------------------------- event within twenty (20) days after the end of each calendar month (and, upon the occurrence and during the continuation of a Default or Event of Default, on a more frequent basis if requested by the Administrative Agent), an accounts receivable aging report listing all Accounts of the Borrowers as of the last Business Day of such month which report shall include the amount and age of each Account Debtor and such other information as the Administrative Agent may require, all in form and substance satisfactory to the Administrative Agent. The Borrowers shall deliver annually on the first day of the second quarter of each Fiscal Year and upon the occurrence and during the continuation of a Default or Event of Default, within thirty (30) days upon the request of the Administrative Agent, the name and mailing address of each Account Debtor. (e) Accounts Payable Aging Report. As soon as available, but in any event ----------------------------- within twenty (20) days after the end of each calendar month (and, upon the occurrence and during the continuation of a Default or Event of Default, on a more frequent basis if requested by the Administrative Agent), an accounts payable aging report which report shall include the amount and age of each payable, the name of each payee and such other information as the Administrative Agent may require, all in form and substance satisfactory to the Administrative Agent. (f) Bear Creek Operations Report. As soon as available, but in any event ---------------------------- within forty-five (45) days after the end of each calendar quarter (or on a more frequent basis if reasonably requested by the Administrative Agent but in no event more than once a calendar month), the Bear Creek Operations Report. 62 (g) Government Contract Report. Upon the request of the Administrative -------------------------- Agent, a status report with respect to all Governmental Contracts of the Borrowers and their Subsidiaries, in form and substance satisfactory to the Administrative Agent. (h) Environmental Database Reports. Written notice to the Administrative ------------------------------ Agent of the existence and location of any new facility of any Borrower at which Hazardous Materials will be processed for disposal or reclamation; and a risk portfolio or environmental database report for each such facility, obtained by the Administrative Agent at the Borrowers' expense upon notice of each new facility and at least every two years with respect to all such facilities, and prepared by an entity and in detail satisfactory to the Administrative Agent; and copies of all state inspections, including updates, and all internally prepared environmental audits relating to any such facility on an annual basis. (i) Tax Returns. Upon request by the Administrative Agent, copies of (i) ----------- all federal, state and local income tax returns filed by any Borrower or its Subsidiaries, (ii) all quarterly reports by any Borrower or its Subsidiaries on Form 941 and (iii) all annual FUTA tax returns of any Borrower or its Subsidiaries. (j) Material Contracts. Written notice immediately upon the award to any ------------------ Borrower or any of its Subsidiaries of, or the termination, lapse or non-renewal of, any contract or agreement including monetary liability of or to any such Person in an amount in excess of $10,000,000. (k) Waste Management Loan Agreement. Promptly notify the Administrative ------------------------------- Agent of any default or event of default under the Waste Management Loan Agreement and promptly deliver to the Administrative Agent copies of all notices, reports or other information delivered or received in connection with the Waste Management Loan Agreement or any document or agreement executed or delivered in connection therewith. (l) Other Information. Such other information regarding the operations, ----------------- business affairs and financial condition of any Borrower or any Subsidiary thereof as the Administrative Agent or any Lender may reasonably request. SECTION 8.5 Notice of Litigation and Other Matters. Prompt (but in no -------------------------------------- event later than ten (10) days after a Responsible Officer of GTS obtains knowledge thereof) telephonic and written notice of: (a) the commencement of, or of a material threat of the commencement of, an action, suit, proceeding or investigation against any Borrower or any of its Subsidiaries which could reasonably be expected to have a Material Adverse Effect or which in any manner questions the validity of this Agreement or any of the other transactions contemplated hereby or thereby, an explanation of the nature of such pending or threatened action, suit, proceeding or investigation and such additional information as may be reasonably requested by the Administrative Agent; 63 (b) any notice of any complaint, order, citation, notice or other written communication from any Person with respect to (i) the existence or alleged existence of a violation of any applicable Environmental Law in connection with any property now or previously owned, leased or operated by a Borrower or any of its Subsidiaries, (ii) any release on such property or any part thereof in a quantity that is reportable under any applicable Environmental Law and (iii) any pending or threatened proceeding for the termination, suspension or non-renewal of any permit required under any applicable Environmental Law, in each case in which there is a reasonable likelihood of an adverse decision or determination which could result in a Material Adverse Effect; (c) any labor controversy that has resulted in, or threatens to result in, a strike or other work action against any Borrower or any Subsidiary thereof which could result in a Material Adverse Effect; (d) any attachment, judgment, lien, levy or order exceeding $250,000 that may be assessed against or threatened against any Borrower or any Subsidiary thereof; (e) any Default or Event of Default, or any event which constitutes or which with the passage of time or giving of notice or both would constitute a default or event of default under any Material Contract to which any Borrower or any Subsidiary thereof is a party or by which any Borrower or any Subsidiary thereof or any of their respective properties may be bound; (f) any change in the government contracting status of the Borrowers with respect to the government of the United States or any department or agency thereof that could reasonably be expected to have a Material Adverse Effect; (g) (i) any unfavorable determination letter from the Internal Revenue Service regarding the qualification of an Employee Benefit Plan under Section 401(a) of the Code (along with a copy thereof), (ii) all notices received by any Borrower or any ERISA Affiliate of the PBGC's intent to terminate any Pension Plan or to have a trustee appointed to administer any Pension Plan, (iii) all notices received by any Borrower or any ERISA Affiliate from a Multiemployer Plan sponsor concerning the imposition or amount of withdrawal liability pursuant to Section 4202 of ERISA and (iv) any Borrower obtaining knowledge or reason to know that any Borrower or any ERISA Affiliate has filed or intends to file a notice of intent to terminate any Pension Plan under a distress termination within the meaning of Section 4041(c) of ERISA; and (h) any event which makes any of the representations set forth in Section 7.1 inaccurate in any respect. SECTION 8.6 Accuracy of Information. All written information, reports, ----------------------- statements and other papers and data furnished by or on behalf of the Borrowers to the Administrative Agent or any Lender (other than financial forecasts) whether pursuant to this Article VIII or any other provision of this Agreement, or any of the Security Documents, shall be, at the time the same is so furnished, complete and correct in all material respects to the extent necessary to give the Administrative Agent or any Lender complete, true and accurate knowledge of the subject matter based on the Borrowers' knowledge thereof. 64 ARTICLE IX AFFIRMATIVE COVENANTS --------------------- Until all of the Obligations have been paid and satisfied in full and the Commitments terminated, unless consent has been obtained in the manner provided for in Section 14.11, each Borrower will, and will cause each of its Subsidiaries to: SECTION 9.1 Preservation of Corporate Existence and Related Matters. ------------------------------------------------------- Except as permitted by Section 11.5, preserve and maintain its separate corporate existence and all rights, franchises, licenses and privileges necessary to the conduct of its business, and qualify and remain qualified as a foreign corporation and authorized to do business in each jurisdiction where the nature and scope of its activities require it to so qualify under Applicable Law. SECTION 9.2 Maintenance of Property. In addition to the requirements of ----------------------- any of the Security Documents, protect and preserve all properties useful in and material to its business, including copyrights, patents, trade names and trademarks; maintain in good working order and condition all buildings, equipment and other tangible real and personal property; and from time to time make or cause to be made all renewals, replacements and additions to such property necessary for the conduct of its business, so that the business carried on in connection therewith may be properly and advantageously conducted at all times. SECTION 9.3 Insurance. Maintain insurance with financially sound and --------- reputable insurance companies against such risks and in such amounts as are customarily maintained by similar businesses and as may be required by Applicable Law and as are required by any Security Documents including, without limitation, hazard and business interruption insurance, and on the Closing Date and from time to time thereafter deliver to the Administrative Agent upon its request a detailed list of the insurance then in effect, stating the names of the insurance companies, the amounts and rates of the insurance, the dates of the expiration thereof and the properties and risks covered thereby. SECTION 9.4 Accounting Methods and Financial Records. Maintain a system ---------------------------------------- of accounting, and keep such books, records and accounts (which shall be true and complete in all material respects) as may be required or as may be necessary to permit the preparation of financial statements in accordance with GAAP and in compliance with the regulations of any Governmental Authority having jurisdiction over it or any of its properties. SECTION 9.5 Payment and Performance of Obligations. Pay and perform all -------------------------------------- Obligations under this Agreement and the other Loan Documents, and pay or perform (a) all taxes, assessments and other governmental charges that may be levied or assessed upon it or any of its property, and (b) all other obligations and liabilities in accordance with customary trade practices; except where the failure to pay or perform the obligations referred to in clause (a) or (b) could not 65 reasonably be expected to have a Material Adverse Effect; provided, that -------- such Borrower or such Subsidiary thereof may contest any item described in clauses (a) or (b) of this Section 9.5 in good faith so long as adequate reserves are maintained with respect thereto in accordance with GAAP. SECTION 9.6 Compliance With Laws and Approvals. Observe and remain in ---------------------------------- compliance with all Applicable Laws and maintain in full force and effect all Governmental Approvals, in each case applicable to the conduct of its business, except to the extent that any such failure to comply would not have a Material Adverse Effect. SECTION 9.7 Environmental Laws. In addition to and without limiting the g ------------------ enerality of Section 9.6, (a) comply with, and ensure such compliance by all tenants and subtenants with all applicable Environmental Laws and obtain and comply with and maintain, and ensure that all tenants and subtenants obtain and comply with and maintain, any and all licenses, approvals, notifications, registrations or permits required by applicable Environmental Laws except to the extent that failure to so comply would not have a Material Adverse Effect, and except that such Borrower or such Subsidiary thereof may contest any such compliance in good faith so long as adequate reserves are maintained with respect thereto in accordance with GAAP, (b) conduct and complete all investigations, studies, sampling and testing, and all remedial, removal and other actions required under Environmental Laws, and promptly comply with all lawful orders and directives of any Governmental Authority regarding Environmental Laws except to the extent that failure to so comply would not have a Material Adverse Effect, and except that such Borrower or such Subsidiary thereof may contest any such compliance in good faith so long as adequate reserves are maintained with respect thereto in accordance with GAAP, and (c) defend, indemnify and hold harmless the Administrative Agent and the Lenders, and their respective parents, Subsidiaries, Affiliates, employees, agents, officers and directors, from and against any claims, demands, penalties, fines, liabilities, settlements, damages, costs and expenses of whatever kind or nature known or unknown, contingent or otherwise, arising out of, or in any way relating to the presence of Hazardous Materials, or the violation of, noncompliance with or liability under any Environmental Laws applicable to the operations of such Borrower or such Subsidiary, or any orders, requirements or demands of Governmental Authorities related thereto, including, without limitation, reasonable attorney's and consultant's fees, investigation and laboratory fees, response costs, court costs and litigation expenses, except to the extent that any of the foregoing directly result from the gross negligence or willful misconduct of the party seeking indemnification therefor. SECTION 9.8 Compliance with ERISA. In addition to and without limiting --------------------- the generality of Section 9.6, (a) comply in all material respects with all applicable provisions of ERISA and the regulations and published interpretations thereunder with respect to all Employee Benefit Plans, (b) not take any action or fail to take action the result of which could be a material liability to the PBGC or to a Multiemployer Plan, (c) not participate in any prohibited transaction that could result in any material civil penalty under ERISA or tax under the Code, (d) operate each Employee Benefit Plan in such a manner that will not incur any material tax liability under Section 4980B of the Code or any liability to any qualified beneficiary as defined in Section 4980B of the Code and (e) furnish to the Administrative Agent upon the Administrative Agent's request such 66 additional information about any Employee Benefit Plan as may be reasonably requested by the Administrative Agent. SECTION 9.9 Compliance With Agreements. Comply in all respects with each -------------------------- term, condition and provision of all leases, agreements and other instruments entered into in the conduct of its business, except to the extent that any such failure to comply would not have a Material Adverse Effect. SECTION 9.10 Conduct of Business. Engage only in the businesses ------------------- conducted on the Closing Date and Substantially Similar Lines of Business. SECTION 9.11 Visits and Inspections. Permit representatives of the ---------------------- Administrative Agent or any Lender, from time to time, to visit and inspect its properties; inspect, audit and make extracts from its books, records and files, including, but not limited to, management letters prepared by independent accountants; and discuss with its principal officers, and its independent accountants, its business, assets, liabilities, financial condition, results of operations and business prospects. SECTION 9.12 Additional Subsidiaries. At such time as any Subsidiary ----------------------- (other than the Oak Ridge SPE, a Non-Material Subsidiary of GTS or any other Borrower) is created or acquired after the Closing Date, cause to be executed and delivered to the Administrative Agent (a) a Joinder Agreement such that such Subsidiary shall become a Borrower hereunder, (b) a supplement to the Security Agreement, and such other applicable Security Documents in form and substance reasonably satisfactory to the Administrative Agent such that the assets of such Subsidiary shall become Collateral for the Obligations, (c) a duly executed Pledge Agreement or supplement thereto, with such changes as the Administrative Agent may reasonably request, such that all of the capital stock or other equity interests of such Subsidiary is pledged to the Administrative Agent for the ratable benefit of itself and the Lenders and (d) favorable legal opinions addressed to the Administrative Agent and Lenders in form and substance satisfactory thereto with respect to such supplements and agreements and such other documents and closing certificates as consistent with Article VI as may be requested by the Administrative Agent; provided that this Section 9.12 shall not -------- apply to any Inactive Subsidiary until such time as such Subsidiary shall engage in any business operations or possess assets in excess of $25,000. SECTION 9.13 Use of Proceeds. The Borrowers shall use the proceeds of --------------- the (a) Revolving Credit Loans, Swingline Loans, Letters of Credit and Term A Loans to refinance certain existing Debt, including, without limitation, the Existing Facility, to fund working capital and for general corporate purposes, including (i) the WMNS Acquisition (ii) Permitted Acquisitions, (iii) Capital Expenditures in the ordinary course of the Borrowers' business and the payment of the fees and expenses incurred in connection with the transactions contemplated hereby and (b) Term B Loans to fund the WMNS Acquisition and to pay the fees and expenses incurred in connection with the WMNS Acquisition. 67 SECTION 9.14 Collection of Accounts; Notification to Account Debtors. ------------------------------------------------------- (a) Use their best efforts to cause to be collected from each Account Debtor, as and when due, any and all amounts owing under or on account of each Account (including, without limitation, Accounts which are delinquent, such Accounts to be collected in accordance with lawful collection procedures) and shall apply forthwith upon receipt thereof all such amounts as are so collected to the outstanding balance of such Account. No Borrower shall rescind or cancel any indebtedness or obligation evidenced by any Account, modify, make adjustments to, extend, renew, compromise or settle any material dispute, claim, suit or legal proceeding relating to or sell or assign any Account, or interest therein, without the prior written consent of the Collateral Agent, except that, subject to the rights of the Lenders under the Loan Documents, as long as a Default or an Event of Default shall not have occurred and be continuing, a Borrower may allow in the ordinary course of business as adjustments to amounts owing under its Accounts (i) an extension or renewal of the time or times of payment, or settlement for less than the total unpaid balance, which the Borrower finds appropriate in accordance with sound business judgment and (ii) a refund or credit due as a result of discounts, over-billings and miscellaneous credits, or the sale or assignment, without recourse, of an Account for collection purposes, all of the foregoing in accordance with the Borrowers' ordinary course of business consistent with its historical collection practices. The costs and expenses (including, without limitation, attorneys' fees) of collection, whether incurred by a Borrower or any of the Lenders, shall be borne by the Borrowers. (b) Promptly notify each Account Debtor in respect of any Account that any payments due or to become due in respect of such Collateral are to be made in the name of the related Borrower to such address and post office box as shall be specified by the Collateral Agent. Except as set forth in Section 3.03 of the Security Agreement, each such payment shall, upon receipt by the Collateral Agent, be deposited in the Operating Account in accordance with past practices of the Borrowers. Upon the occurrence and continuation of an Event of Default, the Borrowers will promptly notify (and the Borrowers hereby authorize the Collateral Agent so to notify) each Account Debtor in respect of any Account or instrument that such Collateral has been assigned to the Collateral Agent and that any payments due or to become due in respect of such Collateral are to be made directly to the Collateral Agent in accordance with Section 3.03 of the Security Agreement. SECTION 9.15 Existing Letters of Credit. Cause each Existing Letter of -------------------------- Credit issued by an Issuing Lender other than First Union to be replaced (if required by the beneficiary thereof) on or before the expiration date of such Existing Letter of Credit as set forth on Schedule 1.1(b). --------------- SECTION 9.16 Further Assurances. Make, execute and deliver all such ------------------ additional and further acts, things, deeds and instruments as the Administrative Agent or any Lender may reasonably require to document and consummate the transactions contemplated hereby and to vest completely in and insure the Administrative Agent and the Lenders their respective rights under this Agreement, the Notes, the Letters of Credit and the other Loan Documents. 68 ARTICLE X FINANCIAL COVENANTS ------------------- Until all of the Obligations have been paid and satisfied in full and the Commitments terminated, unless consent has been obtained in the manner set forth in Section 14.11 hereof, the Borrowers and their Subsidiaries on a Consolidated basis will not: SECTION 10.1 Leverage Ratio: As of any fiscal quarter end during any -------------- period set forth below, permit the ratio of (a) Total Debt on such date to (b) EBITDA for the period of four (4) consecutive fiscal quarters ending on or immediately prior to such date to exceed the corresponding ratio set forth below: Closing Date through December 30, 2000 3.25 to 1.00 December 31, 2000 through December 30, 2001 3.00 to 1.00 December 31, 2001 through December 30, 2002 2.75 to 1.00 December 31, 2002 through December 30, 2003 2.50 to 1.00 December 31, 2003 through December 30, 2004 2.25 to 1.00 December 31, 2004 through December 30, 2005 2.00 to 1.00 Thereafter 2.00 to 1.00 SECTION 10.2 Fixed Charge Coverage Ratio: As of any fiscal quarter end, --------------------------- permit the ratio of (a) the sum of (i) EBITDA for the period of four (4) consecutive fiscal quarters ending on or immediately prior to such date plus ---- (ii) Rental Expense for such period minus (iii) Capital Expenditures (excluding, ----- for the period from the Closing Date through December 30, 2000 only, the Capital Expenditure Adjustment) for such period minus (iv) income, franchise and other ----- similar tax expense paid in cash for such period to (b) Fixed Charges for the period of four (4) consecutive fiscal quarters ending on or immediately prior to such date to be less than the corresponding ratio set forth below: Closing Date through December 30, 2000 1.00 to 1.00 December 31, 2000 through December 30, 2001 1.00 to 1.00 December 31, 2001 through December 30, 2002 1.00 to 1.00 December 31, 2002 through December 30, 2003 1.05 to 1.00 December 31, 2003 through December 30, 2004 1.15 to 1.00 December 31, 2004 through December 30, 2005 1.15 to 1.00 Thereafter 1.05 to 1.00 SECTION 10.3 Interest Coverage Ratio: As of any fiscal quarter end, ----------------------- permit the ratio of (a) EBITDA for the period of four (4) consecutive fiscal quarters ending on or immediately prior to such date to (b) Interest Expense for the period of four (4) consecutive fiscal quarters ending on or immediately prior to such date to be less than 3.00 to 1.00. 