0000950152-95-001789.txt : 19950815 0000950152-95-001789.hdr.sgml : 19950815 ACCESSION NUMBER: 0000950152-95-001789 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 16 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950814 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: OHM CORP CENTRAL INDEX KEY: 0000788964 STANDARD INDUSTRIAL CLASSIFICATION: HAZARDOUS WASTE MANAGEMENT [4955] IRS NUMBER: 341503050 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09654 FILM NUMBER: 95562841 BUSINESS ADDRESS: STREET 1: 16406 US RTE 224 EAST CITY: FINDLAY STATE: OH ZIP: 45840 BUSINESS PHONE: 4194233529 MAIL ADDRESS: STREET 1: P.O. BOX 551 CITY: FINDLAY STATE: OH ZIP: 45839-0551 FORMER COMPANY: FORMER CONFORMED NAME: ENVIRONMENTAL TREATMENT & TECHNOLOGIES CORP DATE OF NAME CHANGE: 19890209 FORMER COMPANY: FORMER CONFORMED NAME: ENVIRONMENTAL TREATMENT & TECHNOLOGY CORP DATE OF NAME CHANGE: 19880816 10-Q 1 OHM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------------------- FORM 10-Q (MARK ONE) __ X__ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1995 OR ______ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 1-9654 OHM CORPORATION (Exact name of registrant as specified in its charter) OHIO 34-1503050 (State of Incorporation) (I.R.S. Employer Identification Number) 16406 U.S. ROUTE 224 EAST, FINDLAY, OH. 45840 (Address of principal executive offices) (Zip Code) (419) 423-3529 (Registrant's telephone number, including area code) Indicate by check whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to filing such requirement for the past 90 days. Yes X No _____ The number of shares of Common Stock outstanding on July 31, 1995 was 26,539,960. 2 OHM CORPORATION INDEX TO QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1995 PART I FINANCIAL INFORMATION
Page Number ------ Item 1. Financial Statements Consolidated Balance Sheets as of June 30, 1995 (Unaudited) and December 31, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Consolidated Statements of Income (Unaudited) for the Three and Six Months Ended June 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Notes to Consolidated Financial Statements (Unaudited) . . . . . . . . . . . . . . . . . . 4 Independent Accountants' Review Report . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations . . 10 PART II OTHER INFORMATION Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . 17 Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3 Item 1. FINANCIAL STATEMENTS OHM CORPORATION CONSOLIDATED BALANCE SHEETS (In Thousands)
June 30, December 31, 1995 1994 ---------- ---------- ASSETS (Unaudited) Current Assets: Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,928 $ 4,930 Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132,318 86,663 Costs and estimated earnings on contracts in process in excess of billings . . 60,785 65,437 Materials and supply inventory, at cost . . . . . . . . . . . . . . . . . . . 11,797 10,099 Prepaid expenses and other assets . . . . . . . . . . . . . . . . . . . . . . 14,463 7,252 Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,612 6,744 Refundable income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 137 205 -------- -------- 237,040 181,330 -------- -------- Property and Equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . 84,347 57,240 -------- --------- Other Noncurrent Assets: Deferred debt issuance and financing costs . . . . . . . . . . . . . . . . . . 1,906 2,381 Investment in affiliated company . . . . . . . . . . . . . . . . . . . . . . . 23,633 23,352 Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 336 336 Intangible assets relating to acquired businesses, net . . . . . . . . . . . . 3,725 370 Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,192 7,537 -------- --------- 41,792 33,976 -------- --------- Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $363,179 $272,546 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 46,051 $ 47,936 Billings on contracts in process in excess of costs and estimated earnings . . 4,782 40 Accrued compensation and related taxes . . . . . . . . . . . . . . . . . . . . 5,877 3,874 Federal, state and local taxes . . . . . . . . . . . . . . . . . . . . . . . . 261 102 Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 17,822 9,652 Current portion of noncurrent liabilities . . . . . . . . . . . . . . . . . . 4,284 3,262 -------- -------- 79,077 64,866 -------- -------- Noncurrent Liabilities: Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122,508 127,279 Capital leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 92 Pension agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 899 906 -------- -------- 123,477 128,277 -------- -------- Deferred Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,112 2,483 -------- -------- Shareholders' Equity: Preferred stock, $10.00 par value, 2,000,000 shares authorized; none issued and outstanding . . . . . . . . . . . . . . . . . . - - Common stock, $.10 par value, 50,000,000 shares authorized; Shares issued: 1995 - 26,516,379; 1994 - 15,848,089 . . . . . . . . . . . 2,651 1,584 Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . 138,046 63,294 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,129 14,598 -------- -------- 156,826 79,476 Less treasury stock, 1995 - 25,994; 1994 - 211,624 . . . . . . . . . . . . . . . (313) (2,556) -------- -------- 156,513 76,920 -------- -------- Total Liabilities and Shareholders' Equity . . . . . . . . . . . . . . . . . $363,179 $272,546 ======== ======== The accompanying notes are an integral part of these consolidated financial statements.
1 4 OHM CORPORATION CONSOLIDATED STATEMENTS OF INCOME (In Thousands, Except Per Share Data)
Three Months Ended Six Months Ended June 30, June 30, ------------------------ ---------------------- 1995 1994 1995 1994 ------- ------ -------- -------- (Unaudited) (Unaudited) Gross Revenues . . . . . . . . . . . . . . . . . . . . . $99,501 $94,686 $179,718 $169,717 Less direct subcontract costs . . . . . . . . . . . . 28,887 29,659 52,555 52,879 Net Revenues . . . . . . . . . . . . . . . . . . . . . . 70,614 65,027 127,163 116,838 Cost of services . . . . . . . . . . . . . . . . . . 54,470 51,336 98,109 92,763 ------- ------- -------- -------- Gross Profit . . . . . . . . . . . . . . . . . . . . . . 16,144 13,691 29,054 24,075 Selling, general and administrative expenses . . . . . 13,285 8,316 20,966 15,603 ------- ------- -------- -------- Operating Income . . . . . . . . . . . . . . . . . . . . 2,859 5,375 8,088 8,472 ------- ------- -------- -------- Other (Income) Expenses: Investment income . . . . . . . . . . . . . . . . . . (13) (6) (23) (16) Interest expense . . . . . . . . . . . . . . . . . . . 2,832 2,185 6,071 3,969 Equity in net earnings of affiliate . . . . . . . . . (198) (293) (281) (361) Miscellaneous expense, net . . . . . . . . . . . . . . 7 199 39 283 ------- ------- -------- -------- 2,628 2,085 5,806 3,875 ------- ------- -------- -------- Income Before Income Taxes (Benefit) . . . . . . . . . . 231 3,290 2,282 4,597 Income taxes (benefit) . . . . . . . . . . . . . . . . (3) 1,221 761 1,723 ------- ------- -------- -------- Net Income . . . . . . . . . . . . . . . . . . . . . . . $ 234 $ 2,069 $ 1,521 $ 2,874 ======= ======= ======== ======== Net Income Per Share . . . . . . . . . . . . . . . . . . $ 0.01 $ 0.13 $ 0.08 $ 0.18 ======= ======= ======== ======== Weighted average number of common and common equivalent shares outstanding . . . . . . . . . 20,593 16,212 18,135 16,207 ======= ======= ======== ======== The accompanying notes are an integral part of these consolidated financial statements.
2 5 OHM CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands)
Six Months Ended June 30, ---------------------------- 1995 1994 ---------- ---------- (Unaudited) Cash flows from operating activities: Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,521 $ 2,874 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . 3,780 3,154 Amortization of other noncurrent assets . . . . . . . . . . . . . . . . . . 1,400 1,215 Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . (239) 1,573 Loss (gain) on sale of property and equipment . . . . . . . . . . . . . . . (22) 213 Equity in net earnings of affiliate's continuing operations . . . . . . . . . (281) (361) Deferred translation adjustments and other . . . . . . . . . . . . . . . . . 59 31 Changes in current assets and liabilities: Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,905) (34,154) Costs and estimated earnings on contracts in process in excess of billings . 7,209 (4,977) Materials and supply inventory . . . . . . . . . . . . . . . . . . . . . . . (1,698) (574) Prepaid expenses and other assets . . . . . . . . . . . . . . . . . . . . . (3,191) (858) Refundable income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 68 - Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14,161) 7,313 Billings on contracts in process in excess of costs and estimated earnings . 2,376 (252) Accrued compensation and related taxes . . . . . . . . . . . . . . . . . . . (148) 532 Federal, state and local income taxes . . . . . . . . . . . . . . . . . . . 159 (162) Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . (748) (1,654) -------- -------- Net cash flow used in operating activities . . . . . . . . . . . . . . . . (14,821) (26,087) -------- -------- Cash flows from investing activities: Purchases of property and equipment . . . . . . . . . . . . . . . . . . . . (7,148) (6,365) Proceeds from sale of property and equipment . . . . . . . . . . . . . . . . 872 1,742 Increase in other noncurrent assets . . . . . . . . . . . . . . . . . . . . (1,144) (947) Cash acquired from purchase of business . . . . . . . . . . . . . . . . . . 16,670 - -------- -------- Net cash provided by (used in) investing activities . . . . . . . . . . . 9,250 (5,570) -------- -------- Cash flows from financing activities: Increase in long term debt . . . . . . . . . . . . . . . . . . . . . . . . . 1,945 - Payments on long-term debt and capital leases . . . . . . . . . . . . . . . (1,646) (807) Proceeds from borrowing under revolving credit and term loan . . . . . . . . 73,800 73,900 Payments on revolving credit agreement . . . . . . . . . . . . . . . . . . . (77,900) (42,600) Payments on pension agreement . . . . . . . . . . . . . . . . . . . . . . . (55) (54) Proceeds from public offering of common stock . . . . . . . . . . . . . . . . - 863 Proceeds from private placement of common stock . . . . . . . . . . . . . . 10,000 - Reissuance of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . 1,425 402 -------- -------- Net cash provided by financing activities . . . . . . . . . . . . . . . . 7,569 31,704 -------- -------- Net increase in cash and cash equivalents . . . . . . . . . . . . . . . . 1,998 47 Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . 4,930 5,039 -------- -------- Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . $ 6,928 $ 5,086 ======== ======== The accompanying notes are an integral part of these consolidated financial statements.
3 6 OHM CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1995 (Unaudited) NOTE 1 - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared by OHM Corporation (the "Company") and reflect all adjustments of a normal recurring nature which are, in the opinion of management, necessary for a fair presentation of financial results for the three and six months ended June 30, 1995 and 1994, in accordance with generally accepted accounting principles for interim financial reporting and pursuant to Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. These interim consolidated financial statements should be read in conjunction with the Company's Annual Report to Shareholders for the year ended December 31, 1994. The results of operations for the three and six months ended June 30, 1995 and 1994, are not necessarily indicative of the results for the full year. The unaudited consolidated financial statements include the accounts of the Company and its subsidiaries. The Company's 40% owned asbestos abatement affiliate, NSC Corporation ("NSC"), has been accounted for using the equity method. All material intercompany transactions and balances have been eliminated in consolidation. The consolidated financial statements at June 30, 1995, and for the three and six months then ended have been reviewed, prior to filing, by Ernst & Young LLP, the Company's independent accountants, and their report is included herein. NOTE 2 - SUPPLEMENTARY CASH FLOW INFORMATION As supplemental information related to the consolidated statements of cash flows, cash paid for interest was $5,952,000 and $3,946,000 and cash paid for income taxes was $330,000 and $293,000 for the six months ended June 30, 1995 and 1994, respectively. NOTE 3 - RECLASSIFICATIONS Certain amounts presented for the three and six months ended June 30, 1994 have been reclassified to conform to the June 30, 1995 presentation. NOTE 4 - INVESTMENTS IN AFFILIATED COMPANY The Company owns a 40% equity interest in NSC, a nationwide asbestos abatement services company, which has been included in the Company's financial statements using the equity method. The following summarizes the income statements of NSC for the three and six months ended June 30, 1995 and 1994:
Three Months Ended Six Months Ended June 30, June 30, ---------------------- ---------------------- 1995 1994 1995 1994 -------- -------- -------- -------- (In Thousands) (In Thousands) Gross revenues . . . . . . . . . . . . . $31,966 $35,150 $61,510 $69,353 Gross profit . . . . . . . . . . . . . . 5,203 5,382 9,903 9,900 Operating income . . . . . . . . . . . . 1,075 1,494 1,623 1,873 Net income . . . . . . . . . . . . . . . 493 731 713 899 Company's interest in net income . . . . 198 293 281 361
4 7 NOTE 5 - INCOME TAXES The reasons for differences between the provisions for income taxes and the amount computed by applying the statutory federal income tax rate to income before income taxes are as follows:
Three Months Ended Six Months Ended June 30, June 30, -------------------- -------------------- 1995 1994 1995 1994 -------- -------- -------- -------- Federal statutory rate . . . . . . . . . . . . . . . 34.0 % 34.0 % 34.0 % 34.0 % Add (deduct): State income taxes, net of federal benefit . . . 1.7 % 4.1 % 4.5 % 4.2 % Equity in net earnings of affiliate . . . . . . (23.3)% (2.4)% (3.3)% (2.1)% Other, net . . . . . . . . . . . . . . . . . . . (13.7)% 1.4 % (1.9)% 1.4 % ---- ---- ---- ---- (1.3)% 37.1 % 33.3% 37.5 % ==== ==== ==== ====
NOTE 6 - PROPERTY AND EQUIPMENT Property and equipment is summarized as follows:
June 30, Dec. 31, 1995 1994 ---------- ---------- (In Thousands) Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 374 $ 257 Buildings and improvements . . . . . . . . . . . . . . . . . 17,734 17,179 Machinery and equipment . . . . . . . . . . . . . . . . . . 95,226 74,270 Construction in progress . . . . . . . . . . . . . . . . . . 12,385 4,190 -------- -------- 125,719 95,896 Less accumulated depreciation and amortization . . . . . . . (41,372) (38,656) -------- -------- $ 84,347 $ 57,240 ======== ========
NOTE 7 - NET INCOME PER SHARE INFORMATION Net income per share amounts are based on the weighted average number of common and common equivalent shares outstanding during the respective periods. Shares of common stock issuable upon conversion of the 8% Convertible Subordinated Debentures due 2006 are not considered to be common stock equivalents and were antidilutive in each of the periods presented. NOTE 8 - SEASONALITY The timing of revenues is dependent on the Company's backlog, contract awards and the performance requirements of each contract. The Company's revenues are also affected by the timing of its clients' planned remediation work which generally increases during the third and fourth quarters. Because of this change in demand, the Company's quarterly revenues can fluctuate, and revenues for the first and second quarters of each year can normally be expected to be lower than the third and fourth quarters. Although the Company believes that the historical trend in quarterly revenues for the third and fourth quarters of each year are generally higher than the first and second quarters, there can be no assurance that this will occur in future periods. Accordingly, quarterly or other interim results should not be considered indicative of results to be expected for any quarter or for the full year. NOTE 9 - ACQUISITION On May 30, 1995, the Company completed the acquisition of substantially all of the assets and certain liabilities of the hazardous and nuclear waste remediation service business (the "Division") of Rust International Inc. ("Rust") in exchange for 9,668,000 shares of common stock of the Company, or approximately 37% of the outstanding shares of the Company's common stock. Such shares issued to Rust are subject to a number of restrictions set forth in a Standstill and Non-Competition Agreement that was entered into pursuant to the Agreement and Plan of Reorganization dated December 5, 1994, as amended (the "Reorganization Agreement"), among the Company, Rust and certain of its subsidiaries. In addition to the net assets of the division, the Company received $16,670,000 in cash pursuant to provisions of the Reorganization Agreement that provided for an adjustment based on the average per share price of the Company's common stock for a 20 trading day period prior to closing. For purposes of calculating 5 8 the consideration given by the Company for the Division, such 20 trading day average per share price of $11.25 was used, adjusted to reflect a discount for the restricted nature of the common stock issued. In exchange for a warrant to purchase up to 700,000 shares of the Company's common stock at an exercise price of $15.00 per share during the five years following the closing date, Rust's parent company, WMX Technologies, Inc. ("WMX"), will provide the Company with a credit enhancement in the form of guarantees, issued from time to time upon request of the Company, of up to $62,000,000 of the Company's indebtedness, which will increase proportionately up to $75,000,000 upon issuance of shares under the warrant. The acquisition of the Division has been accounted for using the purchase method and, accordingly, the acquired assets and assumed liabilities, including goodwill, have been recorded at their estimated fair values as of May 30, 1995. The Company's consolidated financial statements for the three and six month periods ended June 30, 1995, include the results of operations for the Division since May 30, 1995. The following table sets forth the unaudited combined pro forma results of operations for the six months ended June 30, 1995 and 1994, giving effect to the acquisition of the Division as if such acquisition had occurred on January 1, 1994.
Pro Forma Six Months Ended June 30, ------------------------ 1995 1994 ---------- ---------- (In Thousands, Except Per Share Data) Gross revenue . . . . . . . . . . . . . . . . . . . . . . . $242,258 $276,015 Net income . . . . . . . . . . . . . . . . . . . . . . . . . 2,851 5,076 Net income per share . . . . . . . . . . . . . . . . . . . . $0.11 $0.20
The actual purchase accounting adjustments to reflect the fair value of assets and liabilities acquired have not been finalized and, as a result, the accompanying consolidated financial statements and combined pro forma results of operations have been prepared on the basis of preliminary estimates of such adjustments. The combined pro forma results of operations for the six months ended June 30, 1995 are based upon certain assumptions and estimates which the Company believes are reasonable. The combined pro forma results of operations may not be indicative of the operating results that actually would have been reported had the transaction been consummated on January 1, 1994, nor are they necessarily indicative of results which will be reported in the future. NOTE 10 - CAPITAL STOCK On March 28, 1995, the Company sold to H. Wayne Huizenga and an affiliated family foundation 1,000,000 shares of its common stock and options for an aggregate purchase price of $10,000,000. The options are exercisable over five years for the purchase of 620,000 shares of common stock upon payment of $10.00 per share and 380,000 shares of common stock upon payment of $12.00 per share. NOTE 11 - CREDIT AGREEMENT On May 31, 1995, the Company entered into a $150,000,000 revolving credit agreement with a group of banks (the "Bank Group") to provide letters of credit and cash borrowings. The agreement has a five year term and is scheduled to expire on May 30, 2000. WMX has issued a guarantee of up to $62,000,000 outstanding under the credit agreement in favor of the Bank Group (See Note 9 - Acquisition). Under the terms of the agreement the entire credit facility can be used for either cash borrowings or letters of credit subject to certain covenants. Cash borrowings bear interest at either the prime rate plus a percentage up to 0.625% or, at the Company's option, the Eurodollar market rate plus a percentage ranging from 0.325% to 1.625%. The percentage over the prime rate or the Eurodollar market is based on the aggregate amount borrowed under the facility, the presence of the WMX guarantee, and the Company's financial performance as measured by an interest coverage ratio and a total funded debt ratio. The arrangement provides the participating banks and WMX with a security interest in the Company's equipment, inventories, accounts receivables, general intangibles and in the Company's investment in the common stock of NSC as well as the Company's other subsidiaries. The agreement also imposes, among other covenants, a minimum tangible net worth covenant and a restriction on all of the Company's retained earnings including the declaration and payment of cash dividends. The Company had $23,357,000 and $34,771,000 of letters of credit and $53,600,000 and $57,700,000 of cash borrowings outstanding under its revolving credit facility at June 30, 1995 and December 31, 1994, respectively. 6 9 NOTE 12 - LITIGATION AND CONTINGENCIES The Company's accounts receivable at June 30, 1995 include a claim receivable aggregating approximately $24,391,000 in direct costs relating to a major remediation project which was performed by the Company for Citgo Petroleum Corporation ("Citgo") at its Lake Charles, Louisiana refinery during 1993 and 1994. This claim receivable represents direct costs to date for activities which the Company's management believed exceeded the scope of the existing contract due to deficient project specifications provided by Citgo and Oxy USA, Inc. ("Oxy") as well as differing site conditions. In addition, at June 30, 1994, the Company has recorded in its financial statements approximately $5,381,000 of accounts receivable that are in dispute for work performed under the terms of the Company's base contract with Citgo. In April 1994, the Company submitted to Citgo a request for equitable adjustment and Citgo responded by filing an action in the U.S. District Court for the Western District of Louisiana seeking a declaratory judgment that the Company is not entitled to additional compensation under the contract and certain other relief. The Company's answer to the declaratory judgment action was filed in July 1994, together with counterclaims against Citgo for negligent misrepresentation, breach of contract and quantum meruit seeking damages in excess of $35,000,000. In August 1994, Citgo amended its complaint seeking damages under the contract. In January 1995, Citgo filed a third party complaint against Occidental Oil and Gas Corporation and Oxy as third party defendants in such litigation because of their prior involvement with the Citgo site and preparation of the contract specifications. Additionally, in July 1995, the Company filed a complaint against Oxy for negligent misrepresentation as a result of its involvement with the development of sampling and analytical data relied upon by the Company in preparation of its bid and cost estimates for work at the site. The Company has also become involved in litigation with Occidental Chemical Corporation ("Occidental") relating to a separate project performed in 1993 and 1994 for Occidental. The Company's accounts receivable at March 31, 1995 include a claim receivable of $8,297,000 in direct costs relating to this project. The litigation arises from an October 1993 contract between the Company and Occidental for work at a contaminated site in North Tonawanda, New York. The Company's work was substantially delayed and its costs of performance were substantially increased as a result of conditions at the site which the Company's management believes were materially different than as represented by Occidental. The Company believes that Occidental has implicitly acknowledged the existence of differing conditions at the site through its previous execution and partial payment of a change order relating to the Company's position. In October 1994, Occidental issued a deductive change order deleting substantially all remaining work from the contract. On December 30, 1994, while the Company was in the process of developing a comprehensive request for equitable adjustment, Occidental filed suit against the Company in U.S. District Court for the Western District of New York alleging damages in excess of $50,000, the jurisdictional minimum. On March 3, 1995, Occidental filed an amended complaint seeking $8,806,000 in damages primarily for alleged costs incurred as a result of project delays and added volumes of incinerated wastes. On April 6, 1995, the Company filed its answer and counterclaim denying any liability to Occidental and seeking an amount in excess of $9,200,000 for damages arising from Occidental's breach of contract, misrepresentation and failure to pay outstanding contract amounts. During the fourth quarter of 1994, the Company recorded a $25,000,000 pre-tax charge, $15,000,000 after-tax or $0.96 per share, to establish a reserve for accounts receivable, primarily where such accounts are in litigation. Management believes that it has established adequate reserves should the resolution of such accounts receivable be lower than the amounts recorded and such resolution should not have a material adverse impact upon the Company's consolidated results of future operations or financial condition. The Company was named in April 1994 as one of 33 third party defendants in a case titled United States of America v. American Cyanamid Company, Inc., et al., pending in the United States District Court for the Southern District of West Virginia. This litigation arises out of claims made against several potentially responsible parties ("PRPs") by the Environmental Protection Agency ("EPA") for amounts in excess of $24,000,000 for response costs arising out of releases and threatened releases of hazardous waste at the Fike Chemical, Inc. Superfund site (the "Site") in Nitro, West Virginia. The Company was retained as a response action contractor for the site under contracts with the United States Army Corps of Engineers ("USACE") and the EPA. The third party complaint alleges that the Company was an operator of the Site during the remediation and that the Company caused releases or threatened releases of hazardous substances at the Site as a result of its negligent conduct, grossly negligent conduct or intentional misconduct. The third party complaint seeks damages and contribution from the Company and the other third party defendants. The Company has submitted claims for indemnification related to the lawsuit under its contract with the USACE and the EPA and has notified its contractors pollution liability insurance carrier. The Company believes the lawsuit is without merit, intends to vigorously defend against it and does not believe that it will have a material adverse effect on the results of future operations and financial condition of the Company. The Company has also been subject to an investigation by the government relating to the Company's billings to the EPA for its work at the Site. 7 10 The investigation was prompted by allegations made by certain of the PRPs in defense of the main cost recovery action. Those PRPs have also filed a qui tam suit against the Company under seal. The Company cooperated fully with the investigation and has been informed that the government will not be proceeding criminally against the Company. The Company is in the process of discussing with the government the potential disposition of any civil or administrative action by the government, including the qui tam suit. In addition to the above, the Company is subject to a number of claims and lawsuits in the ordinary course of its business. In the opinion of management, the outcome of these actions, which are not clearly determinable at the present time, are either adequately covered by insurance, or if not insured, will not, in the aggregate, have a material adverse impact upon the Company's consolidated financial position or the results of future operations. NOTE 13 - INTEGRATION EXPENSES The Company's consolidated statements of income for the three and six months ended June 30, 1995, include expenses aggregating $2,428,000 (net of $1,426,000 income tax benefit) or $0.12 per share, for integration costs related to the acquisition of the Division. The costs were recorded in selling, general and administrative expenses and were primarily for severance and relocation costs for certain of the Company's personnel and the closing of certain of the Company's offices as a result of combining the operations of the Division and the Company. 8 11 INDEPENDENT ACCOUNTANTS' REVIEW REPORT Board of Directors and Shareholders OHM Corporation We have reviewed the accompanying consolidated balance sheet of OHM Corporation and subsidiaries as of June 30, 1995, and the related consolidated statements of income for the three and six month periods ended June 30, 1995 and 1994 and the consolidated statements of cash flows for the six month periods ended June 30, 1995 and 1994. These financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, which will be performed for the full year with the objective of expressing an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the accompanying consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of OHM Corporation and subsidiaries as of December 31, 1994, and the related consolidated statements of operations, changes in shareholders' equity, and cash flows for the year then ended (not present herein) and in our report dated February 1, 1995, except for Note 19, as to which the date is May 4, 1995, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 1994, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. ERNST & YOUNG LLP Columbus, Ohio August 10, 1995 9 12 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL The Company provides a broad range of environmental, hazardous and nuclear waste remediation services to its clients located primarily in the United States. The timing of the Company's revenues is dependent on its backlog, contract awards and the performance requirements of each contract. The Company's revenues are also affected by the timing of its clients' planned remediation activities which generally increase during the third and fourth quarters. Because of this change in demand, the Company's quarterly revenues can fluctuate, and revenues for the first and second quarters of each year have historically been lower than for the third and fourth quarters, although there can be no assurance that this will occur in this year or future years. Accordingly, quarterly or other interim results should not be considered indicative of results to be expected for any quarter or full fiscal year. On March 28, 1995, the Company sold to H. Wayne Huizenga and an affiliated family foundation 1,000,000 shares of its common stock and options for an aggregate purchase price of $10,000,000. The options are exercisable over five years for the purchase of 620,000 shares of common stock upon payment of $10.00 per share and 380,000 shares of common stock upon payment of $12.00 per share. On May 30, 1995, the Company completed the acquisition of substantially all of the assets and certain liabilities of the hazardous and nuclear waste remediation service business (the "Division") of Rust International Inc. ("Rust") in exchange for 9,668,000 shares of common stock of the Company, or approximately 37% of the outstanding shares of the Company's common stock. In exchange for a warrant to purchase up to 700,000 shares of the Company's common stock at an exercise price of $15.00 per share during the five years following the closing date, Rust's parent company, WMX Technologies, Inc. ("WMX"), will provide the Company with a credit enhancement in the form of guarantees, issued from time to time upon request of the Company, of up to $62,000,000 of the Company's indebtedness, which will increase proportionately up to $75,000,000 upon issuance of shares under the warrant. The acquisition of the Division has been accounted for using the purchase method and, accordingly, the acquired assets and assumed liabilities, including goodwill, have been recorded at their estimated fair values as of May 30, 1995. The Company's consolidated financial statements for the three and six month periods ended June 30, 1995, include the results of operation for the Division since May 30, 1995. The Company's consolidated statements of income for the three and six months ended June 30, 1995, include expenses of $3,854,000 pre- tax, $2,428,000 after-tax or $0.12 per share, for integration costs related to the acquisition of the Division. The costs were recorded in selling, general and administrative expenses and were primarily for severance and relocation costs for certain of the Company's personnel and the closing of certain of the Company's offices as a result of combining the operations of the Division and the Company. RESULTS OF OPERATIONS THREE MONTHS ENDED JUNE 30, 1995 VERSUS THREE MONTHS ENDED JUNE 30, 1994 GROSS REVENUES. The following table sets forth the Company's gross revenues by client type for the three months ended June 30, 1995 and 1994 (in thousands, except percentages):
1995 1994 -------------------- -------------------- Government . . . . . . . . . . . . . . . . . . . $75,907 76% $47,669 50% Industrial . . . . . . . . . . . . . . . . . . . 23,594 24% 47,017 50% -------- -- -------- --- $99,501 100% $94,686 100% ======== === ======= ===
Total gross revenues increased by $4,815,000 to $99,501,000 for the three months ended June 30, 1995 from $94,686,000 for the same period in 1994. Gross revenues reflect all amounts to be billed by the Company to its clients for work performed and include subcontract costs that are generally passed through to clients with a minimal amount of mark-up. The Company's management believes that net revenues represent a better measurement of the Company's ability to generate profit from activities performed by the Company and, accordingly, management's discussion and analysis of revenues focuses on net revenues. 10 13 DIRECT SUBCONTRACT COSTS. Direct subcontract costs for the three months ended June 30, 1995 decreased 3% to $28,887,000 from $29,659,000 for the same period in 1994. Increases or decreases in direct subcontract costs generally result from varying requirements for the use of subcontractors in the projects performed by the Company. Direct subcontract costs as a percentage of gross revenues were 29% for the three months ended June 30, 1995, compared to 31% for the same period in 1994. NET REVENUES. The following table sets forth the Company's net revenues by client type for the three months ended June 30, 1995 and 1994 (in thousands, except percentages):
1995 1994 -------------------- -------------------- Government . . . . . . . . . . . . . . . . . . . $52,203 74% $32,163 49% Industrial . . . . . . . . . . . . . . . . . . . 18,411 26% 32,864 51% -------- -- -------- --- $70,614 100% $65,027 100% ======== === ======= ===
Net revenues for the three months ended June 30, 1995 increased 9% to $70,614,000 from $65,027,000 for the same period in 1994 and were positively impacted by the inclusion of net revenues for the month of June from the Division acquired on May 30, 1995. Net revenues from government agencies for the three months ended June 30, 1995 increased 62% to $52,203,000 from $32,163,000 for the same period in 1994. Such improvement resulted primarily from increased net revenues from the Company's term contracts with the U.S. Navy, the Environmental Protection Agency and the Air Force, as well as increased revenues from other government agencies and certain state and local governments. The Company expects to experience a continued increase in net revenues from such contracts for the balance of 1995 when compared to the same periods in 1994 and the Company continues to experience a significant amount of proposal activity with the various Department of Defense agencies. However, further reductions by Congress in future environmental remediation budgets of government agencies may adversely impact future revenues from such agencies and the funding of the Company's government term contracts included in contract backlog. The Company experienced a $14,453,000 or 44% decrease in net revenues from industrial clients during the three months ended June 30, 1995 as compared to the same period in 1994. The second quarter of 1994 included significant net revenues from a project that was performed for Citgo Petroleum Corporation ("Citgo") (see "Note 12 to the Consolidated Financial Statements") that ended during June 1994. The Company's industrial sector revenues remain sluggish, which the Company believes is due to anticipated changes in the Superfund law pending its reauthorization and current economic conditions in certain industry and geographic sectors. The Company cannot predict the impact upon the environmental industry of the failure of Congress to reauthorize the Superfund law. Further delays in Superfund reauthorization may have an adverse impact upon the demand for the Company's services in the form of project delays as clients and potential clients wait for and anticipate changes in the regulations. Demand for the Company's services from the private sector will remain dependant on general economic conditions and the outcome of the proposed changes to the Superfund regulations. Industrial sector net revenues as a percentage of total net revenues decreased to 26% for the three months ended June 30, 1995 from 51% for the same period in 1994. COST OF SERVICES AND GROSS PROFIT. Cost of services for the three months ended June 30, 1995 increased 6% to $54,470,000 from $51,336,000 for the same period in 1994 primarily due to increased net revenues. Cost of services as a percentage of net revenues was 77% and 79% for the three months ended June 30, 1995 and 1994, respectively. Cost of services as a percentage of net revenues was negatively impacted during the second quarter of 1994 by contract claims arising out of the Company's project with Citgo, which was recorded without gross profit margin. Gross profit for the three months ended June 30, 1995 increased 18% to $16,144,000 from $13,691,000 for the same period in 1994, as a result of factors discussed above. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative ("SGA") expenses for the three months ended June 30, 1995 increased 60% to $13,285,000 from $8,316,000 for the same period in 1994. Selling, general and administrative expenses for the three months ended June 30, 1995, include expenses of $3,854,000 for integration costs related to the acquisition of the Division. The expenses were primarily for severance and relocation costs for certain of the Company's personnel and the closing of certain of the Company's offices as a result of combining the operations of the Division and the Company. SGA expense as a percentage of net revenues increased to 19% for the first quarter of 1995 from 13% in the same period in 1994. 11 14 OPERATING INCOME. Operating income for the three months ended June 30, 1995 decreased 47% to $2,859,000 from $5,375,000 for the same period in 1994. The decrease is primarily due to the integration expenses discussed above. Without such expenses, operating income would have been $6,713,000 during the second quarter of 1995 and would have reflected a 25% increase from the same period in 1994. OTHER (INCOME) EXPENSES. Other (income) expenses, excluding the Company's equity in net earnings of NSC, increased $448,000 to $2,826,000 from $2,378,000 for the three months ended June 30, 1995 when compared to the same period in 1994. Such increase is primarily due to the increase in interest expense for the three months ended June 30, 1995 of $647,000 to $2,832,000 from $2,185,000 for the same period in 1994. The increased interest expense was primarily due to additional borrowing under the Company's credit facility as a result of the increased working capital requirements of certain large remediation projects and government contracts. EQUITY IN NET EARNINGS OF AFFILIATE. The Company's equity interest in NSC's net earnings for the three months ended June 30, 1995 was $198,000 compared to $293,000 for the same period in 1994. The asbestos abatement industry in general continues to experience competitive pressures in the market place which have negatively impacted the gross margin on NSC's projects. NET INCOME. Net income for the three months ended June 30, 1995 was $234,000 or $0.01 per share compared to $2,069,000 or $0.13 per share for the same period in 1994. The effective income tax rate was (1.3)% for the three months ended June 30, 1995, compared to 37% for the same period in 1994. See "Note 5 to the Consolidated Financial Statements" for a reconciliation of the statutory federal income tax rate to the effective income tax rate. SIX MONTHS ENDED JUNE 30, 1995 VERSUS SIX MONTHS ENDED JUNE 30, 1994 GROSS REVENUES. The following table sets forth the Company's gross revenues by client type for the six months ended June 30, 1995 and 1994 (in thousands, except percentages):
1995 1994 -------------------- -------------------- Government . . . . . . . . . . . . . . . . . . . $137,715 77% $ 89,434 53% Industrial . . . . . . . . . . . . . . . . . . . 42,003 23% 80,283 47% --------- -- --------- -- $179,718 100% $169,717 100% ======== === ======== ===
Total gross revenues increased by $10,001,000 to $179,718,000 for the six months ended June 30, 1995 from $169,717,000 for the same period in 1994. Gross revenues reflect all amounts to be billed by the Company to its clients for work performed and include subcontract costs that are generally passed through to clients with a minimal amount of mark-up. The Company's management believes that net revenues represent a better measurement of the Company's ability to generate profit from activities performed by the Company and, accordingly, management's discussion and analysis of revenues focuses on net revenues. DIRECT SUBCONTRACT COSTS. Direct subcontract costs for the six months ended June 30, 1995 decreased 1% to $52,555,000 from $52,879,000 for the same period in 1994. Increases or decreases in direct subcontract costs generally result from varying requirements for the use of subcontractors in the projects performed by the Company. Direct subcontract costs as a percentage of gross revenues were 29% for the six months ended June 30, 1995, compared to 31% for the same period in 1994. 12 15 NET REVENUES. The following table sets forth the Company's net revenues by client type for the six months ended June 30, 1995 and 1994 (in thousands, except percentages):
1995 1994 -------------------- -------------------- Government . . . . . . . . . . . . . . . . . . . $ 94,693 74% $ 59,481 51% Industrial . . . . . . . . . . . . . . . . . . . 32,470 26% 57,357 49% --------- --- --------- --- $127,163 100% $116,838 100% ======== === ======== ===
Net revenues for the six months ended June 30, 1995 increased 9% to $127,163,000 from $116,838,000 for the same period in 1994 and were positively impacted by the inclusion of net revenues for the month of June from the Division acquired on May 30, 1995. Net revenues from government agencies for the six months ended June 30, 1995 increased 59% to $94,693,000 from $59,481,000 for the same period in 1994. Such improvement resulted primarily from increased net revenues from the Company's term contracts with the U.S. Navy, the Environmental Protection Agency and the Air Force, as well as increased revenues from other government agencies and certain state and local governments. The Company expects to experience a continued increase in net revenue from such contracts for the balance of 1995 when compared to the same periods in 1994 and the Company continues to experience a significant amount of proposal activity with the various Department of Defense agencies. However, further reductions by Congress in future environmental remediation budgets of government agencies may adversely impact future revenues from such agencies and the funding of the Company's government term contracts included in contract backlog. The Company experienced a $24,887,000 or 43% decrease in net revenues from industrial clients during the six months ended June 30, 1995 as compared to the same period in 1994. The first half of 1994 included significant net revenues from a project that was performed for Citgo Petroleum Corporation ("Citgo") (see "Note 12 to the Consolidated Financial Statements") that ended during June 1994. The Company's industrial sector revenues remain sluggish, which the Company believes is due to anticipated changes in the Superfund law pending its reauthorization and current economic conditions in certain industry and geographic sectors. The Company cannot predict the impact upon the environmental industry of the failure of Congress to reauthorize the Superfund law. Further delays in Superfund reauthorization may have an adverse impact upon the demand for the Company's services in the form of project delays as clients and potential clients wait for and anticipate changes in the regulations. Demand for the Company's services from the private sector will remain dependant on general economic conditions and the outcome of the proposed changes to the Superfund regulations. Industrial sector net revenues as a percentage of total net revenues decreased to 26% for the six months ended June 30, 1995 from 49% for the same period in 1994. COST OF SERVICES AND GROSS PROFIT. Cost of services for the six months ended June 30, 1995 increased 6% to $98,109,000 from $92,763,000 for the same period in 1994 primarily due to increased net revenues. Cost of services as a percentage of net revenues was 77% and 79% for the six months ended June 30, 1995 and 1994, respectively. Cost of services as a percentage of net revenues was negatively impacted during the first half of 1994 by contract claims arising out of the Company's project with Citgo, which was recorded without gross profit margin. Gross profit for the six months ended June 30, 1995 increased 21% to $29,054,000 from $24,075,000 for the same period in 1994, as a result of factors discussed above. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative ("SGA") expenses for the six months ended June 30, 1995 increased 34% to $20,966,000 from $15,603,000 for the same period in 1994. Selling, general and administrative expenses for the six months ended June 30, 1995, include expenses of $3,854,000 for integration costs related to the acquisition of the Division. The expenses were primarily for severance and relocation costs for certain of the Company's personnel and the closing of certain of the Company's offices as a result of combining the operations of the Company and the Division acquired in May 1995. SGA expense as a percentage of net revenues increased to 17% for the first six months of 1995 from 13% in the same period in 1994. OPERATING INCOME. Operating income for the six months ended June 30, 1995 decreased 5% to $8,088,000 from $8,472,000 for the same period in 1994. The decrease is primarily due to the integration expenses incurred during the second quarter of 1995 related to combining the operations of the Company and the Division acquired. 13 16 OTHER (INCOME) EXPENSES. Other (income) expenses, excluding the Company's equity in net earnings of NSC, increased $1,851,000 to $6,087,000 from $4,236,000 for the six months ended June 30, 1995 when compared to the same period in 1994. Such increase is primarily due to the increase in interest expense for the six months ended June 30, 1995 of $2,102,000 to $6,071,000 from $3,969,000 for the same period in 1994. Such increase was due to additional borrowing under the Company's credit facility as a result of the increased working capital requirements of certain large remediation projects and government contracts. EQUITY IN NET EARNINGS OF AFFILIATE. The Company's equity interest in NSC's net earnings for the six months ended June 30, 1995 was $281,000 compared to $361,000 for the same period in 1994. The asbestos abatement industry in general continues to experience competitive pressures in the market place which have negatively impacted the gross margin on NSC's projects. NET INCOME. Net income for the six months ended June 30, 1995 was $1,521,000 or $0.08 per share compared to $2,874,000 or $0.18 per share for the same period in 1994. The decrease in net income is primarily due to the integration expenses incurred during the second quarter of 1995 related to combining the operations of the Company and the Division acquired in May 1995. The effective income tax rate was 33% for the six months ended June 30, 1995, compared to 38% for the same period in 1994. See "Note 5 to the Consolidated Financial Statements" for a reconciliation of the statutory federal income tax rate to the effective income tax rate. CONTRACT BACKLOG The following table lists, at the dates indicated, (i) the Company's backlog, defined as the unearned portion of the Company's existing contacts and unfilled orders, and (ii) the Company's term contracts, defined as the potential value of government term contracts (in thousands):
June 30, December 31, 1995 1994 ------------ ------------ Backlog . . . . . . . . . . . . . . . . . . . . . . $ 381,000 $ 255,000 Term contracts . . . . . . . . . . . . . . . . . . . 1,627,000 1,498,000 --------- ----------- Total contract backlog . . . . . . . . . . . . . $ 2,008,000 $ 1,753,000 =========== ===========
The Company received more new awards from clients or delivery orders issued under the Company's term contracts in the first half of 1995 than was recorded as revenue, which resulted in the increase in backlog at June 30, 1995. In accordance with industry practice, substantially all of the Company's contracts in backlog may be terminated at the convenience of the client. In addition, the amount of the Company's backlog is subject to changes in the scope of services to be provided under any given contract. The Company estimates that approximately 60% of the backlog at June 30, 1995 will be realized within the next year. Term contracts are typically performed under delivery orders, issued by the contracting government entity, for a large number of small- to medium-sized remediation projects throughout the geographic area covered by the contract. The Company's government term contracts generally may be canceled, delayed or modified at the sole option of the government, and typically are subject to annual funding limitations and public sector budget constraints. Accordingly, such government contracts represent the potential dollar value that may be expended under such contracts, but there is no assurance that such amounts, if any, will be actually spent on any projects or of the timing thereof. In addition, further reductions by Congress in future environmental remediation budgets of government agencies may adversely impact future revenues from such agencies and the funding of the Company's government term contracts included in contract backlog. 14 17 LIQUIDITY AND CAPITAL RESOURCES On May 31, 1995, the Company entered into a $150,000,000 revolving credit agreement with a group of banks (the "Bank Group") to provide letters of credit and cash borrowings. The agreement has a five year term and is scheduled to expire on May 30, 2000. WMX has issued a guarantee of up to $62,000,000 outstanding under the credit agreement in favor of the Bank Group (See Note 9 - Acquisition). Under the terms of the agreement the entire credit facility can be used for either cash borrowings or letters of credit subject to certain covenants. Cash borrowings bear interest at either the prime rate plus a percentage up to 0.625% or, at the Company's option, the Eurodollar market rate plus a percentage ranging from 0.325% to 1.625%. The percentage over the prime rate or the Eurodollar market is based on the aggregate amount borrowed under the facility, the presence of the guaranty, and the Company's financial performance as measured by an interest coverage ratio and a total funded debt ratio. The agreement provides the participating banks with a security interest in the Company's equipment, inventories, accounts receivables, general intangibles and in the Company's investment in the common stock of NSC as well as the Company's other subsidiaries. The agreement also imposes, among other covenants, a minimum tangible net worth covenant and a restriction on all of the Company's retained earnings including the declaration and payment of cash dividends. The Company had $23,357,000 and $34,771,000 of letters of credit and $53,600,000 and $57,700,000 of cash borrowings outstanding under its revolving credit facility at June 30, 1995 and December 31, 1994, respectively. Capital expenditures for the six months ended June 30, 1995 and 1994 were $7,148,000 and $6,365,000, respectively. The Company's capital expenditures are primarily related to the purchase of heavy equipment and the fabrication of custom equipment by the Company for the execution of remediation projects. Capital expenditures for fiscal year 1995 are expected to range between $15,000,000 and $20,000,000. The Company's long-term capital expenditure requirements are dependent upon the type and size of future remediation projects awarded to the Company. During the first six months of 1995, the Company derived 77% of its gross revenues from government agencies compared to 53% during the same period in 1994. Revenues from government agencies historically have required greater working capital, the major component of which is accounts receivable, than revenues from industrial sector clients. In addition, the Company is bidding on a number of large, long-term contract opportunities which, if awarded to the Company, would also increase working capital needs and capital expenditures. The Company believes it will be able to finance its increased working capital needs and capital expenditures in the short term through a combination of cash flows from continuing operations, borrowing under its Revolving Credit Facility, proceeds from permitted asset sales and other external sources. In addition, under the terms of its recently completed acquisition of Rust's hazardous and nuclear waste remediation business, Rust's parent company, WMX, has provided the Company with a credit guarantee of up to $62,000,000 of the Company's indebtedness outstanding until May 30, 2000. Such credit guarantee has allowed the Company to expand its borrowing capacity and lower its cost of capital under its new credit facility entered into on May 31, 1995. The Company's identified long-term capital needs consist of payments due upon the maturity of the Company's Revolving Credit Facility in 2000 and sinking fund payments commencing in 1996 as well as payments due upon maturity of its Convertible Debentures in 2006. The Company believes that it will be able to refinance this indebtedness as necessary. ENVIRONMENTAL MATTERS AND GOVERNMENT CONTRACTING Although the Company believes that it generally benefits from increased environmental regulations and from enforcement of those regulations, increased regulation and enforcement also create significant risks for the Company. The assessment, remediation, analysis, handling and management of hazardous substances necessarily involve significant risks, including the possibility of damages or injuries caused by the escape of hazardous materials into the environment, and the possibility of fines, penalties or other regulatory action. These risks include potentially large civil and criminal liabilities for violations of environmental laws and regulations, and liabilities to customers and to third parties for damages arising from performing services for clients, which could have a material adverse effect on the Company. 15 18 The Company does not believe there are currently any material environmental liabilities which should be recorded or disclosed in its financial statements. The Company anticipates that its compliance with various laws and regulations relating to the protection of the environment will not have a material effect on its capital expenditures, future earnings or competitive position. Because of its dependence on government contracts, the Company also faces the risks associated with such contracting, which could include civil and criminal fines and penalties. As a result of its government contracting business, the Company has been, is, and may in the future be subject to audits and investigations by government agencies. See "Note 12 to the Consolidated Financial Statements." The fines and penalties which could result from noncompliance with the Company's government contracts or appropriate standards and regulations, or the Company's suspension or debarment for future government contracting, could have a material adverse effect on the Company's business. 16 19 PART II -- OTHER INFORMATION Item 1. Legal Proceedings In October 1993, the Company was retained by Citgo for the removal of surface impoundment sludge at its Lake Charles, Louisiana refinery. Based on information provided to the Company by Citgo and Oxy USA, Inc. ("Oxy"), the Company bid and was awarded a contract for approximately $28,600,000. During April 1994, the Company submitted to Citgo a request for a substantial equitable adjustment to the contract as a result of deficient project specifications provided by Citgo as well as other unplanned events controlled by Citgo. On April 29, 1994, Citgo filed a declaratory judgment action in the United States District Court for the Western District of Louisiana requesting a declaratory judgement that the Company is not entitled to additional compensation and requesting an order for specific performance requiring the Company to perform the contract. The Company accounts receivable as of June 30, 1995 reflect a claim receivable and other accounts receivable relating to performance of the Citgo project aggregating approximately $24,391,000. The Company's answer to the declaratory judgement action was filed on July 28, 1994, together with counterclaims against Citgo for negligent misrepresentation, breach of contract and quantum meruit seeking damages in excess of $35,000,000. Subsequent to filing of the Company's answer and counterclaim, Citgo amended its complaint seeking damages under the contract, which the Company believes approximates the amount of disputed accounts receivable that Citgo is currently withholding. In January 1995, Citgo filed a third party complaint against Occidental Oil and Gas Corporation and Oxy asserting various claims relating to their prior involvement with the Citgo site and its contract specifications. Additionally, in July 1995, the Company filed a complaint against Oxy for negligent misrepresentation as a result of its involvement with the development of sampling and analytical data relied upon by the Company in preparation of its bid and cost estimates for work at the site. The Company was named in April 1994 as one of 33 third party defendants in a case titled United States of America v. American Cyanamid Company, Inc., et al., pending in the United States District Court for the Southern District of West Virginia. This litigation arises out of Superfund cost recovery claims made against several potentially responsible parties ("PRPs") by the Environmental Protection Agency ("EPA") for amounts in excess of $24,000,000 for response costs arising out of releases and threatened releases of hazardous waste at the Fike Chemical, Inc. Superfund site (the "Site") in Nitro, West Virginia. The Company was retained as a response action contractor for the Site under contracts with the United States Army Corps of Engineers ("USACE") and the EPA. The third party complaint alleges that the Company was an operator of the Site during the remediation and that the Company caused releases or threatened releases of hazardous substances at the Site as a result of its negligent conduct, grossly negligent conduct or intentional misconduct. The third party complaint seeks damages and contribution from the Company and the other third party defendants. The Company has submitted claims for indemnification related to this lawsuit under its contract with the USACE and the EPA and has notified its contractors pollution liability insurance carrier. The Company believes the lawsuit is without merit, intends to vigorously defend against it and does not believe that it will have a material adverse effect on the results of operations and financial condition of the Company. The Company has also been subject to an investigation by the government relating to the Company's billings to the EPA for its work at the Site. The investigation was prompted by allegations made by certain of the PRPs in defense of the main cost recovery action. Those PRPs also filed a qui tam suit against the Company under seal. The Company cooperated fully with the investigation and has been informed that the government will not be proceeding criminally against the Company. The Company is in the process of discussing with the government the potential disposition of any civil or administrative action by the government, including the qui tam suit. Item 4. Submission of Matters to a Vote of Security Holders (a) The Annual Meeting of the Company's shareholders was held on May 23, 1995. 17 20 (b)(1) At the Annual Meeting, the following persons were elected as directors of the Company, to serve until the next Annual Meeting of Shareholders, with the votes for and withheld with respect to each person, respectively, set forth after such name:
For Withheld ------------- -------- Ivan W. Gorr . . . . . . . . . . . . 10,042,228 54,342 Charles D. Hollister . . . . . . . . 10,042,228 54,342 James L. Kirk . . . . . . . . . . . . 10,041,763 54,807 Joseph R. Kirk . . . . . . . . . . . 10,041,928 54,642 Richard W. Pogue . . . . . . . . . . 10,042,228 54,342 Charles W. Schmidt . . . . . . . . . 10,041,528 55,042
Subsequently, on June 1, 1995, pursuant to the Reorganization Agreement, the Board of Directors increased the number of directors to nine and elected Herbert A. Getz, Rodney C. Gilbert and James E. Koenig to the Board of Directors. (b)(2) A proposal to issue (i) an aggregate of 9,668,000 shares of the Company's common stock (the "Common Stock"), to subsidiaries of Rust in connection with the merger of a wholly-owned subsidiary of Rust with and into OHM Remediation Services Corp., a wholly- owned subsidiary of the Company, pursuant to the Reorganization Agreement, and (ii) a warrant, exercisable for five years, to purchase 700,000 shares of Common Stock at $15.00 per share to WMX in connection with a Guarantee Agreement between the Company and WMX to be entered into in connection with the Reorganization Agreement, was approved by 94.8% of the Company's common stock present and voting at the meeting. The results of the vote on the proposal were: For 9,223,675 Against 5,888 Abstain 496,086
(b)(3) A proposal to approve the Company's Directors' Deferred Fee Plan was approved by 98.67% of the Company's Common Stock present and voting at the meeting. The results of the vote on the proposal were: For 9,869,429 Against 11,728 Abstain 21,213
The total number of shares of the Registrant's Common Stock outstanding as of March 31, 1995, the record date for the Annual Meeting, was 16,636,465. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 10(a) Amendment No. 1 to OHM Corporation Retirement Savings Plan, as amended and restated as of January 1, 1994 10(b) Amendment No. 1 to OHM Corporation Directors' Deferred Fee Plan 10(c) Standstill and Non-Competition Agreement by and among the Company, WMX Technologies, Inc., and Rust International Inc., dated May 30, 1995 10(d) Warrant Agreement by and between WMX Technologies, Inc., and the Company, dated May 30, 1995 10(e) Revolving Credit Agreement dated as of May 31, 1995 among OHM Corporation and OHM Remediation Services Corp., and the banks named therein, Citicorp USA, Inc., as Administrative Agent and Bank of America Illinois, as Issuing and Paying Agent and Co-Agent 18 21 10(f) First Amendment dated as of May 31, 1995 to Pledge Agreement dated as of May 11, 1993 by and between the Company and Bank of America Illinois as Issuing and Paying Agent 10(g) Second Amendment dated as of May 31, 1995 to Security Agreement dated as of May 11, 1993 by and among the Company, OHM Remediation Services Corp., and Bank of America Illinois as Issuing and Paying Agent 10(h) Intercreditor Agreement dated May 31, 1995 by and among Citicorp USA, Inc., as Administrative Agent, Bank of America Illinois, as Issuing and Paying Agent and WMX Technologies, Inc. 10(i) Guarantee Agreement by and among the Company and WMX Technologies, Inc., dated May 30, 1995 10(j) Reimbursement Agreement dated as of May 31, 1995 among the Company, OHM Remediation Services Corp. and WMX Technologies, Inc. 10(k) Security Agreement dated as of May 31, 1995 by and between the Company, OHM Remediation Services Corp., and WMX Technologies, Inc. 10(l) Pledge Agreement dated as of May 31, 1995 by and between the Company and WMX Technologies, Inc. 11 Statement Re Computation of Per Share Earnings 15 Letter Re Unaudited Financial Information 27 Financial Data Schedule (b) Reports on Form 8-K. On June 13, 1995, the Company filed a Current Report on Form 8-K with respect to the consummation, on May 30, 1995, of the transactions contemplated by an Agreement and Plan of Reorganization dated December 5, 1995, as amended, by and among the Company, Rust Remedial Services Inc., Enclean Environmental Services Group, Inc., Rust Environmental, Inc. and Rust International Inc. ("Rust"), pursuant to which the Company acquired the hazardous and nuclear waste remediation services businesses of Rust. The following financial statements and pro forma financial information were filed as part of such Form 8- K by incorporation by reference to the Registrant's definitive Proxy Statement, dated May 10, 1995 for its 1995 Annual Meeting of Shareholders. Audited financial statements of the Business Acquired. Unaudited Pro Forma consolidated balance sheet and consolidated statement of income of the Company for the year ended December 31, 1994 that gives effect to the acquisition as if the transaction had taken place on January 1, 1994. 19 22 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. OHM CORPORATION Date: August 14, 1995 By /s/ JAMES L. KIRK --------------------------------- James L. Kirk Chairman of the Board President and Chief Executive Officer (Duly Authorized Officer) Date: August 14, 1995 By /s/ Harold W. Ingalls --------------------------------- Harold W. Ingalls Vice President and Chief Financial Officer (Principal Financial Officer) Date: August 14, 1995 By /s/ KRIS E. HANSEL --------------------------------- Kris E. Hansel Vice President and Controller (Principal Accounting Officer) 20 23 EXHIBIT INDEX
Exhibit Exhibit Number Description ------ ----------- 10(a) Amendment No. 1 to OHM Corporation Retirement Savings Plan, as amended and restated as of January 1, 1994 10(b) Amendment No. 1 to OHM Corporation Directors' Deferred Fee Plan 10(c) Standstill and Non-Competition Agreement by and among the Registrant, WMX Technologies, Inc., and Rust International Inc., dated May 30, 1995 10(d) Warrant Agreement by and between WMX Technologies, Inc., and the Registrant, dated May 30, 1995 10(e) Revolving Credit Agreement dated as of May 31, 1995 among OHM Corporation and OHM Remediation Services Corp., and the banks named therein, Citicorp USA, Inc., as Administrative Agent and Bank of America Illinois, as Issuing and Paying Agent and Co-Agent 10(f) First Amendment dated as of May 31, 1995 to Pledge Agreement dated as of May 11, 1993 by and between the Registrant and Bank of America Illinois as Issuing and Paying Agent 10(g) Second Amendment dated as of May 31, 1995 to Security Agreement dated as of May 11, 1993 by and between the Registrant, OHM Remediation Services Corp., and Bank of America Illinois as Issuing and Paying Agent 10(h) Intercreditor Agreement dated May 31, 1995 by and among Citicorp USA, Inc., as administrative agent, Bank of America Illinois, as issuing and paying agent and WMX Technologies, Inc. 10(i) Guarantee Agreement by and among the Registrant and WMX Technologies, Inc., dated May 30, 1995 10(j) Reimbursement Agreement dated as of May 31, 1995 among WMX Technologies, Inc., OHM Corporation, and OHM Remediation Services Corp. 10(k) Security Agreement dated as of May 31, 1995 by and between the Registrant, OHM Remediation Services Corp., and WMX Technologies, Inc. 10(l) Pledge Agreement dated as of May 31, 1995 by and between the Registrant and WMX Technologies, Inc. 11 Statement Re Computation of Per Share Earnings 15 Letter Re Unaudited Financial Information 27 Financial Data Schedule
EX-10.A 2 OHM CORP 10-Q EX-10(A) 1 Exhibit 10(a) AMENDMENT NUMBER ONE TO THE OHM CORPORATION RETIREMENT SAVINGS PLAN (AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1994) WHEREAS, OHM Corporation (the "Company") previously adopted the OHM Corporation Retirement Savings Plan (the "Plan"); and WHEREAS, Article 15.1 of the Plan provides that the Company may amend the Plan at any time. NOW, THEREFORE, the Company hereby amends the Plan to read as follows: I. Effective June 1, 1995, Section 1.40 of the Plan is hereby amended by adding the following sentence at the end thereof: With the approval of the Plan Committee, Years of Service will be credited to an Employee for service with an entity that is acquired by the Employer to the extent and for the purposes listed on Schedule A to the Plan. II. Effective June 1, 1995, Section 3.11 of the Plan is hereby amended to read as follows: 3.11 Elective Transfers. The Plan may accept an elective transfer of assets from another qualified plan if the following provisions are satisfied. (a) The person electing the transfer must become an Employee as the result of a corporate transaction for which the Committee deems this provision should be applicable. (b) The plan from which the benefits are transferred must provide that the transfer is conditioned upon a voluntary, fully informed election by the participant to transfer such participant's benefit to this Plan. (c) The plan from which the benefits are transferred must either offer the participant the opportunity to leave his or her assets in that plan or must terminate and make a distribution of all appropriate benefits. 2 (d) Any spousal consent requirements or notice requirements imposed on the elective transfer by the Code must be satisfied. (e) The Employee who elects the transfer must be eligible under the terms of the transferor plan to receive an immediate distribution from that plan. (f) The amount of the benefit transferred must equal the entire nonforfeitable accrued benefit under the plan of the participant whose benefit is transferred and the Employee shall be fully vested in the transferred benefit under this Plan. III. Effective June 1, 1995, Section 4.1 of the Plan is hereby amended by adding the following sentence to the end thereof: Matching Employer Contributions may be made, at the discretion of the Company, in the form of Company Stock. IV. Effective June 1, 1995, Section 5.5 of the Plan is hereby amended to read as follows: 5.5 Investment Options. All Profit Sharing Contributions will be invested by the Trustee at the direction of the Committee. All Matching Employer Contributions made in the form of Company Stock will be initially invested in the Company Stock Fund. Each Participant will, by written direction to the Committee, direct that all Before-Tax Contributions, After-Tax Contributions, Matching Employer Contributions (other than Matching Employer Contributions made in the form of Company Stock) and Rollover Contributions made by or for the Participant be invested in one or more of the Investment Funds in multiples of 5%. An investment option selected by a Participant will remain in effect and be applicable to all subsequent Before-Tax Contributions, After-Tax Contributions, Matching Employer Contributions (other than Matching Employer Contributions made in the form of Company Stock) and Rollover Contributions made by or for the Participant unless and until an investment change is made by the Participant and becomes effective pursuant to Section 5.6. In the absence of an effective investment direction, Before-Tax Contributions, After-Tax Contributions, Matching Employer Contributions (other than Matching Employer 2 3 Contributions made in the form of Company Stock) and Rollover Contributions made to the Trust by or for a Participant will be invested in a fixed income fund or its equivalent maintained pursuant to Section 5.1. V. Effective June 1, 1995, Section 5.6 of the Plan is hereby amended to read as follows: 5.6 Change of Investment Option. Subject to any limitation imposed by the terms of an Investment Fund, a Participant may, as of any Enrollment Date, upon at least 15 days prior written notice filed with the Committee, change his or her investment option to any other option specified in Section 5.5 with respect to all subsequent Before-Tax Contributions, After-Tax Contributions, Matching Employer Contributions (other than Matching Employer Contributions made in the form of Company Stock) and Rollover Contributions made by or for the Participant. In addition, subject to any limitation imposed by the terms of an Investment Fund, a Participant may, as of any Enrollment Date, upon at least 15 days prior written notice filed with the Committee, change his or her investment option to any other option specified in Section 5.5 with respect to all previous Before-Tax Contributions, After-Tax Contributions, Matching Employer Contributions (including Matching Employer Contributions made in the form of Company Stock) and Rollover Contributions made by or for the Participant. Executed this 1st day of June, 1995. OHM Corporation /s/ RANDALL M. WALTERS ----------------------------------- By: Randall M. Walters Vice President, General Counsel and Secretary 3 EX-10.B 3 OHM EX-10(B) 1 Exhibit 10(b) AMENDMENT NO. 1 TO OHM CORPORATION DIRECTORS' DEFERRED FEE PLAN WHEREAS, on November 3, 1994, the Board of Directors of OHM Corporation (the "Company") adopted the OHM Corporation Directors' Deferred Fee Plan (the "Plan") to provide benefits upon termination of service or death for Directors of the Company or their beneficiaries; WHEREAS, Article IX of the Plan grants to the Board of Directors the power, subject to certain limitations, to amend the Plan; WHEREAS, in order to conform the operation of the Plan to certain rules and regulations of the Securities and Exchange Commission, the Board of Directors of the Company, by resolution duly adopted, hereby amends the Plan as follows: 1. Section 4.2 of the Plan is hereby amended by adding to the end of Section 4.2 the phrase "provided; however that until such time as the Vice President, General Counsel and Secretary of the Company shall have made a written determination that the provisions of Rule 16b-3 of the Securities Exchange Act of 1934, as amended (or any successor rule), have been amended to permit the receipt by a "disinterested person" (as defined in such Rule) to receive an amount equal to 25% of such Deferred Fees for such calendar year, the additional amount referred to above which shall be credited to the Participant's Deferred Benefit Account shall be equal to 10% of such Deferred Fees for such calendar year. 2. Except as expressly amended herein, the Plan shall remain in full force and effect. EX-10.C 4 OHM EX-10(C) 1 Exhibit 10(c) STANDSTILL AND NON-COMPETITION AGREEMENT This STANDSTILL AND NON-COMPETITION AGREEMENT ("Agreement") is made and entered into this 30th day of May, 1995 by and among OHM Corporation, an Ohio corporation ("OHM"), WMX Technologies, Inc., a Delaware corporation ("WMX"), and Rust International Inc., a Delaware corporation ("Rust"). WHEREAS, Rust, Rust Remedial Services Inc. ("Remedial"), Enclean Environmental Services Group, Inc. ("Enclean"), Rust Environmental Inc. and OHM have entered into that certain Agreement and Plan of Reorganization dated as of December 5, 1994, as amended (the "Reorganization Agreement") whereby Rust Environmental shall merge with and into a wholly-owned subsidiary of OHM, OHM Remediation Services Corp. ("Acquisition") with Acquisition being the surviving entity and OHM shall issue to Rust or certain of its subsidiaries shares of its common stock (the "OHM Common Stock"); WHEREAS, OHM and WMX propose to enter into that certain Guarantee Agreement, dated the date hereof ("Guarantee Agreement"), whereby WMX will agree to guarantee certain indebtedness of OHM and OHM shall issue to WMX, a warrant to purchase 700,000 shares of OHM Common Stock (the "Warrant"); WHEREAS, the parties desire to provide for certain agreements with respect to the ownership and voting by WMX and its affiliates of OHM Common Stock and other matters after such Merger; and WHEREAS, in order to induce OHM to enter into the Reorganization Agreement, WMX and certain of its affiliates are willing to enter into certain agreements which define the rights of WMX and certain of its affiliates to engage in the environmental remediation business after such Merger; WHEREAS, the execution and delivery of this Agreement is a condition of, and in consideration for, the consummation of the transactions contemplated by the Reorganization Agreement. NOW, THEREFORE, in consideration of the agreements, rights, obligations, and covenants contained herein, OHM, Rust and WMX hereby agree as follows: 1.0 AGREEMENTS REGARDING VOTING AND SHARES The parties agree that during the Term of this Agreement: 1.1 ACQUISITION OF VOTING SECURITIES. No member of the WMX Group will, directly or indirectly, acquire Voting Securities or 2 securities convertible into or exercisable or exchangeable for Voting Securities, including the Warrant ("Convertible Securities") (all such Voting Securities and Convertible Securities owned by members of the WMX Group being referred to herein as "Restricted Securities"), other than (i) the acquisition by Rust and/or its subsidiaries of Restricted Securities pursuant to the Reorganization Agreement, (ii) the acquisition by WMX of the Warrant (but not including shares of OHM Common Stock upon exercise thereof) pursuant to the Guarantee Agreement, and (iii) acquisitions of securities (including by conversion, exercise or exchange of Convertible Securities, including the Warrant) which do not result in the WMX Group being the Beneficial Owner of Restricted Securities constituting more than 40% of the Voting Securities then outstanding (the "Ownership Limit"); provided, however, that if the transaction resulting in the WMX Group's being the Beneficial Owner of less than the Ownership Limit was a sale or transfer by the WMX Group of Restricted Securities (the "Voluntary Transaction"), the percentage ownership of Voting Securities then outstanding resulting from the consummation of such Voluntary Transaction shall thereafter be deemed to be the Ownership Limit. In the event that the WMX Group's ownership of Restricted Securities exceeds the Ownership Limit, the WMX Group will be obligated to dispose of Restricted Securities as promptly as practicable in accordance with law in such amount so that the ownership by the WMX Group of Restricted Securities following such disposition is equal to or less than the Ownership Limit; provided, however, that the WMX Group shall not be obligated to dispose of any Restricted Securities if the aggregate percentage ownership of the WMX Group is increased as a result of (a) any action taken by any person other than a member of the WMX Group, including without limitation any recapitalization of OHM, repurchase of Voting Securities by OHM or any similar transaction; or (b) stock dividends or other distributions or offerings made available to holders of Voting Securities generally. 1.2 VOTING. The WMX Group shall take such action as may be required so that all Restricted Securities at any time entitled to vote are voted: (a) for the election of the slate of nominees for election to the Board of Directors of OHM selected by a majority of the directors of OHM other than the designees of Rust pursuant to Section 2.5 hereof serving as directors of OHM (such directors so designated by Rust being referred to herein as the "Rust Directors" and the remaining directors being referred to herein as the "Other Directors"), provided that such slate includes the nominees designated by Rust pursuant to Section 2.5 hereof; and (b) on all other matters to be voted on by the holders of Voting Securities, (i) in accordance with the recommendation of a majority of the Other Directors of OHM -2- 3 if any recommendation is made or, (ii) in the absence of a recommendation, in the same proportion as other stockholders of OHM shall vote on such matter. 1.3 QUORUM. A representative or representatives of the members of the WMX Group, as holders of Restricted Securities, shall be present, in person or by proxy, at any meeting of shareholders of OHM so that all Restricted Securities may be counted for the purpose of determining the existence of a quorum at such meeting. 1.4 VOTING TRUST OR ARRANGEMENT. No member of the WMX Group shall deposit any Restricted Securities in a voting trust or subject any Restricted Securities to any arrangement or agreement with respect to the voting of such Restricted Securities. 1.5 PROXY SOLICITATIONS. No member of the WMX Group shall solicit proxies or initiate, propose or become a "participant" in a "solicitation" (as such terms are defined in Regulation 14A under the Securities Exchange Act of 1934, as amended, or any similar successor statute (the "Exchange Act")), in opposition to any matter which has been recommended by a majority of the Other Directors or in favor of any matter which has not been approved by a majority of the Other Directors or seek to advise, encourage or influence any Person with respect to the voting of Voting Securities in such manner, or induce or attempt to induce any Person to initiate any stockholder proposal. 1.6 GROUP PARTICIPATION. No member of the WMX Group shall join a partnership, limited partnership, syndicate or other group, or otherwise act in concert with any other person, for the purpose of acquiring, holding, voting or disposing of Voting Securities (other than solely with members of the WMX Group in a manner consistent with the purposes hereof). 1.7 SOLICITATIONS OF OFFERS. No director or executive officer of any member of the WMX Group shall, and no member of the WMX Group shall permit any of its other officers, employees or agents (including investment bankers) to, induce or attempt to induce or give encouragement to any third person, or enter into any serious substantive discussions or negotiations with any third person, in furtherance of any tender offer or business combination transaction in which shares of Voting Securities would be acquired; provided, however, that nothing in this Section 1.7 shall, or shall be construed, directly or indirectly, to limit any rights of the WMX Group to offer, sell or otherwise dispose of shares of Restricted Securities pursuant to any transaction effected in accordance with Section 1.8 hereof. -3- 4 1.8 DISPOSITIONS: (a) WMX hereby agrees that, except as otherwise permitted by this Agreement, no member of the WMX Group shall, directly or indirectly, offer, sell, transfer or hypothecate shares of Restricted Securities other than as follows: (i) to other members of the WMX Group; (ii) in a distribution registered under the Securities Act in which such Restricted Securities are offered and sold to the general public; (iii) in compliance with Rule 144 of the General Rules and Regulations under the Securities Act (or any similar successor rule); provided, however, that WMX shall notify OHM at least three business days prior to the date of entering any sale or transfer order in respect of Restricted Securities pursuant to Rule 144 (or such successor rule), and provided further that, if OHM shall thereupon notify the WMX Group of the pendency of a sale or any public offering by OHM of Voting Securities, no member of the WMX Group shall effect any sales of Restricted Securities under such rule within 10 calendar days prior to the commencement of or during such offering; (iv) a merger or consolidation, approved by a majority of the Other Directors, in which OHM is acquired; (v) in a sale or sales to any person approved by a majority of the Other Directors; or (vi) in privately negotiated transactions in which Restricted Securities are not sold or transferred to any other person or group who or which would immediately thereafter, to the knowledge of the WMX Group after reasonable inquiry, beneficially own or have the right to acquire more than 5% of the Voting Securities then outstanding, unless such other person agrees to execute and deliver to OHM an agreement containing obligations similar to the obligations of the WMX Group contained in this Article 1, which agreement shall be approved by a majority of the Other Directors; provided, however, that in any transaction or transactions described in clauses (ii) or (iii), the WMX Group will use its reasonable efforts to effect the transfer thereof in a manner which will effect the broadest possible distribution with no sales or transfers of Restricted Securities to any person or -4- 5 group of persons (within the meaning of Section 13(d) of the Exchange Act) in excess of 5% of the then outstanding Voting Securities. 1.9 LEGENDS, STOP TRANSFER ORDERS AND NOTICE. The WMX Group agrees: (a) to the placement on the certificate or other instrument representing Restricted Securities of the following legend: "The securities represented by this certificate have not been registered under the Securities Act of 1933 and may not be sold or transferred except in compliance with such Act. The securities represented by this certificate are subject to the provisions of an Agreement, dated ____________, 1995 among OHM Corporation, Rust International Inc. and WMX Technologies, Inc., a copy of which is on file at the office of the Secretary of OHM Corporation. (b) to the entry of stop transfer orders with the transfer agent (or agents) and the registrar (or registrars) of OHM against the transfer other than in compliance with the requirements of this Agreement of legended securities of which the WMX Group from time to time is the Beneficial Owner. (c) OHM agrees to the removal of the legend required by Section 1.9(a) and the stop transfer orders in Section 1.9(b) hereof following the later of three years from the date of Closing or the expiration of the Term of the Agreement. 2.0 OTHER AGREEMENTS REGARDING VOTING STOCK 2.1 ANTI-DILUTION OPTIONS. (a) In the event the WMX Group is the Beneficial Owner of Restricted Securities constituting less than 20% of all Voting Securities then outstanding, OHM hereby grants to Rust a cumulative, continuing option (the "Anti-Dilution Option") to purchase (or to have its affiliate or nominee purchase) that number of shares as may be necessary, when added to all other shares of which the WMX Group shall on the relevant date be the Beneficial Owner (not including the Warrant or shares underlying the unexercised Warrant), to enable the WMX Group to be the Beneficial Owner of Restricted Securities (not including the Warrant or shares underlying the unexercised Warrant) constituting not less than 20% and not more than 21% of all Voting Securities outstanding after the exercise of the Anti-Dilution Option. -5- 6 OHM agrees to notify Rust, as provided in Section 6.3 hereof, promptly upon becoming aware that the WMX Group is the Beneficial Owner of Restricted Securities (not including the Warrant or shares underlying the unexercised Warrant) constituting less than 20% of the then outstanding Voting Securities (the "OHM Notice"). The Anti-Dilution Option may be exercised by Rust by written notice to OHM and shall be exercisable for a period commencing on the date that the WMX Group is the Beneficial Owner of Restricted Securities (not including the Warrant or shares underlying the unexercised Warrant) constituting less than 20% of the then outstanding Voting Securities and continuing for a period of ten business days following the date that Rust has received the OHM Notice (the "Option Period") ; provided, however, that in the event that, during the Option Period, OHM has not released to the public material information which, in the reasonable judgment of OHM is reasonably likely to have a material and adverse effect upon the price of the Voting Securities, OHM will extend the Option Period until the date which is two business days following the release of such material information to the public. The Anti-Dilution Option shall be terminated if the transaction resulting in the WMX Group being the Beneficial Owner of less than 20% of all Voting Securities (not including the Warrant or shares underlying the unexercised Warrant) was a sale or transfer of Voting Securities by the WMX Group or if the WMX Group sells or transfers, and thereby reduces, any or all of its beneficial ownership of Restricted Securities at a time when the WMX Group was the Beneficial Owner of Restricted Securities (not including the Warrant or shares underlying the unexercised Warrant) constituting less than 20% of all Voting Securities or any Option Period shall have expired without Rust exercising such Anti-Dilution Option. It is the intention of the parties hereto that the existence and exercise, from time to time, of an Anti-Dilution Option, in combination with the WMX Group's right herein to designate persons to OHM's Board of Directors shall assist the WMX Group in accounting for its ownership in OHM on the equity method. (b) The price per share payable upon each exercise of an Anti-Dilution Option shall be an amount equal to the average closing price per share of the Voting Securities for the five trading days prior to the date that Rust notifies OHM that it is exercising the Anti-Dilution Option on the New York Stock Exchange or other nationally recognized exchange or over-the-counter market on which the Voting Securities primarily trade and shall be payable by wire transfer in immediately available funds to an account designated by OHM. (c) The Voting Securities issued pursuant to an exercise of an Anti-Dilution Option shall be duly -6- 7 authorized, validly issued and fully paid and non-assessable. (d) OHM shall reserve for issuance at all times during the period any Anti-Dilution Option is exercisable that number of Voting Securities equal to the number of Restricted Securities issuable upon exercise of each Anti-Dilution Option. 2.2 INDEPENDENT DIRECTORS. For so long as the WMX Group owns at least 20% of the outstanding Voting Securities, WMX shall take such action as may be reasonably within its control so that OHM's Board of Directors at all times includes at least three directors not affiliated with the WMX Group or employed by OHM or its subsidiaries (the "Independent Directors"). 2.3 TRANSACTIONS WITH OHM. For so long as the WMX Group is the Beneficial Owner of at least 20% of the outstanding Voting Securities, no member of the WMX Group shall attempt to enter, or enter into any material transaction or agreement, out of the ordinary course of business, other than transactions contemplated by Section 2.4 hereof, with OHM or its subsidiaries unless such transaction or agreement is approved by a majority of the Independent Directors or a committee including only Independent Directors. 2.4 WMX GROUP ACQUISITION OF ADDITIONAL VOTING SECURITIES. For so long as the WMX Group is the Beneficial Owner of at least 20% of the outstanding Voting Securities and whether or not the Term of the Agreement for purposes of Article 1 hereof has expired, no member of the WMX Group shall, directly or indirectly, propose to purchase, attempt to purchase or purchase or otherwise acquire any Voting Securities (including by conversion of securities convertible into Voting Securities, by merger or by other business combination), or make any public announcement with respect thereto, except acquisitions to the Ownership Limit pursuant to Section 1.1 hereof, unless (i) such purchase or other acquisition is pursuant to an offer for all of the outstanding Voting Securities at the same price per share and (ii) such purchase or other acquisition is either (x) approved by the Independent Directors or a committee including only Independent Directors or (y) if not so approved, approved by a majority of the outstanding Voting Securities (other than the Restricted Securities beneficially owned by the WMX Group) at a meeting of shareholders called for that purpose pursuant to the provisions of Article X of OHM's Amended and Restated Articles of Incorporation in effect on the date hereof. 2.5 BOARD REPRESENTATION. Immediately following the Closing Date, OHM will elect to its Board of Directors three qualified designees of the WMX Group mutually acceptable to the WMX Group and OHM. Thereafter, for so long as the WMX Group is the Beneficial Owner of at least 20% of the outstanding Voting -7- 8 Securities or the Anti-Dilution Option has not expired, OHM will include among its Board of Directors' nominees for election a number of qualified designees acceptable to the WMX Group and OHM such that the percentage of the Board of Directors proposed to be composed of such designees is proportionately equal (to the lowest corresponding whole directorship) to the percentage of outstanding Voting Securities which the WMX Group then has Beneficial Ownership. 2.6 LISTING ON SECURITIES EXCHANGES. For so long as the WMX Group is the Beneficial Owner of at least 20% of the outstanding Voting Securities, OHM will list the Restricted Securities, and will maintain the listing thereof, on each national securities exchange on which any Common Stock may be listed, subject to official notice of issuance, the Restricted Securities. 2.7 FILE REPORTS AND COOPERATE IN RULE 144 TRANSACTIONS. For as long as the WMX Group shall continue to hold any Voting Securities, OHM shall use reasonable efforts to file on a timely basis all annual, quarterly and other reports required to be filed by it under Sections 13 and 15(d) of the Exchange Act, and the Rules and Regulations of the Commission thereunder, as amended from time to time. In the event of any proposed sale of Voting Securities by any member of the WMX Group pursuant to Section 1.8(a)(iii) above, OHM shall cooperate with the WMX Group so as to enable such sales to be made in accordance with applicable laws, rules and regulations, the requirements of OHM's transfer agent and the reasonable requirements of the broker through which the sales are proposed to be executed, and shall, upon request, furnish unlegended certificates representing Voting Securities in such numbers and denominations as the transferor shall reasonably require for delivery pursuant to such sales. 2.8 DEFINITIONS. For purposes of Article 1 and Article 2 of this Agreement, the following terms shall have the following meanings. (a) Affiliate. "Affiliate" shall have the meaning ascribed to it in Rule 12b-2 of the General Rules and Regulations under the Exchange Act, as in effect on the date hereof. (b) Beneficial Owner. A person shall be deemed a "Beneficial Owner" of or to have "Beneficially Owned" any Voting Securities (i) in accordance with the term "beneficial ownership" as defined in Rule 13d-3 under the Exchange Act, as in effect on the date hereof, and (ii) shall also include Voting Securities which such person or any Affiliate of such person has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement -8- 9 or understanding or upon the exercise of conversion rights, exchange rights, warrant or options, or otherwise. (c) Person. A "person" shall mean any individual, firm, corporation, partnership or other entity. (d) Term of this Agreement. "Term of this Agreement" for purposes of Article 1 hereof, but not for Article 2 hereof, shall mean a period commencing with the date of this Agreement and ending on the first to occur of (i) the failure of OHM to pay, upon the expiration of a ten (10) day grace period following OHM's receipt of a written demand, a copy of which shall be sent to the Independent Directors, any of OHM's Reimbursement Obligations as such term is defined in the Guarantee Agreement following the payment by WMX of any amounts under the guarantee or guarantees provided for in Section 9.6 of the Reorganization Agreement, or (ii) the date that the WMX Group is the Beneficial Owner of Restricted Securities constituting less than 20% of the then outstanding Voting Securities and the Option Period has expired without exercise of the Anti-Dilution Option. (e) Voting Securities. "Voting Securities" includes Common Stock and any other securities of OHM entitled to vote generally for the election of directors, in each case now or hereafter outstanding. (f) WMX Group. "WMX Group" shall mean WMX, Rust and their respective Affiliates (regardless of whether such person is an Affiliate on the date hereof), both in their individual capacities and collectively. An individual shall not be deemed to be an Affiliate for purposes of this definition if such individual is the Beneficial Owner of less than 50,000 shares of Voting Securities solely for investment purposes and is not a member of a "group" which includes the WMX Group as defined by Section 13(d) of the Exchange Act. 3.0 CERTAIN BUSINESS AGREEMENTS 3.1 WMX AND AFFILIATES RESTRICTIVE COVENANTS. (a) Neither WMX nor Rust, or their respective wholly-owned (directly or indirectly) subsidiaries, which do not include Wheelabrator Technologies Inc. and Waste Management International plc and their respective subsidiaries (collectively, the "WMX Affiliates") shall, for a period of seven years from the Closing Date, engage in North America in the business of providing field services for the on-site remediation of hazardous waste, radioactive materials, mixed waste, waste contaminated with petroleum, hydrocarbons, crude oil, PCBs, or any "Hazardous Substances" as such term is defined in the Comprehensive Environmental Response, -9- 10 Compensation and Liability Act of 1980 as amended ("CERCLA") (individually and collectively, "Contaminants"), which services involve the on- site treatment (in-situ, ex-situ, chemical, physical, thermal, biological or otherwise), neutralization, destruction, recharacterization, detoxifying, dewatering, excavation or staging (for removal, storage, treatment, disposal or otherwise) of Contaminants, whether or not such services (i) are provided on an emergency response, planned, on-going, periodic, or other basis, or (ii) are provided for private sector or governmental clients, including without limitation, state and local governments and federal government agencies such as the Department of Defense, the Department of Energy, Department of the Interior, and the Environmental Protection Agency (the "Business"); provided, however, that the Business shall not include (A) services for loading, removal and transportation to an off-site treatment, storage or disposal facility of Contaminants which have already been staged or prepared (in drum, bulk or otherwise) for such removal and transportation, (B) services typically performed in the industrial cleaning and maintenance services businesses or nuclear service business at operating chemical, industrial, manufacturing, refining, utility or other operating facilities in connection with the servicing for, or support of such facilities (e.g.: routine maintenance; industrial cleaning; special services such as filter pressing, centrifuging and drying of various wastes; cleaning of lagoons and tanks for re-use; packaging of wastes related to these services for storage on-site or shipment off-site); (C) services performed in the decontamination or decommissioning of nuclear power plants in the electric utilities industry; (D) services provided in-plant for the analysis, management and staging for transportation or disposal at an off-site treatment, or disposal facility of Contaminants which are generated in the ordinary course of an on-going manufacturing or industrial process; (E) services provided by a WMX Affiliate incidental to the on-going operations of a treatment, storage or disposal facility owned or operated by such WMX Affiliate in the ordinary course of the business of such facility, (F) engineering, design, program management, or construction management services typically performed in connection with an environmental restoration program; (G) on-site environmental remediation services which are provided by a contractor or other person not directly or indirectly affiliated with a WMX Affiliate under a subcontract or teaming arrangement with a WMX Affiliate, provided that Rust has complied with its obligations under Section 3.3 hereof with respect to such services; or (H) on site environmental remediation services in connection with and incidental to services of the type described in (A) and (B) above; provided that the price for such remediation services (excluding the price of waste loading, removal, -10- 11 transportation and disposal) does not exceed $100,000 per project. (b) Notwithstanding anything in this Agreement to the contrary, neither WMX nor any WMX Affiliate shall be prohibited from acquiring the capital stock or assets of any other entity unless such entity's predominate business is the Business and provided, further, that if WMX or the WMX Affiliate shall acquire the capital stock or assets of any other entity engaged in the Business, WMX or the WMX Affiliate shall promptly offer to sell such Business to OHM at a price equal to the fair market value thereof. WMX or the WMX Affiliate shall make such offer by giving OHM prompt written notice of such offer, disclosing all material information pertaining to such Business, the fair market value thereof, and such other terms and conditions to such offer as may be reasonable. OHM shall have a period of 60 days after receipt of such notice to elect to purchase such Business at such price and on such terms and conditions, which election shall be in writing and shall be signed by a duly authorized officer of OHM. Should OHM fail to purchase such Business, WMX or the WMX Affiliate shall nevertheless be required to dispose of such Business. (c) Notwithstanding the failure by OHM to purchase any Business pursuant to the preceding paragraph, prior to selling any Business to any third party, WMX or the WMX Affiliate shall give OHM prompt written notice of any such proposed sale or other disposition of a Business, disclosing all material information pertaining to such third party sale, including, without limitation, the price and other terms and conditions of such sale, and offering to sell such Business to OHM for such price and on such terms and conditions. OHM may elect within 15 days following receipt of such notice (the "Option Period") to purchase such Business at such price and on such terms and conditions as were contemplated in the third party sale, which election shall be in writing and shall be signed by a duly authorized officer of OHM. If OHM shall not have exercised its right to purchase in accordance with the preceding sentence, WMX or the WMX Affiliate may, within 90 days of the expiration of the Option Period, enter into a binding agreement to sell or otherwise dispose of such Business to (but only to) the person who was the subject of the third party sale upon (but only upon) the material terms and conditions offered to OHM pursuant to the preceding sentence. If for any reason such a binding agreement shall not have been entered into within such 90-day period or the transaction contemplated thereby shall not be consummated, WMX or the WMX Affiliate shall be obligated to offer OHM the opportunity to purchase such Business in accordance with the terms of this paragraph before making any sale or disposition of such Business, whether to the same third party or to a different third COMAIN Doc: 50065_12 -11- 12 party and whether on the same material terms and conditions or on different terms and conditions. (d) Neither WMX nor the WMX Affiliates shall, for a period commencing from the date of this Agreement and ending two years following the Closing Date, solicit, employ or offer employment to or agree to employ any employee of the Division other than an employee of the Division who is not offered employment by OHM or its subsidiaries immediately following the Closing. 3.2 BLUE PENCIL PROVISIONS. If any provision of Section 3.1, as applied to any party or to any circumstances, is adjudged by a court to be invalid or unenforceable, the same will in no way affect any other provision of the said Section 3.1 or any other part of this Agreement, the application of such provision in any other circumstances, or the validity or enforceability of this Agreement. If any such provision, or any part thereof, is held to be unenforceable because of the duration of such provision or the area covered thereby, the parties agree that the court making such determination will have the power to reduce the duration and/or area of such provision, and/or to delete specific words or phrases, and in its reduced form such provision will then be enforceable and will be enforced. Upon breach of any provision of Section 3.1, the other party hereto will be entitled to injunctive relief, since the remedy at law would be inadequate and insufficient. In addition, such other party will be entitled to such damages as it can show it has sustained by reason of such breach. 3.3 PREFERRED PROVIDER STATUS. For so long as the WMX Group owns at least 20% of the outstanding Voting Securities, WMX, on behalf of itself and the WMX Affiliates, agrees and agrees to cause the WMX Affiliates to agree that OHM will be a Preferred Provider with respect to any and all services coming within the scope of the Business, as defined in Section 3.1 (whether as prime contractor, subcontractor or otherwise) that WMX or the WMX Affiliates contract for, control, direct, influence or subcontract, provided it is not violative of law, rule, regulation or other contractual obligations. Rust shall provide OHM and its subsidiaries access to and the services of its engineering, consulting, design and project management services personnel on the same basis and at the same cost as Rust provides them to the WMX Affiliates. For so long as the WMX Group owns at least 20% of the outstanding Voting Securities, OHM, on behalf of itself and its subsidiaries (the "OHM Affiliates"), agrees and agrees to cause the OHM Affiliates to agree, that WMX Affiliates will be a Preferred Provider with respect to all engineering, consulting and design, environmental and waste management services commonly provided by the WMX Affiliates (whether as prime contractor, subcontractor or otherwise) that OHM or the OHM Affiliates contract for, control, direct, influence or subcontract, provided it is not violative of -12- 13 law, rule, regulation or other contractual obligations. As used herein, the term "Preferred Provider" means that the person purchasing or contracting for such services (the "Purchaser") shall not purchase such services from any third party unless the Purchaser has reasonably determined in good faith that the overall value, in terms of price, terms and conditions, quality, documentation, service and other matters, of such services from parties other than the Preferred Provider significantly exceeds the value of such services available from the Preferred Provider, provided that the Purchaser shall be excused from the foregoing obligation with respect to any specific provision of services if (i) the Preferred Provider has failed to respond within a reasonable period of time to a request by the Purchaser for a price quotation or other terms or information with respect to the services or has failed to commit to provide such services within the time period in which the Purchaser shall have required such services to be provided, which time period, in either case, shall not be substantially shorter than the time period that the Purchaser would have required from or allowed to a third party or, if the Preferred Provider shall have made no such commitment, within a reasonable period of time after the Purchaser has requested them, or (ii) in the Purchaser's reasonable, good faith judgment, the particular project or product is not appropriate for the Preferred Provider in light of the nature of the Preferred Provider's expertise and experience with similar projects. 3.4 GUARANTEED REMEDIATION PROJECTS. During the period commencing on the Closing Date and ending on December 31, 1996, WMX shall, or shall cause its affiliates to, contract with OHM to provide environmental remediation services to WMX or its affiliates involving revenues to OHM prior to December 31, 1996 of at least $20,000,000 with respect to services typically performed by OHM (the "Revenue Amount"). Such services shall be performed at mutually agreed upon rates, which may include as appropriate and as mutually agreed to rates established from time to time by OHM's government cost accounting system ("OHM's Government Rates"). In the event WMX shall have contracted, or caused its affiliates to contract with OHM for environmental remediation services which involve an amount of revenues to OHM prior to December 31, 1996, which are in an amount less than the Revenue Amount (the "Revenue Shortfall"), WMX shall pay to OHM an amount equal to 10% of the difference between the Revenue Amount and the Revenue Shortfall. 4.0 REPRESENTATIONS AND WARRANTIES OF OHM. OHM represents and warrants to Rust and WMX as follows: 4.1 CORPORATE EXISTENCE, DUE AUTHORIZATION, AND EXECUTION OF OHM. OHM is a corporation duly organized, validly existing, and in good standing under the laws of the State of Ohio, with full corporate power and authority to execute and deliver this -13- 14 Agreement and all other agreements to be delivered by OHM, to perform OHM's obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby. This Agreement and each of the other agreements contemplated hereby and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action of OHM. This Agreement has been duly executed and delivered by OHM and will, after approval by its shareholders, constitute a legal, valid, and binding obligation of OHM, enforceable against OHM in accordance with its terms. 4.2 NO CONFLICTS. The execution and delivery of this Agreement and each of the other agreements contemplated hereby and the consummation of the transactions contemplated hereby and thereby will not conflict with, or result in any violation of or default under, any provision of the Restated Articles of Incorporation or Regulations of OHM, or of any agreement or instrument binding upon OHM. 5.0 REPRESENTATIONS AND WARRANTIES OF WMX AND RUST. 5.1 CORPORATE EXISTENCE, DUE AUTHORIZATION, AND EXECUTION OF RUST. Rust and WMX are corporations duly organized, validly existing, and in good standing under the laws of the State of Delaware, with full corporate power and authority to execute and deliver this Agreement and all other agreements to be delivered by them, to perform their obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby. This Agreement and each of the other agreements contemplated hereby and the consummation of the transactions contemplated hereby and thereby will, at the Closing, have been duly authorized by all necessary corporate action of Rust and WMX, respectively. This Agreement has been duly executed and delivered by Rust and WMX, respectively, and constitutes a legal, valid, and binding obligation of each of them, enforceable against each of them in accordance with its terms. 5.2 NO CONFLICTS. The execution and delivery of this Agreement and each of the other agreements contemplated hereby and the consummation of the transactions contemplated hereby and thereby will not conflict with, or result in any violation of or default under, any provision of the Certificate of Incorporation or By-Laws of Rust or WMX, or of any agreement or instrument binding upon Rust, WMX or their affiliates. 6.0 MISCELLANEOUS. 6.1 SPECIFIC ENFORCEMENT. The parties acknowledge and agree that OHM would be irreparably damaged in the event any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that OHM shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to -14- 15 specifically enforce this Agreement and the terms and provisions thereof in any action instituted in any court of the United States or any state thereof having subject matter jurisdiction, in addition to any other remedy to which OHM may be entitled, at law or in equity. 6.2 MODIFICATION; WAIVER. This Agreement may be modified in any manner and at any time by written instrument executed by the parties hereto. Any of the terms, covenants, and conditions of this Agreement may be waived at any time by the party entitled to the benefit of such term, covenant, or condition. 6.3 NOTICES. All notices, requests, demands, claims, and other communications hereunder shall be in writing and shall be delivered by certified or registered mail (first class postage pre-paid), guaranteed overnight delivery, or facsimile transmission: (a) if to OHM to: 16406 U.S. Route 224 East Findlay, Ohio 45840 Attention: General Counsel Telecopy: (419) 424-4985 (b) if to Rust to: 100 Corporate Parkway Birmingham, Alabama 35242 Attention: General Counsel Telecopy: (205) 995-7914 (c) if to WMX to: 3003 Butterfield Road Oak Brook, Illinois 60521 Attention: General Counsel Telecopy: (708) 218-1553 (d) or, in each case, at such other address or to such other person as may be specified in writing to the other party. 6.4 PARTIES IN INTEREST; ASSIGNMENT. This Agreement and all the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, but neither this Agreement nor any of the rights, interests, and obligations hereunder shall be assigned by any of the parties hereto without the prior written consent of the other parties hereto. Nothing in this Agreement, whether expressed or implied, shall be construed to give any person other -15- 16 than the parties hereto any legal or equitable right, remedy, or claim under or in respect of this Agreement. 6.5 COUNTERPARTS. This Agreement may be executed in one or more counterparts, all of which shall constitute one and the same instrument. 6.6 HEADINGS. The article and section headings of this Agreement are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof. 6.7 GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Ohio applicable to contracts made and to be performed therein. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written. OHM CORPORATION By: /s/ Randall M. Walters -------------------------- Title: Vice President RUST INTERNATIONAL INC. By: /s/ Michael T. Brown -------------------------- Title: Vice President WMX TECHNOLOGIES, INC. By: /s/ Linda R. Witte -------------------------- Title: Vice President -16- EX-10.D 5 OHM EX-10(D) 1 Exhibit 10(d) ============================================================================== ------------------------------------------------------------------------------ WARRANT AGREEMENT by and between WMX TECHNOLOGIES, INC. and OHM CORPORATION Dated as of May 30, 1995 ------------------------------------------------------------------------------ ============================================================================== 2 TABLE OF CONTENTS
PAGE 1. GRANT OF WARRANT . . . . . . . . . . . . . . . . . . . . . . . . 2 1.1 Grant . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.2 Shares To Be Issued; Reservation of Shares . . . . . . . 2 2. ADJUSTMENTS TO WARRANT RIGHTS . . . . . . . . . . . . . . . . . 2 2.1 Stock Combinations . . . . . . . . . . . . . . . . . . . 2 2.2 Reorganizations . . . . . . . . . . . . . . . . . . . . 2 2.3 Adjustment Upon Changes in Capitalization . . . . . . . 3 2.4 Notice . . . . . . . . . . . . . . . . . . . . . . . . . 3 2.5 Fractional Interests . . . . . . . . . . . . . . . . . . 4 2.6 Effect of Alternate Securities . . . . . . . . . . . . . 4 2.7 Successive Application . . . . . . . . . . . . . . . . . 4 3. EXERCISE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 3.1 Exercise of Warrant . . . . . . . . . . . . . . . . . . 5 3.2 Issuance of Warrant Shares . . . . . . . . . . . . . . . 5 4. RIGHTS OF HOLDER . . . . . . . . . . . . . . . . . . . . . . . . 5 5. TRANSFERABILITY . . . . . . . . . . . . . . . . . . . . . . . . 5 6. LEGEND ON WARRANT SHARES . . . . . . . . . . . . . . . . . . . . 5 7. REGISTRATION RIGHTS . . . . . . . . . . . . . . . . . . . . . . 5 7.1 Transfer of Registration Rights . . . . . . . . . . . . 6 7.2 Piggyback Registration . . . . . . . . . . . . . . . . . 6 7.3 Registration Procedures . . . . . . . . . . . . . . . . 7 7.4 Further Information . . . . . . . . . . . . . . . . . . 9 8. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 9 8.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . 9 8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . 9 8.3 Waiver By Consent . . . . . . . . . . . . . . . . . . . 10 8.4 No Implied Waiver; Rights Are Cumulative . . . . . . . . 10 8.5 Governing Law . . . . . . . . . . . . . . . . . . . . . 10 8.6 Severability . . . . . . . . . . . . . . . . . . . . . . 11 8.7 Captions . . . . . . . . . . . . . . . . . . . . . . . . 11 8.8 Entire Agreement . . . . . . . . . . . . . . . . . . . . 11