69 SECTION 10.4 Limitation on Capital Expenditures. Permit Capital ---------------------------------- Expenditures in the aggregate during any Fiscal Year to exceed $11,000,000; provided that, the maximum amount of Capital Expenditures permitted by this - -------- Section 10.4 in any Fiscal Year shall be increased by the amount of Capital Expenditures that were permitted by this Section 10.4 in the immediately preceding Fiscal Year and were not previously made (without giving effect to any carryover amount from prior Fiscal Years). SECTION 10.5 Minimum Stockholders' Equity. Permit, at any time, ---------------------------- Consolidated stockholders' equity plus Preferred Stock to be less than the sum ---- of $70,000,000 less (i) dividends paid on Preferred Stock pursuant to Section ---- 11.7(c) less (ii) stock repurchases pursuant to Section 11.7(d) plus (iii) 50% ---- ---- of cumulative annual Net Income (to the extent positive) after December 31, 2000. SECTION 10.6 Pro Forma Calculations. For purposes of calculating each ---------------------- financial covenant (other than the limitation on Capital Expenditures set forth in Section 10.4) set forth in this Article X, each financial term referred to in such financial covenants shall be adjusted in a manner reasonably satisfactory to the Administrative Agent to take into account, on a pro forma basis, as of --- ----- the first day of any calculation period, the effect of any acquisition consummated in accordance with or pursuant to Section 11.4(c), or asset sold (which such asset sale requires the consent of the Required Lenders), during such period (any such adjustment or determination, a "Pro Forma" adjustment or determination, as applicable); provided, that such acquisition or asset sale is -------- permitted under this Agreement. ARTICLE XI NEGATIVE COVENANTS ------------------ Until all of the Obligations have been paid and satisfied in full and the Commitments terminated, unless consent has been obtained in the manner set forth in Section 14.11 hereof, each Borrower has not and will not permit any of its Subsidiaries to: SECTION 11.1 Limitations on Debt. Create, incur, assume or suffer to ------------------- exist any Debt or any additional Preferred Stock except: (a) the Obligations; (b) Debt incurred by any Borrower in connection with a Hedging Agreement (i) with a (A) Lender or (B) counterparty reasonably satisfactory to the Administrative Agent and (ii) upon terms and conditions (including interest rate) reasonably satisfactory to the Administrative Agent; (c) Debt existing on the Closing Date and not otherwise permitted under this Section 11.1, as set forth on Schedule 7.1(s) and the renewal and --------------- refinancing (but not the increase of the aggregate principal amount thereof) thereof; 70 (d) Debt of the Borrowers and their Subsidiaries (excluding Oak Ridge SPE and any Inactive Subsidiary) incurred in connection with Capital Leases in an aggregate amount not to exceed $6,000,000 on any date of determination; (e) purchase money Debt of the Borrowers and their Subsidiaries (excluding Oak Ridge SPE and any Inactive Subsidiary) (or any renewal or refinancing thereof which does not increase the principal amount secured) in an aggregate amount not to exceed $5,000,000 on any date of determination; (f) Debt consisting of Guaranty Obligations permitted by Section 11.2(a) or (b); (g) Debt of any Borrower consisting of Capital Leases and purchase money Debt not otherwise permitted under this Section 11.1, incurred by reason of merger or otherwise assumed in connection with any acquisition permitted pursuant to Section 11.4(c) the terms and conditions of which (including without limitation any collateral security therefor) shall be reasonably acceptable to the Administrative Agent and the Required Lenders; provided that such Debt was -------- not created in contemplation of such merger or acquisition; (h) the Waste Management Loan; (i) Debt of the Borrowers or any of their Subsidiaries (excluding the Oak Ridge SPE, Chem-Nuclear Canada, any Inactive Subsidiary and any other Subsidiary which has not executed the appropriate Security Documents) to any Borrower; and (j) Subordinated Debt of one or more of the Borrowers in an aggregate amount outstanding not to exceed $10,000,000 at any time during the term hereof; provided, that no agreement or instrument with respect to Debt permitted to be - -------- incurred by this Section 11.1 (other than Debt permitted pursuant to Section 11.1(h)) shall restrict, limit or otherwise encumber (by covenant or otherwise) the ability of any Subsidiary of any Borrower to make any payment to such Borrower or any of its Subsidiaries (in the form of dividends, intercompany advances or otherwise) for the purpose of enabling such Borrower to pay the Obligations. SECTION 11.2 Limitations on Guaranty Obligations. Create, incur, assume ----------------------------------- or suffer to exist any Guaranty Obligations except (a) Guaranty Obligations in favor of the Administrative Agent for the benefit of the Administrative Agent and the Lenders; (b) Guaranty Obligations existing on the Closing Date and not otherwise permitted under this Section 11.2, as set forth on Schedule 7.1(s) (or as --------------- specifically permitted to be excluded from such Schedule) and the renewal and refinancing but not the increase in the aggregate principal amount thereof; and 71 (c) Guaranty Obligations with respect to Debt permitted under Section 11.1(a) - (e) or (g) or (h) and (j), or with respect to any other obligations of any Borrower or a Subsidiary not prohibited under the Loan Documents; provided, -------- that Guaranty Obligations with respect to Debt permitted under Section 11.1(j) shall be subordinated on terms and in a manner acceptable to the Administrative Agent and the Required Lenders. SECTION 11.3 Limitations on Liens. Create, incur, assume or suffer to -------------------- exist, any Lien on or with respect to any of its assets or properties (including without limitation shares of capital stock or other ownership interests), real or personal, whether now owned or hereafter acquired, except: (a) Liens not otherwise permitted by this Section 11.3 and in existence on the Closing Date and described on Schedule 11.3; ------------- (b) Liens securing Debt permitted under Section 11.1(d) or (e); provided -------- that (i) such Liens shall be created within one hundred eighty (180) days of the acquisition or lease of the related asset, (ii) such Liens do not at any time encumber any property other than the property financed by such Debt, (iii) the amount of Debt secured thereby is not increased and (iv) the principal amount of Debt secured by any such Lien shall at no time exceed the lesser of the cost or the fair market value of such property at the time it was acquired or leased. (c) any Lien existing on an asset prior to the acquisition thereof by a Borrower or any Subsidiary and not created in contemplation of such acquisition; (d) Liens created by any Loan Document; (e) any Lien arising out of the refinancing, extension, renewal or refunding of any Debt secured by any Lien permitted by clauses (a) through (d) of this Section 11.3; provided that the principal amount of such Debt is not -------- increased and such Debt is not secured by any additional assets; (f) Liens for taxes not yet due or Liens for taxes being contested as permitted pursuant to Section 9.5; (g) Liens imposed by law securing the charges, claims, demands or levies of carriers, warehousemen, mechanics and other like persons which were incurred in the ordinary course of business, statutory landlord liens, Liens in favor of customs and revenue authorities in connection with the import of goods, and which, if any such asset or property is material which (i) do not in the aggregate materially detract from the value of the property or assets subject to such Lien or materially impair the use thereof in the operation of the business of any Borrower or Subsidiary or (ii) are being contested (A) as permitted pursuant to Section 9.5, and (B) which contest proceedings have the effect of preventing the forfeiture or sale of the property or assets subject to such Lien; 72 (h) Liens (other than any Liens imposed by ERISA or pursuant to any Environmental Law) not securing Debt or obligations under Hedging Agreements, incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety bonds (other than appeal bonds or bonds securing judgments), bids, leases, government contracts, performance and return-of-money bonds and other similar obligations incurred in the ordinary course of business; (i) Liens constituting easements, rights of way and similar charges, title defects or other irregularities with respect to real property which do not result in a Material Adverse Effect and which do not affect the marketability of the property subject thereto; (j) leases or subleases of any of the Borrowers' owned or leased real property which leases or subleases do not result in a Material Adverse Effect or the retention of title by a lessor which has entered into an operating lease with a Borrower; (k) Liens arising from the rendering of a final judgment or order against any Borrower which does not give rise to any Event of Default; (l) Liens securing Debt permitted in accordance with Section 11.1(g) and existing on any property or asset (excluding Accounts) prior to the acquisition thereof by any Borrower or any Subsidiary; provided, that (i) such Lien is not -------- created in contemplation of or in connection with such acquisition and (ii) such Lien does not apply to any Account or any property or assets of any Borrower (other than the property or assets (excluding Accounts) acquired); (m) Liens on cash or Cash Equivalents securing a Hedging Agreement permitted under this Agreement; and (n) Liens securing the Waste Management Loan in accordance with the terms and conditions of the Waste Management Loan Agreement. SECTION 11.4 Limitations on Loans, Advances, Investments and Acquisitions. ------------------------------------------------------------ Purchase, own, invest in or otherwise acquire, directly or indirectly, any capital stock, interests in any partnership or joint venture (including without limitation the creation or capitalization of any Subsidiary), evidence of Debt or other obligation or security, substantially all or a portion of the business or assets of any other Person or any other investment or interest whatsoever in any other Person, or make or permit to exist, directly or indirectly, any loans, advances or extensions of credit to, or any investment in cash or by delivery of property in, any Person except: (a) investments not otherwise permitted by this Section 11.4 in Subsidiaries existing on the Closing Date (after giving effect to the Transactions) and the other existing loans, advances and investments not otherwise permitted by this Section 11.4 described on Schedule 11.4; ------------- (b) investments (i) in Cash Equivalents, (ii) consisting of receivables owing to any Borrower or Subsidiary thereof, so long as any such receivable is created or acquired in the 73 ordinary course of business and is payable or dischargeable in accordance with customary trade terms; (iii) received in connection with the bankruptcy or reorganization of suppliers and customers and in settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business; and (iv) in the form of loans and advances to employees in the ordinary course of business, which, in the aggregate for all Borrowers, do not exceed at any time $2,000,000; (c) the acquisitions of all or substantially all of the business or line of business (whether by acquisition of capital stock, other equity interest, assets or any combination thereof) by any Borrower or any Subsidiary thereof (excluding the Oak Ridge SPE, Chem-Nuclear Canada, any Inactive Subsidiary and any other Subsidiary which has not executed the appropriate Security Documents); provided -------- that the following conditions are met: (i) the Super Majority Lenders shall have previously consented in writing to any single acquisition or series of related acquisitions at any time that the total aggregate consideration (including, without limitation, all cash payments, Debt and other obligations assumed, earn out payments, seller financing or equity issued) paid in connection with all acquisitions consummated during the term of this Agreement (including the proposed acquisition or acquisitions) equals or exceeds $10,000,000; (ii) the entity to be acquired is a going concern; (iii) the entity to be acquired is in a Substantially Similar Line of Business; (iv) the Borrowers shall have delivered written evidence to the Administrative Agent and the Lenders, that the acquisition does not have a negative impact on EBITDA of the Borrowers and their Subsidiaries taken as a whole (determined on a reasonable adjusted Pro Forma basis) for the four (4) consecutive fiscal quarter period ending on or immediately prior to the date of such proposed acquisition; provided, that no -------- Pro Forma adjustment to EBITDA that increases the non-adjusted historical EBITDA of the entity or entities or assets to be acquired by more than twenty percent (20%) will be permitted without the consent of the Super Majority Lenders; (v) a Borrower is the surviving, controlling corporation upon the consummation of any such acquisition; (vi) the Borrowers shall have delivered evidence in form and substance satisfactory to the Administrative Agent that the board of directors of the entity or entities to be acquired have approved such proposed acquisition; (vii) the entity to be acquired is not subject to material pending litigation which could reasonably be expected to have a Material Adverse Effect; (viii) no Default and no Event of Default has occurred and is continuing or would result from the consummation of such proposed acquisition; (ix) the Borrowers shall have delivered the results of all environmental due diligence reviews relating to each proposed acquisition or series of acquisitions and the Super Majority Lenders shall be reasonably satisfied with the results thereof; and (x) the Borrowers shall have delivered written evidence of compliance after giving effect to such acquisition on a Pro Forma basis with the financial covenants set forth in Article X. (d) investments by any Borrower or a Subsidiary in a Borrower, or as otherwise permitted under Section 11.5 and Section 11.10(b); (e) investments which may be deemed to exist as a result of a Hedging Agreement permitted under this Agreement; and (f) investments in Subsidiaries which become Borrowers in accordance with Section 9.12. 74 SECTION 11.5 Limitations on Mergers and Liquidation. Merge, consolidate -------------------------------------- or enter into any similar combination with any other Person or liquidate, wind- up or dissolve itself (or suffer any liquidation or dissolution) except: (a) any Borrower or Wholly-Owned Subsidiary of any Borrower may merge with any Borrower or any other Wholly-Owned Subsidiary (excluding the Oak Ridge SPE, Chem-Nuclear Canada, any Inactive Subsidiary and any other Subsidiary which has not executed the appropriate Security Documents) of any Borrower; provided, that -------- in the case of a merger with a Borrower, such Borrower shall be the surviving entity; (b) any Wholly-Owned Subsidiary may merge into the Person such Wholly-Owned Subsidiary was formed to acquire in connection with an acquisition permitted by Section 11.4(c); and (c) any Wholly-Owned Subsidiary (including the Oak Ridge SPE) of any Borrower may wind-up into any Borrower or any other Wholly-Owned Subsidiary (excluding the Oak Ridge SPE, Chem-Nuclear Canada, any Inactive Subsidiary and any other Subsidiary which has not executed the appropriate Security Documents) of any Borrower. SECTION 11.6 Limitations on Sale of Assets. Convey, sell, lease, assign, ----------------------------- transfer or otherwise dispose of any of its property, business or assets (including, without limitation, the sale of any receivables and leasehold interests and any sale-leaseback or similar transaction), whether now owned or hereafter acquired except: (a) the sale of inventory in the ordinary course of business; (b) the sale of obsolete or excess assets no longer used or usable in the business of any Borrower or any Subsidiary thereof; (c) the transfer of assets to any Borrower or any Wholly-Owned Subsidiary (excluding the Oak Ridge SPE, Chem-Nuclear Canada, any Inactive Subsidiary and any other Subsidiary which has not executed the appropriate Security Documents) of any Borrower pursuant to Section 11.5; (d) the sale or discount without recourse of Accounts as permitted pursuant to Section 9.14(a); and (e) the termination of operating leases of property in the ordinary course of business; (f) the sale of an asset in connection with its immediate leasing back, to the extent permitted under Sections 11.1 and 11.3; and 75 (g) sales or other dispositions of assets, in addition to the sales or dispositions permitted by the foregoing provisions, for at least fair market value, in an amount not to exceed $100,000 per fiscal year, of which amount up to twenty percent (20%) may be paid other than in cash at the time of sale. Upon any sale of Collateral which is permitted under the Loan Documents, such Collateral shall be sold free and clear of the Liens in favor of the Collateral Agent created by the Loan Documents and the Collateral Agent shall take such actions as may be reasonably requested by any Borrower to evidence such Lien release, at the expense of such Borrower. SECTION 11.7 Limitations on Dividends and Distributions. Declare or pay ------------------------------------------ any dividends upon any of its capital stock; purchase, redeem, retire or otherwise acquire, directly or indirectly, any shares of its capital stock, or make any distribution of cash, property or assets among the holders of shares of its capital stock, or make any change in its capital structure; provided that: -------- (a) any Borrower or any Subsidiary thereof may pay dividends in shares of its own capital stock; (b) any Borrower or any Subsidiary may pay cash dividends to any Borrower; (c) so long as no Default or Event of Default has occurred and is continuing or would result therefrom, GTS may pay dividends on Preferred Stock in an amount not to exceed $1,280,000 in any Fiscal Year; and (d) GTS shall be permitted to make stock repurchases; provided that (i) -------- such repurchase is pursuant to a repurchase plan duly adopted by the board of directors of GTS, (ii) no Default or Event of Default has occurred and is continuing or would result from such stock repurchase, (iii) the Borrowers shall have demonstrated compliance with each of the financial covenants set forth in Article IX after giving Pro Forma effect to the proposed transaction, (iv) the aggregate amount of all share repurchases during the term of this Agreement shall not exceed $8,000,000 in the aggregate and (v) after giving Pro Forma effect to the proposed transaction, the Leverage Ratio shall be less than or equal to 2.0 to 1.0. SECTION 11.8 Aging and Secondary Waste. At the end of any fiscal ------------------------- quarter, permit (a) the quantity of Aging Waste to exceed thirty percent (30%) of total Waste or (b) the quantity of Aged Waste to exceed the amount set forth below for the corresponding periods: - ------------------------------------------------------------------------------- Any fiscal quarter during Fiscal Year 2000 400,000 lbs. - ------------------------------------------------------------------------------- Any fiscal quarter during Fiscal Year 2001 300,000 lbs. - ------------------------------------------------------------------------------- Any fiscal quarter during Fiscal Year 2002 200,000 lbs. and thereafter - -------------------------------------------------------------------------------
SECTION 11.9 Limitations on Exchange and Issuance of Capital Stock. ----------------------------------------------------- Issue, sell or otherwise dispose of any class or series of capital stock that, by its terms or by the terms of 76 any security into which it is convertible or exchangeable, is, or upon the happening of an event or passage of time would be, (a) convertible or exchangeable into Debt or (b) required to be redeemed or repurchased, including at the option of the holder, in whole or in part, or has, or upon the happening of an event or passage of time would have, a redemption or similar payment due; provided that the foregoing shall not apply to any class or series of capital - -------- stock that cannot by its terms be redeemed in cash, repurchased in cash or entitled to any cash payment at any time on or prior to the date that is ninety- one (91) days after the later to occur of the Revolving Credit Maturity Date, the Term A Loan Maturity Date or the Term B Loan Maturity Date. SECTION 11.10 Transactions with Affiliates. Directly or indirectly ---------------------------- (a) make any loan or advance to, or purchase or assume any note or other obligation to or from, any of its officers, directors, shareholders or other Affiliates, or to or from any member of the immediate family of any of its officers, directors, shareholders or other Affiliates, or subcontract any operations to any of its Affiliates except as otherwise permitted pursuant to Section 11.4 or (b) enter into, or be a party to, any other transaction with any of its Affiliates, except pursuant to the reasonable requirements of its business and upon fair and reasonable terms that are no less favorable to it than it would obtain in a comparable arm's length transaction with a Person not its Affiliate. SECTION 11.11 Certain Accounting Changes. Subject to Section 14.9, -------------------------- change its Fiscal Year end, or make any change in its accounting treatment and reporting practices except as are in accordance with GAAP. SECTION 11.12 Amendments; Payments and Prepayments of Subordinated Debt or ------------------------------------------------------------ Preferred Stock. Amend or modify (or permit the modification or amendment of) - --------------- any of the terms or provisions of any Subordinated Debt or the Preferred Stock (which such amendment shall accelerate any cash payment, cash redemption or cash repurchase date, adversely affect any subordination terms or otherwise have a materially adverse effect on the position of the Credit Facilities within the capital structure of the Borrowers), or cancel or forgive, make any voluntary or optional payment or prepayment on, or redeem, defease or acquire for value (including without limitation by way of depositing with any trustee with respect thereto money or securities before due for the purpose of paying when due) or establishing any sinking fund with respect to any Subordinated Debt or the Preferred Stock, except as permitted pursuant to Section 11.7. SECTION 11.13 Restrictive Agreements. Enter into any Debt which ---------------------- restricts, limits or otherwise encumbers its ability to incur Liens on or with respect to any of its assets or properties other than the assets or properties securing such Debt. SECTION 11.14 Limitation on Bonding Obligations. Create, incur, assume or --------------------------------- suffer to exist Bonding Obligations in an aggregate amount in excess of $25,000,000 outstanding at any time during the term hereof. SECTION 11.15 The Oak Ridge SPE. Permit the Oak Ridge SPE to engage in ----------------- any business or other activity, acquire any assets or enter into any transaction except as contemplated 77 in the Credit Agreement and other Loan Documents, the Waste Management Loan Agreement and the Project Documents. ARTICLE XII DEFAULT AND REMEDIES -------------------- SECTION 12.1 Events of Default. Each of the following shall constitute ----------------- an Event of Default, whatever the reason for such event and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment or order of