-i- 3 THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR UNDER ANY APPLICABLE STATE LAW AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION UNDER THE ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER OR SUCH STATE SECURITIES LAWS. THE SECURITIES EVIDENCED HEREBY ARE SUBJECT TO THE PROVISIONS OF AN AGREEMENT, DATED MAY 30, 1995, AMONG OHM CORPORATION, RUST INTERNATIONAL INC. AND WMX TECHNOLOGIES, INC., A COPY OF WHICH IS ON FILE AT THE OFFICE OF THE SECRETARY OF OHM CORPORATION. WARRANT AGREEMENT This WARRANT AGREEMENT (the "Warrant") is being entered into this 30th day of May, 1995, by and between OHM Corporation, an Ohio corporation (together with its successors and permitted assigns, the "Company") and WMX Technologies, Inc., a Delaware corporation (together with his successors and permitted assigns, the "Buyer"). Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Standstill Agreement (as defined below). RECITALS WHEREAS, the Company and Buyer have entered into a Guarantee Agreement of even date herewith pursuant to which Buyer has agreed to guarantee certain indebtedness of the Company and the Company has agreed to grant to Buyer the right to purchase Seven Hundred Thousand (700,000) additional shares of the Company's common stock, par value $.10 per share (the "Common Stock"), at an exercise price of fifteen dollars ($15.00) per share pursuant to the terms and conditions of this Warrant; and WHEREAS, the Company, Rust International Inc. ("Rust") and Buyer have entered into a Standstill and Non-Competition Agreement dated as of the date hereof (the "Standstill Agreement") pursuant to which Rust and Buyer have agreed to certain limitations on their aggregate ownership of the Company, which limitations shall also apply to any shares of Common Stock issued pursuant to this Warrant; NOW, THEREFORE, for the consideration set forth in the Guarantee Agreement and other good and valuable consideration, the sufficiency and receipt of which is hereby acknowledged, the Company agrees with Buyer as follows: 4 1. GRANT OF WARRANT. 1.1 GRANT. The Company hereby grants to Buyer this Warrant, which, subject to the terms and conditions of the Standstill Agreement, is exercisable as provided herein, in whole or in part, at any time and from time to time during the period commencing on the date hereof (the "Closing Date") and ending on the fifth anniversary of the Closing Date at 6:00 p.m., local time in New York, New York, (the "Exercise Period") to purchase an aggregate of up to Seven Hundred Thousand (700,000) shares of Common Stock (the "Warrant Shares"), at an exercise price of fifteen dollars ($15.00) per share (as it may be hereinafter adjusted, the "Exercise Price"). Buyer and its permitted successors and assigns are hereinafter referred to as "Holder." 1.2 SHARES TO BE ISSUED; RESERVATION OF SHARES. The Company covenants and agrees that all Warrant Shares will, upon issuance, be duly authorized, validly issued and outstanding, fully paid and non-assessable, and free from all taxes, liens and charges with respect to the issuance thereof, except as otherwise provided in the Reorganization Agreement. The Company further covenants and agrees that it will from time to time take all actions required to assure that the par value per share of the Common Stock is at all times equal to or less than the effective Exercise Price. The Company further covenants and agrees that, during the Exercise Period, the Company will at all times have authorized and reserved sufficient shares of Common Stock to provide for the exercise of this Warrant in full. 2. ADJUSTMENTS TO WARRANT RIGHTS. 2.1 STOCK COMBINATIONS. In case the Company shall combine all of the outstanding Common Stock proportionately into a smaller number of shares, the Exercise Price per Warrant Share hereunder in effect immediately prior to such combination shall be proportionately increased and the number of Warrant Shares issuable to the Holder upon exercise of this Warrant shall be proportionately decreased, as of the effective date of such combination, as follows: (a) the number of Warrant Shares purchasable upon the exercise of the Warrant immediately prior to the effective date of such combination, shall be adjusted so that the holder of the Warrant exercised after that date shall be entitled to receive the number and kind of Warrant Shares which the holder of the Warrant would have owned and been entitled to receive as a result of the combination had the Warrants been exercised immediately prior to that date, and (b) the Exercise Price in effect immediately prior to such adjustment shall be adjusted by multiplying such Exercise Price by a fraction, the numerator of which is the aggregate number of shares of Common Stock purchasable upon exercise of the Warrants immediately prior to such adjustment, and the denominator of which is the aggregate number of shares of Common Stock purchasable upon exercise of the Warrants immediately thereafter. 2.2 REORGANIZATIONS. If any of the following transactions (each, a "Special Transaction") shall become effective after the Closing Date: (i) a capital reorganization or reclassification of the capital stock of the Company, (ii) a consolidation or merger of the Company with and into another entity, or (iii) a sale or conveyance of all or substantially all 2 5 of the Company's assets, then, as a condition of any such Special Transaction, lawful and adequate provision shall be made whereby the Holder shall thereafter have the right to purchase and receive, at any time after the consummation of such Special Transaction until the expiration of the Exercise Period, upon the basis and upon the terms and conditions specified herein, and in lieu of the Warrant Shares immediately theretofore issuable upon exercise of this Warrant for the aggregate Exercise Price in effect immediately prior to such consummation, such shares of stock, other securities, cash or other assets as may be issued or payable in and pursuant to the terms of such Special Transaction with respect to or in exchange for a number of outstanding shares of Common Stock equal to the number of Warrant Shares immediately theretofore issuable upon exercise of this Warrant had such Special Transaction not taken place (pro rated in the case of any partial exercises). In connection with any Special Transaction, appropriate provision shall be made with respect to the rights and interests of the Holder to the end that the provisions of this Warrant (including without limitation provisions for adjustment of the Exercise Price and the number of Warrant Shares issuable upon the exercise of the Warrant), shall thereafter be applicable, as nearly as may be, to any shares of stock, other securities, cash or other assets thereafter deliverable upon the exercise of this Warrant. The Company shall not effect any Special Transaction unless prior to or simultaneously with the closing the successor entity (if other than the Company), if any, resulting from such consolidation or merger or the entity acquiring such assets shall assume by a written instrument executed and mailed by certified mail or delivered to the Holder at the address of the Holder appearing on the books of the Company, the obligation of the Company or such successor corporation to deliver to such Holder such shares of stock, securities, cash or other assets as, in accordance with the foregoing provisions, such Holder has rights to purchase. 2.3 ADJUSTMENT UPON CHANGES IN CAPITALIZATION. In the event of any change in the Common Stock by reason of stock dividends, stock splits, recapitalizations or reclassifications, the type and number of Warrant Shares issuable upon exercise of this Warrant, and the Exercise Price, as the case may be, shall be adjusted as follows: (a) the number of Warrant Shares purchasable upon the exercise of the Warrant immediately prior to the record date for such dividend or distribution, or the effective date of such recapitalization or reclassification shall be adjusted so that the holder of the Warrant exercised after that date shall be entitled to receive the number and kind of Warrant Shares which the holder of the Warrant would have owned and been entitled to receive as a result of the dividend, distribution, recapitalization or reclassification had the Warrants been exercised immediately prior to that date, and (b) the Exercise Price in effect immediately prior to such adjustment shall be adjusted by multiplying such Exercise Price by a fraction, the numerator of which is the aggregate number of shares of Common Stock purchasable upon exercise of the Warrants immediately prior to such adjustment, and the denominator of which is the aggregate number of shares of Common Stock purchasable upon exercise of the Warrants immediately thereafter. No such adjustment shall be made on account of any dividend payable other than in securities of the Company. 2.4 NOTICE. Whenever this Warrant or the number of Warrant Shares issuable hereunder is to be adjusted as provided herein or a dividend or distribution (in cash, stock or otherwise and including, without limitation, any liquidating distributions) is to be 3 6 declared by the Company, or a definitive agreement with respect to a Special Transaction has been entered into, the Company shall forthwith cause to be sent to the Holder at the last address of the Holder shown on the books of the Company, by first-class mail, postage prepaid, at least ten (10) days prior to the record date specified in (A) below or at least twenty (20) days before the date specified in (B) below, a notice stating in reasonable detail the relevant facts and any resulting adjustments and the calculation thereof, if applicable, and stating (if applicable): (A) the date to be used to determine (i) which holders of Common Stock will be entitled to receive notice of such dividend, distribution, subdivision or combination (the "Record Date"), and (ii) the date as of which such dividend distribution, subdivision or combination shall be made; or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution, subdivision or combination are to be determined (provided, that in the event the Company institutes a policy of declaring cash dividends on a periodic basis, the Company need only provide the relevant information called for in this clause (A) with respect to the first cash dividend payment to be made pursuant to such policy and thereafter provide only notice of any changes in the amount or the frequency of any subsequent dividend payments), or (B) the date on which a Special Transaction is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon consummation of the Special Transaction (the "Exchange Date"). 2.5 FRACTIONAL INTERESTS. The Company shall not be required to issue fractions of shares of Common Stock on the exercise of this Warrant. If any fraction of a share of Common Stock would, except for the provisions of this Section 2.5, be issuable upon the exercise of this Warrant, the Company shall, upon such issuance, purchase such fraction for an amount in cash equal to the current value of such fraction, computed on the basis of the last reported close price of the Common Stock on the New York Stock Exchange ("NYSE") on the last business day prior to the date of exercise upon which such a sale shall have been effected, or, if the Common Stock is not so listed on the NYSE, as the Board of Directors of the Issuer may in good faith determine. 2.6 EFFECT OF ALTERNATE SECURITIES. If at any time, as a result of an adjustment made pursuant to this Section 2, the holder of the Warrants shall thereafter become entitled to receive any securities of the Company other than shares of Common Stock, then the number of such other securities receivable upon exercise of an Warrant shall be subject to adjustment from time to time on terms as nearly equivalent as practicable to the provisions with respect to shares of Common Stock contained in this Section 2. 2.7 SUCCESSIVE APPLICATION. The provisions of this Section 2 shall similarly apply to successive events covered by this Section. 4 7 3. EXERCISE. 3.1 EXERCISE OF WARRANT. (a) The Holder may exercise this Warrant by (i) surrendering this Warrant, with the form of exercise notice attached hereto as Exhibit "A" duly executed by Holder, and (ii) making payment to the Company of the aggregate Exercise Price for the applicable Warrant Shares in cash, by certified check or bank check or by wire transfer to an account designated by the Company. Upon any partial exercise of this Warrant, the Company, at its expense, shall forthwith issue to the Holder for its surrendered warrant a replacement Warrant identical in all respects to this Warrant, except that the number of Warrant Shares shall be reduced accordingly. (b) Record Date for ownership of Warrant Shares. Each person in whose name any Warrant Share certificate is issued upon exercise of the Warrants shall for all purposes been deemed to have become the holder of record of the Warrant Shares for which such Warrants were exercised on, and such Warrant Share certificate shall be dated the date upon which the Warrant exercise notice was duly surrendered and payment of the Exercise Price was tendered to the Company. 3.2 ISSUANCE OF WARRANT SHARES. The Warrant Shares purchased shall be issued to the Holder exercising this Warrant as of the close of business on the date on which all actions and payments required to be taken or made by Holder, pursuant to Section 3.1, shall have been so taken or made. Certificates for the Warrant Shares so purchased shall be delivered to the Holder within a reasonable time, not exceeding ten (10) days after this Warrant is surrendered. 4. RIGHTS OF HOLDER. Holder shall not, solely by virtue of this Warrant and prior to the issuance of the Warrant Shares upon due exercise thereof, be entitled to any rights of a shareholder in the Company. 5. TRANSFERABILITY. Holder hereby represents and warrants that it is acquiring this Warrant and, upon the exercise thereof, the Warrant Shares, for investment and not with a view to resale or distribution thereof. Holder may not sell, assign, transfer or otherwise dispose of this Warrant or any Warrant Shares, except in accordance with federal and state securities laws. Subject to compliance with federal and state securities laws and with the Reorganization Agreement, if applicable, the Holder may sell, assign, transfer or otherwise dispose of any Warrant Shares acquired upon any exercise hereof at any time and from time to time. 6. LEGEND ON WARRANT SHARES. Certificates evidencing the Warrant Shares shall bear the legend set forth on the first page of this Warrant. 7. REGISTRATION RIGHTS. The Warrant Shares will be subject to the following registration rights to successors and assigns of Buyer (other than any successor and assign which is a member of the WMX Group (as defined in the Standstill Agreement)) as hereinafter set forth. For purposes of this Article VII, the term "Registrable Securities" means any of the Warrant Shares and any other shares of Common Stock or other securities 5 8 issued in respect of the Warrant Shares by way of stock dividend or stock split or in connection with any recapitalization, merger, consolidation or reorganization; provided that, as to any particular securities, such securities will cease to be Registrable Securities when they have been sold pursuant to Rule 144 promulgated by the Securities and Exchange Commission or any similar rule then in force ("Rule 144"). 7.1 TRANSFER OF REGISTRATION RIGHTS. Buyer may assign the registration rights with respect to the Warrant Shares to any party or parties to which it may from time to time transfer the Warrants or Warrant Shares, other than any member of the WMX Group. Upon assignment of any registration rights pursuant to this Section 7.1, Buyer shall deliver to Company a notice of such assignment which includes the identity and address of any assignee (each such subsequent holder is referred to as a "Holder"). 7.2 PIGGYBACK REGISTRATION. (a) If at any time, and from time to time, the Company proposes to effect a registration for its account or for the account of a security holder or holders (other than a registration on Form S-8, or any similar or successor form thereto, relating to an employee or director stock option, stock purchase or other benefit plan, or a registration relating to shares issuable in a merger, consolidation, exchange offer, purchase of assets or any similar transaction) ("Piggyback Registration"), the Company shall: (i) promptly give to each Holder of Registrable Securities written notice thereof (which written notice shall include a list of the jurisdictions in which the Company intends to attempt to qualify such securities under or otherwise comply with the applicable blue sky or other state securities laws); and (ii) include in such registration (and any related qualification under or other compliance with blue sky or other state securities laws), and in any underwriting involved therein on the same terms and conditions as the securities being issued thereunder, all the Registrable Securities specified in a written request, made within 15 days after receipt of such written notice from the Company, by any holder of Registrable Securities; provided that if such registration is a registration in which the managing underwriter advises the Company that marketing factors require a limitation of the number of shares of Common Stock to be underwritten in such registration (a "Cutback Registration"), then (i) if such registration is a primary registration, whether or not it includes a secondary registration, on behalf of the Company, the Company shall register in such registration (A) first, the shares of Common Stock the Company proposes to sell in such registration, and (B) second, shares of Common Stock held by each holder of Registrable Securities and any holder of Common Stock, other than the holders of Registrable Securities (in their respective capacities as such) who has the right to request inclusion of Common Stock held by such holder in such registration (the "Electing Holders") on a pro rata basis, based upon the number of shares of Common 6 9 Stock the holders of Registrable Securities and any Electing Holders originally sought to include in such registration; and (ii) if such registration is a Piggyback Registration which is solely a secondary registration on behalf of holders of Common Stock, the Company shall register in such registration shares of Common Stock held by each holder of Registrable Securities and the Electing Holders on a pro rata basis, based upon the number of shares of Common Stock the holders of Registrable Securities and any Electing Holders originally sought to include in such registration andprovided, further, that if such registration is a Cutback Registration, the Company shall use its best efforts to include all shares of Registrable Securities specified in the Holder's written request, but such best efforts shall not include an obligation on the part of the Company to reduce the number of shares of the Company or the other Electing Holders included in such Cutback Registration beyond that expressly provided for in this Section. (b) If the registration of which the Company gives notice is pursuant to an effective registration statement under the Securities Act involving an underwriting, the Company shall so advise each Holder as part of the written notice given pursuant to subclause (i) above. In such event, the right of each such Holder to registration pursuant to this Section shall be conditioned upon such Holder's participation in such underwriting, the inclusion of the Registrable Securities in the underwriting and such Holder entering into an underwriting agreement, containing customary terms and conditions in a form reasonably acceptable to the Holder and the Company, with the underwriter or underwriters selected for such underwriting by the Company; provided that if such underwriting agreement shall not be acceptable to Holder and after reasonable efforts by Company cannot be made acceptable to Holder, the Company may proceed with such registration without registering the stock of Holder in such registration. 7.3 REGISTRATION PROCEDURES. (a) In case of each registration, qualification or compliance effected by the Company subject to this Article VII, the Company shall keep Holder advised in writing as to the initiation of each such registration, qualification and compliance and as to the completion thereof. In addition, at its expense, the Company shall: (i) before filing a registration statement or prospectus or any amendment or supplements thereto subject to this Article VII, the Company shall furnish to counsel selected by Holder copies of all such documents proposed to be filed and the portions of such documents provided in writing by Holder for use therein and for which Holder shall indemnify the Company shall be subject to such Holders approval; (ii) update, correct, amend and supplement such registration, qualification or compliance as necessary; 7 10 (iii) furnish such number of prospectuses, including preliminary prospectuses, and other documents incident thereto as Holder may reasonably request from time to time, which shall be a Selling Expense; (iv) register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions of the United States (up to five of which shall be at the expense of the Company, and any additional of which shall be at the expense of Holder) as Holder may deem reasonable to enable it to consummate the disposition in such jurisdiction of the Registrable Securities (provided that Company will not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this section, or (ii) consent to general service of process in any such jurisdiction); (v) notify Holder at any time when a prospectus relating to the Registrable Securities is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement contains an untrue statement of a material fact or omits any fact necessary to make the statement therein not misleading, and at the request of Holder, Company will prepare a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such shares, such prospectus will not contain any untrue statements of a material fact or omit to state any fact necessary to make the statements therein not misleading; (vi) cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by Company are then listed; (vii) provide a transfer agent and registrar for all such Registrable Securities not later than the effective date of such registration statement; (viii) upon the sale of any Registrable Securities pursuant to such registration statement, remove all restrictive legends from all certificates or other instruments evidencing the Registrable Securities; (ix) furnish, at the request of Holder, on the date that such Registrable Securities are delivered to the underwriter for sale in connection with a registration pursuant to this section, if such Registrable Securities are being sold through an underwriter, or if such Registrable Securities are not being sold through an underwriter, on the date that the registration statement with respect to such Registrable Securities becomes effective, (i) an opinion dated such date of the counsel representing Company for purpose of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to such underwriter, if any, and to 8 11 Holder; and (ii) a letter dated as of such date from the independent certified public accountant of Company, in form and substance as is customarily given by independent certified public accountants to underwriters in connection with a public offering, addressed to the underwriter, if any, and to Holder; and (x) make available for inspection by Holder, any underwriter participating in any disposition pursuant to such registration statement, and any attorney, accountant or any other agent retained by Holder or such underwriter, all financial and other records, pertinent corporate documents and properties of Company, and cause Company's officers, directors and employees to supply all information reasonably requested by any such Holder, underwriter, attorney, accountant or agent in connection with such registration statement. (b) Except as required by law, all expenses incurred by the Company in complying with this Section 7, including but not limited to, all registration, qualification and filing fees, printing expenses, fees and disbursements of counsel for the Company, blue sky fees and expenses in accordance with Section 7.3(a)(iv) hereof, including fees and disbursements of counsel related to all blue sky matters, but excluding the compensation of regular employees of the Company which shall be paid in any event by the Company ("Registration Expenses") incurred in connection with any registration, qualification or compliance pursuant to such Sections shall be borne by the Company. All underwriting discounts and selling commissions applicable to a sale ("Selling Expenses") incurred in connection with any registration of Registrable Securities and the legal fees of Holder shall be born by Holder. 7.4 FURTHER INFORMATION. If Registrable Securities owned by a Holder are included in any registration, such Holder shall furnish the Company such information regarding itself and the distribution proposed by such Holder as the Company may reasonably request and as shall be required in connection with any registration, qualification or compliance referred to in this Agreement. 8. MISCELLANEOUS. 8.1 AMENDMENTS. The parties may, from time to time, enter into written amendments, supplements or modifications hereto for the purpose of adding any provisions to this Warrant or changing in any manner the rights of either of the parties hereunder. No amendment, supplement or modification shall be binding on either party unless made in writing and signed by a duly authorized representative of each party. 8.2 NOTICES. All notices, requests, demands, claims, and other communications hereunder shall be in writing and shall be delivered by certified or registered mail (first class postage pre-paid), guaranteed overnight delivery, or facsimile transmission, which transmission is confirmed by delivery by certified or registered mail (first class postage pre-paid) or guaranteed overnight delivery: 9 12 (a) if to the Company to: OHM Corporation 16406 U.S. Route 224 East Findlay, Ohio 45840 Attention: General Counsel Telecopy: (419) 424-4985 with a copy to: Jones, Day, Reavis & Pogue 41 South High Street 1900 Huntington Center Columbus, OH 43215 Attention: Robert J. Gilker, Esq. Telecopy: (614) 469-4198 (b) if to Buyer to: WMX Technologies, Inc. 3003 Butterfield Road Oak Brook, Illinois 60521 Attention: General Counsel Telecopy: (708) 218-1553 (c) or, in each case, at such other address or to such other person as may be specified in writing to the other party. 8.3 WAIVER BY CONSENT. The Holder may execute and deliver to the Company a written instrument waiving, on such terms and conditions as the Holder may specify in such instrument, any of the requirements of this Warrant. 8.4 NO IMPLIED WAIVER; RIGHTS ARE CUMULATIVE. The failure to exercise or the delay in exercising by either party of any right, remedy, power or privilege under this Warrant, shall not operate as a waiver thereof. The single or partial exercise of any right, remedy, power or privilege under this Warrant shall not preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 8.5 GOVERNING LAW. This Warrant and rights and obligations of the parties hereunder shall be governed by, construed and interpreted in accordance with the 10 13 laws of the State of Ohio applicable to agreements executed by residents of that state, and fully to be performed, in that state. 8.6 SEVERABILITY. If any provision of this Warrant is found to be unenforceable for any reason whatsoever, such provision shall be deemed null and void to the extent of such unenforceability but shall be deemed separable from and shall not invalidate any other provision of this Warrant. 8.7 CAPTIONS. Captions to the various paragraphs of this Agreement are provided for convenience only and shall not be used to construe the provisions of this Warrant. 8.8 ENTIRE AGREEMENT. This Warrant, the Guarantee Agreement and the Standstill Agreement constitute the entire understanding of the parties with respect to the subject matter of the Warrant and supersedes all prior discussions, agreements and representations, whether oral or written, concerning the subject matter hereof and whether or not executed by Buyer and the Company. IN WITNESS WHEREOF, the parties hereto have caused this Warrant to be duly executed and delivered by the proper and duly authorized officers as of the day and year first above written. OHM CORPORATION By: /s/ Randall M. Walters ------------------------------ Name: Randall M. Walters Title: Vice President WMX TECHNOLOGIES, INC. By: /s/ Linda R. Witte ----------------------------- Name: Linda R. Witte Title: Vice President 11 14 EXHIBIT "A" ----------- [To be signed only upon exercise of Warrant] To OHM Corporation: The undersigned, the Holder of the within Warrant, hereby irrevocably elects to exercise the purchase right represented by such Warrant for, and to purchase thereunder, _____________ shares of the common stock, par value $.10 per share, of OHM Corporation and herewith makes payment of $___________ thereof or, and requests that the certificates for such shares be issued in the name of, and be delivered to, ______________ whose address is ___________________________. Dated: _________________________ _______________________________________________ (Signature must conform in all respects to name of Holder as specified on the face of the Warrant) _______________________________________________ Address EX-10.E 6 OHM EX-10(E) 1 EXECUTION COPY Exhibit 10(e) $150,000,000 REVOLVING CREDIT AGREEMENT DATED AS OF MAY 31, 1995 AMONG OHM CORPORATION AND OHM REMEDIATION SERVICES CORP., AS BORROWERS AND CITICORP USA, INC., AS ADMINISTRATIVE AGENT AND BANK OF AMERICA ILLINOIS, AS ISSUING AND PAYING AGENT AND CO-AGENT AND THE FINANCIAL INSTITUTIONS SET FORTH ON THE SIGNATURE PAGES HERETO 2 TABLE OF CONTENTS
SECTION PAGE ------- ---- ARTICLE I DEFINITIONS AND ACCOUNTING TERMS . . . . . . . . . . . . . . . . . . . . . 1 SECTION 1.01. Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES AND LETTERS OF CREDIT . . . . . . . . . . . . . . . 20 SECTION 2.01. The Advances and Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 SECTION 2.02. The Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 SECTION 2.03. Making the Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 SECTION 2.04. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 SECTION 2.05. Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 SECTION 2.06. Joint and Several Liability; Repayment of Advances and Letters of Credit . . . . . . . . . . . . . . . . . . 25 SECTION 2.07. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 SECTION 2.08. Additional Interest on Eurodollar Rate Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 SECTION 2.09. Interest Rate Determination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 SECTION 2.10. Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 SECTION 2.11. Payments and Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 SECTION 2.12. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 SECTION 2.13. Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 SECTION 2.14. Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 SECTION 2.15. Termination or Reduction of the Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 ARTICLE III CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . 39 SECTION 3.01. Conditions Precedent to the Effectiveness of This Agreement . . . . . . . . . . . . . . . . . . . . . . . . 39 SECTION 3.02. Conditions Precedent to Each Extension of Credit Hereunder . . . . . . . . . . . . . . . . . . . . . . . . . 42 ARTICLE IV REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . 43 SECTION 4.01. Representations and Warranties of the Borrowers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 ARTICLE V COVENANTS OF THE BORROWERS . . . . . . . . . . . . . . . . . . . . . . 45 SECTION 5.01. Affirmative Covenants of the Borrowers Other Than Reporting Requirements . . . . . . . . . . . . . . . . . . 45 SECTION 5.02. Negative Covenants of the Borrowers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 SECTION 5.03. Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
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SECTION PAGE ------- ---- ARTICLE VI EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . 58 SECTION 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 ARTICLE VII THE AGENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 62 SECTION 7.01. Authorization and Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 SECTION 7.02. Agents' Reliance, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 SECTION 7.03. Citicorp USA, BAI and Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 SECTION 7.04. Bank Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 SECTION 7.05. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 SECTION 7.06. Successor Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . 65 SECTION 8.01. No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 SECTION 8.02. Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 SECTION 8.03. Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 SECTION 8.04. Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 SECTION 8.05. Obligations Several . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 SECTION 8.06. Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 SECTION 8.07. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 SECTION 8.08. Binding Effect; Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 SECTION 8.09. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 SECTION 8.10. MUTUAL WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 SECTION 8.11. CONSENT TO JURISDICTION; SERVICE OF PROCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 SECTION 8.12. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 SECTION 8.13. Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 SECTION 8.14. Indemnities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 SECTION 8.15. The Transaction Documents; Actions by the Banks; Release and Re-Grant of Collateral; Release of WMX Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 SECTION 8.16. Termination of Prior Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 SECTION 8.17. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
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SECTION PAGE ------- ---- Annexes ------- ANNEX A -- FACILITY A RATE DETERMINATION TABLE ANNEX B -- FACILITY B RATE DETERMINATION TABLE Exhibits -------- EXHIBIT A -- FORM OF ASSIGNMENT AND ACCEPTANCE EXHIBIT B -- FORM OF NOTE EXHIBIT C -- FORM OF NOTICE OF BORROWING EXHIBIT D -- FORM OF SECURITY AGREEMENT AMENDMENT EXHIBIT E -- FORM OF PLEDGE AGREEMENT AMENDMENT EXHIBIT F -- FORM OF WMX GUARANTY EXHIBIT G -- FORM OF WMX INTERCREDITOR AGREEMENT EXHIBIT H -- FORM OF BORROWERS' OPINION OF COUNSEL EXHIBIT I -- FORM OF OPINION OF SPECIAL COUNSEL TO THE AGENT EXHIBIT J -- FORM OF REQUEST FOR RELEASE OF COLLATERAL Schedules --------- SCHEDULE 2.12 -- DOMESTIC AND EURODOLLAR LENDING OFFICES SCHEDULE 2.14(d) -- EXISTING LETTERS OF CREDIT SCHEDULE 4.01(k) -- DOMESTIC AND FOREIGN SUBSIDIARIES SCHEDULE 5.02(a)(iv) -- EXISTING LIENS SCHEDULE 5.02(i)(ii) -- EXISTING INVESTMENTS SCHEDULE 5.02(j)(vii) -- EXISTING INDEBTEDNESS
-iii- 5 EXECUTION COPY REVOLVING CREDIT AGREEMENT This REVOLVING CREDIT AGREEMENT dated as of May 31, 1995 (as the same may be amended, restated, supplemented or otherwise modified from time to time hereafter, the "Agreement") is among OHM Corporation, an Ohio corporation ("OHM"), OHM Remediation Services Corp., an Ohio corporation ("Remediation" and, together with OHM, sometimes hereinafter referred to collectively as the "Borrowers" and each individually as a "Borrower"), the financial institutions listed on the signature pages hereto (together with any other financial institutions from time to time parties hereto, the "Banks" and each a "Bank"), Citicorp USA, Inc., a Delaware corporation, in its individual capacity (in such capacity, "Citicorp USA") and as administrative agent (in such capacity as administrative agent, the "Administrative Agent") for the Banks, and Bank of America Illinois, in its individual capacity (in such capacity, "BAI"), as issuing and paying agent and co-agent (in such capacity as issuing and paying agent and co- agent, the "Issuing and Paying Agent"). In consideration of the mutual covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: ARTICLE I DEFINITIONS AND ACCOUNTING TERMS SECTION 1.01. Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "A Commitment" means, with respect to any Bank at any time, such Bank's Contractual Percentage multiplied by the Total A Commitment at such time. "Accounts Receivable Reserve" means the charge taken by the Borrowers in the fiscal quarter ending December, 1994 in the amount of $25,000,000, in connection with certain accounts receivable or other amounts due from clients of the Borrowers, primarily related to certain litigation between the Borrowers and CITGO Petroleum Corporation. "Advance" means an advance by a Bank to either Borrower as part of a Borrowing and refers to a Eurodollar Rate Advance or a Base Rate Advance, each of which shall be a "Type" of Advance. 6 "Affiliate" means, as to any Person, any other Person that directly or indirectly controls, is controlled by or is under common control with such Person or is a director or officer of such Person. "Alternate Base Rate" means the fluctuating rate per annum as shall be in effect from time to time which rate per annum shall at all times be equal to the highest of (but in no event higher than the maximum rate permitted by law): (a) The rate of interest announced publicly by Citibank in New York, New York, from time to time, as Citibank's base rate; (b) The sum (adjusted to the nearest 1/4 of 1% or, if there is no nearest 1/4 of 1%, to the next higher 1/4 of 1%) of (i) 1/2 of 1% per annum, plus (ii) the rate per annum obtained by dividing (A) the latest three-week moving average of secondary market morning offering rates in the United States for three-month certificates of deposit of major United States money market banks, such three-week moving average being determined weekly on each Monday (or, if any such day is not a Business Day, on the next succeeding Business Day) for the three-week period ending on the previous Friday by Citibank on the basis of such rates reported by certificate of deposit dealers to and published by the Federal Reserve Bank of New York or, if such publication shall be suspended or terminated, on the basis of quotations for such rates received by Citibank from three New York certificate of deposit dealers of recognized standing selected by Citibank, by (B) a percentage equal to 100% minus the average of the daily percentages specified during such three-week period by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, but not limited to, any emergency, supplemental or other marginal reserve requirement) for Citibank in respect of liabilities consisting of or including (among other liabilities) three-month U.S. dollar nonpersonal time deposits in the United States, plus (iii) the average during such three-week period of the annual assessment rates estimated by Citibank for determining the then current annual assessment payable by Citibank to the Federal Deposit Insurance Corporation (or any successor) for insuring U.S. dollar deposits of Citibank in the United States; and (c) The sum of (i) 1/2 of 1% per annum plus (ii) the Federal Funds Rate. "Applicable Base Rate Margin" means the Facility A Base Rate Margin for Facility A Advances and the Facility B Base Rate Margin for Facility B Advances. -2- 7 "Applicable Eurodollar Margin" means the Facility A Eurodollar Margin for Facility A Advances and the Facility B Eurodollar Margin for Facility B Advances. "Applicable Issuance Fee Percentages" means the Facility A Issuance Fee Percentages for Facility A Letters of Credit and the Facility B Issuance Fee Percentages for Facility B Letters of Credit. "Applicable Lending Office" means, with respect to each Bank, (i) such Bank's Eurodollar Lending Office in the case of a Eurodollar Rate Advance and (ii) such Bank's Domestic Lending Office in the case of a Base Rate Advance or a participation in a Letter of Credit. "Applicable Rate Determination Table" means, with respect to Facility A, the Facility A Rate Determination Table and, with respect to Facility B, the Facility B Rate Determination Table. "Assignee" has the meaning specified in Section 8.08. "Assignment" has the meaning specified in Section 8.08. "Assignment and Acceptance" means an Assignment and Acceptance in the form attached hereto as Exhibit A. "Authorized Officer" means, with respect to either Borrower, any of the Chairman of the Board, the President, any Executive Vice President, any Vice President, the Treasurer, the Secretary, the Controller, any Assistant Treasurer or any Assistant Controller of such Borrower, as has been duly authorized to act on behalf of such Borrower hereunder. "B Commitment" means, with respect to any Bank at any time, such Bank's Contractual Percentage multiplied by the Total B Commitment at such time. "Bank of Tokyo Agreement" means that certain Master Loan and Security Agreement dated as of May 11, 1993, between Remediation and BOT Financial Corporation, as the same has been or may be amended from time to time, providing for loans of up to $8,000,000 to finance the capital expenditures in connection with Remediation's Baird and McGuire incineration project in Holbrook, Massachusetts. "Base Rate Advance" means an Advance which bears interest as provided in Section 2.07(b). "Base Rate Margin" has the meaning specified in Section 2.07(b). -3- 8 "Borrower" and "Borrowers" have the meanings specified in the Preamble. "Borrowing" means a borrowing consisting of Advances of the same Type made on the same day by the Banks. "Business Day" means any day on which banks are not required or authorized to close in New York City or Chicago, Illinois and, if the applicable Business Day relates to any Eurodollar Rate Advances, on which dealings are carried on in each interbank eurodollar market. "Capital National" means Capital National Insurance Corp., a Vermont corporation and a wholly-owned subsidiary of OHM. "Citibank" means Citibank, N.A., a national banking association. "Collateral" means all property and interests in property now owned or hereafter acquired by either or both of the Borrowers or any Subsidiary in or upon which a security interest, lien or mortgage is granted to the Issuing and Paying Agent by such Borrower or Subsidiary, as the case may be, whether under this Agreement, the other Transaction Documents, or under any other documents, instruments or writings executed and delivered by such Borrower or Subsidiary, as the case may be, pursuant thereto or in connection therewith. "Commitment" means, as to each Bank, the amount in U.S. dollars set forth opposite the name of such Bank on the signature pages hereof (or, if applicable, on the signature pages of the Assignment and Acceptance pursuant to which such Bank became a Bank hereunder or last made an Assignment hereunder, in each case, pursuant to Section 8.08) with respect to amounts it will make available to the Borrowers by way of Advances and participations in Letters of Credit pursuant to the terms of this Agreement, as such amount may be reduced from time to time pursuant to Section 2.15. "Commitment Fee Agreement" means that certain letter agreement dated April 19, 1995, executed by each of the Borrowers, the Administrative Agent and the Issuing and Paying Agent, with respect to the payment of commitment fees payable in connection with this Agreement. "Consolidated" refers to the consolidation of the accounts of the Borrowers and their Subsidiaries in accordance with generally accepted accounting principles, including principles of consolidation; provided, however, that for purposes of calculating all of the financial covenants for all periods, each of the NSC Companies shall be de-consolidated from OHM and its other Consolidated Subsidiaries and shall be accounted for on -4- 9 an equity basis, in each case, in accordance with generally accepted accounting principles. "Contractual Percentage" means, as to each Bank at any time, such Bank's Commitment at such time divided by the Total Commitment at such time. "Credit Rating" means, at any time, with respect to WMX, the credit rating on the long-term senior unsecured debt of WMX then most recently publicly announced by either Moody's or Standard & Poor's. "Customary Permitted Liens" shall mean: (i) Liens (other than Environmental Liens) for taxes, assessments or governmental charges or claims not yet due or which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves or other appropriate provisions are being maintained in accordance with the provisions of generally accepted accounting principles; (ii) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen and other Liens imposed by law created in the ordinary course of business for amounts not yet due or which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves or other appropriate provisions are being maintained in accordance with the provisions of generally accepted accounting principles; (iii) Liens (other than any Lien imposed by ERISA) incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security benefits or to secure the performance of tenders, bids, leases, contracts (other than for the repayment of borrowed money), statutory obligations and other similar obligations or arising as a result of progress payments under government contracts, or Liens arising under statute or by operation of law (through principles of subrogation) to secure surety, indemnity, payment, performance or other similar bonds in the ordinary course of business; (iv) easements, rights-of-way, restrictions and other similar charges or encumbrances not interfering with the ordinary conduct of the business of the applicable Borrower or its Subsidiaries; and (v) extensions, renewals or replacements of any Lien referred to in paragraphs (i) through (iv) above, -5- 10 provided that the principal amount of the obligation secured thereby is not increased and further provided that any such extension, renewal or replacement is limited to the property originally encumbered thereby. "Debentures" means those certain 8% Convertible Subordinated Debentures due October 1, 2006 in the original principal amount of $57,500,000 issued by OHM (formerly known as Environmental Treatment and Technologies Corp.) under that certain Indenture dated as of October 1, 1986 between OHM and United States Trust Company of New York, as Trustee, as amended (the "Indenture"). "Default" means any event or condition which with the giving of notice or passage of time, or both, would constitute an Event of Default. "Domestic Lending Office" means, with respect to any Bank, the office of such Bank specified as its "Domestic Lending Office" opposite its name on Schedule 2.12 hereto, or such other office of such Bank as such Bank may from time to time specify to the Borrowers, the Administrative Agent and the Issuing and Paying Agent. "EBITDA" means, for any period, on a Consolidated basis for the Borrowers and their Subsidiaries, gross revenues minus direct subcontract costs minus costs of services minus selling, general and administration expenses plus depreciation expense and amortization expense for such period (in each case to the extent such items were included in selling, general and administration expenses and other costs of services), plus, in the case of any period which includes the fiscal quarter ending December 31, 1994, the amount of the Accounts Receivable Reserve. "EBITDA to Interest Expense Ratio" means, as of the last day of any fiscal quarter, the ratio of (i) EBITDA for the preceding four fiscal quarter period ending as of such day to (ii) Interest Expense for such period. "Effective Date" has the meaning specified in Section 3.01. "EFSC" means Environmental Financial Services Corp., a Delaware corporation and a wholly-owned subsidiary of OHM. "Eligible Interest Rate Contract" has the meaning specified in Section 2.16. "Environmental Laws" means any judgment, decree, order, law, license, rule or regulation pertaining to environmental matters, including without limitation, those arising under the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, -6- 11 as amended, the Superfund Amendments and Authorization Act of 1986, the Federal Clean Water Act, the Federal Clean Air Act, the Toxic Substances Control Act or any other federal, state or local statute, regulation, ordinance, order, or decree, or common law, whether in existence now or hereafter enacted, and as such may be amended from time to time, relating to health, safety or the environment. "Environmental Lien" means a lien in favor of any governmental entity for (i) any liability under federal or state environmental laws or regulations, or (ii) damages arising from or costs incurred by such governmental entity in response to a release of a hazardous or toxic waste, substance or constituent, or other substance into the environment. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and the rulings issued thereunder. "ERISA Affiliate" means any (i) corporation which is a member of the same controlled group of corporations (within the meaning of Section 414(b) of the IRC) as either Borrower; (ii) partnership or other trade or business (whether or not incorporated) which is under common control (within the meaning of Section 414(c) of the IRC) with either Borrower; and (iii) member of the same affiliated service group (within the meaning of Section 414(m) of the IRC) as either Borrower, any corporation described in clause (i) above or any partnership, trade or business described in clause (ii) above. "Eurocurrency Liabilities" has the meaning assigned to that term in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time. "Eurodollar Lending Office" means, with respect to any Bank, the office of such Bank specified as its "Eurodollar Lending Office" opposite its name on Schedule 2.12 hereto, or such other office of such Bank as such Bank may from time to time specify to the Borrowers, the Administrative Agent and the Issuing and Paying Agent. "Eurodollar Margin" has the meaning specified in Section 2.07(a). "Eurodollar Rate" means, for the Interest Period for each Eurodollar Rate Advance comprising part of the same Borrowing, an interest rate per annum equal to the average (rounded upward to the nearest whole multiple of 1/16 of 1% per annum, if such average is not such a multiple) of the rate per annum at which deposits in U.S. dollars are offered by the principal office of each of the Reference Banks to prime banks in the interbank eurodollar market at approximately 11:00 A.M. (New York City time) two Business Days before the first day of such -7- 12 Interest Period in an amount substantially equal to such Reference Bank's Eurodollar Rate Advance comprising part of such Borrowing and for a period equal to such Interest Period. The Eurodollar Rate for the Interest Period for each Eurodollar Rate Advance comprising part of the same Borrowing shall be determined by the Issuing and Paying Agent on the basis of applicable rates furnished to and received by the Issuing and Paying Agent from the Reference Banks two Business Days before the first day of such Interest Period, subject, however, to the provisions of Section 2.09. "Eurodollar Rate Advance" means an Advance which bears interest as provided in Section 2.07(a). "Eurodollar Rate Reserve Percentage" of any Bank for the Interest Period for any Eurodollar Rate Advance means the reserve percentage applicable during such Interest Period (or if more than one such percentage shall be so applicable, the daily average of such percentages for those days in such Interest Period during which any such percentage shall be so applicable) under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for such Bank with respect to liabilities or assets consisting of or including Eurocurrency Liabilities having a term equal to such Interest Period. "Events of Default" has the meaning specified in Section 6.01. "Exchange Act" means the Securities Exchange Act of 1934. "Existing Letters of Credit" has the meaning specified in Section 2.14(d). "Facility A Advances" means, on any date, all Advances, or portions thereof, which are part of Facility A Outstandings on such date. "Facility A Base Rate Margin" means the Base Rate Margin determined in accordance with the Facility A Rate Determination Table. "Facility A Eurodollar Margin" means the Eurodollar Margin determined in accordance with the Facility A Rate Determination Table. "Facility A Issuance Fee Percentages" means the Issuance Fee Percentages determined in accordance with the Facility A Rate Determination Table. -8- 13 "Facility A Letters of Credit" means, on any date, all Letters of Credit, or any portion thereof, which are part of Facility A Outstandings on such date. "Facility A Outstandings" means, on any date, all Advances and Letters of Credit on such date other than Advances and Letters of Credit, or any portions thereof, which are Facility B Outstandings. "Facility A Rate Determination Table" means the table set forth as Annex A to this Agreement. "Facility B Advances" means, on any date, all advances, or portions thereof, which are part of Facility B Outstandings on such date. "Facility B Base Rate Margin" means the Base Rate Margin determined in accordance with the Facility B Rate Determination Table. "Facility B Issuance Fee Percentages" means the Issuance Fee Percentages determined in accordance with the Facility B Rate Determination Table. "Facility B Letters of Credit" means, on any date, all Letters of Credit, or any portion thereof, which are part of Facility B Outstandings on such date. "Facility B Level 1 Period" means any period of time during which the Margins and Issuance Fee Percentages for Facility B Outstandings are calculated by reference to Level 1 on the Facility B Rate Determination Table. "Facility B Level 2 Period" means any period of time during which the Margins and Issuance Fee Percentages for Facility B Outstandings are calculated by reference to Level 2 on the Facility B Rate Determination Table. "Facility B Level 3 Period" means any period of time during which the Margins and Issuance Fee Percentages for Facility B Outstandings are calculated by reference to Level 3 on the Facility B Rate Determination Table. "Facility B Level 4 Period" means any period of time during which the Margins and Issuance Fee Percentages for Facility B Outstandings are calculated by reference to Level 4 on the Facility B Rate Determination Table. "Facility B Level 5 Period" means any period of time during which the Margins and Issuance Fee Percentages for Facility B Outstandings are calculated by reference to Level 5 on the Facility B Rate Determination Table. -9- 14 "Facility B Outstandings" means, on any date, the aggregate amount of Advances and Letters of Credit outstanding on such date minus the amount of the Total A Commitment on such date. The amount of Advances and Letters of Credit consisting of Facility A Outstandings and Facility B Outstandings, respectively, will be determined on a daily basis. In making such daily allocation, all outstanding Advances, up to the amount of the Total A Commitment, will be part of Facility A Outstandings. If the Total A Commitment exceeds the amount of outstanding Advances on such date, the aggregate undrawn face amount of Letters of Credit, up to the amount by which the Total A Commitment exceeds the amount of outstanding Advances, will be Facility A Outstandings on such date. "Facility B Rate Determination Table" means the table set forth as Annex B to this Agreement. "Facing Fee" has the meaning specified in Section 2.04(c). "Federal Funds Rate" means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Issuing and Paying Agent from three Federal funds brokers of recognized standing selected by it. "Financial Letter of Credit" means each Letter of Credit determined by the Issuing Bank to be of the type of letter of credit defined as "financial guaranty-type standby letters of credit" in footnote 13 to Appendix A to the Risk Based Capital Guidelines issued by the Comptroller of the Currency. "Funded Debt" means any Indebtedness of either Borrower, created, issued, incurred, assumed or guaranteed (other than the undrawn face amount of letters of credit), whether secured or unsecured, and regardless of maturity date. Funded Debt includes, without limitation, the Notes. "Freeze Event" means a "Freeze Event" under and as defined in the WMX Guaranty. "Freeze Notice" means a "Freeze Notice" under and as defined in the WMX Guaranty. "Funded Debt to EBITDA Ratio" means, as of the last day of any fiscal quarter, the ratio of (i) the aggregate amount of Funded Debt of the Borrowers and their Subsidiaries on a -10- 15 Consolidated basis as at such date to (ii) EBITDA for the preceding four fiscal quarter period ending as of such date. "Government" means the government of any country or sovereign state, or of any state, province, municipality, or other political subdivision thereof, or any department, agency, public corporation or other instrumentality of any of the foregoing. "Guaranties" means, for any Person, (i) all indebtedness or other obligations of any other Person the payment or collection of which such Person has guaranteed (except by reason of endorsement for collection in the ordinary course of business) or in respect of which such Person is liable, contingently or otherwise, including, without limitation, liable by way of agreement to purchase, to provide funds for payment, to supply funds to or otherwise to invest in such other Person, or otherwise to assure a creditor against loss and (ii) all indebtedness or other obligations of any other Person for borrowed money or for the deferred purchase price of property or services secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, deed of trust, pledge, lien, security interest or other charge or encumbrance upon or in property (including, without limitation, accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such indebtedness or obligations. "Guaranty Release Date" has the meaning specified in Section 2.04(d). "Indebtedness" means, for any Person, (i) all indebtedness or other obligations of such Person for borrowed money, including the deferred purchase price of property or services which would constitute indebtedness for purposes of generally accepted accounting principles, (ii) all Guaranties of such Person, (iii) Long Term Lease Obligations of such Person, (iv) withdrawal liability incurred under ERISA by such Person to any Multiemployer Plan, (v) all obligations of such Person in respect of any letter of credit issued for the account of such Person and (vi) all liabilities in respect of unfunded vested benefits under any Plan; provided, however, that "Indebtedness" shall not include (a) non-recourse indebtedness as to which the obligor has no personal liability and which is not secured by any Lien upon any of the obligor's property or (b) credit card indebtedness incurred by or on behalf of either Borrower in the ordinary course of business to purchase property or services if and to the extent such indebtedness is paid in full not less often than monthly, or (c) short-term obligations for the deferred payment of insurance premiums. -11- 16 "Indenture" has the meaning specified in the definition of "Debentures". "Interest Expense" means, for any period, total interest expense of the Borrowers and their Subsidiaries on a Consolidated basis, whether paid or accrued (including the interest component of capital leases), and all commissions, fees and discounts with respect to (i) letters of credit, to the extent such expenses have not otherwise been accounted for as costs of services and (ii) all other Funded Debt, but excluding interest expense not payable in cash (including amortization of discount), all as determined in conformity with generally accepted accounting principles. "Interest Period" means, for each Eurodollar Rate Advance comprising part of the same Borrowing, the period commencing on the date of such Advance, or the date of the conversion of such Advance into a Eurodollar Rate Advance, and ending on the last day of the period selected by the Borrowers pursuant to the provisions below and, thereafter, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by the applicable Borrower pursuant to the provisions below. The duration of each such Interest Period shall be 1, 2, 3 or 6 months, as the applicable Borrower may, upon notice received by the Issuing and Paying Agent not later than 11:00 A.M. (New York City time) on the third Business Day prior to the first day of such Interest Period with respect to such Eurodollar Rate Advance, select; provided, however, that: (i) the Borrowers may not select any Interest Period which ends after the Stated Termination Date; (ii) Interest Periods commencing on the same date for Advances comprising part of the same Borrowing shall be of the same duration; and (iii) whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, provided, in the case of any Interest Period for a Eurodollar Rate Advance, that if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day. "Interest Rate Contracts" means interest rate cap agreements, interest rate swap agreements, interest rate collar agreements, options on any of the foregoing, or any other agreements or arrangements designed to provide protection against fluctuations in interest rates. -12- 17 "Interest Rate and Fee Adjustment Date" means, with respect to each fiscal quarter of the Borrowers ending after September 30, 1995, (a) the first day of the month (occurring in such fiscal quarter) in which the Borrowers shall be deemed to have delivered to the Administrative Agent and the Issuing and Paying Agent, the certificate described in Section 5.03(e) setting forth the calculation of the EBITDA to Interest Expense Ratio and the Funded Debt to EBITDA Ratio for the Measurement Period ending on the last day of the immediately preceding fiscal quarter, in the case of any reduction of the applicable interest rates or fees hereunder, pursuant to Section 2.07 or Section 2.04, respectively, based on the information contained in such certificate, and (b) the first day of such fiscal quarter, in the case of any increase in the applicable interest rates or fees hereunder, pursuant to Section 2.07 or 2.04, respectively, based on the information contained in such certificate. Notwithstanding anything contained herein to the contrary, if the Borrowers shall deliver such certificate to the Administrative Agent and the Issuing and Paying Agent later than the 25th day of any month, it shall be deemed to have been delivered in the succeeding month. In all other cases, the certificate shall be deemed delivered in the month of its actual delivery to the Administrative Agent and the Issuing and Paying Agent. "IRC" means the Internal Revenue Code of 1986, as amended from time to time, the regulations and rules promulgated thereunder, as in effect from time to time, and any successor statute and/or regulations and rules. "IRS" means the Internal Revenue Service (or any successor). "Issuance Fee" has the meaning specified in Section 2.04(b). "Issuance Fee Percentage" has the meaning specified in Section 2.04(b). "Issuing Bank" means, as the context may require, any Bank in its capacity as the issuing bank with respect to any Letter of Credit hereunder. "Letters of Credit" has the meaning specified in Section 2.14(a), and shall include any and all Existing Letters of Credit. "Level" means each of the pricing levels set forth in the Rate Determination Tables. "Lien" shall mean any mortgage, deed of trust, pledge, hypothecation, assignment, deposit arrangement, security interest, encumbrance (including, but not limited to, easements, rights of way, zoning restrictions and the like), lien (statutory -13- 18 or other), preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever, including, without limitation, any conditional sale or other title retention agreement, the interest of a lessor under a capital lease, any financing lease having substantially the same economic effect as any of the foregoing and the filing of any financing statement (other than a financing statement filed by a "true" lessor pursuant to Section 9-408 of the Uniform Commercial Code) naming the owner of the asset to which such Lien relates as debtor, under the Uniform Commercial Code or other comparable law of any jurisdiction. "Long Term Lease Obligations" means, at any time for any Person, the total principal payments remaining at such time in respect of the rental or hire of real or personal property of any kind by such Person (whether or not designated therein as rental or additional rental) under capitalized leases (the principal component of any payments under capitalized leases being determined in accordance with generally accepted accounting principles). "Majority Banks" means Banks having Commitments totaling at least 51% of the Total Commitment. "Margin Stock" has the meaning assigned to such term in Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time. "Margins" means the Eurodollar Margin and the Base Rate Margin. "Measurement Period" means, with respect to any fiscal quarter of the Borrowers, the four fiscal quarter period ending on the last day of the immediately preceding fiscal quarter. "Moody's" means Moody's Investors Service, Inc. "Multiemployer Plan" means a "multiemployer plan", as defined in Section 4001(a)(3) of ERISA. "Net Income" means, with respect to any fiscal period of the Borrowers and their Subsidiaries, the Consolidated net income of the Borrowers and their Subsidiaries after provision for income taxes for such fiscal period, as determined in accordance with generally accepted accounting principles and reported on the Consolidated financial statements of the Borrowers and their Subsidiaries for such fiscal period, less any gain arising from (and plus any loss arising from) extraordinary items or any other non-recurring transaction, as determined in accordance with generally accepted accounting principles. "Net Worth" means as at any date of determination, an amount equal to (i) total assets of the Borrowers and their -14- 19 Subsidiaries (on a Consolidated basis) as at such date, minus (ii) total liabilities of the Borrowers and their Subsidiaries (on a Consolidated basis) as at such date; provided, however, that the Accounts Receivable Reserve shall not be reflected in the calculation of Net Worth for the purposes of this Agreement. "Non-Financial Letter of Credit" means each Letter of Credit which, in the determination of the Issuing Bank, is not a Financial Letter of Credit. "Non-Use Fee" has the meaning specified in Section 2.04(a). "Note" means any of the Revolving Credit Notes of the Borrowers payable to the order of each of the Banks, in substantially the form of Exhibit B, in each case, as the same may be amended, restated, supplemented or otherwise modified from time to time. "Notice of Borrowing" means a telephone, cable or telex notice from either Borrower to the Issuing and Paying Agent, in each case confirmed immediately by a letter in substantially the form of Exhibit C. "NSC Companies" means NSC Corporation, National Surface Cleaning, Inc. and National Service Cleaning Corp., and any other wholly-owned direct or indirect Subsidiary of any of the foregoing. "NSC Corporation" means NSC Corporation, a Delaware corporation. "Obligations" means and includes all loans, advances, debts, liabilities, obligations, covenants and duties owing to either the Administrative Agent, the Issuing and Paying Agent or any of the Banks or any of their respective Affiliates from either or both of the Borrowers of any kind or nature, present or future, arising under this Agreement, under the other Transactions Documents, and under any other agreement, instrument or document executed pursuant to or in connection with this Agreement, whether or not for the payment of money, whether arising by reason of an extension of credit, opening of a letter of credit, loan, guaranty, indemnification or in any other manner, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter arising and the performance obligations of either Borrower under any Eligible Interest Rate Contracts. The term includes, without limitation, the principal amount of all Advances, all Letters of Credit, together with interest, charges, expenses, fees, attorneys' and paralegals' fees and expenses, and any other sums chargeable to either or both of the Borrowers under this Agreement and the other Transaction Documents. -15- 20 "Other Taxes" has the meaning specified in Section 2.12(b). "Participant" has the meaning specified in Section 8.08. "Participation" has the meaning specified in Section 8.08. "PBGC" means the Pension Benefit Guaranty Corporation and any successor thereto. "Permitted Other Indebtedness" has the meaning specified in Section 5.02(j)(ix). "Person" means an individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof. "Plan" means an employee benefit plan (other than a Multiemployer Plan) maintained for employees of either Borrower or any of its ERISA Affiliates and covered by Title IV of ERISA. "Pledge Agreement Amendment" has the meaning specified in Section 3.01(a)(iv). "Prior Credit Agreement" means that certain Revolving Credit Agreement dated as of May 11, 1993, among the Borrowers, Citibank, as agent, BAI, as administrative agent and certain other Persons identified therein, as the same has been amended from time to time. "Rate Determination Table" means each of the Facility A Rate Determination Table and the Facility B Rate Determination Table. "Reference Banks" means Citibank, BAI and The First National Bank of Boston. The Borrowers may, with the consent of the Administrative Agent and the Issuing and Paying Agent, substitute any Bank as a Reference Bank for any of the above-named Banks. "Reorganization Agreement" means that certain Agreement and Plan of Reorganization dated December 5, 1994, as the same may have been and may be amended from time to time among OHM, Rust Remedial Services Inc., Enclean Environmental Services Group, Inc., Rust Environmental, Inc. and Rust International Inc. "Reportable Event" has the meaning assigned to that term in Title IV of ERISA. -16- 21 "Rust Transactions" means the transactions contemplated by the Reorganization Agreement. "Secured Period" means any period prior to the time when the Issuing and Paying Agent and the Banks are required to release their security interests pursuant to Section 8.15(b)(iii), or after the Issuing and Paying Agent are entitled to a re-grant of security interests pursuant to the terms of Section 8.15(b). "Security Agreement Amendment" has the meaning specified in Section 3.01(a)(iii). "Standard & Poor's" means Standard & Poor's Corporation. "Stated Termination Date" means May 30, 2000. "Subsidiary" means any Person the financial statements of which are Consolidated with those of either Borrower. "Subordinated Indebtedness" means the Debentures and any other Indebtedness of either Borrower that is subordinated, in a manner satisfactory in form and substance to the Majority Banks (evidenced by their written confirmation thereof), as to right and time of payment of principal thereof and interest thereon to the Notes and all obligations of the Borrowers under this Agreement, the Notes and the other Transaction Documents. The parties hereto specifically agree that all obligations of the Borrowers hereunder and under the Notes and the other Transaction Documents, whether for principal, interest, fees or otherwise, shall be Senior Indebtedness as defined in the Indenture. "Taxes" has the meaning specified in Section 2.12(a). "Termination Date" means the Stated Termination Date or the earlier date of the termination in whole of the Commitments pursuant to Section 2.15 or Section 6.01. "Termination Event" means (a) a Reportable Event described in Section 4043 of ERISA and the regulations issued thereunder (other than a Reportable Event not subject to the provision for 30-day notice to the PBGC under such regulations), (b) the withdrawal of either Borrower or any of its ERISA Affiliates from a Plan during a plan year in which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA, (c) the filing of a notice of intent to terminate a Plan or the treatment of a Plan amendment as a termination under Section 4041 of ERISA, (d) the institution of proceedings to terminate a Plan by the PBGC, or (e) any other event or condition which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan. -17- 22 "Total A Commitment" means, at any time, an amount equal to the maximum liability of WMX at such time under the WMX Guaranty; provided, however, that at any time that WMX is in default with respect to any indebtedness of WMX with a principal amount that equals or exceeds $50,000,000, the amount of the Total A Commitment shall be zero. "Total B Commitment" means, at any time, an amount equal to the Total Commitment at such time minus the Total A Commitment at such time. "Total Commitment" means at any time, the aggregate sum of the Banks' Commitments at such time. "Total Unused Commitment" means the aggregate sum of the Banks' Unused Commitments. "Transaction Documents" means this Agreement, together with all other instruments, documents and agreements executed and/or delivered in connection therewith, including all notes, security agreements, letters of credit, letter of credit reimbursement agreements, letter of credit applications, guaranties, pledge agreements, including, without limitation, the Notes, the Letters of Credit, the Security Agreement and the Pledge Agreement, in each case, as the same may be amended, restated, supplemented or otherwise modified from time to time. "Underbillings" means, at any time, the amount set forth on the Borrowers' financial statements as "costs and estimated earnings on contracts in process in excess of billings," less any such amounts attributable to (a) Citgo Petroleum Corp. in connection with work done at Citgo's Lake Charles, Louisiana refinery, (b) Occidental Chemical Corporation for work done in North Tonawanda, New York, (c) the Baird & McGuire project and (d) any contracts performed on a "time and materials," "cost plus," or "cost reimbursable" basis, or on any other basis other than a fixed price or fixed unit price basis. "Underbillings Reserve" means, at any time, the excess of (i) the amount of Underbillings at such time, over (ii) thirty five percent (35%) of Net Worth at such time; provided, that during any Facility B Level 1 Period or Facility B Level 2 Period, there will be no Underbillings Reserve. The Underbillings Reserve shall be calculated at the end of each fiscal quarter, and at such other times as the Borrowers may elect. "Unsecured Period" means any period other than a Secured Period. "Unused A Commitment" means, as to each Bank at any time, (i) such Bank's A Commitment at such time less (ii) the sum of (a) such Bank's outstanding Facility A Advances at such time, -18- 23 plus (b) such Bank's participation in the undrawn face amount of Facility A Letters of Credit at such time, plus (c) such Bank's participation interest in any unpaid reimbursement obligations owing by either Borrower in respect of any Facility A Letters of Credit; provided, however, that if the amount described in the foregoing clause (ii) equals or exceeds the amount described in the foregoing clause (i), then such Bank's Unused A Commitment shall be zero. "Unused B Commitment" means, as to each Bank at any time, (i) such Bank's B Commitment at such time less (ii) the sum of (a) such Bank's outstanding Facility B Advances at such time, plus (b) such Bank's participation in the undrawn face amount of Facility B Letters of Credit at such time, plus (c) such Bank's participation interest in any unpaid reimbursement obligations owing by either Borrower in respect of any Facility B Letters of Credit; provided, however, that if the amount described in the foregoing clause (ii) equals or exceeds the amount described in the foregoing clause (i), then such Bank's Unused B Commitment shall be zero. "Unused Commitments" means, as to each Bank at any time, such Bank's Unused A Commitment at such time plus the Bank's Unused B Commitment at such time. "WMX" means WMX Technologies, Inc., a Delaware corporation. "WMX Group" means WMX, Rust and their respective Affiliates. "WMX Guaranty" means that certain Guaranty dated as of the Effective Date, executed by WMX in favor of the Administrative Agent, the Issuing and Paying Agent and the Banks. "WMX Intercreditor Agreement" means that certain Intercreditor Agreement dated as of the date hereof among WMX, the Administrative Agent and the Issuing and Paying Agent, acknowledged by the Borrowers. "WMX Reimbursement Agreement" means the reimbursement agreement to be entered into between WMX and the Borrower providing for the reimbursement of WMX by the Borrowers upon payment being made by WMX under the WMX Guaranty. SECTION 1.02. Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles consistently applied, and all financial data submitted pursuant to this Agreement shall be prepared in accordance with such principles. -19- 24 ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES AND LETTERS OF CREDIT SECTION 2.01. The Advances and Letters of Credit. (a) Each Bank severally agrees, on the terms and subject to the conditions hereinafter set forth, to make Advances to the Borrowers from time to time on any Business Day during the period on and from the Effective Date to but not including the Termination Date in an aggregate amount not to exceed at any time outstanding such Bank's Commitment minus such Bank's Contractual Percentage of the Underbillings Reserve at such time. Each Borrowing shall be in an aggregate amount of not less than $500,000 and in increments of $100,000 in excess of such amount and shall consist of Advances of the same Type, having the same Interest Period and made on the same day by the Banks ratably according to their respective Contractual Percentages at the date of Borrowing. Within the limits of the Total Commitment (minus any applicable Underbillings Reserve), the Borrowers may borrow, prepay pursuant to Section 2.05 or repay pursuant to Section 2.06 and reborrow under this Section 2.01. (b) Each Bank severally agrees on the terms and subject to the conditions hereinafter set forth, to acquire participations in the Letters of Credit issued by an Issuing Bank as provided in Sections 2.14(a) and 2.14(d), in an aggregate undrawn face amount not to exceed at any time outstanding such Bank's Commitment minus such Bank's Contractual Percentage of the Underbillings Reserve at such time. Within the limits of the Total Commitment (minus any applicable Underbillings Reserve), the Borrowers may request the issuance of Letters of Credit on a revolving basis. (c) Notwithstanding the foregoing, the sum of (i) a Bank's outstanding Advances pursuant to Section 2.01(a) plus (ii) such Bank's outstanding participation in Letters of Credit pursuant to Section 2.01(b) plus (iii) the aggregate amount of such Bank's ratable share of any unpaid reimbursement obligations in respect of any Letters of Credit, shall not exceed at any time such Bank's Commitment minus such Bank's Contractual Percentage of any applicable Underbillings Reserve. Furthermore, in no event shall the sum of (1) the aggregate amount of the outstanding Advances, plus (2) the aggregate undrawn face amount of all of the Letters of Credit, plus (3) the aggregate amount of any unpaid reimbursement obligations in respect of any Letters of Credit exceed the Total Commitment at any time minus the Underbillings Reserve at such time. SECTION 2.02. The Notes. The Advances made by each Bank shall be evidenced by the Note received by the Administrative Agent for the account of such Bank. The Borrowers shall execute and deliver additional promissory notes to separately evidence Eurodollar Rate Advances made or to be made -20- 25 pursuant hereto upon the request of the Administrative Agent or any Bank. SECTION 2.03. Making the Advances. (a) The Borrower requesting a Borrowing shall give the Issuing and Paying Agent a Notice of Borrowing not later than 11:00 A.M. (New York City time) on the third Business Day prior to the date of the proposed Borrowing, in the case of Eurodollar Rate Advances, or on the day of the proposed Borrowing, in the case of Base Rate Advances. Each Notice of Borrowing shall specify therein the requested (i) date of such Borrowing, (ii) Type of Advances comprising such Borrowing, (iii) aggregate amount of such Borrowing, and (iv) in the case of a Borrowing consisting of Eurodollar Advances, Interest Period for such Borrowing. In the case of a proposed Borrowing comprised of Eurodollar Rate Advances, the Issuing and Paying Agent shall promptly notify each Bank of the applicable interest rate under Section 2.07. The Issuing and Paying Agent shall, on the date of receipt of the Notice of Borrowing, give telephone notice to each Bank of each proposed Borrowing. Each Bank shall, before 1:00 P.M. (New York City time) on the date of each Borrowing, make available for the account of its Applicable Lending Office to the Issuing and Paying Agent at 231 South LaSalle Street, Chicago, Illinois in same day funds, such Bank's Contractual Percentage of such Borrowing. After the Issuing and Paying Agent's receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Issuing and Paying Agent will make such funds available to the Borrower requesting the Borrowing at the Issuing and Paying Agent's aforesaid address or at such other location or in such other manner as the Issuing and Paying Agent and such Borrower may from time to time agree. The Issuing and Paying Agent shall keep all Notices of Borrowing on file and available for inspection by the Administrative Agent and the Banks. (b) Anything in subsection (a) above to the contrary notwithstanding, (i) if any Bank shall, at least one Business Day before the date of any requested Borrowing, notify the Issuing and Paying Agent that the introduction of or any change in or in the judicial, administrative or other governmental interpretation of any law or regulation makes it unlawful, or that any central bank or other governmental authority asserts that it is unlawful, for such Bank or its Eurodollar Lending Office to perform its obligations hereunder to make Eurodollar Rate Advances or to fund or maintain Eurodollar Rate Advances hereunder, (A) the right of the Borrowers to select Eurodollar Rate Advances for such Borrowing or any subsequent Borrowing shall be suspended until such Bank shall notify the Issuing and Paying Agent that the circumstances causing such suspension no longer exist or such Bank shall cease to be party hereto, and each Advance comprising such Borrowing shall be a Base Rate -21- 26 Advance, and (B) the Borrowers shall, within five Business Days of its receipt of notice thereof from the Issuing and Paying Agent, at their option, either (1) prepay in full all Eurodollar Rate Advances of all Banks then outstanding, together with interest accrued thereon, or (2) convert all Eurodollar Rate Advances of all Banks then outstanding into Base Rate Advances (subject, in each case, to the payment of any amounts required pursuant to subsection (c) below); (ii) if none of the Reference Banks furnish timely information to the Issuing and Paying Agent for determining the Eurodollar Rate for Eurodollar Rate Advances for any Borrowing, the right of the Borrowers to select Eurodollar Rate Advances for such Borrowing or any subsequent Borrowing shall be suspended until the Issuing and Paying Agent shall notify the Borrowers and the Banks that the circumstances causing such suspension no longer exist, and each Advance comprising such Borrowing shall be a Base Rate Advance; and (iii) if the Majority Banks shall at least one Business Day before the date of any requested Borrowing, notify the Issuing and Paying Agent that the Eurodollar Rate for Eurodollar Rate Advances comprising such Borrowing will not adequately reflect the cost to such Majority Banks of making or funding their respective Eurodollar Rate Advances for such Borrowing, the right of the Borrowers to select Eurodollar Rate Advances for such Borrowing or any subsequent Borrowing shall be suspended until the Issuing and Paying Agent shall notify the Borrowers and the Banks that the circumstances causing such suspension no longer exist, and each Advance comprising such Borrowing shall be a Base Rate Advance. (c) Each Notice of Borrowing shall be irrevocable and binding on the Borrowers. Each Borrower shall jointly and severally indemnify each Bank against any loss, cost or expense incurred by such Bank as a result of any payment of principal of any Eurodollar Rate Advance to or for the account of such Bank other than on the last day of the Interest Period therefor, or any failure to fulfill on or before the date specified in any Notice of Borrowing for a Borrowing which is to be comprised of Eurodollar Rate Advances, the applicable conditions set forth in Article III, including, without limitation, any loss (including loss, if any, of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Bank to fund or maintain such Advance or the Advance to be made by such Bank as part of such Borrowing when such Advance, as a result of such failure, is not made on such date. (d) Unless the Issuing and Paying Agent shall have received notice from a Bank prior to the date of any Borrowing that such Bank will not make available to the Issuing and Paying -22- 27 Agent such Bank's portion of such Borrowing (which notice shall not of itself relieve such Bank of any of its obligations hereunder), the Issuing and Paying Agent may assume that such Bank has made such portion available to the Issuing and Paying Agent on the date of such Borrowing in accordance with subsection (a) of this Section 2.03 and the Issuing and Paying Agent may, in reliance upon such assumption, make available to the Borrower requesting the Borrowing on such date a corresponding amount. If and to the extent such Bank shall not have so made such portion available to the Issuing and Paying Agent, such Bank and the Borrowers severally agree to repay to the Issuing and Paying Agent forthwith on demand such corresponding amount together with interest thereon, for each day on and from the date such amount is made available to the requesting Borrower until the date such amount is repaid to the Issuing and Paying Agent, at (i) with respect to the Borrowers, the interest rate applicable at the time to Advances comprising such Borrowing or (ii) with respect to such Bank, the Federal Funds Rate. If such Bank (rather than the Borrowers) shall repay to the Issuing and Paying Agent such corresponding amount, such amount so repaid shall constitute such Bank's Advance as part of such Borrowing for purposes of this Agreement. If the Borrowers (rather than such Bank) shall repay to the Issuing and Paying Agent such corresponding amount, such Borrowing shall not be deemed to include such repaid amount. (e) The failure of any Bank to make the Advance to be made by it as part of any Borrowing shall not relieve any other Bank of its obligation, if any, hereunder to make its Advance on the date of such Borrowing, but no Bank shall be responsible for the failure of any other Bank to make the Advance to be made by such other Bank on the date of any Borrowing. SECTION 2.04. Fees. (a) Non-Use Fee. The Borrowers jointly and severally agree to pay to the Issuing and Paying Agent, for the ratable account of each Bank based on their respective Contractual Percentages, a fee (the "Non-Use Fee") on the average daily Total Unused Commitment from the Effective Date to and including the Termination Date, as follows: (1) on the average daily Total Unused A Commitment, at the rate described in the Facility A Rate Determination Table for the applicable Level set forth on such Table, such rate to change when and as the Credit Rating of WMX changes, and (ii) on the average daily Total Unused B Commitment, at the rate described in the Facility B Rate Determination Table for the applicable Level set forth on such Table for the then applicable Measurement Period. The Non-Use Fee shall be payable in arrears on the first day of each January, April, July and October, commencing on the first such day occurring on or after the Effective Date, and on the Termination Date. (b) Issuance Fee. The Borrowers jointly and severally agree to pay to the Issuing and Paying Agent for the account of each Bank a Letter of Credit issuance fee (the "Issuance Fee") on -23- 28 such Bank's participation in the average daily outstanding undrawn face amount of all Letters of Credit issued or outstanding hereunder, payable in arrears for the immediately preceding quarter on the first day of each January, April, July and October hereafter, and on the Termination Date, at the respective rates (the "Issuance Fee Percentages") described (i) for Facility A Letter of Credit, on the Facility A Rate Determination Table for the applicable Level set forth on such Table, such rate to change when and as the Credit Rating of WMX changes, and (ii) for Facility B Letters of Credit, on the Facility B Rate Determination Table for the applicable Level set forth on such Table for the then applicable Measurement Period. Effective as of each Interest Rate and Fee Adjustment Date, the Facility B Issuance Fee Percentage shall be increased or decreased, if and as applicable, to the rate described on the Facility B Rate Determination Table for the applicable Level set forth on such Table for the then applicable Measurement Period; provided, however, that no decrease in the Facility B Issuance Fee Percentage shall in any event apply to any quarter ending on or prior to the actual date of delivery to the Administrative Agent and the Issuing and Paying Agent of the applicable certificate containing the calculations justifying such decrease. Notwithstanding the foregoing, (i) no decreases in the respective Issuance Fee Percentages shall in any event become effective on any Interest Rate and Fee Adjustment Date or other date on which a Default or an Event of Default shall have occurred and be continuing, and (ii) upon the occurrence of a Default or an Event of Default, until the next subsequent date, in the case of Facility A Letters of Credit, or the next subsequent Interest Rate and Fee Adjustment Date, in the case of Facility B Letters of Credit, on which there shall not exist any Default or Event of Default, (x) if, at the time of such Default or Event of Default, the respective Issuance Fee Percentages are determined by reference to Level 5 on the Applicable Rate Determination Table, the Issuance Fee Percentages shall continue to be determined by reference to such Level, and (y) if, at the time of such Default or Event of Default, the Issuance Fee Percentages are determined by reference to any Level other than Level 5, the Issuance Fee Percentages shall be automatically increased as of the date of such Default or Event of Default, if and to the extent necessary, to the respective rates described at Level 4 on the Applicable Rate Determination Table. From and including the Effective Date until the first date thereafter, in the case of Facility A Letters of Credit, or the first Interest Rate and Fee Adjustment Date thereafter, in the case of the Facility B Letters of Credit, on which a change is called for by application of the Applicable Rate Determination Table, the Facility A Issuance Fee Percentage shall be determined in accordance with Level 2 on the Facility A Rate Determination Table and the Facility B Issuance Fee Percentage shall be determined in accordance with Level 4 on the Facility B Rate Determination Table. -24- 29 (c) Facing Fee. The Borrowers jointly and severally agree to pay to each Issuing Bank, solely for its own account, a fee (the "Facing Fee") on the average daily undrawn face amount of each Letter of Credit issued by such Issuing Bank which is outstanding at any time during the period from the Effective Date to and including the Termination Date, at a rate of 0.125% per annum, payable in arrears on the first day of January, April, July and October, commencing on the first such day occurring on or after the Effective Date, and on the Termination Date. (d) Commitment Fee. If the WMX Guaranty is released pursuant to the provisions of Section 8.15(c), then on such date (the "Guaranty Release Date"), the Borrowers jointly and severally agree to pay to the Issuing and Paying Agent, for the ratable account of each Bank based on the Banks' Contractual Percentages, a fee equal to the amount, if any, by which (1) the amount of the commitment fee which would have been payable to such Bank under the Commitment Fee Agreement had its Commitment on the Effective Date been in the amount of its Commitment on the Guaranty Release Date (after giving effect to any reduction of the Commitments on such date pursuant to Section 2.15) and had such Commitment been treated as entirely a B Commitment, exceeds (2) the amount of the Commitment Fee which was paid to such Bank on the Effective date under the Commitment Fee Agreement. (e) Fees Non-Refundable. All fees paid by the Borrowers pursuant to this Section 2.04 shall be deemed fully earned by performance when paid and shall be non-refundable. SECTION 2.05. Prepayments. The Borrowers may, upon notice to the Issuing and Paying Agent not later than 11:00 A.M. (New York City time) on the day of such prepayment, prepay, without penalty, the outstanding amount of Base Rate Advances comprising the same Borrowing in whole at any time or from time to time ratably in part; provided, however, that each partial prepayment shall be in an aggregate principal amount of not less than $100,000 and in increments of $100,000 in excess of such amount. Notwithstanding the foregoing, any mandatory prepayments of Advances required to be made by the Borrowers hereunder may be made in any amount and such prepayments shall be applied first to the outstanding Base Rate Advances and second to any outstanding Eurodollar Rate Advances in such order as the Issuing and Paying Agent, in its sole discretion, may determine. Any such prepayment of any Eurodollar Rate Advance shall be accompanied by a payment of all accrued and unpaid interest on the amount so prepaid and any losses, costs or expenses of the type described in Section 2.03(c) as a result of such prepayment. SECTION 2.06. Joint and Several Liability; Repayment of Advances and Letters of Credit. (a) Each Borrower shall be jointly and severally obligated to repay the unpaid principal amount of each Advance made by each Bank in accordance with the Notes to the order of such Bank, and to reimburse each Bank with -25- 30 respect to its ratable portion of each drawing on a Letter of Credit, in each case, regardless of whether such Borrower requested the Borrowing or the Letter of Credit or received any funds in respect thereof. (b) Notwithstanding anything contained in this Agreement or any of the other Transaction Documents to the contrary, upon the occurrence of the Termination Date for whatever reason whatsoever, all Obligations (including, without limitation, all unpaid principal of, accrued interest on, and prepayment penalties, if any, with respect to the Advances and the reimbursement obligations in respect of the Letters of Credit, all accrued and unpaid fees and any and all other amounts) shall become immediately due and payable. Additionally on such date, the Borrower shall be required to deliver to each Issuing Bank for cancellation any Letters of Credit issued by such Issuing Bank outstanding at such time or provide to the Issuing and Paying Agent, for the benefit of the Banks, cash collateral in the aggregate amount of the undrawn face amount of any such outstanding Letters of Credit. Notwithstanding the foregoing, until all Obligations are paid and performed in full and all outstanding Letters of Credit are canceled, the Administrative Agent, the Issuing and Paying Agent and the Banks shall retain all of their rights hereunder and under the other Transaction Documents (including, without limitation, the security interest in, and all rights and remedies in respect of, all then existing and after-arising or acquired Collateral for the Obligations). SECTION 2.07. Interest. The Borrowers shall pay interest on the unpaid principal amount of each Advance owing to each Bank from the date of such Advance until such principal amount shall be paid in full, at the following rates per annum: (a) Eurodollar Rate Advances. If such Advance is a Eurodollar Rate Advance, a rate per annum equal at all times during the Interest Period for such Advance to the sum of the Eurodollar Rate for such Interest Period plus a per annum amount (the " Eurodollar Margin") equal to the rate described on the Applicable Rate Determination Table for the applicable Level set forth on such Table, payable on the last day of such Interest Period (and if such Interest Period is 6 months, then also on the last day of the third month of such Interest Period) and as otherwise set forth herein. The Facility A Eurodollar Margin for any Eurodollar Rate Advances shall be determined by reference to the Facility A Rate Determination Table on the first day of the Interest Period for such Advances. The Facility B Eurodollar Margin shall be adjusted, if applicable, on each Interest Rate and Fee Adjustment Date and the Facility B Eurodollar Margin for any Eurodollar Rate Advances for any Interest Period shall be determined by reference to the Facility B Rate Determination Table as of the Interest Rate -26- 31 and Fee Adjustment Date occurring on or immediately prior to the first day of such Interest Period; provided, however, that (i) no decrease in the Facility B Eurodollar Margin shall in any event apply to any Interest Period ending on or prior to the actual date of delivery to the Administrative Agent and the Issuing and Paying Agent of the applicable certificate containing the calculations justifying such decrease or to any part of an Interest Period with respect to which interest became due and payable pursuant to the terms hereof prior to such date of delivery; and (ii) no decrease in the Facility B Eurodollar Margin shall in any event become effective on any Interest Rate and Fee Adjustment Date on which a Default or an Event of Default shall have occurred and be continuing. The Applicable Eurodollar Margin in effect for Advances on the first day of an Interest Period pursuant to the preceding provisions shall be the effective Eurodollar Margin for such Advances throughout such Interest Period; provided, however, that upon the occurrence of a Default or an Event of Default, until the next subsequent date, in the case of Facility A Advances, or the next subsequent Interest Rate and Fee Adjustment Date, in the case of Facility B Advances, on which there shall not exist any Default or Event of Default, (x) if, at the time of such Default or Event of Default, as the case may be, either Applicable Eurodollar Margin is determined by reference to Level 5 on the Applicable Rate Determination Table, such Eurodollar Margin shall continue to be determined by reference to such Level, and (y) if, at the time of such Default or Event of Default, as the case may, either Applicable Eurodollar Margin is determined by reference to any Level other than Level 5, such Eurodollar Margin shall be automatically increased as of the date of such Default or Event of Default, if and to the extent necessary, to the rate described at Level 4 on the Applicable Rate Determination Table. From and including the Closing Date until the first date thereafter, in the case of Facility A Advances, or the first Interest Rate and Fee Adjustment Date thereafter, in the case of Facility B Advances, on which a change is called for by application of the Applicable Rate Determination Table, the Facility A Eurodollar Margin shall be determined in accordance with Level 2 on the Facility A Rate Determination Table and the Facility B Eurodollar Margin shall be determined in accordance with Level 4 on the Facility B Rate Determination Table. (b) Base Rate Advances. If such Advance is a Base Rate Advance, a rate per annum equal at all times to the Alternate Base Rate in effect from time to time plus a per annum amount (the "Base Rate Margin") equal to the rate described on the Applicable Rate Determination Table for the applicable Level set forth on such Table, payable in arrears on the first Business Day of each calendar quarter following -27- 32 a quarter during which such Advance was outstanding and as otherwise set forth herein. The Facility A Base Rate Margin for any Base Rate Advances shall change when and as the Credit Rating of WMX changes. The Facility B Base Rate Margin shall be adjusted, if applicable, on each Interest Date and Fee Adjustment Date; provided, however, that no decrease in the Facility B Base Rate Margin shall in any event apply to any quarter ending on or prior to the actual date of delivery to the Administrative Agent and the Issuing and Paying Agent of the applicable certificate containing the calculations justifying such decrease. Notwithstanding the foregoing, (i) no decrease in either Applicable Base Rate Margin shall in any event become effective on any date on which a Default or an Event of Default shall have occurred and be continuing, and (ii) upon the occurrence of a Default or an Event of Default, until the next subsequent date, in the case of Facility A Advances, or the next subsequent an Interest Rate and Fee Adjustment Date, in the case of Facility B Advances, on which there shall not exist any Default or Event of Default, (x) if, at the time of such Default or Event of Default, as the case may be, either Applicable Base Rate Margin is determined by reference to Level 5 on the Applicable Rate Determination Table, such Base Rate Margin shall continue to be determined by reference such Level, and (y) if, at the time of such Default or Event of Default, as the case may, either Applicable Base Rate Margin is determined by reference to any Level other than Level 5, such Base Rate Margin shall be automatically increased as of the date of such Default or Event of Default, if and to the extent necessary, to the rate described at Level 4 on the Applicable Rate Determination Table. From and including the Closing Date until the first date thereafter, in the case of Facility A Advances, or the first Interest Rate and Fee Adjustment Date thereafter, in the case of Facility B Advances, on which a change is called for by application of the Applicable Rate Determination Table, the Facility A Base Rate Margin shall be determined in accordance with Level 2 on the Facility A Rate Determination Table and the Facility B Base Rate Margin shall be determined in accordance with Level 4 on the Facility B Rate Determination Table. (c) Default Rate. Without limiting anything contained in Sections 2.07(a) or 2.07(b) to the contrary, following the occurrence and during the continuance of an Event of Default, the outstanding principal balance of the Advances shall bear interest, payable on demand, at a rate per annum equal at all times to 2% per annum above the higher of (a) the Alternate Base Rate in effect from time to time or (b) the interest rate applicable to each such Advance at the date of such default (after giving effect, upon the occurrence of such default, to any increase in the Applicable Eurodollar Margin or Applicable Base Rate Margin, as the -28- 33 case may be, if and to the extent required by the provisos to the preceding Sections 2.07(a) and 2.07(b)). (d) Limitation on Interest Rates. In no event shall any interest rate provided for hereunder or under the Notes exceed the maximum rate permissible for corporate borrowers under applicable law (the "Maximum Rate"). If, for any period, any interest rate, absent such limitation, would have exceeded the Maximum Rate, then the interest rate for that period shall be the Maximum Rate, and, if in future periods, that interest rate would otherwise be less than the Maximum Rate, then, to the extent permitted by applicable law, that interest rate shall remain at the Maximum Rate until such time as the amount of interest paid hereunder equals the amount of interest which would have been paid if the same had not been limited by the Maximum Rate. In the event that, upon payment in full of the Obligations under this Agreement, the total amount of interest paid or accrued under the terms of this Agreement is less than the total amount of interest which would, but for this Section 2.07(d), have been paid or accrued if the interest rates otherwise set forth in this Agreement and the Notes had at all times been in effect, then the Borrowers shall, to the extent permitted by applicable law, pay the Banks an amount equal to the difference between (a) the lesser of (i) the amount of interest which would have been charged if the Maximum Rate had, at all times, been in effect or (ii) the amount of interest which would have accrued had the interest rates otherwise set forth in this Agreement, at all times, been in effect and (b) the amount of interest actually paid or accrued under this Agreement. In the event that a court determines that any Bank has received interest and other charges hereunder in excess of the Maximum Rate, such excess shall be deemed received on account of, and shall automatically be applied to reduce, the Obligations other than interest, in the inverse order of maturity, and if there are no Obligations outstanding, such Bank shall refund to the Borrowers such excess. In determining whether any interest rate provided for hereunder or under the Notes exceeds the Maximum Rate, all sums paid or agreed to be paid to the Administrative Agent, the Issuing and Paying Agent, any Issuing Bank, or any Bank for the use, forbearance or detention of the Commitments or the Obligations shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full term of such Commitments or Obligations (including the period of any renewal or extension thereof) so that the interest on the Obligations shall not exceed the Maximum Rate. SECTION 2.08 Additional Interest on Eurodollar Rate Advances. The Borrowers shall pay to the Issuing and Paying Agent for the account of each Bank additional interest on the unpaid principal amount of each Eurodollar Rate Advance of such -29- 34 Bank, from the date of such Advance until such principal amount is paid in full, at a rate per annum equal at all times to the remainder obtained by subtracting (i) the Eurodollar Rate for the Interest Period for such Advance from (ii) the rate obtained by dividing such Eurodollar Rate by a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage, if any, of such Bank for such Interest Period, payable on each date on which interest is payable on such Advance. Such additional interest shall be determined by such Bank and notified to the Borrowers through the Issuing and Paying Agent. SECTION 2.09. Interest Rate Determination. (a) Each Reference Bank agrees to furnish to the Issuing and Paying Agent timely information for the purpose of determining each Eurodollar Rate, as applicable. If any one or more of the Reference Banks shall not furnish such timely information to the Issuing and Paying Agent for the purpose of determining any such interest rate, the Issuing and Paying Agent shall (subject to the requirements of Section 2.03 (b)(ii)) determine such interest rate on the basis of timely information furnished by the remaining Reference Bank. (b) The Issuing and Paying Agent shall give prompt notice to the Borrowers and the Banks of the applicable interest rate determined by the Issuing and Paying Agent for purposes of Section 2.07(a) or (b), and the applicable rate, if any, furnished by each Reference Bank for the purpose of determining the applicable interest rate under Section 2.07(a). (c) The Borrower may, on any Business Day, upon notice given to the Issuing and Paying Agent not later than 11:00 A.M. (New York City time) on the third Business Day prior to the date of the proposed conversion and subject to the provisions of Section 2.03(b), convert all Advances of one Type comprising the same Borrowing into Advances of another Type; provided; however, that, other than as required pursuant to Section 2.03(b)(i), any conversion of any Eurodollar Rate Advances into Base Rate Advances shall be made on, and only on, the last day of an Interest Period for such Eurodollar Rate Advances. Each such notice of a conversion shall, within the restrictions specified above, specify (i) the date of such conversion, (ii) the Advances to be converted, and (iii) if such conversion is into Eurodollar Rate Advances, the duration of the Interest Period for each such Advance. (d) If the Borrowers shall fail to select the duration of any Interest Period for any Eurodollar Rate Advances in accordance with the provisions contained in the definition of "Interest Period" in Section 1.01, the Issuing and Paying Agent will forthwith so notify the Borrowers and the Banks and such Advances will automatically, on the last day of the then existing Interest Period therefor, convert into Base Rate Advances. -30- 35 (e) On the date on which the aggregate unpaid principal amount of Advances comprising any Borrowing shall be reduced, by payment or prepayment or otherwise, to less than $500,000, such Advances shall, if they are Eurodollar Rate Advances, automatically convert into Base Rate Advances, and on and after such date the right of the Borrower to convert such Advances into Advances of a Type other than Base Rate Advances shall terminate; provided however, that if and so long as each such Advance shall be of the same Type and have the same Interest Period as Advances comprising another Borrowing or other Borrowings, and the aggregate unpaid principal amount of all such Advances shall equal or exceed $500,000, the Borrower shall have the right to continue all such Advances as, or to convert all such Advances into, Eurodollar Rate Advances having such Interest Period. SECTION 2.10. Increased Costs. (a) If, due to either (i) the introduction of, or any change (other than any change by way of imposition or increase of reserve requirements included, in the case of Eurodollar Rate Advances, in the Eurodollar Rate Reserve Percentage) in, or in the judicial, administrative or other governmental interpretation of, any law or regulation or (ii) the compliance with any guideline or request from any central bank or other governmental authority (whether or not having the force of law), there shall be any increase in the cost (other than taxes described in clauses (i) through (iv) of Section 2.12(a)) to any Bank of agreeing to make or making, funding or maintaining Eurodollar Rate Advances or Letter of Credit participations, then the Borrowers shall from time to time, upon demand by such Bank (with a copy of such demand to the Issuing and Paying Agent), pay to the Issuing and Paying Agent for the account of such Bank additional amounts sufficient to compensate such Bank for such actual increased cost. A certificate as to the amount of such increased cost, submitted to the Borrowers and the Issuing and Paying Agent by such Bank, shall be prima facie evidence of such amount for all purposes, absent manifest error. (b) If either (i) the introduction of, or any change in, or in the judicial, administrative or other governmental interpretation of, any law or regulation or (ii) compliance with any guideline or request from any central bank or other govern- mental authority (whether or not having the force of law) affects or would affect the amount of capital required to be maintained by any Bank or any corporation controlling any Bank and such Bank determines that the amount of such capital is increased by or based upon the existence of such Bank's Commitment hereunder and other similar commitments, then, upon demand by such Bank (with a copy of such demand to the Issuing and Paying Agent), the Borrowers shall pay to the Issuing and Paying Agent for the account of such Bank from time to time as specified by such Bank additional amounts sufficient to compensate such Bank in the light of such circumstances, to the extent that such Bank reasonably determines such increase in capital to be allocable to the -31- 36 existence of such Bank's Commitment hereunder. A certificate as to such amounts, submitted to the Borrowers and the Issuing and Paying Agent by such Bank, shall be prima facie evidence of such amounts for all purposes, absent manifest error. SECTION 2.11. Payments and Computations. (a) The Borrowers shall make each payment hereunder not later than 11:00 A.M. (New York City time) on the day when due in U.S. dollars to the Issuing and Paying Agent at its address referred to in Section 2.03(a) in same day funds. The Issuing and Paying Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal, interest, facility fees or other amounts to the Banks for the account of their respective Applicable Lending Offices, in each case to be applied in accordance with the terms of this Agreement. The payment of an amount by either Borrower to the Issuing and Paying Agent for the account of any Bank shall satisfy the obligation of the Borrowers to pay such amount to such Bank, and the Borrowers shall not be responsible for the Issuing and Paying Agent's failure to cause a timely distribution of such amounts to such Bank. (b) Each Borrower hereby authorizes each Bank, if and to the extent payment owed to such Bank is not made to the Issuing and Paying Agent when due hereunder, to charge from time to time against any or all of such Borrower's accounts with such Bank any amount so due. (c) All computations of interest and per annum fees hereunder shall be made by the Issuing and Paying Agent, including computations of additional interest pursuant to Section 2.08, shall be made by a Bank, on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or facility fees are payable. Each determination by the Issuing and Paying Agent (or, in the case of Section 2.08, by a Bank) of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error. (d) Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of interest or such fee, as the case may be; provided, however, if such extension would cause payment of interest on or principal of any Eurodollar Rate Advance to be made in the next following calendar month, such payment shall be made on the next preceding Business Day. (e) Unless the Issuing and Paying Agent shall have received notice from the Borrowers prior to the date on which any payment is due to the Bank hereunder that the Borrowers will not make such payment in full, the Issuing and Paying Agent may assume that the Borrowers have made such payment in full to the -32- 37 Issuing and Paying Agent on such date and the Issuing and Paying Agent may, in reliance upon such assumption, cause to be distributed to each Bank on such due date an amount equal to the amount then due such Bank. If and to the extent that the Borrowers shall not have so made such payment in full to the Issuing and Paying Agent, each Bank shall repay to the Issuing and Paying Agent forthwith on demand such amount distributed to such Bank together with interest thereon, for each day from the date such amount is distributed to such Bank until the date such Bank repays such amount to the Issuing and Paying Agent, at the Federal Funds Rate. (f) All payments of principal and interest in respect of outstanding Advances, all payments of fees and all other payments in respect of any other Obligations, shall be allocated among such of the Banks and Issuing Banks as are entitled thereto, in proportion to their respective ratable shares of the Advances or otherwise as provided herein, and shall be applied by the Administrative Agent in respect of the Obligations in the following order: (i) FIRST, to the repayment of and interest on any distribution made by the Issuing and Paying Agent to any Bank pursuant to Section 2.11(e) for which the Issuing and Paying Agent has not then been repaid by such Bank; (ii) SECOND, to pay Obligations in respect of any fees, expense reimbursements or indemnities then due to the Administrative Agent or the Issuing and Paying Agent; (iii) THIRD, to pay Obligations in respect of any fees, expense reimbursements or indemnities then due to the Banks and each Issuing Bank; (iv) FOURTH, to pay interest due in respect of Advances and outstanding reimbursement obligations in respect of Letters of Credit; (v) FIFTH, to pay outstanding reimbursement obligations in respect of Letters of Credit; (vi) SIXTH, to the ratable payment or prepayment of principal outstanding on Advances in such order as the Administrative Agent may determine in its sole discretion; (vii) SEVENTH, to pay the Borrowers' performance obligations under Eligible Interest Rate Contracts; and (viii) EIGHTH, to the ratable payment of all other Obligations. The order of priority set forth in this Section 2.11(f) and the related provisions of this Agreement are set forth solely to -33- 38 determine the rights and priorities of the Administrative Agent, the Issuing and Paying Agent, the Banks and each Issuing Bank. The order of priority set forth in clauses (iii) through (viii) of this Section 2.11(f) may at any time and from time to time be changed by the Majority Banks without necessity of notice to or consent of or approval by either of the Borrowers or any other Person. The order of priority set forth in clause (i) of this Section 2.11(f) may be changed only with the prior written consent of the Issuing and Paying Agent. The order of priority set forth in clause (ii) of this Section 2.11(f) may be changed only with the prior written consent of the Administrative Agent or the Issuing and Paying Agent, as applicable. SECTION 2.12. Taxes. (a) Any and all payments by the Borrowers hereunder shall be made, in accordance with Section 2.11, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding: (i) in the case of each Bank, the Administrative Agent or the Issuing and Paying Agent, taxes imposed on its income, franchise taxes and similar taxes imposed on it, by the jurisdiction under the laws of which such Bank, the Administrative Agent or the Issuing and Paying Agent (as the case may be) is organized or any political subdivision thereof, (ii) in the case of each Bank, taxes imposed on its income, and franchise taxes imposed on it, by the jurisdiction of such Bank's Applicable Lending Office or any political subdivision thereof, (iii) in the case of each Bank, withholding taxes payable with respect to payments to such Bank at its original Applicable Lending Office specified in Schedule 2.12 hereto under laws (including, without limitation, any treaty, ruling, determination or regulation) in effect on May 31, 1995, but not any increase in withholding tax resulting from any subsequent change in such laws, and (iv) in the case of any assignment by a Bank of an interest herein to an assignee pursuant to Section 8.08, or any change of an Applicable Lending Office in one jurisdiction to an Applicable Lending Office in another jurisdiction, any excess of the withholding tax applicable to such assignee, or Applicable Lending Office, over the withholding tax (other than any withholding tax which was excluded from the definition of Taxes under clause (iii) or this clause (iv) of this Section 2.12(a)) which was applicable to the former Bank, or former Applicable Lending Office, as the case may be, in each case as determined under laws (including without limitation, any treaty, ruling, determination or -34- 39 regulation) in effect on the date of such assignment or change, but not including any increase in withholding tax resulting from any subsequent change in such laws; (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 any Taxes from or in respect of any sum payable hereunder to any Bank, the Administrative Agent or the Issuing and Paying Agent, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.12) such Bank, Administrative Agent or Issuing and Paying Agent, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrowers shall make such deductions and (iii) the Borrowers shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. (b) In addition, the Borrowers agree to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Agreement (hereinafter referred to as "Other Taxes"). (c) The Borrowers will jointly and severally indemnify each Bank, the Administrative Agent and the Issuing and Paying Agent for the full amount of all Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 2.12) paid by such Bank, the Administrative Agent or the Issuing and Paying 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. The Borrowers shall make any such payment to such Bank, the Administrative Agent or the Issuing and Paying Agent, as the case may be, within 30 days from the date such Bank, the Administrative Agent or the Issuing and Paying Agent, as the case may be, makes written demand therefor. If any Bank receives a refund in respect of any Taxes or Other Taxes for which such Bank has received payment from the Borrowers hereunder, such Bank shall, within 30 days of such receipt, deliver a notice thereof to the Borrowers. The Borrowers may, within 30 days of receipt of such notice, deliver to such Bank a written request for the amount of such refund in respect of Taxes or Other Taxes, together with a reaffirmation of this Section 2.12 executed by the Borrowers to repay such refund to such Bank (plus any penalties, interest or other charges) in the event that such Bank is required to repay such refund. After receipt of such request, such Bank shall deposit with the Administrative Agent for delivery to the Borrowers the amount of such refund. -35- 40 (d) Within 30 days after the date of any payment of Taxes or Other Taxes withheld by the Borrowers in respect of any payment to any Bank, the Borrower will furnish to the Administrative Agent and the Issuing and Paying Agent, at their respective addresses referred to in Section 8.03, the original or a certified copy of a receipt evidencing payment thereof. (e) Prior to the date of the initial Borrowing in the case of each Bank, and from time to time thereafter if requested by the Borrowers, the Administrative Agent or the Issuing and Paying Agent (and, in any event, annually or as often as may otherwise be required by law or regulation), each Bank organized under the laws of a jurisdiction outside the United States shall provide the Administrative Agent, the Issuing and Paying Agent and the Borrowers with the forms prescribed by the IRS certifying as to such Bank's status for purposes of determining exemption from United States withholding taxes with respect to all payments to be made to such Bank hereunder or other documents satisfactory to the Borrowers, the Issuing and Paying Agent and the Administrative Agent indicating that all payments to be made to such Bank hereunder are subject to such tax at a rate reduced by an applicable tax treaty. Unless the Borrowers, the Issuing and Paying Agent and the Administrative Agent have received forms or other documents satisfactory to them indicating that payments hereunder are not subject to United States withholding tax or are subject to such tax at a rate reduced by an applicable tax treaty, the Borrowers or the Issuing and Paying Agent shall withhold taxes from such payments at the applicable statutory rate in the case of payments to or for any Bank organized under the laws of a jurisdiction outside the United States. (f) Without prejudice to the survival of any other agreement hereunder, the agreements and obligations contained in this Section 2.12 shall survive the payment in full of principal and interest hereunder and the termination of this Agreement. SECTION 2.13. Sharing of Payments, Etc. If any Bank shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of the Obligations owing to it (other than pursuant to Section 2.08, 2.10 or 2.12) in excess of its ratable share (in accordance with the outstanding Advances and Letter of Credit reimbursement obligations of the respective Banks) of payments obtained by all the