any court or any order, rule or regulation of any Governmental Authority or otherwise: (a) Default in Payment of Principal of Loans and Reimbursement Obligations. ---------------------------------------------------------------------- Any Borrower shall default in any payment of principal of any Loan, Note or Reimbursement Obligation when and as due (whether at maturity, by reason of acceleration or otherwise). (b) Other Payment Default. Any Borrower shall default in the payment when --------------------- and as due (whether at maturity, by reason of acceleration or otherwise) of interest on any Loan, Note or Reimbursement Obligation or the payment of any other Obligation and such default shall not be cured within three (3) Business Days after Borrowers have received notice of such default. (c) Misrepresentation. Any representation or warranty made or deemed to be ----------------- made by any Borrower or any Subsidiary thereof under this Agreement, any Loan Document or any amendment hereto or thereto, shall at any time prove to have been incorrect or misleading in any material respect when made or deemed made. (d) Default in Performance of Certain Covenants. (i) Any Borrower shall ------------------------------------------- default in the performance or observance of any covenant or agreement contained in Sections 8.1, 8.2 or 8.5(e) or Articles X or XI of this Agreement and (ii) any Borrower shall default in the performance or observance of any covenant or agreement contained in Section 8.4(c) and such default shall not be cured within five (5) Business Days after the Borrowers have received notice of such default. (e) Default in Performance of Other Covenants and Conditions. Any Borrower -------------------------------------------------------- or any Subsidiary thereof shall default in the performance or observance of any term, covenant, condition or agreement contained in this Agreement (other than as specifically provided for otherwise in this Section 12.1) or any other Loan Document and such default shall continue for a period of thirty (30) days after written notice thereof has been given to the Borrowers by the Administrative Agent. (f) Hedging Agreement. Any termination payment shall be due by any ----------------- Borrower under any Hedging Agreement and such amount is not paid within fifteen (15) Business Days of the due date thereof. (g) Debt or Preferred Stock Cross-Default. Any Borrower or any Subsidiary ------------------------------------- (including, without limitation, the Oak Ridge SPE) thereof shall (i) default in the payment of any Debt (other 78 than the Notes or any Reimbursement Obligation) or the Preferred Stock the aggregate outstanding amount of which Debt is in excess of $750,000 beyond the period of grace if any, provided in the instrument or agreement under which such Debt was created, or (ii) default in the observance or performance of any other agreement or condition relating to any Debt (other than the Notes or any Reimbursement Obligation) the aggregate outstanding amount of which Debt is in excess of $750,000 or contained in any instrument or agreement evidencing, securing or relating thereto or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Debt (or a trustee or agent on behalf of such holder or holders) to cause, with the giving of notice if required, any such Debt to become due, be redeemed in cash or be repurchased in cash prior to its stated maturity (any applicable grace period having expired). (h) Other Cross-Defaults. Any Borrower or any Subsidiary thereof shall -------------------- default in the payment when due, or in the performance or observance, of any obligation or condition of any Material Contract, if the effect of such default is to permit the other party to terminate such Material Contract, and such termination is reasonably likely to occur, except where any such occurrence could not reasonably be expected to have a Material Adverse Effect. (i) Change in Control. (i) Any person or group of persons (within the ----------------- meaning of Section 13(d) of the Securities Exchange Act of 1934, as amended) other than The Carlyle Group and its Affiliates (as such persons are described in the 1996 Proxy Statement of GTS) (the "Carlyle Group"), shall obtain beneficial ownership or control (within the meaning of Section 13(d) of the Securities Exchange Act of 1934, as amended) in one or more series of transactions of more than thirty-five percent (35%) of the common stock or thirty-five percent (35%) of the voting power of any Borrower entitled to vote in the election of members of the board of directors of any Borrower or (ii) there shall have occurred under any indenture or other instrument evidencing any Debt in excess of $750,000 any "change in control" (as defined in such indenture or other evidence of Debt) obligating any Borrower to repurchase, redeem or repay all or any part of the Debt or capital stock provided for therein or (iii) if (a) the Carlyle Group shall fail to maintain, at any time, as a direct result of a sale or other liquidation of ownership interests in GTS, a beneficial ownership interest (within the meaning of Section 13(d) of the Securities Exchange Act of 1934, as amended) of at least twenty percent (20%) of the capital stock entitled to vote in the election of the members of the board of directors of GTS, (and this provision (iii) shall exclude a decline in the Carlyle Group's ownership below the twenty percent (20%) threshold as a direct result of a stock issuance by GTS, either as a primary equity offering or as consideration for an acquisition or merger transaction) and (b) during any annual period after any such reduction in the ownership interests of the Carlyle Group, individuals who at the beginning of such period were nominated, elected, designated or appointed to the board of directors by the Carlyle Group (together with any new directors whose election by such board of directors or whose nomination for election by the shareholders of GTS was approved by the Carlyle Group) cease for any reason to constitute a majority of the board of directors then in office, any such event, a "Change in Control." (j) Voluntary Bankruptcy Proceeding. Any Borrower or any Subsidiary ------------------------------- thereof shall (i) commence a voluntary case under the federal bankruptcy laws (as now or hereafter in effect), 79 (ii) file a petition seeking to take advantage of any other laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding up or composition for adjustment of debts, (iii) consent to or fail to contest in a timely and appropriate manner any petition filed against it in an involuntary case under such bankruptcy laws or other laws, (iv) apply for or consent to, or fail to contest in a timely and appropriate manner, the appointment of, or the taking of possession by, a receiver, custodian, trustee, or liquidator of itself or of a substantial part of its property, domestic or foreign, (v) admit in writing its inability to pay its debts as they become due, (vi) make a general assignment for the benefit of creditors, or (vii) take any corporate action for the purpose of authorizing any of the foregoing. (k) Involuntary Bankruptcy Proceeding. A case or other proceeding shall be --------------------------------- commenced against any Borrower or any Subsidiary thereof in any court of competent jurisdiction seeking (i) relief under the federal bankruptcy laws (as now or hereafter in effect) or under any other laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding up or adjustment of debts, or (ii) the appointment of a trustee, receiver, custodian, liquidator or the like for any Borrower or any Subsidiary thereof or for all or any substantial part of their respective assets, domestic or foreign, and such case or proceeding shall continue without dismissal or stay for a period of sixty (60) consecutive days, or an order granting the relief requested in such case or proceeding (including, but not limited to, an order for relief under such federal bankruptcy laws) shall be entered. (l) Failure of Agreements. Any provision of this Agreement or of any other --------------------- Loan Document shall for any reason cease to be valid and binding on any Borrower or Subsidiary party thereto or any such Person shall so state in writing, or this Agreement or any other Loan Document shall for any reason cease to create a valid and perfected first priority Lien on, or security interest in, any of the collateral purported to be covered thereby, in each case other than in accordance with the express terms hereof or thereof. (m) Termination Event. The occurrence of any of the following events: (i) ----------------- any Borrower or any ERISA Affiliate fails to make full payment when due of all amounts which, under the provisions of any Pension Plan or Section 412 of the Code, any Borrower or any ERISA Affiliate is required to pay as contributions thereto, (ii) an accumulated funding deficiency in excess of $100,000 occurs or exists, whether or not waived, with respect to any Pension Plan, (iii) other than as described on Schedule 7.1(i) as of the Closing Date, a Termination Event --------------- or (iv) any Borrower or any ERISA Affiliate as employers under one or more Multiemployer Plan makes a complete or partial withdrawal from any such Multiemployer Plan and the plan sponsor of such Multiemployer Plans notifies such withdrawing employer that such employer has incurred a withdrawal liability requiring payments in an amount exceeding $100,000. (n) Judgment. A judgment or order for the payment of money which causes -------- the aggregate amount of all such judgments to exceed $500,000 in any Fiscal Year shall be entered against any Borrower or any Subsidiary thereof by any court and such judgment or order shall continue without discharge or stay for a period of thirty (30) days. 80 SECTION 12.2 Remedies. Upon the occurrence and during the continuation -------- of an Event of Default, with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrowers: (a) Acceleration; Termination of Facilities. Declare the principal of and --------------------------------------- interest on the Loans, the Notes and the Reimbursement Obligations at the time outstanding, and all other amounts owed to the Lenders and to the Administrative Agent under this Agreement or any of the other Loan Documents (other than any Hedging Agreement) (including, without limitation, all L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) and all other Obligations (other than obligations owing under any Hedging Agreement), to be forthwith due and payable, whereupon the same shall immediately become due and payable without presentment, demand, protest or other notice of any kind, all of which are expressly waived, anything in this Agreement or the other Loan Documents to the contrary notwithstanding, and terminate the Credit Facility and any right of the Borrowers to request borrowings or Letters of Credit thereunder; provided, that -------- upon the occurrence of an Event of Default specified in Section 12.1(j) or (k), the Credit Facility shall be automatically terminated and all Obligations (other than obligations owing under any Hedging Agreement) shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived. (b) Letters of Credit. With respect to all Letters of Credit with respect ----------------- to which presentment for honor shall not have occurred at the time of an acceleration pursuant to the preceding paragraph, require the Borrowers at such time to deposit in a cash collateral account opened by the Administrative Agent an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit. Amounts held in such cash collateral account shall be applied by the Administrative Agent to the payment of drafts drawn under such Letters of Credit, and the unused portion thereof after all such Letters of Credit shall have expired or been fully drawn upon, if any, shall be applied to repay the other Obligations. After all such Letters of Credit shall have expired or been fully drawn upon, the Reimbursement Obligation shall have been satisfied and all other Obligations shall have been paid in full, the balance, if any, in such cash collateral account shall be returned to the Borrowers. (c) Rights of Collection. Exercise on behalf of the Lenders all of its -------------------- other rights and remedies under this Agreement, the other Loan Documents and Applicable Law, in order to satisfy all of the Obligations of the Borrowers. SECTION 12.3 Rights and Remedies Cumulative; Non-Waiver; etc. The ----------------------------------------------- enumeration of the rights and remedies of the Administrative Agent and the Lenders set forth in this Agreement is not intended to be exhaustive and the exercise by the Administrative Agent and the Lenders of any right or remedy shall not preclude the exercise of any other rights or remedies, all of which shall be cumulative, and shall be in addition to any other right or remedy given hereunder or under the Loan Documents or that may now or hereafter exist in law or in equity or by suit or otherwise. No delay or failure to take action on the part of the Administrative Agent or any Lender in exercising any right, power or privilege shall operate as a waiver thereof, nor shall any single or 81 partial exercise of any such right, power or privilege preclude other or further exercise thereof or the exercise of any other right, power or privilege or shall be construed to be a waiver of any Event of Default. No course of dealing between the Borrowers, the Administrative Agent and the Lenders or their respective agents or employees shall be effective to change, modify or discharge any provision of this Agreement or any of the other Loan Documents or to constitute a waiver of any Event of Default. ARTICLE XIII THE ADMINISTRATIVE AGENT AND COLLATERAL AGENT --------------------------------------------- SECTION 13.1 Appointment. Each of the Lenders hereby irrevocably ----------- designates and appoints First Union as Administrative Agent and as Collateral Agent of such Lender, in each case, under this Agreement and the other Loan Documents for the term hereof and each such Lender irrevocably authorizes each of First Union as Administrative Agent and as Collateral Agent for such Lender, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to such Agent by the terms of this Agreement and such other Loan Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement or such other Loan Documents, neither Agent shall have any duties or responsibilities, except those expressly set forth herein and therein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or the other Loan Documents or otherwise exist against any Agent. Any reference to the Agent in this Article XIII shall be deemed to refer to the Administrative Agent or Collateral Agent, as applicable, solely in its capacity as Administrative Agent or Collateral Agent, as applicable, and not in its capacity as a Lender. SECTION 13.2 Delegation of Duties. The Agents may execute any of their -------------------- respective duties under this Agreement and the other Loan Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. No Agent shall be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by such Agent with reasonable care. SECTION 13.3 Exculpatory Provisions. Neither Agent nor any of such ---------------------- Agent's officers, directors, employees, agents, attorneys-in-fact, Subsidiaries or Affiliates shall be (a) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or the other Loan Documents (except for actions occasioned solely by its or such Person's own gross negligence or willful misconduct), or (b) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by any Borrower or any Subsidiary thereof or any officer thereof contained in this Agreement or the other Loan Documents or in any certificate, report, statement or other document referred to or provided for in, or received by such Agent under or in connection with, this Agreement or the other Loan Documents or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or the other Loan Documents or for any failure of any Borrower or any Subsidiary 82 thereof to perform its obligations hereunder or thereunder. No Agent shall be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement, or to inspect the properties, books or records of the Borrowers or any of their Subsidiaries. SECTION 13.4 Reliance by the Agents. The Agents shall be entitled to ---------------------- rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document or conversation believed by such Agent to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Borrowers), independent accountants and other experts selected by such Agent. The Agents may deem and treat the payee of any Note as the owner thereof for all purposes unless such Note shall have been transferred in accordance with Section 14.10 hereof. The Agents shall be fully justified in failing or refusing to take any action under this Agreement and the other Loan Documents unless such Agent shall first receive such advice or concurrence of the Required Lenders (or, when expressly required hereby or by the relevant other Loan Document, all the Lenders) as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action except for its own gross negligence or willful misconduct. The Agents shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the Notes in accordance with a request of the Required Lenders (or, when expressly required hereby, all the Lenders), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Notes. SECTION 13.5 Notice of Default. No Agent shall be deemed to have ----------------- knowledge or notice of the occurrence of any Default or Event of Default hereunder unless it has received notice from a Lender or the Borrowers referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". In the event that any Agent receives such a notice, it shall promptly give notice thereof to the other Agent and to the Lenders. The Agents shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders; provided -------- that unless and until such Agent shall have received such directions, such Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders, except to the extent that other ------ provisions of this Agreement expressly require that any such action be taken or not be taken only with the consent and authorization or the request of the Lenders or Required Lenders, as applicable. SECTION 13.6 Non-Reliance on the Agents and Other Lenders. Each Lender -------------------------------------------- expressly acknowledges that neither Agent nor any of such Agent's officers, directors, employees, agents, attorneys-in-fact, Subsidiaries or Affiliates has made any representations or warranties to it and that no act by any Agent hereinafter taken, including any review of the affairs of the Borrowers or any of their Subsidiaries, shall be deemed to constitute any representation or warranty by such Agent to any Lender. Each Lender represents to each Agent that it has, 83 independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of the Borrowers and their Subsidiaries and made its own decision to make its Loans and issue or participate in Letter of Credit hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Borrowers and their Subsidiaries. Except for notices, reports and other documents expressly required to be furnished to the Lenders by an Agent hereunder or by the other Loan Documents, no Agent shall have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, financial and other condition or creditworthiness of the Borrowers or any of their Subsidiaries which may come into the possession of any Agent or any of its respective officers, directors, employees, agents, attorneys-in-fact, Subsidiaries or Affiliates. SECTION 13.7 Indemnification. The Lenders agree to indemnify each --------------- Issuing Lender and each of the Administrative Agent, Collateral Agent, Documentation Agent and Syndication Agent in its respective capacity as such and (to the extent not reimbursed by the Borrowers and without limiting the obligation of the Borrowers to do so), ratably according to the respective amounts of their Revolving Credit Commitment Percentage, Term A Loan Percentage and/or Term B Loan Percentage, as applicable, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (including, without limitation, at any time following the payment of the Notes or any Reimbursement Obligation) be imposed on, incurred by or asserted against any Agent in any way relating to or arising out of this Agreement or the other Loan Documents, or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by any Agent under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such - -------- liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting solely from such Agent's bad faith, gross negligence or willful misconduct. The agreements in this Section 13.7 shall survive the payment of the Notes, any Reimbursement Obligation and all other amounts payable hereunder and the termination of this Agreement. SECTION 13.8 The Agents in Their Individual Capacity. Each Agent and its --------------------------------------- respective Subsidiaries and Affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Borrowers as though such Agent were not an Agent hereunder. With respect to any Loans made or renewed by it and any Note issued to it and with respect to any Letter of Credit issued by it or participated in by it, such Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as though it were not an Agent, and the terms "Lender" and "Lenders" shall include the Agent in its individual capacity, if applicable. 