Banks on account of Advances or reimbursement obligations then due and payable or other amounts then due and payable hereunder, such Bank shall forthwith purchase from the other Banks such participation in the Advances or other Obligations owing to them hereunder as shall be necessary to cause such purchasing Bank to share the excess payment ratably with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Bank, such purchase from each Bank shall be rescinded and such Bank shall repay to the purchasing Bank the purchase price to the -36- 41 extent of such recovery together with an amount equal to such Bank's ratable share (according to the proportion of (i) the amount of such Bank's required repayment to (ii) the total amount so recovered from the purchasing Bank) of any interest or other amount paid or payable by the purchasing Bank in respect of the total amount so recovered. Each Borrower agrees that any Bank so purchasing a participation from another Bank pursuant to this Section 2.13 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Bank were the direct creditor of such Borrower in the amount of such participation. SECTION 2.14. Letters of Credit. (a) Subject to the satisfaction of the conditions provided by Article III hereof, each Issuing Bank agrees to issue its irrevocable clean, standby and documentary Letters of Credit (collectively, the "Letters of Credit") for the account of the Borrowers or either of them as account parties from time to time, with prior notice to the Issuing and Paying Agent, on any Business Day during the period on and from the Effective Date to but not including the Termination Date in an aggregate undrawn face amount not to exceed at any time the amounts set forth in Sections 2.01(b) and 2.01(c) (and no Issuing Bank shall issue a Letter of Credit unless it shall have received confirmation from the Issuing and Paying Agent that the aggregate undrawn face amount of all Letters of Credit, after giving effect to such issuance, would not exceed such amounts). Each Letter of Credit shall be issued by the Issuing Bank with respect to such Letter of Credit on behalf of the Banks ratably according to their respective Contractual Percentages, shall be in such Issuing Bank's standard form and issued pursuant to a Borrower's letter of credit application in such Issuing Bank's standard form (or, in either case, such other form as the Administrative Agent and the Issuing and Paying Agent may approve). The expiration date of any Letter of Credit shall not extend beyond the Stated Termination Date. (b) Immediately upon any drawing under a Letter of Credit, the Borrowers shall jointly and severally reimburse the Issuing Bank with respect to such Letter of Credit and the Banks participating in such Letter of Credit for the amount of such drawing in accordance with this Agreement and the letter of credit application relating thereto. If at the date of such drawing the Borrowers would be able to request a Borrowing hereunder in an amount equal to the amount of such drawing, then the Borrowers shall be deemed, without further act, to have requested such a Borrowing in such amount, to be made by the Banks in accordance with their Contractual Percentages (after giving effect to the payment of such reimbursement obligation) on the date of such drawing and to be applied by the Issuing and Paying Agent to such reimbursement obligation. If any such reimbursement obligation is not paid when due, such reimbursement obligation shall bear interest, from the date when due until paid -37- 42 in full, payable on demand, at a rate per annum equal at all times to 2% per annum above the Alternate Base Rate in effect from time to time. (c) Each Letter of Credit shall be issued by an Issuing Bank, and the Banks shall participate therein according to their respective Contractual Percentages. (d) The parties hereto acknowledge that, prior to the Effective Date, BAI has issued Letters of Credit under the Prior Credit Agreement for the account of one or more of the Borrowers, as more fully described in Schedule 2.14(d) hereto (collectively, the "Existing Letters of Credit"). Each such Existing Letter of Credit shall, for all purposes of this Agreement, be treated as, and be deemed to be, a Letter of Credit issued hereunder and shall be subject to the terms and restrictions contained herein. On the Effective Date, each of the Banks shall be required to, and shall, purchase a ratable participation interest in any such Existing Letter of Credit in accordance with their Contractual Percentages, and BAI, as the Issuing Bank, and the Issuing and Paying Agent shall make appropriate adjustments to their records to reflect such participation. (e) Notwithstanding anything in Section 2.01(b) or this Section 2.14 to the contrary, if any Bank shall, at least one Business Day before the date of issuance of any Letter of Credit, notify the Issuing and Paying Agent that it is unlawful, or that any central bank or other governmental authority asserts that it is unlawful, for such Bank or its Applicable Lending Office to perform its obligation hereunder to acquire a participation in such Letter of Credit or to fund or maintain any such participation hereunder, then such Bank shall not participate in such Letter of Credit and the other Banks shall participate in such Letter of Credit ratably according to their respective Contractual Percentages (calculated without including the Commitment of the Bank giving such notice); provided, however, that if such recalculation would result in any Bank's outstanding Advances, Letter of Credit participations and aggregate ratable share of any unpaid reimbursement obligations in respect of Letters of Credit exceeding, in the aggregate, such Bank's Commitment minus such Bank's Contractual Percentage of any applicable Underbillings Reserve, or (ii) the sum of (1) the aggregate amount of all outstanding Advances, plus (2) the aggregate undrawn face amounts of all of the Letters of Credit, plus (3) the aggregate amount of all unpaid Letter of Credit reimbursement obligations exceeding the Total Commitment minus the sum of the Commitment of the Bank giving such notice and any applicable Underbillings Reserve, then such Letter of Credit shall not be issued. SECTION 2.15. Termination or Reduction of the Commitments. The Borrowers shall have the right, upon at least two Business Days' notice to the Administrative Agent and the -38- 43 Issuing and Paying Agent, to terminate in whole or reduce ratably in part the Unused Commitments of the Banks; provided, however, that each partial reduction shall be in an aggregate amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof. SECTION 2.16. Interest Rate Contracts. At any time a Bank may, but shall have no obligation to, enter into Interest Rate Contracts with respect to the Advances, provided, however, that the notional amount for all such Interest Rate Contracts in effect at any time shall not exceed $40,000,000 in the aggregate. The Borrower and the Bank entering into an Interest Rate Contract shall give written notice to the Administrative Agent, at least three (3) Business Days prior to entering into any Interest Rate Contract, specifying the term thereof, the notional amount thereof and requesting that such contract shall be secured by the Collateral. The Administrative Agent shall, within two (2) Business Days of such notice, notify the applicable Bank and Borrower whether, after giving effect to the proposed Interest Rate Contract, such notional amounts are within the limit set forth above, and if the aggregate notional amount is within such limit at such time, then the Interest Rate Contract shall be secured by the Collateral and shall be deemed an "Eligible Interest Rate Contract" (whether or not the aggregate notional amount for all Interest Rate Contracts subsequently exceeds such limit). ARTICLE III CONDITIONS PRECEDENT SECTION 3.01. Conditions Precedent to the Effectiveness of This Agreement. This Agreement shall become effective and be deemed effective on the first Business Day that all of the following conditions precedent shall have been satisfied (the "Effective Date"): (a) The Administrative Agent shall have received on or before the Effective Date all of the following, each dated such day, in form and substance satisfactory to the Administrative Agent (and, where indicated, each of the Banks): (i) 15 original counterparts of this Agreement, fully-executed, together with all Exhibits and Schedules hereto, completed to the satisfaction of the Administrative Agent and the Banks. (ii) A Note of each of the Borrowers drawn to the order of each Bank. (iii) 15 original counterparts of a Security Agreement (the "Security Agreement Amendment"), fully -39- 44 executed, in substantially the form attached hereto as Exhibit D. (iv) 15 original counterparts of a Pledge Agreement (the " Pledge Agreement Amendment"), fully executed, substantially in the form attached hereto as Exhibit E. (v) 15 original counterparts of the WMX Guaranty in the form attached hereto as Exhibit F. (vi) 15 original counterparts of the WMX Intercreditor Agreement in the form attached hereto as Exhibit G. (vii) Certified copies of the resolutions of the respective Board of Directors of each Borrower evidencing approval, as applicable, of this Agreement, the Notes and all of the other instruments, documents and agreements to be executed and/or delivered in connection with the foregoing, in each case, to the extent such Borrower is a party thereto, and all of the other matters contemplated hereby and thereby, and of all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to the foregoing. (viii) A favorable opinion of Randall M. Walters, Esq., counsel for each of the Borrowers, in the form attached hereto as Exhibit H. (ix) A certificate of the Secretary or an Assistant Secretary of each Borrower certifying (a) the names and true signatures of the officers of such Person authorized to sign this Agreement and the other Transaction Documents and the other documents or certificates to be delivered pursuant to this Agreement or such other Transaction Documents and (b) copies attached thereto of the by-laws of such Person, or, to the extent applicable, that such by-laws of such Person have not been amended, supplemented or otherwise modified since May 11, 1993. (x) Articles/Certificates of Incorporation for each Borrower, certified by the Secretary of State of the State of Ohio in which such Person is incorporated. (xi) Good Standing Certificates for each Borrower from the Secretaries of State of each state in which the nature of such Person's business requires that it qualify to do business. -40- 45 (xii) Requests for Information (form UCC-11) and such other search reports (including, without limitation, tax lien and judgment searches) regarding each Borrower from such jurisdictions as the Administrative Agent deems appropriate. (xiii) Evidence that all insurance required to be maintained by each Borrower pursuant to Section 5.01(a) is in effect. (xiv) Certificates of insurance (or other evidence of insurance satisfactory to the Administrative Agent) and lender's loss payable endorsements in respect of any such insurance policy covering the "Equipment" or "Inventory" (as such terms are defined in the Security Agreement) of each Borrower. (xv) A favorable opinion of Sidley & Austin, special local counsel to the Administrative Agent, in the form attached hereto as Exhibit I. (xvi) A certificate from the Treasurer of OHM certifying (a) that the conditions precedent set forth in Section 3.01(b), (f) and (g) have been fulfilled and (b) that all representations and warranties of and the Borrowers contained herein and in all of the other Transaction Documents are true and correct, in each case, as of the Effective Date. (xvii) Such other agreements, documents and instruments as shall be reasonably requested by the Administrative Agent or the Issuing and Paying Agent. (b) The Rust Transactions shall have been consummated in compliance with all applicable laws. (c) All commitment and other fees required to be paid to the Administrative Agent, the Issuing and Paying Agent or any of the Banks by the Borrowers hereunder or in connection herewith on or prior to the Effective Date shall have been paid. (d) All of the representations and warranties of each of the Borrowers contained in this Agreement and in any other Transaction Document shall be true and complete in all material respects on and as of the Effective Date as though made on and as of such date, except to the extent such representation or warranty expressly speaks only as of a different date. (e) No Default or Event of Default shall have occurred and be continuing or would result from the execution of this Agreement or any of the other Transaction Documents and the consummation of the transactions and the extensions of credit -41- 46 contemplated by this Agreement and the other Transaction Documents. (f) There shall not have occurred since December 31, 1994 any event which, in the reasonable judgment of the Majority Banks, has had a material adverse effect on the financial condition, operations or businesses of the Borrowers taken as a whole. (g) The Prior Credit Agreement shall have been terminated. The acceptance by either Borrower of the proceeds of any extensions of credit hereunder shall constitute a representation and warranty by each of the Borrowers as of the Effective Date that all of the conditions contained in this Section 3.01 have been satisfied. SECTION 3.02. Conditions Precedent to Each Extension of Credit Hereunder. The obligation of each Bank to make an Advance on the occasion of each Borrowing (including the initial Borrowing hereunder) and the obligation of each Issuing Bank to issue, and each Bank to participate in, each Letter of Credit shall be subject to the conditions precedent that on the date of such Borrowing or issuance: (a) The following statements shall be true, and, if requested by the Administrative Agent, the Administrative Agent shall have received for the account of such Bank or Issuing Bank a certificate or certificates signed by a duly authorized officer of each Borrower dated the date of such Borrowing or issuance, stating that: (i) the representations and warranties contained in Section 4.01 are correct on and as of the date of such Borrowing or issuance as though made on and as of such date, and (ii) no event has occurred and is continuing, or would result from such Borrowing or issuance, which constitutes a Default or an Event of Default, which event has not been waived by the Majority Banks. In the absence of a request for such a certificate, the delivery by a Borrower of a Notice of Borrowing or of a Letter of Credit application shall constitute each Borrower's representation that each such statement is and, on the date of such Advance or issuance, shall be true and correct. (b) There shall not have occurred since December 31, 1994, in the reasonable judgment of the Majority Banks, a material adverse change in the financial condition, operations or -42- 47 businesses of the Borrowers and their Subsidiaries taken as a whole. (c) The Administrative Agent shall have received such other documents or instruments as any Bank or the Issuing Bank through the Administrative Agent may reasonably request. (D) Such Borrowing or issuance shall not violate any law, rule, regulation, writ, order or judgment. ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.01. Representations and Warranties of the Borrowers. Each Borrower represents and warrants as follows: (a) Each Borrower is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction indicated at the beginning of this Agreement and is duly qualified as a foreign corporation wherever the failure to so qualify would have a material adverse effect on such Borrower. (b) The execution, delivery and performance by each Borrower of this Agreement and the other Transaction Documents to which it is a party are within such Borrower's corporate powers, have been duly authorized by all necessary corporate action, have received all necessary governmental approvals and do not contravene (i) such Borrower's certificate of incorporation or by-laws, (ii) any law or (iii) any contractual restriction binding on such Borrower. (c) This Agreement and the other Transaction Documents to which each Borrower is a party are, and the Letter of Credit applications when delivered by each Borrower hereunder will be, legal, valid and binding obligations of such Borrower enforceable against it in accordance with their respective terms, except as the enforcement thereof may be limited by bankruptcy, insolvency and similar laws affecting the rights of creditors generally and by general principles of equity. (d) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by either Borrower of this Agreement or the Transaction Documents to which it is a party. (e) Except as disclosed in OHM's Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 1994, there is no pending or, to its knowledge, threatened action or proceeding before any court, governmental agency or arbitrator, in which there is a reasonable probability of a determination adverse to either Borrower, any Subsidiary, or -43- 48 any Affiliate of either Borrower which may, in any such case, materially adversely affect the financial condition or operations of the Borrowers taken as a whole. (f) The Consolidated balance sheets of OHM and its Subsidiaries as at December 31, 1994 and March 31, 1995, and the related statements of income and cash flow for the fiscal year and the three (3) months, respectively, then ended (copies of which have been furnished to each Bank) fairly present the Consolidated financial condition of such Persons as at such dates and the results of the Consolidated operations of such Persons for the year and the three (3) months, respectively, ended on such dates, all in accordance with generally accepted accounting principles consistently applied, and since December 31, 1994 there has been no material adverse change in the financial condition, operations, or businesses of the Borrowers taken as a whole. (g) As of the Effective Date, neither Borrower maintains any Plan. No Termination Event has occurred nor is reasonably expected to occur with respect to any Plan; each Schedule B (Actuarial Information) to an annual report (Form 5500 Series) hereafter delivered to the Banks with respect to any Plan will be complete and accurate and fairly present the funding status of such Plan; and neither Borrower has incurred nor reasonably expects to incur (either as a result of its own actions or the actions of any ERISA Affiliate) any withdrawal liability in excess of $100,000 under ERISA to any Multiemployer Plan, which liability is not reserved for on the books of such Borrower. (h) Neither Borrower is engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System), and no proceeds of any Advance or Letter of Credit will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock in either case for any purpose inconsistent with said Regulation U. (i) No proceeds of any Advance or Letter of Credit will be used to acquire any security in any transaction which is subject to Section 13 or 14 of the Exchange Act, which transaction shall not have received the prior approval of the board of directors of each Person which is an issuer of securities to be acquired in such transaction. (j) The proceeds of the Advances hereunder will be used for general corporate purposes. (k) Attached hereto as Schedule 4.01(k) is a true and complete list of all domestic Subsidiaries and of all foreign Subsidiaries, including in each case the jurisdiction -44- 49 of incorporation of such Subsidiaries and the ownership of the capital stock thereof. (l) As of the Effective Date, (i) such Borrower is in compliance in all material respects with all Environmental Laws and health and safety statutes and regulations, (ii) there are no material governmental investigations of the environmental matters of such Borrower, (iii) there are no contingent liabilities which could reasonably be expected to have a material adverse effect on the financial condition or operations of such Borrower taken as a whole, and (iv) the transactions set forth herein and contemplated hereby shall not subject the Administrative Agent, the Issuing and Paying Agent, the Banks, any Issuing Bank or any of their respective Affiliates or properties to any Environmental Law (including without limitation, any clean- up responsibility law or restrictive transfer law or regulation). (m) The Rust Transactions have been consummated in accordance with all applicable laws. ARTICLE V COVENANTS OF THE BORROWERS SECTION 5.01. Affirmative Covenants of the Borrowers Other Than Reporting Requirements. So long as any Note or any payment due hereunder shall remain unpaid or any Bank shall have any Commitment hereunder, each Borrower will, unless the Majority Banks shall otherwise consent in writing, and shall cause each Subsidiary to: (a) Maintenance of Insurance. Maintain with financially sound and reputable insurers, insurance with respect to its properties and business against such liabilities, casualties, risks and contingencies and in such types and amounts as is customary in the case of Persons engaged in the same or similar businesses and similarly situated. (b) Maintenance of Properties, Etc. Except as otherwise permitted pursuant to Section 5.02(c), maintain and preserve all of its properties, necessary in the proper conduct of its business in good working order and condition, ordinary wear and tear excepted. (c) Keeping of Records and Books of Account. Keep adequate records and books of account, in which complete entries will be made in accordance with generally accepted accounting principles consistently applied, reflecting all financial transactions of such Person. (d) Preservation of Corporate Existence, Etc. Preserve and maintain its corporate existence, rights and privileges in the jurisdiction of its incorporation, and qualify -45- 50 and remain qualified as a foreign corporation in each jurisdiction in which the failure to so qualify would have a material adverse effect on such Person; provided, however, that nothing herein contained shall prevent any merger or consolidation permitted under this Agreement. (e) Law. Comply in all material respects with all applicable laws, rules, regulations and orders, such compliance to include, without limitation, paying before the same become delinquent all taxes, assessments and governmental charges and liens imposed upon it or upon its property, except to the extent contested in good faith and by appropriate proceedings and to the extent adequate reserves are maintained with respect thereto in accordance with generally accepted accounting principles. (f) Visitation Rights. At any reasonable time and from time to time on reasonable notice, permit any of the Banks or any agents or representatives thereof to examine and make copies of and abstracts from the records and books of account of, and visit the properties of, such Borrower, and to discuss the affairs, finances and accounts of such Person with any of their respective officers or directors. (g) Subsidiary Guaranties. Cause each existing or future Subsidiary (other than any Subsidiary which is a Borrower) to execute and deliver, upon request of the Administrative Agent, to the Issuing and Paying Agent an unconditional secured guaranty of the Obligations, and, upon request of the Administrative Agent during a Secured Period, pledge the stock of any such Subsidiary to the Issuing and Paying Agent, for the benefit of the Banks. SECTION 5.02. Negative Covenants of the Borrowers. So long as any Note or any payment due hereunder shall remain unpaid or any Bank shall have any Commitment hereunder, neither of the Borrowers nor any Subsidiary will, unless the Majority Banks shall otherwise consent in writing: (a) Liens, Etc. Create, incur, assume or suffer to exist any Lien upon or with respect to any of its properties, now owned or hereafter acquired, or assign or otherwise convey, any right to receive income; provided, however, that the foregoing restrictions shall not be applicable to the following: (i) Liens granted to or held by the Issuing and Paying Agent securing payment and performance of the Obligations; (ii) Customary Permitted Liens; (iii) contracts with or for the Government, directly or indirectly providing for advance, partial or progress payments on such contracts or for any lien, paramount to all other liens, upon moneys advanced or -46- 51 paid pursuant to such contracts, or upon any material or supplies in connection with the performance of such contracts to secure such payments to the Government; and liens or other evidences of interest in favor of the Government, paramount to all other liens, directly or indirectly, for the Government to secure Indebtedness incurred and owing to the Government in connection with any such contracts; (iv) Liens listed on Schedule 5.02(a)(iv) hereto (but not any increase in the debt secured thereby or any enlargement of properties or assets covered thereby); (v) Liens with respect to judgments which do not result in an Default or Event of Default under or a breach of this Agreement; (vi) Liens on the assets of Remediation securing Indebtedness under the Bank of Tokyo Agreement, to the extent such Indebtedness does not exceed $8,000,000 and provided that such Liens attach only to those assets the acquisition of which was financed or refinanced with the proceeds of such Indebtedness; (vii) Liens securing Permitted Other Indebtedness; provided that such Liens attach only to those assets which are acquired with the proceeds of any purchase money Indebtedness constituting Permitted Other Indebtedness or the assets which are the subject of any Long-Term Lease Obligation constituting part of Permitted Other Indebtedness; (viii) rights reserved to or vested in any municipality or governmental, statutory or public authority by the terms of any right, power, franchise, grant, license or permit, or by any provision of law, to terminate such right, power, franchise, grant, license or permit or to purchase, condemn, expropriate or recapture or to designate a purchaser of any of the property of any Borrower; (ix) rights reserved to or vested in any municipality or governmental, statutory or public authority to control or regulate any property of any Borrower or to use such property in a manner which does not materially impair the use of such property for the purposes for which it is held by such Borrower; (x) rights of a common owner of any interest in real estate, rights of way or easements held by any Borrower and such common owner as tenants in common or through other common ownership; -47- 52 (xi) zoning, planning, ordinances and municipal regulations; (xii) servitudes, easements, restrictions, rights of way and other similar rights in real or immovable property or any interest therein, provided the same does not materially impair the use of such property for the purposes for which it is held by any Borrower; (xiii) Liens on the assets of a Subsidiary at the time it becomes a Subsidiary; and (xiv) Liens securing obligations owed to WMX under the WMX Reimbursement Agreement or arising in favor of WMX under principles of subrogation as a result of payments made by WMX under the WMX Guaranty. (b) Mergers, Etc. Except as otherwise permitted pursuant to Section 5.02(c) and this Section 5.02(b), merge or consolidate with, or sell, assign, lease, dispose of or otherwise transfer (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to, any Person, except that (i) any Subsidiary may merge into or consolidate with or so transfer its assets to any wholly owned Subsidiary and (ii) any Person (other than a Subsidiary) may merge into or so transfer its assets to OHM or a wholly owned Subsidiary thereof; provided, however, that (1) both immediately before and after giving effect thereto, no Default or Event of Default shall be outstanding or result therefrom, (2) in the case of any such merger or consolidation to which OHM is a party, OHM is the surviving corporation, (3) the resulting Person of any such merger or consolidation is OHM or a wholly owned Subsidiary and (4) neither Borrower may merge or consolidate with, or transfer its assets to, the other Borrower. (c) Sales, Etc. of Assets. Sell, assign, lease or otherwise dispose of a substantial part of its assets, other than: (i) in connection with a transaction permitted by Section 5.02(b); (ii) the sale or other disposition of obsolete, unnecessary or redundant equipment; (iii) the sale or other disposition of equipment to be replaced with other equipment acquired with the proceeds of such sale or other disposition, provided that the acquisition of the replacement equipment is otherwise permitted pursuant to the terms of this Agreement; (iv) the sale of assets (other than those described in the immediately preceding clauses (ii) and (iii)) in the -48- 53 ordinary course of such Persons's business in an aggregate amount not to exceed 5% of Net Worth during any Secured Period or 10% of Net Worth during any Unsecured Period (based on the higher of the book or market value of such assets at the time of such sale) in any fiscal year of such Person; and (v) the sale by OHM of shares of the common stock of NSC Corporation currently owned by OHM; provided, however, that prior to the date of any such proposed sale, an Authorized Officer of OHM shall have delivered a certificate to the Administrative Agent and the Issuing and Paying Agent certifying that the board of directors of OHM has approved such sale and had determined that the sale price was at or above the fair market value of the stock being sold; (vi) the sale or other transfer of assets to any Person other than an Affiliate of either Borrower, which sale or transfer is promptly followed by the lease by either Borrower, as lessee, of the same assets. (d) Operating Leases. Enter into any operating lease as lessee if (after giving effect to such lease) the aggregate amount of the lease payments under all operating leases which are required to be made by the Borrowers during any consecutive 12 month period would exceed $15,000,000; provided, that the limitation with respect to operating leases under this Section shall apply only (i) if the WMX Guaranty is no longer in effect, if the Borrowers' financial performance has failed, as of the end of any fiscal quarter, to satisfy the conditions for Level 4 set forth on the Facility B Rate Determination Table, or (ii) if the WMX Guaranty is in effect, if (A) the Borrowers' financial performance has failed, as of the end of any fiscal quarter, to satisfy the conditions for Level 4 set forth on the Facility B Rate Determination Table, and (B) the aggregate outstanding Advances plus the aggregate undrawn face amount of outstanding Letters of Credit plus any unpaid reimbursement obligations in respect of Letters of Credit, computed as an average daily amount, exceeds the Total A Commitment for either (1) the thirty day period prior to the occurrence of such failure or (2) any thirty day period so long as such failure continues. (e) Nature of Business. Materially change the nature of its business as conducted at the Effective Date. (f) Restricted Payments. (i) Declare or pay any dividends (other than stock dividends payable in common stock of OHM), purchase, redeem, retire or otherwise acquire for value any of its capital stock, return any capital to its stockholders as such or make any distribution to its stockholders as such, in each case with respect to its capital stock or that of the other Borrower or (ii) make any payment or prepayment of principal of, premium, if any, or interest on, or any redemption, purchase, -49- 54 retirement, defeasance, sinking fund or similar payment with respect to, any Subordinated Indebtedness of either Borrower (all such payments, collectively, "Restricted Payments"), except that so long as no Default or Event of Default exists or would result therefrom (A) Remediation may make Restricted Payments to OHM, (B) either Borrower may make regularly scheduled payments of principal, interest or sinking fund payments on Subordinated Indebtedness, and (C) the Borrowers may make Restricted Payments in an aggregate amount not to exceed $5,000,000 in order to make non-current sinking fund payments on the Debentures or to purchase or redeem the Debentures, provided that any such sinking fund payments are applied in the order of maturity. In addition, (1) during any Facility B Level 3 Period, the Borrowers may make Restricted Payments so long as, after giving effect thereto, the aggregate Restricted Payments made since the Effective Date shall not exceed $10,000,000, (2) during any Facility B Level 2 Period, the Borrowers may make Restricted Payments so long as, after giving effect thereto, the aggregate Restricted Payments made since the Effective Date shall not exceed $25,000,000, and (c) during any Facility B Level 1 Period, the Borrowers may make Restricted Payments so long as no Default or Event of Default is outstanding (or would result therefrom) and the making of such Restricted Payment would not cause the Borrowers' performance to fall below Level 1 for Facility B. (g) Accounting Treatment. Make any significant change in accounting treatment or reporting practices except either (i) as required by changes in generally accepted accounting principles or (ii) as permitted in accordance with generally accepted accounting principles and, in each such case, concurred in by such Person's independent public accountants, or change its Consolidated fiscal year end. (h) Affiliate Transactions. Enter into any loan, purchase, sale or other transaction, whether or not in the ordinary course of business, with any Affiliate of such Person other than on terms and conditions at least as favorable to such Person as would be obtainable at the time in a comparable arm's-length transaction with a Person other than such Affiliate; provided, however, that all Indebtedness of either Borrower arising from any such transaction (other than Indebtedness of OHM to Remediation pursuant to clause (iii) below) shall constitute Subordinated Indebtedness; and provided, further, that: (i) Either of the Borrowers may enter into any purchase, sale or other transaction (other than a loan transaction) with the other Borrower on terms which are other than arm's-length, in each case, to the extent such purchase, sale or other transaction is otherwise permitted pursuant to the terms of this Agreement and the other Transaction Documents; -50- 55 (ii) (A) Either Borrower may make Investments in wholly-owned Subsidiaries as permitted by Section 5.02(i)(v), (B) OHM may make advances to or borrow from Capital National in connection with OHM's self-insurance program, (C) as permitted by Section 5.02(i)(iv) and 5.02(j)(vi), and (D) OHM may have Indebtedness owing to EFSC as permitted by Section 5.02(j)(v); (iii) Remediation may make loans to OHM; (iv) the Borrower may enter into and perform their obligations under the WMX Reimbursement Agreement and any related security agreement; and (v) OHM may (a) issue to WMX, pursuant to the terms of the Reorganization Agreement, warrants to purchase common stock of OHM, (B) issue common stock to WMX upon the exercise of any such warrants; and (C) otherwise perform its obligations under such warrants. (i) Investments. Make any investment in any Person, whether by way of loan, advance, capital contribution, acquisition of stock or other security or otherwise ("Investments"); provided, however, that the foregoing restrictions shall not be applicable to the following: (i) Loans or advances to either Borrower constituting Subordinated Indebtedness, which loans and advances are evidenced by appropriate entries in the books and records of such Person; (ii) Investments existing as of the Effective Date and listed on Schedule 5.02(i)(ii) hereto (but not any subsequent enlargement thereof); (iii) advances by OHM to Capital National in connection with OHM's self-insurance program; (iv) Investments in wholly-owned Subsidiaries of either Borrower, each which Investment shall be specifically related to an environmental remediation project undertaken or to be undertaken by the applicable wholly-owned Subsidiary; provided, however, that during any Secured Period, the aggregate amount of such Investments by both Borrowers at any time outstanding shall not exceed 10% of Net Worth at such time; (v) Investments in wholly-owned Subsidiaries in nominal amounts (individually and in the aggregate) to cover normal operating expenses of such Subsidiaries in the ordinary course of business; -51- 56 (vi) Investments in (A) direct obligations and repurchase agreements of the United States or any agency or instrumentality thereof whose obligations constitute full faith and credit obligations of the United States or have a rating of "A-1" or better by Standard and Poor's Corporation or "P-1" or better by Moody's Investors Service Inc., in each case having a maturity of three months or less, (B) commercial paper, in an aggregate amount not exceeding $2,000,000 per issuer, issued by corporations organized in the United States and having a rating of "A-1" or better by Standard & Poor's Corporation or "P-1" or better by Moody's Investors Service Inc., in each case having a maturity of three months or less, (C) certificates of deposit or bankers acceptances having a maturity of three months or less issued by members of the Federal Reserve System organized in the United States and having deposits in excess of $100,000,000 and ratings equivalent to those described in the preceding clause (B), in an aggregate amount not exceeding $2,000,000 per issuer, and (D) Eurodollar time deposits in domestic or foreign commercial banks with assets in excess of $10,000,000,000 having a maturity of three months or less and ratings equivalent to those described in the preceding clause (B), in an aggregate amount not to exceed $2,000,000 per issuer; (vii) any transaction permitted by Section 5.02 (b); (viii) any Investment in any joint venture with any other Person entered into specifically for the purpose of performing and completing a specific environmental remediation project or projects, which Investments shall be made to fund (a) capital expenditures made by such joint venture in connection with any such project or (b) the ordinary course working capital requirements of such joint venture relating to such project or projects; and (ix) Investments in nominal amounts of the capital stock of competitors of the Borrower and of other Persons involved in the environmental service industry for purposes of acquiring the quarterly and annual reports, shareholder reports and other information distributed by such competitors and such other Persons, respectively, to their shareholders, provided that, if requested by the Administrative Agent, such stock is pledged to the Issuing and Paying Agent for the benefit of the Banks. (j) Indebtedness. Create, incur, assume or suffer to exist any Indebtedness other than: -52- 57 (i) the Indebtedness under this Agreement, the Notes, the Letters of Credit and the other Transaction Documents; (ii) Subordinated Indebtedness other than that represented by the Debentures; (iii) Indebtedness evidenced by the Debentures, in the amount outstanding as of the Effective Date (as the same may be amortized from time to time); (iv) Indebtedness outstanding under (and in accordance with) the Bank of Tokyo Agreement for financing capital expenditures at the Baird and McGuire incineration project in Holbrook, Massachusetts, in an amount not exceeding $8,000,000, in the aggregate, at any time outstanding; (v) Indebtedness of OHM to EFSC in an aggregate amount not to exceed $91,000,000 at any time outstanding; (vi) Indebtedness of OHM to Capital National created by loans or advances from Capital National to OHM in connection with OHM's fronted self-insurance program; (vii) other Indebtedness existing as of the Effective Date and listed on Schedule 5.02(j)(vii) hereto (but not any subsequent increases thereof); (viii) at any time other than during a Facility B Level 5 Period, unsecured Indebtedness; (ix) any other purchase money Indebtedness (or refinancings thereof secured by the same assets) and Long Term Lease Obligations provided, that purchase money Indebtedness (and refinancings thereof) and Long-Term Lease Obligations permitted under this clause are limited to such purchase money Indebtedness (and refinancings thereof) and Long-Term Lease Obligations which, at the time of incurrence of any such purchase money Indebtedness (or the refinancings thereof) or Long-Term Lease Obligations (and after giving effect to such incurrence), would not in the aggregate exceed (a) $30,000,000 during any Facility B Level 5 Period, Facility B Level 4 Period or Facility B Level 3 Period, (b) twenty-five percent (25%) of Net Worth during any Facility B Level 2 Period, or (c) thirty percent (30%) of Net Worth during any Facility B Level 1 Period (purchase money Indebtedness and Long Term Lease Obligations described in this clause (ix) being "Permitted Other Indebtedness"); and (x) any Indebtedness owed to WMX under the WMX Reimbursement Agreement as a result of payments made by WMX under the WMX Guaranty or any subrogation rights of WMX -53- 58 arising as a result of payments made by WMX under the WMX Guaranty. (k) Issuance of Additional Equity. Issue any additional stock or other equity securities; provided, however, that OHM shall be permitted to issue additional stock (including, without limitation, the issuance of additional stock in connection with any conversion of the Debentures into common shares of OHM or pursuant to OHM's stock option plans) so long as (i) no such stock or equity shall have preferential (other than class voting rights of preferred stockholders under certain circumstances) or weighted voting rights or be convertible into Indebtedness, (ii) no mandatory redemption thereof shall be scheduled to occur prior to the maturity of the Debentures, (iii) the issuance thereof would not violate the terms of the Debentures or cause a Default or Event of Default under Section 6.01(m), and (iv) if such stock is preferred stock (x) the stated dividend rate thereof shall not exceed the stated interest rate of the Debentures and (y) no sinking fund payment shall be required to be made in respect thereof in any amount greater than the amount of, or on any date prior to the date upon which, the stinking fund payments in respect of the Debentures are required to be made. (l) Capital Expenditures. Make, or permit any of their Consolidated Subsidiaries to make, any capital expenditures (whether payable in cash or other property or accrued as a liability), whether by purchase, capital lease or otherwise, if, following such incurrence, total Capital Expenditures for the then current fiscal quarter and the three immediately preceding fiscal quarters would exceed (i) $30,000,000 during a Facility B Level 5 Period, (ii) $35,000,000 during a Facility B Level 4 Period, (iii) $40,000,000 during a Facility B Level 3 Period or (iv) $50,000,000 during a Facility B Level 2 Period. This Section will not limit the incurrence of Capital Expenditures during any Facility B Level 1 Period. (m) Minimum Net Worth. Permit Net Worth as at the end of any fiscal quarter of the Borrowers to be less than the sum of (1) Net Worth as of March 31, 1995, minus (2) $______ (which amount constitutes twenty-five percent (25%) of the net cash proceeds received by OHM from the issuance of common stock of OHM completed on March 28, 1995), plus (3) $______ (which amount constitutes fifty percent (50%) of the increase in Net Worth arising from the Rust Transactions, plus (4) fifty percent (50%) of the net income of the Borrowers and their Consolidated Subsidiaries for each fiscal quarter following March 31, 1995 (it being agreed that if net income is negative for any fiscal quarter, it shall be deemed to be zero for the purposes of this clause (4)), minus (5) the amount of any reductions to Net Worth as a result of purchase accounting adjustments made within one year of the closing of the Rust Transactions in connection with the Rust Transactions, minus (6) the amount of any other -54- 59 reductions to Net Worth, but not to exceed $3,000,000, as a result of accounting adjustments (other than purchase accounting adjustments) made within one year of the closing of the Rust Transactions in connection with the Rust Transactions. (n) EBITDA to Interest Expense Ratio. Permit the EBITDA to Interest Expense Ratio to be less than the following amounts on the last day of each fiscal quarter of the Borrowers in each of the following fiscal years:
Minimum EBITDA to Fiscal Year Interest Expense Ratio ----------- ---------------------- 1995 3.00 to 1.0 1996 3.00 to 1.0 1997 3.25 to 1.0 1998 3.25 to 1.0 1999 3.25 to 1.0 2000 3.25 to 1.0
(o) Maximum Funded Debt to EBITDA Ratio. Permit the Funded Debt to EBITDA Ratio to exceed the following amounts as of the last day of any of the following fiscal quarters of the Borrowers:
Maximum Funded Debt Fiscal Quarter Ending to EBITDA Ratio --------------------- ------------------- June 30, 1995 4.75 to 1.0 September 30, 1995 and 4.50 to 1.0 on the last day of each fiscal quarter ending thereafter
SECTION 5.03. Reporting Requirements. So long as any Note or any payment due hereunder shall remain unpaid or any Bank shall have any Commitment hereunder, the Borrowers will furnish to the Administrative Agent, the Issuing and Paying Agent and each Bank, unless the Majority Banks shall otherwise consent in writing: (a) during any Facility B Level 5 Period, as soon as available and in any event within 30 days after the end of each calendar month (or 45 days with respect to the months of January, February, March, June, September and December), Consolidated and consolidating balance sheets of the Borrowers as of the end of such month, and a Consolidated statement of cash flow and Consolidated and consolidating statements of income for the Borrowers (and a Consolidated statement of cash flow for Remediation) for such month and for the period commencing at the end of the previous fiscal year and ending with the end of such month; -55- 60 (b) (i) as soon as available and in any event within 45 days after the end of each of the first three quarters of each fiscal year of OHM, Consolidated and consolidating balance sheets of the Borrowers as of the end of such quarter and a Consolidated statement of cash flow and Consolidated and consolidating statements of income of the Borrowers (and a Consolidated statement of cash flow for Remediation) for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, and (ii) as soon as available such other financial statements as may be prepared from time to time for any unconsolidated subsidiary of either Borrower, each certified by the chief financial officer, the chief accounting officer or the treasurer of such unconsolidated subsidiary; (c) as soon as available and in any event within 90 days after the end of each fiscal year of OHM, (i) a copy of the annual report for such year of OHM, containing financial statements for such year certified in an unqualified manner by Ernst & Young (or any successor to such firm) or any other independent public accountants acceptable to the Majority Banks and (ii) consolidating balance sheets of the Borrowers as of the end of such year and consolidating statements of income of the Borrowers (and a Consolidated statement of cash flow for Remediation) for such year, each certified by the chief financial officer, the chief accounting officer or the treasurer of OHM and, if applicable, Remediation; (d) together with each delivery pursuant to paragraph (b) or (c) of this Section 5.03, a certificate of the chief financial officer, the chief accounting officer or the treasurer of OHM, in form reasonably acceptable to the Administrative Agent, with respect to the Borrowers' compliance with the provisions of Sections 5.01 and 5.02; (e) within 45 days after the end of each fiscal quarter of OHM, a certificate of the chief financial officer, the chief accounting officer or the treasurer of OHM, in form reasonably acceptable to the Administrative Agent, setting forth the EBITDA to Interest Expense Ratio and the Funded Debt to EBITDA Ratio, together with the calculations thereof, for the preceding four fiscal quarter period then ending, and if a Facility B Level 3 Period, Facility B Level 4 Period or Facility B Level 5 Period is then in effect, such certificate shall also set forth the amount of the Underbillings Reserve as of the end of such fiscal quarter together with the calculation thereof; (f) promptly after the sending, filing or issuance thereof, copies of all reports or other material which either Borrower sends pursuant to any requirement of the Securities Act of 1933 or the Exchange Act to any of its security holders, copies of all reports and registration statements which such Person files with the Securities and Exchange Commission or any national securities exchange and copies of all press releases -56- 61 issued by either Borrower; and within 30 days after receipt thereof by either Borrower, copies of any report or other material which any of the NSC Companies sends pursuant to any requirement of the Securities Act of 1933 or the Exchange Act to any of its security holders; (g) as soon as possible and in any event (i) within fifteen days after either Borrower or any of its Affiliates knows or has reason to know that any Termination Event described in clause (a) of the definition of Termination Event with respect to any Plan has occurred and (ii) within fifteen days after either Borrower or any of its Affiliates knows or has reason to know that any other Termination Event with respect to any Plan has occurred, a detailed statement of the chief financial officer of such Borrower describing such Termination Event and the action, if any, which such Borrower or such Affiliate proposes to take with respect thereto; (h) promptly and in any event within five Business Days after receipt thereof by either Borrower or any of its Affiliates from the PBGC, copies of each notice received by such Borrower or any such Affiliate of the PBGC's intention to terminate any Plan or to have a trustee appointed to administer any Plan; (i) from time to time upon request of the Administrative Agent, copies of each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) with respect to each Plan; (j) promptly and in any event within ten Business Days after receipt thereof by either Borrower or any of its Affiliates from a Multiemployer Plan sponsor, a copy of each notice received by such Borrower or such Affiliate concerning the imposition or amount of withdrawal liability pursuant to Section 4202 of ERISA in any individual instance or in the aggregate in excess of $1,000,000; (k) within two Business Days after the occurrence of any event which constitutes a Default or Event of Default, notice of such occurrence together with a detailed statement of the chief financial officer or the chief accounting officer of OHM of the action being taken by the Borrowers to cure the effect of such event; (l) as soon as available and in any event not later than February 28 of each fiscal year, a business plan for such fiscal year of the Borrowers, such business plan to include a statement in reasonable detail of the assumptions and goals underlying such business plan and such business plan to address such matters concerning the business, operations and finances of the Borrowers as any Bank through the Administrative Agent may reasonably request; -57- 62 (m) promptly and in any event within five Business Days after receipt thereof by either Borrower or either of the Borrowers' respective Subsidiaries, a copy of each notice, citation or other communication from the United States Environmental Protection Agency, any state environmental protection agency, any court or any other governmental Person, and of each consent agreement, consent decree, judgment or other document with any such Person, in each case asserting an actual or potential violation, fine, penalty, enforcement action or liability of or against such Borrower, any such Subsidiary or any of the NSC Companies under any Environmental Law, the effect or adverse determination of which may have a materially adverse effect on the properties, condition (financial or otherwise), operations or business of the Borrowers taken as a whole; (n) as soon as available and in any event within 45 days after the end of each calendar quarter, a report with respect to projects having a value in excess of $1,000,000 being performed by Remediation (including any of the projects acquired as part of the Rust Transactions) at the end of such quarter (other than "time and materials" or "cost plus" projects), such report to include information in reasonable detail with respect to such matters and to be otherwise in form and substance satisfactory to the Banks; (o) not less often than quarterly, a summary accounts receivable aging in form and detail reasonably satisfactory to the Administrative Agent, with respect to the accounts of the Borrowers; (p) promptly, and in any event within two Business Days, after either Borrower learns of the same, notice of any default by WMX with respect to any indebtedness of WMX with a principal amount of $50,000,000 or more, or of any change in the Credit Rating of WMX; (q) immediately upon receipt thereof, a copy of any Freeze Notice sent by WMX under the WMX Guaranty; and (r) such other information respecting the condition (financial or otherwise) or operations of either Borrower or any of their Subsidiaries as any Bank through the Administrative Agent may from time to time reasonably request. ARTICLE VI EVENTS OF DEFAULT SECTION 6.01. Events of Default. If any of the following events (the "Events of Default") shall occur: (a) Either Borrower shall fail to pay (i) any installment of principal of any Note when due; or (ii) any reimbursement -58- 63 obligation with respect to a drawing under any Letter of Credit when due; or (iii) any interest on any Note, or any fees or other Obligations hereunder, in each case when due or within one Business Day thereafter; provided, however, that if the Borrowers, in good faith, shall dispute the amount of interest or fees that are owing and shall give notice of such dispute to the Issuing and Paying Agent prior to the time when such payment became due, no Event of Default shall be deemed to exist if such disputed amount of interest or fees is not paid for such period as the Borrowers shall be diligently working with the Issuing and Paying Agent to resolve such dispute, which period shall in no event exceed five Business Days after the date on which such interest or fees were originally due or, if shorter, one Business Day after such dispute is resolved; and provided, further, that nothing in the preceding proviso shall permit or be deemed to permit a deferral of the payment of any non- disputed portion of any interest or fees which are due hereunder; or (b) Any representation or warranty made or deemed made by either of the Borrowers under this Agreement, the Notes, any Letter of Credit application, any other Transaction Document or in any certificate furnished pursuant hereto or thereto shall prove to have been incorrect in any material respect when made or deemed made; or (c) Either Borrower shall fail to perform or observe any of the covenants set forth in Sections 5.02(b), 5.02(e) - (g), inclusive, 5.02(i) (excluding 5.02(i)(vi)), 5.02(j) or 5.02(k); or (d) Either of the Borrowers shall fail to perform or observe any other term, covenant or agreement contained in this Agreement on its part to be performed or observed and any such failure shall remain unremedied for (20) twenty Business Days after written notice thereof shall have been given to such Borrower by the Administrative Agent; or (e) Either of the Borrowers shall fail to pay any Indebtedness (including accrued and unpaid interest, if any) of such Borrower, or any interest or premium thereon, with respect to which the aggregate outstanding principal balance equals or exceeds five percent (5%) of Net Worth, when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness; or any other default under any agreement or instrument relating to any such Indebtedness, or any other event, shall occur and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such default or event is to cause the acceleration of the maturity of, or to permit the holder or holders thereof to accelerate the maturity of, Indebtedness of -59- 64 either of the Borrowers in an aggregate outstanding principal amount which equals or exceeds five percent (5%) of Net Worth; or (f) Either of the Borrowers shall fail to perform or observe any other term, covenant or agreement contained in any of the Transaction Documents (other than this Agreement) on its part to be performed or observed, or an event of default under any such Transaction Document shall occur, and any such failure or event of default shall remain unremedied or uncured, as the case may be, for ten (10) days after written notice thereof shall have been given to such Borrower by the Administrative Agent; or (g) Either of the Borrowers shall admit in writing its inability to pay its debts generally as they become due, or shall make an assignment for the benefit of creditors; or either of the Borrowers shall apply for or consent to the appointment of any receiver, custodian, interim trustee, trustee, or similar officer for it or for all or any substantial part of its property; or any such receiver, custodian, interim trustee, trustee or similar officer shall be appointed without the application or consent of either of the Borrowers and such appointment shall continue undischarged for a period of 60 days; or either of the Borrowers shall institute (by petition, application, answer, consent or otherwise) any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding relating to it under the laws of any jurisdiction; or any such proceeding shall be instituted (by petition, application or otherwise) against either of the Borrowers and either an order for relief is granted in such proceeding or such proceeding shall remain undismissed for a period of 60 days; or either of the Borrowers shall take any corporate action to authorize any of the actions set forth above in this subsection (g); or any judgment, writ, warrant of attachment or execution or similar process shall be issued or levied against a substantial part of the property of either of the Borrowers and such judgment, writ, or similar process shall not be released, vacated or fully bonded within 60 days after its issue or levy; or an order for relief under Title 11 of the United States Code shall be entered against either of the Borrowers; (h) Any Termination Event with respect to a Plan shall have occurred and within 30 days thereafter (i) such Termination Event (if correctable) shall not have been corrected and (ii) the then present value of such Plan's vested benefits exceeds the then current value of assets accumulated in such Plan by more than two and one-half percent (2.50%) of Net Worth (or in the case of a Termination Event described in clause (b) of the definition of Termination Event, the withdrawing employers' proportionate share of such excess shall in the aggregate exceed such amount); or any Borrower or any of its ERISA Affiliates as an employer under a Multiemployer Plan shall have made a complete or partial withdrawal from such Multiemployer Plan and the plan -60- 65 sponsor of such Multiemployer Plan shall have notified such withdrawing employer that such employer has incurred a withdrawal liability in an annual amount exceeding two and one-half percent (2.50%) of Net Worth; or (i) This Agreement, the Notes, the Security Agreement, the Pledge Agreement, the WMX Guaranty or any of the other Transaction Documents shall be terminated (other than pursuant to their respective terms), revoked, or declared void or invalid; or (j) Any judgment or judgments is or are entered against either of the Borrowers in an aggregate amount in excess of (i) $20,000,000 (whether or not covered by insurance), the execution of which has not been stayed by appeal or otherwise within 30 days after the date of entry thereof, or which is paid by either Borrower or on which enforcement proceedings have been commenced or (ii) two and one-half percent (2.50%) of Net Worth which is not covered by insurance and is not stayed by appeal or otherwise within 30 days after the date of entry thereof, or which is paid by either Borrower or on which enforcement proceedings have been commenced; or (k) The