84 SECTION 13.9 Resignation of the Agents; Successor Agents. Subject to the ------------------------------------------- appointment and acceptance of a successor as provided below, any Agent may resign at any time by giving notice thereof to the Lenders and the Borrowers. Upon any such resignation, the Required Lenders shall have the right to appoint a successor Agent, which successor shall have minimum capital and surplus of at least $500,000,000. If no successor Agent shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after such Agent's giving of notice of resignation, then such Agent may, on behalf of the Lenders, appoint a successor Agent, which successor shall have minimum capital and surplus of at least $500,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. After any retiring Agent's resignation hereunder as Agent, the provisions of this Section 13.9 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Agent. SECTION 13.10 Documentation Agent and Syndication Agent. The ----------------------------------------- Documentation Agent and the Syndication Agent, each in its respective capacity as Documentation Agent or Syndication Agent, shall have no duties or responsibilities under this Agreement or any other Loan Document. ARTICLE XIV MISCELLANEOUS ------------- SECTION 14.1 Notices ------- (a) Method of Communication. Except as otherwise provided in this ----------------------- Agreement, all notices and communications hereunder shall be in writing, or by telephone subsequently confirmed in writing. Any notice shall be effective if delivered by hand delivery or sent via telecopy, recognized overnight courier service or certified mail, return receipt requested, and shall be presumed to be received by a party hereto (i) on the date of delivery if delivered by hand or sent by telecopy, (ii) on the next Business Day if sent by recognized overnight courier service and (iii) on the third Business Day following the date sent by certified mail, return receipt requested. A telephonic notice to the Administrative Agent as understood by the Administrative Agent will be deemed to be the controlling and proper notice in the event of a discrepancy with or failure to receive a confirming written notice. (b) Addresses for Notices. Notices to any party shall be sent to it at the --------------------- following addresses, or any other address as to which all the other parties are notified in writing. If to the Borrowers: GTS Duratek, Inc. 10100 Old Columbia Road Columbia, Maryland 21046 Attention: Mr. Robert F. Shawver, Executive Vice President and Chief Financial Officer Telephone No.: (410) 312-5102 Telecopy No.: (410) 290-9112 85 With copies to: The Carlyle Group 1001 Pennsylvania Washington, D.C. 20004 Attention: Hootan Yaghoobzadeh Telephone No.: (202) 661-4372 Telecopy No.: (202) 347-1818 Hogan &Hartson L.L.P. 111 South Calvert Street, Suite 1600 Baltimore, Maryland 21202 Attention: Lawrence R. Seidman, Esq. Telephone No.: (410) 659-2781 Telecopy No.: (410) 539-6981 If to First Union as First Union National Bank Administrative Agent: Charlotte Plaza, CP-23 or as Collateral Agent 201 South College Street Charlotte, North Carolina 28288-0680 Attention: Syndication Agency Services Telephone No.: (704) 374-2698 Telecopy No.: (704) 383-0288 If to any Lender: To the Address set forth on Schedule 1.1(a) hereto --------------- (c) Administrative Agent's Office. The Administrative Agent hereby ----------------------------- designates its office located at the address set forth above, or any subsequent office which shall have been specified for such purpose by written notice to the Borrowers and Lenders, as the Administrative Agent's Office referred to herein, to which payments due are to be made and at which Loans will be disbursed and Letters of Credit issued. SECTION 14.2 Expenses; Indemnity. The Borrowers will (a) pay all ------------------- out-of-pocket expenses of the Agents in connection with (i) the preparation, execution and delivery of this Agreement and each other Loan Document, whenever the same shall be executed and delivered, including without limitation all out- of-pocket syndication and due diligence expenses (including, without limitation, fees and expenses of environmental or other consultants engaged by any Agent) and reasonable fees and disbursements of counsel for the Agents and (ii) the preparation, execution and delivery of any waiver, amendment or consent by the Agents or the Lenders relating to this Agreement or any other Loan Document, including without limitation reasonable fees and disbursements of counsel for the Agents, (b) pay all reasonable out-of-pocket expenses of the 86 Agents and each Lender actually incurred in connection with the administration and enforcement of any rights and remedies of the Agents and Lenders under the Credit Facility, including, in connection with any workout, consulting with appraisers, accountants, engineers, attorneys and other Persons concerning the nature, scope or value of any right or remedy of the Agents or any Lender hereunder or under any other Loan Document or any factual matters in connection therewith, which expenses shall include without limitation the reasonable fees and disbursements of such Persons, and (c) defend, indemnify and hold harmless each Agent and each of the Lenders, and their respective parents, Subsidiaries, Affiliates, employees, Agents, officers and directors, from and against any losses, penalties, fines, liabilities, settlements, damages, costs and expenses, suffered by any such Person in connection with any claim, investigation, litigation or other proceeding, including, without limitation, any of the foregoing arising out of any violation of any applicable Environmental Law (whether or not any Agent or any Lender is a party thereto) and the prosecution and defense thereof, arising out of or in any way connected with the Agreement, any other Loan Document, any Extension of Credit or any actual or proposed use thereof by any Borrower or any Subsidiary thereof, including without limitation reasonable attorney's and consultant's fees, except to the extent that any of the foregoing directly result from the gross negligence or willful misconduct of the party seeking indemnification therefor. SECTION 14.3 Set-off. In addition to any rights now or hereafter granted ------- under Applicable Law and not by way of limitation of any such rights, upon and after the occurrence of any Event of Default and during the continuance thereof, the Lenders and any assignee or participant of a Lender in accordance with Section 14.10 are hereby authorized by the Borrowers at any time or from time to time, without notice to the Borrowers or to any other Person, any such notice being hereby expressly waived subject to Section 5.6, to set off and to appropriate and to apply any and all deposits (general or special, time or demand, including, but not limited to, indebtedness evidenced by certificates of deposit, whether matured or unmatured) and any other indebtedness at any time held or owing by the Lenders, or any such assignee or participant to or for the credit or the account of the Borrowers against and on account of the Obligations irrespective of whether or not (a) the Lenders shall have made any demand under this Agreement or any of the other Loan Documents or (b) the Administrative Agent shall have declared any or all of the Obligations to be due and payable as permitted by Section 12.2 and although such Obligations shall be contingent or unmatured. SECTION 14.4 Governing Law. This Agreement, the Notes and the other ------------- Loan Documents, unless otherwise expressly set forth therein, shall be governed by, construed and enforced in accordance with the laws of the State of New York. SECTION 14.5 Consent to Jurisdiction. The Borrowers hereby irrevocably ----------------------- consent to the personal jurisdiction of the state and federal courts located in New York County, New York, in any action, claim or other proceeding arising out of any dispute in connection with this Agreement, the Notes and the other Loan Documents, any rights or obligations hereunder or thereunder, or the performance of such rights and obligations. The Borrowers hereby irrevocably consent to the service of a summons and complaint and other process in any action, claim or proceeding brought by any Agent or any Lender in connection with this Agreement, the Notes or 87 the other Loan Documents, any rights or obligations hereunder or thereunder, or the performance of such rights and obligations, on behalf of itself or its property, in the manner specified in Section 14.1. Nothing in this Section 14.5 shall affect the right of any Agent or any Lender to serve legal process in any other manner permitted by Applicable Law or affect the right of any Agent or any Lender to bring any action or proceeding against any Borrower or its properties in the courts of any other jurisdictions. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of the venue of any such proceeding brought in any court specified above and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. SECTION 14.6 Waiver of Jury Trial. -------------------- (a) Jury Trial. TO THE EXTENT PERMITTED BY LAW, THE ADMINISTRATIVE ---------- AGENT, THE COLLATERAL AGENT, THE DOCUMENTATION AGENT, THE SYNDICATION AGENT, EACH LENDER AND EACH BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY JUDICIAL PROCEEDING, ANY DISPUTE, CLAIM OR CONTROVERSY ARISING OUT OF, CONNECTED WITH OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTS ("DISPUTES") IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. (b) Preservation of Certain Remedies. Each Party hereto shall have and -------------------------------- hereby reserves the right to proceed in any court of proper jurisdiction or by self help to exercise or prosecute the following remedies: (i) all rights to foreclose against any real or personal property or other security by exercising a power of sale granted in the Loan Documents or under applicable law or by judicial foreclosure and sale, (ii) all rights of self help including peaceful occupation of property and collection of rents, set off, and peaceful possession of property, (iii) obtaining provisional or ancillary remedies including injunctive relief, sequestration, garnishment, attachment, appointment of receiver and in filing an involuntary bankruptcy proceeding, and (iv) when applicable, a judgment by confession of judgment. SECTION 14.7 Reversal of Payments. To the extent any Borrower makes a -------------------- payment or payments to any Agent for the ratable benefit of the Lenders or any Agent receives any payment or proceeds of the collateral which payments or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or proceeds repaid, the Obligations or part thereof intended to be satisfied shall be revived and continued in full force and effect as if such payment or proceeds had not been received by such Agent. 88 SECTION 14.8 Injunctive Relief; Punitive Damages. ----------------------------------- (a) The Borrowers recognize that, in the event any Borrowers fails to perform, observe or discharge any of its obligations or liabilities under this Agreement, any remedy of law may prove to be inadequate relief to the Lenders. Therefore, each Borrower agrees that the Lenders, at the Lenders' option, shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving actual damages. (b) Each Agent, each Lender and each Borrower (on behalf of itself and its Subsidiaries) hereby agree that no such Person shall have a remedy of punitive, exemplary or consequential damages against any other party to a Loan Document and each such Person hereby waives any right or claim to punitive, exemplary or consequential damages that they may now have or may arise in the future in connection with any Dispute whether such Dispute is resolved through arbitration or judicially. (c) The parties agree that they shall not have a remedy of punitive, exemplary or consequential damages against any other party in any Dispute and hereby waive any right or claim to punitive, exemplary or consequential damages they have now or which may arise in the future in connection with any Dispute. SECTION 14.9 Accounting Matters. All financial and accounting ------------------ calculations, measurements and computations made for any purpose relating to this Agreement, including, without limitation, all computations utilized by any Borrower or any Subsidiary thereof to determine compliance with any covenant contained herein, shall, except as otherwise expressly contemplated hereby or unless there is an express written direction by the Administrative Agent to the contrary agreed to by the Borrowers, be performed in accordance with GAAP as in effect on the Closing Date. In the event that after the Closing Date changes in GAAP shall be mandated by the Financial Accounting Standards Board, or any similar accounting body of comparable standing, or changes shall be recommended, consented to or concurred in by the certified public accountants of the Borrowers, to the extent that such changes would modify such accounting terms or the interpretation or computation thereof, such changes shall be followed in defining such accounting terms only from and after the date the Borrowers and the Lenders shall have amended this Agreement to the extent necessary to reflect any such changes in the financial covenants and other terms and conditions of this Agreement. SECTION 14.10 Successors and Assigns; Participations. -------------------------------------- (a) Benefit of Agreement. This Agreement shall be binding upon and inure -------------------- to the benefit of the Borrowers, the Agents and the Lenders, all future holders of the Notes, and their respective successors and assigns, except that the Borrowers shall not assign or transfer any of their rights or obligations under this Agreement without the prior written consent of each Lender. (b) Assignment by Lenders. Each Lender may, with the consent of the --------------------- Borrowers (so long as no Default or Event of Default has occurred and is continuing) and the consent of the 89 Administrative Agent, which consents shall not be unreasonably withheld nor required with respect to the Administrative Agent or the Borrowers if such assignment is to an existing Lender or an Affiliate of a Lender, assign to one or more Eligible Assignees all or a portion of its interests, rights and obligations under this Agreement (including, without limitation, all or a portion of the Extensions of Credit at the time owing to it and the Notes held by it); provided that: -------- (i) each such assignment shall be of a constant, and not a varying, percentage of the Revolving Credit Commitment, Term A Loan Commitment and Term B Loan Commitment, as applicable, of the assigning Lender's rights and obligations under this Agreement; (ii) if less than all of the assigning Lender's Revolving Credit Commitment, Term A Loan Commitment, Term B Loan Commitment, as applicable, is to be assigned, the Commitment so assigned shall not be less than $5,000,000; provided that assignments to existing Lenders shall not be subject to the - -------- foregoing limit; (iii) the parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, an Assignment and Acceptance in the form of Exhibit H attached hereto (an --------- "Assignment and Acceptance"), together with any Note or Notes subject to such assignment; (iv) such assignment shall not, without the consent of the Borrowers, require any Borrower to file a registration statement with the Securities and Exchange Commission or apply to or qualify the Loans or the Notes under the blue sky laws of any state; and (v) the assigning Lender shall pay to the Administrative Agent an assignment fee of $3,500 upon the execution by such Lender of the Assignment and Acceptance; provided that no such fee shall be payable upon any assignment by a -------- Lender to an Affiliate thereof. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, which effective date shall be at least five (5) Business Days after the execution thereof, (A) the assignee thereunder shall be a party hereto and, to the extent provided in such Assignment and Acceptance, have the rights and obligations of a Lender hereby and (B) the Lender thereunder shall, to the extent provided in such assignment, be released from its obligations under this Agreement. (c) Rights and Duties Upon Assignment. By executing and delivering an --------------------------------- Assignment and Acceptance, the assigning Lender thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as set forth in such Assignment and Acceptance. (d) Register. The Administrative Agent shall maintain 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 amount of the Extensions of Credit with respect to each Lender from time to time (the "Register"). The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrowers, the Administrative Agent and the Lenders may treat each person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register 90 shall be available for inspection by the Borrowers or Lender at any reasonable time and from time to time upon reasonable prior notice. (e) Issuance of New Notes. Upon its receipt of an Assignment and --------------------- Acceptance executed by an assigning Lender and an Eligible Assignee together with any Note or Notes subject to such assignment and the written consent to such assignment, the Administrative Agent shall, if such Assignment and Acceptance has been completed and is substantially in the form of Exhibit G: --------- (i) accept such Assignment and Acceptance; (ii) record the information contained therein in the Register; (iii) give prompt notice thereof to the Lenders and the Borrowers; and (iv) promptly deliver a copy of such Assignment and Acceptance to the Borrowers. Within five (5) Business Days after receipt of notice, the Borrowers shall execute and deliver to the Administrative Agent, in exchange for the surrendered Note or Notes, a new Note or Notes to the order of such Eligible Assignee in amounts equal to the Revolving Credit Commitment, Term A Loan Commitment and/or Term B Loan Commitment assumed by it pursuant to such Assignment and Acceptance and a new Note or Notes to the order of the assigning Lender in an amount equal to the Revolving Credit Commitment, Term A Loan Commitment and/or Term B Loan Commitment retained by it hereunder. Such new Note or Notes shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered Note or Notes, shall be dated the effective date of such Assignment and Acceptance and shall otherwise be in substantially the form of the assigned Notes delivered to the assigning Lender. Each surrendered Note or Notes shall be canceled and returned to the Borrowers. (f) Participations. Each Lender may sell participations to one or more -------------- banks or other entities in all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Extensions of Credit and the Notes held by it); provided that: -------- (i) each such participation shall be in an amount not less than $5,000,000; (ii) such Lender's obligations under this Agreement (including, without limitation, its Revolving Credit Commitment, Term A Loan Commitment and/or Term B Loan Commitment, as applicable) shall remain unchanged; (iii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations; (iv) such Lender shall remain the holder of the Notes held by it for all purposes of this Agreement; 91 (v) the Borrowers, 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; (vi) such Lender shall not permit such participant the right to approve any waivers, amendments or other modifications to this Agreement or any other Loan Document other than waivers, amendments or modifications which would reduce the principal of or the interest rate on any Loan or Reimbursement Obligation, extend the term or increase the amount of the Revolving Credit Commitment, Term A Loan Commitment and/or Term B Loan Commitment, reduce the amount of any fees to which such participant is entitled, extend any scheduled payment date for principal of any Loan or, except as expressly contemplated hereby or thereby, release any material portion of the Collateral; and (vii) any such disposition shall not, without the consent of the Borrowers, require any Borrower to file a registration statement with the Securities and Exchange Commission to apply to qualify the Loans or the Notes under the blue sky law of any state. (g) Disclosure of Information; Confidentiality. The Agents and the Lenders ------------------------------------------ shall hold all non-public information with respect to the Borrowers obtained pursuant to the Loan Documents in accordance with their customary procedures for handling confidential information; provided, that the Agents may disclose -------- information relating to this Agreement to Gold Sheets and other similar bank ----------- trade publications, such information to consist of deal terms and other information customarily found in such publications and provided further, that -------- ------- the Agents and Lenders may disclose any such information to the extent such disclosure is required by law or regulation or requested by any regulatory authority or pursuant to subpoena or other legal process or in connection with the Lenders' enforcement of their rights or remedies hereunder or under any other Loan Document. Any Lender may, in connection with any assignment, proposed assignment, participation or proposed participation pursuant to this Section 14.10, disclose to the assignee, participant, proposed assignee or proposed participant, any information relating to the Borrowers furnished to such Lender by or on behalf of the Borrowers; provided, that prior to any such -------- disclosure, each such assignee, proposed assignee, participant or proposed participant shall agree with the Borrowers or such Lender to preserve the confidentiality of any confidential information relating to the Borrowers received from such Lender. The provisions of this Section 14.10(g) shall not be applicable to any information which (a) is or becomes generally known to the public, (b) was already known to the Administrative Agent, the Collateral Agent, the Documentation Agent, the Syndication Agent or any Lender or was in such Person's possession prior to the disclosure of such information in connection with this Agreement (including, without limitation, the underwriting or other evaluation of the transactions contemplated hereby prior to the Closing Date) unless such information is subject to any other confidentiality agreement by such Person in favor of GTS or any Subsidiary or Affiliates thereof or (c) was disclosed to an Agent or a Lender by a third party, GTS or any Subsidiary or Affiliate thereof not known to such Agent or Lender to be bound by a confidentiality agreement with any Borrower. 92 (h) Certain Pledges or Assignments. Nothing herein shall prohibit any ------------------------------ Lender from pledging or assigning any Note to any Federal Reserve Bank in accordance with Applicable Law. SECTION 14.11 Amendments, Waivers and Consents. Except as set forth -------------------------------- below, any term, covenant, agreement or condition of this Agreement or any of the other Loan Documents (other than any Hedging Agreement, the terms and conditions of which may be amended, modified or waived by the parties thereto) may be amended or waived by the Lenders, and any consent given by the Lenders, if, but only if, such amendment, waiver or consent is in writing signed by the Required Lenders (or by the Administrative Agent or Collateral Agent, as applicable, with the written consent of the Required Lenders) and delivered to the Administrative Agent and, in the case of an amendment, signed by the Borrowers; provided, that no amendment, waiver or consent shall: -------- (a) (i) increase the Revolving Credit Commitment of any Lender, (ii) reduce the rate of, or forgive any, interest or fees payable on any Revolving Credit Loan or Reimbursement Obligation, (iii) reduce or forgive the principal amount of any Revolving Credit Loan or Reimbursement Obligation, (iv) extend the originally scheduled time or times of payment of the principal of any Revolving Credit Loan or Reimbursement Obligation or the time or times of payment of interest on any Revolving Credit Loan or Reimbursement Obligation or any fee or commission with respect thereto, (v) permit any subordination of the principal or interest on, or any Lien securing, any Revolving Credit Loan or Reimbursement Obligation or (vi) extend the time of the obligation of the Revolving Commitment Lenders to make or issue or participate in Letters of Credit, in any case, without the written consent of each Lender holding Revolving Credit Loans or a Revolving Credit Commitment; (b) (i) increase the Term A Loan Commitment of any Lender, (ii) reduce the rate of, or forgive any, interest or fees payable on any Term A Loan, (iii) reduce or forgive the principal amount of any Term A Loan, (iv) permit any subordination of the principal or interest on, or any Lien securing, any Term A Loan or (v) extend the originally scheduled time or times of payment of the principal of any Term A Loan or the time or times of payment of interest on any Term A Loan or any fee or commission with respect thereto, in any case, without the written consent of each Lender holding a Term A Loan or a Term A Loan Commitment; (c) (i) increase the Term B Loan Commitment of any Lender, (ii) reduce the rate of, or forgive any, interest or fees payable on any Term B Loan, (iii) reduce or forgive the principal amount of any Term B Loan, (iv) permit any subordination of the principal or interest on, or any Lien securing, any Term B Loan or (v) extend the originally scheduled time or times of payment of the principal of any Term B Loan or the time or times of payment of interest on any Term B Loan or any fee or commission with respect thereto, in any case, without the written consent of each Lender holding a Term B Loan or a Term B Loan Commitments; 93 (d) release any material portion of the Collateral or release any Security Document (other than in connection with a sale of assets permitted pursuant to Section 11.6 or as otherwise specifically permitted in this Agreement or the applicable Security Document), amend the provisions of this Section 14.11, amend any provision pertaining to allocation of prepayments under Section 4.4, or amend the definition or percentage of Required Lenders without the written consent of each Lender or amend the definition, or any percentage therein, of Borrowing Base; or (e) amend the definition or percentage of Super Majority Lenders; or modify the voting rights of the Super Majority Lenders set forth in Section 11.4(c)(i), (iv) or (ix) without the written consent of each Lender; or (f) release any Borrower from the Obligations hereunder or under any other Loan Document or permit any assignment (other than as specifically permitted or contemplated in this Agreement or any other Loan Document) of any Borrower's rights and obligations hereunder or under any other Loan Document without the written consent of each Lender. In addition, no amendment, waiver or consent to the provisions of (a) Article XIII shall be made without the written consent of each Agent, (b) any Security Document shall be made without the written consent of the Collateral Agent and (c) Article III without the written consent of the Issuing Lender. SECTION 14.12 Performance of Duties. The obligations of the Borrowers --------------------- under this Agreement and each of the Loan Documents shall be performed by the Borrowers at their sole cost and expense. SECTION 14.13 All Powers Coupled with Interest. All powers of attorney -------------------------------- and other authorizations granted to the Lenders, the Agents and any Persons designated by the Agents or any Lender pursuant to any provisions of this Agreement or any of the other Loan Documents shall be deemed coupled with an interest and shall be irrevocable so long as any of the Obligations remain unpaid or unsatisfied or the Credit Facility has not been terminated. SECTION 14.14 Survival of Indemnities. Notwithstanding any termination of ----------------------- this Agreement, the indemnities to which the Agents and the Lenders are entitled under the provisions of this Article XIV and any other provision of this Agreement and the Loan Documents shall continue in full force and effect and shall protect the Agents and the Lenders against events arising after such termination as well as before. SECTION 14.15 Titles and Captions. Titles and captions of Articles, ------------------- Sections and subsections in this Agreement are for convenience only, and neither limit nor amplify the provisions of this Agreement. 94 SECTION 14.16 Severability of Provisions. Any provision of this Agreement -------------------------- or any other Loan Document which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating the remainder of such provision or the remaining provisions hereof or thereof or affecting the validity or enforceability of such provision in any other jurisdiction. SECTION 14.17 Counterparts. This Agreement may be executed in any number ------------ of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and shall be binding upon all parties, their successors and assigns, and all of which taken together shall constitute one and the same agreement. SECTION 14.18 Term of Agreement. This Agreement shall remain in effect ----------------- from the Closing Date through and including the date upon which all Obligations shall have been indefeasibly and irrevocably paid and satisfied in full. The Collateral Agent is hereby permitted to release all Liens on the Collateral in favor of the Collateral Agent, for the ratable benefit of the Agents and the Lenders, upon repayment of the outstanding principal of and all accrued interest on the Loans, payment of all outstanding fees and expenses hereunder and the termination of the Lender's Commitments. No termination of this Agreement shall affect the rights and obligations of the parties hereto arising prior to such termination. SECTION 14.19 GTS as Agent for Borrowers; Obligations Joint and Several --------------------------------------------------------- Contributions and Indemnity. - --------------------------- (a) The Borrowers hereby irrevocably appoint and authorize GTS (i) to provide the Agents with all notices with respect to Loans and Letters of Credit obtained for the benefit of any Borrower and all other notices and instructions under this Agreement and (ii) to take such action on behalf of the Borrowers as GTS deems appropriate on its behalf to obtain Loans and Letters of Credit and to exercise such other powers as are reasonably incidental thereto to carry out the purposes of this Agreement. (b) All of the Borrowers shall be jointly and severally liable for the Obligations, however incurred. References to the Borrowers with respect to the Obligations or any portion thereof shall mean each Borrower on a joint and several basis. (c) To the extent any Borrower is required, by reason of its Obligations hereunder, to pay to the Administrative Agent and the Lenders an amount greater than the amount of Loans actually made available to or for the account of such Borrower, such Borrower shall have an enforceable right of contribution against the remaining Borrowers, and the remaining Borrowers shall be jointly and severally liable, for repayment of the full amount of such excess payment. Subject only to the subordination provided in the following subsection (f), such Borrower further shall be subrogated to any and all rights of the Administrative Agent and the Lenders against the remaining Borrowers to the extent of such excess payment. (d) To the extent that any Borrower would, but for the operation of this Section 14.19 and by reason of its Obligations hereunder or its obligations to other Subsidiaries under this Section 95 14.19, be rendered insolvent for any purpose under Applicable Law, each of the Borrowers hereby agrees to indemnify such Borrower in an amount at least equal to the amount necessary to prevent such Borrower from having been rendered insolvent by reason of the incurring of any such obligations. (e) To the extent that any Borrower would, but for the operation of this Section 14.19, be rendered insolvent under any Applicable Law by reason of its incurring of obligations to any other Borrower under the foregoing subsections (c) and (d) above, such Borrower shall, in turn, have rights of contribution and indemnity, to the full extent provided in the foregoing subsections (c) and (d) above, against the remaining Borrowers, such that all Obligations of all of the Borrowers hereunder and under this Section 14.19 shall be allocated in a manner such that no Borrower shall be rendered insolvent for any purpose under Applicable Law by reason of its incurring of such obligations. (f) The rights of any Borrower to contribution, subrogation and indemnity under this Section 14.19 or under Applicable Law shall in all events and all respects be subject and subordinate to the rights of the Administrative Agent and the Lenders under this Agreement and subject to the prior full, final and indefeasible payment to the Administrative Agent and the Lenders of all Obligations and no such right may be exercised until all of such Obligations have been fully, finally and indefeasibly paid and such payments are in no event subject to avoidance under Title 11 of the United States Code or any other Applicable Law. SECTION 14.20 Inconsistencies with Other Documents; Independent Effect -------------------------------------------------------- of Covenants - ------------ (a) In the event there is a conflict or inconsistency between this Agreement and any other Loan Document, the terms of this Agreement shall control; provided, that any provision of the Security Documents which imposes -------- additional burdens on any Borrower or any Subsidiary thereof or further restricts the rights of any Borrower or any Subsidiary thereof or gives the Agents or Lenders additional rights shall not be deemed to be in conflict or inconsistent with this Agreement and shall be given full force and effect. (b) The Borrowers expressly acknowledge and agree that each covenant contained in Articles IX, X, or XI hereof shall be given independent effect. Accordingly, the Borrowers shall not engage in any transaction or other act otherwise permitted under any covenant contained in Articles IX, X, or XI if, before or after giving effect to such transaction or act, the Borrowers shall or would be in breach of any other covenant contained in Articles IX, X, or XI. [Signature pages to follow] 96 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed under seal by their duly authorized officers, all as of the day and year first written above. [CORPORATE SEAL] GTS DURATEK, INC., as Borrower [CORPORATE SEAL] GTS DURATEK BEAR CREEK, INC., as Borrower [CORPORATE SEAL] GTS DURATEK COLORADO, INC., as Borrower [CORPORATE SEAL] HITTMAN TRANSPORT SERVICES, INC., as Borrower [CORPORATE SEAL] GENERAL TECHNICAL SERVICES, INC., as Borrower [CORPORATE SEAL] GTSD SUB III, INC., as Borrower [CORPORATE SEAL] CHEM-NUCLEAR SYSTEMS L.L.C., as Borrower By: GTSD Sub IV, Inc, its Sole Member By: /s/ Craig T. Bartlett ------------------------------ Name: Craig T. Bartlett Title: Treasurer [Signature Page Continues] [CORPORATE SEAL] WASTE MANAGEMENT FEDERAL SERVICES, INC., as Borrower [CORPORATE SEAL] WASTE MANAGEMENT FEDERAL SERVICES OF IDAHO, INC. as Borrower [CORPORATE SEAL] WASTE MANAGEMENT FEDERAL SERVICES OF HANFORD, INC., as Borrower [CORPORATE SEAL] WASTE MANAGEMENT TECHNICAL SERVICES, INC., as Borrower [CORPORATE SEAL] WASTE MANAGEMENT GEOTECH, INC., as Borrower [CORPORATE SEAL] FRANK W. HAKE ASSOCIATES LLC, as Borrower By: GTS Duratek, Inc., its Sole Member. [CORPORATE SEAL] GTSD SUB IV, INC., as Borrower By: /s/ Craig T. Bartlett ------------------------------ Name: Craig T. Bartlett Title: Treasurer [CORPORATE SEAL] GTS INSTRUMENT SERVICES, INCORPORATED, as Borrower By: /s/ Craig T. Bartlett ------------------------------ Name: Craig T. Bartlett Title: Controller [Signature Pages Continue] FIRST UNION NATIONAL BANK, as Collateral Agent and as Administrative Agent for the Lenders and Issuing Lender By: /s/ Richard M. Schmersal ----------------------------- Name: Richard M. Schmersal ---------------------- Title: Director ---------------------- [Signature Pages Continue] CREDIT LYONNAIS NEW YORK BRANCH, as Documentation Agent for the Lenders and Lender By: /s/ Mark Koneval -------------------------------- Name: Mark Koneval ------------------------- Title: Vice President ------------------------- [Signature Pages Continue] FLEET NATIONAL BANK, as Syndication Agent for the Lenders and Lender By: /s/ H. Louis Bailey ------------------------------- Name: H. Louis Bailey ------------------------ Title: Managing Director ------------------------ WACHOVIA BANK, N.A., as Lender By: /s/ D. Randolph Bryan Wilson ----------------------------------- Name: D. Randolph Bryan Wilson Title: Vice President EX-99.5 6 0006.txt EXHIBIT 99.5 2ND AMEND SEC AGMT Exhibit 99.5 SECOND AMENDED AND RESTATED SECURITY AGREEMENT dated as of June 8, 2000 among GTS DURATEK, INC., GTS DURATEK BEAR CREEK, INC., GTS DURATEK COLORADO, INC., HITTMAN TRANSPORT SERVICES, INC. GTS INSTRUMENT SERVICES, INCORPORATED, GENERAL TECHNICAL SERVICES, INC., GTSD SUB III, INC., GTSD SUB IV, INC. CHEM-NUCLEAR SYSTEMS L.L.C., WASTE MANAGEMENT FEDERAL SERVICES, INC., WASTE MANAGEMENT FEDERAL SERVICES OF IDAHO, INC. WASTE MANAGEMENT FEDERAL SERVICES OF HANFORD, INC., WASTE MANAGEMENT TECHNICAL SERVICES, INC., WASTE MANAGEMENT GEOTECH, INC., AND FRANK W. HAKE ASSOCIATES LLC as Assignors and FIRST UNION NATIONAL BANK, as Collateral Agent TABLE OF CONTENTS
Page ---- ARTICLE I..................................................................................................... 1 DEFINITIONS................................................................................................... 1 SECTION 1.01 Definitions..................................................................................... 2 SECTION 1.02 Rules of Construction and Usage................................................................. 7 ARTICLE II.................................................................................................... 8 REPRESENTATIONS AND WARRANTIES................................................................................ 8 SECTION 2.01 Title to Collateral............................................................................. 8 SECTION 2.02 Validity, Perfection and Priority of Security Interests......................................... 8 SECTION 2.03 Insurance....................................................................................... 9 ARTICLE III................................................................................................... 9 SECURITY INTEREST............................................................................................. 9 SECTION 3.01 Grant of Security Interests..................................................................... 9 SECTION 3.02 Continuing Liability of the Borrowers; Right to Use Collateral.................................. 9 SECTION 3.03 Cash Proceeds Account........................................................................... 9 SECTION 3.04 Cash Collateral Account......................................................................... 10 ARTICLE IV.................................................................................................... 12 COVENANTS..................................................................................................... 12 SECTION 4.01 Delivery of Perfection Certificate; Filing of Financing Statements and Delivery of Search Reports.................................................................................. 12 SECTION 4.02 Change of Name, Identity or Structure; Locations of Places of Business, Chief Executive Office and Collateral........................................................................... 12 SECTION 4.03 Further Assurances.............................................................................. 12 SECTION 4.04 Collateral in Possession of Other Persons....................................................... 13 SECTION 4.05 Books and Records............................................................................... 13 SECTION 4.06 Delivery of Instruments......................................................................... 13 SECTION 4.07 Modification of Assigned Agreements, Etc........................................................ 13 SECTION 4.08 Equipment; Fixtures............................................................................. 14
SECTION 4.09 Disposition of Collateral....................................................................... 14 SECTION 4.10 Insurance....................................................................................... 14 SECTION 4.11 Information Regarding Collateral................................................................ 15 SECTION 4.12 Covenants Regarding Patent and Trademark Collateral............................................. 15 ARTICLE V..................................................................................................... 16 REMEDIES; RIGHTS UPON DEFAULT................................................................................. 16 SECTION 5.01 General Authority............................................................................... 16 SECTION 5.02 Remedies upon Event of Default.................................................................. 17 SECTION 5.03 Limitation on Duty of the Collateral Agent in Respect of Collateral............................. 20 SECTION 5.04 Application of Proceeds......................................................................... 20 SECTION 5.05 Assigned Agreements............................................................................. 21 SECTION 5.06 Concerning the Collateral Agent................................................................. 21 ARTICLE VI.................................................................................................... 22 MISCELLANEOUS................................................................................................. 22 SECTION 6.01 Notices......................................................................................... 22 SECTION 6.02 No Waivers; Non-Exclusive Remedies.............................................................. 22 SECTION 6.03 Compensation and Expenses of the Collateral Agent; Indemnification.............................. 22 SECTION 6.04 Amendments and Waivers.......................................................................... 24 SECTION 6.05 Successors and Assigns.......................................................................... 24 SECTION 6.06 Limitation of Law; Severability................................................................. 24 SECTION 6.07 Governing Law................................................................................... 25 SECTION 6.08 Consent to Jurisdiction......................................................................... 25 SECTION 6.09 Preservation of Remedies; Waiver of Jury Trial.................................................. 25 SECTION 6.10 Counterparts; Effectiveness..................................................................... 26 SECTION 6.11 Release and Termination......................................................................... 26 SECTION 6.12 Entire Agreement................................................................................ 27
Schedule 4.01 - Schedule of Filings to Perfect Security Interests Exhibit A - Perfection Certificate Schedule 1 - Changes of Name, Identity or Corporate Structure; Unusual Transactions Schedule 6 - Lists of Patents, Trademarks and Copyrights Schedule 7 - Assigned Agreements Exhibit B - Form of Description of Collateral SECOND AMENDED AND RESTATED SECURITY AGREEMENT ---------------------------------------------- This Second Amended and Restated Security Agreement (as amended, restated, supplemented or otherwise modified, this "Security Agreement") is dated as of June 8, 2000 and is among GTS DURATEK, INC., a Delaware corporation ("Duratek"), GTS DURATEK BEAR CREEK, INC., a Tennessee corporation ("Scientific"), GTS DURATEK COLORADO, INC., a Delaware corporation ("SEG"), HITTMAN TRANSPORT SERVICES, INC., a Delaware corporation ("Hittman"), GTS INSTRUMENT SERVICES, INCORPORATED, a Maryland corporation ("Instrument"), GENERAL TECHNICAL SERVICES, INC., a Maryland corporation ("Technical"), GTSD SUB III, INC., a Delaware corporation ("GTSD"), GTSD SUB IV, INC., a Delaware corporation ("GTSD-IV"), CHEM-NUCLEAR SYSTEMS L.L.C., a Delaware limited liability company, ("Chem- Nuclear"), WASTE MANAGEMENT FEDERAL SERVICES, INC., a Delaware corporation ("Federal"), WASTE MANAGEMENT FEDERAL SERVICES OF IDAHO, a Delaware corporation ("Idaho"), WASTE MANAGEMENT FEDERAL SERVICES OF HANFORD, INC., a Delaware corporation ("Hanford"), WASTE MANAGEMENT TECHNICAL SERVICES, INC., Delaware corporation ("Waste Tech"), WASTE MANAGEMENT GEOTECH, INC., a Delaware corporation ("Geotech") and FRANK W. HAKE ASSOCIATES LLC, a Delaware limited liability company ("Hake" and, together with Duratek, Scientific, SEG, Hittman, Instrument, Technical, GTSD, GTSD-IV, Chem-Nuclear, Federal, Idaho, Hanford, Waste Tech and Geotech, the "Assignors") and FIRST UNION NATIONAL BANK (f/k/a First Union National Bank of Maryland), a national banking association, as Collateral Agent (the "Collateral Agent") for the ratable benefit of itself, the Administrative Agent and the Lenders that are party to the Credit Agreement referred to below. The Assignors, as borrowers (in such capacity, the "Borrowers"), the Lenders, First Union National Bank, in its capacity as Administrative Agent, Credit Lyonnais New York Branch, as Documentation Agent and Fleet National Bank, as Syndication Agent are parties to a Second Amended and Restated Credit Agreement dated as of June 8, 2000 (as the same may be amended, supplemented or modified from time to time and including any agreement extending the maturity of, refinancing or otherwise restructuring all or any portion of the obligations of the Borrowers under such agreement or any successor agreement, the "Credit Agreement"). This Security Agreement amends and restates the Amended and Restated Security Agreement dated as of February 1, 1999 among Duratek, Scientific, SEG, Hittman, Technical, Instrument, GTSD and the Collateral Agent. To induce the Lenders and the Administrative Agent to enter into the Credit Agreement, and as a condition precedent to the Lenders' and Administrative Agent's obligations thereunder, the Assignors have agreed to grant a continuing security interest in and to the Collateral to secure the Obligations. Accordingly, the parties hereto agree as follows: ARTICLE I --------- DEFINITIONS ----------- SECTION 1.01 Definitions. Terms defined in the Credit Agreement and not ----------- otherwise defined herein, when used in this Security Agreement including its preamble and recitals, shall have the respective meanings provided for in the Credit Agreement. The following additional terms, when used in this Security Agreement, shall have the following meanings: "Account Debtor" means, with respect to any Account, Document, Instrument -------------- or General Intangible, any Person obligated to make payment thereunder, including, without limitation, any account debtor thereon. "Accounts" means, with respect to each Assignor, all "accounts" (as defined -------- in the UCC) now owned or hereafter acquired by such Assignor, and shall also mean and include all accounts receivable, contract rights, book debts, notes, drafts and other obligations or indebtedness owing to such Assignor arising from the sale, lease or exchange of goods or other property by it and/or the performance of services by it (including, without limitation, any such obligation which might be characterized as an account, contract right or general intangible under the UCC in effect in any jurisdiction) and all of such Assignor's rights in, to and under all purchase orders for goods, services or other property, and all of such Assignor's rights to any goods, services or other property represented by any of the foregoing (including returned or repossessed goods and unpaid seller's rights of rescission, replevin, reclamation and rights to stoppage in transit) and all monies due to or to become due to such Assignor under all contracts for the sale, lease or exchange of goods or other property and/or the performance of services by it (whether or not yet earned by performance on the part of such Assignor), in each case whether now in existence or hereafter arising or acquired including, without limitation, the right to receive the proceeds of said purchase orders and contracts and all collateral security and guarantees of any kind given by any Person with respect to any of the foregoing. "Assigned Agreements" means, with respect to each Assignor, those contracts ------------------- and agreements of such Assignor identified in or pursuant to Section 7 of the Perfection Certificate, as the same may be amended, modified or supplemented from time to time and any additional Material Contract or Governmental Contract entered into after the Closing Date and designated as an "Assigned Agreement" by the Administrative Agent. "Cash Collateral Account" has the meaning set forth in Section 3.04 of this ----------------------- Security Agreement. "Cash Equivalents" means (a) direct obligations of the United States or any ---------------- agency thereof, or obligations guaranteed by the United States or any agency thereof, (b) commercial paper rated in the highest grade by a nationally recognized credit rating agency or (c) time deposits with, including certificates of deposit issued by, any office located in the United States of any bank or trust company which is organized under the laws of the United States or any state thereof and has capital, surplus and undivided profits aggregating at least $250,000,000; provided, in each case that such investment matures within one year from the - -------- date of acquisition thereof by the Assignor. "Cash Proceeds Account" has the meaning set forth in Section 3.03 of this --------------------- Security Agreement. "Collateral" means, with respect to each Assignor, all right, title and ---------- interest of such Assignor in the following, whether now owned or existing or hereafter acquired, created