loss, destruction, condemnation, seizure, appropriation or taking of any material and substantial portion (taken as a whole) of the property of the Borrowers; or (l) During any Secured Period, this Agreement and/or the other Transaction Documents shall cease to create valid and perfected security interests (which, prior to the commencement of the first Unsecured Period, shall be first priority) in any material and substantial portion of the Collateral covered thereby, except in accordance with the terms thereof; (m) Any "person" (within the meaning of Section 13(d) of the Exchange Act) other than the WMX Group shall directly or indirectly acquire beneficial ownership (within the meaning of Rule 13d-3 and Rule 13d-5 of the Securities and Exchange Commission under the Exchange Act) of 40% or more (on a fully diluted basis) of the aggregate voting stock and other voting securities (including all other securities convertible into voting stock or other voting securities) of OHM entitled to vote for the election of director; or (n) The occurrence of any Freeze Event or the sending by WMX of a Freeze Notice; then, (i) upon the occurrence of an Event of Default of the type described in the immediately preceding clause (g), the obligation of each Bank to make Advances and participate in Letters of Credit and the obligation of any Issuing Bank to issue Letters of Credit shall, in each case, automatically and immediately terminate and all amounts owing by the Borrowers hereunder, under the Notes, and under all of the other Transaction Documents, -61- 66 including all accrued interest and fees and all contingent liabilities under the Letters of Credit (which liabilities may be satisfied by the Borrowers delivering to, and continuing to maintain with, the Issuing and Paying Agent cash collateral in the aggregate amount of all Letters of Credit outstanding at such time), shall become immediately due and payable, without demand, presentment, notice or protest or other requirements of any kind (including, without limitation, valuation and appraisement, diligence, presentment, notice of intent to demand or accelerate and of acceleration) all of which are hereby waived by the Borrowers, and (ii) upon the occurrence of any other Event of Default, the Administrative Agent shall at the request of the Majority Banks, or may with the consent of the Majority Banks, (1) declare the obligations of each Bank to make Advances and participate in Letters of Credit and the obligation of any Issuing Bank to issue Letters of Credit, to be terminated, whereupon the same shall forthwith terminate, (2) declare all amounts owing by the Borrowers hereunder, under the Notes, and under all of the other Transaction Documents, including all accrued interest and fees and all contingent liabilities under the Letters of Credit to be forthwith due and payable, whereupon such amounts shall immediately become due and payable without demand, presentment, notice or protest or other requirements of any kind (including, without limitation, valuation and appraisement, diligence, presentment, notice of intent to demand or accelerate and of acceleration) all of which are hereby waived by the Borrowers, and (3) require the Borrowers to deposit with the Issuing and Paying Agent cash collateral in an amount equal to the aggregate undrawn face amount of all Letters of Credit outstanding at such time. ARTICLE VII THE AGENTS SECTION 7.01. Authorization and Action. Each Bank hereby appoints and authorizes each of the Administrative Agent and the Issuing and Paying Agent (collectively, for purposes of this Article VII, the "Agents") to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to such Agent by the terms hereof together with such powers as are reasonably incidental thereto. As to any matters not expressly provided for by this Agreement (including, without limitation, enforcement or collection of the Notes) the Agents shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Majority Banks and such instructions shall be binding upon all Banks and all holders of Notes; provided, however, that neither Agent shall be required to take any action which exposes such Agent to personal liability or which is contrary to this Agreement or applicable law. -62- 67 SECTION 7.02. Agents' Reliance, Etc. Neither Agent nor any of their respective directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by them in good faith under or in connection with this Agreement, except for their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, each Agent: (i) may treat the payee of any Note as the holder thereof until such Agent receives written notice of the assignment or transfer thereof signed by such payee and in form satisfactory to such Agent; (ii) may consult with legal counsel (including counsel for the Borrowers), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (iii) makes no warranty or representation to any Bank; (iv) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement on the part of either Borrower or to inspect the property (including the books and records) of either Borrower; (v) shall not be responsible to any Bank for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any instrument or document furnished pursuant hereto, or any Collateral covered hereby; and (vi) shall incur no liability under or in respect of this Agreement by acting upon any notice, consent, certificate or other instrument or writing (which may be by telegram, cable or telex) believed by it to be genuine and signed or sent by the proper party or parties. SECTION 7.03. Citicorp USA, BAI and Affiliates. With respect to its Commitment, the Advances made by it, the Letters of Credit in which it participates and the Notes issued to it, each of Citicorp USA and BAI shall have the same rights and powers under this Agreement as any other Bank and may exercise the same as though it were not an Agent; and the term "Bank" or "Banks" shall, unless otherwise expressly indicated, include Citicorp USA in its individual capacity and BAI in its individual capacity. Citicorp USA and BAI and their affiliates may accept deposits from, lend money to, act as a trustee under indentures of, and generally engage in any kind of business with, either Borrower, and any person or entity who may do business with or own securities of either Borrower, all as if Citicorp USA or BAI were not an Agent and without any duty to account therefor to the Banks. SECTION 7.04. Bank Credit Decision. Each Bank acknowledges that it has, independently and without reliance upon either Agent or any other Bank and based on the financial statements referred to in Section 4.01(f) and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Bank also acknowledges that it will, independently and without reliance upon either Agent or any other Bank and based on -63- 68 such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. SECTION 7.05. Indemnification. The Banks agree to indemnify each Agent (to the extent not reimbursed by the Borrowers) ratably according to the respective amounts of such Banks' Commitments, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against such Agent in any way relating to or arising out of this Agreement or any action taken or omitted by such Agent under this Agreement, provided that no Bank shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Agent's gross negligence or willful misconduct. Without limitation of the foregoing, each Bank agrees to reimburse each Agent promptly upon demand for its ratable share of any out-of-pocket expenses (including counsel fees) incurred by such Agent in connection with the enforcement of, or legal advice in respect of rights and responsibilities under, this Agreement to the extent that such Agent is not reimbursed for such expenses by the Borrowers. SECTION 7.06. Successor Agents. Each of the Agents may resign at any time by giving ten (10) Business Day's prior written notice thereof to the Banks and the Borrowers and may be removed at any time with or without cause by the Majority Banks. Upon any such resignation or removal, the Majority Banks shall have the right to appoint a successor Administrative Agent or Issuing and Paying Agent, as the case may be; provided, however, that upon the resignation or removal of the Administrative Agent, the Issuing and Paying Agent shall immediately be and become (and hereby accepts appointment as) the Administrative Agent hereunder unless and until a successor Administrative Agent is appointed as provided in this Section 7.06. Subject to such provision, if no successor Administrative Agent or Issuing and Paying Agent, as the case may be, shall have been so appointed by the Majority Banks, and shall have accepted such appointment, within seven days after the retiring Agent's giving of notice of resignation or the Majority Banks' removal of the retiring Agent, then the retiring Agent may, on behalf of the Banks, appoint a successor Administrative Agent or Issuing and Paying Agent, as the case may be, which shall be a commercial bank organized under the laws of the United States of America or any state thereof and having a combined capital and surplus of at least $100,000,000. Except for the automatic appointment of the Issuing and Paying Agent as Administrative Agent upon resignation or removal of the Administrative Agent, each appointment of a successor Agent hereunder shall require the consent of the Borrowers, which consent shall not be unreasonably withheld. Upon the acceptance of any appointment as an Agent hereunder by a successor Agent, -64- 69 such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Agent's resignation or removal hereunder, the provisions of this Article VII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was such Agent under this Agreement. ARTICLE VIII MISCELLANEOUS SECTION 8.01. No Waiver; Cumulative Remedies. No failure or delay on the part of the Administrative Agent, the Issuing and Paying Agent, any Bank, any Issuing Bank or any holder of any Note in exercising any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy hereunder. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. SECTION 8.02. Amendments, Etc. No amendment, modification or waiver of any provision of this Agreement or of the Notes, nor consent to any departure by either Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Majority Banks (or by the Agent on behalf of the Majority Banks), and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent shall, unless in writing and signed by all the Banks, do any of the following: (a) waive any of the conditions specified in Article III, (b) increase the Commitments of the Banks or subject the Banks or any Issuing Bank to any additional obligations, (c) reduce the principal of, or interest on, the Notes or any fees hereunder, (d) postpone any date fixed for any payment of principal of, or interest on, the Notes or any fees hereunder, (e) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Notes, or the number of Banks, which shall be required for the Banks or any of them to take any action hereunder, (f) release any guarantor of the Obligations, other than the release of WMX from the WMX Guaranty as provided for, and in accordance with the terms of, Section 8.15, (g) release all or a substantial portion of the Collateral, other than as required for any Unsecured Period pursuant to the terms of Section 8.15; provided further that no amendment, waiver or consent subjecting either the Agent or the Issuing and Paying Agent to any additional obligations or otherwise affecting the Agent or the Issuing and Paying Agent shall be effective, unless in writing and signed by the Agent or the Issuing and Paying Agent, as applicable, in addition to the -65- 70 Banks required by the above provisions of this Section; and provided further, that no amendment of the provisions of Sections 5.02(h)(iv) or (v) may be made without the consent of WMX. SECTION 8.03. Notices, Etc. All notices, requests, demands, directions and other communications provided for hereunder shall be in writing (including telex or facsimile communication) and mailed or telexed or delivered or sent by courier service or facsimile transmission to the applicable party at the addresses indicated below: If to the Borrowers or either of them: OHM Corporation 16406 U.S. Route 224 East P.O. Box 551 Findlay, Ohio 45839-0551 Attention: Vice President, Treasurer and Assistant Secretary Telecopier: (419) 424-4985 If to the Administrative Agent: Citicorp USA, Inc. c/o Citicorp North America, Inc. 200 South Wacker Drive 31st Floor Chicago, Illinois 60606 Attention: Emily Rosenstock, Vice President Telecopier: (312) 993-1050 If to the Issuing and Paying Agent: Bank of America Illinois 231 South LaSalle Street Chicago, Illinois 60697 Attention: Agency Management Services - Illinois Telecopier: (312) 974-9101 If to any Bank: at the address of its Domestic Lending Office or, as to each party, at such other address as shall be designated by such party in a written notice to each other party complying as to delivery with the terms of this Section. If any notice is sent with respect to a Default or Event of Default at any time while the WMX Guaranty is outstanding, a copy of such notice shall be sent to WMX at the following address: WMX Technologies, Inc., 3003 Butterfield Road, Oak Brook, Illinois 60521, Attention: Chief Financial Officer, Telecopier: (708) 572-1340, provided, that any failure or delay in delivering such copy shall not affect the effectiveness of such notice. All such -66- 71 notices, requests, demands, directions and other communications shall, when mailed or telexed or sent by courier service, be effective when deposited in the mails or telexed, answerback received, or delivered to the courier service, respectively, addressed as aforesaid, except that notices or requests or directions to either the Administrative Agent or the Issuing and Paying Agent pursuant to any of the provisions of Articles II, III, IV or V shall not be effective until received by the Administrative Agent or the Issuing and Paying Agent, as applicable. SECTION 8.04. Costs and Expenses. The Borrowers jointly and severally agree to pay on demand all reasonable out-of-pocket costs and expenses of the Administrative Agent and each Issuing Bank in connection with the preparation, printing, execution and delivery of this Agreement, the Notes, the Letters of Credit and the other instruments and documents to be delivered hereunder, and all amendments, waivers, modifications and extensions hereof or thereof, including, without limitation, customary issuance fees of each Issuing Bank in connection with the issuance of Letters of Credit and the reasonable fees and out-of-pocket expenses of counsel for the Administrative Agent and each Issuing Bank with respect to the foregoing, and of local counsel, if any, who may be retained by said counsel with respect thereto, and all reasonable costs and expenses, if any, of the Administrative Agent, the Issuing and Paying Agent, each Issuing Bank or any Bank in connection with the enforcement of this Agreement, the Notes, the Letters of Credit and the other instruments and documents to be delivered hereunder. SECTION 8.05. Obligations Several. The obligation of each Bank hereunder is several, and none of the Administrative Agent, the Issuing and Paying Agent, any Bank or any Issuing Bank shall be responsible for the obligation and Commitment of any other Bank hereunder, nor will the failure of any Bank to perform any of its obligations hereunder relieve the other Banks from the performance of their respective obligations hereunder. Nothing contained in this Agreement and no action taken by the Banks pursuant hereto shall be deemed to constitute the Banks a partnership, association, joint venture or other entity. SECTION 8.06. Right of Setoff. Upon the occurrence and during the continuance of any Event of Default, each Bank is hereby authorized at any time and from time to time to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Bank to or for the credit or the account of either Borrower against any and all of the obligations of such Borrower now or hereafter owing under this Agreement, the Notes and the Letters of Credit (including, without limitation, unmatured reimbursement obligations under Letters of Credit). The rights of each Bank under this Section are in addition to -67- 72 other rights and remedies (including, without limitation, other rights of setoff) which such Bank may have. SECTION 8.07. Execution in 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 and delivered shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. SECTION 8.08. Binding Effect; Assignment. (a) This Agreement shall be binding upon and inure to the benefit of each Borrower, the Administrative Agent, the Issuing and Paying Agent, each Issuing Bank and each Bank and their respective successors and assigns, except that no Borrower shall have the right to assign its rights hereunder or any interest herein without the prior written consent of all of the Banks. (b) Each Bank shall have the right to sell or assign all or any part of its Commitment, Advances, Notes, Letter of Credit participations, and other rights and obligations under this Agreement and related documents (such transfer, an "Assignment") to any commercial lender, other financial institution or other entity (an "Assignee"); provided, however, that (i) any Assignment to an entity other than an Affiliate of the Assigning Bank, a commercial lender or financial institution shall require the consent of the Administrative Agent and OHM, such consent not to be unreasonably withheld and (ii) any assignment to an entity other than an Affiliate of the Assigning Bank shall require the consent of all Issuing Banks, such consent not to be unreasonably withheld; and provided, further, that (1) each such assignment shall be of a constant, and not a varying, percentage of all rights and obligations under this Agreement; (2) the amount of the Commitment of the assigning Bank being assigned pursuant to each such assignment (determined as of the date of the Assignment and Acceptance with respect to such assignment) shall in no event be less than the lesser of (i) $5,000,000 and (ii) 100% of the assigning Bank's remaining Commitment; (3) the parties to each such assignment shall execute and deliver to the Administrative Agent and the Issuing and Paying Agent for acceptance and recording, an Assignment and Acceptance; and (4) the parties to each such assignment shall pay to the Issuing and Paying Agent a processing fee of $3000. Upon such Assignment becoming effective, the assigning Bank shall be relieved from the portion of the Commitment, obligations to indemnify the Agent and other obligations hereunder to the extent assumed and undertaken by the Assignee, and to such extent the Assignee shall have the rights and obligations of a "Bank" hereunder. Upon such execution, delivery and acceptance, from and after the effective date specified in each Assignment and Acceptance, (x) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, -68- 73 have the rights and obligations of a Bank hereunder and (y) the Bank assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Bank's rights and obligations under this Agreement, such Bank shall cease to be a party hereto). (c) By executing and delivering an Assignment and Acceptance, the Bank assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Bank makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; (ii) such assigning Bank makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrowers or the performance or observance by the Borrowers of any of its obligations under this Agreement or any other instrument or document furnished pursuant hereto; (iii) such assignee confirms that it has received a copy of this Agreement, together with such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon the Administrative Agent, the Issuing and Paying Agent, such assigning Bank or any other Bank and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such assignee appoints and authorizes the Administrative Agent and the Issuing and Paying Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agent and the Issuing and Paying Agent by the terms hereof, together with such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Bank. (d) The Issuing and Paying Agent shall maintain at its address referred to in Section 8.03 a copy of each Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the names and addresses of the Banks and the Commitment of each Bank from time to time (the "Register"). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrowers, the Administrative Agent and the Issuing and Paying Agent and the Banks may treat each Person whose name is recorded in the -69- 74 Register as a Bank hereunder, as their respective interests may appear, for purposes of this Agreement. The Register shall be available for inspection by the Borrowers or any Bank at any reasonable time and from time to time upon reasonable prior notice. (e) Upon its receipt of an Assignment and Acceptance executed by an assigning Bank and an assignee together with any Notes subject to such assignment, the Administrative Agent shall, if such Assignment and Acceptance has been completed and is in substantially the form of Exhibit A hereto, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Borrowers. Within five Business Days after its receipt of such notice, the Borrowers, at their own expense, shall execute and deliver to the Administrative Agent in exchange for the surrendered Notes, a Note to the order of such assignee in an amount equal to the Commitment assumed by it pursuant to such Assignment and Acceptance and, if the assigning Bank has retained a Commitment hereunder, a new Note to the order of the assigning Bank in an amount equal to the Commitment retained by it hereunder. Such new Notes shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered Note shall be dated the effective date of such Assignment and Acceptance and shall otherwise be in substantially the form of Exhibit B hereto. (f) Each Bank shall also have the right to grant or sell a participation (a "Participation") in all or any part of its Commitment, Advances, Notes and Letter of Credit participations to an Affiliate of such Bank, any commercial lender or other financial institution, or, with the consent of the Administrative Agent and OHM, not to be unreasonably withheld, any other entity (a "Participant"); provided however, that (i) no Participant shall have any direct rights hereunder, (ii) the Borrowers, the Administrative Agent and the Issuing and Paying Agent, each Issuing Bank, and the Banks other than the selling Bank shall deal solely with the selling Bank and shall not be obligated to extend any rights or make any payments to, or seek any consent of, the Participant, (iii) no Participation shall relieve the selling Bank from its Commitment to make Advances hereunder and to participate in Letters of Credit, or from any of its other obligations hereunder, and such Bank shall remain solely responsible for the performance thereof, and (iv) no Participant, other than an affiliate of the selling Bank, shall or shall be entitled to require such selling Bank to take or omit to take any action hereunder, except that such Bank may agree with such Participant that such Bank will not, without such Participant's consent, take any action which would, in the case of any principal, interest or fee in which the Participant has an ownership or beneficial interest, (A) extend the final maturity of any Advances or extend the Stated Termination Date, (B) reduce the interest rate on the Advances or the rate of fees paid on the -70- 75 Commitment or the Letters of Credit, (C) forgive any principal of, or interest on, the Advances or any fees, (D) increase the amount of the Total Commitment, or (E) release all or substantially all of the Collateral. (g) Notwithstanding any other provision contained in this Agreement or any of the other Transaction Documents to the contrary, any Bank may, without notice or consent of any kind, at any time assign or grant a security interest in all or any portion of its rights under this Agreement (including, without limitation, the Advances owing to it) and the other Transaction Documents (including, without limitation, the Notes) in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System. (h) Any Bank and the Administrative Agent may, in connection with any such Assignment or Participation, disclose to the Assignee or Participant or to any prospective Assignee or Participant any nonpublic information relating to the Borrowers furnished by or on behalf of any of them to such Bank or the Administrative Agent, provided that such Assignee or Participant, or prospective Assignee or Participant, agrees to maintain the confidentiality thereof. SECTION 8.09. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. SECTION 8.10. MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), EACH OF THE PARTIES DESIRES THAT ITS DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, EACH OF THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a) ARISING UNDER THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM IN RESPECT TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE. EACH OF THE BORROWERS, THE ADMINISTRATIVE AGENT, THE ISSUING AND PAYING AGENT AND EACH BANK HEREBY EACH AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. SECTION 8.11. CONSENT TO JURISDICTION; SERVICE OF PROCESS. (a) SUBJECT ONLY TO THE EXCEPTION IN THE NEXT SENTENCE, -71- 76 EACH OF THE BORROWERS, THE ADMINISTRATIVE AGENT, THE ISSUING AND PAYING AGENT AND EACH OF THE BANKS HEREBY AGREE TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL COURTS OF THE NORTHERN DISTRICT OF ILLINOIS AND THE SOUTHERN DISTRICT OF THE STATE OF NEW YORK OR, IF THE FEDERAL COURT LACKS JURISDICTION, TO THE STATE COURTS LOCATED WITHIN COOK COUNTY ILLINOIS AND NEW YORK COUNTY, NEW YORK AND WAIVE ANY OBJECTION BASED ON VENUE OR FORUM NON CONVENIENS WITH RESPECT TO ANY ACTION INSTITUTED THEREIN, AND AGREE THAT ANY DISPUTE CONCERNING THE RELATIONSHIP BETWEEN THE ADMINISTRATIVE AGENT, THE ISSUING AND PAYING AGENT, THE BANKS AND THE BORROWERS OR THE CONDUCT OF ANY SUCH PARTY IN CONNECTION WITH THIS AGREEMENT, ANY OF THE OTHER TRANSACTION DOCUMENTS OR OTHERWISE SHALL BE HEARD ONLY IN THE COURTS DESCRIBED ABOVE. NOTWITHSTANDING THE FOREGOING THE ADMINISTRATIVE AGENT, THE ISSUING AND PAYING AND THE BANKS SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST EITHER OF THE BORROWERS OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION AS THE ADMINISTRATIVE AGENT, THE ISSUING AND PAYING AGENT AND/OR BANK DEEMS NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE SECURITY FOR THE OBLIGATIONS AND LIABILITIES OWING TO THEM BY THE BORROWERS HEREUNDER AND UNDER THE OTHER TRANSACTION DOCUMENTS. (b) EACH OF THE BORROWERS HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO SUCH BORROWER AT ITS ADDRESS SET FORTH IN SECTION 8.03 AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED THREE (3) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAIL. (C) NOTHING IN THIS SECTION 8.11 SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT, THE ISSUING AND PAYING AGENT OR THE BANKS TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT, THE ISSUING AND PAYING AGENT AND/OR THE BANKS TO BRING ANY ACTION OR PROCEEDING AGAINST ANY OF THE BORROWERS OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION. SECTION 8.12. Remedies. The Administrative Agent's, the Issuing and Paying Agent's and each Bank's rights and remedies under this Agreement shall be cumulative and nonexclusive of any other rights and remedies which such Persons may have under any other agreement, including without limitation, the other Transaction Documents, by operation of law or otherwise. SECTION 8.13. Severability of Provisions. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. -72- 77 SECTION 8.14. Indemnities. (a) The Borrowers hereby jointly and severally agree to indemnify and hold harmless the Banks, the Administrative Agent, the Issuing and Paying Agent and each Issuing Bank and each of their affiliates and their respective directors, officers, employees and agents from and against any and all losses, claims, damages, liabilities and expenses (including, without limitation, reasonable fees and disbursements of counsel) which may be incurred by or asserted against any such indemnified party in connection with or arising out of any investigation, litigation or proceeding, whether or not such indemnified party is a party thereto, related to any transaction or proposed transaction contemplated by this Agreement or any use of any Letter of Credit or the proceeds of any Advance. (b) To the full extent permitted by applicable law, the Borrowers hereby jointly and severally agree to defend, indemnify and hold harmless the Banks, the Administrative Agent, the Issuing and Paying Agent and each Issuing Bank and each of their affiliates and their respective directors, officers, employees and agents from and against any and all loss, cost, expense or liability incurred in connection with any and all claims or proceedings (whether brought by private party or governmental agencies) for bodily injury, property damage, abatement or remediation, environmental damage or impairment or any other injury or damage resulting from or relating to any hazardous or toxic substance or contaminated material located upon or migrating into, from or through the property of either Borrower (whether or not the release of such materials was caused by any of such Persons, a tenant or subtenant or a prior owner or tenant on any such property and whether or not the alleged liability is attributable to the handling, storage, generation, remediation, transportation or disposal of such substance or the mere presence of the substance on any such property), which any such indemnified party may incur due to the making of loans to either Borrower, the exercise of any of its rights under this Agreement, or otherwise. For purposes of this indemnity, hazardous or toxic substances or contaminated material includes but is not limited to oil and petroleum products and those substances within the scope of all federal, state and local environmental laws, regulations and ordinances, including, without limitation, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act and the Superfund Amendment and Reauthorization Act of 1986. This indemnity will survive foreclosure of any mortgage or conveyance in lieu of foreclosure and the repayment of the Notes and the discharge and release of any mortgage and any other loan documents. SECTION 8.15. The Transaction Documents; Actions by the Banks; Release and Re-Grant of Collateral; Release of WMX Guaranty. (a) Each Bank and each Issuing Bank hereby consents -73- 78 and agrees to the terms of the Transaction Documents and authorizes and directs the Administrative Agent and Issuing and Paying Agent to execute the Transaction Documents. Each Bank and each Issuing Bank hereby agrees, and each holder of any Note by the acceptance thereof will be deemed to agree, that any action taken by the Majority Banks, the Issuing and Paying Agent or the Administrative Agent (as appropriate), in accordance with the provisions of this Agreement or the Transaction Documents, and the exercise by the Majority Banks, the Issuing and Paying Agent or the Administrative Agent (as appropriate), of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all of the Banks, Issuing Banks and the holders of any Note. (b) Prior to the indefeasible payment in full of the Obligations, the release of any Collateral may occur only as follows: (i) the Issuing and Paying Agent, on behalf of the Banks, shall release the Lien on any Collateral to the extent sold, assigned, transferred or otherwise disposed of in accordance with Section 5.02(c); (ii) the Majority Banks may direct the Issuing and Paying Agent to release the Lien on any Collateral; provided, that in no event may all or a substantial portion of the Collateral be released under this clause (ii) without the prior written consent of all Banks; and (iii) upon the Borrowers' written request in the form attached hereto as Exhibit J, delivered to the Administrative Agent and the Issuing and Paying Agent at any time after the delivery to the Banks of the required financial statements and compliance documentation pursuant to Section 5.03 for any fiscal quarter ending on or after December 31, 1995, the Issuing and Paying Agent shall release all of the Collateral if (A) the Borrowers' performance as of the end of the fiscal quarter most recently ended satisfies the conditions for Level 2 set forth on the Facility B Rate Determination Table and (B) prior to or simultaneously with such release, WMX shall have released all liens and security interests in its favor with respect to any property of either Borrower. At any time following the release of Collateral pursuant to clause (iii) above, the Borrowers will, upon the direction of the Majority Banks, be required to execute any necessary collateral documents and re-grant all such Collateral to the Issuing and Paying Agent for the benefit of the Banks, (A) if the WMX Guaranty has been released pursuant to subsection (c) below, and the Borrowers' financial performance has failed, as of the end of any fiscal quarter, to satisfy the conditions for Level 4 set forth on the Facility B Rate Determination Table, or (B) if the -74- 79 WMX Guaranty is still in effect, if (i) the Borrowers' financial performance has failed, as of the end of any fiscal quarter, to satisfy the conditions for Level 4 set forth on the Facility B Rate Determination Table, and (ii) the aggregate outstanding Advances plus the aggregate undrawn face amount of outstanding Letters of Credit, plus the aggregate unpaid reimbursement obligations with respect to the Letters of Credit, computed as an average daily amount, exceeds the amount of the Total A Commitment for either (A) the thirty day period prior to the occurrence of such failure or (B) any thirty day period so long as such failure continues. (c) Upon the written request of the Borrowers prior to the one hundred twentieth (120th) calendar day following the Effective Date, which request certifies the Borrowers' intent to use a guaranty by WMX in support of other Indebtedness of the Borrowers, the Administrative Agent and the Issuing and Paying Agent shall release and terminate the WMX Guaranty in whole or in part, as requested by the Borrowers. SECTION 8.16. Termination of Prior Credit Agreement. On the Effective Date, the Prior Credit Agreement shall terminate and, together with the "Notes" issued thereunder (the "Prior Notes"), shall cease to be of any further force or effect (other than rights of indemnification set forth therein, which shall survive such termination). Each Bank shall use its reasonable efforts to return the Prior Notes issued to it to the Borrowers for cancellation on or before the Effective Date; provided, that in the event that any Bank fails to return its Prior Note on or before the Effective Date, the Effective Date shall nevertheless occur, and each such Bank agrees to indemnify and hold the Borrowers harmless from and against any and all liability, loss, damage, and expense, including reasonable legal fees and expenses, in connection with, or arising out of, the issuance of such Bank's Note or the failure to return such Prior Note. SECTION 8.17. Headings. The Article and Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose. [THIS SPACE INTENTIONALLY LEFT BLANK.] -75- 80 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. BORROWERS: OHM CORPORATION Attest: By_________________________________ Title: __________________________ Secretary OHM REMEDIATION SERVICES CORP. By_________________________________ Title: Commitment: BANKS $25,000,000 CITICORP USA, INC., Individually and as Administrative Agent By_________________________________ Vice President BANK OF AMERICA ILLINOIS, as Issuing and Paying Agent By_________________________________ Vice President $25,000,000 BANK OF AMERICA ILLINOIS By_________________________________ Title: $25,000,000 NBD BANK, N.A. By_________________________________ Title: $20,000,000 THE FIRST NATIONAL BANK OF BOSTON By_________________________________ Title: -76- 81 $15,000,000 NATIONAL CITY BANK By_________________________________ Title: $15,000,000 COMERICA BANK By_________________________________ Title: $12,500,000 BHF BANK By_________________________________ Title: $12,500,000 BANK ONE, LIMA, N.A. By_________________________________ Title: $150,000,000 TOTAL COMMITMENT ___________ -77- 82 ANNEX A to REVOLVING CREDIT AGREEMENT Facility A Rate Determination Table Attached. 83 ANNEX B to REVOLVING CREDIT AGREEMENT Facility B Rate Determination Table Attached. EX-10.F 7 OHM EX-10(F) 1 Exhibit 10(f) EXECUTION COPY FIRST AMENDMENT Dated as of May 31, 1995 to PLEDGE AGREEMENT Dated as of May 11, 1993 This FIRST AMENDMENT TO PLEDGE AGREEMENT dated as of May 31, 1995 (this "Amendment") is entered into by and between OHM Corporation, an Ohio corporation (the "Pledgor"), and Bank of America Illinois ("BAI"), as issuing and paying agent (in such capacity, the "Issuing and Paying Agent") on behalf of the "Banks" parties to the "Credit Agreement" referred to below. PRELIMINARY STATEMENT: A. The Pledgor and OHM Remediation Services Corp., an Ohio corporation (together with the Pledgor, the "Borrowers"), entered into that certain Revolving Credit Agreement dated as of May 11, 1993 (as previously amended and otherwise modified, the "Prior Credit Agreement") with the financial institutions from time to time party thereto, BAI (formerly known as Continental Bank N.A.) in its separate capacities as the administrative agent and issuing bank thereunder, and Citicorp USA, Inc. ("Citicorp"), in its capacity as agent thereunder. B. In connection with the Prior Credit Agreement, the Pledgor executed that certain Pledge Agreement dated as of May 11, 1993 (as previously amended and otherwise modified, the "Pledge Agreement") in favor of the "Administrative Agent" thereunder. C. The Prior Credit Agreement has been substituted and replaced by that certain Revolving Credit Agreement dated as of May 31, 1995 (as amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement") among the Borrowers, the financial institutions from time to time party thereto as banks (the "Banks"), the Issuing and Paying Agent and Citicorp, in its capacity as administrative agent (the "Administrative Agent") for the Banks. D. In connection with the Credit Agreement, the Borrowers, the Banks, the Issuing and Paying Agent and the Administrative Agent have agreed that the Pledge Agreement is to be amended as set forth herein. 2 E. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings ascribed to such terms in the Credit Agreement. NOW, THEREFORE, in consideration of the premises set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. AMENDMENTS TO THE PLEDGE AGREEMENT. 1.1 General Definitions. Capitalized terms used in the Pledge Agreement and defined in the Credit Agreement shall have the respective meanings ascribed to such terms in the Credit Agreement. 1.2 Replaced Terms. As used in the Pledge Agreement, each of the following terms shall be deemed to be replaced as follows: (a) The term Administrative Agent shall be replaced by and shall mean and be a reference to the term Issuing and Paying Agent. (b) The term Agent shall be replaced by and shall mean and be a reference to the term Administrative Agent. (c) The term Issuing Bank shall be replaced by and shall mean and be a reference to the term Issuing Banks. 1.3 Other Changes. (a) Each reference in the Pledge Agreement to the Credit Agreement shall mean and be a reference to the Credit Agreement as defined herein, and each reference in the Pledge Agreement to a section or provision of the Prior Credit Agreement shall mean and be a reference to the corresponding section or provision of the Credit Agreement. (b) Schedule I to the Pledge Agreement is hereby amended to (i) delete the reference to Analytical Services Corp. therein and (ii) delete the number "3,710,000" opposite the reference to NSC Corporation therein and to substitute therefor "4,010,000". SECTION 2. REPRESENTATIONS AND WARRANTIES. The Pledgor hereby represents and warrants that each of the representations and warranties set forth in Section 5 of the Pledge Agreement are true and correct on and as of the Effective Date of the Credit Agreement as if made on and as of such date. -2- 3 SECTION 3. EFFECT ON THE PLEDGE AGREEMENT. 3.1 Upon the effectiveness of this Amendment, each reference in the Pledge Agreement to "this Agreement," "hereunder," "hereof," "herein," or words of like import shall mean and be a reference to the Pledge Agreement as amended hereby, and each reference to the Pledge Agreement in any of the Transaction Documents and any other document, instrument or agreement executed and/or delivered in connection with the Pledge Agreement shall mean and be a reference to the Pledge Agreement as amended hereby. 3.2 Except as specifically set forth herein, the Pledge Agreement shall remain in full force and effect and is hereby ratified and confirmed. Without limiting the generality of the foregoing, the Pledgor hereby acknowledges and agrees that the grant of Liens and security interests contained in the Pledge Agreement shall run in favor of the Issuing and Paying Agent for the benefit of itself, the Banks and the Administrative Agent, and shall constitute security for the prompt payment and performance of the Obligations under the Credit Agreement and the other Transaction Documents. 3.3 The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Issuing and Paying Agent under the Pledge Agreement or any other document, instrument or agreement executed in connection therewith, nor constitute a waiver of any provision contained therein, except as specifically set forth herein. SECTION 4. EXECUTION IN COUNTERPARTS. This Amendment may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. SECTION 5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS (INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAWS BUT OTHERWISE WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS) AND DECISIONS OF THE STATE OF NEW YORK. -3- 4 SECTION 6. SECTION TITLES. Section titles in this Amendment are included herein for convenience of reference only and shall not affect in any way the interpretation of any of the provisions hereof. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized as of the day and year first written above. OHM CORPORATION Attest: By___________________________ Title: Treasurer ________________________ Secretary BANK OF AMERICA ILLINOIS, as Issuing and Paying Agent By___________________________ Title: Vice President -4- EX-10.G 8 OHM EX-10(G) 1 Exhibit 10(g) EXECUTION COPY SECOND AMENDMENT Dated as of May 31, 1995 to SECURITY AGREEMENT Dated as of May 11, 1993 This SECOND AMENDMENT TO SECURITY AGREEMENT dated as of May 31, 1995 (this "Amendment") is entered into by and among OHM Corporation, an Ohio corporation ("OHM"), OHM Remediation Services Corp., an Ohio corporation ("Remediation", and together with OHM, the "Borrowers"), and Bank of America Illinois ("BAI"), as issuing and paying agent (in such capacity, the "Issuing and Paying Agent") on behalf of the "Banks" parties to the "Credit Agreement" referred to below. PRELIMINARY STATEMENT: A. The Borrowers entered into that certain Revolving Credit Agreement dated as of May 11, 1993 (as previously amended and otherwise modified, the "Prior Credit Agreement") with the financial institutions from time to time party thereto, BAI (formerly known as Continental Bank N.A.) in its separate capacities as the administrative agent and issuing bank thereunder, and Citicorp USA, Inc. ("Citicorp"), in its capacity as agent thereunder. B. In connection with the Prior Credit Agreement, the Borrowers and Analytical Services Corp., an affiliate of the Borrowers, executed that certain Security Agreement dated as of May 11, 1993 (as previously amended and otherwise modified, the "Security Agreement") in favor of the "Administrative Agent" thereunder. C. The Prior Credit Agreement has been substituted and replaced by that certain Revolving Credit Agreement dated as of May 31, 1995 (as amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement") among the Borrowers, the financial institutions from time to time party thereto as banks (the "Banks"), the Issuing and Paying Agent and Citicorp, in its capacity as administrative agent (the "Administrative Agent") for the Banks. D. In connection with the Credit Agreement, the Borrowers, the Banks, the Issuing and Paying Agent and the Administrative Agent have agreed that the Security Agreement is to be amended as set forth herein. 2 E. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings ascribed to such terms in the Credit Agreement. NOW, THEREFORE, in consideration of the premises set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. AMENDMENTS TO THE SECURITY AGREEMENT. 1.1 General Definitions. Capitalized terms used in the Security Agreement and defined in the Credit Agreement shall have the respective meanings ascribed to such terms in the Credit Agreement. 1.2 Replaced Terms. As used in the Security Agreement, each of the following terms shall be deemed to be replaced as follows: (a) The term Administrative Agent shall be replaced by and shall mean and be a reference to the term Issuing and Paying Agent. (b) The term Agent shall be replaced by and shall mean and be a reference to the term Administrative Agent. (c) The term Continental shall be replaced by and shall mean and be a reference to the term BAI. (d) The term Issuing Bank shall be replaced by and shall mean and be a reference to the term Issuing Banks. 1.3 Other Changes. (a) As used in the Security Agreement, the term Co-Agents shall refer to the Issuing and Paying Agent and the Administrative Agent. (b) Each reference in the Security Agreement to Analytical Services Corp. (and each provision in the Security Agreement relating solely to Analytical Services Corp.) shall be deleted in its entirety. (c) Each reference in the Security Agreement to the Credit Agreement shall mean and be a reference to the Credit Agreement as defined herein, and each reference in the Security Agreement to a section or provision of the Prior Credit Agreement shall mean and be a reference to the corresponding section or provision of the Credit Agreement. -2- 3 (d) Each reference in the Security Agreement to the Grantors shall mean and be a reference to the Borrowers. (e) Section 8(c) of the Security Agreement is amended by deleting the first sentence thereof and substituting therefor the following: "Notwithstanding anything contained herein to the contrary, upon (i) the occurrence and during the continuance of an Event of Default, or (ii) during any Secured Period, (A) any loss, damage or destruction of any Inventory or Equipment in excess of 2.5% of Net Worth in any one occurrence or in any related series of occurrences, or (B) any loss, damage or destruction of any Inventory or Equipment in excess of 2.5% of Net Worth in any twelve-month period in the aggregate, then (1) in the case of clause (i) above, all insurance payments in respect of loss, damage or destruction of Equipment or Inventory, (2) in the case of clause (ii)(A) above, any insurance proceeds in respect of such lost, damaged or destroyed Equipment or Inventory, and (3) in the case of clause (ii)(B) above, all insurance proceeds in excess of such amount paid in respect of losses occurring in such twelve-month period, shall, in each case, be paid to the Issuing and Paying Agent and, at the Issuing and Paying Agent's sole option, may be applied by the Issuing and Paying Agent (after deducting from such proceeds the expenses, if any, incurred by the Issuing and Paying Agent in the collection of handling thereof) as specified in Section 14(b)." (f) The Schedule to the Security Agreement is amended and restated in its entirety as set forth on Annex I hereto. SECTION 2. REPRESENTATIONS AND WARRANTIES. Each of the Borrowers hereby represents and warrants that each of the representations and warranties set forth in Section 5 of the Security Agreement are true and correct on and as of the Effective Date of the Credit Agreement as if made on and as of such date. SECTION 3. EFFECT ON THE SECURITY AGREEMENT. 3.1 Upon the effectiveness of this Amendment, each reference in the Security Agreement to "this Agreement," "hereunder," "hereof," "herein," or words of like import shall mean and be a reference to the Security Agreement as amended hereby, and each reference to the Security Agreement in any of the Transaction Documents and any other document, instrument or -3- 4 agreement executed and/or delivered in connection with the Security Agreement shall mean and be a reference to the Security Agreement as amended hereby. 3.2 Except as specifically set forth herein, the Security Agreement shall remain in full force and effect and is hereby ratified and confirmed. Without limiting the generality of the foregoing, each of the Borrowers hereby acknowledges and agrees that the grant of Liens and security interests contained in the Security Agreement shall run in favor of the Issuing and Paying Agent for the benefit of itself, the Banks and the Administrative Agent, and shall constitute security for the prompt payment and performance of the Obligations under the Credit Agreement and the other Transaction Documents. 3.3 The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Issuing and Paying Agent under the Security Agreement or any other document, instrument or agreement executed in connection therewith, nor constitute a waiver of any provision contained therein, except as specifically set forth herein. SECTION 4. EXECUTION IN COUNTERPARTS. This Amendment may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. SECTION 5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS (INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAWS BUT OTHERWISE WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS) AND DECISIONS OF THE STATE OF NEW YORK. -4- 5 SECTION 6. SECTION TITLES. Section titles in this Amendment are included herein for convenience of reference only and shall not affect in any way the interpretation of any of the provisions hereof. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized as of the day and year first written above. OHM CORPORATION Attest: By____________________________ Title: Treasurer ________________________ Secretary OHM REMEDIATION SERVICES CORP. By____________________________ Title: Treasurer BANK OF AMERICA ILLINOIS, as Issuing and Paying Agent By____________________________ Title: Vice President -5- 6 ANNEX I TO SECOND AMENDMENT SCHEDULE to SECURITY AGREEMENT
Grantor Location of Chief Executive Office ------- ---------------------------------- OHM Corporation 16406 U.S. Route 224 East Findlay, Ohio 45840 OHM Remediation Services 16406 U.S. Route 224 East Corp. Findlay, Ohio 45840 Records Concerning Accounts also kept at: 200 Horizon Center Boulevard Trenton, New Jersey 08691-1904 5335 Triangle Parkway Suite 450 Norcross, Georgia 30092 5371 West Las Positas Boulevard Pleasanton, California 94588 Trade Names: OHM O.H. Materials Corp. OHM Corporation the Environmental Service Company
-6- EX-10.H 9 OHM EX-10(H) 1 Exhibit 10(h) Execution Copy INTERCREDITOR AGREEMENT This INTERCREDITOR AGREEMENT (this "Agreement") is made and executed as of this 31st day of May, 1995 by and among CITICORP USA, INC., as administrative agent (the "Administrative Agent") for the "Banks" parties to the "Revolving Credit Agreement" described below, BANK OF AMERICA ILLINOIS, as issuing and paying agent (the "Issuing and Paying Agent") for such Banks and WMX TECHNOLOGIES, INC. ("WMX"), with respect to certain financing arrangements with OHM Corporation and its wholly-owned subsidiary OHM Remediation Services Corp. (each, a "Borrower" and, collectively, the "Borrowers"). W I T N E S S E T H: WHEREAS, the Borrowers are parties to that certain Revolving Credit Agreement dated as of May 31, 1995 (as amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement") with the financial institutions from time to time party thereto (the "Banks"), the Issuing and Paying Agent and the Administrative Agent (the Banks, the Issuing and Paying Agent and the Administrative Agent being referred to collectively as, the "Lender Parties"); WHEREAS, the Borrowers have granted to the Issuing and Paying Agent, on behalf of the Lender Parties, in order to secure the "Obligations" (as defined in the Credit Agreement), a security interest in substantially all of their personal property; WHEREAS, WMX has executed that certain Guaranty dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the "WMX Guaranty") pursuant to which WMX has guaranteed the prompt and complete repayment of the Borrowers' Obligations up to limits set forth in the WMX Guaranty; WHEREAS, upon payment by WMX of any of the obligations pursuant to the WMX Guaranty, WMX shall be entitled, to the extent of such payment, to seek reimbursement from the Borrowers under applicable principles of subrogation and under that certain reimbursement agreement dated as of the date hereof between WMX and the Borrower (the "Reimbursement Agreement"); WHEREAS, the Borrowers have granted to WMX, in order to secure their respective reimbursement obligations with respect to 2 payments by WMX under the WMX Guaranty, a security interest in substantially all of their personal property; and WHEREAS, the Administrative Agent and the Issuing and Paying Agent, each on behalf of itself and the other Lender Parties, and WMX desire to set forth certain agreements, rights and interests with respect to and in connection with their respective interests with respect to the Borrowers and their security interests and liens in and upon the "Collateral" (as defined below). NOW, THEREFORE, in consideration of the premises set forth above, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Administrative Agent, the Issuing and Paying Agent and WMX hereby agree as follows: SECTION 1. Definitions. As used in this Agreement, the following terms shall have the meanings set forth below: "Agent" shall means either the Administrative Agent or the Issuing and Paying Agent. "Business Day" means any day on which banks are not required or authorized to close in New York, New York, Chicago, Illinois or Pittsburgh, Pennsylvania. "Claim" shall mean either the Lenders' Claim or the WMX Claim, as the case may be. "Collateral" shall mean all property and interests in property now owned or hereafter acquired by the Borrowers in or upon which a security interest, lien or mortgage has been or is hereafter granted to the Issuing and Paying Agent or any of the other Lender Parties under any of the Lender Documents, or WMX under any of the WMX Documents, or, in each case, under any other documents, instruments or writings executed by either Borrower and delivered to the Issuing and Paying Agent, any other Lender Party or WMX in connection therewith. "Enforcement" shall mean, collectively or individually, any demand for payment or acceleration of the indebtedness of the Borrowers owing to the Lender Parties or WMX, as the case may be, repossession of any of the Collateral, exercise of any set- off rights, or commencement of judicial enforcement of any of the rights and remedies under the Lender Documents, the WMX Documents, any related agreements or applicable law. "Enforcement Notice" shall mean a written notice delivered pursuant to Section 2.01 hereof at a time when a Lender Default or a Reimbursement Default has occurred and is continuing, announcing the intent of the party delivering such notice to commence Enforcement, which notice shall (i) if given -2- 3 by either Agent, state that a Lender Default has occurred and is outstanding, or if given by WMX, state that a Reimbursement Default has occurred and is outstanding, (ii) set forth the current balance of the Lenders' Claim or the WMX Claim, as applicable, and (iii) request the current balance of the other Claim. "Enforcement Stay Period" shall mean, with respect to any Enforcement Notice, a period of time beginning on the date of receipt of such Enforcement Notice by the intended recipients thereof, and ending at the close of business on the 10th Business Day thereafter, or on such earlier date as the Agents and WMX may agree. "Lender Default" shall mean an "Event of Default" (as defined in the Credit Agreement). "Lender Documents" shall mean the "Transactions Documents" (as defined in the Credit Agreement). "Lender Group" means each of (a) the Lender Parties and (b) WMX. "Lenders' Claim" shall mean all of the "Obligations" (as defined in the Credit Agreement) of the Borrowers to the Lender Parties, including, but not limited to, all outstanding credit extended by the Lender Parties to or for the benefit of the Borrowers at any time in connection with the Lender Documents, any interest thereon, any fees and expenses in connection therewith, and any costs or expense of collection or enforcement, including reasonable attorneys' and paralegals' fees and costs. "Lenders' Pro Rata Share" shall mean, with respect to any proceeds of Collateral, payments, or amounts received by exercise of any set-off, a fraction calculated at the time such proceeds arise or such payments or amounts are received, but prior to the application thereof to the Lenders' Claim or the WMX Claim, the numerator of which is the amount of the Lenders' Claim, and the denominator of which is the sum of the Lenders' Claim and the WMX Claim. "Person" means an individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof. "Reimbursement Default" shall mean any failure by the Borrowers to reimburse WMX with respect to the WMX Claim under applicable principles of subrogation or in accordance with the terms of the Reimbursement Agreement. -3- 4 "Sale Notice" shall mean a written notice delivered a any time following the expiration of an Enforcement Stay Period by either Agent to WMX or by WMX to the Agents, as the case may be, stating the intent of the party delivering such notice to conduct either a public or private sale of all or a portion of the Collateral, which notice shall, in reasonably sufficient detail, (i) specify the time and place of such sale, (ii) indicate whether such sale is a public or private sale, and (iii) identify the Collateral which will be the subject of such sale. "WMX Claim" shall mean, at any time, the outstanding claim of WMX against the Borrowers at such time, under applicable legal or equitable principles of indemnity or subrogation or under the Reimbursement Agreement between WMX and the Borrowers, following payment by WMX under the WMX Guaranty, together with any costs or expenses of collection or enforcement, including reasonable attorneys, and paralegals' fees and costs; provided, however, that if for any purpose hereunder the amount of the WMX Claim is to be determined prior to the time a payment is made under the WMX Guaranty, or at any time that a partial draw has been made on the Guaranty and further amounts may be drawn under the Guaranty, the amount of the WMX Claim shall be deemed to be equal to the then applicable WMX Guaranty Cap. "WMX Documents" shall mean the Reimbursement Agreement, that certain Security Agreement between the Borrowers and WMX dated as of the date hereof, and that certain Pledge Agreement between OHM and WMX dated as of the date hereof. "WMX Guaranty Cap" shall mean, at any time, the then applicable "Guaranteed Amount" under and as defined in the WMX Guaranty, or, if WMX's liability under the WMX Guaranty shall have been limited pursuant to Section 3(c) of the WMX Guaranty, such lesser amount to which such liability shall have been so limited. "WMX' Pro Rata Share" shall mean, with respect to any proceeds of Collateral, payments, or amounts received by exercise of any set-off, a fraction, calculated at the time such proceeds arise or such payments or amounts are received, but prior to the application thereof to the Lenders' Claim or the WMX Claim, the numerator of which is the amount of the WMX Claim, and the denominator of which is the sum of the Lenders' Claim and the WMX Claim. SECTION 2. Intercreditor Agreement. 