or arising, whether tangible or intangible, and regardless of where located: (a) Accounts; (b) General Intangibles; (c) Documents; (d) Instruments; (e) Investment Property; (f) Equipment (other than items of Equipment now or hereafter subject to a Capital Lease or a security interest if such lease or security interest (a) is permitted pursuant to Section 11.3 of the Credit Agreement and (b) provides that it would be a breach of the Assignor's obligations thereunder to further encumber such item of Equipment); (g) Assigned Agreements; (h) the Collateral Accounts, all cash deposited therein from time to time, the Liquid Investments made pursuant to Section 3.03 of this Security Agreement and other monies and property (including deposit accounts) of any kind of such Assignor maintained with or in the possession or under the control of the Collateral Agent; (i) all books and records (including, without limitation, customer lists, credit files, computer programs, printouts and other computer materials and records) of such Assignor pertaining to any of the Collateral; and (j) all Proceeds of all or any of the Collateral described in clauses (a) through (i) above. "Collateral Accounts" means the Cash Collateral Account and the Operating ------------------- Account. "Documents" means, with respect to each Assignor, all "documents" (as --------- defined in the UCC) or other receipts covering, evidencing or representing goods, now owned or hereafter acquired by such Assignor. "Equipment" means, with respect to each Assignor, all "equipment" (as --------- defined in the UCC) now owned or hereafter acquired by such Assignor, including all items of machinery, equipment, furnishings and fixtures of every kind, including leasehold improvements, whether affixed to real property or not, as well as all motor vehicles, automobiles, trucks, trailers, railcars, barges and vehicles of every description, trailers, handling and delivery equipment, all additions to, substitutions for, replacements of or accessions to any of the foregoing, all attachments, components, parts (including spare parts) and accessories whether installed thereon or affixed thereto and all fuel for any thereof. "General Intangibles" means, with respect to each Assignor, all "general ------------------- intangibles" (as defined in the UCC) now owned or hereafter acquired by such Assignor, including, without limitation, (a) all obligations and indebtedness owing to such Assignor (other than Accounts), from whatever source arising, (b) all Patents, Trademarks, copyrights, Licenses, rights in intellectual property, goodwill, trade names, service marks, trade secrets, confidential or proprietary technical and business information, know-how, show-how, software, customer lists, subscription lists, data bases and related documentation, registration, franchises and all other intellectual or other similar property rights, (c) all rights or claims in respect of refunds for taxes paid, (d) all rights in respect of any pension plans or similar arrangements maintained for employees of such Assignor or any member of the ERISA Group and (e) all "uncertificated securities" (as defined in the UCC); provided, that the term "General -------- Intangibles" shall exclude (i) any interest of GTS Duratek, Inc. in DuraChem, L.P., and (ii) any of the Assignors' rights in any of the following patents: U.S. Patent Nos. 5,851,246; 5,656,044; 5,584,255 and 5,425,792. "Indemnitee" has the meaning set forth in Section 6.03(c) of this Security ---------- Agreement. "Instruments" means, with respect to each Assignor, all "instruments", ----------- "chattel paper" or "letters of credit" (each as defined in the UCC) evidencing, representing, arising from or existing in respect of, relating to, securing or otherwise supporting the payment of, any of the Accounts or General Intangibles, including (but not limited to) promissory notes, drafts, bills of exchange and trade acceptances, now owned or hereafter acquired by such Assignor. "Investment Property" means all "securities" (whether certified or ------------------- uncertificated), "security entitlement", "securities accounts", "commodity contracts" and "commodity accounts" (in each case as defined in the UCC) of any Assignor, whether now owned or hereafter acquired. "License" means, with respect to each Assignor, (a) with respect to any ------- Patent, any agreement now or hereafter in existence granting to such Assignor, or pursuant to which such Assignor has granted to any other Person, any right with respect to any Patent or any invention now or hereafter in existence, whether patentable or not, whether a Patent or application for Patent is in existence on such invention or not, and whether a Patent or application for Patent on such invention may come into existence, and (b) with respect to any Trademark, any agreement now or hereafter in existence granting to such Assignor, or pursuant to which such Assignor has granted to any other Person, any right to use any Trademark (in each case exclusive of license agreements which by their terms prohibit assignment or a grant of a security interest by such Assignor as licensee thereunder); provided that rights to payments under -------- any such license shall be included in the Collateral to the extent permitted thereby or by Section 9-318 of the UCC. "Liquid Investments" has the meaning set forth in Section 3.05 of this ------------------ Security Agreement. "Obligations" means the Obligations as defined in the Credit Agreement and ----------- any renewals or extensions of any obligations thereunder. "Operating Account" means the demand deposit account maintained with the ----------------- Collateral Agent by Duratek on which Duratek draws checks to pay its operating expenses. "Patents" means all of the following owned by, or licensed to, any ------- Assignor: (a) all letters patent and design letters patent of the United States or any other country, all applications for letters patent and design letters patent of the United States or any other country including, without limitation, applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country or political subdivision thereof; (b) all reissues, divisions, continuations, continuations-in-part, renewals or extensions thereof; (c) all claims for, and rights to sue for, past or future infringement of any of the foregoing; and (d) all income, royalties, damages and payments now or hereafter due or payable with respect to any of the foregoing, including, without limitation, damages and payments for past or future infringements thereof. Notwithstanding the foregoing, the term "Patents" shall not include any of the Assignors' rights in any of the following patents: U.S. Patent Nos. 5,851,246; 5,656,044; 5,584,255 and 5,425,792. "Perfection Certificate" means, with respect to each Assignor, a ---------------------- certificate, substantially in the form of Exhibit A to this Security Agreement, --------- completed and supplemented with the schedules and attachments contemplated thereby to the satisfaction of the Collateral Agent, and duly executed by a Responsible Officer of such Assignor. "Person" means an individual, a corporation, limited liability company, a ------ partnership, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "Proceeds" means, with respect to each Assignor, all "proceeds" as defined -------- in Section 9-306(1) of the UCC and, in any event shall include, without limitation, all other profits, products, rents or receipts, in whatever form, arising from the collection, sale, lease, exchange, assignment, licensing or other disposition of or other realization upon or payment for the use of, Collateral, including (without limitation) all claims of such Assignor against third parties for loss of, damage to or destruction of, or for proceeds payable under, or unearned premiums with respect to, policies of insurance in respect of, any Collateral, and any condemnation or requisition payments with respect to any Collateral, in each case whether now existing or hereafter arising. "Security Agreement" means this Second Amended and Restated Security ------------------ Agreement, as it may be amended, restated, supplemented or otherwise modified. "Security Interests" means the security interests in the Collateral granted ------------------ under this Security Agreement securing the Obligations. "Trademark" means all of the following owned by, or licensed to, any --------- Assignor: (a) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos, brand names, trade dress, prints and labels on which any of the foregoing have appeared or appear, package and other designs, and any other source or business identifiers, and general intangibles of like nature, and the rights in any of the foregoing which arise under Applicable Law; (b) the goodwill of the business symbolized thereby or associated with each of them; (c) all registrations and applications in connection therewith, including, without limitation, registrations and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof; (d) all reissues, extensions and renewals thereof; (e) all claims for, and rights to sue for, past or future infringements of any of the foregoing; and (f) all income, royalties, damages and payments now or hereafter due or payable with respect to any of the foregoing, including, without limitation, damages and payments for past or future infringements thereof. "UCC" means the Uniform Commercial Code as in effect on the date hereof in --- the State of New York; provided that if by reason of mandatory provisions of -------- law, the perfection or the effect of perfection or non-perfection of the Security Interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, "UCC" means the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or effect of perfection or non-perfection. SECTION 1.02 Rules of Construction and Usage. The following rules of ------------------------------- construction and usage shall be applicable to any instrument that is governed by this Security Agreement: (a) All terms defined in this Security Agreement shall have the defined meanings when used in any instrument governed hereby and in any certificate or other document made or delivered pursuant thereto unless otherwise defined therein. All terms not otherwise defined herein shall have the meaning assigned thereto in the Credit Agreement. (b) The words "hereof", "herein", "hereunder" and words of similar import when used in an instrument refer to such instrument as a whole and not to any particular provision or subdivision thereof, references in any instrument to "Article", "Section" or another subdivision or to an attachment are, unless the context otherwise requires, to an article, section or subdivision of or an attachment to such instrument; and the term "including" means "including without limitation". (c) The definitions contained in this Security Agreement are equally applicable to both the singular and plural forms of such terms, unless the context otherwise requires, and to the masculine as well as to the feminine and neuter genders of such terms. (d) Any agreement, instrument or statute defined or referred to below or in any agreement or instrument that is governed by this Security Agreement means such agreement or instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and includes (in the case of agreements or instruments) references to all attachments thereto and instruments incorporated therein. References to a Person are also to its permitted successors and assigns. (e) To the extent any amendment, revision or other modification of the UCC after the date hereof results in the renumbering of specific sections, revision of the order of specific sections or other changes in the organization of the UCC in effect as of the date hereof, all references herein to specific sections of the UCC in effect as of the date hereof shall be deemed to refer to such new section or sections which correspond to such original sections. ARTICLE II ---------- REPRESENTATIONS AND WARRANTIES ------------------------------ The Assignors represent and warrant that: SECTION 2.01 Title to Collateral. Each Assignor has good and marketable ------------------- title to all of the Collateral, free and clear of any Liens other than Liens permitted by Section 11.3 of the Credit Agreement. Each Assignor has taken all actions necessary under the UCC to perfect its interest in any Accounts and "chattel paper" (as defined in the UCC) purchased or otherwise acquired by it, as against its assignors and creditors of its assignors. No Assignor has performed any acts which might prevent the Collateral Agent from enforcing any of the terms of this Security Agreement or which would limit the Collateral Agent in any such enforcement. Other than financing statements or other similar or equivalent documents or instruments with respect to the Security Interests and Liens permitted by Section 11.3 of the Credit Agreement, no financing statement, mortgage, security agreement or similar or equivalent document or instrument covering all or any part of the Collateral is on file or of record in any jurisdiction in which such filing or recording would be effective to perfect a Lien on such Collateral. No Collateral is in the possession of any Person (other than the Assignor) asserting any claim thereto or security interest therein, (a) except as provided in Schedule 11.3 of the Credit Agreement and (b) except that the Collateral Agent or its designee may have possession of Collateral as contemplated hereby and by the Credit Agreement. SECTION 2.02 Validity, Perfection and Priority of Security Interests. ------------------------------------------------------- The Security Interests constitute valid security interests under the UCC securing the Obligations. When UCC financing statements or financing statement amendments, as applicable, containing a description of the Collateral in the form specified in Exhibit B hereto shall have been filed in the offices --------- specified in Schedule 4.01 hereto, the Security Interests shall constitute perfected security interests in all right, title and interest of the Assignors in the Collateral to the extent that a security interest therein may be perfected by filing pursuant to the UCC, prior to all other Liens and rights of others therein except for Liens permitted by Section 11.3 of the Credit Agreement. SECTION 2.03 Insurance. The Equipment is insured in accordance with the --------- requirements of the Credit Agreement and Section 4.10 of this Security Agreement. ARTICLE III ----------- SECURITY INTEREST ----------------- SECTION 3.01 Grant of Security Interests. In order to secure the full and --------------------------- punctual payment of the Obligations in accordance with the terms thereof, and to secure the performance of all of the obligations of the Assignors hereunder and the Borrowers under the Credit Agreement and the other Loan Documents, each Assignor hereby grants to the Collateral Agent a continuing security interest in and to all of the Collateral, whether now owned or existing or hereafter acquired, created or arising, whether tangible or intangible, and regardless of where located. SECTION 3.02 Continuing Liability of the Borrowers; Right to Use --------------------------------------------------- Collateral. The Security Interests are granted as security only and shall not - ---------- subject the Collateral Agent or the Lenders to, or transfer or in any way affect or modify, any obligation or liability of any Assignor with respect to any of the Collateral or any transaction in connection therewith. So long as no Default or Event of Default shall have occurred and be continuing, each Assignor shall have the right to use its Collateral except to the extent otherwise provided herein with respect to the Collateral Accounts. SECTION 3.03 Cash Proceeds Account. --------------------- (a) Creation of Cash Proceeds Account. There is hereby established with --------------------------------- the Collateral Agent a cash collateral account (the "Cash Proceeds Account") in --------------------- the name of "GTS DURATEK, INC. - FIRST UNION NATIONAL BANK" and under the exclusive control of the Collateral Agent into which there shall be deposited from time to time the cash proceeds of the Collateral required to be delivered to the Collateral Agent pursuant to paragraph (b) of this Section or any other provision of the Loan Documents. Any income received by the Collateral Agent with respect to the balance from time to time standing to the credit of the Cash Proceeds Account, including any interest, shall remain, or be deposited, in the Cash Proceeds Account. All right, title and interest in and to the cash amounts on deposit from time to time in the Cash Proceeds Account shall constitute part of the Collateral and shall not constitute payment of the Obligations until applied thereto as hereinafter provided. (b) Deposits to Cash Proceeds Account. Upon the request of the Collateral --------------------------------- Agent upon the occurrence and during the continuation of any Default or Event of Default, the Assignors shall instruct all Account Debtors and other Persons obligated in respect of Accounts and other Collateral to make all payments in respect of the Accounts or other Collateral directly to a post office box which shall be in the name and under the control of the Collateral Agent. All such payments made to the Collateral Agent shall be deposited in the Cash Proceeds Account. In addition to the foregoing, upon the request of the Collateral Agent upon the occurrence and during the continuation of a Default or Event of Default, each Assignor agrees that if the proceeds of any Collateral (including the payments made in respect of Accounts) shall be received by it, such Assignor shall as promptly as possible deposit such proceeds to the Cash Proceeds Account and until so deposited, all such proceeds shall be held in trust by such Assignor for and as the property of the Collateral Agent and shall not be commingled with any other funds or property of such Assignor. The Assignors hereby irrevocably authorize and empower the Collateral Agent, its officers, employees and authorized agents to endorse and sign their names on all checks, drafts, money orders or other media of payment so delivered, and such endorsements or assignments shall, for all purposes, be deemed to have been made by the Assignors prior to any endorsement or assignment thereof by the Collateral Agent. The Collateral Agent may use any convenient or customary means for the purpose of collecting such checks, drafts, money orders or other media of payment. (c) Withdrawals from Cash Proceeds Account. Upon the occurrence and during -------------------------------------- the continuation of a Default or Event of Default, collected funds on deposit in the Cash Proceeds Account shall be withdrawn by the Collateral Agent on the Business Day following the day on which the Collateral Agent considers the funds deposited therein to be collected funds and applied to repay the Obligations which are then due and payable pursuant to Section 5.04 of this Security Agreement and, if applicable, Section 5.5 of the Credit Agreement. SECTION 3.04 Cash Collateral Account. All amounts required to be deposited ----------------------- by the Assignors as cash collateral pursuant to Section 5.04(b) hereof shall be deposited in a cash collateral account (the "Cash Collateral Account") established and maintained by each Assignor at the offices of the Collateral Agent or such other bank as such Assignor and the Collateral Agent may agree, in the name and under the exclusive control of the Collateral Agent. Forthwith upon such establishment, such Assignor shall notify the Collateral Agent of the location, account name and account number of such account. Any income received with respect to the balance from time to time standing to the credit of the Cash Collateral Account, including any interest or capital gains on Liquid Investments, shall remain, or be deposited, in the Cash Collateral Account. All right, title and interest in and to the cash amounts on deposit from time to time in the Cash Collateral Account together with any Liquid Investments from time to time made pursuant to Section 3.05 shall constitute part of the Collateral hereunder and shall not constitute payment of the Obligations until applied thereto as hereinafter provided. If and when any portion of the L/C Obligations on which any deposit in the Cash Collateral Account was based (the "Relevant Contingent Exposure") shall become fixed (a "Direct Exposure") as a result of the payment by the issuer thereof of a draft presented under any Letter of Credit, the amount of such Direct Exposure (but not more than the amount in the Cash Collateral Account at the time) shall be withdrawn by the Collateral Agent from the Cash Collateral Account for application pursuant to Section 5.04 and, if applicable, Section 5.5 of the Credit Agreement, and the Relevant Contingent Exposure shall thereupon be reduced by such amount. If immediately available cash on deposit in the Cash Collateral Account is not sufficient to make any distribution to the Collateral Agent referred to in this Section 3.04, the Collateral Agent shall cause to be liquidated as promptly as practicable such Liquid Investments in the Cash Collateral Account designated by Duratek as required to obtain sufficient cash to make such distribution and, notwithstanding any other provision of this Section 3.04, such distribution shall not be made until such liquidation has taken place. So long as no Default or Event of Default shall have occurred and be continuing, the funds in the Cash Collateral Account in excess of the Relevant Contingent Exposure shall be paid to Duratek on demand. SECTION 3.05 Investment of Funds in Collateral Accounts. Amounts on deposit ------------------------------------------ in the Cash Collateral Account shall be invested and reinvested from time to time in such Liquid Investments as Duratek shall determine, which Liquid Investments shall be held in the name and be under the control of the Collateral Agent, provided that, if a Default or an Event of Default has occurred and is -------- continuing, the Collateral Agent may liquidate any such Liquid Investments and apply or cause to be applied the proceeds thereof in the manner specified in Section 5.04. For this purpose, "Liquid Investments" means Cash Equivalents; provided that (a) each Liquid Investment shall mature within 180 days after it - -------- is acquired by the Collateral Agent and (b) in order to provide the Collateral Agent with a perfected security interest therein, each Liquid Investment shall be either: (i) evidenced by negotiable certificates or instruments, or if nonnegotiable then issued in the name of the Collateral Agent, which (together with any appropriate instruments of transfer) are delivered to, and held by, the Collateral Agent or an agent thereof (which shall not be any Assignor or any of its Affiliates); or (ii) in book-entry form and issued by the United States and subject to pledge under applicable state law and Treasury regulations and as to which (in the opinion of counsel to the Collateral Agent) appropriate measures shall have been taken for perfection of the Security Interests. ARTICLE IV ---------- COVENANTS --------- The Assignors covenant and agree with the Collateral Agent that until the payment in full of all Obligations and termination of the Commitments, the Assignors will comply with the following: SECTION 4.01 Delivery of Perfection Certificate; Filing of Financing ------------------------------------------------------- Statements and Delivery of Search Reports. On or prior to the Closing Date, each - ----------------------------------------- Assignor shall deliver a Perfection Certificate to the Collateral Agent and shall cause all filings, recordings, notices and other actions specified in Schedule 4.01 hereto to have been completed. The information set forth in the Perfection Certificate shall be correct and complete. At the expense of the Assignors, the Collateral