2.01. Enforcement Notices; Enforcement Stay Period; Enforcement. Before commencing Enforcement against either Borrower, the Agents shall deliver an Enforcement Notice to WMX. Before commencing Enforcement against either Borrower, WMX shall deliver an Enforcement Notice to the Agents with a copy to the Borrowers. None of the Lender Parties shall commence Enforcement -4- 5 with respect to any Lender Default referenced in an Enforcement Notice given by the Agents during the Enforcement Stay Period with respect to such Enforcement Notice, provided that during such Enforcement Stay Period, demand for payment may be made, the maturity of any portion of the Lender's Claim may be accelerated, and any commitment to extend credit pursuant to the Credit Agreement may be terminated. WMX shall not commence Enforcement with respect to any Reimbursement Default referenced in an Enforcement Notice given by WMX during the Enforcement Stay Period with respect to such Enforcement Notice provided that such Enforcement Stay Period, demand for payment may be made. Notwithstanding the foregoing, the Lender Parties and WMX may each commence Enforcement without giving a prior Enforcement Notice or prior to the expiration of an Enforcement Stay Period if a petition is filed by or against either Borrower for relief under title 11 of the United States Code, as amended from time to time, or under any similar state statute. Each Lender Group may join with the other Lender Group in such other Lender Group's Enforcement. The Agents and WMX each agree to use good faith efforts to cooperate with respect to any proposed or continuing Enforcement in order to maximize the amount of proceeds obtained therefrom. The Agents and WMX agree to exchange, upon request, information regarding the Collateral (including, but not limited to, appraisals and third party offers to purchase, or inquiries as to, the Collateral). Each Lender Group agrees to use its best efforts to notify the other Lender Group, prior to incurring any material expense in connection with Enforcement, or with any appraisal of or evaluation of the Collateral. 2.02. Sale Notice. If either Lender Group intends to conduct a public or private sale of any of the Collateral, then such Lender Group shall provide a Sale Notice with respect to such Collateral being sold. To be effective, such Sale Notice must be delivered in one of the manners set forth in Section 3.01 hereof, with an actual or deemed receipt date (pursuant to the provisions of Section 3.01) at least ten (10) days prior to such proposed sale. 2.03. The Collateral; Distribution of Proceeds of Collateral. The Agents and WMX each acknowledge and agree that the Borrowers have, pursuant to the Lender Documents and the WMX Documents, granted liens and security interests in all of the Collateral to both the Issuing and Paying Agent (for the benefit of the Lenders) and WMX. To the extent that either Agent or WMX receives at any time while a WMX Claim is outstanding, or at any time after the obligations under the Credit Agreement have become due by their terms at maturity or the Administrative Agent has accelerated the maturity of the obligations under the Credit Agreement and terminated the Banks' agreement to lend under the Credit Agreement, whether or not a payment has been made by WMX under the WMX Guaranty, proceeds of any Collateral, or payments -5- 6 in respect of the WMX Claim or the Lenders' Claim (including any amounts received by exercise of set-off), such proceeds or payments (net of the reasonable costs of enforcement and collection) shall be held in trust (until distributed or retained as set forth below) and shall be promptly paid (or retained) as follows: (a) The Lenders' Pro Rata Share of such net proceeds or payments shall be paid to (or retained by) the Agents; and (b) WMX' Pro Rata Share of such net proceeds or payments shall be paid to (or retained by) WMX. Amounts paid to or retained by the Agents pursuant to clause (a) above shall be applied in accordance with the Lender Documents, and amounts paid to or retained by WMX pursuant to clause (b) above shall be applied in accordance with the WMX Documents; provided, that any amounts so paid to or retained by WMX prior to WMX's having made payment under the WMX Guaranty shall be held by WMX as cash collateral for the Borrowers' contingent obligations under the Reimbursement Agreement. By its consent hereto, each of the Borrowers consents to WMX' so holding or retaining any such proceeds as cash collateral, agrees that such cash collateral need not be segregated, and agrees that WMX may apply such cash collateral to the Borrowers' obligation to reimburse WMX for any payment made by WMX under the WMX Guaranty. Upon the Lenders' receipt of payment in full in cash (including any amounts received by exercise of any set-off) of the Lenders' Claim while the WMX Claim is still outstanding, all further proceeds of Collateral shall be paid to or retained by WMX and applied toward satisfaction of the WMX Claim, and upon payment in full in cash (including amounts received by exercise of any set-off) of the WMX Claim while the Lenders, Claim is still outstanding, all further proceeds of Collateral shall be paid to or retained by the Agents in satisfaction of the Lenders' Claim. If both the Lenders' Claim and the WMX Claim shall have been paid in full (in cash), all further proceeds of Collateral shall be paid to the Borrowers or as otherwise required by law. 2.04. Invalidated Payments. To the extent that any payments on the Lenders' Claim or the WMX Claim, or any application of any proceeds of Collateral to the reduction of the Lenders' Claims or the WMX Claim, are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other Person under any bankruptcy law, state or federal law, common law, or equitable cause, then, to the extent of such payment or proceeds application, the Lenders' Claim or the WMX Claim, or part thereof, as the case may be, intended to be satisfied shall be revived and continue in full force and effect as if such payments or proceeds had not been received. -6- 7 2.05. Additional Collateral. To the extent that either Agent, any other Lender Party or WMX is granted a lien upon or security interest in any additional real or personal property to secure the repayment or performance of the Lenders' Claim or the WMX Claim, such additional collateral shall be deemed Collateral hereunder, subject to all of the terms and provisions hereof. 2.06. Notice of Defaults. (a) The Agents and WMX each agree to use their good faith efforts to give to the other copies of any notice of the occurrence or existence of a Lender Default or a Reimbursement Default, as applicable, sent simultaneously with the sending of such notice to the Borrowers, but the failure to do so shall not affect the validity of any such notice to the Borrowers or create a cause of action against the party failing to give such notice or create any claim or right on behalf of any third party. The sending of any such notice by or on behalf of a Lender Group shall not give the other Lender Group any obligation or right to cure such Lender Default or Reimbursement Default, as applicable. (b) WMX agrees to give to each of the Agents notice of any default or event of default (which continues beyond any applicable grace period) under any indebtedness of WMX with a principal amount of $50,000,000 or more, or under any of the documents executed in connection with any such indebtedness, such notice to be given within ten (10) days after WMX has notice of any such default or event of default, provided, however, that WMX shall have no liability to the Lender Parties for failure to give such notice with respect to indebtedness of WMX with a principal amount of less than 5% of the stockholders' equity of WMX. 2.07. Agency for Perfection. The Agents hereby appoint WMX, and WMX hereby appoints each of the Agents, as agent for purposes of perfecting their respective security interests in Collateral. In the event any party hereto obtains possession of any Collateral, any proceeds arising therefrom shall be applied in accordance with Section 2.03 above. Without limiting the generality of the foregoing, the Issuing and Paying Agent hereby agrees that it shall hold the stock certificates evidencing the issued and outstanding stock pledged pursuant to the "Pledge Agreement" (as defined in the Credit Agreement) as bailee for WMX for purposes of perfecting WMX's lien with respect to such stock as granted under the WMX Documents. Upon indefeasible payment in full in cash of the Lenders' Claim, the Issuing and Paying Agent hereby agrees to deliver the certificates evidencing such stock to WMX, unless the Issuing and Paying Agent has received prior written notice from WMX that the WMX Claim has been paid in full. By its consent hereto, each of the Borrowers hereby authorizes the Issuing and Paying Agent to so deliver the certificates evidencing such stock to WMX upon indefeasible payment in full in cash of the Lenders' Claim and the Issuing and Paying Agent shall have no liability to either Borrower with respect to such -7- 8 delivery. Notwithstanding the foregoing, neither Lender Group makes any representation to the other Lender Group with respect to the perfection or priority of its security interests in any of the Collateral, and neither Lender Group shall be liable to the other for failure to properly perfect its security interests in any of the Collateral. SECTION 3. Miscellaneous. 3.01. Notices. All notices and other communications required or desired to be served, given or delivered hereunder shall be in writing or by a telecommunications device capable of creating a printed record and recording the date and time of transmission, and shall be addressed to the party to be notified as follows: if to WMX, at: WMX Technologies, Inc. 3003 Butter field Road Oak Brook, Illinois 60521 Attention: Chief Financial Officer Telecopy: (708) 572-1340 if to the Issuing and Paying Agent, at Bank of America Illinois 231 South LaSalle Street Chicago, Illinois 60697 Attention: Service Industries Telecopy: (312) 828-1974 if to the Agent, at Citicorp USA, Inc. c/o Citicorp North America, Inc. 200 South Wacker Drive 31st Floor Chicago, Illinois 60606 Attention: Emily Rosenstock Vice President Telecopy: (312) 993-1050 or, as to each party, at such other address as designated by such party in a written notice to the other party. All such notices and communications shall be deemed to be validly served, given or delivered (i) three (3) days following deposit in the United States mails, with proper postage prepaid; (ii) upon delivery thereof if delivered by hand to the party to be notified; (iii) one day following delivery thereof to a reputable overnight courier service, with delivery charges prepaid; or (iv) upon confirmation of receipt thereof if transmitted by a telecommunications device. -8- 9 3.02. Contesting Liens or Security Interests. No Lender Party shall contest the validity, perfection, priority or enforceability of any lien or security interest granted by either Borrower to WMX, or petition any court to equitably subordinate the WMX Claim, and WMX shall not contest the validity, perfection, priority or enforceability of any lien or security interest granted by either Borrower to any Lender Party or petition any court to equitably subordinate the Lenders' Claim. All parties agree all future security interests granted in any of the Collateral during the term of this Intercreditor Agreement are subject to the terms of this Intercreditor Agreement. 3.03. No Additional Rights for Borrower or Other Parties Hereunder. This Agreement sets forth certain rights and obligations of the two Lender Groups as between themselves, and is solely for their benefit. In no event shall the Borrowers or any third party obtain any rights with respect to any Lender Party or WMX as a result of this Agreement. Without limiting the generality of the foregoing, if the Agents or WMX shall fail to comply with the terms of this Agreement, the Borrowers agree that they shall not use such failure as a defense to any Enforcement under the Lender Documents and/or the WMX Documents nor assert such failure as a counterclaim or basis for set-off or recoupment of any kind or nature. 3.04. Independent Credit Investigations. Neither Lender Group, nor any of the directors, officers, agents or employees of any member of either Lender Group, shall be responsible to the other Lender Group or to any other Person for either Borrower's solvency, financial condition or ability to repay the Lenders' Claim or the WMX Claim, or for statements of either Borrower, oral or written, or for the validity, sufficiency or enforceability of the Lenders' Claim or the WMX Claim, the Lenders' Documents, the WMX Documents, or any liens or security interests granted by either Borrower to any Lender Party or WMX in connection therewith. Each Lender Group has entered into its respective financing agreements with the Borrowers based upon its own independent investigation, and makes no warranty or representation to, nor does it rely upon any warranty or representation of, the other Lender Group with respect to matters identified or referred to in this Section 3.04. 3.05. Amendments to Financing Arrangements; Release of Collateral. Each Lender Group, at any time and from time to time, may enter into such agreement or agreements with either Borrower as such Lender Group may deem proper, extending the time of payment of or renewing or otherwise altering, in accordance with the terms of such documents, the terms of the Lender Documents (in the case of the Lender Parties) or the WMX Documents (in the case of WMX) or affecting the security underlying any or all of the Lenders' Claim (in the case of the Lender Parties) or the WMX Claim (in the case of WMX), and may -9- 10 exchange, sell, release, surrender or otherwise deal with any such security, without in any way thereby impairing or affecting this Agreement. The Agents and WMX shall each use its good faith efforts to notify the other of any amendment of or modification to the Lender Documents or the WMX Documents, as the case may be, but the failure to do so shall not create a cause of action against the party failing to give such notice or create any claim or right on behalf of any third party. The Agents and WMX shall, upon request of the other, provide copies of all such modifications or amendments and copies of all other documentation relevant to the Collateral hereunder. 3.06. Amendments. All modifications or amendments of this Agreement must be in writing and duly executed by an authorized officer of each party hereto to be binding and enforceable. 3.07. Term. This Agreement shall be effective upon the execution hereof by the parties hereto, and shall continue in effect and may not be revoked by any, of the parties hereto prior to the earliest of (a) the indefeasible payment in full in cash of the Lenders' Claims and the termination of the Lender Documents, (b) the indefeasible payment in full in cash of the WMX Claim and the termination of the WMX Guaranty and the WMX Documents, and (c) the termination of the WMX Guaranty in accordance with its terms without the WMX Guaranty having been drawn on. The Agreement shall terminate upon the earlier to occur of (a), (b) and (c) above, provided that the provisions of the last paragraph of Section 2.03 shall survive such termination. 3.08. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the respective successors and assigns of each of the parties hereto, but does not otherwise create, and shall not be construed as creating, any rights enforceable by any Person other than the two Lender Groups. 3.9. Governing Law. This Agreement shall be governed as to validity, interpretation, enforcement and effect by the laws (including Section 5-1401 of the General Obligations Law, but otherwise without regard to conflicts of law principles) and decisions of the State of New York. 3.10. Execution in 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 all of which taken together shall constitute one and the same agreement. -10- 11 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first above written. CITICORP USA, INC., as Administrative Agent By:______________________________ Title: BANK OF AMERICA ILLINOIS, as Issuing and Paying Agent By:______________________________ Title: WMX TECHNOLOGIES, INC. By:______________________________ Title: By:______________________________ Title: -11- 12 ACKNOWLEDGMENT Each of the undersigned hereby acknowledges and agrees to the foregoing terms and provisions. By executing this Agreement, each of the undersigned agrees to be bound by the provisions hereof as they relate to the relative rights of the Lender Parties and WMX as between themselves, and in the event of any conflict or inconsistency between the terms of this Agreement and the Lender Documents or the WMX Documents (or any such other documents as the case may be), the terms of this Agreement shall govern. Each of the undersigned further agrees, as provided in Section 3.03 of this Agreement, that the terms of this Agreement shall not give such undersigned any rights against any Lender Party or WMX, and agrees that this Agreement may be amended or modified by the Lender Parties and WMX without the consent of the undersigned. OHM CORPORATION By:______________________________ Title: OHM REMEDIATION SERVICES CORP. By:______________________________ Title: Dated as of: May 31, 1995 -12- EX-10.I 10 OHM EX-10(I) 1 Exhibit 10(i) GUARANTEE AGREEMENT This GUARANTEE AGREEMENT ("Agreement") is made and entered into this 30th day of May, 1995 by and among OHM Corporation, an Ohio corporation ("OHM"), and WMX Technologies, Inc., a Delaware corporation ("WMX"). WHEREAS, OHM, Rust International Inc. and WMX have entered into a Standstill and Non-Competition Agreement, dated the date hereof (the "Standstill Agreement"), providing for certain agreements with respect to the ownership and voting by WMX and its affiliates of OHM Common Stock and other matters after the date hereof; and WHEREAS, WMX is willing to guarantee certain indebtedness of OHM in exchange for a warrant to purchase 700,000 shares of OHM Common Stock (the "Warrant"); NOW, THEREFORE, in consideration of the agreements, rights, obligations, and covenants contained herein, OHM and WMX hereby agree as follows: 1. GUARANTEE. (a) WMX hereby agree to issue from time to time, for a period of five years following the Closing, at the direction of and for the benefit of OHM as determined by a majority of the Other Directors (as defined in the Standstill Agreement), a guaranty or guarantees, as the case may be, of the indebtedness of OHM and/or its subsidiaries outstanding from time to time in an aggregate amount not to exceed the Guaranteed Amount (as defined in Section 1(b) hereof), upon the satisfaction of the following conditions in each instance a guaranty is issued: (i) the form of each such guarantee shall be reasonably satisfactory to WMX and the Independent Directors (as defined in the Standstill Agreement; (ii) OHM shall execute and deliver to WMX a reimbursement agreement, in form and substance satisfactory to WMX, obligating OHM to reimburse WMX for any and all payments made or obligations incurred by WMX under any such guarantees (the "Reimbursement Obligations"); (iii) if required by WMX in its sole discretion and subject to clause (v) below, OHM shall grant WMX a perfected first priority mortgage, lien or security interest in such collateral owned by OHM (the "Collateral") as WMX shall request to secure OHM's Reimbursement Obligations; 2 (iv) OHM shall execute and deliver such mortgages, security agreements and other documents, in form and substance reasonably satisfactory to WMX, and shall take such other action, as WMX shall reasonably request to perfect its mortgage, lien or security interest in the Collateral; (v) in the event any of the Collateral requested by WMX is subject to a prior mortgage, lien, security interest, negative pledge or other encumbrance (the "Prior Liens"), OHM shall cause the holders of the indebtedness secured by such Prior Liens to execute and deliver to WMX an intercreditor agreement, in form and substance reasonably satisfactory to WMX, the effect of which is to provide WMX with a security interest, lien, mortgage or negative pledge in or with respect to any such Collateral pari passu with such Prior Liens upon any payment made by WMX under any such guaranty; and (vi) OHM shall execute and deliver such other documents, certificates and opinions relating to such Guaranty as WMX may reasonably request. (b) As used herein, the term "Guaranteed Amount" shall mean $62,000,000 as of the Closing Date and thereafter shall be increased from time to time by an amount equal to the product of (i) $13,000,000, times (ii) a fraction, (A) the numerator of which shall be the number of shares of OHM Common Stock purchased by WMX or its affiliates upon exercise of all or any portion of the Warrant (as hereinafter defined) or, if WMX shall sell, assign or transfer all or any part of the Warrant to any person other than an affiliate, the number of shares of OHM Common Stock underlying the Warrant (or portion thereof) which are sold, assigned or transferred, but not more in the aggregate (taking into account all prior adjustments as a result of any exercise or sale of any portion of the Warrant) than 700,000 and (B) the denominator of which shall be 700,000. 2. WARRANT. Simultaneously herewith, OHM shall issue to WMX a warrant, exercisable for a period of five years from the date hereof, to purchase 700,000 shares of OHM Common Stock at an exercise price of $15.00 in the form attached hereto as Exhibit A. 3. MODIFICATION; WAIVER. This Agreement may be modified in any manner and at any time by written instrument executed by the parties hereto. Any of the terms, covenants, and conditions of this Agreement may be waived at any time by the party entitled to the benefit of such term, covenant, or condition. 4. PARTIES IN INTEREST; ASSIGNMENT. This Agreement and all the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, but neither this Agreement nor any of the -2- 3 rights, interests, and obligations hereunder shall be assigned by any of the parties hereto without the prior written consent of the other parties hereto. Nothing in this Agreement, whether expressed or implied, shall be construed to give any person other than the parties hereto any legal or equitable right, remedy, or claim under or in respect of this Agreement. 5. COUNTERPARTS. This Agreement may be executed in one or more counterparts, all of which shall constitute one and the same instrument. 6. HEADINGS. The article and section headings of this Agreement are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof. 7. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Ohio applicable to contracts made and to be performed therein. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written. OHM CORPORATION By /s/ Randall M. Walters ------------------------------ Name: Randall M. Walters Title: Vice President WMX TECHNOLOGIES, INC. By /s/ Linda R. Witte ------------------------------ Name: Linda R. Witte Title: Vice President -3- EX-10.J 11 OHM EX-10(J) 1 Exhibit 10(j) REIMBURSEMENT AGREEMENT This Reimbursement Agreement, dated as of May 31, 1995, among WMX Technologies, Inc., a Delaware corporation (the "Guarantor"), OHM Corporation, an Ohio corporation ("OHM"), and OHM Remediation Services Corp., an Ohio corporation ("Remediation") (and, together with OHM, collectively the "Borrowers" and individually a "Borrower"), RECITALS: WHEREAS, the Borrowers are parties to that certain Revolving Credit Agreement dated as of May 31, 1995 (as amended and supplemented from time to time, the "Credit Agreement") among the Borrowers, Citicorp USA, Inc., as Administrative Agent (the "Agent"), Bank of America Illinois, as Issuing and Paying Agent and Co-Agent (the "Paying Agent") and the financial institutions from time to time party thereto (collectively, with the Agent and the Paying Agent, the "Lenders" and individually a "Lender"); and WHEREAS, Rust International Inc. ("Rust"), a subsidiary of the Guarantor, owns approximately 37% of the outstanding common stock of OHM; and WHEREAS, the Lenders have required as a condition to the entry by the Borrowers and the Lenders in and to the Credit Agreement that the Guarantor execute and deliver that certain Guaranty dated as of May 31, 1995 (as amended and supplemented from time to time, the "Guaranty") by the Guarantor in favor of the Lenders pursuant to which the Guarantor has guaranteed the prompt and complete repayment of the Obligations (as defined in the Guaranty) subject to the limitations set forth in the Guaranty; and WHEREAS, the Guarantor has agreed to execute and deliver guarantees and OHM has issued certain warrants for the purchase of common stock of OHM pursuant to the Guarantee Agreement dated May 31, 1995 by and between OHM and the Guarantor entered into pursuant to the Reorganization Agreement; and WHEREAS, the Borrowers desire to execute and deliver this Reimbursement Agreement; and WHEREAS, the obligations of the Borrowers under and pursuant to this Reimbursement Agreement are secured under and pursuant to the Security Documents; and WHEREAS, the Lenders and the Guarantor each desire to execute and deliver that certain Intercreditor Agreement dated as of May 31, 1995 (the "Intercreditor Agreement") by and among the Agent, the Paying Agent and the Guarantor in order to set forth certain agreements, rights and interests with respect to and in connection with their respective interests with respect to the Borrowers as well as their respective security interests in and liens on certain collateral specified therein; 2 NOW, THEREFORE, in consideration of the mutual promises contained herein and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I REIMBURSEMENT SECTION 1.01 AGREEMENT TO REIMBURSE GUARANTOR. (a) Reimbursement. The Borrowers absolutely and unconditionally agree, jointly and severally, to reimburse the Guarantor immediately on demand for each payment made by the Guarantor following a written demand under the Guaranty ("Guaranty Payments") by either or both of the Agent or the Paying Agent by paying to the Guarantor as provided herein an amount equal to the amount of such Guaranty Payment (a "Reimbursement Payment"). Payment shall be made by the Borrowers upon receipt of written demand for payment from the Guarantor setting forth the amount due and owing but without any need of further documentation. A copy of such written demand for payment shall be given to OHM addressed to "Independent Directors" in the manner set forth in Section 5.08 hereof for notice to either Borrower. Any defects or omissions regarding such copy of written demand for payment to "Independent Directors" will not terminate or modify in any way the Borrowers' obligations pursuant to this Agreement. Each Reimbursement Payment to be made by the Borrowers hereunder shall be made in lawful money of the United States of America by wire transfer of immediately available funds to Mellon Bank, N.A. Pittsburgh, Pennsylvania, A.B.A. Number 043000261, for credit to the account of the Guarantor, Account Number: 1979409 (or to such other bank or account as the Guarantor may specify in writing). If the Borrowers fail to pay any amount payable by the Borrowers hereunder when due (including, without limitation, accrued but unpaid interest), such amount shall bear interest (computed on the basis of a 360 day year and actual days elapsed) from the due date thereof until paid in full, at a rate per annum equal to the lesser of (i) the sum of the Prime Rate from time to time in effect plus 2% or (ii) the maximum non-usurious rate permitted by applicable law, payable on demand. (b) Obligations Absolute. The obligations of the Borrowers under this Agreement shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances whatsoever irrespective of: (i) any lack of validity or enforceability of any of the Obligations, the Credit Agreement, this Agreement, any of the Security Documents or any of the Transaction Documents; (ii) the absence of any attempt by, or on behalf of, the Guarantor to collect or to take any other action to enforce, all or any part of the obligations hereunder whether from or against either Borrower, any other guarantor of the Obligations or any other person; 2 3 (iii) the election of any remedy by, or on behalf of, the Guarantor with respect to all or any part of the obligations of the Borrowers hereunder; (iv) the waiver, consent, extension, forbearance or granting of any indulgence by, or on behalf of, the Lenders or the Guarantor with respect to any provision of any of the Transaction Documents; (v) any lack of validity or enforceability of, or any waiver or forbearance by or on behalf of the Guarantor, of the Guarantor's subrogation rights under or in connection with the Guaranty, the Intercreditor Agreement or the Transaction Documents; (vi) any amendment or waiver of or any consent to departure from all or any of the Transaction Documents, the Intercreditor Agreement, this Agreement or Security Agreements; (vii) the existence of any claim, set-off, defense or other rights which either Borrower may have at any time against the Agent, the Paying Agent, any Lender or the Guarantor (other than the defense of payment to the Guarantor in accordance with the terms of this Agreement), or any other person or entity, whether in connection with this Agreement, the Security Documents, the Transaction Documents, the Intercreditor Agreement or any unrelated transaction; (viii) any statement or any other document presented under the Guaranty proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect whatsoever; (ix) the failure of the Guarantor to take any steps to perfect and maintain its security interest in or to preserve its rights to, any security or collateral for the obligations of the Borrowers hereunder; (x) the election by, or on behalf of, the Guarantor in any proceeding instituted under Chapter 11 of Title 11 of the United States Code (11 U.S.C. 101 et. seq.) (the "Bankruptcy Code"), of the application of Section 1111(b)(2) of the Bankruptcy Code; (xi) the disallowance under Section 502 of the Bankruptcy Code, of all or any portion of the claims of the Guarantor for payment of all or any part of the obligations of the Borrowers hereunder or any expenses in connection herewith; (xii) the invalidity, unenforceability or avoidance of any obligation of the Guarantor to make any payment to the Guaranteed Parties under the Guaranty or the failure of or waiver by the Guarantor to contest, object to or otherwise challenge any request by any Lender for the Guarantor to make any payment under the Guaranty; or 3 4 (xiii) any other circumstance which might otherwise constitute a legal or equitable discharge or defense of either Borrower. (c) Liability of the Guarantor. Each Borrower assumes all risks of the acts or omissions of the Agent, the Paying Agent or any Lender with respect to its use of the Guaranty. Neither the Guarantor nor any of its officers or directors shall be liable or responsible for: (i) the use which may be made of the Guaranty or for any acts or omissions of the Agent, the Paying Agent or any Lender or any transferee in connection therewith; (ii) the validity, sufficiency or genuineness of documents, or of any endorsements thereon, even if such documents should in fact prove to be in any or all respects invalid, insufficient, fraudulent or forged; (iii) any other circumstances whatsoever in making or failing to make payment under the Guaranty. The Borrowers acknowledge and agree that the Guarantor shall not in any way be responsible and shall not bear any liability for any failure by or on behalf of any Lender to extend credit or provide funds to either Borrower or for any other action or inaction of any Lender under and pursuant to the Credit Agreement or otherwise. Except as otherwise expressly provided in this Agreement or any other agreement between or among the parties hereto, the Guarantor shall have no liability to the Borrowers (i) on account of making payment upon receipt of a demand under the Guaranty or (ii) except for damages arising out of the gross negligence or willful misconduct of the Guarantor, with respect to any other matters pertaining hereto. (d) Subrogation. In addition to, but not in limitation of, all of the rights, interest and remedies of the Guarantor under this Agreement, the Security Documents and the Intercreditor Agreement, each Borrower acknowledges and agrees that the Guarantor shall upon and to the extent of any payment made by the Guarantor pursuant to a claim made under the Guaranty be subrogated to, and a beneficiary of, all of the rights and interests of the Lenders, the Agent and the Paying Agent under and to the Credit Agreement, the Transaction Documents and any collateral or security granted by either Borrower thereunder. SECTION 1.02 PAYMENT OF INTEREST AND FEES. If any sum becomes payable pursuant to this Agreement on a day which is not a Business Day, the date for payment thereof shall be extended, without penalty, to the next succeeding Business Day, and such extended time shall be included in the computation of interest and fees. SECTION 1.03 NO DEDUCTIONS. All sums payable by the Borrowers hereunder, whether of Reimbursement Amount, interest, expenses or otherwise, shall be paid in full, without any deduction or withholding whatsoever. In the event that either Borrower is compelled by any present or future law, rule or regulation to make any such deduction or withholding, such Borrower shall nevertheless pay the Guarantor such amounts as will result in the receipt by the Guarantor of the sum it would have received had no such deduction or withholding been required to be made. In furtherance of and in addition to the foregoing, each of the Borrowers hereby waives any and all rights, whether now existing or from time to time arising, to set off and apply any and 4 5 all trade deposits or other accounts of the Guarantor of any kind whatsoever at any time held by either Borrower and any other indebtedness at any time owing by the Guarantor to or for the credit or the account of either Borrower against any and all of the obligations of either Borrower now or hereafter owing under this Agreement. ARTICLE II REPRESENTATIONS, WARRANTIES AND COVENANTS SECTION 2.01 REPRESENTATIONS AND WARRANTIES. The Borrowers represent and warrant to the Guarantor that as of the date hereof: (a) Existence, Power and Authority. Each Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Ohio, has all requisite power and authority to execute and deliver this Agreement, the Security Documents and the other Transaction Documents to which it is a party, to perform its obligations thereunder, and to own and operate its properties and to carry on its business as now conducted and as presently proposed to be conducted. (b) Binding Agreement, Etc. The execution and delivery and compliance with all of the provisions of this Agreement, the Security Documents and the other Transaction Documents to which it is a party (i) are within the corporate powers of each Borrower, (ii) do not violate any provisions of any law or any order of any court, regulatory or governmental authority or agency and will not conflict with or result in any breach of any of the terms, conditions or provisions of, or constitute a default under the articles of incorporation or By-laws of either Borrower or result in the imposition of any liens or encumbrances on any property of either Borrower (except as contemplated by the Security Documents) and (iii) have been duly authorized by proper corporate action on the part of either Borrower (no action by the stockholders of either Borrower being required by law, by the articles of incorporation or By-laws of such Borrower or otherwise), executed and delivered by each Borrower. This Agreement, the Security Documents and such other Transaction Documents constitute the legal, valid and binding obligations, contracts and agreements of each Borrower enforceable in accordance with their terms. (c) Authorizations and Approvals. No authorization or approval or other action by, and no notice to or filing (except for filing required under any applicable Uniform Commercial Code pursuant to the Security Documents) with, any governmental authority or regulatory body is required for the due execution, delivery and performance by either Borrower of this Agreement, the Guaranty or any other Transaction Document to which it is a party. SECTION 2.02 LIENS; MERGERS, CONSOLIDATIONS AND SALES. Each of the Borrowers covenants and agrees with the Guarantor that so long as any amounts may be drawn under the 5 6 Guaranty and thereafter, so long as any amounts remain outstanding or obligations remain unfulfilled or unpaid under this Agreement, such Borrower will not and will not permit any subsidiary to, directly or indirectly, unless the Guarantor shall otherwise consent in writing: (a) Liens, Etc. Create, incur, assume or suffer to exist any Lien upon or with respect to any of its properties, now owned or hereafter acquired, or assign or otherwise convey, any right to receive income; provided, however, that the foregoing restrictions shall not be applicable to the following: (i) Liens granted to or held by the Guarantor pursuant to the Security Documents; (ii) Liens arising under the Bank Security Documents; (iii) Customary Permitted Liens; (iv) contracts with or for the Government, directly or indirectly providing for advance, partial or progress payments on such contracts or for any lien, paramount to all other liens, upon moneys advanced or paid pursuant to such contracts, or upon any material or supplies in connection with the performance of such contracts to secure such payments to the Government; and liens or other evidences of interest in favor of the Government, paramount to all other liens, directly or indirectly, for the Government to secure indebtedness incurred and owing to the Government in connection with any such contracts; (v) Liens listed on Schedule 5.02(a)(iii) to the Credit Agreement as in effect on the date hereof (but not any increase in the debt secured thereby or any enlargement of properties or assets covered thereby); (vi) Liens with respect to judgments which do not result in a Default or Event of Default under or a breach of the Credit Agreement; (vii) Liens on the assets of Remediation securing indebtedness under the Bank of Tokyo Agreement, to the extent such indebtedness does not exceed $8,000,000 and provided that such Liens attach only to those assets the acquisition of which was financed or refinanced with the proceeds of such indebtedness; (viii) Liens securing Permitted Other Indebtedness; (ix) rights reserved to or vested in any municipality or governmental, statutory or public authority by the terms of any rights, power, franchise, grant, license or permit, or by any provision of law, to terminate such right, power, franchise, grant, license or permit or to purchase, condemn, expropriate or recapture or to designate a purchaser of any of the property of either Borrower; 6 7 (x) rights reserved to or vested in any municipality or governmental, statutory or public authority to control or regulate any property of either Borrower or to use such property in a manner which does not materially impair the use of such property for the purpose for which it is held by such Borrower; (xi) rights of a common owner of any interest in real estate, rights of way or easements held by either Borrower and such common owner as tenants in common or through other common ownership; (xii) zoning, planning, ordinances and municipal regulations; (xiii) servitudes, easement, restrictions, rights of way and other similar rights in real or immovable property or any interest therein, provided the same does not materially impair the use of such property for the purposes for which it is held by either Borrower; and (xiv) Liens on the assets of a Subsidiary at the time it becomes a Subsidiary. (b) Mergers, Consolidations and Sales. Be a party to any merger or consolidation, nor sell, transfer, lease or otherwise dispose of all or any substantial part of its property, assets or business unless the surviving, continuing or resulting corporation (if not a Borrower) or the corporation that purchases, leases or otherwise acquires all or substantially all of the property, assets or business of such Borrower (the "Surviving Company") is a solvent corporation organized under the laws of the United States of America or any jurisdiction thereof and expressly and unconditionally assumes the due and punctual performance of all obligations of such Borrower hereunder and under the Security Documents, by an instrument in writing delivered to the Guarantor in form and substance reasonably satisfactory to the Guarantor, which instrument shall have been delivered to the Guarantor at the time of or prior to the consummation of the transaction in question. No such transaction shall be consummated unless the form and substance of such instrument shall have been approved in writing by the Guarantor in advance of such consummation. The Borrowers and the Surviving Company (if not a Borrower) shall, prior to or simultaneously with such merger, consolidation, sale, transfer, lease or other disposition, take all such actions and execute and deliver all such agreements, documents and instruments necessary to continue and maintain the perfection of the liens and security interests under and pursuant to the Security Documents for the benefit of the Guarantor and at least the same rights with respect to the security interests in the Collateral which the Guarantor had immediately prior to such transaction. Nothing in this clause (b) shall constitute a release of or an agreement to release any security interests created by any Security Document. All liens and security interests under the Security Documents shall survive all such transactions. 7 8 SECTION 2.03 FREEZE EVENTS. If at any time the aggregate of all amounts outstanding under the Credit Agreement are less than the Guarantied Amount, each of the Borrowers covenants and agrees with the Guarantor that, after the occurrence of a Freeze Event, such Borrower shall not deliver either a letter of credit application or a Notice of Borrowing (as defined in the Credit Agreement) to the Agent, the Paying Agent or any other Lender under the Credit Agreement unless and until the Guarantor is notified of the amount of the Obligations outstanding following such Freeze Event in accordance with Section 3 of the Guaranty. If at any time the aggregate of all amounts outstanding under the Credit Agreement are less than the Guarantied Amount, each of the Borrowers further covenants and agrees that, in the event that a Freeze Event shall occur subsequent to the delivery by such Borrower of either a letter of credit application or a Notice of Borrowing but prior to the issuance of such letter of credit or the making of such Advance (as defined in the Credit Agreement), such Borrower shall terminate such letter of credit application and not accept such Advance. SECTION 2.04. REPORTS AND OTHER INFORMATION. Each of the Borrowers covenants and agrees with the Guarantor that, so long as any amounts may be drawn under the Guaranty and thereafter, so long as any amounts remain outstanding or obligations remain unfulfilled or unpaid under the Agreement, the Borrowers will furnish to the Guarantor all financial statements, reports, certificates and any other information required to be delivered to any Lender under and pursuant to the Credit Agreement. In furtherance of the foregoing, each of the Borrowers covenants and agrees with the Guarantor that the Borrowers shall furnish to the Guarantor all correspondence and other information of either Borrower relating to or resulting from any default or event of default under the Credit Agreement. ARTICLE III EVENTS OF DEFAULT SECTION 3.01 EVENTS OF DEFAULT. If the Borrowers shall fail to pay when due any amounts payable under this Agreement (herein called an "Event of Default"), then the Guarantor, may, at its option and in addition to any right, power or remedy permitted by law or equity, without further notice to either Borrower except as may be required by law or the Security Documents, pursue any action available at law or in equity, including without limitation, any actions or remedies under and pursuant to the Security Documents. ARTICLE IV DEFINITIONS SECTION 4.01 CERTAIN DEFINED TERMS. Capitalized terms when used in this Agreement shall have the same meanings as defined in the Credit Agreement or the Guaranty, unless otherwise defined herein. In addition, as used in this Agreement, the following terms shall have the respective meanings set forth below (such meanings to be equally applicable to both the singular and the plural forms of the terms defined): "AGENT" shall have the meaning set forth in the Recitals hereto. 8 9 "AGREEMENT" shall mean this Reimbursement Agreement as the same may be amended, supplemented or otherwise modified. "BANK OF TOKYO AGREEMENT" shall have the meaning ascribed thereto in the Credit Agreement. "BANK SECURITY DOCUMENTS" shall mean, collectively, the Security Agreement (as defined in the Credit Agreement), the Pledge Agreement (as defined in the Credit Agreement) and all other agreements, documents and instruments executed and delivered in connection therewith, as the same may be amended, supplemented or otherwise modified from time to time.. "BORROWER AND BORROWERS" shall have the meaning set forth in the Recitals hereof. "BUSINESS DAY" shall mean any day on which banks are not required or authorized to close in New York, New York, Chicago, Illinois or Pittsburgh, Pennsylvania. "COLLATERAL" shall mean the Collateral (as defined in the Security Agreement) and the Pledged Collateral (as defined in the Pledge Agreement). "CONSOLIDATED" refers to the consolidation of the accounts of the Borrowers and their Subsidiaries in accordance with generally accepted accounting principles, including principles of consolidation. "CREDIT AGREEMENT" shall have the meaning set forth in the Recitals hereof. "CUSTOMARY PERMITTED LIENS" shall have the meaning ascribed thereto in the Credit Agreement. "EVENT OF DEFAULT" shall have such meaning as is ascribed to it in Section 3.01. "FREEZE EVENT" shall have the meaning ascribed thereto in the Guaranty. "GOVERNMENT" means the government of any country or sovereign state, or of any state, province, municipality or other political subdivision thereof, or any department, agency, public corporation or other instrumentality of any of the foregoing. "GUARANTIED AMOUNT" shall have the meaning ascribed thereto in the Guaranty. "GUARANTY" shall have the meaning set forth in the Recitals hereof. "GUARANTY PAYMENTS" shall have the meaning set forth in Section 1.01 hereof. "GUARANTOR" shall have the meaning set forth in the Recitals hereof. "INTERCREDITOR AGREEMENT" shall have the meaning set forth in the Recitals hereof. "LENDERS" shall have the meaning set forth in the Recitals hereof. 9 10 "LIEN" shall mean any mortgage, deed of trust, pledge, hypothecation, assignment, deposit arrangement, security interest, encumbrance (including, but not limited to, easements, rights of way, zoning restrictions and the like), lien (statutory or other), preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever, including, without limitation, any conditional sale or other title retention agreement, the interest of a lessor under a capital lease, any financing lease having substantially the same economic effect as any of the foregoing and the filing of any financing statement (other than a financing statement filed by a "true" lessor pursuant to Section 9-408 of the Uniform Commercial Code) naming the owner of the asset to which such Lien relates as debtor, under the Uniform Commercial Code or other comparable law of any jurisdiction. "OHM" shall have the meaning set forth in the Recitals hereof. "OBLIGATIONS" shall have the meaning set forth in Section 1 of the Guaranty. "PAYING AGENT" shall have the meaning set forth in the Recitals hereto. "PERMITTED OTHER INDEBTEDNESS" shall have the meaning ascribed thereto in the Credit Agreement. "PERSON" shall mean an individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture or other entity or a government or any political subdivision or agency thereof. "PLEDGE AGREEMENT" shall mean that certain Pledge Agreement dated as of May 31, 1995 from OHM to the Guarantor as the same may be amended or supplemented from time to time in accordance with the terms and provisions thereof. "PRIME RATE" shall mean the rate of interest publicly announced from time to time by Bank of America Illinois, Chicago, Illinois, as its Prime Rate (or its equivalent) for United States Dollar loans. Any change in the Prime Rate shall take effect on the day specified in the public announcement of such change. "REMEDIATION" shall have the meaning set forth in the Recitals hereof. "REORGANIZATION AGREEMENT" shall mean that certain Agreement and Plan of Reorganization dated December 5, 1994 by and among OHM Rust Remedial Services, Inc., Enclean Environmental Services Group, Inc., Rust Environmental, Inc. and Rust International, Inc., as the same may be amended, supplemented or otherwise modified from time to time. "SECURITY AGREEMENT" shall mean that certain Security Agreement dated as of May 31, 1995 among the Borrowers and the Guarantor as the same may be amended or supplemented from time to time in accordance with the terms and provisions thereof. "SECURITY DOCUMENTS" shall mean the Security Agreement and the Pledge Agreement, together with any and all other agreements, documents and instruments heretofore or hereafter 10 11 securing the Borrowers' obligations under this Agreement, including, without limitation, any UCC-1 financing statements filed pursuant to or in connection therewith. "SUBSIDIARY" shall mean any Person the financial statements of which are Consolidated with those of either Borrower. "TRANSACTION DOCUMENTS" shall mean the Guaranty, the Credit Agreement, the Security Documents, this Agreement, the Bank Security Documents and any other document, agreement or instrument executed and/or delivered in connection therewith. ARTICLE V MISCELLANEOUS SECTION 5.01 INDEMNITY, COSTS, EXPENSES AND TAXES. The Borrowers hereby jointly and severally agree to indemnify and hold harmless the Guarantor and each of its affiliates and their respective directors, officers, employees and agents from and against any and all losses, claims, damages, liabilities and expenses (including, without limitation, reasonable fees and disbursements of counsel) which may be incurred by or asserted against any such indemnified party in connection with or arising out of any investigation, litigation or proceeding, whether or not such indemnified party is a party thereto, related to any transaction or proposed transaction contemplated by the Transaction Documents or any use of the Guaranty or any payment thereunder. The Borrowers also hereby jointly and severally agree to indemnify and hold the Guarantor harmless from and against, and to pay on demand, any and all reasonable fees and expenses, if any, in connection with the enforcement or defense of the rights of the Guarantor in connection with this Agreement, the Security Documents or the Guaranty, or the collection of any monies due under this Agreement, the Guaranty, the Security Documents or such other documents which may be delivered in connection with this Agreement, the Security Documents or the Guaranty. Any and all amounts due and owing under this Section 5.01 shall be payable by the Borrowers upon demand by the Guarantor. Payment of all such amounts shall be made in accordance with Section 1.01 hereof. SECTION 5.02 SURVIVAL OF THIS AGREEMENT. All covenants, agreements, representations and warranties (such representations and warranties being true and correct only as of the date hereof) made in this Agreement shall survive the issuance by the Guarantor of the Guaranty and shall continue in full force and effect so long as the Guaranty shall be unexpired or any sums due hereunder shall be outstanding and unpaid, regardless of any investigation made by any person. Whenever in this Agreement the Guarantor is referred to, such reference shall be deemed to include the successors and assigns of the Guarantor and all covenants, promises and agreements by or on behalf of the Borrowers which are contained in this Agreement shall inure to the benefit of the successors and assigns of the Guarantor. The rights and duties of the Borrowers, however, may not be assigned or transferred, except as specifically provided in this Agreement or with the prior written consent of the Guarantor, and all obligations of the Borrowers hereunder shall continue in full force and effect notwithstanding any assignment by either Borrower of any of its rights or obligations under any of the Transaction Documents or the Credit Agreement or any 11 12 entering into, or consent by either Borrower to, any supplement or amendment to any of the Transaction Documents or the Credit Agreement. SECTION 5.03 MODIFICATION OF THIS AGREEMENT. No amendment, modification or waiver of any provision of this Agreement shall be effective unless the same shall be in writing and signed by the Guarantor and the Borrowers. Any such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on either Borrower in any case shall entitle either Borrower to any other or further notice or demand in the same, similar or other circumstances. SECTION 5.04 WAIVER OF RIGHTS BY THE GUARANTOR. No course of dealing or failure or delay on the part of the Guarantor in exercising any right, power or privilege hereunder or under the Guaranty or any other Transaction Document shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise or the exercise of any other right or privilege. The rights of the Guarantor under the Guaranty and the rights of the Guarantor under this Agreement are cumulative and not exclusive of any rights or remedies which the Guarantor would otherwise have. SECTION 5.05 SEVERABILITY. In case any one or more of the provisions contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. The parties shall endeavor in good faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. SECTION 5.06 GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois. SECTION 5.07 CONSENT TO JURISDICTION; COUNTERCLAIMS; FORUM NON CONVENIENS. (a) Exclusive Jurisdiction. Except as provided in subsection (b) of this Section 5.07, the Borrowers and the Guarantor agree that all disputes between them arising out of or related to the relationship established between them in connection with this Agreement, whether arising in contract, tort, equity or otherwise, shall be resolved only by state or federal courts located in Chicago, Illinois, but the parties acknowledge that any appeals from those courts may have to be heard by a court located outside of Chicago, Illinois. (b) Other Jurisdictions. The Guarantor shall have the right to proceed against the Borrowers or their real or personal property in a court in any location to enable the Guarantor to obtain personal jurisdiction over the Borrowers or to enforce a judgment or other court order entered in favor of the Guarantor. (c) Venue; Forum Non Conveniens. Each of the Borrowers and the Guarantor waives any objection that it may have (including, without limitation, any objection to the laying of venue or based on forum non conveniens) to the location of the court in which any proceeding is commenced in accordance with this Section 5.07. 12 13 SECTION 5.08 NOTICES. All notices and other communications required or desired to be served, given or delivered hereunder shall be in writing or by a telecommunications device capable of creating a printed record and recording the date and time of transmission and shall be addressed to the party to be notified as follows: If to the Guarantor, to: WMX Technologies, Inc. 3003 Butterfield Road Oak Brook, IL 60521 Attention: Chief Financial Officer Telecopy: (708) 572-1340 If to the Borrowers or either of them, to: OHM Corporation 16406 U.S. Route 224 East P.O. Box 551 Findlay, OH 45839-0551| Attention: General Counsel Telecopy: (419) 424-4985 If to the Agent or the Lenders, or any of them, to: Citicorp USA, Inc. c/o Citicorp North America, Inc. 200 South Wacker Drive 31st Floor Chicago, IL 60606 Attention: Emily Rosenstock, Vice President Telecopy: (312) 993-1050 or, as to each party, at such other address as designated by such party in a written notice to the other party. All such notices and communications shall be deemed to be validly served, given or delivered (i) three (3) days following deposit in the United States mail, with proper postage prepaid; (ii) upon delivery thereof if delivered by hand to the party to be notified; (iii) one (1) day following delivery thereof to a reputable overnight courier service with delivery charges prepaid; or (iv) upon confirmation of receipt thereof if transmitted by a telecommunications device. SECTION 5.09 DESCRIPTIVE HEADINGS, ETC. The descriptive headings of the several Articles, Sections and Subsections of this Agreement are inserted for convenience only and shall not be deemed to affect the meaning or construction of any of the provisions hereof. SECTION 5.10 COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall constitute an original but both or all of which, when taken together, shall constitute but one instrument, and shall become effective when a set of copies hereof which, when taken together, bear the signatures of each of the parties hereto shall be delivered to each of the Borrowers and the Guarantor. 13 14 SECTION 5.11 FURTHER ASSURANCES. So long as this Agreement or the Guaranty remains in effect or any amount is or may become due or owing to the Guarantor hereunder, each Borrower shall execute and deliver to the Guarantor all such documents and instruments and do all such other acts and things as may be necessary or required by the Guarantor to enable the Guarantor to exercise and enforce its rights under this Agreement and to realize thereon, and record and file and re-record and refile all such documents and instruments, at such time or times, in such manner and at such place or places, all as may be necessary or required by the Guarantor to validate, preserve and protect the position of the Guarantor under this Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their respective duly authorized officers as of the date first above written. OHM CORPORATION By:______________________________ Name:______________________ Title:_____________________ OHM REMEDIATION SERVICES CORP. By:______________________________ Name:______________________ Title:_____________________ WMX TECHNOLOGIES, INC. By:______________________________ Name:______________________ Title:_____________________ By:______________________________ Name:______________________ Title:_____________________ 14 15 Each of the undersigned hereby acknowledges receipt of a copy of this Agreement. Acknowledged: CITICORP USA, INC., as Administrative Agent By:____________________________ Name:____________________ Title:___________________ BANK OF AMERICA ILLINOIS, as Issuing and Paying Agent By:____________________________ Name:____________________ Title:___________________ 15 EX-10.K 12 OHM EX-10(K) 1 Exhibit 10(k) SECURITY AGREEMENT THIS SECURITY AGREEMENT dated as of May 31, 1995 (this "Agreement") is made by OHM CORPORATION, an Ohio corporation ("OHM"), OHM Remediation Services Corp., an Ohio corporation ("Remediation"), a subsidiary of OHM, and those of OHM's other subsidiaries that are parties hereto (together with OHM and Remediation, each a "Grantor" and collectively the "Grantors") in favor of WMX TECHNOLOGIES, INC., a Delaware corporation (the "Guarantor"). PRELIMINARY STATEMENTS: (1) OHM, Remediation (OHM and Remediation are sometimes hereinafter referred to collectively as the "Borrowers"), the Banks, Citicorp USA, Inc., as Administrative Agent (the "Agent") for the Banks which are parties to the Credit Agreement (as hereinafter defined, the "Banks") and Bank of America Illinois, in its capacity as Issuing and Paying Agent and Co- Agent for the Banks (the "Paying Agent"; together with the Agent and the Banks, the "Lenders" and individually a "Lender") have entered into that certain Revolving Credit Agreement dated as of May 31, 1995 as the same may be amended, supplemented or otherwise modified from time to time (the "Credit Agreement"). (2) The Lenders have required as a condition to the entry by the Borrowers and the Lenders in and to the Credit Agreement that the Guarantor execute and deliver that certain Guaranty dated as of May 31, 1995 (as amended, supplemented or otherwise modified from time to time, the "Guaranty") by the Guarantor in favor of the Lenders pursuant to which the Guarantor has guaranteed the prompt and complete repayment of the Obligations (as defined, the "Guaranty") subject to the limitations set forth in the Guaranty. (3) The Guarantor has required as a condition to the entry by the Guarantor in and to the Guaranty that the Borrowers execute and deliver that certain Reimbursement Agreement dated as of May 31, 1995 (as amended, supplemented or otherwise modified from time to time, the "Reimbursement Agreement") among the Guarantor and the Borrowers pursuant to which the Borrowers covenant and agree to promptly and completely reimburse the Guarantor for all payments made by the Guarantor under and pursuant to the Guaranty. (4) The Guarantor has required and the Borrowers have agreed that the obligations of the Borrowers under and pursuant to the Reimbursement Agreement shall be secured under and pursuant to the Security Documents. (5) The Guarantor and the Lenders each desire to execute and deliver that certain Intercreditor Agreement dated as of May 31, 1995 (the "Intercreditor Agreement") by and among the Agent, the Paying Agent and the Guarantor in order to set forth certain agreements, rights and interests with respect to and in connection with their respective interests with respect to the Grantors as well as their respective security interests in and liens on certain collateral specified therein. 