Agent shall be entitled to file search requests and confirmations of receipt of notices from each filing jurisdiction and each notice recipient set forth in Schedule 4.01 confirming the filing information set forth in such Schedule. SECTION 4.02 Change of Name, Identity or Structure; Locations of Places of ------------------------------------------------------------- Business, Chief Executive Office and Collateral. No Assignor will change its - ----------------------------------------------- name, identity or corporate structure in any manner unless it shall have given the Collateral Agent not less than ten (10) days' prior notice thereof. No Assignor will change the location of (a) its place or places of business, its chief executive office or its chief place of business or (b) the locations where it keeps or holds any Collateral or any records relating thereto from the applicable location described in such Assignor's Perfection Certificate unless it shall have given the Collateral Agent not less than thirty (30) days' prior notice thereof, provided, however, that Equipment may be moved without prior notice to the Collateral Agent within or into any jurisdiction in which financing statements have been filed which perfect the security interests in such Equipment in such jurisdiction. In any event, no Assignor will change the location of its place or places of business, its chief executive office or any Collateral if such change would cause the Security Interests in such Collateral to lapse or cease to be perfected. SECTION 4.03 Further Assurances. Each Assignor will, from time to time, at ------------------ its expense, execute, deliver, file and record any statement, assignment, instrument, document, agreement or other paper and take any other action (including, without limitation, any filings of financing or continuation statements under the UCC, any filings with the United States Patent and Trademark Office and any Notices of Assignment under the Assignment of Claims Act), that from time to time may be necessary or desirable, or that the Collateral Agent may request, in order to create, preserve, perfect, confirm or validate the Security Interests or to enable the Collateral Agent to obtain the full benefit of this Security Agreement, or to enable the Collateral Agent to exercise and enforce any of its rights, powers and remedies created hereunder or under Applicable Law with respect to any of the Collateral. To the extent permitted by Applicable Law, each Assignor hereby authorizes the Collateral Agent to execute and file financing statements or continuation statements without such Assignor's signature appearing thereon. Each Assignor agrees that a carbon, photographic, photostatic or other reproduction of this Security Agreement or of a financing statement is sufficient as a financing statement. The Assignors shall pay the costs of, or incidental to, any recording or filing of any financing or continuation statements concerning the Collateral. SECTION 4.04 Collateral in Possession of Other Persons. If any Collateral ----------------------------------------- is at any time in the possession or control of any warehouseman, bailee or any Assignor's agents or processors, such Assignor shall notify such warehouseman, bailee, agent or processor of the Security Interests created hereby and to hold all such Collateral for the Collateral Agent's account subject to the Collateral Agent's instructions. SECTION 4.05 Books and Records. The Assignors shall keep full and accurate ----------------- books and records relating to the Collateral, including, without limitation, the originals of all documentation with respect thereto, records of all payments received, all credits granted thereon, all merchandise returned and all other dealings therewith, and the Assignors will make the same available to the Collateral Agent for inspection, at the Assignors' own cost and expense, at any and all reasonable times upon demand. Upon direction by the Collateral Agent, the Assignors shall stamp or otherwise mark such books and records in such manner as the Collateral Agent may reasonably require in order to reflect the Security Interests. SECTION 4.06 Delivery of Instruments. The Assignors will immediately ----------------------- deliver each Instrument, certificated security and uncertificated security to the Collateral Agent indorsed (as applicable) to the Collateral Agent; provided -------- that so long as no Default or Event of Default shall have occurred and be continuing and except as provided by any other Loan Document, the Assignors may retain for collection in the ordinary course of business any Instruments (other than certificated securities, checks, drafts and other Instruments constituting payments in respect of Accounts and other Collateral, as to which the provisions of Section 3.03 hereof shall apply) received by them in the ordinary course of business and the Collateral Agent shall, promptly upon request of any Assignor, make appropriate arrangements for making any other Instrument pledged by such Assignor available to it for purposes of presentation, collection or renewal (any such arrangement to be effected, to the extent deemed appropriate to the Collateral Agent, against trust receipt or like document). SECTION 4.07 Modification of Assigned Agreements, Etc. Each Assignor shall ---------------------------------------- keep the Collateral Agent informed of all material circumstances bearing upon the right, title and interest of such Assignor under the Assigned Agreements. No Assignor will, except with the consent of the Collateral Agent amend, modify, extend, renew, cancel or terminate any Assigned Agreement, waive any default under or breach of any Assigned Agreement, compromise or settle any material dispute, claim, suit or legal proceeding relating to any Assigned Agreement, sell or assign any Assigned Agreement or interest therein, consent to or permit or accept any prepayment of amounts to become due under or in connection with any Assigned Agreement, except as expressly provided therein, or take any other action in connection with any Assigned Agreement which would impair the value of the interests or rights of such Assignor thereunder or which would impair the interests or rights of the Collateral Agent under this Security Agreement, except that, unless the Collateral Agent shall have notified such Assignor upon the occurrence of a Default or Event of Default that this exception is no longer applicable, such Assignor may modify, make adjustments with respect to, extend or renew any Assigned Agreements in the ordinary course of business. The Assignor will duly fulfill all of its obligations under or in connection with the Assigned Agreements unless the failure to do so could not reasonably be expected to have a Material Adverse Effect. SECTION 4.08 Equipment; Fixtures. The Assignors shall promptly inform the ------------------- Collateral Agent of any material additions to or deletions from the Equipment and shall not permit any such items to become a fixture to real estate or an accession to other personal property. SECTION 4.09 Disposition of Collateral. Without the prior written consent ------------------------- of the Collateral Agent, the Assignors will not sell, lease, exchange, assign or otherwise dispose of, or grant any option with respect to, any Collateral, except that, subject to the rights of the Collateral Agent hereunder if a Default or an Event of Default shall have occurred and be continuing, the Assignors may grant Licenses in their respective Patents and Trademarks in the ordinary course of their businesses, and to the extent permitted by Section 11.6 of the Credit Agreement, the Assignors may sell, lease or exchange obsolete, unused or unnecessary Equipment in the ordinary course of business, whereupon, in the case of such a sale or exchange, the Security Interests created hereby in such item (but not in any Proceeds arising from such sale or exchange) shall cease immediately without any further action on the part of the Collateral Agent. SECTION 4.10 Insurance. Prior to the Closing Date, each Assignor will cause --------- the Collateral Agent to be named as an insured party and loss payee on each insurance policy covering risks relating to any of its Equipment. Each Assignor will deliver to the Collateral Agent, upon its request, the insurance policies for such insurance or certificates of insurance evidencing such coverage. Each such insurance policy shall include effective waivers by the insurer of all claims for insurance premiums against the Collateral Agent, provide for coverage to the Collateral Agent regardless of the breach by such Assignor of any warranty or representation made therein, not be subject to co-insurance, provide that all insurance proceeds in excess of $250,000 per claim shall be payable to such Assignor and the Collateral Agent and provide that no cancellation, termination or material modification thereof shall be effective until at least thirty (30) days after receipt by the Collateral Agent of notice thereof. So long as no Default or Event of Default has occurred and is continuing, the Collateral Agent shall deliver the proceeds of any claims in the Collateral Agent's possession to the Assignor. Each Assignor hereby appoints the Collateral Agent as its attorney-in-fact to make proof of loss, claim for insurance and adjustments with insurers, and to execute or endorse all documents, checks or drafts in connection with payments made as a result of any insurance policies, but the Collateral Agent agrees not to exercise any of the foregoing rights unless a Default or an Event of Default shall have occurred and be continuing. Each Assignor assumes all liability and responsibility in connection with the Collateral acquired by it and the liability of such Assignor to pay the Obligations shall in no way be affected or diminished by reason of the fact that such Collateral may be lost, destroyed, stolen, damaged or for any reason whatsoever unavailable to such Assignor. SECTION 4.11 Information Regarding Collateral. The Assignors will, -------------------------------- promptly upon request, provide to the Collateral Agent all information and evidence it may reasonably request concerning the Collateral to enable the Collateral Agent to enforce the provisions of this Security Agreement. SECTION 4.12 Covenants Regarding Patent and Trademark Collateral. --------------------------------------------------- (a) Each Assignor (either itself or through licensees) will, for each Patent, not do any act, or omit to do any act, whereby any Patent which is material to the conduct of such Assignor's business may become invalidated or dedicated to the public, and shall continue to mark any products covered by a Patent with the relevant patent number or indication that a Patent is pending as required by the Patent laws. (b) Each Assignor (either itself or, if permitted by law, through its licensees or its sublicensees) will, for each Trademark material to the conduct of such Assignor's business, (i) maintain such Trademark in full force free from any claim of abandonment or invalidity for non-use, (ii) maintain the quality of products and services offered under such Trademark, display such Trademark with notice of federal registration to the extent required by Applicable Law, (iv) not knowingly use or knowingly permit the use of such Trademark in violation of any third party rights and (v) not permit any assignment in gross of such Trademark. (c) Each Assignor (either itself or through licensees) will, for each work covered by a material copyright, continue to publish, reproduce, display, adopt and distribute the work with appropriate copyright notice. (d) Each Assignor shall notify the Collateral Agent immediately if it knows or has reason to know that any Patent, Trademark or copyright (or any application or registration relating thereto) material to the conduct of its business may become abandoned or dedicated to the public, or of any adverse determination or development (including, without limitation, the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, United States Copyright Office or any court) regarding such Assignor's ownership of any Patent, Trademark or copyright, its right to register the same or to keep and maintain the same. (e) Each Assignor will take all necessary steps to file, maintain and pursue each material application relating to the Patents, Trademarks and/or copyrights (and to obtain the relevant grant or registration) and to maintain each registration of the Patents, Trademarks and copyrights which is material to the conduct of such Assignor's business, including filing of applications for renewal, affidavits of use, affidavits of incontestability and maintenance fees, and, if consistent with good business judgment, to initiate opposition, interference and cancellation proceedings against third parties. (f) In the event that any rights to any Patent, Trademark, copyright or License relating thereto material to the conduct of any Assignor's business is believed infringed, misappropriated or diluted by a third party, such Assignor shall notify the Collateral Agent promptly after it learns thereof and shall, if consistent with good business judgment, promptly sue for infringement, misappropriation or dilution and to recover any and all damages for such infringement, misappropriation or dilution, and take such other actions as such Assignor shall reasonably deem appropriate under the circumstances to protect such Patent, Trademark, copyright or License. (g) In no event shall any Assignor, either itself or through any agent, employee, licensee or designee, file an application for any Patent, Trademark or copyright with the United States Patent and Trademark Office, United States Copyright Office or any office or agency in any political subdivision of the United States or in any other country or any political subdivision thereof, unless not less than ten (10) days prior thereto it informs the Collateral Agent, and, upon request of the Collateral Agent, executes and delivers any and all agreements, instruments, documents and papers as the Collateral Agent may request to evidence the Security Interests in such Patent, Trademark or copyright and the goodwill or accounts and general intangibles of such Assignor relating thereto or represented thereby, and such Assignor hereby appoints the Collateral Agent its attorney-in-fact to execute and file such writings for the foregoing purposes. ARTICLE V --------- REMEDIES; RIGHTS UPON DEFAULT ----------------------------- SECTION 5.01 General Authority. The Assignors hereby irrevocably appoint ----------------- the Collateral Agent their true and lawful attorney, with full power of substitution, in the name of any or all of the Assignors, the Collateral Agent or otherwise, in the name of each Assignor, the Agents, the Lenders or otherwise, for the sole use and benefit of the Collateral Agent, but at the Assignors' expense, to the extent permitted by law to exercise at any time and from time to time while an Event of Default has occurred and is continuing, all or any of the following powers with respect to all or any of the Collateral, all acts of such attorney being hereby ratified and confirmed; such power, being coupled with an interest, is irrevocable until the Obligations are paid in full and the Commitments are terminated: (a) to demand, sue for, collect, receive and give acquittance for any and all monies due or to become due with respect to any Collateral or by virtue thereof, (b) to settle, compromise, compound, prosecute or defend any action or proceeding with respect to any Collateral, (c) to sell, transfer, assign or otherwise deal in or with the same or the proceeds or avails thereof, including without limitation for the implementation of any assignment, lease, License, sublicense, grant of option, sale or other disposition of any Patent, Trademark or copyright or any action related thereto, as fully and effectually as if the Collateral Agent were the absolute owner thereof, and (d) to extend the time of payment of any or all thereof and to make any allowance and other adjustments with reference to the Collateral; provided that the Collateral Agent shall give such Assignor not less than ten - -------- (10) days' prior notice of the time and place of any sale or other intended disposition of any of such Assignor's Collateral, except any Collateral which is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market. The Collateral Agent and such Assignor agree that such notice constitutes "reasonable notification" within the meaning of Section 9-504(3) of the UCC. Except as otherwise provided herein, each Assignor hereby waives, to the extent permitted by Applicable Law, notice and judicial hearing in connection with the Collateral Agent's taking possession or the Collateral Agent's dispositions of any of the Collateral, including, without limitation, any and all prior notice and hearing for any prejudgment remedy or remedies and any such right which such Assignor would otherwise have under the Constitution or any statute of the United States or of any state. SECTION 5.02 Remedies upon Event of Default. ------------------------------ (a) If any Event of Default has occurred and is continuing, the Collateral Agent may exercise on behalf of itself, the Administrative Agent and the Lenders, upon the request of the Required Lenders, all rights of a secured party under the UCC (whether or not in effect in the jurisdiction where such rights are exercised) and, in addition, the Collateral Agent may, upon the request of the Required Lenders, without being required to give any notice to any Assignor, except as herein provided or as may be required by mandatory provisions of law, (i) withdraw all cash and Liquid Investments in the Collateral Accounts and apply such cash and Liquid Investments and other cash, if any, then held by it as Collateral as specified in Section 5.04 and (ii) if there shall be no such cash or Liquid Investments or if such cash and Liquid Investments shall be insufficient to pay all the Obligations in full or cannot be so applied for any reason, sell the Collateral or any part thereof at public or private sale, for cash, upon credit or for future delivery, and at such price or prices as the Collateral Agent may deem satisfactory. The Collateral Agent, the Administrative Agent or any Lender may be the purchaser of any or all of the Collateral so sold at any public sale (or, if the Collateral is of a type customarily sold in a recognized market or is of a type which is the subject of widely distributed standard price quotations, at any private sale) and thereafter hold the same absolutely, free from any right or claim of whatsoever kind. The Assignors will execute and deliver such documents and take such other action as the Collateral Agent deems necessary or advisable in order that any such sale may be made in compliance with law. Upon any such sale, the Collateral Agent shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold (without warranty). Each purchaser at any such sale shall hold the Collateral so sold to it absolutely and free from any claim or right of whatsoever kind, including any equity or right of redemption of the Assignors which may be waived, and the Assignors, to the extent permitted by law, hereby specifically waive all rights of redemption, stay or appraisal which they have or may have under any law now existing or hereafter adopted. The notice (if any) of such sale required by Section 5.01 shall (i) in the case of a public sale, state the time and place fixed for such sale, and (ii) in the case of a private sale, state the day after which such sale may be consummated. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Collateral Agent may fix in the notice of such sale. At any such sale the Collateral may be sold in one lot as an entirety or in separate parcels, as the Collateral Agent may determine. The Collateral Agent shall not be obligated to make any such sale pursuant to any such notice. The Collateral Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned without further notice. In the case of any sale of all or any part of the Collateral on credit or for future delivery, the Collateral so sold may be retained by the Collateral Agent until the selling price is paid by the purchaser thereof, but the Collateral Agent shall not incur any liability in the case of the failure of such purchaser to take up and pay for the Collateral so sold and, in the case of any such failure, such Collateral may again be sold upon like notice. The Collateral Agent, instead of exercising the power of sale herein conferred upon it, may proceed by a suit or suits at law or in equity to foreclose the Security Interests and sell the Collateral, or any portion thereof, under a judgment or decree of a court or courts of competent jurisdiction. The Assignors shall remain jointly and severally liable for any deficiency. (b) For the purpose of enforcing any and all rights and remedies under this Security Agreement the Collateral Agent may (i) require the Assignors to, and each Assignor agrees that it will, at its expense and upon the request of the Collateral Agent, forthwith assemble all or any part of the Collateral as directed by the Collateral Agent and make it available at a place designated by the Collateral Agent which is, in the Collateral Agent's opinion, reasonably convenient to the Collateral Agent and such Assignor, whether at the premises of such Assignor or otherwise, it being understood that such Assignor's obligation so to deliver the Collateral is of the essence of this Security Agreement and that, accordingly, upon application to a court of equity having jurisdiction, the Collateral Agent shall be entitled to a decree requiring specific performance by such Assignor of such obligations; (ii) to the extent permitted by Applicable Law, enter, with or without process of law and without breach of the peace, any premise where any of the Collateral is or may be located, and without charge or liability to the Collateral Agent seize and remove such Collateral from such premises; (iii) have access to and use the Assignors' books and records relating to the Collateral; and (iv) prior to the disposition of the Collateral, store or transfer it without charge in or by means of any storage or transportation facility owned or leased by the Assignors, process, repair or recondition it or otherwise prepare it for disposition in any manner and to the extent the Collateral Agent deems appropriate and, in connection with such preparation and disposition, use without charge any Patent, Trademark, copyright, License relating thereto or technical process used by the Assignors. The Collateral Agent may also render any or all of the Collateral unusable at any Assignor's premises and may dispose of such Collateral on such premises without liability for rent or costs. (c) Without limiting the generality of the foregoing, if any Event of Default has occurred and is continuing (but subject to the terms of any prior License permitted hereby): (i) the Collateral Agent may license, or sublicense, whether general, special or otherwise, and whether on an exclusive or non-exclusive basis, any Patents, Trademarks or copyrights included in the Collateral throughout the world for such term or terms, on such conditions and in such manner as the Collateral Agent shall in its sole discretion determine; (ii) the Collateral Agent may (without assuming any obligations or liability thereunder), at any time and from time to time, enforce (and shall have the exclusive right to enforce) against any licensee or sublicensee all rights and remedies of the Assignor in, to and under any License with respect to any Patent or Trademark, or license with respect to copyrights and take or refrain from taking any action under any provision thereof, and the Assignor hereby releases the Collateral Agent from, and agrees to hold the Collateral Agent free and harmless from and against any claims arising out of, any lawful action so taken or omitted to be taken with respect thereto; and (iii) upon request by the Collateral Agent, each Assignor will use its best efforts to obtain all requisite consents or approvals by the licensor or sublicensor of each License with respect to Patents, license with respect to copyrights or License with respect to Trademarks to effect the assignment of all of the Assignor's rights, title and interest thereunder to the Collateral Agent or its designee and will execute and deliver to the Collateral Agent a power of attorney, in form and substance satisfactory to the Collateral Agent, for the implementation of any lease, assignment, license, sublicense, grant of option, sale or other disposition of a Patent, Trademark or copyright; and (iv) the Collateral Agent may direct any Assignor to refrain, in which event such Assignor shall refrain, from using or practicing any Trademark, Patent or copyright in any manner whatsoever, directly or indirectly and shall, if requested by the Collateral Agent change such Assignor's name to eliminate therefrom any use of any Trademark and will execute such other and further documents as the Collateral Agent may request to further confirm this and transfer ownership of the Trademarks, Patents, copyrights and registrations and any pending applications therefor to the Collateral Agent. (d) In the event of any disposition of any Patent, Trademark or copyright pursuant to this Article V, the Assignors shall supply their know-how and expertise relating to the manufacture and sale of the products or services bearing Trademarks or the products, services or works made or rendered in connection with or under Patents, Trademarks or copyrights, and their customer lists and other records relating to such Patents, Trademarks or copyrights and to the distribution of said products, services or works, to the Collateral Agent. (e) If any Event of Default has occurred and is continuing, each Assignor shall use its best efforts upon the reasonable request of the Collateral Agent to obtain from the appropriate governmental authorities the necessary consents and approvals, if any, for the assignment or transfer of any governmental authorizations, governmental licenses and governmental permits to the Collateral Agent or its designee upon acceleration of the Obligations. SECTION 5.03 Limitation on Duty of the Collateral Agent in Respect of -------------------------------------------------------- Collateral. Beyond the exercise of reasonable care in the custody thereof, the - ---------- Collateral Agent shall have no duty to exercise any rights or take any steps to preserve the rights of any Assignor in the Collateral in its or such Assignor's possession or control or in the possession or control of any agent or bailee or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto, nor shall the Collateral Agent be liable to the Assignor or any other Person for failure to meet any obligation imposed by Section 9-207 of the UCC or any successor provision. The Collateral Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which it accords its own property, and shall not be liable or responsible for any loss or damage to any of the Collateral, or for any diminution in the value thereof, by reason of the act or omission of any warehouseman, carrier, forwarding agency, consignee or other agent or bailee selected by the Collateral Agent in good faith. SECTION 5.04 Application of Proceeds ----------------------- (a) Priority of Distribution. If an Event of Default shall have occurred ------------------------- and be continuing, the proceeds of any sale of, or other realization upon, all or any part of the Collateral and any cash held in the Collateral Accounts shall be applied by the Collateral Agent in accordance with Section 5.5 of the Credit Agreement, and then to payment to the Assignors or their successors or assigns or as a court of competent jurisdiction may direct, or any surplus then remaining from such proceeds. The Collateral Agent may make distribution hereunder in cash or in kind or, on a ratable basis in any combination thereof. (b) Distributions with Respect to Letters of Credit. The Collateral Agent ----------------------------------------------- agrees and acknowledges that if (after all outstanding Loans and Reimbursement Obligations with respect to Letters of Credit have been paid in full) the Collateral Agent is to receive a distribution on account of undrawn amounts with respect to Letters of Credit issued (or deemed issued) under the Credit Agreement, such amounts shall be deposited in the Cash Collateral Account as cash security for the repayment of Obligations. Upon termination of all outstanding Letters of Credit, all of such cash security shall be applied to the remaining Obligations. If there remains any excess cash security in such accounts, such excess cash shall be withdrawn by the Collateral Agent and distributed in accordance with Section 5.04(a) hereof. (c) It is understood that the Assignors shall remain jointly and severally liable to the extent of any deficiency between the amount of the proceeds of the Collateral and the amount of the Obligations. SECTION 5.05 Assigned Agreements. Each Assignor hereby irrevocably ------------------- authorizes and empowers the Collateral Agent, in the Collateral Agent's sole discretion, if an Event of Default has occurred and is continuing, to assert, either directly or on behalf of such Assignor, any claims such Assignor may have, from time to time, against any other party to any Assigned Agreement or to otherwise exercise any right or remedy of such Assignor under any Assigned Agreement (including without limitation, the right to enforce directly against any party to an Assigned Agreement all of such Assignor's rights thereunder, to make all demands and give all notices and make all requests required or permitted to be made by such Assignor under any Assigned Agreements) as the Collateral Agent may deem proper. Each Assignor hereby irrevocably makes, constitutes and appoints the Collateral Agent (and all officers, employees or agents designated by the Collateral Agent) as such Assignor's true and lawful attorney-in-fact for the purpose of enabling the Collateral Agent, to assert and collect such claims and to exercise such rights and remedies. SECTION 5.06 Concerning the Collateral Agent. The provisions of Article ------------------------------- XIII of the Credit Agreement shall inure to the benefit of the Collateral Agent in respect to this Security Agreement and shall be binding upon the parties to the Credit Agreement in such respect. In furtherance and not in derogation of the rights, privileges and immunities of the Collateral Agent therein set forth: (a) The Collateral Agent is authorized to take all such action as is provided to be taken by it as Collateral Agent hereunder and all other action incidental thereto. As to any matters not expressly provided for herein, the Collateral Agent may request instructions from the Lenders and shall act or refrain from acting in accordance with written instructions from the Required Lenders (or, when expressly required by this Security Agreement or the Credit Agreement, all the Lenders) or, in the absence of such instructions, in accordance with its discretion. (b) The Collateral Agent shall not be responsible for the existence, genuineness or value of any of the Collateral or for the validity, perfection, priority or enforceability of the Security Interests, whether impaired by operation of law or by reason of any action or omission to act on its part (other than any such action or inaction constituting gross negligence or willful misconduct). The Collateral Agent shall have no duty to ascertain or inquire as to the performance or observance of any of the terms of this Security Agreement by any Assignor. ARTICLE VI ---------- MISCELLANEOUS ------------- SECTION 6.01 Notices. Unless otherwise specified herein, all notices, ------- requests or other communications to any party hereunder shall be in writing (including bank wire, telex, facsimile transmission or similar writing) and shall be given or made to such party in accordance with Section 14.1 of the Credit Agreement. SECTION 6.02 No Waivers; Non-Exclusive Remedies. No failure or delay on ---------------------------------- the part of the Collateral Agent, the Administrative Agent or any Lender to exercise, no course of dealing with respect to, and no delay in exercising any right, power or privilege under this Security Agreement or any other Loan Document or any other document or agreement contemplated hereby or thereby shall operate as a waiver thereof nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies provided herein and in the other Loan Documents are cumulative and are not exclusive of any other remedies provided by law. Without limiting the foregoing, nothing in this Security Agreement shall impair the right of the Collateral Agent, the Administrative Agent or any Lender to exercise any right of set-off or counterclaim it may have and to apply the amount subject to such exercise to the payment of indebtedness of each Assignor other than such Assignor's indebtedness under the Credit Agreement and the other Loan Documents. This Security Agreement is a Loan Document executed pursuant to the Credit Agreement. SECTION 6.03 Compensation and Expenses of the Collateral Agent; -------------------------------------------------- Indemnification. - --------------- (a) Expenses. The Assignors shall pay (i) all out-of-pocket expenses of -------- the Collateral Agent, including fees and disbursements of special and local counsel for the Collateral Agent, in connection with the preparation and administration of this Security Agreement or any document or agreement contemplated hereby, any consent or waiver hereunder or any amendment hereof or any Default or alleged Default and (ii) if Default or an Event of Default occurs, all out-of-pocket expenses incurred by the Collateral Agent and each Lender, including (without duplication) the fees and disbursements of outside counsel in connection with such Default or Event of Default and collection, bankruptcy, insolvency and other enforcement proceedings resulting therefrom. (b) Protection of Collateral. If any Assignor fails to comply with the ------------------------ provisions of the Credit Agreement, this Security Agreement or any other Loan Document, such that the value of any Collateral or the validity, perfection, rank or value of any Security Interest is thereby diminished or potentially diminished or put at risk, the Collateral Agent, if requested by the Required Lenders, may, but shall not be required to, effect such compliance on behalf of such Assignor, and such Assignor shall reimburse the Collateral Agent for the costs thereof on demand. All insurance expenses and all expenses of protecting,' storing, warehousing, appraising, insuring, handling, maintaining and shipping the Collateral, any and all excise, property, sales and use taxes imposed by any state, federal or local authority on any of the Collateral, or in respect of periodic appraisals and inspections of the Collateral to the extent the same may be requested by the Collateral Agent from time to time, or in respect of the sale or other disposition thereof shall be borne and paid by the Assignors. If any Assignor fails to promptly pay any portion thereof when due, the Collateral Agent, the Administrative Agent or any Lender may, at its option, but shall not be required to, pay the same and charge such Assignor's account therefor, and such Assignor agrees to reimburse the Collateral Agent, the Administrative Agent or any such Lender on demand. All sums so paid or incurred by the Collateral Agent, the Administrative Agent or any Lender for any of the foregoing and any and all other sums for which the Assignors may become liable hereunder and all costs and expenses (including attorneys' fees, legal expenses and court costs) reasonably incurred by the Collateral Agent, the Administrative Agent or any such Lender in enforcing or protecting the Security Interests or any of its rights or remedies under this Security Agreement, shall, together with interest thereon for each day from the date when paid or incurred by the Collateral Agent until paid by the Assignors at the rate then applicable to Base Rate Loans under the Credit Agreement and shall be additional Obligations. (c) Indemnification. The Assignors agree, jointly and severally, to --------------- indemnify the Lenders, the Agents, their affiliates and their respective directors, officers, trustees, agents and employees (each an "Indemnitee") and hold each Indemnitee harmless from and against any and all liabilities, obligations, losses, damages, penalties, claims, demands, actions, suits, judgments, costs and expenses of any kind, including, without limitation, the reasonable fees and disbursements of counsel, which may be incurred by, imposed on or asserted against such Indemnitee in connection with any investigation or administrative or judicial proceeding (whether or not such Indemnitee shall be designated a party thereto) brought or threatened relating to or arising out of this Security Agreement or in any other way connected with the enforcement of any of the terms of, or the preservation of any rights hereunder, or in any way relating to or arising out of the manufacture, ownership, ordering, purchasing, delivery, control, acceptance, lease, financing, possession, operation, condition, sale, return or other disposition or use of the Collateral (including, without limitation, latent or other defects, whether or not discoverable), the violation of the laws of any country, state or other governmental body or unit, any tort (including, without limitation, any claims, arising or imposed under the doctrine of strict liability, or for or on account of injury to or the death of any Person (including any Indemnitee), or property damage), or contract claim; provided -------- that no Indemnitee shall have the right to be indemnified hereunder for such Indemnitee's own gross negligence or willful misconduct as determined by a court of competent jurisdiction. The Assignors agree that upon written notice by any Indemnitee of the assertion of such a liability, obligation, loss, damage, penalty, claim, demand, action, judgment or suit, the Assignors shall assume full responsibility for the defense thereof. Each Indemnitee agrees to use its best efforts to notify the Assignors of any such assertion of which such Indemnitee has knowledge. (d) Obligations: Survival. Any amounts paid by any Indemnitee as to which --------------------- such Indemnitee has the right to reimbursement shall constitute Obligations. The indemnity obligations of the Assignors contained in this Section 6.03 shall continue in full force and effect notwithstanding the full payment of all Notes and all of the other Obligations and notwithstanding the discharge thereof. SECTION 6.04 Amendments and Waivers. Any provision of this Security ---------------------- Agreement may be amended, changed, discharged, terminated or waived if, but only if, such amendment or waiver is in writing and is signed by the Assignors and the Collateral Agent in a manner consistent with Section 14.11 of Credit Agreement). SECTION 6.05 Successors and Assigns. This Security Agreement shall be ---------------------- binding upon and inure to the benefit of the Assignors and the Agents and their respective successors and assigns (as permitted by the Credit Agreement), and in the event or an assignment of all or any portion of the Obligations, the rights hereunder, to the extent applicable to the indebtedness so assigned, may be transferred with such indebtedness. This Security Agreement shall be binding on the Assignors and their successors and assigns; provided, that the Assignors may -------- not assign any of their rights or obligations hereunder without the prior written consent of the Agents and the Lenders. SECTION 6.06 Limitation of Law; Severability. ------------------------------- (a) All rights, remedies and powers provided in this Security Agreement may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law, and all the provisions of this Security Agreement are intended to be subject to all applicable mandatory provisions of law which may be controlling and be limited to the extent necessary so that they will not render this Security Agreement invalid, unenforceable in whole or in part, or not entitled to be recorded, registered or filed under the provisions of any Applicable Law. (b) Any provision of this Security Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating the remainder of such provision or the remaining provisions hereof or thereof or affecting the validity or enforceability of such provision in any other jurisdiction. SECTION 6.07 Governing Law. This Security Agreement shall be governed by, ------------- construed and enforced in accordance with the laws of the State of New York. SECTION 6.08 Consent to Jurisdiction. Each Assignor hereby irrevocably ----------------------- consents to the personal jurisdiction of the state and federal courts located in New York County, New York, in any action, claim or other proceeding arising out of or any dispute in connection with this Security Agreement, any rights or obligations hereunder, or the performance of such rights and obligations. Each Assignor hereby irrevocably consents to the service of a summons and complaint and other process in any action, claim or proceeding brought by any Agent or any Lender in connection with this Security Agreement, any rights or obligations hereunder, or the performance of such rights and obligations, on behalf of itself or its property, in the manner provided in Section 14.1 of the Credit ------------ Agreement. Nothing in this Section 6.08 shall affect the right of the ------------ Administrative Agent or Lender to serve legal process in any other manner permitted by Applicable Law or affect the right of any Agent or any Lender to bring any action or proceeding against any Assignor or its properties in the courts of any other jurisdictions. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of the venue of any such proceeding brought in any court specified above and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. SECTION 6.09 Preservation of Remedies; Waiver of Jury Trial ---------------------------------------------- (a) Preservation and Limitation of Remedies. --------------------------------------- (i) Each such Party hereto shall have the right to proceed in any court of proper jurisdiction or by self-help to exercise or prosecute the following remedies, with respect to any judicial proceeding, any claim or controversy arising out of, or relating to this Security Agreement or any other Loan Document (a "Dispute"), as applicable: (i) all rights to foreclose against any real or personal property or other security by exercising a power of sale or under applicable law by judicial foreclosure including a proceeding to confirm the sale; (ii) all rights of self-help including peaceful occupation of real property and collection of rents, set-off, and peaceful possession of personal property; (iii) obtaining provisional or ancillary remedies including injunctive relief, sequestration, garnishment, attachment, appointment of receiver and filing an involuntary bankruptcy proceeding; and (iv) when applicable, a judgment by confession of judgment. Any claim or controversy with regard to any party's entitlement to such remedies is a Dispute. (ii) Each party hereto and to the other Loan Documents agrees that it shall not have a remedy of punitive, exemplary or consequential damages against any other party hereto or any other Loan Document in any Dispute and hereby waives any right or claim to punitive, exemplary or consequential damages such party has now or which may arise in the future in connection with any Dispute. (b) JURY TRIAL. TO THE EXTENT PERMITTED BY LAW, THE PARTIES HERETO HEREBY ---------- IRREVOCABLY AND UNCONDITIONALLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS SECURITY AGREEMENT OR THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. SECTION 6.10 Counterparts; Effectiveness. This Security Agreement may be --------------------------- executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and shall be binding upon all parties, their successors and assigns, and all of which taken together shall constitute one and the same agreement. SECTION 6.11 Release and Termination. ----------------------- (a) Upon any sale, lease, transfer or other disposition of any item of Collateral by any Assignor in accordance with the terms of the Loan Documents (other than sales of Collateral in the ordinary course of business consistent with past practices), the Collateral Agent will, at such Assignor's expense, execute and deliver to such Assignor such documents as such Assignor shall request to evidence the release of such item of Collateral from the assignment and security interest granted hereby. (b) This Security Agreement shall remain in effect from the Closing Date through and including the date upon which all Obligations shall have been indefeasibly and irrevocably paid and satisfied in full and the Commitments terminated and upon such date the Security Interest granted hereby shall terminate and all rights to the Collateral shall revert to the Assignors. Upon any such termination, (i) the Collateral Agent shall promptly assign, release, transfer and deliver to the Assignors the Collateral held by it hereunder, all instruments of assignment executed in connection therewith, together with all monies held by the Collateral Agent or any of its agents hereunder, free and clear of the Liens hereof and (ii) the Agents and the Lenders will promptly execute and deliver to the Assignors such documents and instruments (including but not limited to appropriate UCC termination statements) as the Assignors shall request to evidence such termination in each such case at the expense of the Grantors. SECTION 6.12 Entire Agreement. This Security Agreement and the other Loan ---------------- Documents constitute the entire agreement and understanding among the parties hereto and supersedes any and all prior agreements and understandings, oral or written, and any contemporaneous oral agreements and understandings relating to the subject matter hereof and thereof. [SIGNATURES APPEAR ON NEXT PAGE] IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be executed under seal by their duly authorized officers, all as of the day and year first written above. [CORPORATE SEAL] GTS DURATEK, INC., as Assignor [CORPORATE SEAL] GTS DURATEK BEAR CREEK, INC., as Assignor [CORPORATE SEAL] GTS DURATEK COLORADO, INC., as Assignor [CORPORATE SEAL] HITTMAN TRANSPORT SERVICES, INC., as Assignor [CORPORATE SEAL] GENERAL TECHNICAL SERVICES, INC., as Assignor [CORPORATE SEAL] GTSD SUB III, INC., as Assignor [CORPORATE SEAL] CHEM-NUCLEAR SYSTEMS L.L.C., as Assignor By: GTSD Sub IV, Inc, its Sole Member By: /s/ Craig T. Bartlett ----------------------------- Name: Craig T. Bartlett Title: Treasurer [Signature Page Continues] [CORPORATE SEAL] WASTE MANAGEMENT FEDERAL SERVICES, INC., as Assignor [CORPORATE SEAL] WASTE MANAGEMENT FEDERAL SERVICES OF IDAHO, INC. as Assignor [CORPORATE SEAL] WASTE MANAGEMENT FEDERAL SERVICES OF HANFORD, INC., as Assignor [CORPORATE SEAL] WASTE MANAGEMENT TECHNICAL SERVICES, INC., as Assignor [CORPORATE SEAL] WASTE MANAGEMENT GEOTECH, INC., as Assignor [CORPORATE SEAL] FRANK W. HAKE ASSOCIATES LLC, as Assignor By: GTS Duratek, Inc., its Sole Member. [CORPORATE SEAL] GTSD SUB IV, INC., as Assignor By: /s/ Craig T. Bartlett ----------------------------- Name: Craig T. Bartlett Title: Treasurer [CORPORATE SEAL] GTS INSTRUMENT SERVICES, INCORPORATED, as Assignor By: /s/ Craig T. Bartlett ----------------------------- Name: Craig T. Bartlett Title: Controller [Signature Pages Continue] FIRST UNION NATIONAL BANK, as Collateral Agent By: /s/ Richard Schmersal ----------------------------- Name: Richard M. Schmersal -------------------------- Title: Director -------------------------- -----END PRIVACY-ENHANCED MESSAGE-----