2 NOW, THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and to induce Guarantor to enter into the Guaranty, the Grantors each hereby agrees as follows: SECTION 1. Defined Terms. (a) Unless otherwise defined herein, capitalized terms used herein shall have the meanings assigned to them in the Reimbursement Agreement. (b) In addition to the terms defined above, in this Agreement the following terms shall have the meanings set forth below: "Accounts" means, with respect to each Grantor, all of such Grantor's now owned or hereafter acquired or arising accounts, contract rights, and any other rights to payment for the sale or lease of goods or rendition of services, whether or not they have been earned by performance. "Code" means the Uniform Commercial Code (or any successor statute), as in effect in the State of Illinois or other applicable jurisdiction from time to time. "Collateral" shall have the meaning assigned in Section 2 of this Agreement. "Equipment" means, with respect to each Grantor, all of such Grantor's now owned and hereafter acquired machinery, equipment, furniture, furnishings, fixtures, trade fixtures and other tangible personal property (except Inventory), including, without limitation, computers, computer software, peripheral computer equipment, motor vehicles, fork lifts, construction equipment, tools, and office equipment, as well as all of such types of property leased by such Grantor and all of such Grantor's rights and interests with respect thereto under such leases (including, without limitation, options to purchase); together with all present and future additions and accessions thereto, replacements therefor, component and auxiliary parts and supplies used or to be used in connection therewith, and all substitutes for any of the foregoing, and all manuals, drawings, instructions, warranties and rights with respect thereto; wherever any of the foregoing is located. "General Intangibles" means, with respect to each Grantor, all of such Grantor's now owned or hereafter acquired general intangibles, choses in action and causes of action and all other intangible personal property of such Grantor of every kind and nature (other than Accounts), including, without limitation, all Proprietary Rights, corporate or other business records, inventions, designs, blue-prints, plans, specifications, trade secrets, goodwill, computer software, customer lists, registrations, licenses, franchises, tax refund claims, reversions of funds or any rights thereto and any other amounts payable to such Grantor from any Plan or other employee benefit plan, leasehold interests in real and personal property, rights and claims against carriers and shippers, rights to indemnification, business interruption insurance and proceeds thereof, property, casualty or any similar type of insurance and any proceeds thereof, proceeds of insurance covering the lives of key employees on which such Grantor is beneficiary, and any letter of credit, 2 3 guarantee, claim, security interest or other security held by or granted to such Grantor to secure payment of any of the Accounts. "Guarantor Documents" shall mean the Reimbursement Agreement, the Security Documents and any other document, agreement or instrument executed and/or delivered in connection therewith. "Inventory" means, with respect to each Grantor, all of such Grantor's now owned and hereafter acquired inventory, goods, merchandise, work in process, spare parts and other personal property, wherever located, to be furnished under any contract of service or held for sale or lease, all returned goods, and materials and supplies of any kind, nature or description which are or might be consumed in such Grantor's businesses (except Equipment), or used in connection with the servicing or provision of parts or supplies for or with respect to the Equipment, and all documents of title or other documents representing them. "Permitted Liens" shall have the meaning assigned in Section 5(b) of this Agreement. "Proprietary Rights" means, with respect to each Grantor, all of such Grantor's now owned and hereafter arising or acquired: licenses, franchises, permits, patents, patent rights, patent applications, copyrights, works which are the subject matter of copyrights, trademarks, service marks, trade names, trade styles, patent, trademark and service mark applications, and all licenses and rights related to any of the foregoing, and all other rights under any of the foregoing, all extensions, renewals, reissues, divisions, continuations, and continuations-in-part of any of the foregoing, and all rights to sue for past, present and future infringement of any of the foregoing. (c) Unless otherwise defined herein, terms used in Article 9 of the Code are used herein as therein defined. SECTION 2. Grant of Security. Each Grantor hereby grants, pledges and assigns to the Guarantor, for the benefit of the Guarantor, a continuing security interest in, liens on, assignment of and right of set-off against, all of such Grantor's right, title and interest in and to the following property, whether now owned or hereafter acquired or arising and wheresoever located (the "Collateral"): (i) all Accounts, contract rights, letters of credit, chattel paper, instruments, notes, documents, and documents of title; (ii) General Intangibles; (iii) Inventory; (iv) Equipment; 3 4 (v) all monies, securities and other property of any kind of such Grantor in the possession or under the control of either of the Agent, any Bank, the Paying Agent, a bailee of any of the foregoing, or any of the foregoing's Affiliates; (vi) all of such Grantor's deposit accounts, credits, and balances with and other claims against the Agent, any of the Banks, the Paying Agent or any Affiliates of the foregoing or any other financial institution with which such Grantor maintains deposits; (vii) all books, records and other property relating to or referring to any of the foregoing, including, without limitation, all books, records, ledger cards, data processing records, computer software and other property and general intangibles at any time evidencing or relating to any of the foregoing; and (viii) all accessions to, substitutions for and replacements, products and proceeds of any of the foregoing, including, but not limited to, proceeds of any insurance policies, claims against third parties, and condemnation or requisition payments with respect to all or any of the foregoing. SECTION 3. Security for Secured Obligations. This Agreement secures the payment of (i) all obligations of the Borrowers now or hereafter existing under the Reimbursement Agreement, and all of the other Guarantor Documents, whether for principal, interest, fees, expenses or otherwise and (ii) all obligations of the Grantors now or hereafter existing under this Agreement (all such obligations of the Borrowers and other obligations of the Grantors being collectively referred to herein as, the "Secured Obligations"). Without limiting the generality of the foregoing, this Agreement secures the payment of all amounts which constitute part of the Secured Obligations and would be owed by any of the Grantors to the Guarantor under the Reimbursement Agreement and the other Guarantor Documents but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving any Grantor. SECTION 4. Grantors Remain Liable. Anything herein to the contrary notwithstanding, (a) the Grantors shall remain liable under the contracts and agreements included in the Collateral to the extent set forth therein to perform all of their duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by the Guarantor of any of the rights hereunder shall not release the Grantors from any of their duties or obligations under the contracts and agreements included in the Collateral and (c) the Guarantor shall not have any obligation or liability under the contracts and agreements included in the Collateral by reason of this Agreement, nor shall the Guarantor be obligated to perform any of the obligations or duties of the Grantors thereunder or to take any action to collect or enforce any claim for payment assigned hereunder. 4 5 SECTION 5. Representations and Warranties. Each Grantor represents and warrants as follows: (a) The chief place of business and chief executive office of such Grantor and the office where such Grantor keeps its records concerning the Accounts, and the originals of all chattel paper that evidence Accounts, are located at its addresses specified in Schedule A hereto. (b) Such Grantor is the legal and beneficial owner of its Collateral free and clear of any lien, security interest, option or other charge or encumbrance except for the security interest created by this Agreement or any such lien, security interest, option, charge or encumbrance permitted pursuant to Section 3.02(a) of the Reimbursement Agreement (collectively, the "Permitted Liens"). No effective financing statement or other document similar in effect covering all or any part of the Collateral is on file in any recording office, except such as may have been filed in favor of the Guarantor relating to this Agreement or in favor of a secured party with respect to any Permitted Liens. The exact corporate name of such Grantor is as set forth on the Schedule A hereto and such Grantor has no trade names and is not doing business under or creating Accounts under any other name, in each case, except as set forth in the Schedule A hereto. Each of the Grantors will warrant and defend the Collateral against any claims and demands (other than Permitted Liens) of all persons at any time claiming the same or any interest in the Collateral adverse to the Guarantor. (c) Subject to the rights of owners and clients with respect to Equipment and Inventory located at project sites from time to time, such Grantor has exclusive possession and control of its Equipment and Inventory. (d) This Agreement creates a valid security interest in the Collateral, securing the payment of the Secured Obligations, and all filings and other actions necessary or desirable to perfect and protect a first priority security interest in the Collateral (subject, however, to Permitted Liens) in respect of which a security interest can be perfected by filing under the Code have been duly taken, except for the filing of one or more notices of the assignment of Accounts pursuant to the Federal Assignment of Claims Act. (e) No consent of any other Person and no authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required (i) for the grant by such Grantor of the security interest granted hereby or for the execution, delivery or performance of this Agreement by such Grantor, (ii) for the perfection or maintenance of the security interest created hereby (including the first priority nature (subject to Permitted Liens) of such security interest), other than the execution and filing of appropriate financing statements under the Code, or (iii) for the exercise by the Guarantor of its rights and remedies hereunder, except in each case for the filing of one or more notices of the assignment of Accounts pursuant to the Federal Assignment of Claims Act. (f) Such Grantor has, independently and without reliance upon the Guarantor and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. 5 6 SECTION 6. Further Assurances; Expenses. (a) The Grantors agree that from time to time, at the expense of the Grantors, the Grantors will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that the Guarantor may request, to perfect and protect any security interest granted or purported to be granted hereby or to enable the Guarantor to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Without limiting the generality of the foregoing, the Grantor will: (i) after the occurrence of an Event of Default, if any Account shall be evidenced by a promissory note or other instrument, deliver and pledge to the Guarantor hereunder such note or instrument duly endorsed and accompanied by duly executed instruments of transfer or assignment, all in form and substance satisfactory to the Guarantor; (ii) subject to the terms of this Agreement, execute and file such financing or continuation statements, or amendments thereto, and such other instruments or notices, as may be necessary or desirable, or as the Guarantor may request, to perfect and preserve the security interest granted or purported to be granted hereby; and (iii) file such notices and other documents under the Federal Assignment of Claims Act as may be required from time to time with respect to the Accounts. (b) The Grantors hereby authorize the Guarantor to file one or more financing or continuation statements, and amendments thereto, relating to all or any part of the Collateral without the signature of any Grantor where permitted by law. A photocopy or other reproduction of this Agreement or any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement where permitted by law. The Grantors agree to indemnify the Guarantor and its counsel from and against any and all expenses, fees and other liabilities including, without limitation, any recording and/or filing fees, taxes or other expenses relating to the filing or recordation of financing and/or continuation statements. (c) The Grantors will furnish to the Guarantor from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Guarantor may reasonably request, all in reasonable detail. (d) The Grantors agree to promptly execute and deliver any and all instruments and take such other action as may be necessary to remove or otherwise terminate any security interests in or liens on the Collateral (other than Permitted Liens) whether or not in existence at the time of execution of this Agreement or whether or not known by either Grantor on the date hereof. SECTION 7. As to Equipment and Inventory. (a) The Grantors shall cause the Equipment to be maintained and preserved in good condition, repair and working order, ordinary wear and tear excepted, and shall forthwith, or in the case of any loss or damage to any of the Equipment as quickly as practicable after the occurrence thereof, make or cause to be made all repairs, replacements and other improvements in connection therewith as are necessary or desirable to such end. The Grantors shall promptly furnish to the Guarantor a statement respecting any loss or damage to any of the Equipment in excess of $300,000. 6 7 (b) The Grantors shall pay promptly when due all property and other taxes, assessments and governmental charges or levies imposed upon, and all claims (including claims for labor, materials and supplies) against, the Equipment and Inventory. (c) The Grantors each represents and warrants to the Guarantor that all of such Grantor's Inventory is and will be held for sale or lease, or to be furnished in connection with the rendition of services, in the ordinary course of such Grantor's business, and is and will be fit for such purposes. Each Grantor will keep its Inventory in good and marketable condition, at its own expense. SECTION 8. Insurance. (a) The Grantors shall, at their own expense, maintain insurance with respect to the Collateral in such amounts, against such risks, in such form and with such insurers, as is typical for businesses similarly situated. After an Event of Default shall have occurred and be continuing, the Grantors shall cause each policy for property damage insurance covering the Inventory and Equipment to provide that all insurance proceeds in respect of loss, damage or destruction of any such Inventory or Equipment in excess of $100,000 per occurrence or in any related series of occurrences or $300,000, in the aggregate, in any calendar year, are to be paid directly to the Guarantor. Such amounts shall, subject to the limitations set forth in this subsection (a) and in subsection (c) of this Section 8 and after deducting from such proceeds the expenses, if any, incurred by the Guarantor in the collection or handling thereof, be returned to such Grantor, which Grantor shall make or cause to be made the necessary repairs to or replacements of such Inventory or Equipment. All such replacements or repairs shall be made with materials and property of substantially as good a quality as existed before such loss, damage or destruction, and such Grantor shall commence the replacement or repair of such property as soon as practicable and proceed diligently with it until completion. Plans for any such repair or replacement shall be reasonably satisfactory to the Guarantor and shall be subject to the reasonable approval of the Guarantor prior to the release of insurance proceeds to the applicable Grantor. Each such property policy covering the Equipment or Inventory shall in addition to the foregoing (i) name the appropriate Grantor and the Guarantor as insured parties thereunder (without any representation or warranty by or obligation upon the Guarantor) as their interests may appear, (ii) provide that there shall be no recourse against the Guarantor for payment of premiums or other amounts with respect thereto, (iii) provide that at least 30 days' prior written notice of cancellation of or lapse shall be given to the Guarantor by the insurer, and (iv) contain a clause or endorsement stating that the interest of the Guarantor shall not be impaired or invalidated by any act or neglect of the Grantor insured thereunder or the owner of any premises for purposes more hazardous than are permitted by such policy. After an Event of Default shall have occurred and be continuing, each such property policy shall also contain the agreement by the insurer that losses thereunder shall be payable to the Guarantor, subject to the terms and limitations set forth in the first sentence of this Section 8, notwithstanding any action, inaction or breach of representation or warranty by the Grantor. The Grantors shall, if so requested by the Guarantor, deliver to the Guarantor duplicate policies of such insurance and, as often as the Guarantor may reasonably request, a report of a reputable insurance broker with respect to such insurance. Further, the Grantors shall, at the request of the Guarantor, duly execute and deliver 7 8 instruments of assignment of such insurance policies to comply with the requirements of Section 6 and cause the insurers to acknowledge notice of such assignment. (b) Reimbursement under any liability insurance maintained by any Grantor pursuant to this Section 8 may be paid directly to the Person who shall have incurred liability covered by such insurance. (c) Notwithstanding anything contained herein to the contrary, upon the occurrence and during the continuance of an Event of Default, any loss, damage or destruction of any Inventory or Equipment in excess of $1,000,000 in any one occurrence or in any related series of occurrences any insurance proceeds in respect of such lost, damaged or destroyed Equipment or Inventory shall be paid to the Guarantor and, at the Guarantor's sole option, may be applied by the Guarantor (after deducting from such proceeds the expenses, if any, incurred by the Guarantor in the collection or handling thereof) as specified in Section 14(b). Notwithstanding anything contained in this Agreement to the contrary, if any of the Grantors shall receive any insurance proceeds which, pursuant to the terms of this Section 8, are required to be delivered to the Guarantor, such Grantor (1) shall be deemed to be holding such proceeds in trust for the Guarantor, (2) shall segregate such proceeds from such Grantor's funds and (3) shall promptly upon its receipt thereof remit such proceeds to the Guarantor in the same form as received by such Grantor, other than for any necessary endorsements. SECTION 9. As to Accounts. (a) Each Grantor shall keep its chief place of business and chief executive office and the office where it keeps its records concerning the Accounts, and the originals of all chattel paper that evidence Accounts, at the location therefor specified in Section 5(a) or, upon 30 days' prior written notice to the Guarantor, at any other locations in jurisdictions where all actions required by Section 6 shall have been taken with respect to the Accounts. The Grantors will hold and preserve such records and chattel paper and will permit the Guarantor or its representatives at any time during normal business hours to inspect and make abstracts from such records and chattel paper. (b) Except as otherwise provided in this subsection (b), the Grantors shall continue to collect, at their own expense, all amounts due or to become due the Grantors under the Accounts. In connection with such collections, the Grantors may take such action as the Grantors or the Guarantor may deem necessary or advisable to enforce collection of the Accounts; provided, however, that the Guarantor shall have the right at any time, upon the occurrence and during the continuance of an Event of Default and upon written notice to the Grantors of its intention to do so, to notify the account debtors or obligors under any Accounts of the assignment of such Accounts to the Guarantor and to direct such account debtors or obligors to make payment of all amounts due or to become due to the Grantors thereunder directly to the Guarantor and, upon such notification and at the expense of the Grantors, to enforce collection of any such Accounts, and to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as the Grantors might have done. After receipt by the Grantors of the notice from the Guarantor referred to in the proviso to the preceding sentence, (i) all amounts and proceeds (including instruments) received by any Grantor in respect of the Accounts shall be received in trust for the benefit of the Guarantor hereunder, shall be segregated 8 9 from other funds of such Grantor and shall be forthwith paid over to the Guarantor in the same form as so received (with any necessary endorsement) and either (A) released to the applicable Grantor so long as no Event of Default shall have occurred and be continuing or (B) if any Event of Default shall have occurred and be continuing, applied as provided by Section 14(b), and (ii) the Grantors shall not adjust, settle or compromise the amount or payment of any Account, release wholly or partly any account debtor or obligor thereof, or allow any credit or discount thereon. SECTION 10. Transfers and Other Liens. The Grantors shall not (i) sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, any of the Collateral, except Inventory and Equipment in the ordinary course of business and except as otherwise expressly permitted under the terms of the Reimbursement Agreement, or (ii) create or permit to exist any lien, security interest, option or other charge or encumbrance upon or with respect to any of the Collateral, except for Permitted Liens. SECTION 11. Guarantor Appointed Attorney-in-Fact. Upon the occurrence and during the continuance of an Event of Default, each Grantor hereby irrevocably appoints the Guarantor as such Grantor's attorney-in-fact, with full authority in the place and stead of such Grantor and in the name of such Grantor or otherwise, from time to time in the Guarantor's discretion, to take any action and to execute any instrument which the Guarantor may deem necessary or advisable to accomplish the purposes of this Agreement (subject to the rights of the Grantors under Section 9), including, without limitation: (a) to obtain and adjust insurance required to be paid to the Guarantor pursuant to Section 8, (b) to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in connection with the Collateral, (c) to receive, endorse and collect any drafts or other instruments, documents and chattel paper, in connection therewith, and (d) to file any claims or take any action or institute any proceedings which the Guarantor may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Guarantor with respect to any of the Collateral. SECTION 12. Guarantor May Perform. If any Grantor fails to perform any agreement contained herein, the Guarantor may itself perform, or cause performance of, such agreement, and the expenses of the Guarantor (including, without limitation, reasonable attorney's fees and expenses) incurred in connection therewith shall be payable by the Grantors under Section 15(b). SECTION 13. The Guarantor's Duties. The powers conferred on the Guarantor hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the safe custody of any Collateral in its possession and 9 10 the accounting for moneys actually received by it hereunder, the Guarantor shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. The Guarantor shall be deemed to have exercised reasonable care in the custody and preservation of any Collateral in its possession if such Collateral is accorded treatment substantially equal to that which Continental accords its own property. SECTION 14. Remedies. If any Event of Default shall have occurred and be continuing: (a) The Guarantor may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party on default under the Code (whether or not the Code applies to the affected Collateral), and also may (i) require the Grantors to, and the Grantors hereby agree that they will at their expense and upon request of the Guarantor forthwith, assemble all or part of the Collateral as directed by the Guarantor and make it available to the Guarantor at a place to be designated by the Guarantor which is reasonably convenient to the Guarantor and the Grantors and (ii) without notice except as specified below, sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Guarantor's offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Guarantor may deem commercially reasonable. The Grantors agree that, to the extent notice of sale shall be required by law, at least ten days' notice to the Grantors of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The Guarantor shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Guarantor may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. (b) Any cash held by the Guarantor as Collateral and all cash proceeds received by the Guarantor in respect of any sale of, collection from, or other realization upon all or any part of the Collateral may, in the discretion of the Guarantor, be held by the Guarantor as collateral for, and/or then or at any time thereafter be applied (after payment of any amounts payable to the Guarantor pursuant to Section 15) in whole or in part by the Guarantor for the benefit of the Guarantor against, all or any part of the Secured Obligations in such order as the Guarantor shall elect. Any surplus of such cash or cash proceeds held by the Guarantor and remaining after payment in full of all the Secured Obligations shall be paid over to the Grantors or to whomsoever may be lawfully entitled to receive such surplus. SECTION 15. Indemnity and Expenses. (a) The Grantors agree to indemnify the Guarantor from and against any and all expenses, claims, losses and liabilities (including reasonable attorneys' fees and disbursements) growing out of or resulting from this Agreement (including, without limitation, enforcement of this Agreement), except claims, losses or liabilities resulting from the Guarantor's gross negligence or willful misconduct. 10 11 (b) The Grantors will upon demand pay to the Guarantor the amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and agents, which the Guarantor may incur in connection with (i) the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, any of the Collateral, (ii) the exercise or enforcement of any of the rights of the Guarantor hereunder or (iii) the failure by any Grantor to perform or observe any of the provisions hereof. SECTION 16. Amendments, Etc. No amendment or waiver of any provision of this Agreement, and no consent to any departure by the Grantors herefrom, shall in any event be effective unless the same shall be in writing and signed by the Guarantor or the Grantors, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. SECTION 17. Notices. All notices and other communications required or desired to be served, given or delivered hereunder shall be given in the manner and to the addresses set forth in the Reimbursement Agreement. SECTION 18. Continuing Security Interest; Assignments under Reimbursement Agreement. This Agreement shall create a continuing security interest in the Collateral and shall (i) remain in full force and effect until the later of (x) the payment in full of the Secured Obligations and all other amounts payable under this Agreement, (y) the expiration or termination of the Reimbursement Agreement and (z) the expiration or termination of the Guaranty, (ii) be binding upon the Grantors, their successors and assigns and (iii) inure to the benefit of, and be enforceable by, the Guarantor and its successors, transferees and assigns. Upon the payment in full of the Secured Obligations, the security interest granted hereby shall terminate and all rights to the Collateral shall revert to the respective Grantors. Upon any such termination, the Guarantor will, at the Grantors' expense, execute and deliver to the Grantors such documents as the Grantors shall reasonably request to evidence such termination. SECTION 19. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF ILLINOIS. SECTION 20. Joint and Several Obligations. Except to the extent the context may otherwise necessarily imply, all obligations and agreements of the Grantors hereunder shall be joint and several. SECTION 21. Incorporation of Preliminary Statements. The Preliminary Statements to this Agreement are hereby incorporated herein by this reference thereto. SECTION 22. Counterparts. This Agreement may be executed in any number of counterparts, and by the Guarantor and any of the Grantors in separate counterparts, each of which shall be an original, but all of which shall together constitute one and the same agreement. 11 12 SECTION 23. Captions. The captions contained in this Agreement are for convenience of reference only, are without substantive meaning and should not be construed to modify, enlarge, or restrict any provision. SECTION 24. Severability of Provisions. Any provision of this Agreement or of any other instrument, document or agreement executed and/or delivered in connection herewith which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or thereof or affecting the validity or enforceability of such provision in any other jurisdiction. IN WITNESS WHEREOF, the Grantors have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first above written. OHM CORPORATION By:_______________________________ Name:_________________________ Title:________________________ Attest: ____________________________ Secretary OHM REMEDIATION SERVICES CORP. By:_______________________________ Name:_________________________ Title:________________________ 12 13 SCHEDULE A TO SECURITY AGREEMENT
Grantor Location of Chief Executive Office ------- ---------------------------------- OHM Corporation 16406 U.S. Route 224 East Findlay, OH 45840 OHM Remediation Services Corp. 16406 U.S. Route 224 East Findlay, OH 45840 Records concerning Accounts also kept at: 200 Horizon Center Boulevard Trenton, NJ 08650 5335 Triangle Parkway Suite 450 Norcross, GA 30092 5731 West Las Positas Blvd. Pleasanton, CA 94588 Trade Names: None. Records concerning Account also kept at: None. Trade Names: None.
EX-10.L 13 OHM EX-10(L) 1 Exhibit 10(l) PLEDGE AGREEMENT THIS PLEDGE AGREEMENT (the "Pledge Agreement"), dated as of May 31, 1995, is executed by and between OHM Corporation, an Ohio corporation (the "Pledgor"), and WMX Technologies, Inc. (the "Pledgee") under the Reimbursement Agreement referred to below. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings ascribed to such terms in the Reimbursement Agreement referred to below. PRELIMINARY STATEMENTS: (1) The Pledgor, OHM Remediation Services Corp., an Ohio corporation ("Remediation"; Pledgor and Remediation are sometimes hereinafter collectively referred to as the "Borrowers"), Citicorp USA, Inc. as Administrative Agent (the "Agent") for the Banks which are parties to the Credit Agreement (as hereinafter defined) (the "Banks") and Bank of America Illinois in its capacity as Issuing and Paying Agent and Co-Agent for the Banks (the "Paying Agent"; together with the Agent and the Banks, the "Lenders" and individually a "Lender") have entered into that certain Revolving Credit Agreement dated as of May 31, 1995 as the same may be amended, supplemented or otherwise modified from time to time (the "Credit Agreement"). (2) The Lenders have required as a condition to the entry by the Borrowers and the Lenders in and to the Credit Agreement that the Pledgee execute and deliver that certain Guaranty dated as of May 31, 1995 (as amended, supplemented or otherwise modified from time to time, the "Guaranty") by the Pledgee in favor of the Lenders pursuant to which the Pledgee has guaranteed the prompt and complete repayment of the Obligations (as defined, the "Guaranty") subject to the limitations set forth in the Guaranty. (3) The Pledgee has required as a condition to the entry by the Pledgee in and to the Guaranty that the Borrowers execute and deliver that certain Reimbursement Agreement dated as of May 31, 1995 (as amended, supplemented or otherwise modified from time to time, the "Reimbursement Agreement") among the Pledgee and the Borrowers pursuant to which the Borrowers covenant and agree to promptly and completely reimburse the Pledgee for all payments made by the Pledgee under and pursuant to the Guaranty. (4) The Pledgor is the owner of the issued and outstanding capital stock of each of the corporations (collectively, the "Corporations" and individually, a "Corporation") set forth on Schedule I hereto. (5) The Lenders and the Pledgee each desire to execute and deliver that certain Intercreditor Agreement dated as of May 31, 1995 (the "Intercreditor Agreement") by and among the Agent, the Paying Agent and the Pledgee in order to set forth certain agreements, rights and interests with respect to and in connection with their respective interests with respect to the Borrowers as well as their respective security interests in and liens on certain collateral specified therein. 2 (6) The Pledgee has required, as a condition to its entering into the Reimbursement Agreement, that the Pledgor execute and deliver this Pledge Agreement; NOW, THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and to induce the Pledgee to enter into the Guaranty, the Pledgor and the Pledgee hereby agree as follows: SECTION 1. Pledge. The Pledgor hereby pledges to the Pledgee, for its benefit, and grants to the Pledgee for its benefit, a security interest in, the following (collectively, the "Pledged Collateral"): (a) The shares of the capital stock of each of the Corporations, now or at any time or times hereafter owned by the Pledgor, and the certificates representing the shares of such capital stock (such now-owned shares being identified on Schedule I attached hereto and made a part hereof), all options and warrants for the purchase of shares of the stock of the Corporations now or hereafter held in the name of the Pledgor (all of said capital stock, options and warrants and all capital stock held in the name of the Pledgor as a result of the exercise of such options or warrants being hereinafter collectively referred to as the "Pledged Stock"), and all dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of, or in exchange for, any or all of the Pledged Stock; (b) All additional shares of stock of the Corporations from time to time acquired by the Pledgor in any manner, and the certificates representing such additional shares (any such additional shares shall constitute part of the Pledged Stock and the Pledgee is irrevocably authorized to amend Schedule I from time to time to reflect such additional shares), and all options, warrants, dividends, cash, instruments and other rights and options from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares; (c) The property and interests in property described in Section 3 below; and (d) All proceeds of the foregoing. The Pledgor has on the date hereof delivered to the Agent on behalf of the Lenders the certificates representing the Pledged Stock pursuant to the Pledge Agreement (as defined in the Credit Agreement). The Pledgor covenants and agrees that upon the expiration or termination of such Pledge Agreement, the Pledgor shall cause such certificates representing the Pledged Stock to be promptly delivered to the Pledgee accompanied by stock powers in form and substance satisfactory to the Pledgee duly executed in blank (the "Powers"). 2 3 SECTION 2. Security for Obligations. The Pledged Collateral secures the prompt payment, performance and observance of the obligations of the Borrowers under and pursuant to the Reimbursement Agreement. SECTION 3. Pledged Collateral Adjustments. If, during the term of this Pledge Agreement: (a) Any stock dividend, reclassification, readjustment or other change is declared or made in the capital structure of any Corporation, or any option included within the Pledged Collateral is exercised, or both, or (b) Any warrants or any other rights or options shall be issued in connection with the Pledged Collateral, then all new, substituted and additional shares, warrants, rights, options or other securities, issued by reason of any of the foregoing, shall be immediately delivered to and held by the Pledgee under the terms of this Pledge Agreement and shall constitute Pledged Collateral hereunder. SECTION 4. Subsequent Changes Affecting Pledged Collateral. The Pledgor represents and warrants that it has made its own arrangements for keeping itself informed of changes or potential changes affecting the Pledged Collateral (including, but not limited to, rights to convert, rights to subscribe, payment of dividends, reorganization or other exchanges, tender offers and voting rights), and the Pledgor agrees that the Pledgee shall not have any obligation to inform the Pledgor of any such changes or potential changes or to take any action or omit to take any action with respect thereto. The Pledgee may, after the occurrence and during the continuance of an Event of Default, without notice and at its option, transfer or register the Pledged Collateral or any part thereof into its or its nominee's name with or without any indication that such Pledged Collateral is subject to the security interest hereunder. In addition, the Pledgee may at any time exchange certificates or instruments representing or evidencing Pledged Shares for certificates or instruments of smaller or larger denominations. SECTION 5. Representations and Warranties. The Pledgor represents and warrants as follows: (a) The Pledgor is the sole legal and beneficial owner of the issued and outstanding common stock of each Corporation in the amounts and percentages set forth on Schedule I, free and clear of any Lien except for the security interest created by this Pledge Agreement and that certain Pledge Agreement dated as of May 31, 1995 from the Pledgor to the Agent (as amended, supplemented or otherwise modified from time to time, the "Bank Pledge Agreement"); (b) The Pledgor has full corporate power and authority to enter into this Pledge Agreement; 3 4 (c) There are no restrictions upon the voting rights associated with, or upon the transfer of, any of the Pledged Collateral; (d) The Pledgor has the right to vote, pledge and grant a security interest in or otherwise transfer such Pledged Collateral free of any Liens other than the Lien of the Bank Pledge Agreement; (e) No authorization, approval, or other action by, and no notice to or filing with, any governmental authority or regulatory body is required either (i) for the pledge of the Pledged Collateral pursuant to this Pledge Agreement or for the due execution, delivery or performance of this Pledge Agreement by the Pledgor or (ii) for the exercise by the Pledgee of the voting or other rights provided for in this Pledge Agreement or the remedies in respect of the Pledged Collateral pursuant to this Pledge Agreement (except as may be required in connection with such disposition by laws affecting the offering and sale of securities generally and except as set forth in the Intercreditor Agreement); (f) The pledge of the Pledged Collateral pursuant to this Pledge Agreement creates a valid and perfected security interest in the Pledged Collateral, in favor of the Pledgee for its benefit, securing the payment and performance of the Obligations subject in priority only to the security interest created under the Bank Pledge Agreement; and (g) The Powers are duly executed and give the Pledgee the authority they purport to confer. SECTION 6. Voting Rights. During the term of this Pledge Agreement, and except as provided in this Section 6 below, the Pledgor shall have the right to vote the Pledged Stock on all corporate questions in a manner not inconsistent with the terms of this Pledge Agreement, the Reimbursement Agreement, the Intercreditor Agreement and any other Security Document. After the occurrence and during the continuance of an Event of Default, the Pledgee may, at the Pledgee's option and following written notice from the Pledgee to the Pledgor, exercise all voting powers pertaining to the Pledged Collateral, including the right to take action by shareholder consent, and Pledgor hereby irrevocably appoints and constitutes the Pledgee as its attorney for such purpose. SECTION 7. Dividends and Other Distributions. (a) So long as no Event of Default shall have occurred and be continuing: (i) The Pledgor shall be entitled to receive and retain any and all dividends and interest paid in respect of the Pledged Collateral, provided, however, that any and all 4 5 (A) dividends and interest paid or payable other than in cash with respect to, and instruments and other property received, receivable or otherwise distributed with respect to, or in exchange for, any of the Pledged Collateral; (B) dividends and other distributions paid or payable in cash with respect to any of the Pledged Collateral on account of a partial or total liquidation or dissolution or in connection with a reduction of capital, capital surplus or paid-in surplus; and (C) cash paid, payable or otherwise distributed with respect to principal of, or in redemption of, or in exchange for, any of the Pledged Collateral; shall be Pledged Collateral, and shall be forthwith delivered (subject to the expiration and termination of the Pledge Agreement (as defined in the Credit Agreement)) to the Pledgee to hold for its benefit, as Pledged Collateral and shall, if received by the Pledgor, be received in trust for the Pledgee, for its benefit, be segregated from the other property or funds of the Pledgor, and be delivered immediately to the Pledgee as Pledged Collateral in the same form as so received (with any necessary endorsement); and (ii) The Pledgee shall execute and deliver (or cause to be executed and delivered) to the Pledgor all such proxies and other instruments as the Pledgor may reasonably request for the purpose of enabling the Pledgor to receive the dividends or interest payments which it is authorized to receive and retain pursuant to clause (i) above. (b) After the occurrence and during the continuance of an Event of Default: (i) All rights of the Pledgor to receive the dividends and interest payments which it would otherwise be authorized to receive and retain pursuant to Section 7(a) (i) hereof shall cease, and all such rights shall thereupon become vested in the Pledgee, for its benefit, which shall thereupon have the sole right to receive and hold as Pledged Collateral such dividends and interest payments (subject to the Bank Pledge Agreement); and (ii) All dividends and interest payments which are received by the Pledgor contrary to the provisions of clause (i) of this Section 7(b) shall be received in trust for the Pledgee, for its benefit, shall be segregated from other funds of the Pledgor and shall be paid over immediately to the Pledgee as Pledged Collateral in the same form as so receive (with any necessary endorsements) (subject to the Bank Pledge Agreement). SECTION 8. Transfers and Other Liens. The Pledgor agrees that it will not (i) sell or otherwise dispose of, or grant any option with respect to, any of the Pledged Collateral without the prior written consent of the Pledgee, or (ii) create or permit to exist any Lien upon or 5 6 with respect to any of the Pledged Collateral, except for the security interest under this Pledge Agreement and the Bank Pledge Agreement. Notwithstanding the foregoing, the Pledgor may at any time sell or otherwise dispose of, in whole or in part, for fair market value as determined by the Board of Directors of the Pledgor the shares of common stock of NSC Corporation owned by the Pledgor, provided however, that any of such shares owned by the Pledgor shall remain subject to the lien of this Pledge Agreement. SECTION 9. Remedies. (a) The Pledgee shall have, in addition to any other rights given under this Pledge Agreement or by law, all of the rights and remedies with respect to the Pledged Collateral of a secured party under the Uniform Commercial Code as in effect in the State of Illinois. In addition, after the occurrence and during the continuance of an Event of Default, the Pledgee shall have such powers of sale and other powers as may be conferred by applicable law. With respect to the Pledged Collateral or any part thereof which shall then be in or shall thereafter come into the possession or custody of the Pledgee or which the Pledgee shall otherwise have the ability to transfer under applicable law, the Pledgee may, in its sole discretion, without notice except as specified below, after the occurrence and during the continuance of an Event of Default, sell or cause the same to be sold at any exchange, broker's board or at public or private sale, in one or more sales or lots, at such price as the Pledgee may deem best, for cash or on credit or for future delivery, without assumption of any credit risk, and the purchaser of any or all of the Pledged Collateral so sold shall thereafter own the same, absolutely free from any claim, encumbrance or right of any kind whatsoever. The Pledgee, may, in its own name, or in the name of a designee or nominee, buy the Pledged Collateral at any public sale and, if permitted by applicable law, buy the Pledged Collateral at any private sale. The Pledgor will pay to the Pledgee all reasonable expenses (including, without limitation, court costs and reasonable attorneys' and paralegals' fees and expenses) of, or incident to, the enforcement of any of the provisions hereof. The Pledgee agrees to distribute any proceeds of the sale of the Pledged Collateral in satisfaction of the obligations under the Reimbursement Agreement and the Pledgor shall remain liable for any deficiency following the sale of the Pledged Collateral. Any balance remaining subsequent to the foregoing shall be returned to the Pledgor or such other persons as are entitled thereto. (b) Unless any of the Pledged Collateral threatens to decline speedily in value or is or becomes of a type sold on a recognized market, the Pledgee will give the Pledgor reasonable notice of the time and place of any public sale thereof, or of the time after which any private sale or other intended disposition is to be made. Any sale of the Pledged Collateral conducted in conformity with reasonable commercial practices of banks, commercial finance companies, insurance companies or other financial institutions disposing of property similar to the Pledged Collateral shall be deemed to be commercially reasonable. Notwithstanding any provision to the contrary contained herein, the Pledgor agrees that any requirements of reasonable notice shall be met if such notice is received by the Pledgor as provided in Section 19 below at least five (5) Business Days before the time of the sale or disposition; provided, however, that the Pledgee may give any shorter notice that is commercially reasonable under the 6 7 circumstances. Any other requirement of notice, demand or advertisement for sale is waived, to the extent permitted by law. (c) In view of the fact that federal and state securities laws may impose certain restrictions on the method by which a sale of the Pledged Collateral may be effected after the occurrence and during the continuance of an Event of Default, the Pledgor agrees that after the occurrence and during the continuance of an Event of Default, the Pledgee may, from time to time, attempt to sell all or any part of the Pledged Collateral by means of a private placement restricting the bidders and prospective purchasers to those who are qualified and will represent and agree that they are purchasing for investment only and not for distribution. In so doing, the Pledgee may solicit offers to buy the Pledged Collateral, or any part of it, from a limited number of investors deemed by the Pledgee, in its reasonable judgment, to be financially responsible parties who might be interested in purchasing the Pledged Collateral. If the Pledgee solicits such offers from not less than four (4) such investors, then the acceptance by the Pledgee of the highest offer obtained therefrom shall be deemed to be a commercially reasonable method of disposing of such Pledged Collateral; provided, however, that this Section does not impose a requirement that the Pledgee solicit offers from four or more investors in order for the sale to be commercially reasonable. SECTION 10. Pledgee Appointed Attorney-in-Fact. The Pledgor hereby appoints the Pledgee its attorney-in-fact, with full authority, in the name of the Pledgor or otherwise, after the occurrence and during the continuance of an Event of Default, from time to time in the Pledgee's sole discretion, to take any action and to execute any instrument which the Pledgee may deem necessary or advisable to accomplish the purposes of this Pledge Agreement, including, without limitation, to exercise voting rights with respect to any of the Pledged Collateral, to receive, endorse and collect all instruments made payable to the Pledgor representing any dividend, interest payment or other distribution in respect of the Pledged Collateral or any part thereof and to give full discharge for the same and to arrange for the transfer of all or any part of the Pledged Collateral on the books of any Corporation to the name of the Pledgee or the Pledgee's nominee. SECTION 11. Waivers. The Pledgor waives presentment and demand for payment of any of the Obligations, protest and notice of dishonor or Event of Default with respect to any of the Obligations and all other notices to which the Pledgor might otherwise be entitled except as otherwise expressly provided herein or in the Reimbursement Agreement. SECTION 12. Term. This Pledge Agreement shall remain in full force and effect until the later to occur of (a) the Obligations have been fully and indefeasibly paid in cash or (b) the Reimbursement Agreement and the Guaranty have terminated pursuant to their respective terms. Upon the termination of this Pledge Agreement as provided above (other than as a result of the sale of the Pledged Collateral), the Pledgee will release the security interest created hereunder and, if it then has possession of the Pledged Stock, will deliver the Pledged Stock and the Powers to the Pledgor. 7 8 SECTION 13. Definitions. The singular shall include the plural and vice versa and any gender shall include any other gender as the context may require. SECTION 14. Successors and Assigns. This Pledge Agreement shall be binding upon and inure to the benefit of the Pledgor, the Pledgee, for its benefit, and their respective successors and assigns. The Pledgor's successors and assigns shall include, without limitation, a receiver, trustee or debtor-in-possession of or for the Pledgor. SECTION 15. Governing Law. Any dispute between the Pledgee and the Pledgor arising out of or related to the relationship established between them in connection with this Pledge Agreement, and whether arising in contract, tort, equity, or otherwise, shall be resolved in accordance with the laws of the State of Illinois. SECTION 16. Severability. Whenever possible, each provision of this Pledge Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but, if any provision of this Pledge Agreement shall be held to be prohibited or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Pledge Agreement. SECTION 17. Further Assurances. The Pledgor agrees that it will, at its expense, cooperate with the Pledgee and will execute and deliver, or cause to be executed and delivered, all such other stock powers, proxies, instruments and documents, and will take all such other actions, including, without limitation, the execution and filing of financing statements, as the Pledgee may request from time to time to carry out the provisions and purposes of this Pledge Agreement. SECTION 18. The Pledgee's Duty of Care. The Pledgee shall not be liable for any acts, omissions, errors of judgment or mistakes of fact or law including, without limitation, acts, omissions, errors or mistakes with respect to the Pledged Collateral, except for those arising out of or in connection with the Pledgee's (i) gross negligence or willful misconduct, or (ii) failure to use reasonable care with respect to the safe custody of the Pledged Collateral in the Pledgee's possession. Without limiting the generality of the foregoing, the Pledgee shall be under no obligation to take any steps necessary to preserve rights in the Pledged Collateral against any other parties but may do so at its option. All expenses incurred in connection therewith shall be for the sole account of the Pledgor, and shall constitute part of the Obligations secured hereby. SECTION 19. Notices. All notices and other communications required or desired to be served, given or delivered hereunder shall be given in the manner and to the addresses set forth in the Reimbursement Agreement. SECTION 20. Amendments. Waivers and Consents. No amendment or waiver of any provision of this Pledge Agreement nor consent to any departure by the Pledgor herefrom, shall in any event be effective unless the same shall be in writing and signed by the Pledgee, and 8 9 then such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. SECTION 21. Section Headings. The section headings herein are for convenience of reference only, and shall not affect in any way the interpretation of any of the provisions hereof. SECTION 22. Execution in Counterparts. This Pledge Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which shall together constitute one and the same agreement. SECTION 23. Merger. This Pledge Agreement represents the final agreement of the Pledgor with respect to the matters contained herein and may not be contradicted by evidence of prior or contemporaneous agreements, or subsequent oral agreements, between the Pledgor and the Pledgee. 9 10 IN WITNESS WHEREOF, the Pledgor and the Pledgee have executed this Pledge Agreement as of the date set forth above. OHM CORPORATION By:____________________________ Name:______________________ Title:_____________________ WMX TECHNOLOGIES, INC. By:____________________________ Name:______________________ Title:_____________________ By:____________________________ Name:______________________ Title:_____________________ 10 11 ACKNOWLEDGMENT The undersigned each hereby acknowledges receipt of a copy of the foregoing Pledge Agreement, agrees promptly to note on its books the security interests granted under such Pledge Agreement, and waives any rights or requirement at any time hereafter to receive a copy of such Pledge Agreement in connection with the registration of any Pledged Collateral in the name of the Pledgee or its nominee or the exercise of voting rights by the Pledgee. ENVIRONMENTAL FINANCIAL SERVICES CORP. By:____________________________ Name:______________________ Title:_____________________ CAPITAL NATIONAL INSURANCE COMPANY By:____________________________ Name:______________________ Title:_____________________ OHM REMEDIATION SERVICES CORP. By:____________________________ Name:______________________ Title:_____________________ NSC CORPORATION By:____________________________ Name:______________________ Title:_____________________ 11 12 OHM CORPORATION, A NEVADA CORPORATION By:____________________________ Name:______________________ Title:_____________________ OHM ENVIRONMENTAL RESOURCE MANAGEMENT CORP. By:____________________________ Name:______________________ Title:_____________________ OHM ASBESTOS ABATEMENT CORP. By:____________________________ Name:______________________ Title:_____________________ 12 13 SCHEDULE I to PLEDGE AGREEMENT Pledged Stock Certificates
Percentage of Shares of Common Issued and Outstanding Stock owned by Common Stock owned the Pledgor Subject Name by the Pledgor to Pledge ---- Environmental Financial Services Corp. 100% 100 Capital National Insurance Company 100% 100,000 OHM Remediation Services Corp. 100% 100 NSC Corporation 40% 4,010,000 OHM Corporation, a Nevada corporation 100% 100 OHM Environmental Resource Management Corp. 100% 100% OHM Asbestos Abatement Corp. 100% 100
13 EX-11 14 OHM EX-11 1 EXHIBIT 11 Statement Re Computation of Per Share Earnings OHM CORPORATION COMPUTATION OF PER SHARE EARNINGS (In Thousands, Except Per Share Data)
Three Months Ended Six Months Ended June 30, June 30, ------------------------ ----------------------- 1995 1994 1995 1994 ---- ---- ---- ---- PRIMARY: Average Shares Outstanding 20,100 15,578 17,903 15,559 Net effect of dilutive stock options and warrants-- based on the treasury stock method 493 634 232 648 ------- ------- ------- ------- Total 20,593 16,212 18,135 16,207 ======= ======= ======= ======= Net Income $ 234 $ 2,069 $ 1,521 $ 2,874 ======= ======= ======= ======= Per Share Amount $ 0.01 $ 0.13 $ 0.08 $ 0.18 ======= ======= ======= ======= FULLY DILUTED: (1) Average Shares Outstanding 20,100 15,578 17,903 15,559 Net effect of dilutive stock options and warrants-- based on the treasury stock method 623 634 553 648 ------- ------- ------- ------- Total 20,723 16,212 18,456 16,207 ======= ======= ======= ======= Net Income $ 234 $ 2,069 $ 1,521 $ 2,874 ======= ======= ======= ======= Per Share Amount $ 0.01 $ 0.13 $ 0.08 $ 0.18 ======= ======= ======= ======= (1) Fully dilutive effect of stock options and warrants on per share amounts for the three and six months ended June 30, 1995 and 1994, has not been presented in the statements of income since any reduction of less than 3% in the aggregate need not be considered as dilution.
EX-15 15 OHM EX-15 1 EXHIBIT 15 Letter Re Unaudited Financial Information Board of Directors and Shareholders OHM Corporation We are aware of the incorporation by reference into the Registration Statements (Form S-8 No. 33-24953 and Form S-8 No. 33-28025) of OHM Corporation of our report dated August 10, 1995, relating to the unaudited consolidated interim financial statements of OHM Corporation which are included in its Form 10-Q for the quarter ended June 30, 1995. Pursuant to Rule 436(c) of the Securities Act of 1933, our report is not a part of the registration statement prepared or certified by accountants within the meaning of Section 7 or 11 of the Securities Act of 1933. Ernst & Young LLP Columbus, Ohio August 10, 1995 EX-27 16 OHM EX-27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED CONSOLIDATED BALANCE SHEET AND THE UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1995 JAN-01-1995 JUN-30-1995 6,928 0 215,664 27,343 11,797 237,040 125,719 41,372 363,179 79,077 122,578 2,651 0 0 154,175 363,179 0 179,718 0 150,664 20,701 0 6,071 2,282 761 1,521 0 0 0 1,521 .08 .08